The Money Mustache Community
Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: mustachecat on May 03, 2013, 12:52:11 PM
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http://thebillfold.com/2013/05/not-all-of-us-are-wasteful/
Have at it, all.
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Wow. This author really embodies the entitled mindset of today's Americans.
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I find the tone of the comments entitled, but the article itself has some decent points. People can make decent choices and still be in a bad situation. The race is not to the swift and all that. Unfortunately he takes the MMM shtick too literally. It doesn't take a genius to recognize hyperbole. Yes, we should talk about larger economic issues rather than blaming the middle class, but the solution to that is to talk about those issues, not get caught up arguing with someone you think is blaming the middle class.
And I can't help but love someone who insists that not everyone's personal finance plan is going to be the same. The blanket statements out there about personal finances are everybody's worst enemy. But, again, to score this point against MMM is to be arguing against a strawman.
It reminds me a lot of this comic:
http://www.smbc-comics.com/index.php?db=comics&id=2939#comic
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Here in the U.S., due to how low our taxes are, how cheap our cost of living is, and how high our wages are, if you aren't being wasteful then you'll likely have a surplus.
Yes, you can get in a tough situation. Yes, there can be things that happen beyond your control.
But the average person, if they weren't wasteful, would have tons of disposable cash.
http://www.mrmoneymustache.com/2012/07/08/early-retirement-cant-work-or-id-have-heard-of-it-before/
We're better off than ever, and we're generally letting the excess slip out of our grasp it in an exploding volcano of wastefulness rather than save it.
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Follow the "never want to retire" link near the end:
My maternal grandmother is somewhere north of 90 (or as she rationalizes, she’s just been an 18-year-old for 70 some years), and she still works full-time...
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I'm sorry, but that guy at the Billfold is.....well, wrong.
My goodness....the pieces over there are just one after another of "blame them, blame them, their fault, I'm innocent, it's healthcare, not my long list of luxury spending that I justify as "necessity", its education, its housing, etc, etc, etc".
Billfold: Suggest to your readers that they grow a pair and take responsibility for their own actions.
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About the only valid point the blog post had was that everyone's situation is slightly different. But yes the current typical American middle class lifestyle is incredibly wasteful. I'm not sure how much of a defense you can raise against that. Then again I guess I'm rather biased in already believing that. I just haven't seen a good defense other than occasionally someone referring to wage increases vs. inflation but that conversation is a hot mess.
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But the majority of people I know aren’t wildly irresponsible. They’re not buying luxury cars and designer clothing and $5 lattes every day (ah, the latte factor!—every personal finance guru’s favorite example). They’re dealing with shrinking salaries, skyrocketing health care and education costs, a weak economy that has resulted in job loss. Indeed, some of these people are the ones who tried to do it right—who saved up six months’ worth or a year’s worth of emergency savings only to drain it all during the financial crisis and housing crash; who cashed out their retirement accounts because they needed to pay their mortgage and didn’t want to lose their home. All the bike-riding and TV cable canceling wasn’t going to help them. Quitting your yoga class isn’t going to fix pay inequality or result in employer-supported maternity leave appearing in the office. And we can go on about the 401(k) problem.
The bolded part is what I have a problem with. Cable costs at least 600/year generally from what I've seen and I'd also assume that most people spend at least $150/month on gas I'd think. That is $2400 a year. To suggest that an extra $2400 wouldn't have helped these hypothetical people is absurd. I don't know what yoga costs but certainly that would be hundreds per year.
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Dude, they need some cheese for all that whine.
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Stopped reading at "computer engineer". Guy is obviously clueless.
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Aaagh. I will grant that he raises some valid points about stagnating wages and income inequality. But the idea that frugality isn't going to help people is just giving up! Almost every person I know who's been dealt a bad financial situation has also compounded the issue through poor choices. I have a friend right now who is freaking out b/c she is "barely making ends meet", facing a summer with no job, and racking up a bit of credit card debt. But, she likes to go out for dinner or drinks every few weeks, she chose to live in a slightly pricier (but not the priciest) part of town, she drives a truck with some regularity. None of these choices are obviously "wasteful" to the average consumer, but they are accumulating to put her in a tight situation.
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Hmmm. I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do). Mr and Mrs. MMM certainly dealt with the whole maternity leave/childcare issue in a way most young parents don't even imagine: retirement. And, one of my personal pet peeves, do people not realize you can still get free tv with a rabbit ears antenna? More stations than I had as a child :) And almost everything else shows up the next day for free on the internet. As I said to my teen daughter, it's better for you to watch Scandal and Grey's Anatomy on Friday (for free on the internet) than Thursday (which would require cable where we live) anyhow since it's not a school night.
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I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do).
Astute observation, thanks.
The author of the article is in a variation of the group trap from Harry Browne's How I Found Freedom in an Unfree World - trying to accomplish something indirectly (thought trying to change society, other people's minds, etc.) instead of what he can change directly.
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I will grant that he raises some valid points about stagnating wages and income inequality. But the idea that frugality isn't going to help people is just giving up!
Stagnating wages and income inequality are a real problem, but the author creates a false dichotomy -- as if MMM's message (or any other finance message) is only true in an economy with quickly rising wages and a flatter income structure. The message is just as true for people who make $25,000 as for people who make $125,000 -- spending less of what you earn and investing the difference will lead to early retirement. Spending less can be achieved by not buying into contemporary consumer culture's "must haves" such as cable television and driving everywhere. Spending less means not using money inefficiently by going into debt for things you don't need but merely want (like one poster who said she can't afford to live closer to town but needs her $265/month dance classes to keep sane. If she were to move closer to town, cut out dance and cut out all the money she spends commuting, after 1-2 years she will have saved enough that the dance classes could pay for themselves out of her passive income. It is short-sighted).
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I read The Billfold regularly, although a large portion of the posts get on my nerves. This was a pretty ridiculous criticism. Obviously it's difficult to reach FI if you're unemployed or underemployed, but MMM still offers a ton of practical advice that can save anyone money, even if they don't make much money.
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I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do).
Astute observation, thanks.
The author of the article is in a variation of the group trap from Harry Browne's How I Found Freedom in an Unfree World - trying to accomplish something indirectly (thought trying to change society, other people's minds, etc.) instead of what he can change directly.
It's not always appropriate to make individual effort a condition for reform. Should the EPA not be allowed jurisdiction over drilling companies because so many individuals don't sort their recyclables properly?
The London fog caused a number of deaths. Individuals could have moved farther out of the city so at least they weren't sleeping in it. They could have exercised to improve their overall cardiovascular health so they were less impacted by the pollution. People could have closed their windows and wiped down all the surfaces in their houses. Why puritanically judge people who don't take these precautions when the obvious problem is the poisonous frikkin' fog over everything?
If this guy is saying the fact that someone can't afford yoga classes is cause for reform, that's a bad argument for reform. But I don't think that's what he's saying. I think he's saying that the fact that people could save $2400/year by not getting cable is not an argument _against_ reform. I think it's a bad article because that argument isn't in MMM's blog.
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I mostly got from what he said in the article was that things like lattes and yoga classes aren't the problem. When in fact it is a portion of the problem. He says that distinctly that our lifestyle being wasteful is a myth. Then he proceeds to get into all the outside factors such as wages, health care, and education. It's a forest from the trees situation. MMM is saying in his article here is what you can control. Focus on what you can control and you will see an immediate improvement on your life. The Billfold dude is saying forget that, here are all the (mostly) uncontrollable aspects that you can hang your problems on. That in my mind is BS. Focus on the things you can do and improve upon. And if you are politically motivated enough, get going on the (mostly) uncontrollable aspects that take large coordinated effort through government/corporate/large scale organizational efforts.
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I am glad that this blogger at least acknowledges that the MMM lifestyle will work for some. I choose frugality over spendiness, but I don't think it's fair when people insist that others follow their lifestyle. At least this dude didn't trash those of us who choose to live more frugally (like some of the douchebag bloggers out there).
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Focus on what you can control and you will see an immediate improvement on your life. The Billfold dude is saying forget that here are all the (mostly) uncontrollable aspects that you can hang your problems on. That in my mind is BS. Focus on the things you can do and improve upon. And if you are politically motivated enough, get going on the (mostly) uncontrollable aspects that take large coordinated effort through government/corporate/large scale organizational efforts.
This.
It's the classic "locus of control" dichotomy. Some people believe forces act upon you and you must tolerate them, endure and react as best you can like a ship adrift at sea. Some people believe you have total control to steer your life and those who fail to do so are somehow lacking.
The truth is probably somewhere in the middle.
The rebuttal to MMM's philosophy will always encompass some aspect of his good fortune to be born white, male, first world, healthy, have his education paid for by Canadian taxpayers, moving to the most prosperous country in the history of the planet, etc.
Rather than harp on this, however, the author could have done what Matchewed did, which was to emphasize how you play the cards you were dealt and stop fussing that you didn't get all the aces.
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Focus on what you can control and you will see an immediate improvement on your life. The Billfold dude is saying forget that here are all the (mostly) uncontrollable aspects that you can hang your problems on. That in my mind is BS. Focus on the things you can do and improve upon. And if you are politically motivated enough, get going on the (mostly) uncontrollable aspects that take large coordinated effort through government/corporate/large scale organizational efforts.
This.
It's the classic "locus of control" dichotomy. Some people believe forces act upon you and you must tolerate them, endure and react as best you can like a ship adrift at sea. Some people believe you have total control to steer your life and those who fail to do so are somehow lacking.
The truth is probably somewhere in the middle.
