The Money Mustache Community

General Discussion => Welcome and General Discussion => Topic started by: obstinate on May 20, 2017, 08:24:20 AM

Title: MMM 2016 Budget
Post by: obstinate on May 20, 2017, 08:24:20 AM
MMM just posted (http://www.mrmoneymustache.com/2017/05/19/2016-spending/) the family's 2016 budget. When this happened last year, a big thread started where a surprising number of people predicted an immediate end to his frugalness and basically implied that the whole deal was a fraud. Since his spending hasn't really increased very much, doom is still very much impending, and carping is still deeply needed. So I figured I'd get the ball rolling. Let's all come up with excuses on how MMM isn't legit frugal this year!

The thread already has a good bit about how he's not including his imputed rent, so I won't go that route. Instead, I'll start the complaining off by observing that if he were working a full time job, it'd be completely impossible for him to find the time to save (e.g. by going to Sam's Club)! Et tu, MMM????
Title: Re: MMM 2016 Budget
Post by: surfhb on May 20, 2017, 08:53:21 AM
I guess I'll assume you're being sarcastic?   

My first reaction is Who Cares?   He created a well written blog and are changing the ways people think about money and living.   All this while backing up his shit.

I feel pretty good about my own spending habits.   I spend about the same living in Los Angeles, with a FT job. 


Sent from my iPhone using Tapatalk
Title: Re: MMM 2016 Budget
Post by: Moonwaves on May 20, 2017, 12:51:38 PM
I only read that thread from last year because he mentioned it in his post. I thought that his adding in a bit more about business expenses was a way of dealing with some of the comments. In particular when he mentioned that both he and Mrs. MMM end up spending money on business stuff or travelling for business and that that probably satisfies any desire for spending/travelling, whereas if they weren't doing so for business, they might end up spending/travelling a bit more for personal fun. As always, I feel like he is as genuine and up-front as he seems to be.

Liked the shout-out for Quiet as well. That book made a big difference to me when I read it.
Title: Re: MMM 2016 Budget
Post by: brooklynmoney on May 20, 2017, 01:40:58 PM
I just feel shame since I spend 60k for 1 person. He's still badass in my book.
Title: Re: MMM 2016 Budget
Post by: FI4good on May 20, 2017, 02:50:04 PM
A great successful blog he could drive a brand new tesla and i'd not think bad of him.

I'd worry on a certain level if he got too far away from the nice folksy canadian guy who started this thing , burning round in an F40 and posting photos of a house like one in "the queen of versailles"  or spending money like water.

He seems ok tho'
Title: Re: MMM 2016 Budget
Post by: Aggie1999 on May 20, 2017, 06:57:29 PM
Couple critique comments:

- I don't see where he is including Colorado state income tax. IMO he needs to include that since property tax rates are very much tied whether a state has state income tax. He could certainly move to a state without state income tax so that's an optional expense in my book. Some how the state income tax should be expressed in an amount a normal early retiree would pay from investment income in Colorado.

- No home owners insurance which to the best of my knowledge means no umbrella type insurance policy. IMO, not a good thing given his wealth and future wealth.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 20, 2017, 08:00:06 PM
He bought (financed) a Leaf.  Not including those payments is a pretty big omission in my opinion.  Claiming it was bought for the blog and advocacy doesn't excuse that IMO.
Title: Re: MMM 2016 Budget
Post by: AdrianC on May 20, 2017, 08:42:11 PM
I appreciate MMM sharing his families' spending. It is interesting to compare.

Here's a few large expense items for us that are missing from MMMs:
- Kids sporting activities - gymnastics, tae kwon do, soccer, swimming.
- Kids music lessons, instrument rental.
- Transport of kids to activities.
- Visiting elderly relatives and helping with doctors appointments, errands, etc.
- Subsequently much higher vehicle costs.
- College savings.
- Vacations (he include flights only - no other expenses?)

Not intended as criticism. We have a different lifestyle. More middle class "normal", I guess.

Title: Re: MMM 2016 Budget
Post by: Hotstreak on May 20, 2017, 09:09:01 PM
He bought (financed) a Leaf.  Not including those payments is a pretty big omission in my opinion.  Claiming it was bought for the blog and advocacy doesn't excuse that IMO.


He states the full purchase price in the footnotes, so I don't think he really omitted it, and considering the low balance and rate it doesn't seem particularly material.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 20, 2017, 11:05:37 PM
Not that it really matters, but MMM's budget is very luxurious if you dig into the real cashflow (not walling off the business expenses like none of it actually happens).  He should definitely include his imputed home income, because these last 9 years have been significantly more optimal to carry a mortgage and keep money in index funds - so that's 46k core spending last year.  Plus 30k for the home office (although he will get some of it back if he eventually sells, but he's enjoying it now and it depreciates) and 14k for his car experiment.  Add in some 4k for travel, although it's probably higher if he included all of the lodging and incidentals.  Then there should be something for getting his wife's business off the ground (he never accounted for this expense previously, but it was probably negative cash flow the first year).  He also seems to enjoy helping renovate homes, which sucks up capital (tools, material, labor) unless he is cashing out, but he doesn't talk about the finances involved in this 'hobby'. 

So, bottom line, I would call his spending to be more like 100k last year, just on a cash flow basis.  Of course, he makes plenty on the blog to cover this and has plenty in investments, along with all his assets.  He can easily cut back to 25k, but why bother if you have a 400k/yr income and spending the business income helps make more...  He's a smart businessman, but not necessarily a traditional retiree that happened to do it 30+ years earlier.   
Title: Re: MMM 2016 Budget
Post by: Laserjet3051 on May 21, 2017, 10:35:19 AM
He bought (financed) a Leaf.  Not including those payments is a pretty big omission in my opinion.  Claiming it was bought for the blog and advocacy doesn't excuse that IMO.


He states the full purchase price in the footnotes, so I don't think he really omitted it, and considering the low balance and rate it doesn't seem particularly material.

I too wondered where the Leaf cost showed up in his itemized budget. Thank you for letting me know where to find the buried value. Is there a reason why this cost did not appear in his line item budget and why it doesnt contribute to the total computed annual 2016 expense? I bought a car this year to use for my business, should I also be burying this cost and obscuring it from my family by a similar means?
Title: Re: MMM 2016 Budget
Post by: Gondolin on May 21, 2017, 10:57:16 AM
At this point I am a part of this community to follow the journey of other FIRE people who - though probably inspired by MMM - are doing it without the backstop of $300k /year income.

Doesn't mean the shockingly simple math is wrong, just that MMM's own financial picture is so warped by the blog income that it no longer serves as a relatable guide.
Title: Re: MMM 2016 Budget
Post by: soupcxan on May 21, 2017, 11:35:59 AM
It's a shame he diminishes his credibility by choosing to omit so many expenses through his creative accounting. Makes comparisons to normal people meaningless.
Title: Re: MMM 2016 Budget
Post by: former player on May 21, 2017, 11:43:14 AM
One thing I think his budget does prove is the benefit of having capital resources.  The paid-for house, car, home office, bikes, tools and so on, and the ability to cash-flow bulk groceries, are what allow the revenue expenses to be low.  The converse helps to explain how expensive it is to be poor.

So I think his budget numbers are fine, but just need to be put in context.
Title: Re: MMM 2016 Budget
Post by: TomTX on May 21, 2017, 11:49:16 AM
He bought (financed) a Leaf.  Not including those payments is a pretty big omission in my opinion.  Claiming it was bought for the blog and advocacy doesn't excuse that IMO.


He states the full purchase price in the footnotes, so I don't think he really omitted it, and considering the low balance and rate it doesn't seem particularly material.

I too wondered where the Leaf cost showed up in his itemized budget. Thank you for letting me know where to find the buried value. Is there a reason why this cost did not appear in his line item budget and why it doesnt contribute to the total computed annual 2016 expense? I bought a car this year to use for my business, should I also be burying this cost and obscuring it from my family by a similar means?

It looks like the net cost of the Leaf was $5k ($14,000 spent, offset by $9,000 received for the Scion)
Title: Re: MMM 2016 Budget
Post by: zarfus on May 21, 2017, 12:28:57 PM
I dunno, people would have complained if he didn't post it, and complained that he did. If anything, his current lifestyle should just be an example of what can come when you have financial Independence. Look how much money he made just doing what he believes.

In my opinion, he just threw that post out there to please the nay-sayers, I'm sure he wishes he could be a little less transparent this stage of the game. He did it and shared his journey with us. I'm guessing you are all here because you were at least a little inspired, just be grateful.
Title: Re: MMM 2016 Budget
Post by: FinallyAwake on May 21, 2017, 12:39:17 PM
At this point I am a part of this community to follow the journey of other FIRE people who - though probably inspired by MMM - are doing it without the backstop of $300k /year income.

Doesn't mean the shockingly simple math is wrong, just that MMM's own financial picture is so warped by the blog income that it no longer serves as a relatable guide.

+1
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 21, 2017, 12:58:42 PM
He bought (financed) a Leaf.  Not including those payments is a pretty big omission in my opinion.  Claiming it was bought for the blog and advocacy doesn't excuse that IMO.


He states the full purchase price in the footnotes, so I don't think he really omitted it, and considering the low balance and rate it doesn't seem particularly material.

I too wondered where the Leaf cost showed up in his itemized budget. Thank you for letting me know where to find the buried value. Is there a reason why this cost did not appear in his line item budget and why it doesnt contribute to the total computed annual 2016 expense? I bought a car this year to use for my business, should I also be burying this cost and obscuring it from my family by a similar means?

It looks like the net cost of the Leaf was $5k ($14,000 spent, offset by $9,000 received for the Scion)

"This was $9000 more than I got for selling the Scion..." since total cost was $14k, Scion was sold for $5k, $9k cost to MMM.
Title: Re: MMM 2016 Budget
Post by: Cassie on May 21, 2017, 04:57:46 PM
Overall, he has inspired people to reduce their expenses which is good. However, he did spend 98k last year.
Title: Re: MMM 2016 Budget
Post by: undercover on May 21, 2017, 05:03:52 PM
I'm not sure where MMM claimed to be the king of frugality that warrants all the speculation and naysaying. He freely admits to living a luxurious life of excess. Nitpicking by trying to include opportunity costs into his spending is just ridiculous.

Sure if he started splurging on restaurants and expensive travel then his credibility would go down a bit. That would make it obvious that he doesn't practice what he preaches, which is a big part of the blog since he is the face of it. But I don't get the impression at all that he's not at least somewhat authentic. He's obviously business-minded and I think that he just tries to incorporate a way of making money into everything he does for the added security it affords his days of not working. His blog is based on ideals, facts, truisms, and basically no more than a framework on how to live a purposeful life.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 21, 2017, 05:06:39 PM
To me, MMM is really about reaching FIRE.  After you've built wealth and are FI?  Well, do whatever you want, you've made it.  Where is it written that one must never spend money, especially after FI?
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 21, 2017, 06:31:13 PM
Overall, he has inspired people to reduce their expenses which is good. However, he did spend 98k last year.

How did you come up with that figure?
Title: Re: MMM 2016 Budget
Post by: TryingtoFIREinLAnow on May 21, 2017, 06:52:53 PM
The thread already has a good bit about how he's not including his imputed rent, so I won't go that route. Instead, I'll start the complaining off by observing that if he were working a full time job, it'd be completely impossible for him to find the time to save (e.g. by going to Sam's Club)! Et tu, MMM????

I thought the OP here was just going for some good ol' fashioned face punching sarcasm? 

I'll take it back there by noting my first response to the budget breakdown (pun intended)- $3,000 for doctor's bills for a child's broken arm???!!!  A little frugality, internet research, elbow grease and DIY splintwork and I'm sure the OLD MMM could have saved that money (and maybe it might have inspired a new article: Frugal Home Medical Care!)  He's sure gotten lazy what with all this blog income. 

Probably DROVE the poor little chap to the hospital in that fancypants LEAF instead of biking......
Title: Re: MMM 2016 Budget
Post by: nottoolatetostart on May 22, 2017, 03:05:27 AM
I dunno, people would have complained if he didn't post it, and complained that he did. If anything, his current lifestyle should just be an example of what can come when you have financial Independence. Look how much money he made just doing what he believes.

In my opinion, he just threw that post out there to please the nay-sayers, I'm sure he wishes he could be a little less transparent this stage of the game. He did it and shared his journey with us. I'm guessing you are all here because you were at least a little inspired, just be grateful.

+1

I also don't think he cares to be bothered with tracking this. Surprisingly, he did include things all the naysayers complain about (the leaf, his shed, travel), which I found to be funny.

I am grateful he just keeps site going...even last week his article on plumbing and Sharkbites saved me some solid Benjamins vs calling a plumber. It's all legit, in my book.
Title: Re: MMM 2016 Budget
Post by: Moustachienne on May 22, 2017, 09:11:12 AM
Not saying MMM is Jesus or anything but these budget critiques always remind me of the Grand Inquisitor in The Brothers K.  Something about the 'true' religion turning on its founder...
https://en.m.wikipedia.org/wiki/The_Grand_Inquisitor

Or maybe more like the Terreur of the French Revolution guillotining Robespierre and others for insufficient purity/ loyalty.
https://en.m.wikipedia.org/wiki/Reign_of_Terror

If we didn't put someone on a pedestal, we wouldn't have to tear them down....
Title: Re: MMM 2016 Budget
Post by: nmoerbeek on May 22, 2017, 10:24:02 AM
Not saying MMM is Jesus or anything but these budget critiques always remind me of the Grand Inquisitor in The Brothers K.  Something about the 'true' religion turning on its founder...
https://en.m.wikipedia.org/wiki/The_Grand_Inquisitor

Or maybe more like the Terreur of the French Revolution guillotining Robespierre and others for insufficient purity/ loyalty.
https://en.m.wikipedia.org/wiki/Reign_of_Terror

If we didn't put someone on a pedestal, we wouldn't have to tear them down....

Robespierre and crew where evil and got a just punishment for their deeds.   
Title: Re: MMM 2016 Budget
Post by: intellectsucks on May 22, 2017, 10:29:35 AM
I definitely have a problem with the 2016 spending article, especially the effect it will have on newcomers to the site.  MMM states or implies often that you can live frugally and still have the “good life” but seems to have trouble relating to the huge impact that some of his “business expenses” make to perceived and actual quality of life.  There is a big, quantifiable difference between having a giant, badass Man-cave/office, and staring at your backyard wishing you had one but not being able to drop 20-30 grand on it.  There is a big, quantifiable difference between vacationing at the local park or free museums, and flying out to LA and Ecuador for a week or two.  Same thing with having a brand new electric car vs having an old Ford POS that may or may not break down the next time you start it.
If I’m new to MMM and I know he dropped $30k on a brand new out-building, then look and see his total spending is listed as $30k FOR EVERYTHING FOR THE WHOLE YEAR, it makes me think the whole thing is bogus.  I don’t care how much his homes value increases because of it, he SPENT that money on that shed.  Same thing for the travel expenses and the Nissan.  “Oh we live such a simple lifestyle….except when we’re flying around the country and world a few times a year and buying brand new cars”.  I get it; MMM is in the position now to do these things because he put in all the hard work before.  He spent years and decades living as frugally as possible to get to where he is.  It’s just that this spending article seems like he’s trying to hide those expenses.  I don’t know if the footnotes at the bottom of the article are enough, or if some of the articles detail those expenses clearly enough. 
Take the etsy shop; the footnotes details 20 grand in materials and shipping.  How much of this was upfront?  How long did it take to recoup those costs?  Are those costs likely to be steady year after year or will future expenses likely be much lower?  After I read the etsy article, I asked my wife (who isn’t working) if she’d be interested in doing something similar as a fun way to earn extra income because the article made it seem like a fairly easy, low cost way to bootstrap yourself into some business income.  If it’s going to cost us 20 grand to get started, then forget it.
I’ve been pretty disappointed with a few of MMM’s articles in the last year or so.  It really started with “Lessons Learned From Having My Bike Stolen”.  The lesson I learned is that it’s really awesome to be a millionaire, internationally famous blogger who lives in an awesome suburb of a major U.S. city; because if I left my bike outside overnight in my neighborhood, odds are high that it wouldn’t be there in the morning.  “1400 Miles of Non-Driving in a Tesla”, “Notes on Doing Something Ridiculously Difficult” and, to a lesser extent, “A DIY Case Study: Building a Fancypants Detached Studio” are all examples of articles that hit me in the same way.
I really wish that MMM would more strongly link the frugality of years past with the ability to do the awesome things that he is doing now, instead of playing games with his accounting.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 22, 2017, 10:32:04 AM
Not saying MMM is Jesus or anything but these budget critiques always remind me of the Grand Inquisitor in The Brothers K.  Something about the 'true' religion turning on its founder...
https://en.m.wikipedia.org/wiki/The_Grand_Inquisitor

Or maybe more like the Terreur of the French Revolution guillotining Robespierre and others for insufficient purity/ loyalty.
https://en.m.wikipedia.org/wiki/Reign_of_Terror

If we didn't put someone on a pedestal, we wouldn't have to tear them down....

It rubs me the wrong way when someone screams A LOT "I live a hyper-luxurious life for $25k/yr!!!" and then admits in the footnotes that a lot of what makes the life hyper-luxurious (travel, new car, fancy home improvements) is not counted in that $25k/yr.  MMM is obviously free to spend whatever he wants, and I don't begrudge him any of it, but that doesn't mean I won't throw the BS flag when he uses accounting tricks to disguise a lot of his spending.  It's a shame, because I think a lot of his luxurious spending is done on the cheap in intelligent ways (DIY, looking for arbitrage on purchases, etc) and is a model for how to live well inexpensively but it cheapens the message when he just fails to account for it because "it's a business expense" or whatever. 

I think it would be more instructive to do a side by side on what he spent (all of it) and then a list of what others might pay to live the same way less intelligently (i.e., "MMM workshop, DIY, $30k....Normal person workshop, paid contractor, $80k").  THAT would be a comparison worth reading.
Title: Re: MMM 2016 Budget
Post by: intellectsucks on May 22, 2017, 10:56:31 AM
Thanks for saying what I wanted to say much more clearly and concisely!!!
Not saying MMM is Jesus or anything but these budget critiques always remind me of the Grand Inquisitor in The Brothers K.  Something about the 'true' religion turning on its founder...
https://en.m.wikipedia.org/wiki/The_Grand_Inquisitor

Or maybe more like the Terreur of the French Revolution guillotining Robespierre and others for insufficient purity/ loyalty.
https://en.m.wikipedia.org/wiki/Reign_of_Terror

If we didn't put someone on a pedestal, we wouldn't have to tear them down....

It rubs me the wrong way when someone screams A LOT "I live a hyper-luxurious life for $25k/yr!!!" and then admits in the footnotes that a lot of what makes the life hyper-luxurious (travel, new car, fancy home improvements) is not counted in that $25k/yr.  MMM is obviously free to spend whatever he wants, and I don't begrudge him any of it, but that doesn't mean I won't throw the BS flag when he uses accounting tricks to disguise a lot of his spending.  It's a shame, because I think a lot of his luxurious spending is done on the cheap in intelligent ways (DIY, looking for arbitrage on purchases, etc) and is a model for how to live well inexpensively but it cheapens the message when he just fails to account for it because "it's a business expense" or whatever. 

I think it would be more instructive to do a side by side on what he spent (all of it) and then a list of what others might pay to live the same way less intelligently (i.e., "MMM workshop, DIY, $30k....Normal person workshop, paid contractor, $80k").  THAT would be a comparison worth reading.
Title: Re: MMM 2016 Budget
Post by: Moustachienne on May 22, 2017, 10:56:51 AM
MMM lived frugally and worked hard so he could retire and live frugally and work hard AT WORK OF HIS CHOOSING.  That's what I take away from MMM. Living smart to earn the freedom of choice. And if you choose to work, you just might make some money. 

The fact that he's now making so much money is an interesting twist.  Kind of like the challenge the 19 century Quakers faced.  (Cadbury, Rowntree, Lloyds, Fry). The simple life plus hard work ended up making them rich.  Some held to ideals; others not so much.

I think MMM is doing well on this front but I don't have any absolute ideals I'm holding him to. It's his life and I have mine.

Would his budget confuse a newbie?  MMM spends less than he earns and lives a good life.  Everyone has to set those levels for themselves but the inspiration is the same.

Can we all have MMM's life?  Nope, but we can have our own version.

Title: Re: MMM 2016 Budget
Post by: Laura33 on May 22, 2017, 11:38:46 AM
Eh, I thought it was a good article.  He pretty clearly labeled the breakdown as the "basic" expenses associated with maintaining his current lifestyle.  He's just in a sweet spot where his retirement hobby is a business that makes a ton of money, thus allowing him to buy things and expense them in the interest of research.  But all that stuff is optional and could go away if the business did -- and he even (fairly) acknowledges that this might displace some of the desire for travel/stuff he might otherwise have.  IDK, I really don't know many people at his level of income who still maintain his type of lifestyle.

It is an interesting corollary, but my mom just retired from teaching after almost 40 years.  Except she still has her second job, a/k/a the consulting company that she co-founded probably 10 years ago and that makes her more than teaching ever did.  And, like MMM, this is her hobby -- she loves what she does and will do it until she dies.  She cracks me up, because she was telling me that her expenses last year were $30K -- most of which is taxes/utilities on three properties.  It is absolutely, completely true that she has a travel bug, and that her business satisfies a lot of that need (she travels almost every week).  So in the absolute sense, she actually spent a lot more than that on flights, hotels, and restaurant meals.  On the other hand, those expenses are a necessary investment to earn a low-but-multiple-six-figures net profit, and if she shut down her business tomorrow, all those costs would go away -- sure, without the job, she'd probably travel more frequently for personal vacations than she does now, because the business travel scratches the itch, but there's just flat-out no way she'd travel or eat out *that* much.  And when she's home, she's puttering around the house, shopping at the Asian market, working in the garden, and basically still being the fundamentally frugal person she has been my whole life.  So I mean if she weren't working, she might spend $40K vs. $30K, but I can't see her even getting up to $50K.

I get the same impression from MMM:  he seems like the same guy he has always been, just with more cash to play with.  He has fun letting the business play with it some, but he knows better to wrap that into his basic lifestyle expectations.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 22, 2017, 12:00:55 PM
Not that it really matters, but MMM's budget is very luxurious if you dig into the real cashflow (not walling off the business expenses like none of it actually happens).  He should definitely include his imputed home income, because these last 9 years have been significantly more optimal to carry a mortgage and keep money in index funds - so that's 46k core spending last year.  Plus 30k for the home office (although he will get some of it back if he eventually sells, but he's enjoying it now and it depreciates) and 14k for his car experiment.  Add in some 4k for travel, although it's probably higher if he included all of the lodging and incidentals.  Then there should be something for getting his wife's business off the ground (he never accounted for this expense previously, but it was probably negative cash flow the first year).  He also seems to enjoy helping renovate homes, which sucks up capital (tools, material, labor) unless he is cashing out, but he doesn't talk about the finances involved in this 'hobby'. 

So, bottom line, I would call his spending to be more like 100k last year, just on a cash flow basis.  Of course, he makes plenty on the blog to cover this and has plenty in investments, along with all his assets.  He can easily cut back to 25k, but why bother if you have a 400k/yr income and spending the business income helps make more...  He's a smart businessman, but not necessarily a traditional retiree that happened to do it 30+ years earlier.   

Yeah, he spent $100 on gas for a snowboard trip, and apparently barely drove the Leaf (electrical costs down)? So except one trip the family never went outside biking distance of their house? Ehh, I'm sure they had a great time being hermits, and their village looks lovely.. But personally I would not want that, my kids would miss on alot of experiences, and the grandparents would be pretty damn pissed if we never bothered to visit! Just to save a tank of gas!

I get that's his thing; truly drastic steps to save drastic amounts of money. But personally I don't bother following now because that's not the type of life my family would want. If anything I've learned that spending time with my kids now is more important than saving a few bucks so I'm actually going back on doing everything myself! (queue; "burn the heretic!"). I may only get to max the 401ks, and be 50 by the time we retire, but I think that balance works better for us.
Title: Re: MMM 2016 Budget
Post by: former player on May 22, 2017, 12:16:52 PM
Not that it really matters, but MMM's budget is very luxurious if you dig into the real cashflow (not walling off the business expenses like none of it actually happens).  He should definitely include his imputed home income, because these last 9 years have been significantly more optimal to carry a mortgage and keep money in index funds - so that's 46k core spending last year.  Plus 30k for the home office (although he will get some of it back if he eventually sells, but he's enjoying it now and it depreciates) and 14k for his car experiment.  Add in some 4k for travel, although it's probably higher if he included all of the lodging and incidentals.  Then there should be something for getting his wife's business off the ground (he never accounted for this expense previously, but it was probably negative cash flow the first year).  He also seems to enjoy helping renovate homes, which sucks up capital (tools, material, labor) unless he is cashing out, but he doesn't talk about the finances involved in this 'hobby'. 

So, bottom line, I would call his spending to be more like 100k last year, just on a cash flow basis.  Of course, he makes plenty on the blog to cover this and has plenty in investments, along with all his assets.  He can easily cut back to 25k, but why bother if you have a 400k/yr income and spending the business income helps make more...  He's a smart businessman, but not necessarily a traditional retiree that happened to do it 30+ years earlier.   

Yeah, he spent $100 on gas for a snowboard trip, and apparently barely drove the Leaf (electrical costs down)? So except one trip the family never went outside biking distance of their house? Ehh, I'm sure they had a great time being hermits, and their village looks lovely.. But personally I would not want that, my kids would miss on alot of experiences, and the grandparents would be pretty damn pissed if we never bothered to visit! Just to save a tank of gas!

I get that's his thing; truly drastic steps to save drastic amounts of money. But personally I don't bother following now because that's not the type of life my family would want. If anything I've learned that spending time with my kids now is more important than saving a few bucks so I'm actually going back on doing everything myself! (queue; "burn the heretic!"). I may only get to max the 401ks, and be 50 by the time we retire, but I think that balance works better for us.
Er, he did include the flights for trips to Florida and Canada (twice - it's where his family is) in his costs, as well as the snowboarding trip.    So even without the business travel that's 4 separate trips/holidays in the year.  Hardly a hermit, and the grandparents visited twice.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 22, 2017, 12:22:07 PM
Not that it really matters, but MMM's budget is very luxurious if you dig into the real cashflow (not walling off the business expenses like none of it actually happens).  He should definitely include his imputed home income, because these last 9 years have been significantly more optimal to carry a mortgage and keep money in index funds - so that's 46k core spending last year.  Plus 30k for the home office (although he will get some of it back if he eventually sells, but he's enjoying it now and it depreciates) and 14k for his car experiment.  Add in some 4k for travel, although it's probably higher if he included all of the lodging and incidentals.  Then there should be something for getting his wife's business off the ground (he never accounted for this expense previously, but it was probably negative cash flow the first year).  He also seems to enjoy helping renovate homes, which sucks up capital (tools, material, labor) unless he is cashing out, but he doesn't talk about the finances involved in this 'hobby'. 

So, bottom line, I would call his spending to be more like 100k last year, just on a cash flow basis.  Of course, he makes plenty on the blog to cover this and has plenty in investments, along with all his assets.  He can easily cut back to 25k, but why bother if you have a 400k/yr income and spending the business income helps make more...  He's a smart businessman, but not necessarily a traditional retiree that happened to do it 30+ years earlier.   

Yeah, he spent $100 on gas for a snowboard trip, and apparently barely drove the Leaf (electrical costs down)? So except one trip the family never went outside biking distance of their house? Ehh, I'm sure they had a great time being hermits, and their village looks lovely.. But personally I would not want that, my kids would miss on alot of experiences, and the grandparents would be pretty damn pissed if we never bothered to visit! Just to save a tank of gas!

I get that's his thing; truly drastic steps to save drastic amounts of money. But personally I don't bother following now because that's not the type of life my family would want. If anything I've learned that spending time with my kids now is more important than saving a few bucks so I'm actually going back on doing everything myself! (queue; "burn the heretic!"). I may only get to max the 401ks, and be 50 by the time we retire, but I think that balance works better for us.
Er, he did include the flights for trips to Florida and Canada (twice - it's where his family is) in his costs, as well as the snowboarding trip.    So even without the business travel that's 4 separate trips/holidays in the year.  Hardly a hermit, and the grandparents visited twice.

OK, I missed that. So four times they were outside bike distance. Good for them, still not my choice
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on May 22, 2017, 12:51:48 PM
One thing I think his budget does prove is the benefit of having capital resources.  The paid-for house, car, home office, bikes, tools and so on, and the ability to cash-flow bulk groceries, are what allow the revenue expenses to be low.  The converse helps to explain how expensive it is to be poor.

So I think his budget numbers are fine, but just need to be put in context.

I think this is a fair observation - it doesn't change the spending per se but if one had a fairly spendy lifestyle buying nice things and high priced houses, one could then enjoy those things for a long time with nominal expenses. 



I dunno, people would have complained if he didn't post it, and complained that he did.

Almost always a true statement for people in general.

Should include imputed rent....why is it an ongoing cost.  If he sold to rent or mortgaged is house then costs would be higher...its simple math that any body could figure out for their own budget.  Besides if he had a mortgage then the extra $200k would have been invested and that certainly would have proved better over the last several years - in that case should the extra investment returns reduce expenses? Its a valid question is it not.

I always thought he was too lax on healthcare, obviously makes it easier to handle when you have a nice income but if this would have happened before the blog blew up or back when the market was lower and he was living more on the 4% rule - how would he have felt.  That is a real issue for people (FIREd or not). 

All the extra spending is suspect to the I live awesome on $25k but at least he put it out there this year.  I also don't think some of it shouldn't be included in the year fully anyway such as for the leaf or outhouse.  I would argue that maybe that they be amortized over some period .

The other question is that is his this more reflective of his desired life or just nice extravagances that he is simply working to pay for them - kind of IRP question but if he (or I or anyone) decided that they wanted to take a nice vacation/make their house more luxurious/buy a car they don't need  - all of which are by themselves a one time expense but lets say beyond their FIRE budget and they decided to get some job or make money to pay for that one thing wouldn't that be ok.  Of course if you have many one things every year then it becomes permanent budget additions and means you are no longer FIRE'd I guess. 

There is always a lot of grey.....I replaced my HVAC last year for about $7k but I also transfer $400/month (counted in my annual spending) into a repair/replacement account for house/car/major items (such as appliances/furniture/etc.) that had built up to about $20k that I don't include in my net worth or WR calculations.  So the way I view it is I didn't spend $7k bc transferred it from the "off book" account and the spending is in my $4800 per year on average.  But I will bet some or more of you will argue this is not correct.   

Same could be said for travel - if you plan $5k per year but do a $10k trip one year and $0 in another, which do you use for your WR.....the answer is neither.  You could apply this logic to everything which is why its best to think about it when figuring your spending for FIRE - it shouldn't be your highest or lowest year, it should be a normal/average year.
Title: Re: MMM 2016 Budget
Post by: inline five on May 22, 2017, 01:22:03 PM
I've never taken a $25k/yr spending limit seriously for a long term viewpoint. You can't.

I view a limited budget lifestyle as a means to an end. A way to save a bunch of money to improve your life exponentially that would take you a long time under normal savings rates. Pay off the (lower cost) house, purchase investments that make money, and use it to enhance your current life either by cutting back at work giving you more time at home, or allowing you to live a more luxurious/lavish lifestyle than you otherwise could if you had a bunch of bills. Your earned money can go toward enhancing your life vs paying off things you've purchased.

It really boils down to limited housing and limited car expenses. Follow the 80/20 rule. Focus on the 20% of your budget line items that consume 80% of your resources. Once you use your sharp pencil on those, invest the rest in assets that pay you to own them.

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

Title: Re: MMM 2016 Budget
Post by: boarder42 on May 22, 2017, 02:30:55 PM
i think it is what it is.  he is showing you what could be done if you really really dont want to work at all and FIRE ASAP.  but he lives a life of luxury that most high incomers in lower COLs can relate to and picks and chooses where he spends his money.  If he had a mortgage and property taxes like i do in my area we spend about the same amount accounting for his wife's business and his traveling and buying cars and calling them work expenses. 

i mean when you see the budget it points out that this really is more for high incomers to jsut truly spend more smartly.  not to say it doesnt work at most income levels but his levels of badassity arent near what some forum members are.
Title: Re: MMM 2016 Budget
Post by: Zikoris on May 22, 2017, 02:54:13 PM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 22, 2017, 03:14:38 PM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

$14k is a little high, but we did Hawaii recently and hotel rooms are ~$800/night including tax at some of the mid-level hotels (we stay at Hyatts on Kauai and Maui).  So 7 nights x $800 = $5600 plus another call it $1k/person for airfare, you're at about $8k.  Food/fun/rental car is probably another $2k for a week if you're doing some activities and eating out at least 1-2 meals a day, so that's around $10k.  Not sure where the other $4k would come from. 
Title: Re: MMM 2016 Budget
Post by: inline five on May 22, 2017, 03:25:02 PM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

Did you read? Airfare was valued at roughly $11,000. We flew first class on some legs.

Also we don't stay in hostels.

MOD EDIT: They obviously must have missed that. Be nice.
Title: Re: MMM 2016 Budget
Post by: JayhawkRacer on May 22, 2017, 03:33:38 PM
He's a smart businessman, but not necessarily a traditional retiree that happened to do it 30+ years earlier.   

I'm surprised to see a member of the Internet Retirement Police here in the MMM forum. :)
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 22, 2017, 03:55:14 PM
He's a smart businessman, but not necessarily a traditional retiree that happened to do it 30+ years earlier.   

I'm surprised to see a member of the Internet Retirement Police here in the MMM forum. :)

Yup, still on the beat 😀
Title: Re: MMM 2016 Budget
Post by: Cassie on May 22, 2017, 04:17:30 PM
I would fly first class if I could fly free too. However, most normal people would not choose to spend 11k on airfare unless they were very wealthy.
Title: Re: MMM 2016 Budget
Post by: wordnerd on May 22, 2017, 04:18:16 PM
To me, MMM is really about reaching FIRE.  After you've built wealth and are FI?  Well, do whatever you want, you've made it.  Where is it written that one must never spend money, especially after FI?

