If You Think This is About Extreme Frugality, You’re Missing The Point

[EscapeVelocity2020]

Alright, I read this one and, as MMM said in his post, "steam sprouted from my collar" (or something similarly silly).  Were you a little put off?  For example, this particularly raised my hackles:

"The Mustache family does not lead an “extremely frugal” lifestyle by any stretch of the imagination. I mean, holy shit, we are a multimillionaire family living in an expensive house with a stream of luxury goods, services and food shooting at us from all directions.

Not only do we bathe daily in this spectacular river of affluence, but we even walk casually away from it a few times a year in order to ride in Jet Aircraft which allow us to sample other unnecessary parts of the world. The total bill for this nuclear explosion of consumption is an outrageous $25,000 per year, which would be closer to $40,000 if you accounted for mortgage interest or rent on a comparable house. The life we lead in this rich part of a rich country is extreme, but at the other end of the scale than that suggested by the critics."

[kendallf]

Maybe it's just you.

I thought it was a good post, reiterating the message of living life consciously and not with a deprivation mindset. 

[deborah]

I thought the post was much better than some of his latest ones - getting back to the fundamentals I see in Mustashianism.

I have been a bit put off by the credit card hacking post in particular, because I see mustashianism as living frugally to become (or meet) yourself, rather than a consumer king. On the other hand credit card hacking seems to me to be becoming a consumer king (I can consume more than you with less expense nyah nyah nyah). I also see mustashianism as reducing the stress in your life - and why should I stress myself out further by timing the credit card?

[EscapeVelocity2020]

If you read his replies on his posts, he has said that he spends more than 25k/yr.  On his credit card churn post, he said he spent 60k on remodelling.

[EscapeVelocity2020]

I will admit, at this point, that one of the biggest reasons that I'm not RE is because of MMM.  When he said that he retired at 30 and I researched it, he started a construction company.  It failed miserably, but this website magically took off, so much so that his wife was finally convinced she could retire.  It has skyrocketed since then, mainly due to posts like 'biking is the safest form of transportation'. 

I have nothing against Mustachianism, I guess I just get a little 'steamed' when the website makes the cult leader millions (his words, not mine) while professing how easy life is.  I guess I'd be impressed if he didn't research eBikes and hydroponics and credit card churning, all the 'business travel and home expenses', and really just retired and told us what a 25k/yr life looked like. 

Wait a second, I live in Houston, I happen to know lots of people that live on 25k/yr very happily, but it's not quite as pretty as this website doles out.  That's what gets me.  That it's not that bad, but it's not as great as he purports.

[kendallf]

I will admit, at this point, that one of the biggest reasons that I'm not RE is because of MMM.  When he said that he retired at 30 and I researched it, he started a construction company.  It failed miserably, but this website magically took off, so much so that his wife was finally convinced she could retire.  It has skyrocketed since then, mainly due to posts like 'biking is the safest form of transportation'. 

I have nothing against Mustachianism, I guess I just get a little 'steamed' when the website makes the cult leader millions (his words, not mine) while professing how easy life is.  I guess I'd be impressed if he didn't research eBikes and hydroponics and credit card churning, all the 'business travel and home expenses', and really just retired and told us what a 25k/yr life looked like. 

Wait a second, I live in Houston, I happen to know lots of people that live on 25k/yr very happily, but it's not quite as pretty as this website doles out.  That's what gets me.  That it's not that bad, but it's not as great as he purports.

Serious question: why are you here?  The negativity and jealousy drips from your posts.  I hope you're happier IRL.

[ShortInSeattle]

I enjoyed the post.

To me the post said "This isn't about deprivation! It's about living a rich and happy life that doesn't need to cost a lot of money."

I think that's a message lost by the spendthrifts (who believe spending creates happiness) *and* the skinflints (who use competitive cost-cutting as a kind of holier-than-thou sport around here).

Just my 2 cents. :)

[MikeBear]

I will admit, at this point, that one of the biggest reasons that I'm not RE is because of MMM.  When he said that he retired at 30 and I researched it, he started a construction company.  It failed miserably, but this website magically took off, so much so that his wife was finally convinced she could retire.  It has skyrocketed since then, mainly due to posts like 'biking is the safest form of transportation'. 

I have nothing against Mustachianism, I guess I just get a little 'steamed' when the website makes the cult leader millions (his words, not mine) while professing how easy life is.  I guess I'd be impressed if he didn't research eBikes and hydroponics and credit card churning, all the 'business travel and home expenses', and really just retired and told us what a 25k/yr life looked like. 

Wait a second, I live in Houston, I happen to know lots of people that live on 25k/yr very happily, but it's not quite as pretty as this website doles out.  That's what gets me.  That it's not that bad, but it's not as great as he purports.

Serious question: why are you here?  The negativity and jealousy drips from your posts.  I hope you're happier IRL.

He's a loser, and MMM is a winner that promotes and helps other people to be winners, and he feels jealous and threatened by that. So, since he can't duplicate being a MMM winner, he has to spend his time cutting down and mocking others who are. He's not really just cutting down MMM, he's cutting down everybody that uses any and all MMM methods to emulate MMM as best they can for their own lives.

He finds something in nearly every blog post to bitch about, and he guises his posts about it as a debate, when it's really just a diatribe in which he invites no debate that he'll accept that he's wrong.

[deborah]

I will admit, at this point, that one of the biggest reasons that I'm not RE is because of MMM.  When he said that he retired at 30 and I researched it, he started a construction company.  It failed miserably, but this website magically took off, so much so that his wife was finally convinced she could retire.  It has skyrocketed since then, mainly due to posts like 'biking is the safest form of transportation'. 