The rebuttal to MMM's philosophy will always encompass some aspect of his good fortune to be born white, male, first world, healthy, have his education paid for by Canadian taxpayers, moving to the most prosperous country in the history of the planet, etc.
Rather than harp on this, however, the author could have done what Matchewed did, which was to emphasize how you play the cards you were dealt and stop fussing that you didn't get all the aces.
+1
Also, looking forward to the MMM book, tv show, .... :D
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Living on something like 3500 or so(you have to factor in the cost of having 400k tied up in a house to get the true cost/month) a month is easy. It is pretty close to what the median family in the US takes home. It is being happy with it is the part that most people struggle with. Personally I found that working 80hrs a week was a good solution. Didn't have anytime to spend money.:) Besides MMM lifestyle is still incredibly wasteful. He is spending ~200% of what the feds think a family of 3 needs to live.
The hard part is how to most people get the 800k or so in assets. A good chunk of the reason MMM was able to do it was because his family was making 160k+ (i.e.top 5% in income) which isn't realistic for a lot of families. A couple of made up (but roughly right but there are too many unknowns to be exact) to think about. A family making 160k would take home ~100k and spend 40k allows you to save 60k/year which means in 10 years you have 800k(assume 7%) and can retire. The same couple making 60k(above national average) taking home 50 and saving 10k has a mere 140k and has to save almost 30 years to get the same results. Now being able to retire at 50 instead of 75 is still a big win.
I am glad that this blogger at least acknowledges that the MMM lifestyle will work for some. I choose frugality over spendiness, but I don't think it's fair when people insist that others follow their lifestyle. At least this dude didn't trash those of us who choose to live more frugally (like some of the douchebag bloggers out there).
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Living on something like 3500 or so(you have to factor in the cost of having 400k tied up in a house to get the true cost/month) a month is easy. It is pretty close to what the median family in the US takes home. It is being happy with it is the part that most people struggle with. Personally I found that working 80hrs a week was a good solution. Didn't have anytime to spend money.:) Besides MMM lifestyle is still incredibly wasteful. He is spending ~200% of what the feds think a family of 3 needs to live.
The hard part is how to most people get the 800k or so in assets. A good chunk of the reason MMM was able to do it was because his family was making 160k+ (i.e.top 5% in income) which isn't realistic for a lot of families. A couple of made up (but roughly right but there are too many unknowns to be exact) to think about. A family making 160k would take home ~100k and spend 40k allows you to save 60k/year which means in 10 years you have 800k(assume 7%) and can retire. The same couple making 60k(above national average) taking home 50 and saving 10k has a mere 140k and has to save almost 30 years to get the same results. Now being able to retire at 50 instead of 75 is still a big win.
I am glad that this blogger at least acknowledges that the MMM lifestyle will work for some. I choose frugality over spendiness, but I don't think it's fair when people insist that others follow their lifestyle. At least this dude didn't trash those of us who choose to live more frugally (like some of the douchebag bloggers out there).
So, you are letting the feds decide what is frugal instead of real people? I am curious to know where are you getting your information from. Is it from what welfare recipients get because I'm thinking the official "poverty line" is higher than you state, but I'm not sure. From my Canadian so-called middle class perspective, MMM is not wasteful. And certainly less wasteful than whiners who claim it can't be done. They are the people I was referring to. Some of them are the same types of people who told me that my children would have unhappy childhoods because I don't own a car and that there was no way I could afford to work part-time and raise my children.
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From my Canadian so-called middle class perspective, MMM is not wasteful.
Not wasteful, no, I agree with you there.
But he certainly has many luxuries. He does spend beyond what is necessary. And that's fine, but his level of spending is not at a poverty level, it is enough to provide a comfortable life, if you use it correctly (I.e. much of the spending is not going to interest on credit cards, car loan, etc. etc.)
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People are just so bad at maths. MMM indeed has probably above average effective income, once you 'correct' the headline figure for the mortgage free house and taxes when compared to the average US household. A better equiv. Income would be more like 60k., well above median.
On top of that above average household income, he is sensibly superfrugal, and so doesn't just 'not suffer' but achieves a lifestyle of luxury. The average American would need loads of money to approach it, but still wouldn't be as happy!
This is the power of mustashianism. Being truly happy, and living a full life of luxury, while enjoying the one thing money cannot buy. Time.
All it takes is about $800k - $1.5 mil
And a bike.
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From my Canadian so-called middle class perspective, MMM is not wasteful.
Not wasteful, no, I agree with you there.
But he certainly has many luxuries. He does spend beyond what is necessary. And that's fine, but his level of spending is not at a poverty level, it is enough to provide a comfortable life, if you use it correctly (I.e. much of the spending is not going to interest on credit cards, car loan, etc. etc.)
There's a thread on ERE right now which discusses the difference between ERE and being on welfare. Welfare is certainly subsistence level. ERE/MMM allows the follower to choose his/her luxuries, so I agree with your statement. When I think of wasteful, I think of the dumpsters many of my neighbours have placed in their driveways every few years when they aren't actually renovating their houses. I don't think of mindful spending on some luxuries is wasteful. Besides, think of how much is diverted from landfills when one buys and sells on craiglist.
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I don't think of mindful spending on some luxuries is wasteful.
Right! It's the non-mindful spending on things that are falsely believed to be necessities that catches so many in the middle class. Like the example of commuting to your office job in an F-150*: you'd get there just as quickly & comfortably in a 20-year old Honda Civic, and save a lot of money by doing so.
*Which in itself is sorta frugal, when you think about all the people doing the same commute in F-350s :-)
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I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do).
Astute observation, thanks.
The author of the article is in a variation of the group trap from Harry Browne's How I Found Freedom in an Unfree World - trying to accomplish something indirectly (thought trying to change society, other people's minds, etc.) instead of what he can change directly.
It's not always appropriate to make individual effort a condition for reform. Should the EPA not be allowed jurisdiction over drilling companies because so many individuals don't sort their recyclables properly?
The London fog caused a number of deaths. Individuals could have moved farther out of the city so at least they weren't sleeping in it. They could have exercised to improve their overall cardiovascular health so they were less impacted by the pollution. People could have closed their windows and wiped down all the surfaces in their houses. Why puritanically judge people who don't take these precautions when the obvious problem is the poisonous frikkin' fog over everything?
If this guy is saying the fact that someone can't afford yoga classes is cause for reform, that's a bad argument for reform. But I don't think that's what he's saying. I think he's saying that the fact that people could save $2400/year by not getting cable is not an argument _against_ reform. I think it's a bad article because that argument isn't in MMM's blog.
The poisonous frikin' fog was caused by everyone in London burning coal to heat, cook with, and run factories. Legislation forced people to stop burning so much coal-- wonderful!-- but while waiting for, and campaigning for said legislation, I'm sure there were plenty of ordinary Londoners who cut back on the consumption of dirty coal in their everyday lives.
That's not an argument against reform, either. There's no dichotomy, individual action vs. reform. Not only are they not in opposition, but you have to have both-- just look at how much good Al Gore has done to get down CO2 emissions by jetting around the globe. If he (and other powerful, concerned-sounding people) sold his mansion, took the train, and drove a Prius, I suspect we would have had a treaty. As they said in the 70s, "the personal is political."
As I said to my teen daughter, it's better for you to watch Scandal and Grey's Anatomy on Friday (for free on the internet) than Thursday (which would require cable where we live) anyhow since it's not a school night.
Ah, but it's not free on the Internet. If you were using the interwebs only for hypertext, as we did once upon a time, your connection would cost a tiny fraction of what it does if you need enough bandwidth for video use. Cheaper than cable? It sure is! But not free. Heck, depending on where you live, you might actually be able to get free dialup, if all you wanted was hypertext.
Anyway, I agree with everyone who says the MMM family is wasteful-- he'd agree with you! MMM is quite unapologetic in his posts that he lives a life of (relative) luxury. Of course, anyone but a subsistence farmer can have that accusation leveled at them, so I'm not sure what the point is. He's living well below his means, anyway, and that's the point.
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I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level. Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier. You will always be able to find a thing here or there that you disagree with but there is a reason why MMM is spending 40k/year on living expenses and not cutting it down to the 20k that is more than enough to live on. At a certain point you start cutting out things that make live enjoyable to you.
If you want to argue about who is frugal, there is pretty much always someone that is cheaper out there. You bought TP. I just take it from public restrooms. You buy gas? I power my car on donated vegitable fat. You buy food? I only eat road kill and free costco samples. You pay rent, I live in a card board box under the underpass. Read the cheapskates websites sometime. They would find MMM lifestyle incredibly wasteful. They also are letting money run their lives.
So, you are letting the feds decide what is frugal instead of real people? I am curious to know where are you getting your information from. Is it from what welfare recipients get because I'm thinking the official "poverty line" is higher than you state, but I'm not sure. From my Canadian so-called middle class perspective, MMM is not wasteful. And certainly less wasteful than whiners who claim it can't be done. They are the people I was referring to. Some of them are the same types of people who told me that my children would have unhappy childhoods because I don't own a car and that there was no way I could afford to work part-time and raise my children.
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Hmmm. I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do).
This was my thought exactly when reading this article. Completely blow off practical ideas that could allow people flexible and comfortable financial lives in their current situation, or complain that everything else needs to change, and that changing lifestyles is asking too much.
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I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level. Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier.
To be fair, he does occasionally discuss ways of increasing your income, if you're on the lower rungs of the economic ladder. That is also something that is partially subject to an individual's control: I doubt whether any extremes of frugality would have allowed me to accumulate my current stash, if I had all those years ago pigeonholed myself as farm/construction worker. But practicing frugality while working those low-level jobs let me accumulate enough to go to school, and eventually get a much higher paying job.