Well, since his stated objective is to save the environment by reducing consumerism, I don't think a go-for-broke attitude post-ER is what he's promoting.
Title: Re: MMM 2016 Budget
Post by: Cassie on May 22, 2017, 04:23:57 PM
I think he loves biking and is very concerned about the environment.  Both of those are great.
Title: Re: MMM 2016 Budget
Post by: Dee18 on May 22, 2017, 04:40:28 PM
Two areas where MMM's budgets have differed from mine:  kid activities and home repair.  If I had known 10 years ago what I know now, both of those categories would have been substantially lower dollar figures for me.  I admire MMM's choice to create great opportunities for his son without getting sucked into expensive sports and other extracurricular activities and his skills related to construction and home repair.  Downsizing his house, using his bike for most transportation needs, and just plain staying closer to home are good for the environment and remind me that I could do better on that front as well.
Title: Re: MMM 2016 Budget
Post by: Cassie on May 22, 2017, 04:52:54 PM
How did you come up with that figure?

Here is how: regular spending 30k, shed 30k, car 9k, travel 4k and etsy shop 20k. Grand Total = 93k. Oops sorry not 98k.  Still many things are not going to be reoccurring every year and so next years spending may be much lower.
Title: Re: MMM 2016 Budget
Post by: nereo on May 22, 2017, 04:56:39 PM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

Did you read? Airfare was valued at roughly $11,000. We flew first class on some legs.

Also we don't stay in hostels.
Holy crow !  I can't fathom spending $1000 an hour to sit, regardles of how comfy the chair might be.
Been to Hawai'ii 3x (twice with my SO), always spent less than $2,000 on the entire trip.
To each their own
Title: Re: MMM 2016 Budget
Post by: inline five on May 22, 2017, 05:00:35 PM
I would fly first class if I could fly free too. However, most normal people would not choose to spend 11k on airfare unless they were very wealthy.

Yes I know that is why I said it's disingenuous to state we did the vacation on so little amount of money. Sort of like how it's (kinda) disingenuous for MMM to state he spends $25k a year living like he does, which was my point.

He doesn't. He does a lot of things outside of just subsisting in life. One could "retire" on very little money if they lived in CA, and had a VW bus, and lived in it and begged for food.

MMM core basic $25k spending level is a good shock point to get people down to, it's a nice round number that most people, if they make enough effort, can obtain. It gets them thinking about what really matters and supercharges their savings/retirement plans. But it's not, IMO, a lifelong goal to only spend that amount. One would go completely nuts living in your house, just eating, sleeping, and sh!ting around and posting on forums all day. Hardly a way to live one's life, and certainly not the "retirement" most imagine.

IMO.
Title: Re: MMM 2016 Budget
Post by: inline five on May 22, 2017, 05:05:32 PM

Holy crow !  I can't fathom spending $1000 an hour to sit, regardles of how comfy the chair might be.
Been to Hawai'ii 3x (twice with my SO), always spent less than $2,000 on the entire trip.
To each their own

Not my photo but this was our LAX-JFK leg

(https://www.sanspotter.com/wp-content/uploads/2016/01/american_airlines_lax_jfk_first_class_28.jpg)

It was amazing. I wouldn't spend the money but I can see why people do.

People spend all sorts of varied amounts on vacation. You just have to compare apples to apples. Staying in Motel 6's or Hostels isn't my thing on vacations - I want a nice condo to relax in. That's part of the trip. When we visit we always do things - that costs money - as well as eat out occasionally. We also grocery shop.

I know people who do vacations for almost nothing - they fly for free and stay at friends places. Again apples to apples, just because someone spends more on vacations doesn't mean what they are doing is 'wrong'.
Title: Re: MMM 2016 Budget
Post by: Cassie on May 22, 2017, 05:22:27 PM
I am not disagreeing with you. Some of his expenses are 1 time occurrences though.  He won't build a shed or buy a new car every year.  I agree that retirement is time for fun and I worry about young people that quit too young on such a small budget. I know a few people that did that and by their 50's were very unhappy but unable to re-enter work force.   We actually spend more since retiring on entertainment, eating out, travel, etc because we now have the time and energy for such things.   We spend less on cars and clothes, etc.
Title: Re: MMM 2016 Budget
Post by: dragoncar on May 22, 2017, 05:24:52 PM

It rubs me the wrong way when someone screams A LOT "I live a hyper-luxurious life for $25k/yr!!!" and then admits in the footnotes that a lot of what makes the life hyper-luxurious (travel, new car, fancy home improvements) is not counted in that $25k/yr.  MMM is obviously free to spend whatever he wants, and I don't begrudge him any of it, but that doesn't mean I won't throw the BS flag when he uses accounting tricks to disguise a lot of his spending.  It's a shame, because I think a lot of his luxurious spending is done on the cheap in intelligent ways (DIY, looking for arbitrage on purchases, etc) and is a model for how to live well inexpensively but it cheapens the message when he just fails to account for it because "it's a business expense" or whatever. 

I think it would be more instructive to do a side by side on what he spent (all of it) and then a list of what others might pay to live the same way less intelligently (i.e., "MMM workshop, DIY, $30k....Normal person workshop, paid contractor, $80k").  THAT would be a comparison worth reading.

I always thought that MMM should actually focus on the fact that he effectively gets all this "consumerism" for free just by virtue of the way he's organized his business.  It's a feature, not a bug.  He should just straight up say "I live a $100k lifestyle on $25k by having a hobby business in retirement."

When I was working, I had a lot of perks like free food and travel that I certainly didn't count towards my monthly spending, but on the other hand likely offset some similar spending I will be doing in retirement. 

Either way, I can't begrudge the accounting of a guy who is spending only 10% of his blog profits.  If it was me, I would be spending WAY more no matter which way you cut it.  I obviously don't fall into the "I spend whatever I like and it's still under the poverty line" camp.  I spend less because it allows me to quit work earlier, not because I can't find a reason to spend more.
Title: Re: MMM 2016 Budget
Post by: Cassie on May 22, 2017, 05:31:46 PM
If I was making that much $ from a blog I would be spending more $ too.  I think it is great the amount he has given to charity. I think he is living his values.  We are semi-retired so our income can vary widely each year. Some years we spend more then others.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 22, 2017, 05:36:34 PM
I would fly first class if I could fly free too. However, most normal people would not choose to spend 11k on airfare unless they were very wealthy.

Yes I know that is why I said it's disingenuous to state we did the vacation on so little amount of money. Sort of like how it's (kinda) disingenuous for MMM to state he spends $25k a year living like he does, which was my point.

He doesn't. He does a lot of things outside of just subsisting in life. One could "retire" on very little money if they lived in CA, and had a VW bus, and lived in it and begged for food.

MMM core basic $25k spending level is a good shock point to get people down to, it's a nice round number that most people, if they make enough effort, can obtain. It gets them thinking about what really matters and supercharges their savings/retirement plans. But it's not, IMO, a lifelong goal to only spend that amount. One would go completely nuts living in your house, just eating, sleeping, and sh!ting around and posting on forums all day. Hardly a way to live one's life, and certainly not the "retirement" most imagine.

IMO.

Your vacation was expensive 2x what my wife and I spent flying first class and staying in 5 star hotels. See grand wailea and a Jeep rental car. For 10days in Maui. It's not disingenuous to state this bc this is easily obtained travel hacking no job required.
Title: Re: MMM 2016 Budget
Post by: TheStachery on May 22, 2017, 05:37:11 PM
It's a shame he diminishes his credibility by choosing to omit so many expenses through his creative accounting. Makes comparisons to normal people meaningless.
Agreed


Sent from my iPhone using Tapatalk
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 22, 2017, 06:13:52 PM
I only read that thread from last year because he mentioned it in his post. I thought that his adding in a bit more about business expenses was a way of dealing with some of the comments. In particular when he mentioned that both he and Mrs. MMM end up spending money on business stuff or travelling for business and that that probably satisfies any desire for spending/travelling, whereas if they weren't doing so for business, they might end up spending/travelling a bit more for personal fun. As always, I feel like he is as genuine and up-front as he seems to be.

Liked the shout-out for Quiet as well. That book made a big difference to me when I read it.

Pretty much this.

I think that a lot of people who complain about how he gets a luxurious lifestyle because of his blog, and note that it's a benefit compared to "hanging out at the park" - well, actually LIKE that sort of thing.  But, what if you don't?

I mean, you can go on business travel, and enjoy it, but still recognize that you wouldn't spend the money otherwise.  Maybe I'm reading a lot of wanking into it, but it seems like several people on this thread feel this way.  Like "SURE you'd be happy camping".

But what if you were?  I really like the IDEA of travel.  I grew up never vacationing as a kid. But you want to know something?  I don't really like travel.  The whole fancy-pants vacations to ... Ecuador that MMM goes on, or others go on to Maui, or Europe, or Bali, or whatever by travel hacking.  It doesn't sound like fun to me.

So when he says that his costs would go up a little without these trips...I believe him.  And when he says his wife's craft costs would go up a bit without the business...I believe him.  Because I'm pretty much the same way. 

I love crafting, and years ago spent a crap ton of money on it.  Now?  A lot less.  Certainly wouldn't affect my budget more than a few hundred bucks a year.

And travel.  I've been some places.  I prefer simple trips like short road trips, and mid-level hotels with a kitchenette (or an Air-BNB), or camping.
- I don't have enough vacation time to go a lot of places.
- Traveling with kids kind of sucks. 
- My husband used to travel a lot with kids.  And, his old boss used to invite me (pre-kid).  I didn't go!  Florida, DC, whatever.  I could have grabbed a plane ticket and had a cheap vacation!  I didn't do it!  (I did take my then-5-year old for a long weekend to DC once, when hubby was there for 1.5 weeks.  Because we had friends there.  And we flew on miles.)
- I NEVER travel for work.  But the thing is - I could probably head off to Japan a couple of times a year for work.  But whenever someone mentions  in passing "it might be good for you go head to Japan some day for XYZ" I run and hide.  Seriously.


And I just thought the whole rent thing was ridiculous too.

And I agree with whomever else mentioned free food at work.  I don't work for google.  But we have free coffee and tea at work.  The occasional free lunch.  Spouse gets a free lunch once a month.  Does it affect our spending?  No.  It doesn't mean I "get my fill of takeout" at work.
Title: Re: MMM 2016 Budget
Post by: GU on May 22, 2017, 06:23:51 PM
Couple critique comments:

- I don't see where he is including Colorado state income tax. IMO he needs to include that since property tax rates are very much tied whether a state has state income tax. He could certainly move to a state without state income tax so that's an optional expense in my book. Some how the state income tax should be expressed in an amount a normal early retiree would pay from investment income in Colorado.

- No home owners insurance which to the best of my knowledge means no umbrella type insurance policy. IMO, not a good thing given his wealth and future wealth.

Furthermore, CO has low property taxes.  States that lack income taxes tend to have high property taxes (e.g., TX and FL).  But the two highest property tax states, NJ and IL, both also have income taxes. And, if we're going to focus on state and local taxes, sales tax is pretty important as well. 

But for most early retirees, I don't think state and local taxes will be that big of deal.  Probably worth factoring in some rough estimates, but probably not worth a really in-depth analysis.
Title: Re: MMM 2016 Budget
Post by: Celda on May 22, 2017, 08:46:38 PM
Quote
My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000.

But it's even more disingenuous to say that the airfare is $11K - since if it wasn't free, you wouldn't have gotten first class. I don't know how much airfare to Hawaii is, but I've paid around $1K (Canadian dollar) for Canada-Asia / Asia-Asia flight - / Asia-Canada flight.

So you would only add maybe $600 or $700 per person for the airfare.
Title: Re: MMM 2016 Budget
Post by: obstinate on May 22, 2017, 09:59:25 PM
Well this thread became exactly what I expected. :) I think the purpose of the budget is to show what it would cost to live the core of his lifestyle, and it fulfills its purpose admirably. This year he couched it in many layers of caveats and full disclosures, but it doesn't surprise me that that's not enough for some folks.

I see people here saying things like, "could he really do without travel if he didn't have the business travel??" Uh, yes. Literally billions of people do. Ditto on the backyard studio and the Leaf.
Title: Re: MMM 2016 Budget
Post by: dragoncar on May 22, 2017, 11:02:56 PM
I think he does enjoy the travel because in the end he does travel instead of staying home and going to the park.  Dude can do whatever he wants, but still travels extensively. If he was completely indifferent, he would just stay home
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 05:24:57 AM
Well this thread became exactly what I expected. :) I think the purpose of the budget is to show what it would cost to live the core of his lifestyle, and it fulfills its purpose admirably. This year he couched it in many layers of caveats and full disclosures, but it doesn't surprise me that that's not enough for some folks.

I see people here saying things like, "could he really do without travel if he didn't have the business travel??" Uh, yes. Literally billions of people do. Ditto on the backyard studio and the Leaf.

i mean yes he could but the underlying message here is he really doesnt practice what he preaches.  could he if he had to probably but he doesnt and i dont have a problem with it, but many newcomers and the general population will point to all this as to why it cant be done.  VS if he did practice 100% what he preached then many more people may jump on the band wagon.  Instead his wife is satisfying her need to buy things crafty by running a craft business online, he is satisfying his need to build things by buying supplies and building a studio.  Hell he just bought a downtown building for other things.  the guy clearly is buying alot of things and this just makes it easier for outsiders to look in and go what a crock of shit.
Title: Re: MMM 2016 Budget
Post by: inline five on May 23, 2017, 06:11:10 AM
Quote
My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000.

But it's even more disingenuous to say that the airfare is $11K - since if it wasn't free, you wouldn't have gotten first class. I don't know how much airfare to Hawaii is, but I've paid around $1K (Canadian dollar) for Canada-Asia / Asia-Asia flight - / Asia-Canada flight.

So you would only add maybe $600 or $700 per person for the airfare.

And you could camp on the beach for free instead of staying in a condo.

And you can dumpster dive and not have to buy food.

OUR vacation experience would be a lot different than others. OUR vacation experience was valued a lot higher than someone else, doesn't mean it can't be done cheaper.
Title: Re: MMM 2016 Budget
Post by: former player on May 23, 2017, 06:41:23 AM
Well this thread became exactly what I expected. :) I think the purpose of the budget is to show what it would cost to live the core of his lifestyle, and it fulfills its purpose admirably. This year he couched it in many layers of caveats and full disclosures, but it doesn't surprise me that that's not enough for some folks.

I see people here saying things like, "could he really do without travel if he didn't have the business travel??" Uh, yes. Literally billions of people do. Ditto on the backyard studio and the Leaf.

i mean yes he could but the underlying message here is he really doesnt practice what he preaches.  could he if he had to probably but he doesnt and i dont have a problem with it, but many newcomers and the general population will point to all this as to why it cant be done.  VS if he did practice 100% what he preached then many more people may jump on the band wagon.  Instead his wife is satisfying her need to buy things crafty by running a craft business online, he is satisfying his need to build things by buying supplies and building a studio.  Hell he just bought a downtown building for other things.  the guy clearly is buying alot of things and this just makes it easier for outsiders to look in and go what a crock of shit.
You know, I'm really not understanding the level of criticism here.  MMM has been putting his household budget up for years, and long ago proved the point of principle: if you save and invest enough to cover your expenses at 4% you can retire early.  Yes, he and Mrs MMM have moved on from simple retirement to running two successful businesses, which wasn't in their original plan, but why should any of us constitute ourselves as his internet retirement police?  He has used his financial freedom first to retire early (although always keeping himself busy with various projects) and now to keep a business going which helps other people get their financial and personal lives in order.  I'm not seeing anything wrong with any of that.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 06:43:19 AM
Quote
My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000.

But it's even more disingenuous to say that the airfare is $11K - since if it wasn't free, you wouldn't have gotten first class. I don't know how much airfare to Hawaii is, but I've paid around $1K (Canadian dollar) for Canada-Asia / Asia-Asia flight - / Asia-Canada flight.

So you would only add maybe $600 or $700 per person for the airfare.

And you could camp on the beach for free instead of staying in a condo.

And you can dumpster dive and not have to buy food.

OUR vacation experience would be a lot different than others. OUR vacation experience was valued a lot higher than someone else, doesn't mean it can't be done cheaper.

did you read above ... you way overspent getting your flights free - travel hacking allows you to do everything you did for free.  we spent half and stayed at luxurious resorts you act as if the only way to get free perks is some business benefit or dumpster diving and camping on a beach.

hawaii 10 days 2 adults
grand wailea - free including have to valet park and a 250 dollar dinner
First class flights - free
Jeep rental car - Free
Food - negligible since we would have to eat back home - and we got free gormet buffet at the grand wailea.

and everyone elses point is that i shouldnt sum that up and say it costs 20k to spend 10 days in hawaii. b/c thats what it would have cost.  NO b/c its not what i would have spent.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 06:45:33 AM
Well this thread became exactly what I expected. :) I think the purpose of the budget is to show what it would cost to live the core of his lifestyle, and it fulfills its purpose admirably. This year he couched it in many layers of caveats and full disclosures, but it doesn't surprise me that that's not enough for some folks.

I see people here saying things like, "could he really do without travel if he didn't have the business travel??" Uh, yes. Literally billions of people do. Ditto on the backyard studio and the Leaf.

i mean yes he could but the underlying message here is he really doesnt practice what he preaches.  could he if he had to probably but he doesnt and i dont have a problem with it, but many newcomers and the general population will point to all this as to why it cant be done.  VS if he did practice 100% what he preached then many more people may jump on the band wagon.  Instead his wife is satisfying her need to buy things crafty by running a craft business online, he is satisfying his need to build things by buying supplies and building a studio.  Hell he just bought a downtown building for other things.  the guy clearly is buying alot of things and this just makes it easier for outsiders to look in and go what a crock of shit.
You know, I'm really not understanding the level of criticism here.  MMM has been putting his household budget up for years, and long ago proved the point of principle: if you save and invest enough to cover your expenses at 4% you can retire early.  Yes, he and Mrs MMM have moved on from simple retirement to running two successful businesses, which wasn't in their original plan, but why should any of us constitute ourselves as his internet retirement police?  He has used his financial freedom first to retire early (although always keeping himself busy with various projects) and now to keep a business going which helps other people get their financial and personal lives in order.  I'm not seeing anything wrong with any of that.

did you read what i wrote.  i said I DONT HAVE A F"n Problem with how he lives his life BUT if his goal is to really get this to the masses he shouldnt give joe blow 50k on an SUV a reason to look at this and go well he's full of shit.
Title: Re: MMM 2016 Budget
Post by: Laura33 on May 23, 2017, 07:32:47 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed. 
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 07:36:52 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed.

can none of you take 2 steps back and look at this from an average joe perspective.  you come to a site of a guy claiming all this can be done then you see he's spent another 50k or more this year on stuff he isnt counting.  makes it seem much more daunting a task.

yes all of the people here in the forums can see past all that to read the real message.  but every internet retirement police blogger is probably typing away after the release of his post to show why this is dumb and cant be done.

IF he truly practiced what he preached 100% of all revenues from "fun things" he's doing now in FIRE would be going to charity and he'd be living on exactly what he retired with.  but he's not b/c the safety of that money. 
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 23, 2017, 07:39:34 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed.

But he's always trumpeted pretty loudly his "we spend ~$25k/yr and live luxuriously and I don't want for more"; only half of that is really true. 

That's kinda always been the problem with MMM, to be honest; his IDEAS are fine and his philosophy is fine, but when he tries to put numbers to things he generally uses wacky math that doesn't add up under scrutiny and for numbers people like me, that really adversely affects his message. 
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 07:48:58 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed.

But he's always trumpeted pretty loudly his "we spend ~$25k/yr and live luxuriously and I don't want for more"; only half of that is really true. 

That's kinda always been the problem with MMM, to be honest; his IDEAS are fine and his philosophy is fine, but when he tries to put numbers to things he generally uses wacky math that doesn't add up under scrutiny and for numbers people like me, that really adversely affects his message.

yes and it hurts and takes away from more people adopting this lifestyle or listening to the ideas etc.

if you go back to day one he didnt just "quit" his job to go be retired.  he quit to start a house building business.  i mean its all there and the IDEAS appear to work but he doesnt follow them by any stretch of the imagination.  be really good to see someone who is actually using a roth ladder etc. to fund their FIRE.  but if they get popular then you run into the whole same situation.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 23, 2017, 07:49:11 AM
Well this thread became exactly what I expected. :) I think the purpose of the budget is to show what it would cost to live the core of his lifestyle, and it fulfills its purpose admirably. This year he couched it in many layers of caveats and full disclosures, but it doesn't surprise me that that's not enough for some folks.

I see people here saying things like, "could he really do without travel if he didn't have the business travel??" Uh, yes. Literally billions of people do. Ditto on the backyard studio and the Leaf.

Yes many people go without travel to Ecuador, but then they might spend money on iphones or SUVs to satisfy their need for fun/spending/feeling-rich or whatever. The kind of behavior MMM rail against. Is'nt hat just a different kind of entertainment, one is not better/worse than the other? Isn't he just contradicting his point of "you only need to spend $25k to be happy"? No travel, no fancy phones or cars don't seem to work for him either..

Oh you could say he has enough so he can afford it. Well that just prove the point some people make that MMM was only able to retire because they made (and make) $150k/year, and now life off stock market gains like a filthy capitalist (#occupyWS. #audtithefed .. /s)

I don't think he's disingenuous per say, and certainly free to spend what he wants. But it does weaken his point some. Maybe they lived off $25k when they were working, and never traveled or drove or bought anything. I honestly don't remember i read it so long ago. But "modern" MMM seems a bit different, frankly I'm not very interested what he's up to now.
Title: Re: MMM 2016 Budget
Post by: nereo on May 23, 2017, 07:49:54 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed.
My read as well.
I don't know how many blog posts MMM has written where he tries to shred the notion that they somehow don't live a life surrounded in luxury. His message is constantly "look at all the fancy toys we have, the luxurious life we live, the awesome food we eat - we still have a car and fly in airplanes etc. And its all possible because we routinely eliminate BS spending (which is most of the average Joe's paycheck) and invest the difference, and you can too!."

Our lives don't seem to differ much from the MMM family, and we actually do spend a similar amount with no external income from blogs or side businesses.  We still manage a few plane-ride vacations per year, own a too-nice car, and want very little. I don't agree that our last trip to Scotland should be considered to have cost $10k+ because we used airmiles and looped it in with a work conference.

What keeps it 'authentic' for me is that the MMM family could still lead this awesome life if Pete walked away from the blog (and Mrs. MM from her etsy shop), and this lifestyle would be obtainable to most any able-bodied young adult in the developed world. A family of 3-4 can live very well on $25k/year (after rent/mortgage) if they just choose sensibility over consumerism, and be happier and healthier for it.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 08:09:50 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed.
My read as well.
I don't know how many blog posts MMM has written where he tries to shred the notion that they somehow don't live a life surrounded in luxury. His message is constantly "look at all the fancy toys we have, the luxurious life we live, the awesome food we eat - we still have a car and fly in airplanes etc. And its all possible because we routinely eliminate BS spending (which is most of the average Joe's paycheck) and invest the difference, and you can too!."

Our lives don't seem to differ much from the MMM family, and we actually do spend a similar amount with no external income from blogs or side businesses.  We still manage a few plane-ride vacations per year, own a too-nice car, and want very little. I don't agree that our last trip to Scotland should be considered to have cost $10k+ because we used airmiles and looped it in with a work conference.

What keeps it 'authentic' for me is that the MMM family could still lead this awesome life if Pete walked away from the blog (and Mrs. MM from her etsy shop), and this lifestyle would be obtainable to most any able-bodied young adult in the developed world. A family of 3-4 can live very well on $25k/year (after rent/mortgage) if they just choose sensibility over consumerism, and be happier and healthier for it.

he readily admitted that the etsy shop was satisfying consumerism as well as him building the studio and buying the leaf and buying the downtown building ... he's full of consumerism.  And i'd submit their lives would be much less fullfilling with out this spending. 
Title: Re: MMM 2016 Budget
Post by: nereo on May 23, 2017, 08:24:07 AM
the underlying message here is he really doesnt practice what he preaches.

I disagree.  He has never been an ERE guy; his message was more along the lines of "save 75%+ of what you earn and you can be RE within a decade and do whatever the hell you want," flavored by a good chunk of stoicism, DIY, and environmentalism.  The underlying dollar signs have gotten larger on some of the extras, but none of those fundamental tenets have changed.
My read as well.
I don't know how many blog posts MMM has written where he tries to shred the notion that they somehow don't live a life surrounded in luxury. His message is constantly "look at all the fancy toys we have, the luxurious life we live, the awesome food we eat - we still have a car and fly in airplanes etc. And its all possible because we routinely eliminate BS spending (which is most of the average Joe's paycheck) and invest the difference, and you can too!."

Our lives don't seem to differ much from the MMM family, and we actually do spend a similar amount with no external income from blogs or side businesses.  We still manage a few plane-ride vacations per year, own a too-nice car, and want very little. I don't agree that our last trip to Scotland should be considered to have cost $10k+ because we used airmiles and looped it in with a work conference.

What keeps it 'authentic' for me is that the MMM family could still lead this awesome life if Pete walked away from the blog (and Mrs. MM from her etsy shop), and this lifestyle would be obtainable to most any able-bodied young adult in the developed world. A family of 3-4 can live very well on $25k/year (after rent/mortgage) if they just choose sensibility over consumerism, and be happier and healthier for it.

he readily admitted that the etsy shop was satisfying consumerism as well as him building the studio and buying the leaf and buying the downtown building ... he's full of consumerism.  And i'd submit their lives would be much less fullfilling with out this spending.
I'm not sure what you mean.
He's repeatedly talked about how he has all this stuff, how he's 'soft' and 'drowning in luxury'.
i don't understand what level you are talking about when you say 'their lives would be much less fulfilling without this spending'.
Title: Re: MMM 2016 Budget
Post by: inline five on May 23, 2017, 08:28:37 AM
Quote
My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000.

But it's even more disingenuous to say that the airfare is $11K - since if it wasn't free, you wouldn't have gotten first class. I don't know how much airfare to Hawaii is, but I've paid around $1K (Canadian dollar) for Canada-Asia / Asia-Asia flight - / Asia-Canada flight.

So you would only add maybe $600 or $700 per person for the airfare.

And you could camp on the beach for free instead of staying in a condo.

And you can dumpster dive and not have to buy food.

OUR vacation experience would be a lot different than others. OUR vacation experience was valued a lot higher than someone else, doesn't mean it can't be done cheaper.

did you read above ... you way overspent getting your flights free - travel hacking allows you to do everything you did for free.  we spent half and stayed at luxurious resorts you act as if the only way to get free perks is some business benefit or dumpster diving and camping on a beach.

hawaii 10 days 2 adults
grand wailea - free including have to valet park and a 250 dollar dinner
First class flights - free
Jeep rental car - Free
Food - negligible since we would have to eat back home - and we got free gormet buffet at the grand wailea.

and everyone elses point is that i shouldnt sum that up and say it costs 20k to spend 10 days in hawaii. b/c thats what it would have cost.  NO b/c its not what i would have spent.
Congrats on the travel hacking! Fortunately we don't need to spend points on travel so we can use them for other things.

Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 23, 2017, 09:22:48 AM

I'm not sure what you mean.
He's repeatedly talked about how he has all this stuff, how he's 'soft' and 'drowning in luxury'.
i don't understand what level you are talking about when you say 'their lives would be much less fulfilling without this spending'.

I'm pretty sure everyone takes MMM's claims of exploding volcanos of luxury in his life as hyperbole.  People seemed pretty surprised when he admitted that his little blog was making over 400k/yr.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 23, 2017, 09:36:00 AM
I only read that thread from last year because he mentioned it in his post. I thought that his adding in a bit more about business expenses was a way of dealing with some of the comments. In particular when he mentioned that both he and Mrs. MMM end up spending money on business stuff or travelling for business and that that probably satisfies any desire for spending/travelling, whereas if they weren't doing so for business, they might end up spending/travelling a bit more for personal fun. As always, I feel like he is as genuine and up-front as he seems to be.

Liked the shout-out for Quiet as well. That book made a big difference to me when I read it.

Pretty much this.

I think that a lot of people who complain about how he gets a luxurious lifestyle because of his blog, and note that it's a benefit compared to "hanging out at the park" - well, actually LIKE that sort of thing.  But, what if you don't?

I mean, you can go on business travel, and enjoy it, but still recognize that you wouldn't spend the money otherwise.  Maybe I'm reading a lot of wanking into it, but it seems like several people on this thread feel this way.  Like "SURE you'd be happy camping".

But what if you were?  I really like the IDEA of travel.  I grew up never vacationing as a kid. But you want to know something?  I don't really like travel.  The whole fancy-pants vacations to ... Ecuador that MMM goes on, or others go on to Maui, or Europe, or Bali, or whatever by travel hacking.  It doesn't sound like fun to me.

So when he says that his costs would go up a little without these trips...I believe him.  And when he says his wife's craft costs would go up a bit without the business...I believe him.  Because I'm pretty much the same way. 

I love crafting, and years ago spent a crap ton of money on it.  Now?  A lot less.  Certainly wouldn't affect my budget more than a few hundred bucks a year.

And travel.  I've been some places.  I prefer simple trips like short road trips, and mid-level hotels with a kitchenette (or an Air-BNB), or camping.
- I don't have enough vacation time to go a lot of places.
- Traveling with kids kind of sucks. 
- My husband used to travel a lot with kids.  And, his old boss used to invite me (pre-kid).  I didn't go!  Florida, DC, whatever.  I could have grabbed a plane ticket and had a cheap vacation!  I didn't do it!  (I did take my then-5-year old for a long weekend to DC once, when hubby was there for 1.5 weeks.  Because we had friends there.  And we flew on miles.)
- I NEVER travel for work.  But the thing is - I could probably head off to Japan a couple of times a year for work.  But whenever someone mentions  in passing "it might be good for you go head to Japan some day for XYZ" I run and hide.  Seriously.

Well, I don't totally disagree with you but I would say there is a big differnce between most peoples "work travel" and MMM's. I mean sales pitches, meeting, trade shows vs hanging out with other interesting FIRE'd people, doing hikes, etc. like they do at the camps and chataquas.

I personally love camping; but I also loved my trips to Europe, and cruises, and ski trips and and so sure I try to spend less on travel then I used to pre finding MMM but I could certainly spend more.

And I do disagree with you on the traveling with kids, I love traveling with my kids and showing them new stuff and seeing how happy they are. They talk about our trips for months after and love looking through the photo albums as well as planning/anticipating the upcoming ones.

Anyway, to each their own on the travel thing.

Just in general running your own small business and having write offs is different then having a "normal" job and expens-ing things; lots more leeway which as others have mentioned I think he down plays.
Well, work travel is going to depend. My husband travels for work, and it sucks for him usually.  He doesn't go to very fun places, and he's pretty much minimizing his time there so he can get home to his family.  Otherwise, he could stay some extra days in DC and see old friends, or swing by his parent's houses in NY, or visit his Aunt & Uncle in AZ.  And likewise with international travel, it wouldn't be any big deal to just delay your trip home and see some sights while in Japan, or wherever.

Traveling with kids sucks - well, it depends on your kids, their ages, and their need for routine.  My big kid (11) gets carsick.  Not barfing carsick, but very nauseous carsick, and the ONLY thing that works is dramamine, and that knocks him out.  So, it's not fun.  Even driving to the airport is not fun.  Flying on a plane for 5 hours with his brother, who is 4, is not fun.  Flying to visit family, which often requires 2-3 flights, plus a couple of long drives, totalling an 11 to 14 hour day, is ... bear with me ... not fun.  Sure, when we GET there, it's likely to be fun.  But the travel part itself... we are at the point right now where I'm not certain it's worth the effort to get there.

Plus our kids really like routine.

"He gets to travel and write it off".  Yes, yes he does.  But you are looking at it from the lens of someone who LIKES that kind of travel.  Not everyone would CHOOSE that type of travel.  Would he CHOOSE that if it weren't for the blog?  He seems to say no.  And being of similar personality, I'm not going to doubt him.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 23, 2017, 09:37:36 AM
I think some people on this board would very much like to spend lots of money and only cut their costs to achieve FI.  So any time MMM (or anyone else) spends more than the bare minimum, they pop up and say "See!!!  You have to spend $$ to be happy!  Even MMM does it!!!"  And then I think they feel better about themselves and their secret resentment at being frugal.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 23, 2017, 09:41:47 AM
I think some people on this board would very much like to spend lots of money and only cut their costs to achieve FI.  So any time MMM (or anyone else) spends more than the bare minimum, they pop up and say "See!!!  You have to spend $$ to be happy!  Even MMM does it!!!"  And then I think they feel better about themselves and their secret resentment at being frugal.

Maybe for some.  For me, it's the cherry picking that pisses me off.  He's very "4 legs good, 2 legs better" when it comes to justifying things HE wants to spend money on, and very preachy when it comes to things HE doesn't value.  If he wasn't so goddamn outspoken it wouldn't be a big deal, but when he wants to dole out facepunches so often, he should stand by to get some back. 
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 23, 2017, 09:48:35 AM
I think some people on this board would very much like to spend lots of money and only cut their costs to achieve FI.  So any time MMM (or anyone else) spends more than the bare minimum, they pop up and say "See!!!  You have to spend $$ to be happy!  Even MMM does it!!!"  And then I think they feel better about themselves and their secret resentment at being frugal.

Maybe for some.  For me, it's the cherry picking that pisses me off.  He's very "4 legs good, 2 legs better" when it comes to justifying things HE wants to spend money on, and very preachy when it comes to things HE doesn't value.  If he wasn't so goddamn outspoken it wouldn't be a big deal, but when he wants to dole out facepunches so often, he should stand by to get some back.

I dunno Chris, I've rarely seen any happy or optimistic posts from you.  You seem kind of pissed off all the time.  Maybe MMM is just an easy target for your pre-existing anger?
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 23, 2017, 09:50:34 AM
I think some people on this board would very much like to spend lots of money and only cut their costs to achieve FI.  So any time MMM (or anyone else) spends more than the bare minimum, they pop up and say "See!!!  You have to spend $$ to be happy!  Even MMM does it!!!"  And then I think they feel better about themselves and their secret resentment at being frugal.