I have nothing against Mustachianism, I guess I just get a little 'steamed' when the website makes the cult leader millions (his words, not mine) while professing how easy life is.  I guess I'd be impressed if he didn't research eBikes and hydroponics and credit card churning, all the 'business travel and home expenses', and really just retired and told us what a 25k/yr life looked like. 

Wait a second, I live in Houston, I happen to know lots of people that live on 25k/yr very happily, but it's not quite as pretty as this website doles out.  That's what gets me.  That it's not that bad, but it's not as great as he purports.

Serious question: why are you here?  The negativity and jealousy drips from your posts.  I hope you're happier IRL.

He's a loser, and MMM is a winner that promotes and helps other people to be winners, and he feels jealous and threatened by that. So, since he can't duplicate being a MMM winner, he has to spend his time cutting down and mocking others who are. He's not really just cutting down MMM, he's cutting down everybody that uses any and all MMM methods to emulate MMM as best they can for their own lives.

He finds something in nearly every blog post to bitch about, and he guises his posts about it as a debate, when it's really just a diatribe in which he invites no debate that he'll accept that he's wrong.

You are all being a bit precious. The forum is about discussion of different ideas, and encouragement of others, not about tearing each other to shreds! If some people see things differently lets discuss those things. Most of us appear to have stubborn ideas - and that's reasonable because we are not your normal guys and girls - we want FI, unlike most of the population!

MMM doesn't do everything right - he is not a god, and some of his posts are better than others. I happen to think this one is a really good one.

[bacchi]

If you read his replies on his posts, he has said that he spends more than 25k/yr.  On his credit card churn post, he said he spent 60k on remodelling.

And I spent $6,500 on lending club notes the other day. And $6,000 on US stocks on Friday.

We don't usually include investments in "spending".

Escape has a point, though. In accounting, there is (among others) the cash flow sheet and the balance sheet. While the $60k may be a capital improvement (a depreciating one), the cash has to come from somewhere. Someone with $625k ($25k at 4%) can't just pull out $60k for a remodel without actually reducing their past or future spending to below $25k.

In other words, if I paint the house, the paint and brushes definitely go in the budget.

Of course, he does have imputed rent, which lifts his "spending" to $40k, as he stated. That's quite doable in Houston.

[EscapeVelocity2020]

Serious question: why are you here?  The negativity and jealousy drips from your posts.  I hope you're happier IRL.

It's a valid question, I'm here (in the forums) to speak my mind and hopefully it doesn't hurt or offend other people.  I'm not jealous of MMM (unless maybe subconsciously, but how would I know).  I just wonder why he still needs ads and paid sponsored links if he is so content with his lifestyle. 

[matchewed]

So far you haven't put a cohesive disagreement with the article. You don't like it, that's fair. But stepping away from your dislike is there anything wrong with the article or are you just dragging some luggage into it? You've articulated that you think he's not being honest with his reasons for monetizing the blog, fine. But do you have something to actually say about the article?

[EscapeVelocity2020]

So far you haven't put a cohesive disagreement with the article. You don't like it, that's fair. But stepping away from your dislike is there anything wrong with the article or are you just dragging some luggage into it? You've articulated that you think he's not being honest with his reasons for monetizing the blog, fine. But do you have something to actually say about the article?

To be specific, it's the claim that the life he claims to live for 25k/yr while doing things like buying a house, rehabbing it significantly, buying his Mom a roof, flying to South America (and lots of other travel), and who knows what else...   I just think there's a lot of hypocrisy in the post.  I'd estimate that his family spending is more like 100k/yr (running the site, buying stuff to test, his home rehab, travel, etc.), and that is why his life looks so desirable.  I think he has even said it himself, if they just biked to the library and lived a 25k/yr life, that nobody would pay attention.     

[BPA]

There are many others who have achieved FIRE before MMM who prove that it can be done.

Long before this blog I followed the lives of Diane Nahirny (a former Hamiltonian like MMM), the people who wrote Why Swim With the Sharks, Jacob Lund Fisker, and many other moms who wanted to make it on one income. 

MMM's philosophy that he does it while living a luxurious life is because he defines luxury in his own terms.  Yes, he takes vacations, eats good food, has a nice house, but he also spends much less than many of his peers in the engineering world. 

I too feel that I have a ridiculously luxurious life.  Everyone in my house has their own bedroom, I spend my 2 month summer break on the east coast, I have pets, but I don't own a car, I rarely eat in restaurants, and I spend far less than my peers who can't figure out how I can manage to live on so little compared to them (I work part-time).  Some of my students mock me because they have nicer phones than me.  Good thing I don't care what they think.  :)

More and more I'm realizing how fortunate I am to "get it."  Call that a cult if you want (and MMM does tongue-in-cheek, I'm assuming), but I was living this lifestyle before there was an MMM.

ETA:  I guess I'm an MMM hipster.  ;)  But MMM is only among the most recent I've observed who lives a luxurious yet frugal type existence.

[kendallf]

To be specific, it's the claim that the life he claims to live for 25k/yr while doing things like buying a house, rehabbing it significantly, buying his Mom a roof, flying to South America (and lots of other travel), and who knows what else...   I just think there's a lot of hypocrisy in the post.  I'd estimate that his family spending is more like 100k/yr (running the site, buying stuff to test, his home rehab, travel, etc.), and that is why his life looks so desirable.  I think he has even said it himself, if they just biked to the library and lived a 25k/yr life, that nobody would pay attention.   

So your problem is not with the content of this specific post, it's with the accounting of his yearly income and his activities.   Can I mention a few things?