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I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level. Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier. You will always be able to find a thing here or there that you disagree with but there is a reason why MMM is spending 40k/year on living expenses and not cutting it down to the 20k that is more than enough to live on. At a certain point you start cutting out things that make live enjoyable to you.
If you want to argue about who is frugal, there is pretty much always someone that is cheaper out there. You bought TP. I just take it from public restrooms. You buy gas? I power my car on donated vegitable fat. You buy food? I only eat road kill and free costco samples. You pay rent, I live in a card board box under the underpass. Read the cheapskates websites sometime. They would find MMM lifestyle incredibly wasteful. They also are letting money run their lives.
I don't disagree with the overall message of what you say. I guess this would be nitpicky of me but 60k expenses becoming dicey? I think that's the crux of some of my points, we start believing that 60k is dicey rather than closer to the (probably) wasteful living. I know the rebuttal would be that as long as it is spent on what is of value to the individual/family it is okay but how is that so different from the 100k family, isn't their spending valuable to them? I'm not saying I know where the line is but I think you can still have a valuable life and still reduce spending without any diceyness below the 60k level. And to state that those who choose or even not choose to live above 20k are sacrificing enjoyment in their lives is rather presumptuous.
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What I found troubling about the Billfold article is that it seemed to miss the larger point of MMM, which is not that everyone MUST retire early at 30, but that you should make spending choices with a concious attitude of how today's choice can improve or constrain your lifestyle tomorrow. I don't think there's anything wrong at all with working until you're 65 if that is honestly what you want, but I think more people should do the math and understand the power of small choices to affect their future. Mike seemed fixated on the idea that if you don't want to retire early there's nothing to be gained from those principles and I fundamentally disagree.
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60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would be plenty for a family of 3) but at some point you hit limits most people don't want to cross.
Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money. But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.
I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level. Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier. You will always be able to find a thing here or there that you disagree with but there is a reason why MMM is spending 40k/year on living expenses and not cutting it down to the 20k that is more than enough to live on. At a certain point you start cutting out things that make live enjoyable to you.
If you want to argue about who is frugal, there is pretty much always someone that is cheaper out there. You bought TP. I just take it from public restrooms. You buy gas? I power my car on donated vegitable fat. You buy food? I only eat road kill and free costco samples. You pay rent, I live in a card board box under the underpass. Read the cheapskates websites sometime. They would find MMM lifestyle incredibly wasteful. They also are letting money run their lives.
I don't disagree with the overall message of what you say. I guess this would be nitpicky of me but 60k expenses becoming dicey? I think that's the crux of some of my points, we start believing that 60k is dicey rather than closer to the (probably) wasteful living. I know the rebuttal would be that as long as it is spent on what is of value to the individual/family it is okay but how is that so different from the 100k family, isn't their spending valuable to them? I'm not saying I know where the line is but I think you can still have a valuable life and still reduce spending without any diceyness below the 60k level. And to state that those who choose or even not choose to live above 20k are sacrificing enjoyment in their lives is rather presumptuous.
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60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would be plenty for a family of 3) but at some point you hit limits most people don't want to cross.
Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money. But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.
Nearly 17% of the forum posters who have responded to a demographic survey are individuals/families who make between 40-60k Nearly 28% of the forum posters who have responded to a demographic survey are individuals/families who make less than 60k, being one of those I find your post absurd for you to suggest that I'm living a limited life. How do you get to define what these limits are? How do you know what limits people are or are not willing to cross? Why is a 400k house required for a family of three?
Yes sometimes life happens. I'm not disagreeing with you there. But terrible things can happen and if you have a good enough savings rate and a drive to do better and/or get better you can pull through. You are (mostly) in control of your decisions and your life. Stick with that "mostly" and don't hang your problems on the things you can't control.
*Edit* I messed up on my numbers from the demographic survey - corrected number and statement is above.
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You are reading in things that I didn't write. All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle. I don't want to debate what is wasteful. There is too much value judgement in that and those choices will change depending on your circumstances. You can definitely live comfortablely on half of what MMM is spending if you have 100 hours a week to spend on doing things that save money at the cost of time.
60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would be plenty for a family of 3) but at some point you hit limits most people don't want to cross.
Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money. But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.
Nearly 17% of the forum posters who have responded to a demographic survey are individuals/families who make between 40-60k, being one of those I find your post absurd for you to suggest that I'm living a limited life. How do you get to define what these limits are? How do you know what limits people are or are not willing to cross? Why is a 400k house required for a family of three?
Yes sometimes life happens. I'm not disagreeing with you there. But terrible things can happen and if you have a good enough savings rate and a drive to do better and/or get better you can pull through. You are (mostly) in control of your decisions and your life. Stick with that "mostly" and don't hang your problems on the things you can't control.
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Where did I place words in your mouth? I believe I'm going directly from your statements.
You're making some pretty big assumptions about others spending habits without actually doing any reading. You seem to only have a typical take on lifestyle and are hiding behind "value judgement" rather than looking at our culture of spending with a critical eye. Please, stick around, read some posts on the blog, keep interacting with the forum beyond this post. You'll probably find a diverse group who does not have to work an additional 100 hours on frugality tactics in order to attain FI.
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All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle.
Interesting observation. I find it hard to disagree, based on the amount they're spending.
Then again, I know they aren't wasting money on expensive cell phone plans, cable TV packages, new cars, they don't pay any interest or constantly buy new clothes, lattes, etc. etc. (Plus then they don't have child care to pay, typically not a "waste," but still not an expense for them).
So I wonder where all their money is going. I suppose I could dig up one of those yearly spending reports, but I don't care that much, because the point is that their specific example isn't what's important: the concept and how you can apply it to your life is.
Your point is interesting though, they do spend an average family's worth of expenses, so to call the others at that level an exploding volcano of wastefulness is interesting. Hmm. (Of course how low could that family's expenses be if they cut out all those things I listed above?)
Thanks for the thoughts.
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As what others have said, it often times IS about the cable and the yoga that really add up. The author seemed to want to look at the forest rather than the trees. It is hard to take a few steps back from a sequoia named "yoga" and look at the forest because some of those "insignificant" trees are still blocking the view. Prune the troublesome trees for Pete's sake.
In the comments, those who seemed put off by the idea of cutting yoga seemed to admit they could do it on their own if push came to shove. That seems the definition of a luxury to me.
"The $140/month I spend on my yoga.....I could do all this by doing yoga on my own, for free........"
"Yes, this! Yoga helped me get off several pricey medications and greatly improved my quality of life and while yes, I could do it alone......."
I think these people are missing the point (one of them at least). You can love yoga all you want and feel it is of utmost importance in your life for various reasons, but at the end of the day, you have to realize it is still a luxury. If the comments read something like, "Yeah, I am a sucker for yoga. It provides benefits to me in so many ways, it is worth the $140/month to me. I realize I could be investing that $140 instead of spending it but it is my choice and currently the yoga provides a better usage of my money by my terms." that would be great. At least admit the problem rather than make excuses and use that reasoning to help shoot down an article with generally great advice.
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You are reading in things that I didn't write. All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle. I don't want to debate what is wasteful. There is too much value judgement in that and those choices will change depending on your circumstances. You can definitely live comfortablely on half of what MMM is spending if you have 100 hours a week to spend on doing things that save money at the cost of time.
60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would be plenty for a family of 3) but at some point you hit limits most people don't want to cross.
Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money. But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.
Nearly 17% of the forum posters who have responded to a demographic survey are individuals/families who make between 40-60k, being one of those I find your post absurd for you to suggest that I'm living a limited life. How do you get to define what these limits are? How do you know what limits people are or are not willing to cross? Why is a 400k house required for a family of three?
Yes sometimes life happens. I'm not disagreeing with you there. But terrible things can happen and if you have a good enough savings rate and a drive to do better and/or get better you can pull through. You are (mostly) in control of your decisions and your life. Stick with that "mostly" and don't hang your problems on the things you can't control.
Remember that the average middle class family lives beyond their means through the use of credit so the MMM family likely lives on less than the "typical family". And your example of the $60k couple is ridiculous because my wife and I made about that last year and still managed to save $28k and live a comfortable life. I remember in an older article that MMM said their average household income would have been $60k/yr from 22-30 even with their large incomes later in their careers. So even if it takes a couple to 30 to start making $60k (and they saved nothing to this point) then they have to wait until 38-40 to be FI. Still better than 65-70.
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MMM said their average household income would have been $60k/yr from 22-30
You're wrong in a couple places, but this one stands out the most. MMM by himself was making $57k his second year working, their combined income climbed pretty much every year after that.
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MMM said their average household income would have been $60k/yr from 22-30
You're wrong in a couple places, but this one stands out the most. MMM by himself was making $57k his second year working, their combined income climbed pretty much every year after that.
Could you please elaborate on the points I am wrong on?
And I don't remember if it was the article featured on MSN or the hypothetical two teacher article but MMM did say their average pay while working would have been $60k.
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I think he meant you were wrong when you said "average household income" of 60k. They had double that, as it was 60k each.
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I think he meant you were wrong when you said "average household income" of 60k. They had double that, as it was 60k each.
Yeah now that I reread it I realize that I was wrong. Their higher than average salaries still should not be used an excuse for why it is impossible for most people to reach FI early.
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Could you please elaborate on the points I am wrong on?
That $60k average is each, putting them at $120k average minus their bonuses and stock options (no data to back this up, but I'm guessing neither are "typical"). Each of them earned more than the typical gross income of a household for the bulk of their careers.