Maybe for some.  For me, it's the cherry picking that pisses me off.  He's very "4 legs good, 2 legs better" when it comes to justifying things HE wants to spend money on, and very preachy when it comes to things HE doesn't value.  If he wasn't so goddamn outspoken it wouldn't be a big deal, but when he wants to dole out facepunches so often, he should stand by to get some back.

I dunno Chris, I've rarely seen any happy or optimistic posts from you.  You seem kind of pissed off all the time.  Maybe MMM is just an easy target for your pre-existing anger?

LOL!  I'm a tremendously happy and optimistic person in real life.  I think it's your debbie downers bringing me down :p
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 23, 2017, 09:54:29 AM
LOL!  I'm a tremendously happy and optimistic person in real life.  I think it's your debbie downers bringing me down :p

As am I, so we have that in common :)

OK, back to the budget, I tend to think that uber frugality is useful for becoming FI as soon as possible.  To me, that's the main goal and main message.  Once your FI?  Eh, do what you want.  You earned it.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 23, 2017, 09:58:26 AM
I think some people on this board would very much like to spend lots of money and only cut their costs to achieve FI.  So any time MMM (or anyone else) spends more than the bare minimum, they pop up and say "See!!!  You have to spend $$ to be happy!  Even MMM does it!!!"  And then I think they feel better about themselves and their secret resentment at being frugal.

I feel more like there is confusion in MMM's message when he claims not to think about his spending, that his life is awesome, that he only spends 25k to achieve all this, then his real world life includes loads of business spending.  Financial Independence IS pretty awesome if spending 25k, 100k, or 300k any given year doesn't matter.  Of course people like that message, which is actually the underpinning for Pete to enjoy his FI as much as he does on this blog.  Broken arm costs a few thousand - no worries.  30k home office project, sure thing.  Still have a fire hose of cash.  I'm still actually surprised he went for a Leaf and not a Tesla, but I won't be surprised if he does have more expensive experiments coming up - and why not, YOLO!  Except I guess that wasn't supposed to happen...
Title: Re: MMM 2016 Budget
Post by: Laura33 on May 23, 2017, 10:45:17 AM
Yeah, OK, I'm going to say one more thing, then shut up. :-)  The thing that I have seen in my own life (and one of the reasons I am here now) is increasing income = lifestyle creep.  I grew up frugal and have clung to that mental image of myself (hah); when DH and I got married, I was very conscious of lifestyle creep and intent on avoiding it, because I know it's a hedonic treadmill that is ultimately unsatisfying. 

And yet every car I have bought has been nicer and more expensive than the one before.  Yes, DH is spendy, so it's a balancing act; and yes, I am a car girl, so it is something that I in particular value; but it is also completely true that the increases in our incomes allowed me to dream of certain luxuries that I literally could not even conceive of as a kid, and I have given in to that temptation more than I should have. 

And that kind of lifestyle creep interferes with FIRE, because it increases your baseline expectation of what daily life needs to be like, and therefore increases the 'stache you need to FIRE (not to mention leaving you less to save to start with).  I am now living the consequences of my earlier choices:  I joined the grocery spend challenge early this year, at a fairly ridiculous budget, and yet the amount of whining and pushback I am getting from the kids and DH about wanting takeout or going to CFA or whatever is both ridiculous and incredibly annoying.  Because they got used to a life where if someone wanted to go out, I just said yes, and so now eating in 6 nights out of 7 feels like deprivation instead of a pretty damn luxurious life. 

Now, one car, one decision to get takeout, is irrelevant in the larger scheme of things.  But it adds up over time.  And the result of 20+ years of "trivial" decisions is that we have sacrificed freedom to the pernicious creep of invisible luxury.

That is specifically why I continue to be impressed by MMM.  His income has clearly skyrocketed beyond what he ever would have dreamed when he started this thing.  But he keeps his daily lifestyle basically the same -- biking everywhere, shopping at the bulk discount stores, cooking at home, doing his own projects, etc.  Sure, he has used play money to do interesting projects, but those can all go away if the shit hits the fan.  It is more important to me that he has not given in to takeout, or hiring contractors, or all the other stuff that makes life easier and becomes so tempting (and seems so innocuous) when you can suddenly afford it; he has found a way to resist that most insidious of temptations. 

Tl;dr:  it's not the overall budget that impresses me, it's the fact that he has managed to keep the basic lifestyle expenses so low, because I know from personal experience just how hard that is, even with the best of intentions.

But I also understand that different people get different things out of it, and so might view these changes differently.
Title: Re: MMM 2016 Budget
Post by: sol on May 23, 2017, 10:50:38 AM
There sure are a lot of whiny complainypants in this thread.

The underlying message is the same every year: a normal middle class American lifestyle costs between 5 and 10 thousands dollars per year per person in a family, after housing costs, if you live efficiently.

Then there are additional costs for luxury items.  If you want to fly your family around the planet on vacations, that of course will cost more and it doesn't really matter of you pay out of pocket or use miles or call it a business expense.  In any case it's not included in the base budget.

My family is significantly larger than MMM's but our basic budget is very similar.  Except we still carry a mortgage so that we can invest the difference, so our ongoing housing costs are higher as part of a strategy to maximize savings during our accumulation phase.  We buy some luxuries out of pocket instead of with business income, like family trips and our EV.  And we still have child care expenses, because we have full time jobs.

But those are details.  The real power in this message is for people who currently spend $50k/yr on just two people (after housing)  because they have a $450/mo cable/phone package and shop at whole foods every three days.  Or are dropping $15k/year on hobby expenses, or private school, or supporting a deadbeat relative.  Those are the folks who don't realize that what feels like easy spending within their "budget" is actually ruining them, or adding decades to their required career length.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 23, 2017, 10:58:40 AM
There sure are a lot of whiny complainypants in this thread.

The underlying message is the same every year: a normal middle class American lifestyle costs between 5 and 10 thousands dollars per year per person in a family, after housing costs, if you live efficiently.

Then there are additional costs for luxury items.  If you want to fly your family around the planet on vacations, that of course will cost more and it doesn't really matter of you pay out of pocket or use miles or call it a business expense.  In any case it's not included in the base budget.

My family is significantly larger than MMM's but our basic budget is very similar.  Except we still carry a mortgage so that we can invest the difference, so our ongoing housing costs are higher as part of a strategy to maximize savings during our accumulation phase.  We buy some luxuries out of pocket instead of with business income, like family trips and our EV.  And we still have child care expenses, because we have full time jobs.

But those are details.  The real power in this message is for people who currently spend $50k/yr on just two people (after housing)  because they have a $450/mo cable/phone package and shop at whole foods every three days.  Or are dropping $15k/year on hobby expenses, or private school, or supporting a deadbeat relative.  Those are the folks who don't realize that what feels like easy spending within their "budget" is actually ruining them, or adding decades to their required career length.

the message gets lost on the general population when he obviously is not living all of that. i'm trying to state what others outside of here who havent seen the light would see when presented that.  people who arent frugal by nature.  well MMM just chooses to build a workshop i chose to buy an SUV. etc.

His volcano of awesomeness is greatly filled with much more than 5-10k per person and its "business expenses"

But i dont give two shits about that really, just that if he lived it the general population may be more receptive.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 23, 2017, 11:10:13 AM
But i dont give two shits about that really, just that if he lived it the general population may be more receptive.

His blog made $400k last year, I think we don't have to worry much about the 'general population'. 

The way I see it, MMM is an ideal.  Pete is a person.  People don't always live by to their ideals.  So what?
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 23, 2017, 12:01:00 PM
How did you come up with that figure?

Here is how: regular spending 30k, shed 30k, car 9k, travel 4k and etsy shop 20k. Grand Total = 93k. Oops sorry not 98k.  Still many things are not going to be reoccurring every year and so next years spending may be much lower.

I would deduct the Etsy shop from that list since items were bought and then sold for a profit for the wife.  So lets get that down to $73k.  I fully agree adding the travel and like you said the other expenses are not every year expenses so maybe amortizing them over X years should be more appropriate.  Lets make it over 5 years to be somewhat fair so lets add that to about $10k/yr.  So his expenses are about $44k/yr.  I think that is pretty damn good for the very comfortable lifestyle he has.

MMM's numbers prove having more money makes life easier and more fun.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 23, 2017, 12:07:48 PM
How did you come up with that figure?

Here is how: regular spending 30k, shed 30k, car 9k, travel 4k and etsy shop 20k. Grand Total = 93k. Oops sorry not 98k.  Still many things are not going to be reoccurring every year and so next years spending may be much lower.

I would deduct the Etsy shop from that list since items were bought and then sold for a profit for the wife.  So lets get that down to $73k.  I fully agree adding the travel and like you said the other expenses are not every year expenses so maybe amortizing them over X years should be more appropriate.  Lets make it over 5 years to be somewhat fair so lets add that to about $10k/yr.  So his expenses are about $44k/yr.  I think that is pretty damn good for the very comfortable lifestyle he has.

MMM's numbers prove having more money makes life easier and more fun.

And the way to "get" more money in the first place is to be frugal and save a boatload of money during the accumulation phase.  That's what's been most helpful for me in the MMM message.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 23, 2017, 12:20:51 PM

Traveling with kids sucks - well, it depends on your kids, their ages, and their need for routine.  My big kid (11) gets carsick.  Not barfing carsick, but very nauseous carsick, and the ONLY thing that works is dramamine, and that knocks him out.  So, it's not fun.  Even driving to the airport is not fun.  Flying on a plane for 5 hours with his brother, who is 4, is not fun.  Flying to visit family, which often requires 2-3 flights, plus a couple of long drives, totalling an 11 to 14 hour day, is ... bear with me ... not fun.  Sure, when we GET there, it's likely to be fun.  But the travel part itself... we are at the point right now where I'm not certain it's worth the effort to get there.

Plus our kids really like routine.

"He gets to travel and write it off".  Yes, yes he does.  But you are looking at it from the lens of someone who LIKES that kind of travel.  Not everyone would CHOOSE that type of travel.  Would he CHOOSE that if it weren't for the blog?  He seems to say no.  And being of similar personality, I'm not going to doubt him.

ehh, you seem confused. No sane person likes to sit in an airplane! That's not the part of "travel" (most) people enjoy. It's getting there, being there, looking around, experiencing stuff.

Frankly your whole post is the definition of complainypants. Traveling with and without our kid we've had many great experiences, both adults and kids. The trip isn't easy, but in the end it's worth it. But if you can't be positive, flexible and make the best of it when traveling with kids then you definitely shouldn't do it. You can always find reasons why it's just easier to stay home..
Title: Re: MMM 2016 Budget
Post by: dragoncar on May 23, 2017, 12:50:50 PM

Traveling with kids sucks - well, it depends on your kids, their ages, and their need for routine.  My big kid (11) gets carsick.  Not barfing carsick, but very nauseous carsick, and the ONLY thing that works is dramamine, and that knocks him out.  So, it's not fun.  Even driving to the airport is not fun.  Flying on a plane for 5 hours with his brother, who is 4, is not fun.  Flying to visit family, which often requires 2-3 flights, plus a couple of long drives, totalling an 11 to 14 hour day, is ... bear with me ... not fun.  Sure, when we GET there, it's likely to be fun.  But the travel part itself... we are at the point right now where I'm not certain it's worth the effort to get there.

Plus our kids really like routine.

"He gets to travel and write it off".  Yes, yes he does.  But you are looking at it from the lens of someone who LIKES that kind of travel.  Not everyone would CHOOSE that type of travel.  Would he CHOOSE that if it weren't for the blog?  He seems to say no.  And being of similar personality, I'm not going to doubt him.

ehh, you seem confused. No sane person likes to sit in an airplane! That's not the part of "travel" (most) people enjoy. It's getting there, being there, looking around, experiencing stuff.

Frankly your whole post is the definition of complainypants. Traveling with and without our kid we've had many great experiences, both adults and kids. The trip isn't easy, but in the end it's worth it. But if you can't be positive, flexible and make the best of it when traveling with kids then you definitely shouldn't do it. You can always find reasons why it's just easier to stay home..

I love short flights with a window seat!  Looking at the way different cities are laid out, terrain, etc.  Interesting clouds, too.  Yeah I don't like transatlantic flights where all you see is water and marine layer, but a nice 1 hour flight down the coast with a beverage service... sign me up!
Title: Re: MMM 2016 Budget
Post by: PoutineLover on May 23, 2017, 01:32:56 PM
I'm still impressed that he manages to feed and house his family for that amount, but I don't think that amount is necessarily realistic for someone who doesn't have some of the stuff he starts out with in that case. I'm just one person and I spend about 21K a year, but I can't afford to buy yet so I rent, and I can't deduct my travel for business, and my taxes are way higher than his. However, I do bike everywhere, and don't own a car, and don't eat out too much, so my expenses are still lower than they could be. Everyone looking at that breakdown can see where they can improve and where they just have to suck up the costs, based on their individual situations. It's still useful to see it, even if he is omitting certain things.
He probably wouldn't have built that studio or bought that car if he was still in the accumulation phase, and he would probably facepunch someone who did spend that kind of money while in debt, and rightly so because they were extras that he didn't need and couldn't afford. But now that he has the money, more than he could ever need, he decided to use that excess to try out different things and tell his fans about it, because that's the kind of person he is choosing to be. I personally like seeing his projects, and in the end, it's his life and he is not obligated to live a certain way just because a bunch of random people on the internet are judging him.
Title: Re: MMM 2016 Budget
Post by: nereo on May 23, 2017, 01:33:17 PM

I love short flights with a window seat!  Looking at the way different cities are laid out, terrain, etc.  Interesting clouds, too.  Yeah I don't like transatlantic flights where all you see is water and marine layer, but a nice 1 hour flight down the coast with a beverage service... sign me up!

Can't you, like, fly on your own? What do you need an airplane for?
:-P
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 23, 2017, 01:38:32 PM
He probably wouldn't have built that studio or bought that car if he was still in the accumulation phase, and he would probably facepunch someone who did spend that kind of money while in debt, and rightly so because they were extras that he didn't need and couldn't afford. But now that he has the money, more than he could ever need, he decided to use that excess to try out different things and tell his fans about it, because that's the kind of person he is choosing to be. I personally like seeing his projects, and in the end, it's his life and he is not obligated to live a certain way just because a bunch of random people on the internet are judging him.

Again, no one is saying he shouldn't have the car or the shed.  We're just saying you can't buy them and then say you didn't spend that money because "it's an investment" or "it's for the blog" or whatever other reasoning.  It's spending, plain and simple, so count it as such.  ESPECIALLY if you're going to preach about the merits of downsizing your house and not having a car/car payment. 
Title: Re: MMM 2016 Budget
Post by: PoutineLover on May 23, 2017, 01:45:05 PM
Again, no one is saying he shouldn't have the car or the shed.  We're just saying you can't buy them and then say you didn't spend that money because "it's an investment" or "it's for the blog" or whatever other reasoning.  It's spending, plain and simple, so count it as such.  ESPECIALLY if you're going to preach about the merits of downsizing your house and not having a car/car payment. 
Yeah fair enough, but the way I read it was more like "this is what it costs us to live" and "this is what I spent extra money on"
because he did list it, he just didn't put it in the core expenses. They were also more like one-off costs, not regular spending that will show up every year. So if his point is about living simply for a certain price, he isn't wrong to separate out the living costs from the extras, but it is more honest if he mentions all of it.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 23, 2017, 02:17:29 PM
Again, no one is saying he shouldn't have the car or the shed.  We're just saying you can't buy them and then say you didn't spend that money because "it's an investment" or "it's for the blog" or whatever other reasoning.  It's spending, plain and simple, so count it as such.  ESPECIALLY if you're going to preach about the merits of downsizing your house and not having a car/car payment. 
Yeah fair enough, but the way I read it was more like "this is what it costs us to live" and "this is what I spent extra money on"
because he did list it, he just didn't put it in the core expenses. They were also more like one-off costs, not regular spending that will show up every year. So if his point is about living simply for a certain price, he isn't wrong to separate out the living costs from the extras, but it is more honest if he mentions all of it.

I thought the shed was the most spurious, and the most likely to receive facepunches if someone else said it to him.  Go say "I'm going to spend $20k upgrading my kitchen and putting in granite, stainless appliances, etc, but it's okay because it's an investment and I'll get it back" and watch his head explode at the wastefullness of it.  But in reality, money spent in a kitchen is probably MORE likely to see a pay back than money spent on a fancy shed when the time comes to sell a house. 
Title: Re: MMM 2016 Budget
Post by: Ramblin' Ma'am on May 23, 2017, 02:26:54 PM
the message gets lost on the general population when he obviously is not living all of that. i'm trying to state what others outside of here who havent seen the light would see when presented that.  people who arent frugal by nature.  well MMM just chooses to build a workshop i chose to buy an SUV. etc.

His volcano of awesomeness is greatly filled with much more than 5-10k per person and its "business expenses"

But i dont give two shits about that really, just that if he lived it the general population may be more receptive.

Yeah, I don't really care either, since for me MMM is more about the general concept/way of life, not about the specifics. But it is clear that his "hook" is "You only need to live on X amount"--that's a huge part of what brought the blog so much attention. And yet, because of the blog income, early retirement looks very different for him than it would for many people.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 23, 2017, 02:51:03 PM
Yeah, OK, I'm going to say one more thing, then shut up. :-)  The thing that I have seen in my own life (and one of the reasons I am here now) is increasing income = lifestyle creep.  I grew up frugal and have clung to that mental image of myself (hah); when DH and I got married, I was very conscious of lifestyle creep and intent on avoiding it, because I know it's a hedonic treadmill that is ultimately unsatisfying. 

And yet every car I have bought has been nicer and more expensive than the one before.  Yes, DH is spendy, so it's a balancing act; and yes, I am a car girl, so it is something that I in particular value; but it is also completely true that the increases in our incomes allowed me to dream of certain luxuries that I literally could not even conceive of as a kid, and I have given in to that temptation more than I should have. 

And that kind of lifestyle creep interferes with FIRE, because it increases your baseline expectation of what daily life needs to be like, and therefore increases the 'stache you need to FIRE (not to mention leaving you less to save to start with).  I am now living the consequences of my earlier choices:  I joined the grocery spend challenge early this year, at a fairly ridiculous budget, and yet the amount of whining and pushback I am getting from the kids and DH about wanting takeout or going to CFA or whatever is both ridiculous and incredibly annoying.  Because they got used to a life where if someone wanted to go out, I just said yes, and so now eating in 6 nights out of 7 feels like deprivation instead of a pretty damn luxurious life. 

Now, one car, one decision to get takeout, is irrelevant in the larger scheme of things.  But it adds up over time.  And the result of 20+ years of "trivial" decisions is that we have sacrificed freedom to the pernicious creep of invisible luxury.

That is specifically why I continue to be impressed by MMM.  His income has clearly skyrocketed beyond what he ever would have dreamed when he started this thing.  But he keeps his daily lifestyle basically the same -- biking everywhere, shopping at the bulk discount stores, cooking at home, doing his own projects, etc.  Sure, he has used play money to do interesting projects, but those can all go away if the shit hits the fan.  It is more important to me that he has not given in to takeout, or hiring contractors, or all the other stuff that makes life easier and becomes so tempting (and seems so innocuous) when you can suddenly afford it; he has found a way to resist that most insidious of temptations. 

Tl;dr:  it's not the overall budget that impresses me, it's the fact that he has managed to keep the basic lifestyle expenses so low, because I know from personal experience just how hard that is, even with the best of intentions.

But I also understand that different people get different things out of it, and so might view these changes differently.

This really spoke to me, so much that I thought about it on my lunchtime walk.

We went from used cars to new cars.  Sure they are still small cars, and we paid cash, but we bought them new in 2006 and 2009.  And now, boy what I wouldn't do for a small SUV.  It would be so much more comfy for 4-person road trips than our "big" car (Matrix).

Our schedule has been busy, so eating out has crept up in and around baseball and soccer.  And more easily prepared foods.

Then there is the kid's snacks and toys.

And vacation.  I don't tend to vacation much (see my previous posts on vacationing with kids). But even something like camping, that I enjoy...locally, you have to book months in advance.  I just picked 2 local state parks, one non-local state park, and one national park for camping, and there's literally nothing available on weekends until November. So it's no wonder that if we want to "get away" we end up paying $$ for a hotel.  Even though I don't feel like I can unplug as easily.
Title: Re: MMM 2016 Budget
Post by: nereo on May 23, 2017, 03:09:03 PM
Again, no one is saying he shouldn't have the car or the shed.  We're just saying you can't buy them and then say you didn't spend that money because "it's an investment" or "it's for the blog" or whatever other reasoning.  It's spending, plain and simple, so count it as such.  ESPECIALLY if you're going to preach about the merits of downsizing your house and not having a car/car payment. 
Yeah fair enough, but the way I read it was more like "this is what it costs us to live" and "this is what I spent extra money on"
because he did list it, he just didn't put it in the core expenses. They were also more like one-off costs, not regular spending that will show up every year. So if his point is about living simply for a certain price, he isn't wrong to separate out the living costs from the extras, but it is more honest if he mentions all of it.

I thought the shed was the most spurious, and the most likely to receive facepunches if someone else said it to him.  Go say "I'm going to spend $20k upgrading my kitchen and putting in granite, stainless appliances, etc, but it's okay because it's an investment and I'll get it back" and watch his head explode at the wastefullness of it.  But in reality, money spent in a kitchen is probably MORE likely to see a pay back than money spent on a fancy shed when the time comes to sell a house.
Are you sure? I think not... I've often heard Pete describe himself as a 'housing junkie' who regularly renovates both his own home and friends/rentals primarily because he likes a high degree of fit and finish.  No idea what kind of a ROI a swanky stand-alone shed would bring in his neighborhood, but it wouldn't surprise me if he got all his money back and then some.  Regardless, it seems in line with years of blog posts - once you've eliminated debt and set up a fat stache spend money on what matters to you and cut out the waste.

This paragraph from MMM himself seems apt i describing his philosophy:
Quote from: MMM in May, 2011
The Mr. Money Mustache way is not about living on the cheap. It’s about living the GOOD LIFE on the cheap. The fundamental lesson of this blog is that there is plenty of money to go around in this country, so you don’t have to eliminate your spending on everything to become financially independent. You just have to cut out your waste. And for the most part, buying yourself a home is not a waste.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 23, 2017, 03:23:47 PM

This paragraph from MMM himself seems apt i describing his philosophy:
Quote from: MMM in May, 2011
The Mr. Money Mustache way is not about living on the cheap. It’s about living the GOOD LIFE on the cheap. The fundamental lesson of this blog is that there is plenty of money to go around in this country, so you don’t have to eliminate your spending on everything to become financially independent. You just have to cut out your waste. And for the most part, buying yourself a home is not a waste.

Right on. We spend more than the MMM family, but by cutting out the waste a few years back we have set in motion a rapid run for FI. We still live the "GOOD LIFE," but without the waste we enjoy it even more.
Frankly, it would be really silly for MMM to not build that shed.  He has the money, he uses that shed, and has purchase happiness with that cash.  Good for him.  Why have all that money and not make good use of it?
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on May 24, 2017, 03:39:19 AM
I understand the objections here, and I empathize with the idea of "hidden spending" turning off some readers, but lets stop for a sec and think about this. 

To me the whole idea of Mustachianism isn't just being frugal, clipping coupons, credit card bonuses, etc.  It's about designing an efficient lifestyle, one that make you happy. We are so quick to use spending as a way to measure, we forget, that's not even the point. Our goal is to fulfill our needs without "throw a bunch of cash at the problem" as our first option.  MMM designed his life so that his need for travel, buying electric cars, etc are fulfilled.  At the same time he is writing articles and promoting an agenda/lifestyle important to him, earning income he gets to divert to large scale donations to other causes important to him, meet friends with similar values, ect.  IOW, one action works towards several goals at once, all without directly costing him money. He has parlayed his financial independence into a more efficient lifestyle.

We are comparing apples to oranges in that we are trying to compare the accounting of a 50hr a week salaryman to someone who is financially independent.  None of MMM's endeavors would have been possible if his baseline needs weren't covered (aka financial independence).  No blog, no trips, no electric car, no six figure donations to charity.

In essence I agree his spending is a poor comparison for the average new reader, because the average reader is not financial independent and works a salary job, then uses that income to provide for needs, very inefficiently.  MMM has all needs already covered and just works to reach is goals, financial accounting is really just not that important anymore, as long as his actions make him happy and help him work towards his goals.  I would hope the longer-term participants on this forum understand these not so nuanced differences.

EDIT:  I fear I was terribly unclear with my point as I'm working an overnight shift and not functioning at 100 % cognitive ability at the moment, so, analogy time.  A common hobby around here is gardening. Someone who gardens for enjoyment gets the chance to be outside in the sun, gets a little exercise, promotes local food sourcing, decreases carbon footprint, and reaps the benefit of the produce. We wouldn't argue that the gardener is being dishonest about spending because the budget included seed costs, but no "imputed grocery costs for fresh veggies", "imputed costs for tanning salon and gym", or imputed cost for donations to green charity" because non-gardeners don't enjoy these fringe benefits and would have to pay for them.  Instead we acknowledge this persons efficient lifestyle has provided these things to them at no dollar cost, while simultaneously meeting personal goals and enhancing happiness.  We acknowledge they put themselves in a position to garden instead of extra hours at the office to buy the same outcome.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 24, 2017, 06:25:01 AM
I still think people are missing the point.  Maybe a more succinct way to frame my point is simply this - I wonder what the blog would be like if there had been no extra income and MMM actually did only spend 25k/yr since 2008.  What if the trips to Ecuador, Portland, etc. came out of his own pocket (not going to bike to those places).  What if there had been no incentive to push PeerStreet and all those other bum financial products.  Maybe he actually would have leveraged his 'will work for food' ethos like when he took his family to Hawaii.  Maybe he would have reported back that the radiant heat experiment was a failure (capital costs outweighed the savings).  Maybe he'd express his lust for an e-bike occasionally but, alas, human power is still optimal.  Obviously we'll never know, since it is a hypothetical now, but it is probably a better case for many aspiring ER's that still read his blog.  Those initial years were really when he was doing something magical, and I'm just a little disappointed that he lost his way. 
Title: Re: MMM 2016 Budget
Post by: former player on May 24, 2017, 06:31:49 AM
I still think people are missing the point.  Maybe a more succinct way to frame my point is simply this - I wonder what the blog would be like if there had been no extra income and MMM actually did only spend 25k/yr since 2008.  What if the trips to Ecuador, Portland, etc. came out of his own pocket (not going to bike to those places).  What if there had been no incentive to push PeerStreet and all those other bum financial products.  Maybe he actually would have leveraged his 'will work for food' ethos like when he took his family to Hawaii.  Maybe he would have reported back that the radiant heat experiment was a failure (capital costs outweighed the savings).  Maybe he'd express his lust for an e-bike occasionally but, alas, human power is still optimal.  Obviously we'll never know, since it is a hypothetical now, but it is probably a better case for many aspiring ER's that still read his blog.  Those initial years were really when he was doing something magical, and I'm just a little disappointed that he lost his way.
But couldn't it be seen in a different way?  Not that everyone who achieves FIRE will reach MMM's heights of post-FIRE entrepreneurship.  But that the freedom of FIRE creates the opportunity for new ventures, whether money earning or not? 

And the maths that MMM sets out shows that even without earning additional money in FIRE, after a few years of FIRE at 4% the likelihood is that investment returns will start to create excess income which will enable the financial reins to be loosened at about the same stage that MMM is loosening his.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 24, 2017, 06:57:58 AM
I understand the objections here, and I empathize with the idea of "hidden spending" turning off some readers, but lets stop for a sec and think about this. 

To me the whole idea of Mustachianism isn't just being frugal, clipping coupons, credit card bonuses, etc.  It's about designing an efficient lifestyle, one that make you happy. We are so quick to use spending as a way to measure, we forget, that's not even the point. Our goal is to fulfill our needs without "throw a bunch of cash at the problem" as our first option.  MMM designed his life so that his need for travel, buying electric cars, etc are fulfilled.  At the same time he is writing articles and promoting an agenda/lifestyle important to him, earning income he gets to divert to large scale donations to other causes important to him, meet friends with similar values, ect.  IOW, one action works towards several goals at once, all without directly costing him money. He has parlayed his financial independence into a more efficient lifestyle.

We are comparing apples to oranges in that we are trying to compare the accounting of a 50hr a week salaryman to someone who is financially independent.  None of MMM's endeavors would have been possible if his baseline needs weren't covered (aka financial independence).  No blog, no trips, no electric car, no six figure donations to charity.


Well, I think that's the point many are making. His "advice" and writing these days isn't really applicable to 99% of people. I certainly find nothing actionable there lately. What he thinks of the Leaf, or donating $100k may be interesting reading for some, but I can read that elsewhere. And frankly don't care.

99% out blogs never make a dime, and 9/10 people who start a business go bust. So reading about one of the few who has a half million dollar blog and actually make money from his business may be fascinating on some level, but provide virtually nothing to apply to my life. I can only work my desk job and try to save, starting a blog would not make me anything. It's a necessity caused by his success, but I don't feel a need to read it anymore, and I haven't.
Title: Re: MMM 2016 Budget
Post by: Blackeagle on May 24, 2017, 07:10:32 AM
One thing to remember about the shed is that the expense really a part of MMM's sale of his old house and moving into a new, smaller one.  He sold the old house for about $400k, bought the new one for $240k and spent about $60k renovating it with the express intention to make up some of the space he lost in the downsizing by constructing an outbuilding.  From the articles it sounds like he's gotten a house that's more energy efficient, has spaces that work better for he and his family, and freed up about $70,000 ($400k from the old house, vs $330 to buy the new house, renovate it, and build the shed).  Sounds pretty mustachian to me.
Title: Re: MMM 2016 Budget
Post by: nereo on May 24, 2017, 07:39:45 AM
One thing to remember about the shed is that the expense really a part of MMM's sale of his old house and moving into a new, smaller one.  He sold the old house for about $400k, bought the new one for $240k and spent about $60k renovating it with the express intention to make up some of the space he lost in the downsizing by constructing an outbuilding.  From the articles it sounds like he's gotten a house that's more energy efficient, has spaces that work better for he and his family, and freed up about $70,000 ($400k from the old house, vs $330 to buy the new house, renovate it, and build the shed).  Sounds pretty mustachian to me.
Yeah, one thing that's routinely impressed me about Pete is how he continually optimizes, particularly the largest expenses while maintaining a high QOL. Each new (to him) home is slightly smaller and more efficient. I, too, have dreams of having a stand-alone shed for carpentry projects. 
At least it's better than Dave Ramsey's $4.9M modern castle
(http://cdn.biblemoneymatters.com/wp-content/uploads/2010/10/dave-ramsey-house-1.jpg)
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on May 24, 2017, 07:44:48 AM
I still think people are missing the point.  Maybe a more succinct way to frame my point is simply this - I wonder what the blog would be like if there had been no extra income and MMM actually did only spend 25k/yr since 2008.  What if the trips to Ecuador, Portland, etc. came out of his own pocket (not going to bike to those places).  What if there had been no incentive to push PeerStreet and all those other bum financial products.  Maybe he actually would have leveraged his 'will work for food' ethos like when he took his family to Hawaii.  Maybe he would have reported back that the radiant heat experiment was a failure (capital costs outweighed the savings).  Maybe he'd express his lust for an e-bike occasionally but, alas, human power is still optimal.  Obviously we'll never know, since it is a hypothetical now, but it is probably a better case for many aspiring ER's that still read his blog.  Those initial years were really when he was doing something magical, and I'm just a little disappointed that he lost his way.

I agree the early years posts are the magic makers.  However, I think that is partially because I have not yet reached his level in thought processes.  Meaning to say I haven't been FI for a decade plus & had the opportunity (financial safety) to do the things he has had the opportunity to do.  Maybe in 10 years I will come to see the world more as he sees it today?


Well, I think that's the point many are making. His "advice" and writing these days isn't really applicable to 99% of people. I certainly find nothing actionable there lately. What he thinks of the Leaf, or donating $100k may be interesting reading for some, but I can read that elsewhere. And frankly don't care.

99% out blogs never make a dime, and 9/10 people who start a business go bust. So reading about one of the few who has a half million dollar blog and actually make money from his business may be fascinating on some level, but provide virtually nothing to apply to my life. I can only work my desk job and try to save, starting a blog would not make me anything. It's a necessity caused by his success, but I don't feel a need to read it anymore, and I haven't.

I guess I look at his "advice" as more conceptual vs practical.  The concept of becoming FI, or the concept of saving 3/4's of my income being possible, as opposed to exactly how to do it.  I don't want to mimic the guys decisions.  I don't even like biking (I walk) and I've never set foot inside a Costco.  While I have gotten a few practical tips, it's more realizing I can make life optimal in a similar way. I have just done it my way, which outside of a ridiculously high savings rate, does not mirror his accumulation years at all.  This may just personality related as I'm an ENTJ big picture type of person.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 24, 2017, 07:57:03 AM
One thing to remember about the shed is that the expense really a part of MMM's sale of his old house and moving into a new, smaller one.  He sold the old house for about $400k, bought the new one for $240k and spent about $60k renovating it with the express intention to make up some of the space he lost in the downsizing by constructing an outbuilding.  From the articles it sounds like he's gotten a house that's more energy efficient, has spaces that work better for he and his family, and freed up about $70,000 ($400k from the old house, vs $330 to buy the new house, renovate it, and build the shed).  Sounds pretty mustachian to me.

good way to present it and something he should have done in his blog post.
Title: Re: MMM 2016 Budget
Post by: Spitfire on May 24, 2017, 08:11:48 AM
I don't have a problem with the way he split his budget out with core expenses vs blog/business expenses. I really don't think a couple business trips, a nissan leaf, and a shed would make or break his happiness.   

Maybe people are just objecting that he rationalizes it as a business expense rather than enjoyment, which is a fair point.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 24, 2017, 08:19:20 AM
I don't have a problem with the way he split his budget out with core expenses vs blog/business expenses. I really don't think a couple business trips, a nissan leaf, and a shed would make or break his happiness.   

