Author Topic: Question on MMM's journey to ER  (Read 11648 times)

Baylor3217

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Question on MMM's journey to ER
« on: June 30, 2013, 09:49:45 PM »
http://money.msn.com/retirement-plan/article.aspx?post=dd544488-f716-496b-b314-8e25b69e7aa9

I've read this article several times.

It's not clear to me, based on the info he provided, how much of his $600k or so stache was in taxable accounts when he retired - reference the last number before year 9.

He mentions adding in $100k increase in the value of a house, but of course, that isn't cash flow that puts food on the table.

Some of the $600k appears to have been in tax deferred accounts as well, but it's not clear how much...point being those can't be touched until 59.5 unless he's doing something unusual so I'm assuming that doesn't factor into his retirement cash flow.

Assuming he based his ER on the low end of his spending, he's looking at needing $30,000 x 25 - or $750,000 in accessible investments (i.e. not 401k and property value).

Now maybe he decided to "retire" and work his part time gig to make up the different if he only had say $15,000 x 25  = $375,000 in more liquid savings, give or take.

Has anyone analyzed this and tried to apply it to their own situation?

I'm trying to better understand the numbers so I can maybe shave some more time off my own plan. 

As it stands right now, I'm assuming I need to spend about $48,000 per year for a savings of $1.2MM in fairly liquid savings.  I could easily retire sooner than that (by keeping spending down around $30k - $40k) but enjoy my job and want to create some buffer.

Thoughts?

Frankies Girl

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Re: Question on MMM's journey to ER
« Reply #1 on: June 30, 2013, 10:05:02 PM »
I don't know how much he had in taxable/nontaxable accounts, but I do know that he and Mrs. MM do still make money from rental property and she up until recently worked part time with a family enterprise where she was drawing a salary. They are technically still working in a traditional sense, but it is at things they choose to do - so they don't consider it work. They are FI and retired from traditional 9-5 jobs, and consider the work they do as hobbies that happen to make income.

Someone correct me if I'm wrong...

happy

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Re: Question on MMM's journey to ER
« Reply #2 on: July 01, 2013, 04:25:22 AM »
Not sure if this helps but :

MMM has a rental property which cash flows $24k a year, which is what he and his family live off.  So whatever figure he had in his stash (somewhere between 500-750k I think,) on retirement he more or less has not touched this and its continued to grow. In addition Mr and Mrs have had various enjoyable part-time works, which have further been added to the stash. He mentioned in a post recently he could afford to spend 3x his current rate of spending i.e. another 48k on top of the 24k. So I assume his stash has grown to about 1.2 million (25x48k). Just rough back of the envelop stuff.

It depends on how you view retirement and whether you  are OK to work enough each year to replace your expenses, or like MMM and some other posters here, you have real estate producing enough to cover your expenses. Once you have a reasonable size stash, if you just work to replace expenses, the stash will keep growing and compounding. If you leave the stash untouched 5 years, 10 years 15 years or more, the results are remarkable. You just have to commit to covering annual expenses some other way (work or rent or blog, whatever).  This will shave time off no end. Use a compound interest calculator to work out how much you need and the stash will grow over a certain period. 

For example if you have 500k, invested at a very conservative 5% you will have 640k after 5 years and 824k after 10 years. If you get a better return , say 7% you end up with 710k in 5 years or 1mill in 10 years.

So if you commit to replacing expenses  for 5 or 10 or more years,  keeping the stash untouched...you can reduce the time you spend in fulltime work accumulation phase. Personally I'm planning to retire in about 5-6 years.  Depending on how the stash is going and a number of other factors I might decide to work enough to cover expenses for another  few years if I'm enjoying it..and really nail that stash.

Fletch

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Re: Question on MMM's journey to ER
« Reply #3 on: July 01, 2013, 04:44:25 AM »
Well, the max he and Mrs could contribute is probably $17k a year each, for 8 years, plus a few years of ROTH eligibility maybe? So the absolute most they could have contributed is in the neighborhood of $300k (plus matching) but that is assuming they contributed the maximum allowed every year, which is only speculation.

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Baylor3217

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Re: Question on MMM's journey to ER
« Reply #5 on: July 01, 2013, 09:52:20 PM »
Here's the article where he explains it!

http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/

Thanks. That's mostly a retread of the article I linked in in the OP.