One: he's totally up front about what he's doing.  You can gripe about activities and expenditures because he posts about them.  How is that hypocrisy?

Two: the central thrust of this blog, IMO, is on mindful and efficient living, with reduced consumption and financial independence as a happy byproduct.  Investing some money and a ton of sweat equity in a house renovation isn't "consumption" in my book. 

Three: paying for the travel is almost trivial if you engage in some travel hacking (and find it worthwhile!)  I seriously doubt he's spending much on trips, and if I recall correctly, Mrs. MM posted their blog and other travel expenditures last year and it was  $2-3kish.

Enough of that.  Back to actionable items.  Do you feel like you're deprived of these activities yourself, or that no one will read a blog on frugality that doesn't feature some sort of cool "life hacking" theme?  That's fixable.  Can you make MMM conform to your accounting definitions?  Probably not.  :-)

To a couple of other commenters: I'm not trying to quash disagreement.  I just think MMM's central, positive message is powerful and an agent for social change.  I think people who get caught up nitpicking the details may be losing out on a chance for personal improvement. 

[matchewed]

So far you haven't put a cohesive disagreement with the article. You don't like it, that's fair. But stepping away from your dislike is there anything wrong with the article or are you just dragging some luggage into it? You've articulated that you think he's not being honest with his reasons for monetizing the blog, fine. But do you have something to actually say about the article?

To be specific, it's the claim that the life he claims to live for 25k/yr while doing things like buying a house, rehabbing it significantly, buying his Mom a roof, flying to South America (and lots of other travel), and who knows what else...   I just think there's a lot of hypocrisy in the post.  I'd estimate that his family spending is more like 100k/yr (running the site, buying stuff to test, his home rehab, travel, etc.), and that is why his life looks so desirable.  I think he has even said it himself, if they just biked to the library and lived a 25k/yr life, that nobody would pay attention.   

So people should include their business expenses when calculating their lifestyle expenses? That is the crux of your argument? Or that they should be open about home repairs?

The hilarious thing about this topic is that the top is about missing the point and I think you may be. Rather than focusing on what the article is trying to communicate and discussing that, you're dragging in borderline ad hominem factors that have little to do with the article. I could see your point if the article was specifically about how much they spend and was a dissection of that. But rather the article is a reaffirmation about finding the efficiencies in your life to live your life the way you want without having to spend more for the same stuff. And your response is "what a hypocrite." He's living his life the way he wants (running a blog, doing a home rehab, traveling and meeting people as you noted) where exactly is the hypocrisy when he's so open about it? Just because he hasn't answered your questions directly doesn't make him a hypocrite. When he makes the claim of living on 25k a year he's saying that normal life living costs 25k a year. That's not hypocrisy. And in his MMM family spending breakdowns annually he goes to great lengths to detail that is what he means.

Again, I think you're missing the point, this isn't about MMM's living. It is a way to demonstrate that it is perfectly possible to FIRE and live any lifestyle you want. I still haven't heard you say anything about the article, just about the dude writing it. It's fine if you just don't like it. But don't hide it under a guise of having beef with the article when you have yet to say anything about the article.

[odput]

So you have a beef with his accounting because he doesn't specifically separate blog income/expenses from personal...I can at least see that point.

But you are missing the intent of the article - you have to realize that this article is a response to mainstream media labeling him (and mustachianism for that matter) as being so cheap and deprived...how could you possibly live this way?!?!?!?!?  And that is 100% NOT his message, and indeed would even turn away much of his TARGET AUDIENCE.  So yeah, it's a little braggadocio to lay out all the luxury in one post, but the point is to show that you can live a great life while not spending all of your income - is that so hard to get behind?

[DecD]

So far you haven't put a cohesive disagreement with the article. You don't like it, that's fair. But stepping away from your dislike is there anything wrong with the article or are you just dragging some luggage into it? You've articulated that you think he's not being honest with his reasons for monetizing the blog, fine. But do you have something to actually say about the article?

To be specific, it's the claim that the life he claims to live for 25k/yr while doing things like buying a house, rehabbing it significantly, buying his Mom a roof, flying to South America (and lots of other travel), and who knows what else...   I just think there's a lot of hypocrisy in the post.  I'd estimate that his family spending is more like 100k/yr (running the site, buying stuff to test, his home rehab, travel, etc.), and that is why his life looks so desirable.  I think he has even said it himself, if they just biked to the library and lived a 25k/yr life, that nobody would pay attention.   

Interesting points, but I don't think he's being disingenuous.

Yes, he bought and rehabbed a house...but he did it by selling a more-expensive paid-off house....he bought a less-expensive house, renovated it, and still made money on the deal.  It didn't "cost" him anything because he'd already put in the work to pay off his old house.

He also didn't pay for a trip to South America.  Just like I didn't pay for the work-trips to Germany and France, or the work-conferences I attended in Hawaii (twice!) and Prague.  Were they cool trips?  Totally!  Were they vacations?  No- I was working, and work paid for them.  He wasn't taking fancy trips to South America when he first started the blog- he's taking fancy trips to South America BECAUSE he has a successful blog.  The trip happened BECAUSE of his blog.  Nobody is paying me to take a fancy trip to South America, because I don't have millions of people reading my articles every day.  But if I get my act together and write a paper this winter, I might get a free trip to Vail next year for a conference.