Maybe people are just objecting that he rationalizes it as a business expense rather than enjoyment, which is a fair point.

None of it matters if he doesn't crow about spending $25k-$30k a year.  But if he wants to brag about that number, the other stuff does affect his credibility. 
Title: Re: MMM 2016 Budget
Post by: edgema on May 24, 2017, 08:19:57 AM
Very interesting to see everyone’s comments – and this is my first.

I have been following this and other FI blogs for the past 3 years and have made some of the major adjustments (downsized house, cheap cars) to accelerate FI and am super excited (I am 2 years away). That said, I think the numbers are simply bigger on both the assets required and the spending needed.

We (family of four) are quite big spenders (certainly compared to $30k) and my concern about when to retire have always hinged on;

1)   Realistic expectation of spend while still enjoying life (there is not a designer shoe, handbag, watch or the like to be seen in our house)
2)   Realistic return expectation on the investment portfolio

On both sides I have always found MMM substantially lower than I can see as realistic, at least for our family.

On 1) I have always had my suspicions of how achievable / joyful this lifestyle would be for us as there are so many things not included which would seriously test my relationship with wife and children if I cut out, noting of course that these would be considered great luxuries to 95% of the world but if we are all reading this that is perhaps not the relevant measure;

•   We live in the UK and I grew up skiing so want my 2 kids to experience this and you are going to drop $4k to get to France and ski for a week. The pass alone is $800 for the family for the week.
•   Housing is simply very expensive in the UK and I want to live near my family so kiss goodbye to at a very minimum $500k for the house (even after the 50% downsize – value wise).
•   Our kids friends live all over the place so we are racking up miles
•   My Dad lives in Florida and if we are to visit him during children's school holidays, say hello to a $3,000 air fare for the four of us.
•   We want to help out our two kids for college fees (average UK student debt at graduation $50k) or helping with first apartments for the kids. That is $10k additional ‘spend’ each year for the next 10.   

Be gentle as I can see true Moustacians sharpening their knives (but I could go on) and what is the option – tell my kids to only make local friends, tell them that I know I grew up going skiing but daddy wants to retire at 40 so tough luck, tell my dad sorry but we aren’t going to visit, saddle my kids with massive debt and thus impact their career choices (as it did me)? This has led me to some sort of Moustache ‘lite’ version which looks, perhaps ironically, much more like MMM spending this past year and something like a baseline something like $80,000 a year if you are free of mortgage and debt. I believe many of the ‘one off’ items in this 2016 budget are simply not (like many corporate accounts!) and would be replaced by other ‘one off’ items each year. For example, I seem to remember a blog entry where the beauty of FI was described by MMM as the ability to go to Florida for a month to escape the harsh winters in Colorado. A quick owners direct on that would tell you that is not a cheap endeavour.

On 2) I have always found the ‘how much do I need’ incredibly optimistic. I work in investments and I think it is quite risky that people have almost taken as gospel that the most impressive recent economy (US) and most impressive run in equity markets (US equities), leading to the highest P/E multiples in decades, is the model to base the next 30-years off of. So, you take a relatively generous 2.5% dividend yield, my $80,000 requirement and end up needing $2.8m unless you assume markets carry on getting more expensive. Admittedly, my calculation is probably too harsh but I would say to endlessly expect equities to compound at 7% is just fantasy.

Let me be clear, the overall the message is great and has led me to major changes in life, but to pick up what some others have said, I think MMM has somewhat retro-fitted the ‘Message’ to his life as though everything was planned when it was not (e.g. the fact he actually didn’t retire but instead set up a construction business). I am 40 and have c$2.0m in invested assets and very lucky to be a high earner. But I am in a job that I would not be able to pick up again once I walk away. If I get this wrong there is no turning back to my current level of earnings.

Throw all that in the mix and the calculation I get to is that the (hopefully) 40 years I have left would be better sticking to work for at least another 2 years, saving hard, be well above what FIRE devotees think is the right amount (and still be very young compared to most retirees). BUT not risk being 50 and not in the comfortable financial position I could be.
Title: Re: MMM 2016 Budget
Post by: Blackeagle on May 24, 2017, 08:44:38 AM
Why do you say that Pete sold the old house with the "express intention to make up some of the space he lost in the downsizing by constructing an outbuilding"?  Based on the article, the evidence for that assertion seems dubious.  And by dubious, I mean that there is no actual evidence for it.

"So, moving to this new house came with one condition: I could survive the compression if I could at least build something about the size of a garage – to function as a place to work, think, create loud music of questionable quality,  and spread out my big messy projects."

http://www.mrmoneymustache.com/2017/01/24/diy-studio-building/
Title: Re: MMM 2016 Budget
Post by: nereo on May 24, 2017, 08:47:34 AM
@ edgema: one thing that's routinely missed about MMM's $25k/year spending is that it includes a paid off home (he paid something like $330k for his current abode). He counts property taxes but not rent/mortgage (because he has none).

It's not really hidden, but many start out thinking "but I pay $1250/mo for my reasonable home in a HCOL area - that's $15,000/year!  I can't live on just $833/mo!"  No.   To follow his spending example it's $2,100/mo AFTER/EXCLUDING your rent or mortgage. 

But as you said, it's about expectations, values and regions.  Ultimately it's about paying for what you value and enriches your life, and cutting out all the other crap that creeps into our modern lives.
Title: Re: MMM 2016 Budget
Post by: jim555 on May 24, 2017, 08:55:59 AM
MMM is way under spending considering his income.  Frugality is hard to change once you have it.
Title: Re: MMM 2016 Budget
Post by: BeanCounter on May 24, 2017, 08:57:05 AM
While I believe in the overall MMM message, I have been one of his outspoken critics in the past year regarding the disclosure of his expenses and the sustainability of his lifestyle. I do think this years post is better written than the previous year.
Title: Re: MMM 2016 Budget
Post by: ditkanate on May 24, 2017, 09:03:38 AM
I'm a bit confused why some people upset. Because MMM is completely FI, he shouldn't spend beyond $25k per year for the rest of his life til death do us part, because he explained years ago in his blog how to become FI?  Because he espouses these principles he is forever bound by them?  Maybe he should quit writing entirely and just leave up the old posts about his life before he was making boatloads of cash through the blog?  Seems like he is in a no win situation.  He acknowledges in his post that he is spending money beyond what he used to preach.  He is only ABLE to spend that additional money because he DID live the life he used to preach.  And because he lived the frugal FIRE life he had the free time to create his blog, which has given him even MORE financial freedom.  Which he is choosing to use in various ways. 
Title: Re: MMM 2016 Budget
Post by: edgema on May 24, 2017, 09:27:03 AM
Nerio.

I understand that property point, but only included as the higher the number the harder to pay off and start building the FI pot.

I totally agree with your ‘expectations, values and regions’ point. I liked a view presented on, I think, another blog which promoted being more mindful of what you are spending money on. Is this purchase adding a positive or taking away a negative in my life. Garden man cave for $30k, fabulous fun for decades, lets’ do it. $15k rolex, ridiculous consumerism, let’s not.

The problem is I think MMM can be a little preachy that $25k is ‘the’ number where the family live the life they ‘exactly’ want. Where people have taking issue is that is clearly not the case has they have spent $90k plus this year.

My concern is that if people take the $25k and the 4% figures too literally and too early in life, they may make the jump too early and give up well paid careers and then may have to struggle into less well paid ones later in life if they get the numbers wrong.
Title: Re: MMM 2016 Budget
Post by: Gondolin on May 24, 2017, 09:39:30 AM
Quote
Because he espouses these principles he is forever bound by them? Seems like he is in a no win situation.

No, he's not bound by them and yes, he's in a no-win situation. All that's really at stake here is whether or not Pete wants to be the "lifestyle guru" that he has previously stated is his goal. If he wants to just kick back and enjoy FI, he can spend whatever he likes. If he really wants to bring in new people to his environmentalist, anti-consumerism movement, he kinda needs to stay the original course.

I'm not mad. I understand all the nuance. All I'm saying if that I was a new site visitor and the 2016 budget post was the first thing I saw (aka "I'm retired but make >300k a year and spend only 25k12345!!), my first reaction would be to think that MMM was just another Internet charlatan financing his life by preying on the dreams of others. I would immediately close the browser.



1Not including business expenses
2Not including 'investment' home renovations
3Not including property taxes
4Not including buying cars for 'advocacy' purposes
5Not including whatever else I bought
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 24, 2017, 09:41:19 AM
I'm a bit confused why some people upset. Because MMM is completely FI, he shouldn't spend beyond $25k per year for the rest of his life til death do us part, because he explained years ago in his blog how to become FI?  Because he espouses these principles he is forever bound by them?  Maybe he should quit writing entirely and just leave up the old posts about his life before he was making boatloads of cash through the blog?  Seems like he is in a no win situation.  He acknowledges in his post that he is spending money beyond what he used to preach.  He is only ABLE to spend that additional money because he DID live the life he used to preach.  And because he lived the frugal FIRE life he had the free time to create his blog, which has given him even MORE financial freedom.  Which he is choosing to use in various ways.

If his life was an exploding volcano of luxury at 25k, then spending more should be an unpleasant, bedpan and catheter issue.  Hardship was a virtue.  This was the foundation of Mustachianism, so basically Pete is living as though his assumption was wrong and as income rises then spending more makes for a better life.

Maybe he should've quit while he was ahead, he won't be the first to have made that mistake (George Lucas).
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 24, 2017, 09:44:40 AM
Quote
Because he espouses these principles he is forever bound by them? Seems like he is in a no win situation.

No, he's not bound by them and yes, he's in a no-win situation. All that's really at stake here is whether or not Pete wants to be the "lifestyle guru" that he has previously stated is his goal. If he wants to just kick back and enjoy FI, he can spend whatever he likes. 

I'm not mad. I understand all the nuance. All I'm saying if that I was a new site visitor and the 2016 budget post was the first thing I saw (aka "I'm retired but make >300k a year and spend only 25k12345!!), my first reaction would be to think that MMM was just another Internet charlatan financing his life by preying on the dreams of others. I would immediately close the browser.



1Not including business expenses
2Not including 'investment' home renovations
3Not including property taxes
4Not including buying cars for 'advocacy' purposes
5Not including whatever else I bought

This.  All of this.  Well stated.

Quote
If he really wants to bring in new people to his environmentalist, anti-consumerism movement, he kinda needs to stay the original course.

I wouldn't even necessarily argue this, I would just say he can't be crowing about "I spend $25k a year and live a super-luxurious life!"  A lot of what makes his life super-luxurious is not counted when calculating that $25k.  If you're the kind of person who can say "eh, I get his jist, it doesn't matter" then that's fine.  I'm not that kind of person.  I'm an accountant.  If you tell me you spent $25k and your spending doesn't add up to $25k I'm going to throw the bullshit flag, because you're lying. 
Title: Re: MMM 2016 Budget
Post by: BeanCounter on May 24, 2017, 09:46:02 AM
The problem is I think MMM can be a little preachy that $25k is ‘the’ number where the family live the life they ‘exactly’ want. Where people have taking issue is that is clearly not the case has they have spent $90k plus this year.

My concern is that if people take the $25k and the 4% figures too literally and too early in life, they may make the jump too early and give up well paid careers and then may have to struggle into less well paid ones later in life if they get the numbers wrong.
+1
I think we're pretty frugal. But $25k with kids would require a pretty extreme lifestyle. And saying no a lot. MMM has no extra sports or extra curricular activities for his kid in the budget. Is that really realistic? There are zero school expenses. I feel like I'm always throwing in some money for something my kids need at school. Or outings to museums or other family entertainment that costs money?
What about things like braces when the boy gets older. Are you going to say no to that? What about the kid getting his drivers license? Are you going to say no to that because the insurance is expensive and he should just ride his bike?
I could go on and on.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 24, 2017, 09:51:25 AM
I understand the objections here, and I empathize with the idea of "hidden spending" turning off some readers, but lets stop for a sec and think about this. 

To me the whole idea of Mustachianism isn't just being frugal, clipping coupons, credit card bonuses, etc.  It's about designing an efficient lifestyle, one that make you happy. We are so quick to use spending as a way to measure, we forget, that's not even the point. Our goal is to fulfill our needs without "throw a bunch of cash at the problem" as our first option.  MMM designed his life so that his need for travel, buying electric cars, etc are fulfilled.  At the same time he is writing articles and promoting an agenda/lifestyle important to him, earning income he gets to divert to large scale donations to other causes important to him, meet friends with similar values, ect.  IOW, one action works towards several goals at once, all without directly costing him money. He has parlayed his financial independence into a more efficient lifestyle.

We are comparing apples to oranges in that we are trying to compare the accounting of a 50hr a week salaryman to someone who is financially independent.  None of MMM's endeavors would have been possible if his baseline needs weren't covered (aka financial independence).  No blog, no trips, no electric car, no six figure donations to charity.


Well, I think that's the point many are making. His "advice" and writing these days isn't really applicable to 99% of people. I certainly find nothing actionable there lately. What he thinks of the Leaf, or donating $100k may be interesting reading for some, but I can read that elsewhere. And frankly don't care.

99% out blogs never make a dime, and 9/10 people who start a business go bust. So reading about one of the few who has a half million dollar blog and actually make money from his business may be fascinating on some level, but provide virtually nothing to apply to my life. I can only work my desk job and try to save, starting a blog would not make me anything. It's a necessity caused by his success, but I don't feel a need to read it anymore, and I haven't.

I think some of that is just because he's awesome.

I mean, think about it...most people aren't as successful as he is.  Whether in software or anything.

He and his wife both had really good jobs...higher than most people. 
Then they saved a lot of money ... a lot more than most people.

Retiring early gave him the freedom to work on other ventures.  And it turns out, he's really good at a lot of things...better than most people.  And, by retiring early, he had the time to work on them.

- His writing is engaging, and his blog was really good at the beginning. I'm betting it's not just that he's a good writer - he had to work at it.  I've had a blog for 10 years, and I can identify the <10 good posts that I wrote, and they were definitely ones that I wrote and re-wrote and researched.

- He's really good at real estate and fixing up houses.  But you know, he had some early fails.  Sure he's mechanically inclined, but a lot of his success has come from...practice.  My husband is mechanically inclined too, but you can tell which parts of the house he did earlier rather than later.

- Then there is Mrs MMM.  First, there was getting her real estate license, which helped save money on the transactions (I mean, aside from her prior day job!)
- Then there's her hobbies. I  love crafting too.  I've tried just about everything.  The two things I've stuck to most are quilting and crocheting, though I've dabbled in jewelry making.  I don't wear jewelry though, so it's not my interest.   Well, it turns out her Etsy shop is successful.  Now, how?  First, she was retired, so she had the time to try and few things.  And pick the ones that she liked.  And see what sold.  Then, she did RESEARCH.  It's not just "putting stuff on Etsy".  I wouldn't have the faintest clue on how to do the research MMM described in his blog post - but that's a key to her success.  Doing the research to figure out what sells, and how to get more business.

So in both cases - the two individuals are both more talented than most (which will make others jealous at times), AND they've designed their lives so that they can follow these passions and work on them.  And now they are lucrative. 

I mean, isn't that part of the point?  Designing your own life?  Not needing the money?  I just think that a lot of the disappointment in how MMM's life is going is just sour grapes because it all came up roses.  Is it really his "fault" that he's good at things?

Most blogs don't make money, but most of them suck.
I'd gather that most Etsy shops aren't big money makers either.

It's like a blog I used to read where it was a mom packing vegan lunchboxes for her kid.  She went on to write two vegan cookbooks.  Then a few years later, stopped being vegan.  The vitriol!  "How dare you make money on these cookbooks when you are a faker!"  Um, she wasn't a faker when she wrote the books?  And they are good books with good recipes?  And she still is mostly vegan?
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 24, 2017, 09:55:32 AM
It's like a blog I used to read where it was a mom packing vegan lunchboxes for her kid.  She went on to write two vegan cookbooks.  Then a few years later, stopped being vegan.  The vitriol!  "How dare you make money on these cookbooks when you are a faker!"  Um, she wasn't a faker when she wrote the books?  And they are good books with good recipes?  And she still is mostly vegan?

But there's a difference between:

"I'm mostly vegan, here are some great vegan recipes, but occasionally I'll have meat"

and

"I'm a vegan, everyone should be vegan, look how awesome my vegan lifestyle is and we're all vegan all the time*



*except sometimes we eat meat when we want a really good meal"
Title: Re: MMM 2016 Budget
Post by: Dabnasty on May 24, 2017, 09:56:02 AM
Nerio.

I understand that property point, but only included as the higher the number the harder to pay off and start building the FI pot.

I totally agree with your ‘expectations, values and regions’ point. I liked a view presented on, I think, another blog which promoted being more mindful of what you are spending money on. Is this purchase adding a positive or taking away a negative in my life. Garden man cave for $30k, fabulous fun for decades, lets’ do it. $15k rolex, ridiculous consumerism, let’s not.

The problem is I think MMM can be a little preachy that $25k is ‘the’ number where the family live the life they ‘exactly’ want. Where people have taking issue is that is clearly not the case has they have spent $90k plus this year.

My concern is that if people take the $25k and the 4% figures too literally and too early in life, they may make the jump too early and give up well paid careers and then may have to struggle into less well paid ones later in life if they get the numbers wrong.
I think you're right that this is why some are critical, he claimed life couldn't possibly get better with more spending but I always took that as part of his optimistic/exaggerative writing style and what he really meant was he was high enough on the diminishing returns scale to not care much. On the other hand I can actually agree with some of his creative accounting and I think his costs to meet maximum happiness haven't changed much. I suppose the up front shed cost should factor in opportunity cost :) Then again he may get his 30 back +7%/per year in appreciation, the world may never know...

That being said I am impressed that certain costs like restaurants and automobile are still so low. I think this is interesting because it shows which expenses they truly aren't interested in spending more on and these are the types of consumerist spending he is most critical of. I find this useful information because I do wonder, If I were not working full time would I eat out more due to boredom or would I eat out less because I can take as much time as I want to cook. I assume the latter but I know I can't always trust my future self.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 24, 2017, 09:58:22 AM
That being said I am impressed that certain costs like restaurants and automobile are still so low. I think this is interesting because it shows which expenses they truly aren't interested in spending more on and these are the types of consumerist spending he is most critical of. I find this useful information because I do wonder, If I were not working full time would I eat out more due to boredom or would I eat out less because I can take as much time as I want to cook. I assume the latter but I know I can't always trust my future self.

Except his automobile costs are NOT so low, because he didn't count the fact that he bought, you know, an automobile.  He just said they're low because he wrote a small number for "automobile".

 
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 24, 2017, 09:58:43 AM
Quote
Be gentle as I can see true Moustacians sharpening their knives (but I could go on) and what is the option – tell my kids to only make local friends, tell them that I know I grew up going skiing but daddy wants to retire at 40 so tough luck, tell my dad sorry but we aren’t going to visit, saddle my kids with massive debt and thus impact their career choices (as it did me)? This has led me to some sort of Moustache ‘lite’ version which looks, perhaps ironically, much more like MMM spending this past year and something like a baseline something like $80,000 a year if you are free of mortgage and debt. I believe many of the ‘one off’ items in this 2016 budget are simply not (like many corporate accounts!) and would be replaced by other ‘one off’ items each year. For example, I seem to remember a blog entry where the beauty of FI was described by MMM as the ability to go to Florida for a month to escape the harsh winters in Colorado.

- Have dad come visit you, or visit less often, or figure out how to use miles (I used to fly my mother over to visit us because it's 1 plane ticket instead of 4)
- MMM hasn't said he will saddle his kid with debt.  I'm imagining he won't pay outright for college but also won't let him get into debt either.  Kind of nice when your parents know their way around.
- I assume there are ways to ski for less, but I don't ski.  My husband did ski growing up.  And...right now my kids have been skiing exactly once (well, one of them anyway), and they don't seem to be damaged by lack of skiing.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 24, 2017, 10:00:11 AM
It's like a blog I used to read where it was a mom packing vegan lunchboxes for her kid.  She went on to write two vegan cookbooks.  Then a few years later, stopped being vegan.  The vitriol!  "How dare you make money on these cookbooks when you are a faker!"  Um, she wasn't a faker when she wrote the books?  And they are good books with good recipes?  And she still is mostly vegan?

But there's a difference between:

"I'm mostly vegan, here are some great vegan recipes, but occasionally I'll have meat"

and

"I'm a vegan, everyone should be vegan, look how awesome my vegan lifestyle is and we're all vegan all the time*



*except sometimes we eat meat when we want a really good meal"

Thing is, she *was* a vegan for a very very long time.  And when she wrote the cookbooks, she was a vegan.  So I really don't understand the attitude of "how dare you make money on it!"  Like she has to turn in her vegan card (well, if there was one)...but she still wrote the books.  And by then, she was shutting down the blog. 
Title: Re: MMM 2016 Budget
Post by: SingleMomDebt on May 24, 2017, 10:04:24 AM
I ended up reading his post due to this thread. I understand the angst some have. But the lesson or bit I took from it is to create multiple business incomes. That's an advantage. If neither of them had businesses then they would be fine on their bare bones budget fo $25K ish. At some point, they both had to expand their lives. Instead of doing it from personal or dividend income, they are doing it with business income. With no fear of failure because they have set up a great safety net. That can take a person quite far if the want.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 24, 2017, 10:06:38 AM
Quote
MMM has no extra sports or extra curricular activities for his kid in the budget. Is that really realistic? There are zero school expenses. I feel like I'm always throwing in some money for something my kids need at school. Or outings to museums or other family entertainment that costs money?
What about things like braces when the boy gets older. Are you going to say no to that? What about the kid getting his drivers license? Are you going to say no to that because the insurance is expensive and he should just ride his bike?
I could go on and on.

Why would it be in the budget if he doesn't need it yet?

My older kid is his kid's age.  He didn't really need a budget for sports or extra-curriculars for a very long time.  Eventually, he joined baseball. So yeah, now we pay for baseball.  But he's got quite a few friends who aren't into sports, and don't play sports.

We have free music lessons at school, and even extra music district-wide.  Also free.  And they bus your kids there.
We also have free sports at school. Soccer, basketball, and track.

I never had braces.  Many kids never need braces.  Even if they do, eventually, why would he have braces in his budget if his kid doesn't need them (yet)?

His kid is 5 years from driving, why on earth would he have a driver's license in his budget?

There are plenty of family entertainment things that you can do that are free.  The library.  Free days at museums.  Around here, kids go on field trips to museums, and then the museums often give them a ticket for a free family entry for a day.  Free concerts in the park.  Hikes.  Parks.  And, of course, if you are retired - you then have more time to figure out all these free days and things.

You can get by at school spending very little money.  Like $0.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 24, 2017, 10:07:15 AM
It's like a blog I used to read where it was a mom packing vegan lunchboxes for her kid.  She went on to write two vegan cookbooks.  Then a few years later, stopped being vegan.  The vitriol!  "How dare you make money on these cookbooks when you are a faker!"  Um, she wasn't a faker when she wrote the books?  And they are good books with good recipes?  And she still is mostly vegan?

But there's a difference between:

"I'm mostly vegan, here are some great vegan recipes, but occasionally I'll have meat"

and

"I'm a vegan, everyone should be vegan, look how awesome my vegan lifestyle is and we're all vegan all the time*



*except sometimes we eat meat when we want a really good meal"

Thing is, she *was* a vegan for a very very long time.  And when she wrote the cookbooks, she was a vegan.  So I really don't understand the attitude of "how dare you make money on it!"  Like she has to turn in her vegan card (well, if there was one)...but she still wrote the books.  And by then, she was shutting down the blog.

I have zero problem with the money MMM makes from his blog.  None at all.  I'm just asking for some intellectual honesty, if there's lifestyle creep (and there is) A) admit to it, and B) either defend it or reject it and desire to do better.  But don't pretend it isn't there because you make up numbers that omit it. 

It would be like if your vegan author was telling everyone they should be vegan because it's so great but not being vegan herself.  She doesn't need to be vegan for her vegan recipes to have merit.  But her overall message of "you should be a vegan" (assuming she's pushing veganism" falls apart if she's, uh, not being vegan.  If you're going to tell me I should be a vegan then you should be a vegan.  If you are going to tell me be mostly vegan but some meat sometimes is okay, then that's fine too.  But a non-vegan telling me I should be a vegan is different.
Title: Re: MMM 2016 Budget
Post by: Dabnasty on May 24, 2017, 10:17:18 AM
If his life was an exploding volcano of luxury at 25k, then spending more should be an unpleasant, bedpan and catheter issue.  Hardship was a virtue.  This was the foundation of Mustachianism, so basically Pete is living as though his assumption was wrong and as income rises then spending more makes for a better life.

Maybe he should've quit while he was ahead, he won't be the first to have made that mistake (George Lucas).

I have to disagree with this angle because he never said additional spending is a step toward bedpan/catheter, that's only the case if you're spending on convenience and luxury. People spend thousands of dollars to climb Mount Everest.

And he built a shed. Sure, he spent $30,000 on it but he could have spent more and had it built without lifting a finger. He drives for Uber to try out the leaf. He continues to help friends with construction projects for beer. Are these not voluntary hardships?

As for Star Wars, well. I mean. ya
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 24, 2017, 10:19:14 AM
Pete is in a tough place - he's got expenses that can be accounted for as personal expenses or business expenses.

If he labels them as personal expenses, then he is criticized - LIFESTYLE CREEP!!

If he labels them as business expenses, then he is criticized - NOT RETIRED!!!

Kind of the definition of a no win situation.
Title: Re: MMM 2016 Budget
Post by: Gondolin on May 24, 2017, 10:24:05 AM
Quote
If he really wants to bring in new people to his environmentalist, anti-consumerism movement, he kinda needs to stay the original course.

I wouldn't even necessarily argue this

Yeah, I agree (Hence the 'kinda' qualifier). There's got to be a way to package his current situation in a way that doesn't dull the original message.

Quote
But don't pretend it isn't there because you make up numbers that omit it. 

Ah, this! I think you and I are on the same page Chris22. Vagueness, accounting tricks, "all the secrets are in my $19.99 e-book" BS is what internet charlatans love. Part of what drew me to the MMM website was how clear and transparent it all was. Now MMM is starting to lose that and I think it muddles the clarity of his original message for new readers.

The shockingly simple math is shocking because it is simple. Once you start adding caveats, business expense categories, and complex accounting, it completely loses it's potency.


Quote
If he labels them as personal expenses, then he is criticized - LIFESTYLE CREEP!!
If he labels them as business expenses, then he is criticized - NOT RETIRED!!!

Also, true. Welcome to the Internet I guess.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 24, 2017, 10:27:19 AM
Pete is in a tough place - he's got expenses that can be accounted for as personal expenses or business expenses.

If he labels them as personal expenses, then he is criticized - LIFESTYLE CREEP!!

If he labels them as business expenses, then he is criticized - NOT RETIRED!!!

Kind of the definition of a no win situation.

The two I'm most critical of, the car and the shed, can't reasonably be claimed as business expenses in my opinion, and the shed he excluded purely on the basis that it will appreciate so it isn't spending (Jennifer Lawrence yeah ok gif).  The car replaced his other personal car, and yeah he wants to "use it as an experiment for the blog" but it's pretty clearly replacing his last personal car, so.....


I don't even think either is excessive lifestyle creep.  "Hey we downsized houses, and I used some proceeds to build a shed, it all happened to hit this year."  "I wanted to get an electric car to replace a gas car because it's the right thing to do, that cost me $XXXX in car payments this year."  No big deal.  The problem, as they say, is in the coverup.
Title: Re: MMM 2016 Budget
Post by: BeanCounter on May 24, 2017, 10:29:56 AM
Quote
MMM has no extra sports or extra curricular activities for his kid in the budget. Is that really realistic? There are zero school expenses. I feel like I'm always throwing in some money for something my kids need at school. Or outings to museums or other family entertainment that costs money?
What about things like braces when the boy gets older. Are you going to say no to that? What about the kid getting his drivers license? Are you going to say no to that because the insurance is expensive and he should just ride his bike?
I could go on and on.

Why would it be in the budget if he doesn't need it yet?

My older kid is his kid's age.  He didn't really need a budget for sports or extra-curriculars for a very long time.  Eventually, he joined baseball. So yeah, now we pay for baseball.  But he's got quite a few friends who aren't into sports, and don't play sports.

We have free music lessons at school, and even extra music district-wide.  Also free.  And they bus your kids there.
We also have free sports at school. Soccer, basketball, and track.

I never had braces.  Many kids never need braces.  Even if they do, eventually, why would he have braces in his budget if his kid doesn't need them (yet)?

His kid is 5 years from driving, why on earth would he have a driver's license in his budget?

There are plenty of family entertainment things that you can do that are free.  The library.  Free days at museums.  Around here, kids go on field trips to museums, and then the museums often give them a ticket for a free family entry for a day.  Free concerts in the park.  Hikes.  Parks.  And, of course, if you are retired - you then have more time to figure out all these free days and things.

You can get by at school spending very little money.  Like $0.

He wouldn't necessarily have those particular things in his budget. I'm just using them as an example of how kids cause lifestyle creep that you have very little control over. If you FIRE with kids on a $700k stache, how do you pay for those things over time. Or maybe you don't, you just say no to everything.
Title: Re: MMM 2016 Budget
Post by: Saving4Fire on May 24, 2017, 10:34:08 AM

The two I'm most critical of, the car and the shed, can't reasonably be claimed as business expenses in my opinion, and the shed he excluded purely on the basis that it will appreciate so it isn't spending (Jennifer Lawrence yeah ok gif).  The car replaced his other personal car, and yeah he wants to "use it as an experiment for the blog" but it's pretty clearly replacing his last personal car, so.....

For me MMM has a minor amount of hypocrisy judging others lifestyle creep while glossing over his own.   Basically, there's a bit of arrogance being the judge, jury and executioner on what constitutes "good" life style creep spending.

I like MMM and I think he makes some good points, but the way he presents this budget is pretty ridiculous.
Title: Re: MMM 2016 Budget
Post by: bacchi on May 24, 2017, 10:45:10 AM
At least it's better than Dave Ramsey's $4.9M modern castle

That is one tacky monstrosity.
Title: Re: MMM 2016 Budget
Post by: nereo on May 24, 2017, 10:53:08 AM
At least it's better than Dave Ramsey's $4.9M modern castle

That is one tacky monstrosity.
"God" provided it for him.
13,000 sqft + a 1,500 sqft garage.
When he runs out of milk he can ask Lee Ann Rimes next door for a cup.
Title: Re: MMM 2016 Budget
Post by: Blackeagle on May 24, 2017, 11:21:19 AM
I do have a bit of a problem with the blog income.  He said that being FI means he no longer needs to make decisions with regard to how much income his actions will generate... and then goes ahead and relentlessly monetizes his website. 

He is no where close to "relentlessly" monetizing the blog.  Sure, he's doing some affiliate marketing, but there's no straight up ads (even here on the forum), no sponsored content, he's not hawking books or seminars, there's no membership where you can pay more each month to get extra content, and the posting rate is pretty clearly driven by his level of interest in writing rather than what would generate the most money.  Frankly, when it comes to monetizing MMM he's being pretty lazy about it. 
Title: Re: MMM 2016 Budget
Post by: ditkanate on May 24, 2017, 11:45:32 AM
Pete is in a tough place - he's got expenses that can be accounted for as personal expenses or business expenses.

If he labels them as personal expenses, then he is criticized - LIFESTYLE CREEP!!

If he labels them as business expenses, then he is criticized - NOT RETIRED!!!

Kind of the definition of a no win situation.

The two I'm most critical of, the car and the shed, can't reasonably be claimed as business expenses in my opinion, and the shed he excluded purely on the basis that it will appreciate so it isn't spending (Jennifer Lawrence yeah ok gif).  The car replaced his other personal car, and yeah he wants to "use it as an experiment for the blog" but it's pretty clearly replacing his last personal car, so.....


I don't even think either is excessive lifestyle creep.  "Hey we downsized houses, and I used some proceeds to build a shed, it all happened to hit this year."  "I wanted to get an electric car to replace a gas car because it's the right thing to do, that cost me $XXXX in car payments this year."  No big deal.  The problem, as they say, is in the coverup.

But, he wrote about both of those things in the blog.  How is that a coverup?  Because he didn't categorize them how you'd prefer? 

Perhaps he should write his spending blog posts with just two categories:

1. Spending that would've happened no matter what even if I wasn't retired yet.
2. Other spending due to being super rich and retired.

It sounds like the main problem many have is looking at this post through the eyes of a complete MMM newbie and seeing them get turned off by a perceived slight of hand with the accounting. 
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 24, 2017, 11:53:30 AM
The two I'm most critical of, the car and the shed, can't reasonably be claimed as business expenses in my opinion, and the shed he excluded purely on the basis that it will appreciate so it isn't spending (Jennifer Lawrence yeah ok gif).  The car replaced his other personal car, and yeah he wants to "use it as an experiment for the blog" but it's pretty clearly replacing his last personal car, so.....


I don't even think either is excessive lifestyle creep.  "Hey we downsized houses, and I used some proceeds to build a shed, it all happened to hit this year."  "I wanted to get an electric car to replace a gas car because it's the right thing to do, that cost me $XXXX in car payments this year."  No big deal.  The problem, as they say, is in the coverup.

Yeah, I haven't read the blog lately so when I went back and read the post about the shed I rolled my eyes hard.  MMM goes from "downsizing is so great!" to "whoops, guess that getting rid of a lot of housing space isn't all it's all cracked up to be!" And then justifies the shed because he's a "Maker" and it will appreciate (uh, not so sure random structures on a property are always a plus).

I scanned through the original post about the house and didn't see anything about the plans for the shed mentioned then (as he now claims was the case from the beginning), so I think it is disingenous to be all "Downsizing is so great!!!" and then come back a few years later saying you were planning to build extra space the whole time.