Also, when you factor in their mortgage (which they don't have anymore) their yearly spending is roughly $50k, which is more than the median income of the US. MMM isn't kidding when he says that he lives a life of luxury.
http://www.census.gov/compendia/statab/2012/tables/12s0690.pdf
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Their higher than average salaries still should not be used an excuse for why it is impossible for most people to reach FI early.
Correct. It's all about your savings rate percentage.
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I see a lot of thoughtful analysis here. It seems like a lot of straining to justify the articles existence if you ask me. The article title and tone were picked exclusively to create page views and revenue. Referring to the advice given as being part of the "Personal finance industrial complex" sealed the deal for me.
I've wasted more time writing this than that author and his opinions are worth.
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Did anyone else laugh out loud at the "overly smug dickball" comment?
The Mole
There’s nothing quite like an appropriate call-out of an overly smug dickball that can’t understand there are different strokes for different folks.
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Sure but lets look at some take home pay numbers and see how they go. Lets assume a 50% savings rate (you can retire in about 12 years depending on the return)
150k -> lives of 75k. No problem.
100k -> lives of 50k. Again no problem.
50k -> lives of 25k. Now this getting a bit tight but definitely doable
25k -> lives of 12.5k. Good luck. It can be done. But it isn't MMM life of luxury.
The saving percentage tells how long it will take to get enough assets to replace your income. But your saving percentage to a large part is dictated by income. Now the guys making 150k like MMM who are willing to live on 50k can drop the number of years down to like 7. On the other hand the family making 60k, might find that they can only save 20% and they are looking at 25 years of saving.
If you want to start saying that MMM lifestyle is wasteful and he should spend half as much (perfectly doable) thats fine. But claiming the average family spending the same amount of money is wasteful because you don't like their choices is imposing your values on them. You can go through pretty much any budget (the homeless guy on the corner is spending too much on hooch) and cut money. Read any of the cheapstake sites and you can see how the approximate amount of money need to live is 0.
I think he meant you were wrong when you said "average household income" of 60k. They had double that, as it was 60k each.
Yeah now that I reread it I realize that I was wrong. Their higher than average salaries still should not be used an excuse for why it is impossible for most people to reach FI early.
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To the 2 or 3 people who keep posting back at eachother arguing over MMMs spending. Remember he's hinted towards getting a smaller house, so that would actually reduce his house to less than 400K. In fact, he could easily maintain the same lifestyle in other towns with a house of 200K or even less. I think the point of 400K providing 16K/year, so his expenditures are only 41K is kind of pointless as he has complained about his house's size before.
But for the doubters, if you need an example, I gross right around 50K, and I live a life of extreme luxury, and I have a 50%+ savings rate (it's actually been nearly 80% every month this year so far. I expect it to decrease this month, and be closer to 55 the rest of the year). It's certainly possible to live a life of luxury, at least in St. Louis, at 10-15K expenses per year. To be fair, I'm single and sharing an apartment. On the other hand, I don't grow my own food and I drive quite a bit ...
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If you want to start saying that MMM lifestyle is wasteful and he should spend half as much (perfectly doable) thats fine. But claiming the average family spending the same amount of money is wasteful because you don't like their choices is imposing your values on them.
I think you need to reflect on the meaning of the term "waste" here. The point is that a lot of these middle class families are spending a lot of money to achieve exactly what could be achieved for a lot less, with a little thought. As for example the guy commuting to an office job in his new F-[123]50, at a cost of (guessing a bit here, but figuring payments, gas,&c) $10K/year, when the same commute might be done in a 20 year old Honda Civic for $1K/year.
I go along with mpbaker: if you define luxury as having stuff I want, rather than what consumer society tells me I ought to want, I live a life of almost ridiculous luxury. I kept my own airplane up until last year, keep a horse for riding, have a large garden (mostly ornamental), can take off to hike, bike, ski or whatever any time I want... And I doubt if I've ever spent much over $25K/year on living expenses (excluding the large downpayment on the house).
Oh, and I still do my yoga most days, as I have since my teens. Think I spent about 20 bucks on a nice foam mat about 10 years ago, when I put in hardwood floors...
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The truth is somewhere in the middle . . .
Yes, unless you are Warren Buffet or Michael Jordan and have more money than you and your children could ever spend in two lifetimes, frugality WILL HELP you get ahead. Whether your personal goals include retiring early, putting your kids through college, or whatever . . . being conscious of your spending and putting money away each and every month WILL HELP. To say otherwise is to see yourself as a victim.
However, the Billfold guy's not entirely wrong when he says that people can make all the right decisions and still find themselves in trouble. I'm a teacher, and let me tell you what's happened to every teacher in my state over the last few years:
- We used to automatically get 2% more each year (that was the deal for which we signed on: You'll never make a big paycheck, but it'll be secure and you'll have a moderate pension at retirement), but for four years our pay was frozen. That's 8% I anticipated -- 8% I'll never get back. This affects my paycheck every month, and it will eventually affect my pension.
- While our pay was frozen, our health insurance increased -- every year. So every year for the last four years, I made progressively less money.
- The county /state removed some nice bonuses we used to get for meeting state testing scores. No, I don't teach well when a bonus is on the line and say, "Screw it" when there's nothing extra for me, but the state never once intimated that bonuses were based upon whether they had pots of money lying about.
- This year we were given a 1.2% increase . . . coupled with the biggest health insurance increase yet.
- Alhough it wasn't the fault of the school board, the Social Security "re-set" was another kick in the teeth.
So, the bottom line is that I am bringing home fewer dollars than I did five years ago: In fact, I am roughly 15% behind the salary I anticipated making at this age, AND my pension will be smaller than anticipated. AND because they've laid off some of the younger teachers, I am making less money to teach larger classes!
At the same time, my personal expenses have increased:
- My oldest child is now in college, and although I'm very happy to provide this opportunity for her, it is money out of our pocket.
- We have taken in an elderly relative who could no longer live on her own. This is the kind of decision one makes without regard to cost -- it's about family -- but our living expenses have increased.
You see why I say I do understand Billfold's point? As a teacher, I am middle-middle America . . . and these things genuinely are out of my control. I'm not saying this to be whiney -- I'm pointing out how these things happen, and they are genuinely beyond my control.
At the same time, I'm not saying, "Oh, no, what shall I do? Shall I buy groceries, or pay the electrical bill?" Because I have lived frugally all my adult life, and I have reserves upon which I can rely. We won't be sitting in the dark, eating nothing but beans any time soon. BUT I've had years of adult life and earning to prepare for this (meaning both I've had time to save, AND I've had time to learn how to live frugally -- you don't pick that up overnight). The person for whom I really feel sorry is the teacher across the hall from me -- she's a fifth year teacher, but she's still making first-year teacher salary. She works at the mall 3-4 evenings a week to make ends meet.
So, yeah, wastefulness IS part of the problem . . . but it isn't the whole kit and caboodle.
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You are reading in things that I didn't write. All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle. I don't want to debate what is wasteful. There is too much value judgement in that and those choices will change depending on your circumstances. You can definitely live comfortablely on half of what MMM is spending if you have 100 hours a week to spend on doing things that save money at the cost of time.
MMM defines his lifestyle as "kickass" with some cool middle class stuff, not as middle class. Those living a middle class lifestyle think that riding your bike in snowstorms (or even using it as your primary means of transportation) is weird. I know this because I live it. I have friends who are middle class and think it some sort of self-abuse not to hit the spa or restaurants regularly. Of course, people could always cut back until the point that they are homeless and I have read several "cheapskate" media, including Jeff Yeager's book, so I understand what you are saying, but I think you are the one missing the point. Mindful spending isn't wasteful. People who whine and bitch and complain that they don't have any money and they can't possibly cut back or shouldn't cut back when there are areas where they could need a face punch. Their spending habits are often the problem. At the very least they need to shut the fuck up and not criticize others who choose to be frugal to live the lifestyle they want. Spending beyond your means on shit you don't need is wasteful whether you make $20K (which I have in the past), $63K (which I do now), or $100K.
I applauded the author at The Billfold for acknowledging that the MMM lifestyle works for many. Not sure why you are clinging to "he's a hypocrite because he's wasteful." It completely depends on a person's definition of wasteful. And you and I clearly disagree.
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And Jacob, at ERE, who is one of the most resourceful, frugal people blogging about lifestyle has a great deal of respect for MMM. In fact many of us discovered MMM because we were readers of Jacob's and he pointed MMM's blog out to us. In my opinion, the internet cheapskates ain't got nothing on Jacob's resourcefulness. His endorsement is pretty strong support for the MMM lifestyle and I dare anyone to call Jacob wasteful. ;)
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However, the Billfold guy's not entirely wrong when he says that people can make all the right decisions and still find themselves in trouble. I'm a teacher, and let me tell you what's happened to every teacher in my state over the last few years:
Yes, things could go wrong. I could be in a situation where I have to max out my deductible year after year on health insurance, and my car could get totaled year after year. And I could have a stock go to 0 this year. And I could ... etc.
I think the point is that most people have one or two of these things happen once or twice. They then proceed to use it as their excuse for their problems while spending extraordinary amounts of money.
Yes, for some people disaster has struck often. It's a fact of probability that the highly unlikely will happen to a few. But it won't happen to most.
And to the specifics you listed, I don't know where you live so percentage increases don't mean a whole lot to me. My sister is a teacher in Chicago and probably got a lower raise than me last year (before the strike), but she started out at 50% higher pay. On the other hand, a friend of mine makes probably less than half what I make, but actually got a bigger raise ...
Again, my major point is that most people use small problems as their excuses, but it's actually the pointless luxuries that they choose that left them ill-prepared for the problems.