Sounds like I need some high quality rental property.

happy

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Re: Question on MMM's journey to ER
« Reply #6 on: July 02, 2013, 02:22:02 AM »
Yes netting $24k off a single property seems pretty good. (Keeping his family expenses to under $30k is what impresses me.)
It does depend on where you wish to buy the property, and what the ROI is in your chosen area. Also you need to be willing to be a landlord.

I was seriously thinking about this, then did some math. In Australia a property renting for $500pw is probably worth $500,000k approx. If you invested 500k and got 5% net return...well guess what that's $25k.  So probably a lot of extra work for about the same returns.  The diversification and possibly less volatility would seem to be the main advantages.  (Of course, there's nothing to stop me from investing the US where the numbers are better, except for the added layer of complexity that tickles my inner hasselhof.)

rtrnow

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Re: Question on MMM's journey to ER
« Reply #7 on: July 02, 2013, 07:38:42 AM »
You wouldn't need that full 1mil in your case in taxable accounts. You would only need enough to bridge the gap until you can tap those other accounts. All my money is in some kind of tax advantaged accounts, but I have the luxury of a 457 that has no early penalty. So in my case the 457 (along with ROTH IRA contributions if necessary) are my gap filler until 59.5

BlackRat

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Re: Question on MMM's journey to ER
« Reply #8 on: July 02, 2013, 08:07:26 AM »
It may be that the amount generated by his stash is well above the 4% assumed by 25x yearly expenses - and it is this income number that he uses, even though its above the long term 'safe estimate'.
I'm not sure about his particular area but it sounds like real estate is giving very high returns in some parts of the US. The cash flow for the property would be increased if he isn't including an equivalent to the wage cost of hiring himself to do maintenance on the house (as it is a hobby).

nktokyo

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Re: Question on MMM's journey to ER
« Reply #9 on: July 02, 2013, 08:10:51 AM »
Here's the article where he explains it!

http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/

Thanks. That's mostly a retread of the article I linked in in the OP.

Sounds like I need some high quality rental property.

I recommend it. I "retired" with only $200,000 in money but with $100K in property income and a $30K burn rate.

arebelspy

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Re: Question on MMM's journey to ER
« Reply #10 on: July 02, 2013, 10:01:03 AM »
(Keeping his family expenses to under $30k is what impresses me.)

Plus paid off house.. assuming he sold that house and rented at a rate of 1500/mo, that'd add 18k to his (25kish?) budget, so it's more like a bit over 40 with housing.  (Or if you look at it another way: 400k house that could generate 4% SWR is 16k in opportunity cost that house is costing him, so add that 16k to the budget, puts him right around 40k).  Plenty of room for fancy food, some vacations, etc. without being wasteful.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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aj_yooper

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Re: Question on MMM's journey to ER
« Reply #11 on: July 02, 2013, 10:45:10 AM »
Plus paid off house.. assuming he sold that house and rented at a rate of 1500/mo, that'd add 18k to his (25kish?) budget, so it's more like a bit over 40 with housing.  (Or if you look at it another way: 400k house that could generate 4% SWR is 16k in opportunity cost that house is costing him, so add that 16k to the budget, puts him right around 40k).  Plenty of room for fancy food, some vacations, etc. without being wasteful.

If MMM's is rentable at the same rate as his rental property (1% value/month), then his untaxed, free rent is $4,000 per month.  Renting at $1,500 would be a big downward change in SOL.  So the choice might be:  Keep the nice home's free rent or add to his stash, increase taxable income, and rent?  We already read that post.

arebelspy

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Re: Question on MMM's journey to ER
« Reply #12 on: July 02, 2013, 10:47:17 AM »
Plus paid off house.. assuming he sold that house and rented at a rate of 1500/mo, that'd add 18k to his (25kish?) budget, so it's more like a bit over 40 with housing.  (Or if you look at it another way: 400k house that could generate 4% SWR is 16k in opportunity cost that house is costing him, so add that 16k to the budget, puts him right around 40k).  Plenty of room for fancy food, some vacations, etc. without being wasteful.

If MMM's is rentable at the same rate as his rental property (1% value/month), then his untaxed, free rent is $4,000 per month.  Renting at $1,500 would be a big downward change in SOL.  So the choice might be:  Keep the nice home's free rent or add to his stash, increase taxable income, and rent?  We already read that post.