Edit: In a subsequent post about the house http://www.mrmoneymustache.com/2013/09/23/rebuilding-our-new-old-house-want-to-help/ I do see the shed is mentioned although it is was described as an office/workspace/cross-fit studio (presumably for both MMM and Mrs. MMM) while in its final incarnation it seems to have become solely an office/workshop for MMM. I still consider it disingenous that this wasn't mentioned when all the benefits of downsizing were being discussed.
Title: Re: MMM 2016 Budget
Post by: Raenia on May 24, 2017, 11:54:17 AM
I don't have much too add to the conversation here, but just wanted to say that posts like this were what made me roll my eyes and close the browser the first time someone directed me to MMM.  Yeah, sure, it looks so easy when you have two high-earning adults with no kids during the accumulation phase, and you can count all your expensive hobbies as business expenses instead of actual spending.  It took years for me to come back and give the blog another read to get past that and see the truth of the math.  I wouldn't be surprised if others see the creativity of MMM's budgeting and are convinced there's nothing real behind it and give up without trying.

I have not interest in face-punching for the spending, they're successful and retired and can do what they like.  But still, it is definitely off-putting to newbies.
Title: Re: MMM 2016 Budget
Post by: obstinate on May 24, 2017, 12:00:43 PM
Pete is in a tough place - he's got expenses that can be accounted for as personal expenses or business expenses.
Well, he'd be in a tough place if he gave a shit about the carping that gets done on these fora, which he doesn't read.
Title: Re: MMM 2016 Budget
Post by: threefive on May 24, 2017, 12:04:27 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)

Business expenses: why would he include these in his personal spending? I travel all over the world for my job. Trust me, I get a LOT of personal enjoyment out of doing so. I would never think to add the costs of those trips into my personal spending. I'm about to take a job that includes free public transportation on the area's public transit. My personal spending will go down quite a bit because of this. I never thought to continue calculating the imputed cost of that into my personal budget. Sure, maybe I need to think about the potential future transportation costs when I leave the job, but right now it's a benefit. Should I also include my employers considerable contribution to my health insurance when calculating personal expenses? Would it matter if a company I owned paid these costs?

The Nissan Leaf stuff is a bit hand-wavy BS. He has/had a car. He spent that money. Sure he can write about the car, but if he isn't deducting it from his taxes, then I wouldn't consider it a business expense. I think he'd have a tough time in an audit if he did deduct it from his taxes as a business expense. The outbuilding is just him spending money and outright pretending he didn't. He will not get $30k added value to the house. I spent $15k this year renovating our kitchen. I won't get $15k back out. I spent $15k because I wanted a new kitchen. He spent $30k because he wanted a man cave. I have no beef with that, but he did still spend the money.

Still ... if we add in the the car and the outbuilding, we're looking at:

(1) Car: Say $14k (not sure how he swung that!), worth about $7k in 5 years, so about $1,400 spread over that time. I'm even ignoring the sale of the Scion.
(2) Outbuilding: I'll spread this cost over 10 years, because how many outbuildings are you going to build in that time? Forget opportunity cost. That's $3000 in spending.

So ... $35,000. If I take that number and add to it my housing costs, then he's at a typical middle class level of spending. He'd need roughly a $70k a year job to support that level of spending with the inclusion of "traditional" retirement saving. What that means is he is not some frugal living god, but a relatively normal middle class spender, which I don't think he disagrees with.

My point: Live like you make $60-70k on a salary of $120k and retire early. If you don't make $120k, then ... start making $120k or spend less than MMM. If you make the average household income in the US, then don't expect the MMM lifestyle. It's too fancy.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 24, 2017, 12:09:15 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?
Title: Re: MMM 2016 Budget
Post by: PoutineLover on May 24, 2017, 12:16:12 PM
Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?
... he saw an opportunity, he took it. He is pretty transparent about all the things he has recommended and states that he recommends them because he uses them and that if you sign up he (and sometimes you) will get a benefit. It's done in a more tasteful way than just papering the blog in ads. In the end, it adds to his safety cushion, or he donates it. Wouldn't you take that same opportunity, even if you didn't really need the money?
Title: Re: MMM 2016 Budget
Post by: ol1970 on May 24, 2017, 12:16:25 PM
I'm just glad he came clean that his budget for alcohol and craft beer is grossly understated at $350!  Dear lord I'd be embarrassed as hell to tell the world what a single guy who lives on the water, entertains with sunset boat rides, and has been known to throw the occasional party spends on that line item!

In all seriousness though, I get that he is sort of "trapped" in his spending because his fame and identity is as the super frugal dude.  I think 50 years from now though, when he's got a massive pile of money laying on his death bed, he may wish he would have taken his wife and kids on a Safari, or a sailing trip to through the Caribbean, or (fill in with other awesome life experience here).  To each their own and if he's happy that is all that matters...I for one wouldn't be pissed if he took those trips as business expenses and wrote about it, life's way too short to sit ultra-frugally on your pile when there is so much cool stuff out there to experience. 
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 24, 2017, 12:20:15 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?

b/c if you're going to do something why not make some extra cash doing it if its possible.  also MMM didnt FIRE

he left his job to start building houses <-- career change
then the housing market colapsed.  <--- if this doesnt happen we may never know about him.  he may just keep building houses making a killing.
then the markets crashed. <---- butt hole pucker time.

anyone in that situation would likely be looking to bring in extra income if possible so he blogged and monetized it.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 24, 2017, 12:20:56 PM
Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?
... he saw an opportunity, he took it. He is pretty transparent about all the things he has recommended and states that he recommends them because he uses them and that if you sign up he (and sometimes you) will get a benefit. It's done in a more tasteful way than just papering the blog in ads. In the end, it adds to his safety cushion, or he donates it. Wouldn't you take that same opportunity, even if you didn't really need the money?

Me personally yes, but I don't go around telling people but that I have the one true way of living and you're a consumer sucka if you don't agree with me.

MMM has been all about how his ideals are more important than money so there seems to be some cognitive dissonance there. Would MMM really have used some of these things if there wasn't the potential payoff down the road? As an earlier poster said, there's now no way to be sure so it does dilute his message.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 24, 2017, 12:28:03 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?

b/c if you're going to do something why not make some extra cash doing it if its possible.  also MMM didnt FIRE

he left his job to start building houses <-- career change
then the housing market colapsed.  <--- if this doesnt happen we may never know about him.  he may just keep building houses making a killing.
then the markets crashed. <---- butt hole pucker time.

anyone in that situation would likely be looking to bring in extra income if possible so he blogged and monetized it.

I don't disagree with your above sequence of history, but doesn't that also undercut that the message of "the 4% rule will see you through" that is a cornerstone of the MMM philosophy?

When one is basically preaching a philosophical system, not being consistent to it yourself is not the best way to get others to buy into it - especially when the philosophy itself promotes black and white thinking about its key concepts.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 24, 2017, 12:30:33 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?

b/c if you're going to do something why not make some extra cash doing it if its possible.  also MMM didnt FIRE

he left his job to start building houses <-- career change
then the housing market colapsed.  <--- if this doesnt happen we may never know about him.  he may just keep building houses making a killing.
then the markets crashed. <---- butt hole pucker time.

anyone in that situation would likely be looking to bring in extra income if possible so he blogged and monetized it.

I don't disagree with your above sequence of history, but doesn't that also undercut that the message of "the 4% rule will see you through" that is a cornerstone of the MMM philosophy?

When one is basically preaching a philosophical system, not being consistent to it yourself is not the best way to get others to buy into it - especially when the philosophy itself promotes black and white thinking about its key concepts.

i 100% agree thats the side i'm on with the whole thing.  If he really wants to show this works every dime he makes should be given away.  (but who the hell is gonna do that)  the insurance is worth so much just to have that cash there for the healthcare what ifs the end of life what ifs.

it'd be really cool to see some one FIRE and 100% live on the 4% rule with a roth ladder and blog about it ... but when that happens and then it gets popular then it makes money and that money is now a safety net and you're no longer retired.  you see where this is going. its an infinite cycle.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 24, 2017, 12:39:11 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?

b/c if you're going to do something why not make some extra cash doing it if its possible.  also MMM didnt FIRE

he left his job to start building houses <-- career change
then the housing market colapsed.  <--- if this doesnt happen we may never know about him.  he may just keep building houses making a killing.
then the markets crashed. <---- butt hole pucker time.

anyone in that situation would likely be looking to bring in extra income if possible so he blogged and monetized it.

I don't disagree with your above sequence of history, but doesn't that also undercut that the message of "the 4% rule will see you through" that is a cornerstone of the MMM philosophy?

When one is basically preaching a philosophical system, not being consistent to it yourself is not the best way to get others to buy into it - especially when the philosophy itself promotes black and white thinking about its key concepts.

i 100% agree thats the side i'm on with the whole thing.  If he really wants to show this works every dime he makes should be given away.  (but who the hell is gonna do that)  the insurance is worth so much just to have that cash there for the healthcare what ifs the end of life what ifs.

it'd be really cool to see some one FIRE and 100% live on the 4% rule with a roth ladder and blog about it ... but when that happens and then it gets popular then it makes money and that money is now a safety net and you're no longer retired.  you see where this is going. its an infinite cycle.

That could be gotten around by a blog owner seeking out those who are FI but don't have a blog themselves (maybe this is already out there somewhere?). Would be more of one-off or occasional check-in but I think it would be extremely valuable to see how how the FIRE concepts play out when there's not a firehose of blog income as a back-up.  Of course there are FIRE'd forum members here but don't know how publicly some of them would want to share all their details.
Title: Re: MMM 2016 Budget
Post by: threefive on May 24, 2017, 12:44:44 PM
Me personally yes, but I don't go around telling people but that I have the one true way of living and you're a consumer sucka if you don't agree with me.

MMM has been all about how his ideals are more important than money so there seems to be some cognitive dissonance there. Would MMM really have used some of these things if there wasn't the potential payoff down the road? As an earlier poster said, there's now no way to be sure so it does dilute his message.

I guess it might dilute his "message" in some people's minds, but I think those people are getting the wrong message. What I've gotten from MMM is that you don't need a lot to live fancy, and you don't really get any more happiness or much more fancyness past a certain level of spending. His message is aimed at the six-figure set: after $40-50k of spending, you're really just accumulating useless stuff that doesn't make you happy. So stop, save, and quit working in 10 years. If you want true frugal blogging for the average salary family, then there are way better options than MMM.

I honestly get the impression that Pete is a dude that writes some shit in a computer, and he got lucky that it became popular. Once popular, he monetized because, why not? Then he probably got bored with doing too much of that. Now, he barely writes shit in a computer anymore, but when he does, it seems to be whatever happens to be swirling around in his head, which is different in many ways from several years ago.

First, like I said, there is very little monetization. Really, he has like the least monetization I think reasonably possible for a blog other than zero. He's SUPER lazy on that side. Second, this blog has some massive expenses you don't see. He is probably paying several thousand dollars a month in server costs and technical support (which, it seems, some would expect him to include in his "spending"). He needs some minimal amount of monetization to cover those costs. And that pretty much is what he has. The traffic is just so large that that minimal amount of lazy monetization covers costs AND makes extra bank. And then the asshole has the audacity to write six-figure checks to charities with some of that extra bank.

Accept it: Pete is some random rich guy that started writing some shit in a computer at just about the perfect time and got lucky. Some of that shit may work for you, some may not.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 24, 2017, 12:48:05 PM
Me personally yes, but I don't go around telling people but that I have the one true way of living and you're a consumer sucka if you don't agree with me.

MMM has been all about how his ideals are more important than money so there seems to be some cognitive dissonance there. Would MMM really have used some of these things if there wasn't the potential payoff down the road? As an earlier poster said, there's now no way to be sure so it does dilute his message.

I guess it might dilute his "message" in some people's minds, but I think those people are getting the wrong message. What I've gotten from MMM is that you don't need a lot to live fancy, and you don't really get any more happiness or much more fancyness past a certain level of spending. His message is aimed at the six-figure set: after $40-50k of spending, you're really just accumulating useless stuff that doesn't make you happy. So stop, save, and quit working in 10 years. If you want true frugal blogging for the average salary family, then there are way better options than MMM.

I honestly get the impression that Pete is a dude that writes some shit in a computer, and he got lucky that it became popular. Once popular, he monetized because, why not? Then he probably got bored with doing too much of that. Now, he barely writes shit in a computer anymore, but when he does, it seems to be whatever happens to be swirling around in his head, which is different in many ways from several years ago.

First, like I said, there is very little monetization. Really, he has like the least monetization I think reasonably possible for a blog other than zero. He's SUPER lazy on that side. Second, this blog has some massive expenses you don't see. He is probably paying several thousand dollars a month in server costs and technical support (which, it seems, some would expect him to include in his "spending"). He needs some minimal amount of monetization to cover those costs. And that pretty much is what he has. The traffic is just so large that that minimal amount of lazy monetization covers costs AND makes extra bank. And then the asshole has the audacity to write six-figure checks to charities with some of that extra bank.

Accept it: Pete is some random rich guy that started writing some shit in a computer at just about the perfect time and got lucky. Some of that shit may work for you, some may not.

he has spent many blog posts trying to say its not aimed at this set and anyone can do it look at me on 25k.  not to say it doesnt work better for those of us with 6 figure salaries.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 24, 2017, 12:56:48 PM
Me personally yes, but I don't go around telling people but that I have the one true way of living and you're a consumer sucka if you don't agree with me.

MMM has been all about how his ideals are more important than money so there seems to be some cognitive dissonance there. Would MMM really have used some of these things if there wasn't the potential payoff down the road? As an earlier poster said, there's now no way to be sure so it does dilute his message.

I guess it might dilute his "message" in some people's minds, but I think those people are getting the wrong message. What I've gotten from MMM is that you don't need a lot to live fancy, and you don't really get any more happiness or much more fancyness past a certain level of spending. His message is aimed at the six-figure set: after $40-50k of spending, you're really just accumulating useless stuff that doesn't make you happy. So stop, save, and quit working in 10 years. If you want true frugal blogging for the average salary family, then there are way better options than MMM.

I honestly get the impression that Pete is a dude that writes some shit in a computer, and he got lucky that it became popular. Once popular, he monetized because, why not? Then he probably got bored with doing too much of that. Now, he barely writes shit in a computer anymore, but when he does, it seems to be whatever happens to be swirling around in his head, which is different in many ways from several years ago.

First, like I said, there is very little monetization. Really, he has like the least monetization I think reasonably possible for a blog other than zero. He's SUPER lazy on that side. Second, this blog has some massive expenses you don't see. He is probably paying several thousand dollars a month in server costs and technical support (which, it seems, some would expect him to include in his "spending"). He needs some minimal amount of monetization to cover those costs. And that pretty much is what he has. The traffic is just so large that that minimal amount of lazy monetization covers costs AND makes extra bank. And then the asshole has the audacity to write six-figure checks to charities with some of that extra bank.

Accept it: Pete is some random rich guy that started writing some shit in a computer at just about the perfect time and got lucky. Some of that shit may work for you, some may not.

Believe me, I've accepted it. I am very happy with my Prius for example, but am not planning to move into town or start riding a bike down my rural gravel roads anytime soon.  However, since Pete puts himself out there as Mr. Money Mustache, the expert on frugal and optimized living, I am also free to call out where he is not consistent with what he himself espouses. This site seems to be all about critical thinking other than when it touches on MMM/Mustachianism itself.

Overall, I think it might be time for Pete to hang up his MMM cape rather than getting more and more convoluted in his justifications for spending (or he could always just be more honest about when he's not consistent with his own past statements).
Title: Re: MMM 2016 Budget
Post by: prognastat on May 24, 2017, 01:01:38 PM
Me personally yes, but I don't go around telling people but that I have the one true way of living and you're a consumer sucka if you don't agree with me.

MMM has been all about how his ideals are more important than money so there seems to be some cognitive dissonance there. Would MMM really have used some of these things if there wasn't the potential payoff down the road? As an earlier poster said, there's now no way to be sure so it does dilute his message.

I guess it might dilute his "message" in some people's minds, but I think those people are getting the wrong message. What I've gotten from MMM is that you don't need a lot to live fancy, and you don't really get any more happiness or much more fancyness past a certain level of spending. His message is aimed at the six-figure set: after $40-50k of spending, you're really just accumulating useless stuff that doesn't make you happy. So stop, save, and quit working in 10 years. If you want true frugal blogging for the average salary family, then there are way better options than MMM.

I honestly get the impression that Pete is a dude that writes some shit in a computer, and he got lucky that it became popular. Once popular, he monetized because, why not? Then he probably got bored with doing too much of that. Now, he barely writes shit in a computer anymore, but when he does, it seems to be whatever happens to be swirling around in his head, which is different in many ways from several years ago.

First, like I said, there is very little monetization. Really, he has like the least monetization I think reasonably possible for a blog other than zero. He's SUPER lazy on that side. Second, this blog has some massive expenses you don't see. He is probably paying several thousand dollars a month in server costs and technical support (which, it seems, some would expect him to include in his "spending"). He needs some minimal amount of monetization to cover those costs. And that pretty much is what he has. The traffic is just so large that that minimal amount of lazy monetization covers costs AND makes extra bank. And then the asshole has the audacity to write six-figure checks to charities with some of that extra bank.

Accept it: Pete is some random rich guy that started writing some shit in a computer at just about the perfect time and got lucky. Some of that shit may work for you, some may not.

he has spent many blog posts trying to say its not aimed at this set and anyone can do it look at me on 25k.  not to say it doesnt work better for those of us with 6 figure salaries.

Just because it isn't applicable to only that group doesn't mean those are the ones most aimed at by MMM.

Given his own life naturally his experience is based on his history making those incomes and the people around him like coworkers and neighbours that were probably achieving a similar income. Although a lot of the things he talks about can be applied at lower income levels or at least modified to work with lower incomes that doesn't mean his experience doesn't come from this perspective and is most applicable to people in a similar situation.
Title: Re: MMM 2016 Budget
Post by: Pennycounter on May 24, 2017, 01:22:59 PM
Very interesting to see everyone’s comments – and this is my first.

I have been following this and other FI blogs for the past 3 years and have made some of the major adjustments (downsized house, cheap cars) to accelerate FI and am super excited (I am 2 years away). That said, I think the numbers are simply bigger on both the assets required and the spending needed.

We (family of four) are quite big spenders (certainly compared to $30k) and my concern about when to retire have always hinged on;

1)   Realistic expectation of spend while still enjoying life (there is not a designer shoe, handbag, watch or the like to be seen in our house)
2)   Realistic return expectation on the investment portfolio

On both sides I have always found MMM substantially lower than I can see as realistic, at least for our family.

On 1) I have always had my suspicions of how achievable / joyful this lifestyle would be for us as there are so many things not included which would seriously test my relationship with wife and children if I cut out, noting of course that these would be considered great luxuries to 95% of the world but if we are all reading this that is perhaps not the relevant measure;

•   We live in the UK and I grew up skiing so want my 2 kids to experience this and you are going to drop $4k to get to France and ski for a week. The pass alone is $800 for the family for the week.
•   Housing is simply very expensive in the UK and I want to live near my family so kiss goodbye to at a very minimum $500k for the house (even after the 50% downsize – value wise).
•   Our kids friends live all over the place so we are racking up miles
•   My Dad lives in Florida and if we are to visit him during children's school holidays, say hello to a $3,000 air fare for the four of us.
•   We want to help out our two kids for college fees (average UK student debt at graduation $50k) or helping with first apartments for the kids. That is $10k additional ‘spend’ each year for the next 10.   

Be gentle as I can see true Moustacians sharpening their knives (but I could go on) and what is the option – tell my kids to only make local friends, tell them that I know I grew up going skiing but daddy wants to retire at 40 so tough luck, tell my dad sorry but we aren’t going to visit, saddle my kids with massive debt and thus impact their career choices (as it did me)? This has led me to some sort of Moustache ‘lite’ version which looks, perhaps ironically, much more like MMM spending this past year and something like a baseline something like $80,000 a year if you are free of mortgage and debt. I believe many of the ‘one off’ items in this 2016 budget are simply not (like many corporate accounts!) and would be replaced by other ‘one off’ items each year. For example, I seem to remember a blog entry where the beauty of FI was described by MMM as the ability to go to Florida for a month to escape the harsh winters in Colorado. A quick owners direct on that would tell you that is not a cheap endeavour.

On 2) I have always found the ‘how much do I need’ incredibly optimistic. I work in investments and I think it is quite risky that people have almost taken as gospel that the most impressive recent economy (US) and most impressive run in equity markets (US equities), leading to the highest P/E multiples in decades, is the model to base the next 30-years off of. So, you take a relatively generous 2.5% dividend yield, my $80,000 requirement and end up needing $2.8m unless you assume markets carry on getting more expensive. Admittedly, my calculation is probably too harsh but I would say to endlessly expect equities to compound at 7% is just fantasy.

Let me be clear, the overall the message is great and has led me to major changes in life, but to pick up what some others have said, I think MMM has somewhat retro-fitted the ‘Message’ to his life as though everything was planned when it was not (e.g. the fact he actually didn’t retire but instead set up a construction business). I am 40 and have c$2.0m in invested assets and very lucky to be a high earner. But I am in a job that I would not be able to pick up again once I walk away. If I get this wrong there is no turning back to my current level of earnings.

Throw all that in the mix and the calculation I get to is that the (hopefully) 40 years I have left would be better sticking to work for at least another 2 years, saving hard, be well above what FIRE devotees think is the right amount (and still be very young compared to most retirees). BUT not risk being 50 and not in the comfortable financial position I could be.

I totally agreed with your comments, very thoughtful.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 24, 2017, 01:25:15 PM
Man, to think we average $200/mo for our son's Boyscouts and my daughter is beginning competitive gymnastics which will cost roughly $300/mo plus travel. Guess it's time to switch to Ramen. Haha I kid.

I am still a fan of MMM's message. And it's inspired me (and my wifey unknowingly) to live a more frugal badass life. In fact I'm getting ready to call it quits from my full time cubicle job in a few weeks. Wouldn't be possible without the metaphorical face punches after stumbling on MMM a few years ago.  However, I have always taken his annual spending reports with a grain of salt. And comparing them to our own is utterly pointless.  I applaud MMM for being more transparent. So the message to me is still sound, so long as you mold it to your own lifestyle. But we can finally know that even MMM doesn't quite live on the 25K he's claimed to live on over the years.
Title: Re: MMM 2016 Budget
Post by: MilesTeg on May 24, 2017, 01:56:29 PM
MMM just doing what every other business person does. Leverage his businesses for personal reasons. Just because he chooses to spend money on things like foreign travel, eco-toys and other things instead of caviar and blow doesn't make it any less personal spending. While MMMs message is decent, he's always been less than honest about the realities.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 24, 2017, 02:23:48 PM
This has been a frustrating thread for me, because on the one hand I want to call Mr Money Mustache out on his inconsistencies and hypocrises... but on the other hand, this nice, modest engineer in Colorado named Pete has had a hugely positive impact on my life.  There's some cognitive dissonance going on for me, and maybe I'm not the only one.

oh i'm on both sides of this.  i personally dont care what he does from my perspective my life is going to be better.

but from a big picture perspective and others seeing the light the inconsistencies and hiporcracies may drive those people away.
Title: Re: MMM 2016 Budget
Post by: NoraLenderbee on May 24, 2017, 02:29:08 PM
When I buy a car, it's an expense, whether the car is new or used, cheap or fancy, ecological or a gas-guzzler. When I build a shed, it's an expense, whether I hire it out or build it myself out of scrap wood. The amount of the expense varies, but it still comes out of my stash/income, and it's still part of my spending.  MMM gets to claim he lives on 25K because he doesn't count as expenses things that you and I have to count.  It's like saying my grocery spending doesn't count because it's actually an investment in my health. I can call it an investment, but I still have to spend the money to survive.

Come to think of it, it's like saying I live on 1200 calories a day, when I actually eat 2000, because I just don't count dinner and dessert for some bullshit reason. ("I'm only eating it to make my mother happy! I'm definitely going to burn it off tomorrow!")
 
Title: Re: MMM 2016 Budget
Post by: nereo on May 24, 2017, 03:09:12 PM
When I buy a car, it's an expense, whether the car is new or used, cheap or fancy, ecological or a gas-guzzler. When I build a shed, it's an expense, whether I hire it out or build it myself out of scrap wood. The amount of the expense varies, but it still comes out of my stash/income, and it's still part of my spending.  MMM gets to claim he lives on 25K because he doesn't count as expenses things that you and I have to count.  It's like saying my grocery spending doesn't count because it's actually an investment in my health. I can call it an investment, but I still have to spend the money to survive.

Come to think of it, it's like saying I live on 1200 calories a day, when I actually eat 2000, because I just don't count dinner and dessert for some bullshit reason. ("I'm only eating it to make my mother happy! I'm definitely going to burn it off tomorrow!")
I'm not so sure - this is pretty much the same thing that's done when people refurbish their homes; some choose to list it as a one-time expense, while others (and in this case MMM) its seen as adding value to the eventual sale-price of the home.  The problem comes with the accounting - what's being done is a transfer of equity and the ultimate cost will only be known later. 

What would have happened if MMM had used a HELOC to build a $30k shed? Would that be an expense of $30k or would you simply total the payments made in FY2016? If the former then what happens the year you close on a rental house - is that a sudden one-time annual expense of $300k?  When you sell do you have an 'income' of $300k+? Of course not - you've made an investment, trading cash for a house.

This is why the concept of assets and liabilities comes about. If you pay to go to Hawai'i on a swanky vacation that money is gone. If you pay for a Leaf you have both a liability (something that neds insurance and upkeep) as well as an asset that can be sold for cash (in this example a depreciating asset). This of course is how people get into trouble though.  They buy a shed for $30k, hold it for 5 years and then sell it along with the house for $30k more than they paid - and think "that didn't cost me a thing!" It very well might have, in opportunity costs, with inflation, extra insurance and periodic upkeep.  But it also doesn't mean that a person spent $30k building it with nothing to show for it later.
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on May 24, 2017, 04:48:44 PM
This is why the concept of assets and liabilities comes about. If you pay to go to Hawai'i on a swanky vacation that money is gone. If you pay for a Leaf you have both a liability (something that neds insurance and upkeep) as well as an asset that can be sold for cash (in this example a depreciating asset). This of course is how people get into trouble though.  They buy a shed for $30k, hold it for 5 years and then sell it along with the house for $30k more than they paid - and think "that didn't cost me a thing!" It very well might have, in opportunity costs, with inflation, extra insurance and periodic upkeep.  But it also doesn't mean that a person spent $30k building it with nothing to show for it later.

Yes, accounting gets murky! Not just in non-depreciating assets. If someone went on that swanky Hawaii trip and then wrote an article about the trip which was sold to a publication for the exact cost of the vacation, how do you account for that cash flow?  Does it matter what the original intent of the vacation was? If you enjoyed the vacation, enjoyed writing the article & would have done both no matter what, was it work? This is the dilemma of an FI person.  Is manufacturing the income to pay for the vacation through writing any different than juggling rewards credit cards to pay for it?  If so, should the rest of us count "imputed spending" for our rewards points usage?  or did we just design our life better than average to get free travel?
Title: Re: MMM 2016 Budget
Post by: Out of the Blue on May 24, 2017, 06:53:47 PM
Quote
This is why the concept of assets and liabilities comes about. If you pay to go to Hawai'i on a swanky vacation that money is gone. If you pay for a Leaf you have both a liability (something that neds insurance and upkeep) as well as an asset that can be sold for cash (in this example a depreciating asset). This of course is how people get into trouble though.  They buy a shed for $30k, hold it for 5 years and then sell it along with the house for $30k more than they paid - and think "that didn't cost me a thing!" It very well might have, in opportunity costs, with inflation, extra insurance and periodic upkeep.  But it also doesn't mean that a person spent $30k building it with nothing to show for it later.

The problem is the $25k figure does not include the $30k one-off cost of the shed or the cost of depreciation for the shed, or "imputed rent" for the shed.  It's like if in 2015 you paid upfront for the expenses for a holiday that you're going to take in 2016.  But then you don't account for it in 2015 because "I haven't taken the vacation yet", OR in 2016 because "It was paid for in the past!".  It's reasonable to account for it in either 2015 or 2016 - but you have to account for it at least once, that holiday expense shouldn't just disappear into thin air. 

Same goes for things like buying a house or building a shed - either you account for that expense on a cash basis in the year you bought it (e.g. -$30k in Year 1) or you account for it on an accrual basis using a calculation based on depreciation, imputed rent, or opportunity cost.

That's also why I think either an imputed rent or opportunity cost for his housing must be added in to show the full picture of his spending.  It looks like he spent less than my household of 2 if you take a $25k figure, but when you add in the imputed rent he actually spent quite a lot more.  He has given more information in this post to allow people to make those calculations, at least.     

I don't really have a problem with MMM spending more in retirement than in accumulation.  As others have pointed out, he still spends remarkably little on eating out and gas.  If I were in his position, I'd probably be spending as much as him, if not more.  But I do understand why people take issue with his accounting methods, and also see why it may be offputting to newcomers.
Title: Re: MMM 2016 Budget
Post by: jim555 on May 24, 2017, 09:32:14 PM
I don't look at buying a house for cash as an expense, it is a transfer of assets from one form to another. 

Imputed rent is not a real cost, it is an opportunity cost.  I don't understand why it needs to be accounted for. 
Title: Re: MMM 2016 Budget
Post by: undercover on May 24, 2017, 10:30:33 PM
Four pages in and no mention of the fact that he bought a commercial building a few months ago.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 24, 2017, 10:39:54 PM
Four pages in and no mention of the fact that he bought a commercial building a few months ago.

I guess that is under the section of investments/real estate and does not need to be included just as he did not include any extra purchases into VTI for 2016. The whole thing is blurry.

What else is interesting is that maybe Mrs MM is a bit bored and needs something productive to do.  Maybe ER is not all its cracked up to be.
Title: Re: MMM 2016 Budget
Post by: undercover on May 24, 2017, 10:41:25 PM
Four pages in and no mention of the fact that he bought a commercial building a few months ago.

I guess that is under the section of investments/real estate and does not need to be included just as he did not include any extra purchases into VTI for 2016.

Really? From what I've read he doesn't plan on renting it out or starting a business. It's simply dubbed "MMM HQ". I would thus far consider the shed more of an investment than the building.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 24, 2017, 10:44:31 PM
Four pages in and no mention of the fact that he bought a commercial building a few months ago.

I guess that is under the section of investments/real estate and does not need to be included just as he did not include any extra purchases into VTI for 2016.

Really? From what I've read he doesn't plan on renting it out or starting a business. It's simply dubbed "MMM HQ". I would thus far consider the shed more of an investment than the building.

i thought it was for the wife's jewelry store? Maybe I misread or misunderstood.
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 25, 2017, 04:20:28 AM
Four pages in and no mention of the fact that he bought a commercial building a few months ago.

I've mentioned it a couple times
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 05:31:10 AM
Four pages in and no mention of the fact that he bought a commercial building a few months ago.

I've mentioned it a couple times

In the comments section, MMM states it was purchased in 2017. And he plans on turning a modest profit on it??? So again, probably won't count towards 2017 spending.

When I buy a car, it's an expense, whether the car is new or used, cheap or fancy, ecological or a gas-guzzler. When I build a shed, it's an expense, whether I hire it out or build it myself out of scrap wood. The amount of the expense varies, but it still comes out of my stash/income, and it's still part of my spending.  MMM gets to claim he lives on 25K because he doesn't count as expenses things that you and I have to count.  It's like saying my grocery spending doesn't count because it's actually an investment in my health. I can call it an investment, but I still have to spend the money to survive.

Come to think of it, it's like saying I live on 1200 calories a day, when I actually eat 2000, because I just don't count dinner and dessert for some bullshit reason. ("I'm only eating it to make my mother happy! I'm definitely going to burn it off tomorrow!")
I'm not so sure - this is pretty much the same thing that's done when people refurbish their homes; some choose to list it as a one-time expense, while others (and in this case MMM) its seen as adding value to the eventual sale-price of the home.  The problem comes with the accounting - what's being done is a transfer of equity and the ultimate cost will only be known later. 

We refurbished our home and it's increased the value substantially. However, every bit of it was counted as an expense. I do keep it in a separate column apart from normal regular spending because much of it is a one time expense. I also count mortgage principle payment. Essentially I count everything weather it's an asset or a liability. It's money that comes out of our pockets.
Title: Re: MMM 2016 Budget
Post by: Adram on May 25, 2017, 07:15:34 AM
I wouldn't have included the shed either. It's not an expense, it's capital spending. We live on about 30K per year, and when i added on a pergola and paved the backyard for 20K all up cost that didn't go in the expenses, it went into the balance sheet as as addition to the house. Pretty basic accountancy. My expenses didn't suddenly become 50K for the year.

I really don't see the problem with MMM posting only his personal expenses, and adding notes that he also spent money on x, y, and z which werent included above for such and such a reason. He proved he could live on 25K early on in the piece, and he's still pretty frugal considering his circumstances.

Seems like a fair bit of jealously, and nitpicking whining in this thread. Oh, no, new people might get the wrong idea... Yeah sure you are worried about new people, you just want a reason to cry your eyes out.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 07:52:49 AM
I wouldn't have included the shed either. It's not an expense, it's capital spending. We live on about 30K per year, and when i added on a pergola and paved the backyard for 20K all up cost that didn't go in the expenses, it went into the balance sheet as as addition to the house. Pretty basic accountancy. My expenses didn't suddenly become 50K for the year.

It is pretty basic accountancy for a business because they invest in income-generating assets that they capitalize.  Your pergola and backyard are not income-generating assets.  You may someday receive a return on the money spent*, but highly unlikely it's a 1:1 return, and it will be way less than any other sort of investment (mutual fund, stock, etc barring a market collapse).  You expenses did, in fact, become $50k for THAT year (you spent $50k, didn't you?), but it doesn't affect your "baseline spending".  Problem is, if you base your needed nest egg on only your baseline spend, you are essentially saying you will never have these "one-time charges" again, so unless you over-save, you will be unable to service them.  Not being able to build a pergola is not a big deal, but what if it's a new roof or furnace or something similar?  In my own spending, I find I have a "one time expense" almost every year; not the same expense, but an expense.  A new furnace, surgery for the dog, an unexpected medical bill, large car repair, last minute plane tickets for a family emergency, etc etc.  There's always SOMETHING.