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Some people think MMM must 'suffer' to be authentic, and then decry the suffering. Others insist he' s a hypocrite because he doesn't suffer and actually enjoys above average disposable income.
All complain y pants.
A lot of it IMHO is jealousy. Because they didn't do it, and despite being older, perhaps have waaaaaay lower net worth and are not just 'not FI' but '6months from bankruptcy'... they want it to be a con.
See cognitive dissonanace.
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I am saying he is hypocrite because he is saying people spending 50k or so are wastefull while his spending 50k is not. I trust people to make the choices that make them happy. Whether that is living in a mcmanision or driving a f150, I don't care. MMM writing is style designed to be shocking and that is part of what makes it fun to read.. Saying you live on 27k is shocking since mentally most of us go I couldn't live on a salary of 27k with a family of 3. Change it to I make 50k and don't have to spend any time working and it doesn't sound anywhere as difficult. As far as biking, no one I have met ever cares. They ask a couple of questions and move on. And the snow isn't the hard part. It is the 105 degree heat with 95% humidity. That is the killer(literally).
If you read the Billfold he really isn't condemning MMM lifestyle. He is just using at an intro to talk about points he wants to. He is coming at the problem from a different viewpoint. MMM looks at the upper middle class people he worked with (all of which consider themselves middle class) and says they are wasting a ton of money and says spending is the problem. Billforld looks at the family of 4 with 60k of income from 2 working parents and says their cost of living is up 20% while they have stagnant income and says that is the problem. MMM says move close to your job. Billfold is more like damm after 6 months of unemployment I am lucky to have a job. To bad it is 30 miles from my house and we can't move because we are 60k underwater and my wifes job is 5 miles in the opposite direction.
The reality is a bit in between. You can always say you should have saved more at a younger age and that in retrospect certain choices were poor. But the outside world also changes and sometimes you win and sometimes you lose.
You are reading in things that I didn't write. All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle. I don't want to debate what is wasteful. There is too much value judgement in that and those choices will change depending on your circumstances. You can definitely live comfortablely on half of what MMM is spending if you have 100 hours a week to spend on doing things that save money at the cost of time.
MMM defines his lifestyle as "kickass" with some cool middle class stuff, not as middle class. Those living a middle class lifestyle think that riding your bike in snowstorms (or even using it as your primary means of transportation) is weird. I know this because I live it. I have friends who are middle class and think it some sort of self-abuse not to hit the spa or restaurants regularly. Of course, people could always cut back until the point that they are homeless and I have read several "cheapskate" media, including Jeff Yeager's book, so I understand what you are saying, but I think you are the one missing the point. Mindful spending isn't wasteful. People who whine and bitch and complain that they don't have any money and they can't possibly cut back or shouldn't cut back when there are areas where they could need a face punch. Their spending habits are often the problem. At the very least they need to shut the fuck up and not criticize others who choose to be frugal to live the lifestyle they want. Spending beyond your means on shit you don't need is wasteful whether you make $20K (which I have in the past), $63K (which I do now), or $100K.
I applauded the author at The Billfold for acknowledging that the MMM lifestyle works for many. Not sure why you are clinging to "he's a hypocrite because he's wasteful." It completely depends on a person's definition of wasteful. And you and I clearly disagree.
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No the Billfold author clearly states that MMM is wrong in saying that the middle class lifestyle is an exploding volcano of wastefulness.
Here's the quote -
But it’s a myth that the typical middle class life is an “exploding volcano of wastefulness” and that “everyone always chooses the expensive ones and then complains that life is hard these days”. This is the myth that’s driving and funding the personal finance industrial complex.
The guy then proceeds to go into anecdotes. Sure he says that it is judgmental to claim that eating out once a week is wasteful and that statement. But that is not a simple value judgement. If your goal is reducing your spending there is a clear option that is less wasteful. That is not solely a judgement call but a fact. Cooking your own food is almost always cheaper than eating out.
Your attacking MMM's spending without even really knowing it. See this article http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/
MMM probably would say that if you have been out of a job for 6 months and need to shore up your financial foundation go ahead and take that job 30 miles away. But look at how to minimize your costs of living and you in the future would be able to weather those 6 month life problems that you can't control. So again focusing on the things you can control is the best advice I've seen. Why attack the man who gives you that advice? Instead let's praise the dude who focuses on the things you can't control and tears down the guy who is a bit more bootstrappy.
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I am saying he is hypocrite because he is saying people spending 50k or so are wastefull while his spending 50k is not.
Uhhhhh....by his own accounting, it's actually 30k. Quit making a straw man on his spending. 30k spending is 30k spending, period.
http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/
And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income".
The logical fallacy there is saying that someone with a 10 year old paid off car is "earning" what it would cost to rent a car 365 days a year ("oh, they have a paid off car, therefore they "earn" an extra 5k a year"). Or "earning" the cost of renting a hammer, saw and other tools when doing a household project (oh, they have paid off tools, they "earned" the $200 it cost me to rent tools at Bob's Tool Rent-All place).
The price of that house was earned, and spent, years ago. Trying to count it again is double booking the money previously spent.
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And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income".
You make a decent point about the car, but I think the argument is less about actual spending. MMM spends 27k a year outside of his mortgage something most people wouldn't be able to do if they were hoping to save a good chunk of their money.
You only have to count the money once to see the difference, MMM paid over $400k for his house and still managed to pull $25k in other investments. No one is saying MMM doesn't teach valuable lessons, just that the typical individual or household cannot expect to do the same.
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the typical individual or household cannot expect to do the same.
Before I get flamed on this, I meant retire SO early with SO much luxury, I do believe that almost anyone can retire early.
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the typical individual or household cannot expect to do the same.
Before I get flamed on this, I meant retire SO early with SO much luxury, I do believe that almost anyone can retire early.
That is fair. No one is expecting everyone in the world to retire at 30. MMM isn't saying that either. But the article's point isn't about MMM's spending, it is saying his advice doesn't work because people don't spend wastefully.
The crux of the argument (foobars points) from what I'm hearing is that you cannot define others spending as wasteful because it is a pure value judgement. The MMM approach is to have individuals look at their own spending and evaluate whether they're being wasteful and that is imposing a judgement on others somehow. No one is forcing an individual to do this. But it is good advice for those who seek to have a buffer from when life dishes out serious shit. It won't eliminate the serious shit but it will mitigate it.
Living below your means or reducing your spending will help protect you from the points brought up in the Billfold article. Don't take umbrage at the normal Middle Class American lifestyle being called wasteful when it is. In fact most lifestyles are wasteful when taken from an efficiency viewpoint, which is (at the temerity of putting words into MMM's mouth) the viewpoint he generally takes (alongside many other viewpoints as no one is just a single faceted character).
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So if I buy a 400k whole foods gift card and use it to buy food for the next 10 years, you only count it is an expense in 2013 and not 2014 on? The point was it takes 50k of cash to live MMM life. If that cash comes from spending or from previously bought asset doesn't matter. And anyone with a brain would take the 400k asset over a 16k of income even it if it inflation indexed.
I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no. What about having a pet? Pet people would say their life would be worse other people just look at them as burdens. If you get the same satisfaction drinking 1000 of lattes as MMM gets going on a 1000 dollar vacation, that is your choice. I might lean more towards MMM world view (after all I don't drink) but I understand that it is my personal choice. I also understand that when money is an issue, both go away.
Billfords point as I read it is that between the "fixed" (yes they are not really fixed) expense and income, the discretionary spending is a bit of a noise thing. Yeah having 50k would be good but it isn't going to help when your laid off and your house drops 100k in value.
Uhhhhh....by his own accounting, it's actually 30k. Quit making a straw man on his spending. 30k spending is 30k spending, period.
http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/
And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income".
The logical fallacy there is saying that someone with a 10 year old paid off car is "earning" what it would cost to rent a car 365 days a year ("oh, they have a paid off car, therefore they "earn" an extra 5k a year"). Or "earning" the cost of renting a hammer, saw and other tools when doing a household project (oh, they have paid off tools, they "earned" the $200 it cost me to rent tools at Bob's Tool Rent-All place).
The price of that house was earned, and spent, years ago. Trying to count it again is double booking the money previously spent.
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I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no. What about having a pet? Pet people would say their life would be worse other people just look at them as burdens. If you get the same satisfaction drinking 1000 of lattes as MMM gets going on a 1000 dollar vacation, that is your choice. I might lean more towards MMM world view (after all I don't drink) but I understand that it is my personal choice. I also understand that when money is an issue, both go away.
Billfords point as I read it is that between the "fixed" (yes they are not really fixed) expense and income, the discretionary spending is a bit of a noise thing. Yeah having 50k would be good but it isn't going to help when your laid off and your house drops 100k in value.
So you're going to use the slippery slope? Spending is all relative there is no way to view your spending and evaluate it for improvements because someone else might view it differently?
And yes 50k will help if you lose your job and your house value drops. How would it not?
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I am saying he is hypocrite because he is saying people spending 50k or so are wastefull while his spending 50k is not.
Uhhhhh....by his own accounting, it's actually 30k. Quit making a straw man on his spending. 30k spending is 30k spending, period.
http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/
And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income".
The logical fallacy there is saying that someone with a 10 year old paid off car is "earning" what it would cost to rent a car 365 days a year ("oh, they have a paid off car, therefore they "earn" an extra 5k a year"). Or "earning" the cost of renting a hammer, saw and other tools when doing a household project (oh, they have paid off tools, they "earned" the $200 it cost me to rent tools at Bob's Tool Rent-All place).
The price of that house was earned, and spent, years ago. Trying to count it again is double booking the money previously spent.