However you want to slice it, it is clear his expenses are more than 25-30k when you count housing (which nearly everyone would in a budget).
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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omni

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Re: Question on MMM's journey to ER
« Reply #13 on: July 02, 2013, 03:50:09 PM »
I recommend it. I "retired" with only $200,000 in money but with $100K in property income and a $30K burn rate.
Wow that's impressive. In Australia to get an equivalent property income of $100k I'd need around $2mil unencumbered

nktokyo

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Re: Question on MMM's journey to ER
« Reply #14 on: July 02, 2013, 06:39:52 PM »
Some of it is active investing through renovations. When I say retired, it's like MMM. I still do stuff, I just wear old clothes and set my own schedule.

We even work with other investors now. I'm Nick on the about page.


[Mod Edit: Link removed.  PM poster if you want more information.]
« Last Edit: July 02, 2013, 08:12:28 PM by arebelspy »

travelbug

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Re: Question on MMM's journey to ER
« Reply #15 on: July 03, 2013, 10:27:37 PM »
Yes netting $24k off a single property seems pretty good. (Keeping his family expenses to under $30k is what impresses me.)
It does depend on where you wish to buy the property, and what the ROI is in your chosen area. Also you need to be willing to be a landlord.

I was seriously thinking about this, then did some math. In Australia a property renting for $500pw is probably worth $500,000k approx. If you invested 500k and got 5% net return...well guess what that's $25k.  So probably a lot of extra work for about the same returns.  The diversification and possibly less volatility would seem to be the main advantages.  (Of course, there's nothing to stop me from investing the US where the numbers are better, except for the added layer of complexity that tickles my inner hasselhof.)


I agree, we have looked at purchasing real estate in the USA, even have a friend who has, but we have decided to invest in shares instead as it's so much more fluid and accessible.

That said, we have invested in real estate here but it is in more of a commercial area and it pays much much better than residential.

MMM's cost of living is awesome and a reason why we are leaving Australia to retire early next year.

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Re: Question on MMM's journey to ER
« Reply #16 on: July 03, 2013, 11:14:29 PM »
To answer your question as far as I know, MMM has never disclosed how much is in taxable vs non-taxable.  There are limits as to what people will let you know about themselves, understandably so!!

Here is my best estimate, when MMM retired at age 30 his total savings was around 750k.  arebelspy makes a good point in that a very large portion of MMM's wealth is in his house which is 400k (fully paid off no mortgage).  That means he had about 350k in investments and 400k in his house at age 30. 

The regular taxable investments includes his rental house and a vanguard stock index fund (that he never touches and just lets it grow).

He gets his living money 24k of year from the rental house (before this I don't know where he got money to live off of).  This rental house (the foreclosure project as it is known on the blog) costs him 100k plus he put in about 10k in materials costs according to the blog post.  So you have 110k in investment money here.  Baylor3217 in your original posting you are assuming the 4% withdraw rate (which is reasonable) which is why you are multiplying yearly expenses by x 25.  However, here is tip from the blog, rental properties bought as self-fixer upper foreclosures yield you better passive income that the 4% withdraw rate.  This is where he is getting more income with less capital invested. 

Continuing on, I am not sure how much he has with Vanguard.  Of the savings we have 350k - 110k = 240k. That is 240k Split between the regular taxable vanguard index fund and the 401k type investments (non-taxable investments). 

So the 401k type investments (non-taxable investments) could be as little as a $1 and as high as $240k at the time he retired at age 30. 

Since then the stock market has bad years and good years, so if we assume an 8% return, 17k in new money going into each year for the last 6 years or so, plugging these numbers into a compound interest calculator gives the value would now be 531k.  This amount is split between the regular taxable vanguard index fund and the 401k type investments (non-taxable investments).  This would put the total value of his stash at an estimated $1.1 million at age 36 (I find this impressive, something to shoot for, even if takes me until 46 to do it). 

So I think happy's numbers are pretty reasonable.  I get around the same estimates for total savings. 

You have to give MMM credit, it takes courage to put all personal stuff on the Web for the public to see, I don't think I could do that;

It helps aspiring Mustachians because I need to see the numbers to fully understand whether his strategy makes sense; MMM is serving as a role model; seeing his actual savings amounts and seeing that the math works out makes it more real for us readers; It is a good question because you or I don't want to commit time and energy to a system/strategy unless we know that it works out in real life.