Go back and read the first few months of posts.  He was posting daily, or nearly, to build readership- putting in a lot of work.  He was writing exactly the kind of posts you're asking for- biking to the library and living off of $25K/year.  And people DID read it.  I love those early posts, in fact.  The blog has had to morph a bit, cause how many times can you write a compelling article about biking to the library?  Now he's branching out to electric bikes, hydroponics, etc because he can, because if he's going to keep writing he needs to write about SOMETHING.  He has the opportunity to try out e-bikes BECAUSE he has a successful blog.  The blog pays for itself.  It didn't start out like this!

And to address a comment above:

So I also continue to work at a job that I enjoy that brings in a healthy income.  MMM can have this, why can't I?

This comment I don't understand.  Who's saying you can't have a job you enjoy?  The point of MMM's blogs is not "RETIRE NOW!" it's "quit wasting, and then you can choose what you do".  It seems pretty apparent that he's the kind of guy that gets bored sitting around, hence the side-jobs.  But clearly he doesn't NEED that income, right?  You say you've made life-choices based on this blog (MMM is part of the reason you're not retired) but you seem to resent what he has to say- that seems like a contradiction?  If you don't need the income either, but also like working, then keep working!  MMM even made a fancy little acronym (swami) for that situation in one of his articles. 

I think....it's a blog.  He's a guy.   It's one guy's opinion.  Take it with a grain of salt.

[mak1277]

I think we all have a tendency to look at things as black and white...either/or...and miss the concept that there is usually a spectrum.  There are clearly options all along the spectrum of earning/spending.  It's not like the only options in life are "spend everything you earn" or "live at the poverty line or below".**  But people on both sides of the discussion often make it sound like those are the only two possible outcomes.  At least MMM clearly states that he believes he lives luxuriously on $25k per year, admitting he could live on less. 

Most people have choices...the problems come when people refuse to own their choices.  If you choose to spend every dollar you make, don't you dare complain to me about not being able to retire.  But just because you choose to live on $20k per year, don't think you're a better person than someone who's a consumer. 

That's my biggest beef with MMM and Edit the many people on the forums...this inherent belief that making mustachian choices somehow makes you a better person than your consumerist neighbor.  I think that everyone wants to believe they're better than other people.  In reality, we're all assholes in our own way, and the minute you think you're better than anyone else, you just became that much more of an asshole.


** - Yes, I realize some people only earn at the poverty line, but I think it's fair to say that's neither the target audience for MMM or for my comments. 

[EscapeVelocity2020]

Good points BPA, Kendallf, Matchewed, Odput, DecD.  I'm sure I missed the point of most of the blog post because I know the story he wants to tell backward and forward, so when I read it I was thinking about all of the other stuff he has done in 2014 and how inconsistent the story about living on 25k/yr is when he already stated in an earlier comment that he'd spent 60k just in home improvements alone. 

I do think that his lifestyle and his business (and all of the accounting) should be kept together.  I'm a stickler for details, it's the engineer in me, and I get especially bent out of shape when I read something that isn't internally consistent, like the financials of this year's blog posts.

[matchewed]

So your frustration is perceived inconsistencies aggregate over time. Fine. Have a ball with his spending exposed post in January.

[dios.del.sol]

I think that everyone wants to believe they're better than other people.  In reality, we're all assholes in our own way, and the minute you think you're better than anyone else, you just became that much more of an asshole.

Nicely put!

[brooklynguy]

I don't understand the animosity some of the posters are showing towards EscapeVelocity.  I love reading his "skeptic of the mustachian dogma" posts like these, which provide a healthy counterpoint to the "outrageous optimism" expressed by the blindly faithful members of the cult.  This forum should be a marketplace of ideas, so why are some people trying to stifle the voices of dissent instead of continuing to advance the discourse?

That said, I agree with matchewed that EV does not really have a specific disagreement with this article but is using this article as additional evidence in the overall case he has slowly been building against MMM--which seems to be that MMM's claims about attaining financial independence are misleading, in that he holds himself out as a representative example of the ridiculously luxurious lifestyle that any extremely-early retiree can easily achieve using the simple methods MMM describes.  But I think you are reading a message that isn't there into MMM's posts--he never says (nor, in my view, does he imply) that anyone can achieve the equivalent of his own particular situation by following the methods he describes for attaining FIRE (e.g., I don't think it would be a reasonable reading of this article or the blog in general for a worker earning mininum wage and cutting expenses down to the bone to believe that if they amass 25x their annual spending they can suddenly live the life of MMM himself).

You also suggest, in this thread and in your others on this recurring theme, that MMM is driven by an ulterior motive.  I'm curious what you believe that motive to be.  Is it just his self-professed desire to save the planet by getting people to change their ways, or something nefarious like increasing his own personal fortune?

On the minor point of the quibble with the phrase "allow us to sample other unnecessary parts of the world", I agree with you that it was probably just poor word choice--I think what MMM meant to say was "allow us to unnecessarily sample other parts of the world."

[Gone Fishing]

From an accounting standpoint, MMM's allocations of "spending" have never been too far from the truth.  However, like most small business owners, he has always used a little funny math with business expenses when it comes to travel, and most homeowners do not consider renovations as capital transactions like a business would, but instead spending.  I figured this out early on, corrected for it in my own math, and moved on.   

All said, it's a timely post.  In the first few minutes of the Tony Robbins video someone posted a while back, he made the point to recognize the abundance in our lives.  Christians thank God for their blessings, and the most acetic monk is grateful for his bowl of porridge and a beautiful sun rise. 

Being thankful for what you have and recognizing how good most of us really have it is the basic foundation for happiness and satisfaction.  And once you are satisfied you no longer have to spend money chasing "stuff".  MMM's philosophy allows you build your own reality, one where you actually can be satisfied in a world where everyone is constantly telling you that you are not and that you need some product or service to enhance your position.     