*I laugh at MMM's expectation that because houses in his neighborhood go for $300sq ft, his shed is also worth $300sq ft.  It's not.  In fact for some people it may be a detractor rather than a benefit. 
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 07:58:31 AM
We live on about 30K per year, and when i added on a pergola and paved the backyard for 20K all up cost that didn't go in the expenses, it went into the balance sheet as as addition to the house. Pretty basic accountancy. My expenses didn't suddenly become 50K for the year.

Except actually they did. Total money out of your pocket was 50K, not 30K. You can't exclude an expense because you believe it adds value. How much value? How much value when you sell the house? What if the patio crumbles and the Pergola is deteriorated? Does it still add value? What about long term maintenance cost?



   
Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 08:30:35 AM
I wouldn't count the shed as a regular expense either because it's not one. If only the statement of cash flows mattered, then yeah, but that's not how accounting works. The shed goes on the balance sheet as an asset. If you didn't account for assets or liabilities, then taking debt wouldn't mean anything to your finances, only cash in and cash out would matter. Might as well lease everything. You can't factor one and not the other. Balance sheets do matter in personal finance; it's net worth.
Title: Re: MMM 2016 Budget
Post by: Raenia on May 25, 2017, 08:36:52 AM
Seems like a fair bit of jealously, and nitpicking whining in this thread. Oh, no, new people might get the wrong idea... Yeah sure you are worried about new people, you just want a reason to cry your eyes out.

This is a real problem though.  I said myself earlier in the thread that it was posts like this that convinced me what he was 'selling' was snake oil and would never work.  I closed the browser without getting through all the meat of the better articles and realizing the math really does work.  It took years before I was willing to come back and give the blog another chance, starting with the oldest posts instead of the newer ones this time.  I certainly wouldn't blame anyone for never coming back - I almost didn't.  That's five years of my life I don't get to redo, because representing his spending in this way undermined the validity of the method to me.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 08:46:53 AM
I wouldn't count the shed as a regular expense either because it's not one. If only the statement of cash flows mattered, then yeah, but that's not how accounting works. The shed goes on the balance sheet as an asset. If you didn't account for assets or liabilities, then taking debt wouldn't mean anything to your finances, only cash in and cash out would matter. Might as well lease everything. You can't factor one and not the other. Balance sheets do matter in personal finance; it's net worth.

Again, a shed is not an income-generating asset, and I can pretty much guarantee it is worth less than the $30k he spent on it.  It would be like me going out and buying a $1k TV and then claiming I didn't "spend" because I now have this $1k asset.  Everyone and their brother would call bullshit on that, and rightly so.  I MIGHT have a $500 asset. 
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 08:55:03 AM
I wouldn't count the shed as a regular expense either because it's not one. If only the statement of cash flows mattered, then yeah, but that's not how accounting works. The shed goes on the balance sheet as an asset. If you didn't account for assets or liabilities, then taking debt wouldn't mean anything to your finances, only cash in and cash out would matter. Might as well lease everything. You can't factor one and not the other. Balance sheets do matter in personal finance; it's net worth.

It's been beaten to death. It doesn't matter if it's a one time expense.  Life is full of those. A roof replacement will add value to your home. Is it not an expense then? Of course it's an expense. Yearly expenses aren't broken down based on what counts as an asset and what counts as a liability. I mean you could do that, but it seems rather pointless. Heck our spending is extremely low if I deduct what I deem an asset (house renovation cost, workout equipment, etc. etc.)

If you are FIRE, it's even more relevant. You could be claiming to live on 25K per year while technically spending 90K (65K goes into what you deem as "assets"). If 4% dictates you should be spending roughly 25K/year, you will run out of money real quick.

Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 08:55:35 AM
Again, a shed is not an income-generating asset, and I can pretty much guarantee it is worth less than the $30k he spent on it.  It would be like me going out and buying a $1k TV and then claiming I didn't "spend" because I now have this $1k asset.  Everyone and their brother would call bullshit on that, and rightly so.  I MIGHT have a $500 asset.

A house isn't income generating either, but it has value. I wouldn't say the TV is the same at all. A technology is a rapidly depreciating asset, but it is an asset. The shed+house CAN appreciate over a long period of time. Unless the TV becomes some kind of collectors item in decades, it never will. Having said that, nothing is guaranteed 1:1 for value. Saying the market will always appreciate or return good dividends is a fallacy. It's just likely that it will.
Title: Re: MMM 2016 Budget
Post by: Adram on May 25, 2017, 08:56:56 AM

It is pretty basic accountancy for a business because they invest in income-generating assets that they capitalize.  Your pergola and backyard are not income-generating assets.  You may someday receive a return on the money spent*, but highly unlikely it's a 1:1 return, and it will be way less than any other sort of investment (mutual fund, stock, etc barring a market collapse).  You expenses did, in fact, become $50k for THAT year (you spent $50k, didn't you?), but it doesn't affect your "baseline spending".  Problem is, if you base your needed nest egg on only your baseline spend, you are essentially saying you will never have these "one-time charges" again, so unless you over-save, you will be unable to service them.  Not being able to build a pergola is not a big deal, but what if it's a new roof or furnace or something similar?  In my own spending, I find I have a "one time expense" almost every year; not the same expense, but an expense.  A new furnace, surgery for the dog, an unexpected medical bill, large car repair, last minute plane tickets for a family emergency, etc etc.  There's always SOMETHING.

*I laugh at MMM's expectation that because houses in his neighborhood go for $300sq ft, his shed is also worth $300sq ft.  It's not.  In fact for some people it may be a detractor rather than a benefit.

Whether housing is an income producing asset is irrelevant to whether it's an expense or a capital improvement. what about the imputed rental income, if you want to make that argument? Rental property capital works are not expensed in the year they are done.

Therefore my expenses didn't become $50K, although my spending did, in a way. In fact it was mostly on interest free credit cards, so spending could be said to be nil at that point, just debit asset, credit liability 😃

You have a point about the regular one time expenses, but i'm not gonna be building a pergola again, and any repairs will be expensed. This was something that we took into account when we bought the house, so really its part of the house purchase... Which i don't think was an expense either.

Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 09:00:30 AM
Again, a shed is not an income-generating asset, and I can pretty much guarantee it is worth less than the $30k he spent on it.  It would be like me going out and buying a $1k TV and then claiming I didn't "spend" because I now have this $1k asset.  Everyone and their brother would call bullshit on that, and rightly so.  I MIGHT have a $500 asset.


A house isn't income generating either, but it has value. I wouldn't say the TV is the same at all. A technology is a rapidly depreciating asset, but it is an asset. The shed+house CAN appreciate over a long period of time. Unless the TV becomes some kind of collectors item in decades, it never will. Having said that, nothing is guaranteed 1:1 for value. Saying the market will always appreciate or return good dividends is a fallacy. It's just likely that it will.

A house has a measurable market value (to an extent), can be borrowed against, etc etc.  A shed, not so much.  I look at it the same as if he decided to redo his kitchen or bathroom.  You're adding some theoretical value to the house, but it is almost certainly less than what you spent, and unless you turn around and sell the house right away after doing the remodeling, you're not engaging in an income-producing activity.  You're spending money. 
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on May 25, 2017, 09:09:02 AM
One thing to remember about the shed is that the expense really a part of MMM's sale of his old house and moving into a new, smaller one.  He sold the old house for about $400k, bought the new one for $240k and spent about $60k renovating it with the express intention to make up some of the space he lost in the downsizing by constructing an outbuilding.  From the articles it sounds like he's gotten a house that's more energy efficient, has spaces that work better for he and his family, and freed up about $70,000 ($400k from the old house, vs $330 to buy the new house, renovate it, and build the shed).  Sounds pretty mustachian to me.

I think its mixed....sure it is from surplus capital from the old house so that makes it ok.  Although your numbers are a bit off (we don't have the full numbers) - that article did say they bought it for $240k (no mention of transaction costs) and there were estimated carrying costs of about $6k from the time they bought it to the time when they expected to move into it, and then an estimated $60k for renovations (quoted as...."this is on the very high end of possible costs") - in the spending report for 2014 he said he had spent about $80k to date and still had work to go.  Plus his taxes went up this year, which is not just because the market appreciated (that's not how it works entirely) but because he improved the house - so that savings ended up being false as well.  Then he spent $30k on the out building.   So $240k + $6k +$80k (or more) + $30k = $44k surplus left from old house not factoring in many additional other costs (or valuing any labor on his part for doing it himself).

I am perfectly fine with recycling capital into something that is better suited especially if on a net cost is equal or less, but would be ok to me if it was a bit more too.

Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 09:14:43 AM

It's been beaten to death. It doesn't matter if it's a one time expense.  Life is full of those. A roof replacement will add value to your home. Is it not an expense then? Of course it's an expense. Yearly expenses aren't broken down based on what counts as an asset and what counts as a liability. I mean you could do that, but it seems rather pointless. Heck our spending is extremely low if I deduct what I deem an asset (house renovation cost, workout equipment, etc. etc.)

If you are FIRE, it's even more relevant. You could be claiming to live on 25K per year while technically spending 90K (65K goes into what you deem as "assets"). If 4% dictates you should be spending roughly 25K/year, you will run out of money real quick.

Beaten to death or not, it does matter because that's how accounting works. If you sell your house and recoup the value of the roof then no, it wasn't an expense. It's not like going out and buying groceries. There is no way to see that money back after consumption, ever. Of course, no one should ever buy a $30,000 shed if they only have the resources for $25,000 a year and no wiggle room to cut spending. He traded $30,000 cash for a $30,000 asset because he has enough resources to do that. If you get in hard times, you CAN sell the house and possibly get your money back. That's way different than a regular expense.



A house has a measurable market value (to an extent), can be borrowed against, etc etc.  A shed, not so much.  I look at it the same as if he decided to redo his kitchen or bathroom.  You're adding some theoretical value to the house, but it is almost certainly less than what you spent, and unless you turn around and sell the house right away after doing the remodeling, you're not engaging in an income-producing activity.  You're spending money. 

The shed is a part of the whole property now. The property is what is appraised and can be borrowed against. You don't just sell the shed. Based on the pictures he posted, it looks like finished space and would be included in the sqft of the appraised livable property. He could AirBnB it if he needed to.

Title: Re: MMM 2016 Budget
Post by: tyort1 on May 25, 2017, 09:25:50 AM
I wouldn't have included the shed either. It's not an expense, it's capital spending. We live on about 30K per year, and when i added on a pergola and paved the backyard for 20K all up cost that didn't go in the expenses, it went into the balance sheet as as addition to the house. Pretty basic accountancy. My expenses didn't suddenly become 50K for the year.

I really don't see the problem with MMM posting only his personal expenses, and adding notes that he also spent money on x, y, and z which werent included above for such and such a reason. He proved he could live on 25K early on in the piece, and he's still pretty frugal considering his circumstances.

Seems like a fair bit of jealously, and nitpicking whining in this thread. Oh, no, new people might get the wrong idea... Yeah sure you are worried about new people, you just want a reason to cry your eyes out.

Agreed.
Title: Re: MMM 2016 Budget
Post by: Spitfire on May 25, 2017, 09:29:35 AM
I wouldn't have included the shed either. It's not an expense, it's capital spending.

This is true. An improvement like that would be added to the tax basis of the home. Whether it increases the property value more or less than the $30k he spent makes it a good or bad investment, but it's an investment either way.
Title: Re: MMM 2016 Budget
Post by: secondcor521 on May 25, 2017, 09:43:19 AM
it'd be really cool to see some one FIRE and 100% live on the 4% rule with a roth ladder and blog about it ... but when that happens and then it gets popular then it makes money and that money is now a safety net and you're no longer retired.  you see where this is going. its an infinite cycle.

That could be gotten around by a blog owner seeking out those who are FI but don't have a blog themselves (maybe this is already out there somewhere?). Would be more of one-off or occasional check-in but I think it would be extremely valuable to see how how the FIRE concepts play out when there's not a firehose of blog income as a back-up.  Of course there are FIRE'd forum members here but don't know how publicly some of them would want to share all their details.

I sorta fit the bill.

I retired a little over a year ago at age 46.  I generally keep expenses under 4%.  I am using a Roth ladder.

I have no blog and doubt I'll ever start one, so I will have no firehose of income.  I do have a journal here titled "February 19, 2016" in which I document my transition to FIRE.

My general rule on sharing is that I'll share stuff on the expenses side of the cash flow statement.  I don't explicitly discuss assets or income, although I speak in generalities about SWR% that could give someone a rough idea.

My blog would be boring, though.  I got a college degree in a good field that I'm good at, worked at several good companies that paid well, got an MBA through my employer, then worked as a manager and saved a lot over the last 10 years into the stock market which did well, using tax-preferred investments to the extent possible.  I bought a reasonable home and paid it off in 8 years, refinancing three times as interest rates dropped.  I looked at my expenses and pay for stuff I value and don't pay for stuff I don't value.

The IRP might quibble with me over my non-portfolio income:  I do credit card piggybacking.  I collect rent from my oldest kid, mostly to give him some incentive to leave the nest.  My Dad gifts me money and trips because he wants to and I appreciate it.  But I don't count these incomes in my SWR%.  I fully admit that the trips that I go on with my Dad cut down on my desire to do more international travel.

People might also quibble with me about how I account for two facets of spending that I do on my kids:

1.  I have child support payments that will end in 1,101 days.  I subtract these payments out of my spending, but I also maintain a liability representing the NPV of those payments which I subtract from my FIRE stash before calculating my SWR.  (At this point this NPV is only about 3% of my FIRE stash anyway, so it's a relatively small adjustment.)

2.  I have kid educational expenses (private high school and college).  I have accounts (529's and ESA's) that fund the vast majority of these expenses as I predict them to be.  These accounts are separate and are not included in my FIRE stash.

I don't own a Leaf or a $30K outbuilding, though, so I got that going for me.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 25, 2017, 09:47:51 AM
I wouldn't count the shed as a regular expense either because it's not one. If only the statement of cash flows mattered, then yeah, but that's not how accounting works. The shed goes on the balance sheet as an asset. If you didn't account for assets or liabilities, then taking debt wouldn't mean anything to your finances, only cash in and cash out would matter. Might as well lease everything. You can't factor one and not the other. Balance sheets do matter in personal finance; it's net worth.

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 25, 2017, 09:49:57 AM
We live on about 30K per year, and when i added on a pergola and paved the backyard for 20K all up cost that didn't go in the expenses, it went into the balance sheet as as addition to the house. Pretty basic accountancy. My expenses didn't suddenly become 50K for the year.

Except actually they did. Total money out of your pocket was 50K, not 30K. You can't exclude an expense because you believe it adds value. How much value? How much value when you sell the house? What if the patio crumbles and the Pergola is deteriorated? Does it still add value? What about long term maintenance cost?

 

+1
Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 10:01:58 AM

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.

Cash flow, income, and net worth all matter. I was just trying to say that buying a finished studio is different than consumption. People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense. That's all. It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 10:09:17 AM
It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

But it's also disingenuous (more so IMO) to brag about your super-luxurious lifestyle on $25k a year when a bunch of the stuff that makes it super-luxurious is not included in that $25k.
Title: Re: MMM 2016 Budget
Post by: MoseyingAlong on May 25, 2017, 10:11:19 AM
I've really enjoyed this discussion and the different takes on his post.

One of the things that strikes me is that usually MMM seems very clear-eyed about reality. But when it comes to his spending reports, he seems to fall into the same trap that many new, naive, sometimes "delusional" business owners fall into. Discounting personal spending because it's a "business expense" or "tax-deductible." This is less critical when you're profitable but still a bad habit.

How many people write off their Starbucks habit or restaurant meals because they were "working" or meeting with clients without factoring in that they will still have a coffee habit and eat out with friends if/when the business ends? Same with people who get a new car every couple years to "maintain their professional image;" that's a pattern they are apt to continue.

I don't have a great solution. One might be to have a budget line item "Personal expenses paid by business" such as the 50% of meals and entertainment that are not tax-deductible.  Just something to remind yourself that the business is subsidizing your personal spending.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 25, 2017, 10:16:52 AM

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.

Cash flow, income, and net worth all matter. I was just trying to say that buying a finished studio is different than consumption. People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense. That's all. It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing. 
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 10:19:30 AM
One of the things that strikes me is that usually MMM seems very clear-eyed about reality. But when it comes to his spending reports, he seems to fall into the same trap that many new, naive, sometimes "delusional" business owners fall into. Discounting personal spending because it's a "business expense" or "tax-deductible." This is less critical when you're profitable but still a bad habit.

He's got some very strong biases, to which he is entitled, but he holds a lot of things to different standards.  One of his biggest "tricks" is taking expenses he doesn't approve of, and projecting them out for 10 years, plus theoretical market gains, to come up with a very big number.  "Oh, you have cable?  At $100/mo times 10 years that's $12,000 plus theoretical market returns of, I dunno, 40% after compounding, you've spent $16,800 on cable TV!!!"  Yeah, got it.  But how about applying that same logic to some of MMM's spending.  What that shed cost him over 10 years including opportunity costs, even subtracting a theoretical resale? 

It's always been the tortured math that really gets to me, even when I fundamentally agree with the message.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 10:26:15 AM

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.

Cash flow, income, and net worth all matter. I was just trying to say that buying a finished studio is different than consumption. People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense. That's all. It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing.

I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.   
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 25, 2017, 10:29:41 AM

It's been beaten to death. It doesn't matter if it's a one time expense.  Life is full of those. A roof replacement will add value to your home. Is it not an expense then? Of course it's an expense. Yearly expenses aren't broken down based on what counts as an asset and what counts as a liability. I mean you could do that, but it seems rather pointless. Heck our spending is extremely low if I deduct what I deem an asset (house renovation cost, workout equipment, etc. etc.)

If you are FIRE, it's even more relevant. You could be claiming to live on 25K per year while technically spending 90K (65K goes into what you deem as "assets"). If 4% dictates you should be spending roughly 25K/year, you will run out of money real quick.

Beaten to death or not, it does matter because that's how accounting works. If you sell your house and recoup the value of the roof then no, it wasn't an expense. It's not like going out and buying groceries. There is no way to see that money back after consumption, ever. Of course, no one should ever buy a $30,000 shed if they only have the resources for $25,000 a year and no wiggle room to cut spending. He traded $30,000 cash for a $30,000 asset because he has enough resources to do that. If you get in hard times, you CAN sell the house and possibly get your money back. That's way different than a regular expense.



A house has a measurable market value (to an extent), can be borrowed against, etc etc.  A shed, not so much.  I look at it the same as if he decided to redo his kitchen or bathroom.  You're adding some theoretical value to the house, but it is almost certainly less than what you spent, and unless you turn around and sell the house right away after doing the remodeling, you're not engaging in an income-producing activity.  You're spending money. 

The shed is a part of the whole property now. The property is what is appraised and can be borrowed against. You don't just sell the shed. Based on the pictures he posted, it looks like finished space and would be included in the sqft of the appraised livable property. He could AirBnB it if he needed to.

This is pretty much what I think.  And that's one of the reasons that all these websites for home improvement talk about how much you get back for each improvement.  Rarely is it more than 100%, but a typical kitchen remodel might add 75% of the value, for example.  That depends, of course, on who does the work.  I believe that most of the calculations assume you are paying for the work.

As an example, we paid $40k to have our backyard redone over a decade ago.  After it was done, we had an appraisal done (for tax purposes, yay), and it increased the value of our property by $30k.  (before the big crash whee!)  I'd assume that a backyard shed would be similar.  Our next door neighbor has one that he put in, and the value of his property is higher than ours for that reason.  (We have a storage shed, he has a shed with electrical that he uses as a home office.)

So it very well could be that the $30k shed is actually a $5k "expense" if it increases the value of his property by $25k.  But what if it increases the value of his property by $35k?
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 10:33:46 AM

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.

Cash flow, income, and net worth all matter. I was just trying to say that buying a finished studio is different than consumption. People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense. That's all. It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing.

I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

But if you run a whole web site predicated on the idea that your life is better if you spend a lot less than you're able, don't be surprised when people bitch if you aren't really honest with how that spending translates to the good life.
Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 11:02:38 AM

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing.

What is the dispute then? I'm arguing the difference between an asset and consumption which is pretty clear by definition and accounting standards. Whether he can afford it or not is not the distinction. An asset has residual value that can be turned back into cash. Consumable goods and services do not. That's a pretty clear distinction.

It is also an asset if someone without much cash reserves buys it. That's the way it works. Smart or not.
Title: Re: MMM 2016 Budget
Post by: SweetTPi on May 25, 2017, 11:03:38 AM
My main 'issue' with his numbers is the car purchase.  Saying he only bought it because of the blog and thus not including it is disingenuous.  If the purpose was just for the blog, why not keep the old car, and work out some longer-than-normal-term rental on the Leaf?  That would be a business expense, generated solely for the blog.  To me, it seems like he wanted the new car, and found a way to justify the spending (for the blog!) and to justify leaving it out of the spending numbers (business!). 

I think MMM should count the new car as spending.  It's a single year thing, so if he wants to spread it out over 5 or 10 years, sure, we would grouse about predicting the future or accounting tricks, but at least it would be accounted for as spending, and not tucked down out of the way as a footnote.  He already takes the final number and subtracts out things to give a 'bare-bones' number, so why not add in the car purchase, then remove it too.

It's understandable that MMM wants to project spending as the ongoing routine categories and leave out the big isolated one-time expenses.  It makes it easier to track year-to-year, and comparisons are clearer.  However, so many expenses in life are large one-time expenses.  A renovation, a new car, a new roof- all are expenses, and should be treated as such.

FWIW, I had to buy a 'new' car this year.  (Yes, had to- the old one had an unfortunate incident involving a concrete highway barrier and a snowstorm.)  I account for this in my yearly spending, since, you know, I paid money for it.
Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 11:07:43 AM


I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

Nope. It's still an asset. It's just if you did that, it was likely a mistake.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 11:14:01 AM


I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

Nope. It's still an asset. It's just if you did that, it was likely a mistake.

I said nothing about an asset.
Title: Re: MMM 2016 Budget
Post by: lemonlyman on May 25, 2017, 11:16:25 AM


I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

Nope. It's still an asset. It's just if you did that, it was likely a mistake.

I said nothing about an asset.

What do you mean if you can afford it, it's not an expense, but if you can't afford it, then it is an expense? What do you call the "not expense". Either way, it's not an expense.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 11:22:26 AM


I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

Nope. It's still an asset. It's just if you did that, it was likely a mistake.

I said nothing about an asset.

What do you mean if you can afford it, it's not an expense, but if you can't afford it, then it is an expense? What do you call the "not expense". Either way, it's not an expense.

Great question... for yourself

People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 25, 2017, 12:06:13 PM

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing.

What is the dispute then? I'm arguing the difference between an asset and consumption which is pretty clear by definition and accounting standards. Whether he can afford it or not is not the distinction. An asset has residual value that can be turned back into cash. Consumable goods and services do not. That's a pretty clear distinction.

It is also an asset if someone without much cash reserves buys it. That's the way it works. Smart or not.

The dispute is that it's not as clear a break between being an "asset" vs. "consumption" as you think it is in terms of personal finances. Almost anything you buy, you can later sell and get some money for it.

But the main point you're ignoring is that even an "asset" costs money to purchase at the time, and that money is then unavailable to use for other purposes (see previous discussion on cash flow) until you sell the item.

ETA: You seem to be saying an asset equals a "durable good" rather than a consumable and assets/durable goods don't need to be counted as spending. But, however you classify something or its acquisition, the money to buy it still had to come from somewhere and that is what people are having a problem with in MMM's spending report.
Title: Re: MMM 2016 Budget
Post by: nmoerbeek on May 25, 2017, 12:26:35 PM
One of the things that strikes me is that usually MMM seems very clear-eyed about reality. But when it comes to his spending reports, he seems to fall into the same trap that many new, naive, sometimes "delusional" business owners fall into. Discounting personal spending because it's a "business expense" or "tax-deductible." This is less critical when you're profitable but still a bad habit.

He's got some very strong biases, to which he is entitled, but he holds a lot of things to different standards.  One of his biggest "tricks" is taking expenses he doesn't approve of, and projecting them out for 10 years, plus theoretical market gains, to come up with a very big number.  "Oh, you have cable?  At $100/mo times 10 years that's $12,000 plus theoretical market returns of, I dunno, 40% after compounding, you've spent $16,800 on cable TV!!!"  Yeah, got it.  But how about applying that same logic to some of MMM's spending.  What that shed cost him over 10 years including opportunity costs, even subtracting a theoretical resale? 

It's always been the tortured math that really gets to me, even when I fundamentally agree with the message.

I fundamentally agree with many of his ideas as well.  The tone of the blog at time can come across in the wrong way especially in some of its sharp (if not sometimes humorous) observations about finance.     No need to be a condescending to the majority of the population that spends almost all they earn, when your level of spending in a year matches what they would take home after taxes.  The median household income in the usa is around $51,000 and that is total income, payroll taxes take a good part of it. 

I don't think the solution is sharp criticism, but perhaps an acknowledgement that preserving in thrift for a long time is very difficult.  Arguably perhaps more difficult than even stopping regular employment for early retirement.

Title: Re: MMM 2016 Budget
Post by: tyort1 on May 25, 2017, 12:33:48 PM
The real question is - with his income and assets, does his total spending come in under 4%?

The 4% rule is the real message, the $25k nonsense is just a red herring. 

I do think there should be a sharp division between pre and post FIRE.  Pre-Fire, you need to hunker down and cut as much as possible to accelerate FI.  Post Fire?  Stay under 4%.  Spend on whatever you want. 

Personally I'm saving enough for $50k/year post FIRE, plus a paid off house.  Most years I won't spend that, but some years I'll spend more, because as we see, expenses are lumpy. 
Title: Re: MMM 2016 Budget
Post by: princeradar on May 25, 2017, 01:35:07 PM
Greetings All,

Perhaps we are making much to do about nothing:  Here's the way I see it.

1.  Did MMM use the principles he preaches to become financially independent - YES
2.  If you follow his advice, will you be able to FIRE sooner - YES
3.  Does he generally live by the principles that he teaches - YES

I think it's reasonable that he's increased his spending in certain areas based on the huge increase in income (car, studio), and I think he's been more than transparent.  I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.  Remember, one of his biggest expenditures he's made is to charity, for which I think we all should give him some kudos for.


Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 01:45:31 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 25, 2017, 01:52:23 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 25, 2017, 02:00:31 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Again, "four legs good, two legs better."
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 25, 2017, 02:26:01 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.
Title: Re: MMM 2016 Budget
Post by: Fireball on May 25, 2017, 03:10:31 PM
It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

But it's also disingenuous (more so IMO) to brag about your super-luxurious lifestyle on $25k a year when a bunch of the stuff that makes it super-luxurious is not included in that $25k.

THIS. +1. 

I don't care if his recent spending is business spending, consumer spending, recurring expenses, assets or whatever else. It all impacts his day to day life and increases his joy(or else why do it). Which is perfectly fine! But, at least own it. Don't tip-toe around it. 
Title: Re: MMM 2016 Budget
Post by: princeradar on May 25, 2017, 03:43:18 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

I hardly think a Nissan Leaf, and a studio where he did most of the labour himself constitute lavish speeding, considering part of the motivation for the Leaf was to advocate increased adoption of electric vehicles, which I think we all can agree it did.  MMM is also not using the fact that it's electric to start to replace his bike transport philosophy either.  Also consider that both "Lavish" purchases are sill way less than 1/2 of what he donated to charity, I think he's still living true to his principles.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 25, 2017, 04:04:00 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

I hardly think a Nissan Leaf, and a studio where he did most of the labour himself constitute lavish speeding, considering part of the motivation for the Leaf was to advocate increased adoption of electric vehicles, which I think we all can agree it did.  MMM is also not using the fact that it's electric to start to replace his bike transport philosophy either.  Also consider that both "Lavish" purchases are sill way less than 1/2 of what he donated to charity, I think he's still living true to his principles.

A 30K car and 30K "shed" are pretty lavish, IMO. I think it's great he bought a Leaf and by doing so I am sure encouraged many others to do so as well. But it's still spending. If I bought a Leaf it would be to advocate for lower emissions and less dependency on fossil fuels. Doesn't mean I can hand wave away the cost.
Title: Re: MMM 2016 Budget
Post by: Scandium on May 25, 2017, 05:00:06 PM
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

I hardly think a Nissan Leaf, and a studio where he did most of the labour himself constitute lavish speeding, considering part of the motivation for the Leaf was to advocate increased adoption of electric vehicles, which I think we all can agree it did.  MMM is also not using the fact that it's electric to start to replace his bike transport philosophy either.  Also consider that both "Lavish" purchases are sill way less than 1/2 of what he donated to charity, I think he's still living true to his principles.
I never used the word lavish. The rest of your post I just read: excuse excuse excuse.

I'm buying an escalade. To help Detroit. See, I'm helping the poor! It'd be wrong not to! You can defend almost anything that way.

And had to lol at "offsetting" spending by charity. Almost like those carbon offset greenwashing scams

Sent from my Nexus 5X using Tapatalk
Title: Re: MMM 2016 Budget
Post by: Optimiser on May 25, 2017, 05:54:46 PM
Let me start off buying saying that Pete was not obligated to start to start the blog, and is not obligated to post annual spending reports, or justify any of his spending. I appreciate that fact that he did, because it has no doubt changed the trajectory of my life, and will shave years off my working career.

However, I do find issue with his spending report, and am mostly in agreement with Chris22.

To claim that he lives a live of overwhelming luxury on 25k a year is simply not true. It is also not possible for someone else to replicate his lifestyle without A) spending more than 25k a year, and B) having a substantial amount of assets.

As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.

There is nothing wrong with how MMM chooses to spend his money, and to be honest I wish I could afford to spend my time and money the way he does. But the tone of the blog often comes off as, I only spend 25k a year on this amazing lifestyle and if you spend more than that you are a spendypants consumer sucker. I can see why this would turn away new readers who don't immediately grasp the bigger picture.
Title: Re: MMM 2016 Budget
Post by: FireLane on May 25, 2017, 07:26:10 PM
While I don't want to say a word against our gracious host, it always bothered me that stuff like his trips to Ecuador weren't listed on his annual spending reports. I thought it was shady to exclude them by classifying them as "business" expenses. Business expense or not, they scratched an itch for travel and fun that he would've had to pay for one way or another. I'm glad that he's being more transparent about this.

That said, I don't begrudge MMM a single bit of his success. He could have gone into a peaceful stealth retirement and never written a word. Instead, he chose to spread a philosophy that's changed countless people' lives, including all of us here. As far as I'm concerned, he deserves every dollar he's earned through his blog.

Besides, isn't this the point of FIRE? He's comfortably retired, he has way more money than he'll ever need, so why not have a little fun with it and launch some moonshot passion projects? There's no rule saying you have to spend only 4% of your savings. Anyway, his life is way more modest than most people with his income. I mean, a shed in his backyard and a midrange electric car? In the grand scheme of things, that's barely any lifestyle inflation at all. We're not talking caviar or private planes here.

Regardless, even though it's not in any way his fault, his newfound fortune does make his situation less relatable.

When I found out about MMM, his articles on frugality, simple living and Stoicism struck a nerve with me. It was just what I needed to hear. It all seemed so simple and straightforward, it convinced me that I could live a lifestyle like his. If I'd discovered his site today, with articles about donating $100,000, or starting an S-corp to funnel his taxes through, or buying a storefront in town to launch his own business, I might not have stuck around.

If I was directing someone new to MMM's site, I'd tell them to start with the oldest articles first, and consider skipping most of the posts from 2016 onward, about the time his blog output started to drop off.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 25, 2017, 09:36:22 PM
While I don't want to say a word against our gracious host, it always bothered me that stuff like his trips to Ecuador weren't listed on his annual spending reports. I thought it was shady to exclude them by classifying them as "business" expenses. Business expense or not, they scratched an itch for travel and fun that he would've had to pay for one way or another. I'm glad that he's being more transparent about this.

That said, I don't begrudge MMM a single bit of his success. He could have gone into a peaceful stealth retirement and never written a word. Instead, he chose to spread a philosophy that's changed countless people' lives, including all of us here. As far as I'm concerned, he deserves every dollar he's earned through his blog.

Besides, isn't this the point of FIRE? He's comfortably retired, he has way more money than he'll ever need, so why not have a little fun with it and launch some moonshot passion projects? There's no rule saying you have to spend only 4% of your savings. Anyway, his life is way more modest than most people with his income. I mean, a shed in his backyard and a midrange electric car? In the grand scheme of things, that's barely any lifestyle inflation at all. We're not talking caviar or private planes here.

Regardless, even though it's not in any way his fault, his newfound fortune does make his situation less relatable.

When I found out about MMM, his articles on frugality, simple living and Stoicism struck a nerve with me. It was just what I needed to hear. It all seemed so simple and straightforward, it convinced me that I could live a lifestyle like his. If I'd discovered his site today, with articles about donating $100,000, or starting an S-corp to funnel his taxes through, or buying a storefront in town to launch his own business, I might not have stuck around.

If I was directing someone new to MMM's site, I'd tell them to start with the oldest articles first, and consider skipping most of the posts from 2016 onward, about the time his blog output started to drop off.

Very well written, huge +1. 

I had noticed discontinuities in past '25k spending revealed' vs. what he'd obviously spent in his blog posts in 2015 and 16 and never heard a response like yours demonstrating people really got it.  He likely used to live on 25k early in the blog when he was bringing us on-board with biking, how clownish upper-middle class lives are, and the timeless value of stoicism, somewhat updated and rebranded as mindfullness...  Sometimes he would throw out gems like zero to hero and challenge (but educate) with the idea that biking may be safer overall than driving.

Nowadays, he could still live on 25k if he had to, but his business and related deductions give him opportunities that he otherwise would not be able to have on a typical 25k lifestyle.  He certainly wouldn't need an accountant to do his taxes if he were ER spending 25k from a rollover IRA, and maybe he would have more relevant info on how an ER should optimize with converting within the remaining non-taxable space to a Roth.  Basically, his posts now about how he doesn't have a care in the world about money will probably he hard for people pre-FI and people early in ER to relate to. 