 

« Last Edit: July 03, 2013, 11:23:25 PM by George_PA »

Gerard

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Re: Question on MMM's journey to ER
« Reply #17 on: July 04, 2013, 05:01:15 AM »
He gets his living money 24k of year from the rental house (before this I don't know where he got money to live off of).  This rental house (the foreclosure project as it is known on the blog) costs him 100k plus he put in about 10k in materials costs according to the blog post. 
I'm pretty sure they're actually two different houses. The 24K-earning rental house is one he has owned for a while; the foreclosure project is more recent, and I think his involvement in it is solely a loan to the owner and a bunch of sweat equity. So the house pulling in 2K a month presumably cost a lot more than 100K to buy.

Christof

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Re: Question on MMM's journey to ER
« Reply #18 on: July 04, 2013, 05:14:13 AM »
The rental is over $450K (http://www.mrmoneymustache.com/2012/02/01/mr-money-mustaches-big-mistake/). Originally, MMM planned to sell it for $650K, but that was before prices went down. I guess these days it's probably closer to $500K, as he keeps mentioning how the rental is 4-5%. The house that MMM lives in is another $400K, so almost a million just in properties.

Rural

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Re: Question on MMM's journey to ER
« Reply #19 on: July 04, 2013, 05:33:06 AM »
Plus paid off house.. assuming he sold that house and rented at a rate of 1500/mo, that'd add 18k to his (25kish?) budget, so it's more like a bit over 40 with housing.  (Or if you look at it another way: 400k house that could generate 4% SWR is 16k in opportunity cost that house is costing him, so add that 16k to the budget, puts him right around 40k).  Plenty of room for fancy food, some vacations, etc. without being wasteful.

If MMM's is rentable at the same rate as his rental property (1% value/month), then his untaxed, free rent is $4,000 per month.  Renting at $1,500 would be a big downward change in SOL.  So the choice might be:  Keep the nice home's free rent or add to his stash, increase taxable income, and rent?  We already read that post.

However you want to slice it, it is clear his expenses are more than 25-30k when you count housing (which nearly everyone would in a budget).

See, this is the value of a paid-off house in retirement. It's a strategy. Personally, I think it's one that works better in a low-tax, low-COL area, but clearly it's working for MMM. Lower living expenses mean less stash needed in both taxable and sheltered accounts. Frankly, I think it's one of the best strategies out there for those of us in lower-paying industries.

George_PA

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Re: Question on MMM's journey to ER
« Reply #20 on: July 04, 2013, 09:44:01 AM »
Thanks Gerard and Christof, you're right, I got the two rental houses confused

arebelspy

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Re: Question on MMM's journey to ER
« Reply #21 on: July 04, 2013, 09:47:23 AM »
See, this is the value of a paid-off house in retirement. It's a strategy. Personally, I think it's one that works better in a low-tax, low-COL area, but clearly it's working for MMM. Lower living expenses mean less stash needed in both taxable and sheltered accounts. Frankly, I think it's one of the best strategies out there for those of us in lower-paying industries.

This again?

Sure, it's a strategy, in the same way that buying a warehouse full of food for the next decade is a strategy.

It leaves me with less liquid funds, but lower expenses as well.  It should rise with inflation, but if I expect my investments to beat inflation, it's a sub-par investment.

Yes, it works.  Is it mathematically optimal?  No.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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Rural

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Re: Question on MMM's journey to ER
« Reply #22 on: July 04, 2013, 11:45:34 AM »
See, this is the value of a paid-off house in retirement. It's a strategy. Personally, I think it's one that works better in a low-tax, low-COL area, but clearly it's working for MMM. Lower living expenses mean less stash needed in both taxable and sheltered accounts. Frankly, I think it's one of the best strategies out there for those of us in lower-paying industries.

This again?

Sure, it's a strategy, in the same way that buying a warehouse full of food for the next decade is a strategy.

It leaves me with less liquid funds, but lower expenses as well.  It should rise with inflation, but if I expect my investments to beat inflation, it's a sub-par investment.

Yes, it works.  Is it mathematically optimal?  No.