Happy Thanksgiving, everyone!

[Cheddar Stacker]

If you read his replies on his posts, he has said that he spends more than 25k/yr.  On his credit card churn post, he said he spent 60k on remodelling.

And I spent $6,500 on lending club notes the other day. And $6,000 on US stocks on Friday.

We don't usually include investments in "spending".

+1.

A house renovation that substantially increases the value of the house is more an investment than expense. Yes, cash goes out the door, but that's irrelevant. Do you count your 401k contributions as an expense?

I thought the post was great. I particularly liked this:

And as for that New York Magazine headline, no, I don’t want you to Spend Like You’re Poor. To me, that would imply car loans, processed food, hair salons, restaurants, lawn care companies, housekeepers and all the things that people get when they follow the standard script of a people who are starved for free time and chasing material comforts as a replacement for happiness.

As to the optimism and MMM making this sound so easy, well, I have no interest in reading the opposite. I don't want to hear about how life is so hard, we should all work more for safety margin, and life after work is boring. The blog is refreshing. It's the opposite of the shit we're fed everywhere else we turn. Life is great. I don't need someone telling me otherwise.

[EscapeVelocity2020]

A house renovation that substantially increases the value of the house is more an investment than expense. Yes, cash goes out the door, but that's irrelevant. Do you count your 401k contributions as an expense?

Maybe I'm wrong, to me (and I'm not an accountant), anything that takes cash flow away should be put into an expense category, and if you are clear about it, even savings.  Most bloggers that are saving for the future do it this way, showing that (hopefully) income is greater that outflow and this excess then goes toward savings (so it's not an expense per se, but can also be "accounted for" in this way).  For instance, I judge my FI based on not having to save and comparing my passive income against my full year of expenses (typically around 40k).  My expenses this year included re-carpeting the house.  I won't have to do that again for 5 - 10 years, but I figure I will tackle a project like that every year, so I keep my budget at 40k.   

As to the optimism and MMM making this sound so easy, well, I have no interest in reading the opposite. I don't want to hear about how life is so hard, we should all work more for safety margin, and life after work is boring. The blog is refreshing. It's the opposite of the shit we're fed everywhere else we turn. Life is great. I don't need someone telling me otherwise.

That's true, I was shooting more toward being skeptical, like, if it's so easy then why aren't there whole communities of FIRE'd people?  In fact, in the 70's, hippies sounded like they were everywhere.  What happened between then and now?  I still wonder about this, even on this forum there are only a handful of ER's, even after one of the longest, best bull market runs I've ever experienced.

[mak1277]

A house renovation that substantially increases the value of the house is more an investment than expense. Yes, cash goes out the door, but that's irrelevant. Do you count your 401k contributions as an expense?

Maybe I'm wrong, to me (and I'm not an accountant), anything that takes cash flow away should be put into an expense category, and if you are clear about it, even savings.

From an accounting standpoint, it's clear that not every cash outflow (showing up on the cash flow statement) is an expense (showing up on the income statement).  I think it's up to every individual to determine how to treat cash outflows that are asset purchases.  There is a line that everyone has to draw for him or herself.

Is it an Investment or an Expense to spend money on home renovations?
Is a car purchase an investment in a productive asset or an expense?  What about a computer?  A screwdriver used to make home repairs?  If you stretch it far enough, you could consider quite a list of things to be "investments", but the fact is they're all cash outflows.

Personally, the only hard "asset" I have in my calculation of net worth is my home.  In other words, I consider the purchase of a car to be an Expense not an Investment.  I think as long as we (and MMM) are consistent then we're fine.  Trouble comes if and when we start changing the rules to benefit a certain purpose/agenda.  I'm not suggesting that's happening, mind you.

[odput]

What happened between then and now?

Advertisers have gotten WAY better at their jobs...and they have a direct line (you might even call it a "cable") into most peoples' houses, constantly telling them they don't have enough/the best stuff

[EscapeVelocity2020]

A more interesting point to be made about all of this accounting is, let's just say I did only budget 25k/yr although I know that living comfortably up to this point costs 40k/yr.  When it came time to replace the carpet, I wouldn't be able to afford it, and when people saw my lifestyle, they would know that I didn't have extra money to fix my carpet.  And if I were blogging about my great lifestyle, I probably wouldn't mention my stained, outdated, lumpy carpet (that I'm very glad to have had replaced)...

There are a lot of shades of gray, that's all I'm trying to puzzle out.

[mak1277]

A more interesting point to be made about all of this accounting is, let's just say I did only budget 25k/yr although I know that living comfortably up to this point costs 40k/yr.  When it came time to replace the carpet, I wouldn't be able to afford it, and when people saw my lifestyle, they would know that I didn't have extra money to fix my carpet.  And if I were blogging about my great lifestyle, I probably wouldn't mention my stained, outdated, lumpy carpet (that I'm very glad to have had replaced)...

There are a lot of shades of gray, that's all I'm trying to puzzle out.

But retiring on $25K/year doesn't mean you are always spending or needing $25K/year. He may actually be living on far less than $25K/year to cover his day to day expenses and the rest gets stashed to cover those things like replacing a carpet or travel. I do this myself (and have for over a decade now) - live on an income of approx. $17K/year but only need a small amount of that money to cover all my basic living expenses and save the rest to use when/if needed. There are some months when I only need a few hundred bucks to cover my food and utilities and the rest gets stashed. And I do not live an extremely frugal life style of deprivation as I have all the normal things others have - house, car, good food, fun times, etc... Maybe MMM does the same.