I disagree withboth of you.
Yes, he spends about 50k, but not as wastefully as average people. It's not the amount, it's the 'bang for the buck' he achieves.
equiv. Income is important. Owning a house outright is still an investment and a use of ones stash that could be deployed elsewhere. That it provides low cost living as well is fine, but it is replacing rental expense, and could be sold and the proceeds used to fund say, 4% swr.
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I disagree withboth of you.
Yes, he spends about 50k, but not as wastefully as average people. It's not the amount, it's the 'bang for the buck' he achieves.
Actuall Mr. Mark, please read his post. He spent exactly $25,046, not "about 50k" - that was my biggest objection to Mr / Ms. Foobar's post. It's a strawman to say MMM is spending (e.g. dollars going out) ~25k more than he actually is.
And opportunity cost isn't the same as actual dollars out the door spending. As a thought experiment, take it to the extreme - should a person sell everything, plow the money into income producing assets and only rent things they need? Should I NOT buy clothes and rent them instead? Car? Coin Op laundry versus washer and dryer at home? Household tools? How is a house (shelter) any different than any other object that fulfills a need? Or should one look at their unique position and decide on a case by case basis that buying this, renting that, is the most efficient way to obtain the goods and services "needed" to have the desired life.
That said Mr. Mark, I do agree entirely that MMM gets a lot for his money. That is the very definition of frugal in my mind. That's another spot I take exception to Mr. Billfold - instead of telling his readers to make the most of what they DO have, its whine, whine, whine at external factors and then also whine that being efficient doesn't get you anywhere. Flat out wrong on that latter point. Efficiency (in both fixed and so called discretionary expenses) is what leaves one with a surplus and that surplus is what provides the cushion to personal financial shocks (illness, job loss, etc) and the means to get to FI, be in at 30, 40 or 50.
Foobar: 400k on a gift card...yeah, riiiiiiiight.....ok, well, food is a consumable. Try selling it after you've used it. :-) A cared for house on the other hand will still retain utility value after being used by a person for 50 years of providing shelter. 50 year old used food on the other hand, not so much utility value there. And no, it does not take 50k. It takes $25,046 cash out the door to live the life he lived in 2012, with the accumulated skills and objects he has. Read the link.
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I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.
Depends. Why spend $200/yr on a cellphone, when you can pay $85/yr? And use it to replace the landline that was costing over $300/yr? Likewise with pets: why pay upwards of $1000 for a purebred puppy, when you can get an adult dog for nearly free?
Furthermore, I think you, and to a certain extent even MMM, are missing the larger point about waste. Financial independence shouldn't just be about retiring early. Say you want consumer good X because you think it's going to make you happier. If you're FI, you can just go out and buy it. If you're a typical middle-class consumer, you put it on a credit card, and pay 18% interest in addition to the purchase price. Now is there any reasoning under which that extra 18% isn't waste?
A big part of the reason I can live so cheaply is that (except for a mortgage) I haven't paid a cent in consumer interest since I paid off my last student loan. So even if I chose to start living exactly the same consumer lifestyle as the average American, it would cost me a good bit less because FI means I don't have to do it on credit.
That is something that almost anyone can do: restrict their wants/needs until they can pay cash.
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As a thought experiment, take it to the extreme - should a person sell everything, plow the money into income producing assets and only rent things they need? Should I NOT buy clothes and rent them instead? Car? Coin Op laundry versus washer and dryer at home? Household tools?
No one rents those things because the cost of renting massively exceeds the cost of ownership over the lifetime of the item. And even if it were a wash in terms of cost, there is a convenience factor it items you use regularly. People DO rent tools that are 1) very expensive to purchase and 2) used infrequently. Actually, the same is true for clothes. People rent tuxes for weddings because they are 1) very expensive and 2) used infrequently. If that were true of ALL items, then yes I would say someone should rent them rather than buying and put all their money into income producing assets - or account for the investment when talking about their spending.
So, yes, if I spent $200k right now on enough MREs to feed my family for 30 years, it wouldn't be fair to say that my food budget was zero dollars.
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As a follow-up: the reason we account for the investment in a home purchase and not any other purchase (besides the fact that the home will presumably appreciate) is that all other purchases are trivial in comparison. If MMM drives a $10k car, for example, at 4% withdrawal rate that only equals $25 a month. Not super relevant to the discussion. The $1600 a month in lost investment gains for the $400k house, however, is very relevant. Clothing and household goods would be an even more trivial amount.
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As a follow-up: the reason we account for the investment in a home purchase and not any other purchase (besides the fact that the home will presumably appreciate) is that all other purchases are trivial in comparison. If MMM drives a $10k car, for example, at 4% withdrawal rate that only equals $25 a month. Not super relevant to the discussion. The $1600 a month in lost investment gains for the $400k house, however, is very relevant. Clothing and household goods would be an even more trivial amount.
+1
And a house is special, because you can live in it, and you've gotta live somewhere.
So, if I spend say, 25k/ yr after tax, in a free house I own thats worth around 16k per year to rent, I'm saying that to compare my situation with Joe-paycheck will give them the wrong idea. I just want a closer apples to apples comparison for 'headline' purposes. So I want to include the implied rent as income and then gross it up to account for differences in tax treatment of that income.
Effective gross income of MMM is I think above the U.S. median household, but that's a guess, I confess. Any CPAs out there?
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So if I buy a 400k whole foods gift card and use it to buy food for the next 10 years, you only count it is an expense in 2013 and not 2014 on? The point was it takes 50k of cash to live MMM life. If that cash comes from spending or from previously bought asset doesn't matter. And anyone with a brain would take the 400k asset over a 16k of income even it if it inflation indexed.
I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no. What about having a pet? Pet people would say their life would be worse other people just look at them as burdens. If you get the same satisfaction drinking 1000 of lattes as MMM gets going on a 1000 dollar vacation, that is your choice. I might lean more towards MMM world view (after all I don't drink) but I understand that it is my personal choice. I also understand that when money is an issue, both go away.
I think the point that I have taken from MMM and attempt to talk to my friends about when it comes up is that while spending on enjoyable things is relative to a degree, most people, when they really analyze their habits and spending patterns agree that lattes and new cars and fancy things are not very worthwhile. That is almost a very simple realization. The hard part is actually getting people to WANT to think about their spending in a conscious manner.
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I think some of the people bitching about the cost of the house are missing the point. I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent. He might spend half that or less. To just blindly add $25k to his budget because of the house is irresponsible. Just as irresponsible as not accounting for it at all.
Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.
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I think some of the people bitching about the cost of the house are missing the point. I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent. He might spend half that or less. To just blindly add $25k to his budget because of the house is irresponsible. Just as irresponsible as not accounting for it at all.
Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.
Er...it actually sounds like you're missing the point here. It isn't about $400k vs $200k vs. $100k. It is that a large portion of his net worth is tied up in a paid-for home - and the forgone gains from that large chunk are (arguably) effectively an expense when comparing MMM's budget to that of other people. $400k at a 4% withdrawal rate is $16k a year. Adding that to his other $27k in expenses is $43k in effective expenses (to make an apples-to-apples comparison) and that is a very average budget - not at all kick ass, and certainly not difficult to achieve for most people.
Do I love MMM? Yes! Does he kick me in the teeth with awesomeness every week? Yes! Do I think he gets more bang for his buck in terms of happiness and life satisfaction from his average middle class budget? Hell yes! Do I think he lives an "average" life? Fuck no! But in terms of spending, $27k is completely and totally average if we remove housing expense from the picture.
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Why buy an 80 phone when you can by a 0 dollar one? After all you can make an emergency call without service and are already paying for a internet(another lux item given how many places you can get it for free) at home. Your free dog still needs shots and food and sucks up time. Having a pet is wasteful. A frugal person would run a pet sitting service and get paid to satiate their need for a pet. Heck MMM is still eating meat. Haven't you ever talked to a vegan about how wasteful that is? It turns out most peoples definition of wasteful is anything more than what I spend:)
If you can live the life you have been living for the past 10 years without having to work, I am fine calling that FI. If you define FI as being able to buy anything you want, then I am screwed. I need 20 million+ for a ride on the soyuz. That is going to take me 25 years or so (assuming 10% ROI and no taxes). I am guessing I am going to pass on that desire.
And is thee F150 a regional thing? I never see anyone other than contractors in them. We are all about driving crossovers instead of cars in my neck of the woods.
Again I don't really read the Billfold article as a rebuttal. It is more of a commentary on how not everyone made 120k/yr in their 20s and that the middle class (again not the upper middle class guys making 100k) are not the crazy spenders you read about. Yes some 20's people go nuts (i.e. MMM buying a bike)but most recover. You can always talk about living cheaper but that fact is that you can make money mistakes (i.e. spending 10k on bike) when your upper middle class and recover. Make the same mistake in the middle class and you are set back for a couple of years
I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.
Depends. Why spend $200/yr on a cellphone, when you can pay $85/yr? And use it to replace the landline that was costing over $300/yr? Likewise with pets: why pay upwards of $1000 for a purebred puppy, when you can get an adult dog for nearly free?
Furthermore, I think you, and to a certain extent even MMM, are missing the larger point about waste. Financial independence shouldn't just be about retiring early. Say you want consumer good X because you think it's going to make you happier. If you're FI, you can just go out and buy it. If you're a typical middle-class consumer, you put it on a credit card, and pay 18% interest in addition to the purchase price. Now is there any reasoning under which that extra 18% isn't waste?