I think you know that I respect you and your opinions both. But (you saw the "but"coming, right?) why rule out strategies completely (ie: "this again"?) It didn't work best for you. It wouldn't work best for those who can get a 3.5% fixed rate 30-year mortgage and invest. But interest rates are on the way up again in the US, and a large percentage of the posters here are not in the US in the first place. There are other cases, like mine which we've already hashed out, but those are rare. Rising interest rates and non-US mortgages aren't rare here. Shouldn't we discuss it all and let folks run the numbers themselves?

nktokyo

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Re: Question on MMM's journey to ER
« Reply #23 on: July 04, 2013, 12:01:50 PM »
I'm a kiwi and rates are 6% and you can only fix for 5 years at a time. Being mortgage free is a good idea for me.

Baylor3217

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Re: Question on MMM's journey to ER
« Reply #24 on: July 04, 2013, 12:26:05 PM »
The rental is over $450K (http://www.mrmoneymustache.com/2012/02/01/mr-money-mustaches-big-mistake/). Originally, MMM planned to sell it for $650K, but that was before prices went down. I guess these days it's probably closer to $500K, as he keeps mentioning how the rental is 4-5%. The house that MMM lives in is another $400K, so almost a million just in properties.

$1MM PAID FOR properties?  Or just valuation that's being paid for?

arebelspy

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Re: Question on MMM's journey to ER
« Reply #25 on: July 04, 2013, 01:10:28 PM »
Shouldn't we discuss it all and let folks run the numbers themselves?

Sure.  And we have dozens of threads and hundreds of posts about it.  Taking another thread off the main topic to discuss it once more is what prompted the "this again" comment.


The rental is over $450K (http://www.mrmoneymustache.com/2012/02/01/mr-money-mustaches-big-mistake/). Originally, MMM planned to sell it for $650K, but that was before prices went down. I guess these days it's probably closer to $500K, as he keeps mentioning how the rental is 4-5%. The house that MMM lives in is another $400K, so almost a million just in properties.

$1MM PAID FOR properties?  Or just valuation that's being paid for?

Both his properties are free and clear.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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plantingourpennies

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Re: Question on MMM's journey to ER
« Reply #26 on: July 04, 2013, 07:08:22 PM »
I wish that MMM could have kept a public record of his finances while he was in the process of reaching FI. Some of the journals on the ERE site have a good level of granularity and a few years worth of data and commentary, but they are not publicized to the extent this site is.

Best,
Mr. PoP


arebelspy

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Re: Question on MMM's journey to ER
« Reply #27 on: July 04, 2013, 08:42:13 PM »
I wish that MMM could have kept a public record of his finances while he was in the process of reaching FI. Some of the journals on the ERE site have a good level of granularity and a few years worth of data and commentary, but they are not publicized to the extent this site is.

Best,
Mr. PoP

Hmm.. How come?  The math shows it's possible.  The rest is just anecdotes.

And if you want anecdotes, there are plenty. Here, on the E-R.org forums, and, as you point, out, on ERE.  Lacking Ambition and Brave New World provide more examples.  The wife and I should reach FI by 30 on two teacher's salaries after a six-figure screwup.  It's completely possible, proven via anecdotes and math.

What does one person's example matter that much (especially when it already is fairly well documented, just by round numbers, not down to the penny)?

I haven't ever understood the desire to see the Money Mustache family's financial lives in even more detail than already exists.

/shrug
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Rural

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Re: Question on MMM's journey to ER
« Reply #28 on: July 05, 2013, 06:48:22 AM »
Shouldn't we discuss it all and let folks run the numbers themselves?

Sure.  And we have dozens of threads and hundreds of posts about it.  Taking another thread off the main topic to discuss it once more is what prompted the "this again" comment.


But I didn't bring it up or take it off topic. You actually brought it up in fact (responding to anothe post on the relevant parts of how MMM did it; I don't think you were off topic). Here's what you said:

Plus paid off house.. assuming he sold that house and rented at a rate of 1500/mo, that'd add 18k to his (25kish?) budget, so it's more like a bit over 40 with housing.  (Or if you look at it another way: 400k house that could generate 4% SWR is 16k in opportunity cost that house is costing him, so add that 16k to the budget, puts him right around 40k).  Plenty of room for fancy food, some vacations, etc. without being wasteful.