Not to mention the idea that MMM mentions in his Jan. '14 accounting of 2013 expenditures that he doesn't really keep a budget at all -- just tracks spending. 

I don't think I would be able to claim financial independence if I had to keep a detailed budget without flexibility (assuming a modicum of mustachianism/frugality).  The whole point of being independent is not having to worry about replacing your carpet because you have the money. 

[StashDaddy]

EscapeVelocity, I see your point.  Sometimes (oftentimes?) spending a lot of money on a big home renovation will not return you 100% on your "investment."  Especially when you over-improve a house in relation to its neighborhood "comps."  In that case, the money spent shouldn't be counted as an "investment", but rather an "expenditure".

Did MMM spend more money buying and renovating his home vs. what it could currently appraise for?  I have no idea.  Only time will tell, b/c I'm sure he has no plans on appraising it or selling it anytime soon.

[rockstache]

You are all being a bit precious.

Unrelated but, what does this mean wherever you are from? I don't understand it.

[bacchi]

But that $60K may have come from several years of stashing any let-over money from the $25K annual amount he lives on.

But we know it doesn't in this case. His 2010-2013 budgets have no allowances for future costs.

Of course, if it's just tracking spending, then that's different, but it still affects the 4% SWR. If the $60k is broken up over 10 years, the $25k/yr becomes $31k/yr (and $36.5k for 2010). That's a $150,000 savings difference.

[EscapeVelocity2020]

I like when people question the validity of MMM or even my own FIRE status on a low income. Especially if they are trying to put some of those ideas into their own life. But, as you stated, not everyone can or wants to be in MMM's situation (or mine as I've had some things that have allowed me to ER on less than other people like free/low cost medical, and early pension, no kids, etc..). But that doesn't mean that they can't take little tidbits of info that would be  useful to their situation to achieve whatever they want to achieve.

+1
In case it wasn't obvious (and I did ramble on, and bring up unrelated stuff) I am really struggling with the Retirement Early part of FIRE.  Kinda sad and pathetic, I know, this should be the easy part, but that's what I meant when I went off about MMM being why I haven't ER'ed.  If a person who says they are content living off of 'X' but is actually living off of 'Y', maybe I will ER and find out I'd have preferred to have worked a little longer for 'Y' and not settled with 'X'. 

[StashDaddy]

If you want to do any luxurious home renovations, I recommend you do them BEFORE you ER :)

[matchewed]

I like when people question the validity of MMM or even my own FIRE status on a low income. Especially if they are trying to put some of those ideas into their own life. But, as you stated, not everyone can or wants to be in MMM's situation (or mine as I've had some things that have allowed me to ER on less than other people like free/low cost medical, and early pension, no kids, etc..). But that doesn't mean that they can't take little tidbits of info that would be  useful to their situation to achieve whatever they want to achieve.

+1
In case it wasn't obvious (and I did ramble on, and bring up unrelated stuff) I am really struggling with the Retirement Early part of FIRE.  Kinda sad and pathetic, I know, this should be the easy part, but that's what I meant when I went off about MMM being why I haven't ER'ed.  If a person who says they are content living off of 'X' but is actually living off of 'Y', maybe I will ER and find out I'd have preferred to have worked a little longer for 'Y' and not settled with 'X'.

It's not sad and pathetic. The portion of FIRE people refer to as Retirement will mean different things to different people. It's not easy to for many people who struggle with whether to stop working or not.

But something still doesn't jive. If the message being provided is "in spite of my travel spending, construction spending, and blog income I can be FIRE'd given my day to day expenses and the fact that I own my home." I wouldn't worry about MMM. Understand that message is that he's saying he's happy with X and lives off of X but gets to do all these other Y things with Y. FIRE has provided the opportunity to do so.

When and if you FIRE all you'll have done is bought yourself options. Financial independence just provides more options for the people who achieve it. I'm not sure what value there is for calling out hypocrisy in this scenario (frankly don't see it either). If this is just for you to explore your situation and determining if you want to live lifestyle X or lifestyle Y then do some introspection. I'm not sure "complainypantsing" is going to aid you in your journey to figure out your lifestyle.

[deborah]

If you want to do any luxurious home renovations, I recommend you do them BEFORE you ER :)

I actually go the other way, and deliberately put off renovations until after I retired (OK some were done earlier - but they were mainly to make the house livable in summer). Part of it is that I can give more sweat-equity now I am retired. Another reason is that I think renovations are better done slowly, after you know the place you are living in, and have a commitment to stay in it long enough to appreciate your work.  The later you leave renovations the more you have thought about the problems you are fixing or the luxury you actually want. I am doing them with left over money each year, so they get prioritised and are done gradually. Also, it means they actually cost less, as the money is invested until each is done.

Being precious - I thought this was a US term that had come to be used in Australia, and when I look it up, the top references are from the US - see http://scottberkun.com/2013/dont-be-precious-with-your-ideas/ for example - "It means you’ve lost perspective and can’t see things objectively anymore." - in this case everyone was just calling each other names rather than discussing their views.

[EscapeVelocity2020]

... Understand that message is that he's saying he's happy with X and lives off of X but gets to do all these other Y things with Y. FIRE has provided the opportunity to do so.

The pair of complainypants that I slipped on last night has to do with the fact he states he lives on 25k, but has a new shiny metal roof, eBike, radiant floor heating system, bike trailer, 'business travel'....  If you say you live luxuriously on 25k/yr and the success of your strategy depends on it, and your product is your strategy, then it's worth disclosing plainly what you really mean.  If someone came to me and said, wow you live really well on 25k/yr, which covers the essentials, but I am spending 40k so I can have new carpet and another 10k in discretionary spending, then I'd tell them I actually spend 40k/yr which allows me to have this nicer lifestyle that they see.