So we now have this sort of hybrid blog from a guy with tons of business income that pretends he doesn't spend much to enjoy a luxurious lifestyle.  It's just not as authentic as it used to be (like when he bought a bread-maker or bragged about making espresso drinks at home).  I'm honestly not sure if he purposefully walls off his personal spending from all the 'other business stuff' in his mind of if he truly believes that anything spent in the name of the MMM business is basically free / investment (since it is more than paid for by ongoing business income).  I'm sure his accountant has him buying personal non-deductible stuff in cash and one card, but using business credit for the other deductible home office stuff.  In other words, I would guess that his real financial life is nothing at all like that 25k ER family.

He means well, it's not his fault that he can buy a 30k home office and 14k (after subsidies) car without blinking.  And, maybe the MMM HQ storefront is intended to help others more than himself, but I just want to know the details then decide if they are relevant to me.  All of this '25k spending reveal' stuff that doesn't line up with what he's been posting about in the blog already does more harm than good.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 25, 2017, 11:53:12 PM
I have wondered for a few years why MMM only spends $25k/yr considering his wealth and ability to spend more.  I have sent him an email asking him why he doesn't spend some cash on a little extra freedom and possible happy experiences. I was hoping to understand his views a little better. In my email I explained how spending more money on certain items can make his life better without taking away from his DIY ideals and badassity attitude. I gave examples such as getting a baby sitter for the evening so that he and his wife can have a night out alone, maybe getting a nice buzz and returning home for private mustache time without worrying about junior.  Maybe going to the Caribbean with the family and scuba diving followed by lessons with junior about what they saw is not only fun but also educational and money well spent. I was hoping he can express his reasoning and maybe make me think about my own lifestyle choices. Unfortunately I have never received a response.  To be honest, I don't want to live on $25k/yr.  The life that offers is not something I want because I can choose to work more and therefor spend more. Apparently MMM is willing to spend more on happiness as well. I learned so much from his blog posts regarding happiness and made me look at my own life and choices. I try my best to not waste money on useless trinkets but value each expenditure to purchase the maximum amount of joy for my life.  I am glad that MMM does the same though I still wish he would respond to me :)
Title: Re: MMM 2016 Budget
Post by: Moonwaves on May 26, 2017, 05:19:49 AM
It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

But it's also disingenuous (more so IMO) to brag about your super-luxurious lifestyle on $25k a year when a bunch of the stuff that makes it super-luxurious is not included in that $25k.
But his point, and a big part of mustachiaism, is that the life he lives on $25k/year is super-luxurious. And all the extras on top just make it super-duper-extra luxurious. But in his opinion, the basic stuff that they do, the stuff for $25k/year is already super-luxurious. Several people here seem to think that that life would be miserable. Yes, the numbers and the maths are important. But that is not the entire point. The other side of things is learning to be content with less consumer goods, learning how to do things yourself (not because you're a cheap-ass but because it's interesting and fun to learn how to do stuff, not to mention being able to enjoy the smug feeling of being able to do whatever-it-is), figuring out that it is not things (above a certain minimum level) that make you happy.
Title: Re: MMM 2016 Budget
Post by: obstinate on May 26, 2017, 06:35:49 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 26, 2017, 07:24:54 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 26, 2017, 07:45:17 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

MMM preaches spending on what adds value. Clearly the shed, car, travel etc. add value to his life. Otherwise why do it? It just needs to be accounted for in his spending and not a footnote.
Title: Re: MMM 2016 Budget
Post by: BeanCounter on May 26, 2017, 07:52:22 AM
I think MMM should spend more on things that add value to him. He's worked hard to earn the additional income through the blog and other projects and should enjoy it. BUT, he should disclose it.
What I would like to see as someone aspiring to FIRE fairly young, is how the original investment of RE stache has gone. So if he retired on $700k what has that earned to be drawn down year by year. And then the spending that allowed. So if the stache earned $25k then what kind of lifestyle did that $25k drawdown bring. And then he could report the rest as "but RE allowed me to build other revenue streams that have generated X and here is how I chose to spend that".
Or he could not disclose anything. But I do agree that the current method seems somewhat disingenuous and I question it's integrity.
Title: Re: MMM 2016 Budget
Post by: prognastat on May 26, 2017, 08:09:19 AM
I would say in my opinion the only real valid criticism is imputed rent, but he doesn't really hide that this is part of what allows him to live off as little as he does.

If he weren't MMM and just Pete without the blog he could easily be living FIRE off the amount he is spending now with the paid for house. If he had a mortgage a realistic amount he would spend yearly adding the mortgage to his regular expenses would be about 45k a year which is very doable.

I wouldn't count the car, because a large part of his intent with the blog is environmental and I'm sure that influenced his choices with that. Without the blog I suspect he would have kept his old car and I'm sure it is the same for the work shed. The multiple a year vacations are something that would be horrible to me and I definitely wouldn't be spending on even if I had the money he has.

So in my opinion yes he doesn't live off 25k a year without considering the paid off house, however I don't feel this is something he necessarily hides and has made multiple posts around. Living off 25k a year with a paid off house definitely isn't deprivation in any sense. He effectively lives off just below the median household income, nothing crazy. He has just structured his life in a way where he could achieve that without having to continue working.
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on May 26, 2017, 08:57:26 AM
So in my opinion yes he doesn't live off 25k a year without considering the paid off house, however I don't feel this is something he necessarily hides and has made multiple posts around. Living off 25k a year with a paid off house definitely isn't deprivation in any sense. He effectively lives off just below the median household income, nothing crazy. He has just structured his life in a way where he could achieve that without having to continue working.

I agree....if I assume that the out of pocket health care costs this year were only one time, and my property taxes were equal to his (which they are so not), exclude all the costs related to kids bc they are one time only this year too (its not like they will do this stuff in the future even though they have been doing it many years already), and the vacation related expenses didn't really happen, and the HVAC system was one time and nothing else will go wrong with the house, and the brakes I did for the car weren't needed.....yeah I can get to $25k and living fine.

Not sure why everybody is bitching about this so much.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 26, 2017, 09:14:55 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Right.  Same here.  It's hard for me to understand "but he gets to travel and I LOVE travel", when I can't relate.

Has he ever said that spending $ on travel is not justified?  I mean, I kind of remember his mentioning travel hacking, house swaps, etc., as ways to travel for less.

The next question is: "why is your $25k much less luxurious?" (to obstinate).  Why does it feel that way?  There are many possible reasons
- you have housing costs (in which case you aren't comparing apples to oranges)
- you have childcare costs (ditto)
- you live in a HCOL area
- you spend money on things that don't add value to your life

Goodness, I have no idea how much $ we spend a year, if we were to make a comparable budget.  Maybe it would be worth it to do that analysis for me.  I do know that our biggest expenses are mortgage ($3500/month) and childcare ($1300/month).  Compared to that, the rest of my life is pretty cheap.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 26, 2017, 09:15:08 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?

I suspected something like this might be the underlying cause of your anger in this thread.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 26, 2017, 09:20:29 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?

I suspected something like this might be the underlying cause of your anger in this thread.

Anger is the wrong word.  Annoyance?  Like I said, I'm an accountant, when people torture numbers to badly make a point it makes my brain itch.
Title: Re: MMM 2016 Budget
Post by: Dabnasty on May 26, 2017, 09:23:42 AM
I would say in my opinion the only real valid criticism is imputed rent, but he doesn't really hide that this is part of what allows him to live off as little as he does.
I agree with this. Opportunity cost on a home is very relevant and the quality of home you live in can influence other spending. For example, If I live in a 700sq/ft house I purchased for $60,000 but I spend more on maintenance, gym membership for lack of a home gym, activities outside of the home for lack of space; I may still be coming out ahead but I'd be counting the other expenses.

On the other hand I'm ok with the shed because I think it's reasonable to lump that into the home cost (which again I think should be accounted for but since it's in it's own bubble...)

I'm sorta ok with the leaf, I mean it should count but not for $14,000. Has anyone acknowledged that he sold the scion for $5,000? That means the leaf is now $9000 and if he amortized that over 10 years or so it's only $900 +opportunity cost. That he didn't include it at all, well I believe it when he says he wouldn't have bought it if not for the blog but he almost certainly enjoys it. There's not much point in arguing what the alternative reality would have been and how he would have otherwise entertained himself because that void could be filled with anything from $0 up.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 26, 2017, 09:30:24 AM
I wouldn't count the car, because a large part of his intent with the blog is environmental and I'm sure that influenced his choices with that.

Perhaps he should have bought a Tesla then since it doesn't count as "spending."  Why settle for a Leaf?
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 26, 2017, 09:37:52 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?

I suspected something like this might be the underlying cause of your anger in this thread.

Anger is the wrong word.  Annoyance?  Like I said, I'm an accountant, when people torture numbers to badly make a point it makes my brain itch.

Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?  I get it, I also have/had expensive hobbies.  But I'm also not FI, so I've decided to put a pin in mine for a bit until I get a bigger ball of money.  Especially since the market is on such a tear right now.  But that's my choice.  Your choice is no less valid, because after all, we do have to live and enjoy life between now and full FI status.  So it's a balancing act. 
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 26, 2017, 09:41:25 AM
Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?

I never feel guilty about what some mystery dude on the internet is doing, but I do find his "automotive pursuits are wasteful and terrible, but ignore this new Leaf I bought" the equivalent of a man shoveling donuts in his maw and yelling about cookies are bad for you.  It's just eye rolling, ESPECIALLY when he brings his goofy-ass MustacheMath(TM) along for the ride as justification.
Title: Re: MMM 2016 Budget
Post by: Spitfire on May 26, 2017, 09:50:18 AM
I wouldn't count the car, because a large part of his intent with the blog is environmental and I'm sure that influenced his choices with that.

Perhaps he should have bought a Tesla then since it doesn't count as "spending."  Why settle for a Leaf?

I actually put this one in MMM's favor. If he was trying to get pure enjoyment from something and pass it off as "eco-friendly" he would have gotten a Tesla. Nobody is getting any enjoyment from driving a Leaf.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 26, 2017, 09:54:36 AM
Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?

I never feel guilty about what some mystery dude on the internet is doing, but I do find his "automotive pursuits are wasteful and terrible, but ignore this new Leaf I bought" the equivalent of a man shoveling donuts in his maw and yelling about cookies are bad for you.  It's just eye rolling, ESPECIALLY when he brings his goofy-ass MustacheMath(TM) along for the ride as justification.

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 26, 2017, 09:59:26 AM
Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?

I never feel guilty about what some mystery dude on the internet is doing, but I do find his "automotive pursuits are wasteful and terrible, but ignore this new Leaf I bought" the equivalent of a man shoveling donuts in his maw and yelling about cookies are bad for you.  It's just eye rolling, ESPECIALLY when he brings his goofy-ass MustacheMath(TM) along for the ride as justification.

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.

Upset?  We're just discussing here, what makes you think I'm upset?  But I will say I get a special itch when frugality and environmentalism conflict, and MMM tries to make the environmental option also the frugal one using goofy math.  Why not just admit that being green is sometimes more expensive but that's okay?  Or why not admit that not being green is not necessarily particularly expensive, but that doesn't mean you shouldn't do it?  You can be all for things like "not running a gas dryer" because it's green, but you can't really convince anyone it's meaningfully expensive.  So he should stop trying.
Title: Re: MMM 2016 Budget
Post by: mamagoose on May 26, 2017, 10:01:29 AM
One thing I think was missing from the 2016 budget was the kid's allowance (I remember reading him paying his kid per mile of bicycle travel). It's probably small, but maybe indicative of other holes in the budget that were not reported. Maybe I'm picking the fly shit from the pepper.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 26, 2017, 10:06:08 AM

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.

Upset?  We're just discussing here, what makes you think I'm upset?  But I will say I get a special itch when frugality and environmentalism conflict, and MMM tries to make the environmental option also the frugal one using goofy math.  Why not just admit that being green is sometimes more expensive but that's okay?  Or why not admit that not being green is not necessarily particularly expensive, but that doesn't mean you shouldn't do it?  You can be all for things like "not running a gas dryer" because it's green, but you can't really convince anyone it's meaningfully expensive.  So he should stop trying.

Yes your tone is upset/annoyed/aggressive.  Might not be your intention, but that's how it reads. 
Title: Re: MMM 2016 Budget
Post by: boarder42 on May 26, 2017, 10:06:29 AM
One thing I think was missing from the 2016 budget was the kid's allowance (I remember reading him paying his kid per mile of bicycle travel). It's probably small, but maybe indicative of other holes in the budget that were not reported. Maybe I'm picking the fly shit from the pepper.

taxes are missing too.  even if he shouldnt count his full tax burden on income.  he should still estimate what his taxes would be assuming no income at all.
Title: Re: MMM 2016 Budget
Post by: Dabnasty on May 26, 2017, 10:11:06 AM
I think he should give up on the accounting and just point out that this is part of the beauty of ER. All this free time means he can find alternative ways to fill his needs/desires. Help a friend and get free beer. Spend time to barter certain items. Fly on a specific day because it costs less and use travel hacking. Do your own home repair.

In his case additional income has opened different paths for creativity and helping others but I have no doubt that without that additional income he would have chosen another path. Debating whether that other path would be better or worse is 100% pointless. His readers have tried to equate his lifestyle to a standard blueprint and in response he did his best to come up with a transparent analysis that fits that mold but in the end he just fed the beast.
Title: Re: MMM 2016 Budget
Post by: AlanStache on May 26, 2017, 10:14:02 AM
I read this entire thread then went back and reread MMM's budget blog. 

http://www.mrmoneymustache.com/2017/05/19/2016-spending/ (http://www.mrmoneymustache.com/2017/05/19/2016-spending/)

Quote
Well, I might as well come clean on our spending for last year.  It either went up, or way up, depending on how you want to account for things.
...
If you are early on in your journey to financial freedom, you should not do what we are doing. Until you have your finances on auto-pilot so that you are saving 50-75% of your income, you should absolutely be reviewing every piece of spending and adding up all the categories.

Please everyone go reread the blog.  Pete is 100% upfront about all his spending.  He even make some of the same pro/con arguments made here. 

At the end of the day he (and probably all in this thread) have a dozen different columns in our annual spending report.  The answer to "what did I spend last year" is very much dependent on what specific question you are interested in answering.  The idea that a complicated thing like annual spending can be universally summed up in one number with perfect clarity to all people is dumb.  Go reread the blog-everything is broken out.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 26, 2017, 10:27:19 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Right.  Same here.  It's hard for me to understand "but he gets to travel and I LOVE travel", when I can't relate.


Rather than "travel" insert whatever you'd like to potentially do that costs several thousand dollars.
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 26, 2017, 10:29:35 AM
The more interesting question to me is this - what's more important, the $25k life, or living off the 4% rule?

Because if we're living off the 4% rule, then Pete could spend a LOT more and still be under the 4% rule, with all his new income and bigger stache. 

I do think there's some tension between the frugality message, because he uses it for 2 purposes - to get people to save and FIRE, but also to positively impact the environment by reducing consumerism.  Often those 2 things are aligned, but not always.  With the Leaf, we see an example of where it's not aligned. 
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on May 26, 2017, 10:32:51 AM

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.

Upset?  We're just discussing here, what makes you think I'm upset?  But I will say I get a special itch when frugality and environmentalism conflict, and MMM tries to make the environmental option also the frugal one using goofy math.  Why not just admit that being green is sometimes more expensive but that's okay?  Or why not admit that not being green is not necessarily particularly expensive, but that doesn't mean you shouldn't do it?  You can be all for things like "not running a gas dryer" because it's green, but you can't really convince anyone it's meaningfully expensive.  So he should stop trying.

Yes your tone is upset/annoyed/aggressive.  Might not be your intention, but that's how it reads.

I'm getting annoyed but not upset or aggressive by any means (unless aggressive means that Chris22 doesn't automatically agree with you?).  Are you projecting here?
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 26, 2017, 10:37:28 AM
I do think there's some tension between the frugality message, because he uses it for 2 purposes - to get people to save and FIRE, but also to positively impact the environment by reducing consumerism.  Often those 2 things are aligned, but not always.  With the Leaf, we see an example of where it's not aligned. 

I'd even go one step further to say that buying the Leaf instead of a Tesla or Prius is a perfect example of why an environmentalist living on 25k/yr could be seen as having made a non-Mustachian choice as compared to MMM who doesn't have to live on 25k/yr.  Pete seems to have a huge (and justifiable) crush on Elon Musk, so why not ramp up spending AND support a good company that you want to see succeed.  Plus a Tesla is a better product (arguable a better value, and seemingly more in line with his values) and it's something more people would be interested in hearing his take on (extra blog revenue).  Why give his money to the Nissan corporation and buy a crappy Leaf that no-one really cares to read about?  Was it just to save money although he's already got an income stream that is (depending on the math) 4 - 8x his annual spending?  I'm pretty sure readers get it that he's FI and still living below his means and forgive him for spending excess blog income on an experiment...

Title: Re: MMM 2016 Budget
Post by: MasterStache on May 26, 2017, 10:38:13 AM
The more interesting question to me is this - what's more important, the $25k life, or living off the 4% rule?

Because if we're living off the 4% rule, then Pete could spend a LOT more and still be under the 4% rule, with all his new income and bigger stache. 

I do think there's some tension between the frugality message, because he uses it for 2 purposes - to get people to save and FIRE, but also to positively impact the environment by reducing consumerism.  Often those 2 things are aligned, but not always.  With the Leaf, we see an example of where it's not aligned.

I think there possible could be some discrepancy there as well. From what I can remember MMM claimed he would giving away his blog income some day. I realize he donated some. If he is indeed keeping blog income separate, I wonder if 90K truly is 4% of his savings. That's over 2.3mil. I have no idea so can't make a claim either way.
Title: Re: MMM 2016 Budget
Post by: SustainableStache on May 26, 2017, 10:51:17 AM
I read this entire thread then went back and reread MMM's budget blog. 

http://www.mrmoneymustache.com/2017/05/19/2016-spending/ (http://www.mrmoneymustache.com/2017/05/19/2016-spending/)

Quote
Well, I might as well come clean on our spending for last year.  It either went up, or way up, depending on how you want to account for things.
...
If you are early on in your journey to financial freedom, you should not do what we are doing. Until you have your finances on auto-pilot so that you are saving 50-75% of your income, you should absolutely be reviewing every piece of spending and adding up all the categories.

Please everyone go reread the blog.  Pete is 100% upfront about all his spending.  He even make some of the same pro/con arguments made here. 

At the end of the day he (and probably all in this thread) have a dozen different columns in our annual spending report.  The answer to "what did I spend last year" is very much dependent on what specific question you are interested in answering.  The idea that a complicated thing like annual spending can be universally summed up in one number with perfect clarity to all people is dumb.  Go reread the blog-everything is broken out.


I agree with this post. Stop trying to keep up with the Joneses (or Pete in this case). Don't compare yourself to what others are spending. "Pete has a hobby car so I can have a hobby car." Not true.. If you're FI and can afford it... sure. If you're not FI but saving 50-75% of your salary... sure. Otherwise, you can't afford it. Don't buy shit you can't afford.
Title: Re: MMM 2016 Budget
Post by: Rogue on May 26, 2017, 10:58:19 AM
Anger is the wrong word.  Annoyance?  Like I said, I'm an accountant, when people torture numbers to badly make a point it makes my brain itch.

Not angry, just... disappointed?   :)

Title: Re: MMM 2016 Budget
Post by: mm1970 on May 26, 2017, 11:17:21 AM
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Right.  Same here.  It's hard for me to understand "but he gets to travel and I LOVE travel", when I can't relate.


Rather than "travel" insert whatever you'd like to potentially do that costs several thousand dollars.

That's just it.  I can't think of anything.  I mean, I'm not FIRE.  But our net worth is high.  I'd love to buy a new car.  I'm jonesing for a minivan.  I can buy a new car.  I just deposited a reimbursement check into savings (I don't generally do the banking) and our stupid savings acct has almost six figures in it.  It just builds up until we realize it and move it into the market. 

I'd also love to add on to my house (what I wouldn't do for a second toilet!)  I can afford to do that too.  But what  PITA to deal with all of that.  So, I haven't done anything.
Title: Re: MMM 2016 Budget
Post by: dougules on May 26, 2017, 11:23:44 AM
I do think the accounting is a bit questionable, but the real question is does the basic idea still stand?  If he had to move into a modest house and cut back to that $22k for the rest of his life (plus homeowners insurance of course) would he still feel like he was living a luxurious lifestyle?  That probably still holds. 
Title: Re: MMM 2016 Budget
Post by: tyort1 on May 26, 2017, 11:27:41 AM
I do think the accounting is a bit questionable, but the real question is does the basic idea still stand?  If he had to move into a modest house and cut back to that $22k for the rest of his life (plus homeowners insurance of course) would he still feel like he was living a luxurious lifestyle?  That probably still holds.

Speaking for myself, I've lived a high consumption lifestyle and a much lower consumption lifestyle.  I've also had periods of very little to no income.  Overall levels of happiness were about the same for me once I adjusted to that particular level.  That's part of why MMM's message resonated with me so strongly - I'd lived a consumerist lifestyle and found myself no happier at the end of it. 
Title: Re: MMM 2016 Budget
Post by: Spitfire on May 26, 2017, 11:42:13 AM
I don't think his $24k was ever meant to include a housing payment. He FIRED on 600k and a paid off house, so I've always looked at his budgets with that understanding.
Title: Re: MMM 2016 Budget
Post by: inline five on May 26, 2017, 11:47:45 AM
I don't think anyone has ever said you can have a "luxurious lifestyle" on $25,000 in yearly income even without a house payment.

You can survive and live out your life, but luxurious wouldn't ever be in the subtitle of that movie.

Title: Re: MMM 2016 Budget
Post by: MasterStache on May 26, 2017, 11:48:37 AM
I don't think his $24k was ever meant to include a housing payment. He FIRED on 600k and a paid off house, so I've always looked at his budgets with that understanding.

I believe his first house was paid off. He did end up moving into a 350K house and had a house payment for a bit. Before and up to the first year or two of the blog. He never included his mortgage principle payment in his spending though.
Title: Re: MMM 2016 Budget
Post by: inline five on May 26, 2017, 11:49:44 AM
Also didn't he have a $4,000/month rental home too that he leased out?
Title: Re: MMM 2016 Budget
Post by: dougules on May 26, 2017, 11:53:30 AM
I do think the accounting is a bit questionable, but the real question is does the basic idea still stand?  If he had to move into a modest house and cut back to that $22k for the rest of his life (plus homeowners insurance of course) would he still feel like he was living a luxurious lifestyle?  That probably still holds.

Speaking for myself, I've lived a high consumption lifestyle and a much lower consumption lifestyle.  I've also had periods of very little to no income.  Overall levels of happiness were about the same for me once I adjusted to that particular level.  That's part of why MMM's message resonated with me so strongly - I'd lived a consumerist lifestyle and found myself no happier at the end of it.

There are plenty of people in not-quite-as-rich countries that are living at a lower level than that $22k buys in Colorado, and they seem to be happy maybe more so than a lot of people in developed countries.  Sure they'd love to have the chance to afford some of the luxuries I take for granted, but they clearly don't need them just to be happy.  A lot of them are even still enjoying luxuries my great great grandparents could have only dreamed of. 
Title: Re: MMM 2016 Budget
Post by: Dabnasty on May 26, 2017, 12:22:20 PM
I'd even go one step further to say that buying the Leaf instead of a Tesla or Prius is a perfect example of why an environmentalist living on 25k/yr could be seen as having made a non-Mustachian choice as compared to MMM who doesn't have to live on 25k/yr.  Pete seems to have a huge (and justifiable) crush on Elon Musk, so why not ramp up spending AND support a good company that you want to see succeed.  Plus a Tesla is a better product (arguable a better value, and seemingly more in line with his values) and it's something more people would be interested in hearing his take on (extra blog revenue).  Why give his money to the Nissan corporation and buy a crappy Leaf that no-one really cares to read about?  Was it just to save money although he's already got an income stream that is (depending on the math) 4 - 8x his annual spending?  I'm pretty sure readers get it that he's FI and still living below his means and forgive him for spending excess blog income on an experiment...
I would bet mustachian readers would be more likely to purchase a leaf than a Tesla. Depending on commutes, some people could actually come out ahead once you consider tax credits and gas money over 5-10 years vs. buying a compact with 100,000 miles.

And I would argue that there is no way a Tesla is a better value because you're paying way more for most of the same practical benefits. The additional pros of the Tesla fall into the luxury category which mustachianism values at 0. And remember the actual price difference is after tax credits so in his case it would be $60,000 vs. $14,000.
Title: Re: MMM 2016 Budget
Post by: Dabnasty on May 26, 2017, 12:32:45 PM
I don't think anyone has ever said you can have a "luxurious lifestyle" on $25,000 in yearly income even without a house payment.

You can survive and live out your life, but luxurious wouldn't ever be in the subtitle of that movie.
I'm pretty sure MMM did say this? Many times?

And I would kind of agree. I currently live closer to $10,000 with rent included. Admittedly it's not luxury but the biggest thing I would want to change would be my housing situation and if we're not counting housing, my expenses are more like $5500. Also this is for 1 person and housing is shared.

I think if I added $20,000 to the budget and a nice house I'd be well past my personal definition of 'luxury'.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on May 26, 2017, 01:27:05 PM
I'd even go one step further to say that buying the Leaf instead of a Tesla or Prius is a perfect example of why an environmentalist living on 25k/yr could be seen as having made a non-Mustachian choice as compared to MMM who doesn't have to live on 25k/yr.  Pete seems to have a huge (and justifiable) crush on Elon Musk, so why not ramp up spending AND support a good company that you want to see succeed.  Plus a Tesla is a better product (arguable a better value, and seemingly more in line with his values) and it's something more people would be interested in hearing his take on (extra blog revenue).  Why give his money to the Nissan corporation and buy a crappy Leaf that no-one really cares to read about?  Was it just to save money although he's already got an income stream that is (depending on the math) 4 - 8x his annual spending?  I'm pretty sure readers get it that he's FI and still living below his means and forgive him for spending excess blog income on an experiment...
I would bet mustachian readers would be more likely to purchase a leaf than a Tesla. Depending on commutes, some people could actually come out ahead once you consider tax credits and gas money over 5-10 years vs. buying a compact with 100,000 miles.

And I would argue that there is no way a Tesla is a better value because you're paying way more for most of the same practical benefits. The additional pros of the Tesla fall into the luxury category which mustachianism values at 0. And remember the actual price difference is after tax credits so in his case it would be $60,000 vs. $14,000.

Ah, but you're not using MustacheMath.  Just make a few assumptions about resale value (the next gen Leaf is going to have 2x the battery capacity, so Pete's Leaf is gonna depreciate like a rock), and that MMM's Leaf broke down once already.  Surely there is a personal / time cost to having to recharge more often and being limited by range.  And Pete himself also acknowledges that his target audience are the upper middle class making six figures, not a whole lot of Leafs in my company garage, but a few Teslas... 
Title: Re: MMM 2016 Budget
Post by: sol on May 26, 2017, 01:28:37 PM
The MMM Enterprise is a victim of its own success.  It's a good problem to have, but that doesn't mean it's not a problem.

The early message was "you don't need to be rich to be happy" and he wrote a blog about finding happiness without riches.  He argued persuasively that money doesn't buy happiness.

Except the blog made so much money that he started spending it on things that made him happy.  It's straight up lifestyle inflation, plain and simple.  I think it's well-done lifestyle inflation, focused on travel and housing and interesting projects instead of disposable consumer goods, but it's still lifestyle inflation.

And I think that's what rubs some of these folks the wrong way.  It seems like a betrayal of the principles he's (still?) pushing, because his current life undermines the message of his earlier work.  You don't work for civil rights all through your 20s and 30s and then join the Klan in your 40s without getting called a hypocrite, or a disappointment.  Your earlier work may have been and good and just, and maybe you've rationalized some way to make your Klan membership also feel good and just to you, but these two periods of your life are not compatible.

...

Isn't the MMM story the same as every rich person's story?  There's nothing magical about "spend much less than you earn and invest the difference" that literally ANY multimillionaire or billionaires doesn't already intuitively understand.  The acquisition and preservation of wealth requires prudent financial management, a skill that you have to learn early, before you have wealth, in order to use effectively later, when you are rich.  MMM hasn't cracked any secret code there, and like every fabulously wealthy person before him he has gradually increased his spending in line with his growing income and assets, using progressively more complicated shell businesses and tax-avoidance strategies to continue growing that wealth prudently. 

These day's, Pete is just another rich guy.  He seems like a pretty down-to-earth rich guy, but in the larger sense he's no different than the guy who owns 12 restaurants in your town, or the startup founder who sold to google in 2007, or the developer who built that 200-home retirement community your parents have been eyeing.  He's a successful entrepreneur, the lucky individual who through hard work and good timing managed to amass a small fortune in our modern economy.  He lives like them, jetsetting around the world to exotic locations.  He eats like them, all fancy organic meats and craft beers and abundant recreational weed.  He works like them, sheltering expenses in his businesses and turning down opportunities to deal with people he doesn't like.  The only difference is that while living this capitalist fat cat's utopian lifestyle, he's somehow still stuck with the aftertaste of the project that brought him fame, the MMM-as-frugal-blogger persona.

Shake it off, Pete!  Embrace your success!  Go ahead and buy that yacht.  Start a foundation, and put your name on a university building.  Take up golf.  Get yourself a top hat and monocle and accept that you've joined the ranks of America's elite successful small business owners.  And whenever one of the peasants complains about the betrayal of your principles, just do what every rapper who lives in a mansion does:  donate some money to the kids back in the projects to assuage any lingering guilt you might feel.
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on May 26, 2017, 04:38:46 PM
Whenever @Sol makes a thoughtful post I either LMAO, get pissed at him, start having deep thoughts on the subject, or some combination of all three.  Do you have your own blog?
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 26, 2017, 05:02:52 PM
Whenever @Sol makes a thoughtful post I either LMAO, get pissed at him, start having deep thoughts on the subject, or some combination of all three.  Do you have your own blog?

Haha!! Good way to put it. I am a bit jealous that I can't cobble the words together as well as Sol can to explain how I feel.

I'll just +1 him. Well said
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on May 26, 2017, 05:15:55 PM
It's the values that MMM has espoused that are important, not actually how much Pete spends now that his blog makes him a yearly fortune. Pete has taught the importance of super-saving, finding satisfaction in a less consumerist lifestyle that is still rewarding, being mindful of how lifestyle choices impact the climate, investing in passive index funds rather than trying to "beat" the market, and gaining financial independence in order to find a better and more rewarding quality of life.

And what does Pete actually spend his newfound income on?  Things that grow in value (home office building), provide enriching experiences (conferences), a car that reflects the need to take global climate change seriously, and charitable giving as well.
Title: Re: MMM 2016 Budget
Post by: sol on May 26, 2017, 06:37:57 PM
Whenever @Sol makes a thoughtful post I either LMAO, get pissed at him, start having deep thoughts on the subject, or some combination of all three.  Do you have your own blog?

I've been telling myself that I'm too busy to get organized enough to start my own blog, but honestly I spend so much time here that it's a pretty thin excuse.  I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...

Anyway, thanks for the vote of confidence. 
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 26, 2017, 06:43:13 PM
Whenever @Sol makes a thoughtful post I either LMAO, get pissed at him, start having deep thoughts on the subject, or some combination of all three.  Do you have your own blog?

I've been telling myself that I'm too busy to get organized enough to start my own blog, but honestly I spend so much time here that it's a pretty thin excuse.  I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...

Anyway, thanks for the vote of confidence.

Can I suggest a good theme? Deep Thoughts by Sol Handey.
Title: Re: MMM 2016 Budget
Post by: dragoncar on May 26, 2017, 07:22:51 PM
Whenever @Sol makes a thoughtful post I either LMAO, get pissed at him, start having deep thoughts on the subject, or some combination of all three.  Do you have your own blog?

I've been telling myself that I'm too busy to get organized enough to start my own blog, but honestly I spend so much time here that it's a pretty thin excuse.  I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...

Anyway, thanks for the vote of confidence.

I was agreeing with you until the end, when I was no longer sure if you were being super-ironical. 

That said, you could publish a book "The best hits of Sol" where you just take some of your posts and post the best replies, with director commentary. 
Title: Re: MMM 2016 Budget
Post by: obstinate on May 26, 2017, 09:05:59 PM
The next question is: "why is your $25k much less luxurious?" (to obstinate).  Why does it feel that way?  There are many possible reasons
- you have housing costs (in which case you aren't comparing apples to oranges)
- you have childcare costs (ditto)
- you live in a HCOL area
- you spend money on things that don't add value to your life
Oh, I spend a lot more than MMM does, although most of the delta is housing + childcare. What feels luxurious to me about his life is basically that he can breakfast as long as he wants, seven days a week, and no one will ever hassle him about it. That seems amazing. I'll be there in due time.
Title: Re: MMM 2016 Budget
Post by: Fireball on May 26, 2017, 09:51:05 PM
Whenever @Sol makes a thoughtful post I either LMAO, get pissed at him, start having deep thoughts on the subject, or some combination of all three.  Do you have your own blog?

+1... lol.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on May 28, 2017, 12:46:05 PM

..... I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...


Would you mind elaborating a little bit about the above statement.  I seam to have some of that thinking as well and curious how you got there and what your plans might be.
Title: Re: MMM 2016 Budget
Post by: stackorstarve on May 28, 2017, 01:46:45 PM
@Everyone nitpicking the numbers, I'm pretty sure he still throws out the spending articles because he's been doing it for years now, but at this point his complete finances are not representative because he has multiple sources of FIRE income now. But his ~30k spending still represents what people would be spending for a family of 3. It's not to say he personally hasn't made and spent money elsewhere, but you could conceivably be living on the spending in the main table with interest income.

BUT, that's not the point of the blog at all. Seriously, you could nitpick every article he writes but he's always been true to his core principles. Keep your spending down, and you can retire earlier than you think. Once you FIRE, do things that you love to do. If they make money, even better, you get to live a life of more luxury because you have more money. I mean he claims to be living a life of luxury from the beginning of his FIRE but he clearly didn't fake it through high interest personal loans or credit card debt.

Most importantly, you don't have to worry about living your life after losing your job. I mean how is that not the biggest advantage of FI? And even then, he stresses that making more 9-5 income pre-FI is still very helpful to FIRE. Just not as helpful as cutting back spending (because work income ends at FIRE, spending doesn't).