You were pointing out that he's effectively living at a higher standard of living on less cash flow because of the paid off house. At least I took it that way. I think you were suggesting that we should mentally add in the mortgage or rental payment he isn't making when we look at his months expenses, because it's something most people don't think about, and so people who are new to the idea freak when they see what the MMM family lives on. I think that's a great strategy when talking to new people who can't see how it could be done. All I added was that it's also a good idea to consider that strategy -- whether more cash flow (increased from investing) or lower costs will work better for each of us in retirement. There's no ideal answer that fits all, of course.

arebelspy

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Re: Question on MMM's journey to ER
« Reply #29 on: July 05, 2013, 08:23:02 AM »
Okay.

Not gonna argue with you.

Have a good day.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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Rural

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Re: Question on MMM's journey to ER
« Reply #30 on: July 05, 2013, 11:15:39 AM »
:)

fiveoclockshadow

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Re: Question on MMM's journey to ER
« Reply #31 on: July 05, 2013, 11:43:22 AM »
Just wanted to comment on one misunderstanding in the OPs post.

Money in retirement accounts (401k/IRA both Roth and Traditional) are in no way "trapped" until 59.5 or any other date.  You can get money out without the 10% penalty and typically with low or no tax (no tax for Roth, your presumably low retirement income tax bracket for traditional).  The techniques require a bit of planning and careful execution and some are more flexible than others, but they all work to get money out penalty free early.

These techniques are discussed fairly frequently here, search for "Roth Pipeline" or "SEPP" to understand both methods.  In my opinion the Roth Pipeline is the more flexible though it requires some setup in advance.  The SEPP option is particularly inflexible in a low interest rate environment such as we are in right now.

George_PA

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Re: Question on MMM's journey to ER
« Reply #32 on: July 05, 2013, 08:36:23 PM »
This post has inspired me, and probably may of you as well, to go back and read http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/ again.

Some interesting facts can be found:

* At the end of year 9, he has about 800k or so; This is mostly split between his house he lives in 400k and the 400k rental (that is providing his income $2400/month) and a retirement 401k type account.  Thus, it would seem that almost all his non-401k wealth is in real estate.  I find it interesting that there is very little in regular taxable stock-type investments.

* The first two years he really did not even try that hard to save much (only 5k saved the 1st year, 17k save the 2nd year)

* During the core stash building years (years 4-8), the income Mr. and Mrs. MMM through their salaried jobs averages $160,000

(year4: $127k  + year5: $160k  + year6: $~170k +  year7: $170k +  year8: $175k) / 5

* MMM mentions really flipping real estate or moving quite often during the 10 year period.

* The transition between years 4 to 5 is really interesting (to me anyway), this appears to be a particularly badass year; the stash went from ~150k to ~250k, thus a 100k after-tax increase in a single year.  The combined salaried income for year 5 is 160k + 10k in investment gains.  If you make 170k, the fed taxes paid comes out to an estimated 35k; this means of the 135k left after tax (170k - 35k), 100k of this when to the stash; This is a savings rate of 74% (100k/135k)!!  This is factoring him buying a 10k motorcycle.

 

« Last Edit: July 05, 2013, 08:52:03 PM by George_PA »

happy

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Re: Question on MMM's journey to ER
« Reply #33 on: July 05, 2013, 09:45:39 PM »
Well George, your post got me re-reading it also. I've read this post lots before, trying to peg where I was up to compared to MMM. I hadn't quite got that the 2 houses might be a lot of the stash. On re-reading it,  looking at just the housing equity it is a bit unclear, investing in stocks definitely comes into it, although its really unclear how much is RE equity, how much in retirement accounts and how much in the stock market. I'm not sure that the $800k stash was all RE and old man money. However, I think there is more RE equity there than I had previously appreciated.

Baylor3217

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Re: Question on MMM's journey to ER
« Reply #34 on: July 05, 2013, 11:14:37 PM »
Well George, your post got me re-reading it also. I've read this post lots before, trying to peg where I was up to compared to MMM. I hadn't quite got that the 2 houses might be a lot of the stash. On re-reading it,  looking at just the housing equity it is a bit unclear, investing in stocks definitely comes into it, although its really unclear how much is RE equity, how much in retirement accounts and how much in the stock market. I'm not sure that the $800k stash was all RE and old man money. However, I think there is more RE equity there than I had previously appreciated.

What do you mean by old man money?

happy

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Re: Question on MMM's journey to ER
« Reply #35 on: July 06, 2013, 12:02:32 AM »
Money that is locked up in retirement accounts that can't be accessed until a certain age (usually perceived as "old").