A big part of the reason I can live so cheaply is that (except for a mortgage) I haven't paid a cent in consumer interest since I paid off my last student loan. So even if I chose to start living exactly the same consumer lifestyle as the average American, it would cost me a good bit less because FI means I don't have to do it on credit.
That is something that almost anyone can do: restrict their wants/needs until they can pay cash.
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I think some of the people bitching about the cost of the house are missing the point. I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent. He might spend half that or less. To just blindly add $25k to his budget because of the house is irresponsible. Just as irresponsible as not accounting for it at all.
Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.
Er...it actually sounds like you're missing the point here. It isn't about $400k vs $200k vs. $100k. It is that a large portion of his net worth is tied up in a paid-for home - and the forgone gains from that large chunk are (arguably) effectively an expense when comparing MMM's budget to that of other people. $400k at a 4% withdrawal rate is $16k a year. Adding that to his other $27k in expenses is $43k in effective expenses (to make an apples-to-apples comparison) and that is a very average budget - not at all kick ass, and certainly not difficult to achieve for most people.
Do I love MMM? Yes! Does he kick me in the teeth with awesomeness every week? Yes! Do I think he gets more bang for his buck in terms of happiness and life satisfaction from his average middle class budget? Hell yes! Do I think he lives an "average" life? Fuck no! But in terms of spending, $27k is completely and totally average if we remove housing expense from the picture.
Hard to argue with someone who seemingly purposely skews numbers away from reality!
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I think some of the people bitching about the cost of the house are missing the point. I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent. He might spend half that or less. To just blindly add $25k to his budget because of the house is irresponsible. Just as irresponsible as not accounting for it at all.
Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.
Er...it actually sounds like you're missing the point here. It isn't about $400k vs $200k vs. $100k. It is that a large portion of his net worth is tied up in a paid-for home - and the forgone gains from that large chunk are (arguably) effectively an expense when comparing MMM's budget to that of other people. $400k at a 4% withdrawal rate is $16k a year. Adding that to his other $27k in expenses is $43k in effective expenses (to make an apples-to-apples comparison) and that is a very average budget - not at all kick ass, and certainly not difficult to achieve for most people.
Do I love MMM? Yes! Does he kick me in the teeth with awesomeness every week? Yes! Do I think he gets more bang for his buck in terms of happiness and life satisfaction from his average middle class budget? Hell yes! Do I think he lives an "average" life? Fuck no! But in terms of spending, $27k is completely and totally average if we remove housing expense from the picture.
Hard to argue with someone who seemingly purposely skews numbers away from reality!
I completely agree with the math there, 400k in a house at 4% SWR = 16k. If MMM sold and rented, he'd be using that 16k to rent (at a rate of about 1300/mo, fairly reasonable for a family of 3), so it makes some sense to me to count that into his expenses to compare his total spending to a person with a mortgage or renting as apples to apples. In essence, he's living a life of 25k spending without housing, that's the same as someone spending 41k (25k without housing, same as him, 16k on the housing).
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I completely agree with the math there, 400k in a house at 4% SWR = 16k.
OK, but then there are people like me, who don't have a paid-off house (though it was bought a dozen years ago, with a big downpayment), yet manage to live comfortably with spending levels similar to MMM's. Even with the mortgage, I seldom spend over $2K in a month, usually less.
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I completely agree with the math there, 400k in a house at 4% SWR = 16k.
OK, but then there are people like me, who don't have a paid-off house (though it was bought a dozen years ago, with a big downpayment), yet manage to live comfortably with spending levels similar to MMM's. Even with the mortgage, I seldom spend over $2K in a month, usually less.
That's fine, and I myself have the same level of spending (though no kids). Certainly it can be done.
However, if we're talking about comparing MMM's spending to yours, MMM spends 25K with none on housing. You spend 25K including housing. Clearly that's not apples to apples, so typically one would account for that spending as the opportunity cost of what he has invested in his house as what he's spending (i.e. that 400k house, if sold and he started renting, could produce 16k at 4% SWR. Therefore, since he keeps that 400k locked up in the house, it's like he's spending that 16k on housing).
You certainly spend less than MMM, as do I. But we're talking about comparing MMM to a typical household, and to do so, you have to account for his housing allowance.
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However, if we're talking about comparing MMM's spending to yours, MMM spends 25K with none on housing. You spend 25K including housing. Clearly that's not apples to apples...
In other ways, too, as his spending includes MrsMM and MMMjr. The point is, first, that whether you're a single guy, or a couple with kid, you can still live more than comfortably on a lot less than what the mainstream considers necessary for a middle-class life. And second, once you have done this for a while, it becomes increasingly easier to keep doing it. Not just because of practice (or reverse hedonic adaptation), but because your accumulating stash means you seldom if ever have that consumer interest taken off the top of your spending. That is, even if Joe Average and I buy exactly the same things, he'll pay considerably more for them.
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I agree with all of that.
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Me too.
One of the revelations for me from MMM was how well one can actually live on 50k/ yr. This dramatically changed my FIRE calc.
MMM reminds me of the character Morpheus in the matrix sometimes, in the way his POV is very game changing. He is an enabler.
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I think a point of contention regarding the wastefulness/spending of say, MMM, to average/median what have you is that the units aren't really equivalent ($'s vs. {utility units} per $). This could just be me, but I view most of MMM principles more or less as a way to maximize "utils"/$ in a given situation rather than just pure dollars. That is how how some rationalize a cheap dog compared to a more expensive one (and technically, the people buying the more expensive dog THINK they are getting more absolute utils compared to the less expensive option so their internal utils/$ calculator is not buzzing telling them they are being silly since the ratios are similar to them) or different phone plans or what have you. MMM is a wake up call to hone your utility function to make sure it is as robust as possible so you can make the best decisions and have the best life possible. It just so happens optimizing your financial situation in myriad ways is positively correlated with having the most enjoyable life.
That's basically how everyone is different since we all have our own utility functions. A dollar may be a dollar (even that is debatable) but utility is definitely not a constant across consumption of goods. Thus, different decisions and different consumption levels even if everyone had the exact same income level. Using MMM advice, do your thing and maximize your value in all situations and the awesome by-products are that you tend to be easier on the environment, healthier, and you enjoy life more all the while typically retiring earlier and being financially independent.
If you are just talking $'s and $'s, then sure, pick apart and argue about what is average or what is wasteful or what should even count as spending, etc. It is argued that 50k for one person is equal to 50k for another person. That may or may not be true but who cares? What really counts, IMO, is the value, or utils/$, one person or household is getting for what they consume. If MMM's spending is indeed 50k and that is indeed the national average, I would place a bet that MMM's 50k and the way in which it is spent does more to enhance value, at least in his household's eyes than would the way the average 50k would be consumed by his household. It's purely coincidental that what MMM spends, if you include the housing consumption, is near the median household level spending.
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I think a point of contention regarding the wastefulness/spending of say, MMM, to average/median what have you is that the units aren't really equivalent ($'s vs. {utility units} per $). This could just be me, but I view most of MMM principles more or less as a way to maximize "utils"/$ in a given situation rather than just pure dollars. That is how how some rationalize a cheap dog compared to a more expensive one (and technically, the people buying the more expensive dog THINK they are getting more absolute utils compared to the less expensive option so their internal utils/$ calculator is not buzzing telling them they are being silly since the ratios are similar to them) or different phone plans or what have you. MMM is a wake up call to hone your utility function to make sure it is as robust as possible so you can make the best decisions and have the best life possible. It just so happens optimizing your financial situation in myriad ways is positively correlated with having the most enjoyable life.
That's basically how everyone is different since we all have our own utility functions. A dollar may be a dollar (even that is debatable) but utility is definitely not a constant across consumption of goods. Thus, different decisions and different consumption levels even if everyone had the exact same income level. Using MMM advice, do your thing and maximize your value in all situations and the awesome by-products are that you tend to be easier on the environment, healthier, and you enjoy life more all the while typically retiring earlier and being financially independent.
If you are just talking $'s and $'s, then sure, pick apart and argue about what is average or what is wasteful or what should even count as spending, etc. It is argued that 50k for one person is equal to 50k for another person. That may or may not be true but who cares? What really counts, IMO, is the value, or utils/$, one person or household is getting for what they consume. If MMM's spending is indeed 50k and that is indeed the national average, I would place a bet that MMM's 50k and the way in which it is spent does more to enhance value, at least in his household's eyes than would the way the average 50k would be consumed by his household. It's purely coincidental that what MMM spends, if you include the housing consumption, is near the median household level spending.
I completely agree. MMM is essentially living a upper middle class lifestyle while spending at regular middle class levels. I imagine if MMM wanted to live at a middle class level he could easily spend less than a normal middle class income (which I believe many people on this forum are already doing).
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Or he could have invested more money before starting and be able to live cheaper. Imagine what a 30k geothermal system, 200k solar cell system with some huge storage batteries, picked up a model S. and prepaying the college tuition (I know MMM jr is paying for college by working over the summer and commuting 30+ mins each way. For the rest of us that expect college cost to out gain inflation (like they have for the past 30 years) and states to cut back on funding (i.e. No new taxes) it might make sense). Heck get some roomba and the robot mower (Ok this is mainly for the coolness factor). After all buying assets before hand doesn't count. I am not sure if it counts if you give setup a trust with 800k to give you gifts of items if they are allowed to buy you stuff. After all technically it is the trust spending money not you. You got to learn to think outside of the box if your going to maximize your frugal lifestyle.
I completely agree. MMM is essentially living a upper middle class lifestyle while spending at regular middle class levels. I imagine if MMM wanted to live at a middle class level he could easily spend less than a normal middle class income (which I believe many people on this forum are already doing).
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Wow. This turned out to be quite a thread.