That's fine if it doesn't bother people, but it is a big deal in the sense of being FI.  If I retired and needed 100k in year one, then I could be screwed.  If I estimated my expenses at 25k/yr and 'one off events' kept my spending at 40k every year, I could be screwed.  On the other hand, if I budget for 100k/yr and only spend 40k, I also would be writing articles about how comfortable and easy FIRE is. 

So, to sum it up, the MMM household are multimillionaires (as they state), it is no wonder they/the blog can spend up to 100k/yr comfortably.  If they had no income and lived their lifestyle, and especially if they didn't know they were spending more than 25k/yr, then they'd go bankrupt or have to cut back dramatically.

[Hannah]

Legitimate criticism of the article following: Other parts of the world are not unnecessary. It is unnecessary for MMM to go to them in Jet Aircraft or otherwise.

[matchewed]

... Understand that message is that he's saying he's happy with X and lives off of X but gets to do all these other Y things with Y. FIRE has provided the opportunity to do so.

The pair of complainypants that I slipped on last night has with the fact he states he lives on 25k, but has a new shiny metal roof, eBike, radiant floor heating system, bike trailer, 'business travel'....  If you say you live luxuriously on 25k/yr and the success of your strategy depends on it, and your product is your strategy, then it's worth disclosing plainly what you really mean.  If someone came to me and said, wow you live really well on 25k/yr, which covers the essentials, but I am spending 40k so I can have new carpet and another 10k in discretionary spending, then I'd tell them I actually spend 40k/yr which allows me to have this nicer lifestyle that they see.

That's fine if it doesn't bother people, but it is a big deal in the sense of being FI.  If I retired and needed 100k in year one, then I could be screwed.  If I estimated my expenses at 25k/yr and 'one off events' kept my spending at 40k every year, I could be screwed.  On the other hand, if I budget for 100k/yr and only spend 40k, I also would be writing articles about how comfortable and easy FIRE is.

But you're putting the cart before the horse. Choosing to be FIRE bought the opportunity to do those other things. Living the X lifestyle allowed him to dabble in Y which he has not been hiding. You're seeing these three years of posting and are drawing an inaccurate conclusion that all his life was filled with these opportunities that he is blogging about. Which again misses the point of what he is trying to say.

I think you don't have enough information to draw conclusions. That you're taking some, offense maybe (I'm honestly not sure what term to use given your lack of a cohesive statement) to this seems strange. It actually lacks anything remotely related to criticism as it doesn't discuss the article. Instead you're taking offense to the person writing it.

Like I said you may want to wait until the spending exposed article comes out. He tends to be very honest in those. This article and this one expose his spending. Feel free to work off of those and determine where the so called hypocrisy is. Does running his business count as living? Does selling your house and using the profits to fix up another house count as living? What if he was able to net more money out of it? Should he say he has negative spending to satisfy you? Do you intend to try to replicate his living? Or are you going to use yourself as your own benchmark and determine what number works for you? Trying to be literalistic about his articles and his lifestyle is missing the forest from the trees.

[Hannah]

Regarding home renovations as a part of RE: MMM definitely made money on his house remodel (ie sale of former home + purchase of new home +remodel costs), but he could have made more if he lived in the new house while renovating it (as he would not have required interest on the loan, or otherwise tie up interest bearing assets).

Since MMM is already rich, he can make a choice to earn less money on his home remodel than if he/his family lived in the house while he was flipping it.

Since I am not already rich, I have to live in my house while renovating it.

[dios.del.sol]

EV2020: Not sure I disagree or agree, but you raise an important point and I'm glad you brought it up. It's made me think. (Just thought I'd add a voice to counter the haters out there ;) )

[matchewed]

  . Living the X lifestyle allowed him to dabble in Y

I think I can understand what EV is saying and ther reasons behind it. I could say that I live in $500/month ($6,000/year) and that would be the complete truth since that is all I need to cover all my basic expenses and I can happily and easily live on that amount and often do and have thru out my years in ER. But the actual reality is that I often spend more than that amount (and have a higher income so can spend higher than that amount) on other things like home repairs, travel, etc... So it would be somewhat misleading if I said "I can live the way I do on only $6,000/year" when I am actually giving examples of things I am spending more on than $6000/year. That is why I would say "I can cover all my basic expenses on $6000/year but I actually live on more some years because I took a few trips or bought a car or put in a new roof". Doesn't matter where the source of my money comes from, it's the fact that I would be claiming to only live on $6K/year and showing the things I bought or did on that amount that a reader would perceive was from my $6K spending, but I was really living on more most of the time. 

By the same token if I sold my house, bought a less expensive place with cash from the profit and then used some more of the profit to renovate the new digs I wouldn't consider that as anything that changed my income or spending levels - just basically rolling over a profit into something else. I think MMM has done that kind of thing a lot.

Sure but wouldn't you just boil that down to speaking of things in generalities vs. specifics. If I say my family can live on 25k a year does that mean my family lives solely on 25k a year every year for ever and ever without any concerns for specifics? I think most people would say no. It seems like I'm hearing feedback demanding yes or hypocrisy/loss of legitimacy.