What I get out of MMM's message ("You're being wasteful") is inspirational, everything is within my control. A lot of people just shut down when they perceive criticism, though. I don't know if Billfold is one of these people, but he's certainly recognizing those people's existence. By saying that everything isn't their fault, a lot of people will be more receptive to messages that may help their lives.
I just hear Billfold's message as coddling excuse making, but that's the only way to get through to some people.
MMM doesn't bother with getting through to those people, which works great for me.
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What I get out of MMM's message ("You're being wasteful") is inspirational, everything is within my control. A lot of people just shut down when they perceive criticism, though. I don't know if Billfold is one of these people, but he's certainly recognizing those people's existence. By saying that everything isn't their fault, a lot of people will be more receptive to messages that may help their lives.
I just hear Billfold's message as coddling excuse making, but that's the only way to get through to some people.
So, I think you're right that it comes through as coddling and excuses because they don't make a good distinction between who is struggling legitimately and who is creating their own struggles for themselves. I think a family of four living on $23,550 (poverty line) is struggling. I do think much of what MMM says applies to them (especially about cars) but I have a hard time saying they're making excuses when they complain about being poor and having hard life.* What I really like about MMM and hate about The Billfold article is how they deal with families above median income for their situation. To hear someone more privileged (or at least earning more) than half the country and most of the world complain about money troubles is tedious. The audience for most of this stuff falls into the latter half. The half that could get themselves out of money troubles but makes life choices that put them at the edge each month. Now, I don't think anyone has to be a Mustachian, but I do think they need to own up to creating their own problems. The article is a bit duplicitous as well. It talks about all of the options people have to show that not everyone has to choose the MMM lifestyle (duh). You can't have it both ways. You can't spend on the luxury items now and then somehow feel victimized when you don't have a nest egg.
* There are a million caveats to this. Suffice it to say that I think and feel for the millions of legitimately disadvantaged in the U.S.
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Hi guys! I'm late to the party, so please excuse my interjection. My issues follow:
But the majority of people I know aren’t wildly irresponsible. They’re not buying luxury cars and designer clothing and $5 lattes every day (ah, the latte factor!—every personal finance guru’s favorite example).
Sure they're not buying a luxury car, but their car is probably still sapping their funds at a dreadful rate. To start, did they buy it brand new or used? Are they driving it half a block to the store? Do they carpool whenever possible? Also, the concept of a 'luxury' based on manufacturer is faulty, especially once you hit the used market. A brand new Civic can easily cost double a used BMW or Benz. Yet people don't see a problem with buying new Civics, but will make a big deal if they see someone in a BMW. (Something I have firsthand experience with. People assume my car was extremely expensive because of those black, white, and blue decals. I bought it for $7500. They're driving a $16,000 Corolla.)
They’re dealing with shrinking salaries,
All the more reason to invest as much and soon as possible. Salaries are shrinking, but payouts to stockholders aren't. Clearly, one should become a stockholder if they want to share in the profits of the company.
skyrocketing health care and education costs,
Public schools are still free through high school. At the college level, Harvard isn't necessary for everyone and couldn't possibly take everyone anyway. State schools are fine. Community colleges are dirt cheap. Simplifying life will also lower healthcare costs. Many illnesses are stress-induced anyway. Lower the stress, bike more, and you'll suddenly not be at the doctor so often.
a weak economy that has resulted in job loss. Indeed, some of these people are the ones who tried to do it right—who saved up six months’ worth or a year’s worth of emergency savings only to drain it all during the financial crisis and housing crash; who cashed out their retirement accounts because they needed to pay their mortgage and didn’t want to lose their home. All the bike-riding and TV cable canceling wasn't going to help them. Quitting your yoga class isn’t going to fix pay inequality or result in employer-supported maternity leave appearing in the office. And we can go on about the 401(k) problem.
A nice mishmash of faulty assumptions. All those are problems—for people who want to make excuses. But financial independence (even when just budding) would in every single one of those instances. MMM already showed what happens to a Mustachian who loses their job (http://www.mrmoneymustache.com/2012/08/27/mr-frugal-toque-gets-laid-off/). He's also already shown how many people literally lose money working (http://www.mrmoneymustache.com/2012/04/04/reader-case-study-working-a-crappy-job-for-nothing/). Many of MMM's recommendations will help. People had to drain their savings—because they were already living at the 102% level of their income. People had to cash out their retirement accounts—because they didn't have enough savings to begin with. And the list goes on.
As employer-supported maternity leave, it keeps being brought up everywhere as some gigantic panacea to fix all of society's problems. It ain't. FI would be a much better focus for everyone to beat the drum over.
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So, I think you're right that it comes through as coddling and excuses because they don't make a good distinction between who is struggling legitimately and who is creating their own struggles for themselves. I think a family of four living on $23,550 (poverty line) is struggling.
Quick note...I've figured the costs for our family of four, and at $24,000/yr we'd be living a pretty good, and somewhat wasteful, life. This is back in Tennessee, USA. Not including housing costs, which ours cost...hrm...under $20,000 (ok, more like $25,000 after we fixed it up). We'd be able to go out multiple times a week, spend $50/wk on going out to eat (we now spend $20/wk, but the last time I really crunched numbers I was figuring on $50), at least two weeks of vacation a year (Disney plus a cruise), etc. It's hard for me to feel sorry for SOME of the people struggling...when they whip out their shiny iphones and drive off in their new car (a note...in rural Tennessee, there is NO public transportation except for school buses, so a car is a virtual necessity...though a huge 4WD to go muddin' in and carry your 4-wheelers may not be).
I could go on a full-blown rant, but I'd sound too cynical. I do feel bad for people who have a rough life. I just don't think very many of them live in the US.
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So, I think you're right that it comes through as coddling and excuses because they don't make a good distinction between who is struggling legitimately and who is creating their own struggles for themselves. I think a family of four living on $23,550 (poverty line) is struggling.
Quick note...I've figured the costs for our family of four, and at $24,000/yr we'd be living a pretty good, and somewhat wasteful, life. This is back in Tennessee, USA. Not including housing costs, which ours cost...hrm...under $20,000 (ok, more like $25,000 after we fixed it up). We'd be able to go out multiple times a week, spend $50/wk on going out to eat (we now spend $20/wk, but the last time I really crunched numbers I was figuring on $50), at least two weeks of vacation a year (Disney plus a cruise), etc. It's hard for me to feel sorry for SOME of the people struggling...when they whip out their shiny iphones and drive off in their new car (a note...in rural Tennessee, there is NO public transportation except for school buses, so a car is a virtual necessity...though a huge 4WD to go muddin' in and carry your 4-wheelers may not be).
I could go on a full-blown rant, but I'd sound too cynical. I do feel bad for people who have a rough life. I just don't think very many of them live in the US.
I think many of us living on more underestimate startup costs. I can easily live (and probably with kids too) on $24,000 given what I've set up for myself. But I had the money to make a house down payment, I had the family to furnish the house, etc.
Also, are you saying your whole house cost $20,000? or you spent $20,000 a year to pay it off? It was unclear to me.
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I think many of us living on more underestimate startup costs. I can easily live (and probably with kids too) on $24,000 given what I've set up for myself. But I had the money to make a house down payment, I had the family to furnish the house, etc.
Also, are you saying your whole house cost $20,000? or you spent $20,000 a year to pay it off? It was unclear to me.
Before closing fees and what-not, it cost $17,750. 3/4 acre with a creek out back. Add in costs to fix up (replace busted windows, new mini-split ac/heat pump, hardwood flooring, etc), we have about $25k total in the place. Yeah, it's a fairly rural area (nearest walmart 30 minutes away, so not too bad), low wages, etc. But in my scenario, where $24k is a spendy lifestyle, $12k is just getting by (with no government help btw...i.e. no food stamps needed). So if you have a "mere" $24k/yr, just save half for a house. Two years, you have something livable. Four years, you have a pretty nice place. Then you go back to living a wasteful life...or a moderate lifestyle at $18k (includes dining out multiple times a month, plus one week vacation a year) with a 25% savings rate. Or keep the barebones lifestyle and have a 50% savings rate.
Even in Australia, if you take out our retirement savings and our holiday spending, we're living on a similar amount. No way we'd ever get a home for $25k, or even one in 5 digits; but still....
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I am sympathetic to his points about shrinking salaries, rising healthcare and education costs, etc. but isn't this a reason to be smarter with the money that we do have. I know that I was pretty wasteful with my money for about 10 years, and it was pretty regular middle class stuff, nothing extravagant. Now that my salary is stagnant- and might shrink this year- and my health care costs are much higher than I'd like because of some lingering issues, I really really wish I'd been smarter for those 10 years.
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I am sympathetic to his points about shrinking salaries, rising healthcare and education costs, etc. but isn't this a reason to be smarter with the money that we do have.
Hear hear.
In a tough situation we can make the best of it and try and improve on it, or we can complain.
I'll take the former, thanks.
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When I lost my job a year ago, I took another that paid less.
Then I got mean. Grrr.
I decided that rather than save less, I would save the same and spend less. Sh*t got real.
So you have a choice. Even when your pay is cut. Even when you don't get a promised raise. Even as healthcare costs rise.
Either you are committed to your goal, or you find an excuse.
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In a tough situation we can make the best of it and try and improve on it, or we can complain.
Or of course we can do both :-)
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In a tough situation we can make the best of it and try and improve on it, or we can complain.
Or of course we can do both :-)
ha ha I do both.
I spend a lot of my free time advocating for better working/living conditions. When I FIRE, I will do even more. People who complain but do nothing to help themselves make me crazy.