[Frugalteacher]

I think that EV does bring up some interesting points, and I think those are things that you need to factor into your own retirement plan. In many of his older posts MMM mentions that he built in a safety when he originally retired so that if extra expenses did pop up over the course of a year he could cover them. Therefore, if you don't use this safety margin and instead continue investing it, each year the amount you can spend goes up. I also think there is a fundamental disagreement in your method of accounting and MMM's. For instance, you feel that he should include all of the money he spent on his house as expenses; however, I would argue that because he sold the house he was living in in order to downsize I don't feel that these are expenses. He didn't actually spend money he just reallocated those funds from one space to another.

Maybe I'm mistaken, but I feel that your other argument is that he should include his blog when discussing his expenses. I can see the logic behind this, and I will admit that he does get to do some pretty cool things because of the blog. However, I agree with a few of the other posters on here that this is no different then anyone receiving perks from a job. MMM is retired in the sense that he was able to quit his traditional engineering job and start what has become a small business in the form of his blog. If MMM was running a small bike store instead of this blog would you expect him to include the money he spent on merchandise or advertising in his personal expenditures or would that be a separate type of accounting? I personally would argue that those should be kept separate, similar to how MMM keeps his blog expenses separate from his personal spending.Either way, I think the overall sentiment holds in that it's not about depriving yourself, but learning to be happy with less consumer goods.

[sirdoug007]

... Understand that message is that he's saying he's happy with X and lives off of X but gets to do all these other Y things with Y. FIRE has provided the opportunity to do so.

The pair of complainypants that I slipped on last night has to do with the fact he states he lives on 25k, but has a new shiny metal roof, eBike, radiant floor heating system, bike trailer, 'business travel'....  If you say you live luxuriously on 25k/yr and the success of your strategy depends on it, and your product is your strategy, then it's worth disclosing plainly what you really mean.  If someone came to me and said, wow you live really well on 25k/yr, which covers the essentials, but I am spending 40k so I can have new carpet and another 10k in discretionary spending, then I'd tell them I actually spend 40k/yr which allows me to have this nicer lifestyle that they see.

That's fine if it doesn't bother people, but it is a big deal in the sense of being FI.  If I retired and needed 100k in year one, then I could be screwed.  If I estimated my expenses at 25k/yr and 'one off events' kept my spending at 40k every year, I could be screwed.  On the other hand, if I budget for 100k/yr and only spend 40k, I also would be writing articles about how comfortable and easy FIRE is. 

So, to sum it up, the MMM household are multimillionaires (as they state), it is no wonder they/the blog can spend up to 100k/yr comfortably.  If they had no income and lived their lifestyle, and especially if they didn't know they were spending more than 25k/yr, then they'd go bankrupt or have to cut back dramatically.

Some of the stuff he talks about in the blog are obviously expenses.  The eBike post is clear that he spent $1600 electrifying one of his bikes.  He also paid $750 for the heavy duty bike trailer.  Therefore, I would expect to see the $1600 for the eBike and a $750 for a bike trailer ($2350 total) on his 2014 expenses. 

His blog related meet-up travel seems natural to be paid for by the blog or by the group that he is travelling to visit.   I would not consider these part of his annual expenses since they would not occur without the blog and are being fully paid for from either that money or from the money people contribute to the meet-ups in Equador etc.  His family vacations yes, FI blogger conventions no.

His house move is a whole different category since he is using the proceeds of the sale of his previously paid for house to buy and renovate a smaller house.  He says he ended up with $400k net from the sale.  Therefore the new house (and the fancy metal roof and radiant heating system) did not require any earnings to fund it. 

MMM is quite clear that $25k is with no rent/mortgage costs and his spending would be closer to $40k with these costs that have been eliminated through savings.

I'm sure a post in January with 2014 numbers will make his expenses even more clear.  In every year he includes home renovation costs analogous to your carpet expense.  What more detail do you want?  I really don't understand where you get this idea that they spend $100k/year.  Maybe based on the new house but that was a move that he banked $100k into Betterment!  Hardly a ER killing expense.

[mak1277]

So I posted a comment on the blog post and it got deleted by the moderator/approver. Anyone know why that would happen?  I hope not simply because I posted something that wasn't in total agreement.

[matchewed]

So I posted a comment on the blog post and it got deleted by the moderator/approver. Anyone know why that would happen?  I hope not simply because I posted something that wasn't in total agreement.

MMM has stated that the blog is his land, he will do as he sees fit, namely to promote his side. Not that he will delete anything dissenting, but re-look at what you wrote and truly consider the subject. Did what you wrote have something meaningful to add or a valid point? Or was it complainypants?

Either way if you've got beef let it out in the forum if you wish, he's nice enough to provide the space for your dissent their, valid or complainypants.

[mak1277]

I was responding to another commenter. I wasn't complaining at all...just discussing my experiences with frugality...that frugality itself had not increased my happiness and my spending was swinging back (slightly) because lower spending (taking my lunch vs. eating out for example) doesn't meaningfully change my FIRE date.

[matchewed]

I was responding to another commenter. I wasn't complaining at all...just discussing my experiences with frugality...that frugality itself had not increased my happiness and my spending was swinging back (slightly) because lower spending (taking my lunch vs. eating out for example) doesn't meaningfully change my FIRE date.

So not adding anything to the actual post, I can see how that would be not approved. Not saying I'd so it but it isn't my blog. :)

[MoneyCat]

My post on the blog wasn't approved either.  Basically what I said is that Mustachianism has gotten me back in touch with who I was as a kid, doing things like riding a bicycle everywhere and spending every afternoon at the library.  While I came from poverty, the experience of bicycle riding and library visits didn't make me feel deprived.  They made me feel happy and fulfilled.  Now that I have decided to reject consumerism and actually enjoy the real, simple pleasures in life, I feel a lot happier.  I think that goes along with what MMM was saying in the blog post.