And on top of that, FIRE may not be for everyone; everyone has different principles. But the idea that it's impossible should be clearly false by now.

There's no denying that it takes some hard work to get there. I don't think anyone claims that this is easy. We're all subject to emotions after all.

[Not sure why I had an urge to defend him but whatever]
Title: Re: MMM 2016 Budget
Post by: nereo on May 28, 2017, 02:58:53 PM
I don't think anyone has ever said you can have a "luxurious lifestyle" on $25,000 in yearly income even without a house payment.

You can survive and live out your life, but luxurious wouldn't ever be in the subtitle of that movie.

**I** would say I live a luxurious lifestyle spending far less than $25k after excluding our mortgage payments (but including all taxes).  We live in an urban environment, eat great food, go on vacations, own a way-too-nice car, have hobbies, host parties, ski extensively, etc.  Basically money doesn't limit what we want to do.

we're not surviving, we're thriving.
Title: Re: MMM 2016 Budget
Post by: lemonde on May 28, 2017, 03:22:13 PM
Meh, he's not retired, but he's been FI for years. He spends lots more than 25k a year, but it's possible to be happy on 25k (or less). All of this is readily apparent, but it makes for good banter (like the endless discussion over whether or not Trump did this or that with the Russians). The blog is a business, and business is about branding. Use what you find useful and ignore the rest.
Title: Re: MMM 2016 Budget
Post by: TomTX on May 28, 2017, 08:45:05 PM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

$14k is a little high, but we did Hawaii recently and hotel rooms are ~$800/night including tax at some of the mid-level hotels (we stay at Hyatts on Kauai and Maui).  So 7 nights x $800 = $5600 plus another call it $1k/person for airfare, you're at about $8k.  Food/fun/rental car is probably another $2k for a week if you're doing some activities and eating out at least 1-2 meals a day, so that's around $10k.  Not sure where the other $4k would come from.

Hyatt Regency on Maui is under $500/night right now. Hell, even the Ritz Carlton is only $659. There are lots of hotel options in the ~$250 and under range, without even looking at Airbnbor regular B&B. Days Inn is $140.
Title: Re: MMM 2016 Budget
Post by: nereo on May 29, 2017, 08:45:37 AM

Hyatt Regency on Maui is under $500/night right now. Hell, even the Ritz Carlton is only $659. There are lots of hotel options in the ~$250 and under range, without even looking at Airbnbor regular B&B. Days Inn is $140.
Frankly I'm a bit shocked that people on this forum would ever pay the full sticker price... it's like paying MSRP for a brand new car.  The Sheraton & Hilton on the big island (Kona) both have rooms for <$200/night.  ::shrug::  It just seems wierd that we'd be nit-picking on MMM's budget while entertaining a discussion on spending half my take-home pay for a one-week vacation when I make annual trips to the big island to visit family and friends.
Title: Re: MMM 2016 Budget
Post by: TomTX on May 29, 2017, 09:10:57 AM
Man, to think we average $200/mo for our son's Boyscouts and my daughter is beginning competitive gymnastics which will cost roughly $300/mo plus travel. Guess it's time to switch to Ramen. Haha I kid.

How do you spend $200/month on Scouts?
Title: Re: MMM 2016 Budget
Post by: TomTX on May 29, 2017, 09:13:50 AM

Hyatt Regency on Maui is under $500/night right now. Hell, even the Ritz Carlton is only $659. There are lots of hotel options in the ~$250 and under range, without even looking at Airbnbor regular B&B. Days Inn is $140.
Frankly I'm a bit shocked that people on this forum would ever pay the full sticker price... it's like paying MSRP for a brand new car.  The Sheraton & Hilton on the big island (Kona) both have rooms for <$200/night.  ::shrug::  It just seems wierd that we'd be nit-picking on MMM's budget while entertaining a discussion on spending half my take-home pay for a one-week vacation when I make annual trips to the big island to visit family and friends.

When we went to the Big Island a few years ago for a wedding, our average lodging cost was around $135/night - without even travel hacking. Mostly B&Bs, so breakfast included. we did stay in one motel for a couple of nights to stay near family - and those were our most expensive nights.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 29, 2017, 11:26:02 AM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

$14k is a little high, but we did Hawaii recently and hotel rooms are ~$800/night including tax at some of the mid-level hotels (we stay at Hyatts on Kauai and Maui).  So 7 nights x $800 = $5600 plus another call it $1k/person for airfare, you're at about $8k.  Food/fun/rental car is probably another $2k for a week if you're doing some activities and eating out at least 1-2 meals a day, so that's around $10k.  Not sure where the other $4k would come from.

Hyatt Regency on Maui is under $500/night right now. Hell, even the Ritz Carlton is only $659. There are lots of hotel options in the ~$250 and under range, without even looking at Airbnbor regular B&B. Days Inn is $140.

"Right now".  Well, yeah, it's summertime now. Who wants to go to Hawaii when it's beautiful at home??  Check the prices for, say, February and get back to me.
Title: Re: MMM 2016 Budget
Post by: MasterStache on May 30, 2017, 06:02:32 AM
Man, to think we average $200/mo for our son's Boyscouts and my daughter is beginning competitive gymnastics which will cost roughly $300/mo plus travel. Guess it's time to switch to Ramen. Haha I kid.

How do you spend $200/month on Scouts?

That's the average. Some months we spend 0. Others we spend more than $200. He goes on at least one campout per month which sometimes requires food and extra gear. He's growing so he outgrows things like boots and more recently his backpack. Sometimes we volunteer to drive. We have a big Philmont trip coming up. Between myself and my son we have to come up with a couple grand, plus travel cost. I'll need to purchase gear as well. We always seem to be buying something. It's a bit frustrating, but since he plays no sports we are fine with the cost. It keeps him involved.
Title: Re: MMM 2016 Budget
Post by: BeanCounter on May 30, 2017, 06:24:26 AM
Man, to think we average $200/mo for our son's Boyscouts and my daughter is beginning competitive gymnastics which will cost roughly $300/mo plus travel. Guess it's time to switch to Ramen. Haha I kid.

How do you spend $200/month on Scouts?

That's the average. Some months we spend 0. Others we spend more than $200. He goes on at least one campout per month which sometimes requires food and extra gear. He's growing so he outgrows things like boots and more recently his backpack. Sometimes we volunteer to drive. We have a big Philmont trip coming up. Between myself and my son we have to come up with a couple grand, plus travel cost. I'll need to purchase gear as well. We always seem to be buying something. It's a bit frustrating, but since he plays no sports we are fine with the cost. It keeps him involved.
We pay ridiculous money for all the boys sports and activities. This is something I feel is missing from MMM's budget. It seems odd that there would be nothing for this.
At least with boy scouts it's something you all do together and make many memories. Pretty important stuff in my book.
Title: Re: MMM 2016 Budget
Post by: fa on May 30, 2017, 07:12:06 AM
Except the blog made so much money that he started spending it on things that made him happy.  It's straight up lifestyle inflation, plain and simple.  I think it's well-done lifestyle inflation, focused on travel and housing and interesting projects instead of disposable consumer goods, but it's still lifestyle inflation.

Very well said.  For years I noticed that personal expenses are categorized as "blog research".  I am happy for Pete's success, but he is losing his authenticity.  That does not happen to all rich people.  The founder of IKEA, a billionaire, still buys his clothes at a thrift store.  Warren Buffet drives an old car and has lived in the same house for 50 years or so.  These are business people, who do not build their businesses on personal lifestyle choices.  Pete has built his business on being thrifty.  For him, lifestyle inflation is directly at odds with the core of his message.  It makes me wonder how much of his original message was actually genuine.

Pete is human and is succumbing to the allure of the money.  Still, he has helped many people see a path to FI.  That is priceless.
Title: Re: MMM 2016 Budget
Post by: Spitfire on May 30, 2017, 08:14:49 AM
MMM has obviously done a good job getting his frugality message across since he is being put through the ringer for spending $75k in a year.
Title: Re: MMM 2016 Budget
Post by: Chris22 on May 30, 2017, 08:19:01 AM
MMM has obviously done a good job getting his frugality message across since he is being put through the ringer for spending $75k in a year.

I don't think anyone cares what he actually spends, it only matters what he actually spends versus what he CLAIMS to spend. 
Title: Re: MMM 2016 Budget
Post by: threefive on May 30, 2017, 09:18:43 AM
Except the blog made so much money that he started spending it on things that made him happy.  It's straight up lifestyle inflation, plain and simple.  I think it's well-done lifestyle inflation, focused on travel and housing and interesting projects instead of disposable consumer goods, but it's still lifestyle inflation.

Very well said.  For years I noticed that personal expenses are categorized as "blog research".  I am happy for Pete's success, but he is losing his authenticity.  That does not happen to all rich people.  The founder of IKEA, a billionaire, still buys his clothes at a thrift store.  Warren Buffet drives an old car and has lived in the same house for 50 years or so.  These are business people, who do not build their businesses on personal lifestyle choices.  Pete has built his business on being thrifty.  For him, lifestyle inflation is directly at odds with the core of his message.  It makes me wonder how much of his original message was actually genuine.

Pete is human and is succumbing to the allure of the money.  Still, he has helped many people see a path to FI.  That is priceless.

Buffett recently bought a brand new Cadillac. The dealership in Omaha that sold it made a bunch of hype highlighting exactly that fact. Granted, he traded in his 8 year old caddy. It's a really, really nice Cadillac, too. He may have lived in the same house for 50 years, but have you seen it? It's a very nice house in one of the posher areas of town. All of that said, he certainly lives no where near the lifestyle of what most expect a billionaire to live. But, he doesn't ride bikes all over Omaha, live in a 1,000 sq. ft. house, buy his clothes from thrift stores, and do all of his own manual labor. He also doesn't fly commercial. Both Buffett and Pete enjoy some luxuries well within their ability to afford them, because more spending after a certain point doesn't translate to a better life. I'd say they both have similar philosophies. You should read Buffett's explanation for why he has a private jet: he hates TSA lines, and he can afford to avoid them. Why does Pete have a Leaf? He wants to promote electric vehicles (which, is odd for someone that seems more interested in promoting bikes!) and he can afford it. They have different points for where more spending stops improving their life, as we all do, and Pete's is probably moving out a little with greater wealth and age.

I will agree with the fundamental point, though. Lifestyle inflation and authenticity. Early MMM might well have facepunched current Pete for wasting money on a new Leaf and building a little man cave. But, current Pete has more money and has past the point where he worries too much about how he spends it or what MMM would say. Authenticity: keep in mind that MMM is a character and Pete is a human. Just like the Buffett in your mind is a character, and the real human is not quite so ideal. We build characters as models we can strive to be like while living our flawed (compared to models) human existence. MMM is an authentic model which Pete (and thousands of others) tries to live up to, stymied by our little rationalizations here and there.
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on May 30, 2017, 09:35:07 AM
The more interesting question to me is this - what's more important, the $25k life, or living off the 4% rule?

Because if we're living off the 4% rule, then Pete could spend a LOT more and still be under the 4% rule, with all his new income and bigger stache. 

I am not so sure about this.   He has had significant income and his stash has likely gotten bigger as a result - but if he made $400k last year and the year prior say that is not what he cleared.  Fed, state, and 2x employment taxes take their toll even after running a bunch of deductions through. So it really comes down to the ratio of the increased spending to the amount saved of the income (ie if his spending went up by $20k and he has saved $500k of his new income the 4% WR is preserved but if he spent $40k and only saved $500k and he has come to enjoy (need) the lifestyle inflation then he is no longer able to be FIRE bc he doesn't have enough to meet the 4% rule. 

Except the blog made so much money that he started spending it on things that made him happy.  It's straight up lifestyle inflation, plain and simple.  I think it's well-done lifestyle inflation, focused on travel and housing and interesting projects instead of disposable consumer goods, but it's still lifestyle inflation.

+1, and the question then goes to if the blog income dried up would he enjoy going back to the lifestyle level he had before? 
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 30, 2017, 10:35:15 AM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

$14k is a little high, but we did Hawaii recently and hotel rooms are ~$800/night including tax at some of the mid-level hotels (we stay at Hyatts on Kauai and Maui).  So 7 nights x $800 = $5600 plus another call it $1k/person for airfare, you're at about $8k.  Food/fun/rental car is probably another $2k for a week if you're doing some activities and eating out at least 1-2 meals a day, so that's around $10k.  Not sure where the other $4k would come from.

Hyatt Regency on Maui is under $500/night right now. Hell, even the Ritz Carlton is only $659. There are lots of hotel options in the ~$250 and under range, without even looking at Airbnbor regular B&B. Days Inn is $140.
I've never spent $800 a night on Hawaii.  Admittedly, our last 2 trips were booked with Costco travel.  Most recent one was at a very nice resort (I have a tendency to prefer condos to resorts because you can cook your own meals.  But anyway, it was fun.)

The biggest variation seems to be airfare.  A quick search earlier this year (for spring break) and just now shows many options for a week in Hawaii for under $5000 (that's with four plane tickets and rental car included).  I checked Maui and Kauai.  My limit for Hawaii would probably be $6k.  Last time we went we spent $4k, but there were only 3 of us at the time.
Title: Re: MMM 2016 Budget
Post by: mm1970 on May 30, 2017, 10:38:41 AM

My wife and I recently did a week vacation in Maui for around $2,000. But it's disingenuous to say that because airfare was free (I work for an airline). That value of the airfare on that trip was roughly $11,000. We used points to offset the condo and did splurge and do a helicopter tour for $240 although we got a $200 credit from doing a 2-hour timeshare viewing.

Had we not had all these free credits it would've cost over around $14,000 for that trip.

How the hell would a one week trip to Maui cost $14,000? I'm just kind of in awe, because we spend $8-9,000/year for two people to spend several weeks a year traveling to Europe, Asia, and around Canada and the US. We don't use any kinds of points or freebies, and stay in pretty nice condos most of the time.

$14k is a little high, but we did Hawaii recently and hotel rooms are ~$800/night including tax at some of the mid-level hotels (we stay at Hyatts on Kauai and Maui).  So 7 nights x $800 = $5600 plus another call it $1k/person for airfare, you're at about $8k.  Food/fun/rental car is probably another $2k for a week if you're doing some activities and eating out at least 1-2 meals a day, so that's around $10k.  Not sure where the other $4k would come from.

Hyatt Regency on Maui is under $500/night right now. Hell, even the Ritz Carlton is only $659. There are lots of hotel options in the ~$250 and under range, without even looking at Airbnbor regular B&B. Days Inn is $140.

"Right now".  Well, yeah, it's summertime now. Who wants to go to Hawaii when it's beautiful at home??  Check the prices for, say, February and get back to me.
My absolute cheapest trip to Hawaii ever was in February, booked it in January.  Got some killer deals because: 1. relatively last minute (booked 3 weeks out) and 2. school schedule.

If you have kids in school, then you are beholden to the school calendar.  I was not beholden at the time.  It's important to know that a certain % of school district have a "ski week" in Feb, right around President's day.  (And then a spring break in April.)  Our school does not have this winter break.

So long as you avoid traveling during that particular week, you should be fine.  Same thing around spring break.

Mid Jan to Mid Feb are good.  Most of March until the last week, when spring break starts.
Title: Re: MMM 2016 Budget
Post by: Laura Ingalls on May 31, 2017, 11:40:02 PM
So why exactly are we not supposed to comment on the lack of homeowners insurance?

I do think he would be self insured on the dwelling, but the hubris about the liability is just crazy. He needs a big umbrella policy too.

It can't even be that big of a savings.

Title: Re: MMM 2016 Budget
Post by: dragoncar on May 31, 2017, 11:51:44 PM
I always assumed he had liability, because it would be crazy not to.   It's probably cheap enough to fit into the other category
Title: Re: MMM 2016 Budget
Post by: Laura Ingalls on June 01, 2017, 06:42:00 AM
I always assumed he had liability, because it would be crazy not to.   It's probably cheap enough to fit into the other category

Except that insurance companies don't sell such a product. There are folks that buy renters insurance for paid for homes in hurricane prone areas. 
Title: Re: MMM 2016 Budget
Post by: boarder42 on June 01, 2017, 07:36:48 AM
the insurance thing is a good adder.  an assumed insurance on his house and umbrella to protect his assets probably exists.  and some level of that would still exist if he didnt have the income he did.  you dont fire on 800k and a paid off house and not carry insurance on that house.
Title: Re: MMM 2016 Budget
Post by: anonymouscow on June 01, 2017, 07:59:00 AM
Am I reading things wrong or missing something, why does he subtract $23,614 for organic / luxury food?

I do not have a problem with him spending money, but to me, spending is spending. I think you  want to put a line in for the car and at least spread the cost over the expected useful life of the car.

He does not include his studio because it is an investment, he says "spending money on repairs, changing paint colors, gardens, or swimming pools would count as spending to me, since these items are more likely to be recurring and/or not recouped at the time of sale" but I do not see any of these things in his budget unless he is counting it as home renovations.

I don't say I live off 250 dollars a month when I'm spending 1500 because I "could" live off 250 dollars, saying and doing are two different things.
Title: Re: MMM 2016 Budget
Post by: undercover on June 01, 2017, 09:36:57 AM
I will agree with the fundamental point, though. Lifestyle inflation and authenticity. Early MMM might well have facepunched current Pete for wasting money on a new Leaf and building a little man cave. But, current Pete has more money and has past the point where he worries too much about how he spends it or what MMM would say. Authenticity: keep in mind that MMM is a character and Pete is a human. Just like the Buffett in your mind is a character, and the real human is not quite so ideal. We build characters as models we can strive to be like while living our flawed (compared to models) human existence. MMM is an authentic model which Pete (and thousands of others) tries to live up to, stymied by our little rationalizations here and there.

Regarding authenticity: isn't it LESS authentic to hide your "extraneous" spending? I think there's less separation between MMM/Pete as you're making out. I think Pete/MMM has evolved. His core message still fits within his current lifestyle. He's making smart purchases with money he didn't expect to have totally under the same intentions and goals. He's always said that the purpose of work is to create and thus the path to happiness. If you have the money to create things that you weren't able to before because you had less money, what does it matter? Why is that a sin in the MMM ecosphere? It's not in my opinion because the core message has never changed.

These day's, Pete is just another rich guy.  He seems like a pretty down-to-earth rich guy, but in the larger sense he's no different than the guy who owns 12 restaurants in your town, or the startup founder who sold to google in 2007, or the developer who built that 200-home retirement community your parents have been eyeing.  He's a successful entrepreneur, the lucky individual who through hard work and good timing managed to amass a small fortune in our modern economy.  He lives like them, jetsetting around the world to exotic locations.  He eats like them, all fancy organic meats and craft beers and abundant recreational weed.  He works like them, sheltering expenses in his businesses and turning down opportunities to deal with people he doesn't like.  The only difference is that while living this capitalist fat cat's utopian lifestyle, he's somehow still stuck with the aftertaste of the project that brought him fame, the MMM-as-frugal-blogger persona.

No. I'm pretty sure he chose who he wanted to deal with LONG before he was "rich". That's how most rich people get rich is by choosing carefully who they deal with. And he chose carefully to quit his job long before he was at this level of "rich".

You're making his situation out to be much more enviable than it actually is. I don't envy MMM at all. At the end of the day, what is the point of amassing so much wealth that you don't know what to do with it? His hobby is working and creating income producing ventures. That's what drives him. Not many people are going to sit down and write hundreds of thousands of words into a blog. But plenty of people can take those words and live a much more "settled" life. If you (like me) do believe that after a certain point of money that happiness doesn't increase, you'd know that MMM's own life wouldn't be any different in terms of happiness had the blog not blown up in success.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on June 01, 2017, 09:58:22 AM
. . . .If you (like me) do believe that after a certain point of money that happiness doesn't increase, you'd know that MMM's own life wouldn't be any different in terms of happiness had the blog not blown up in success.

Depending on the sources, they say that at spending level of about $75k/yr you do not buy significantly more happiness.  It just appears to me that MMM is creeping closer and closer to that level.  Since he does not drive much, that $75k would be closer to $60k and I am pretty sure that is very close to what he spent in 2016.  Lets see what he does in 2017.

I think the message is still clear.  You can live a happy life on $25k/yr if you so desired, but by doing so you may find yourself even wealthier over time considering the one more year syndrome and also other sporadic earnings potentials. This would lead to the ability to spend more and potentially purchase more happiness.  Even if his blog did not take off and he retired with $600k, he still did some side hustles that made him extra money that would allow his stache to continue to grow over that decade which would allow him to spend more.  Maybe by now he would not be spending $60k/yr.  Maybe it would be $35k but I am pretty sure it would increase either way.  It is human nature.

Title: Re: MMM 2016 Budget
Post by: mm1970 on June 01, 2017, 10:57:05 AM
Quote
Am I reading things wrong or missing something, why does he subtract $23,614 for organic / luxury food?

He's only subtracting a little bit of money to get TO $23,614.  Meaning he's estimating $2247 of his annual food bill is luxury and could be eliminated if he so chose.  That would put his annual food bill at a little under $5k, which I still think would be a challenge for a family of 3? 
Title: Re: MMM 2016 Budget
Post by: Nangirl17 on June 01, 2017, 10:57:19 AM

..... I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...


Would you mind elaborating a little bit about the above statement.  I seam to have some of that thinking as well and curious how you got there and what your plans might be.

I'm also interested to hear your thoughts.

We hit a "skin-of-our-teeth" FI lately, and somehow something in my brain relaxed and I'm not even half as anxious to retire now! (Maybe it is because I went part time and the balance it brought to my life made work seem so much less stressful....?)


Title: Re: MMM 2016 Budget
Post by: EnjoyIt on June 01, 2017, 11:01:12 AM

..... I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...


Would you mind elaborating a little bit about the above statement.  I seam to have some of that thinking as well and curious how you got there and what your plans might be.

I'm also interested to hear your thoughts.

We hit a "skin-of-our-teeth" FI lately, and somehow something in my brain relaxed and I'm not even half as anxious to retire now! (Maybe it is because I went part time and the balance it brought to my life made work seem so much less stressful....?)

definitely true, the less I work, the more I enjoy the work. 
Title: Re: MMM 2016 Budget
Post by: sol on June 01, 2017, 11:06:49 AM

..... I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...


Would you mind elaborating a little bit about the above statement.  I seam to have some of that thinking as well and curious how you got there and what your plans might be.

I'm also interested to hear your thoughts.

Oh no you don't.  I won't be goaded into starting a blog until I'm good and ready.  Not by either of you.

I should start writing these things up and then NOT posting them to the forum, so I can have a little backlog of blog posts for when the time is right.

In the meantime, suffice it to say that we each need to answer the question "why do we work" and then decide for ourselves whether our job is contributing to, or interfering with, that goal.  It's not always about money.  Lots of folks here work long past their FI date.  Brad Pitt and Warren Buffett don't need to work anymore, but they choose to do so anyway.  Why is that?
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 01, 2017, 11:13:19 AM
I've been doing some thinking on that very question of "Why do I work"?  I can say this - my current job pays me a lot of money and I like it, but it's not particularly exciting or rewarding.  There's other things that I'd love to do instead, but those other things pay very little (or nothing).  So I'm going to keep working after FI, but doing other things.

What things, you might ask?  OK, here's an example - I'd love to work with our local library or other community groups and teach money/finance/work/society life hacks and skills to people that haven't been able to learn these things from their families.  It'd be very cool and rewarding to do but would not pay much, if anything. 

That's only one thing, there's quite a few others, but you get the idea.   
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on June 01, 2017, 11:17:16 AM

..... I've always figured I'd start writing more once I'm free of the 9-5, but the longer I have it the less motivation I feel to get rid of it.  Suddenly, early retirement is becoming a lot less attractive to me.  That sounds like the core of a decent blog post...


Would you mind elaborating a little bit about the above statement.  I seam to have some of that thinking as well and curious how you got there and what your plans might be.

I'm also interested to hear your thoughts.

Oh no you don't.  I won't be goaded into starting a blog until I'm good and ready.  Not by either of you.

I should start writing these things up and then NOT posting them to the forum, so I can have a little backlog of blog posts for when the time is right.

In the meantime, suffice it to say that we each need to answer the question "why do we work" and then decide for ourselves whether our job is contributing to, or interfering with, that goal.  It's not always about money.  Lots of folks here work long past their FI date.  Brad Pitt and Warren Buffett don't need to work anymore, but they choose to do so anyway.  Why is that?

Sol,
I thought I wanted to retire very early as well, but the closer I get the more I think I would rather semi-retire and work part time. My job and what I do gives me joy especially when I can really turn around someones life. Once I retire and have a significant amount of time off, most places would never hire me as I would have lost a lot of skill. I believe I need to work at a minimum of 6-8 days a month to still be proficient at my job. My goal is still to semi-fire by December 2018 though it may be sooner if I get sick of my administrative duties. I also like the added security of more money so who knows I may change my mind again by that date.
Title: Re: MMM 2016 Budget
Post by: anonymouscow on June 01, 2017, 11:35:55 AM
Quote
Am I reading things wrong or missing something, why does he subtract $23,614 for organic / luxury food?

He's only subtracting a little bit of money to get TO $23,614.  Meaning he's estimating $2247 of his annual food bill is luxury and could be eliminated if he so chose.  That would put his annual food bill at a little under $5k, which I still think would be a challenge for a family of 3?

Ah thanks, it wasn't clicking with me how he was subtracting things.
Title: Re: MMM 2016 Budget
Post by: brooklynguy on June 01, 2017, 11:51:19 AM
I won't be goaded into starting a blog until I'm good and ready.

Hate to break it to you, but you already have one.  It just happens to be embedded within this forum.  And I'd venture to guess that your readership eclipses that of many respectable stand-alone blogs.
Title: Re: MMM 2016 Budget
Post by: Reynold on June 01, 2017, 12:57:20 PM
I'm not sure why people are so bent out of shape about MMM's business expenses and consider it "shady" to not include those in his personal expenses.   To start with the Ecuador trips, has anyone seen any indication from him that if the MMM empire didn't exist, he would be flying down there once a year?   He is not claiming his Canada trips as business expenses, and there are probably creative ways to do that if he really wanted to.   Regarding the car, maybe if MMM didn't exist he would have bought it anyway, but we have no way of knowing, and he didn't seem unhappy with his previous car(s).  The shed is probably on the shakiest ground, I suspect it is used more for his construction side gigs (still a business expense if so) than for MMM, since he is not writing as much these days.  If the IRS wants to challenge it, let them do so, and he can reclassify it at that point. 

I do think there was a good argument made that if he got extra capital from selling a larger house, and put part of it into a new capital asset of a shed, it might not be appropriate to consider the shed a "sudden expense" without matching it against the "windfall income" from the profit on the larger house.   That is separate from whether it is a business expense, of course. 

But as a general thing, it is completely appropriate to separate business expenses from personal ones.  To give an example, suppose the sole side gig of the MMM household was an Etsy business, and they spent a million dollars on supplies in a year, and sold what they made for a million and one dollars (because they were terrible business people).  They now have personal expenditures of about $25k, and net additional business income of $1, not personal expenditures of $1,025,000.   

I would also say the blog is not, and has never been, focused on the details of how to start and manage side gigs.  He has given a few suggestions, but MMM is trying to show how to manage your personal lifestyle.  Thus I wouldn't expect him to break out all the information on his and Mrs. MMM's side businesses the way he does their household budget.   Does he have a separate business structure for the construction stuff versus the blog stuff, or is the construction stuff considered part of what he wanted to learn to keep ER expenses low?  We don't know, but we don't need to to get his core messages. 
Title: Re: MMM 2016 Budget
Post by: anonymouscow on June 01, 2017, 01:28:28 PM
I'm not sure why people are so bent out of shape about MMM's business expenses and consider it "shady" to not include those in his personal expenses.   To start with the Ecuador trips, has anyone seen any indication from him that if the MMM empire didn't exist, he would be flying down there once a year?   He is not claiming his Canada trips as business expenses, and there are probably creative ways to do that if he really wanted to.   Regarding the car, maybe if MMM didn't exist he would have bought it anyway, but we have no way of knowing, and he didn't seem unhappy with his previous car(s).  The shed is probably on the shakiest ground, I suspect it is used more for his construction side gigs (still a business expense if so) than for MMM, since he is not writing as much these days.  If the IRS wants to challenge it, let them do so, and he can reclassify it at that point. 

I do think there was a good argument made that if he got extra capital from selling a larger house, and put part of it into a new capital asset of a shed, it might not be appropriate to consider the shed a "sudden expense" without matching it against the "windfall income" from the profit on the larger house.   That is separate from whether it is a business expense, of course. 

But as a general thing, it is completely appropriate to separate business expenses from personal ones.  To give an example, suppose the sole side gig of the MMM household was an Etsy business, and they spent a million dollars on supplies in a year, and sold what they made for a million and one dollars (because they were terrible business people).  They now have personal expenditures of about $25k, and net additional business income of $1, not personal expenditures of $1,025,000.   

I would also say the blog is not, and has never been, focused on the details of how to start and manage side gigs.  He has given a few suggestions, but MMM is trying to show how to manage your personal lifestyle.  Thus I wouldn't expect him to break out all the information on his and Mrs. MMM's side businesses the way he does their household budget.   Does he have a separate business structure for the construction stuff versus the blog stuff, or is the construction stuff considered part of what he wanted to learn to keep ER expenses low?  We don't know, but we don't need to to get his core messages.

So is the $2335 for "Flights to Florida in January, Canada in July and December" personal or business? If it's personal why subtract it at the bottom? I can see subtracting it if for business.

I think it's silly he subtracted organic food at the bottom. How is it any different than any other expense that's not really necessary? Gap, Old Navy, books, etc. And why subtract home renovations? I doubt he is increasing the value of his home by the renovation amount.

the car still seems like an expense to me no matter what he says it is for.
Title: Re: MMM 2016 Budget
Post by: Cassie on June 01, 2017, 01:55:34 PM
We semi-retired 5 years ago and love it. Because I am now almost 63 I have people ask when I will fully retire. The answer is when I no longer love the work I do for about 10 hours/week from home in my pj's:))
Title: Re: MMM 2016 Budget
Post by: dragoncar on June 02, 2017, 12:24:51 AM
I always assumed he had liability, because it would be crazy not to.   It's probably cheap enough to fit into the other category

Except that insurance companies don't sell such a product. There are folks that buy renters insurance for paid for homes in hurricane prone areas.

so they do sell such a product then
Title: Re: MMM 2016 Budget
Post by: Laura Ingalls on June 02, 2017, 10:32:13 PM
I always assumed he had liability, because it would be crazy not to.   It's probably cheap enough to fit into the other category

Except that insurance companies don't sell such a product. There are folks that buy renters insurance for paid for homes in hurricane prone areas.


so they do sell such a product then

I guess if you put it that way yes liability and personal property andloss of use.  People do it in hurricane prone places because it can save real money (low 4 figures yearly on a modest house).  If I employed the same strategy in my Midwest location it might save me $200 per year for a house with 200k replacement value.  I would have to live to be 150 years old and pay premiums for 100 more years to not be ahead on a catastrophic loss.  Catastrophic losses do happen.  I know of two houses in my town of 15,000 that are currently being rebuilt after serious fires. 

Title: Re: MMM 2016 Budget
Post by: BeanCounter on June 03, 2017, 05:29:45 AM
I'm pretty sure they wouldn't let me buy our umbrella policy without the comprehensive home owners.
Title: Re: MMM 2016 Budget
Post by: undercover on June 03, 2017, 09:08:33 AM
I think the message is still clear.  You can live a happy life on $25k/yr if you so desired, but by doing so you may find yourself even wealthier over time considering the one more year syndrome and also other sporadic earnings potentials.

Most people (general America) have more money than they know what to do with and don't even realize it. Even more people are so bad with not knowing what to do with it that they blow it all from paycheck to paycheck. I don't think having enough money is really the problem in rich countries. The problem is (not) knowing what to do with it.

MMM getting blasted for doing intelligent things with his money makes zero sense when he's spending equally intelligently on the "core" things in life like travel/food/housing/transportation/etc. He could spend much more in the categories that most people foolishly/obliviously blow their money on but chooses not to because he realizes his money and happiness goes much farther elsewhere. I think that's what people are forgetting when they read his budget. They forget that the past MMM that's always made good choices and developed habits that lead to wealth and happiness has afforded him to have all of these unnecessary additional expenses that don't lead to a better life but simply allow him to do more things than he could or felt like he could before. That's all while still maintaining a 90% savings rate.

He's getting criticized here and elsewhere because people think that he actually needs these extra things above his "basic" budget or he wouldn't be as happy as he is. That's completely and utterly wrong. He doesn't/didn't need the success of the blog to continue to be happy or buy a shed or buy a Leaf or buy a commercial building on main street. He's still doing what he's always done: automate what are for most people the most expensive line items in life and watch as his wealth grows while meticulously spending his money in a way that benefits himself and his family the most. It's all about engineering a beautifully efficiently constructed life. It doesn't require lots of money. Lots of money is the side benefit.
Title: Re: MMM 2016 Budget
Post by: dragoncar on June 03, 2017, 01:01:11 PM
I think the message is still clear.  You can live a happy life on $25k/yr if you so desired, but by doing so you may find yourself even wealthier over time considering the one more year syndrome and also other sporadic earnings potentials.

Most people (general America) have more money than they know what to do with and don't even realize it. Even more people are so bad with not knowing what to do with it that they blow it all from paycheck to paycheck. I don't think having enough money is really the problem in rich countries. The problem is (not) knowing what to do with it.

MMM getting blasted for doing intelligent things with his money makes zero sense when he's spending equally intelligently on the "core" things in life like travel/food/housing/transportation/etc. He could spend much more in the categories that most people foolishly/obliviously blow their money on but chooses not to because he realizes his money and happiness goes much farther elsewhere. I think that's what people are forgetting when they read his budget. They forget that the past MMM that's always made good choices and developed habits that lead to wealth and happiness has afforded him to have all of these unnecessary additional expenses that don't lead to a better life but simply allow him to do more things than he could or felt like he could before. That's all while still maintaining a 90% savings rate.

He's getting criticized here and elsewhere because people think that he actually needs these extra things above his "basic" budget or he wouldn't be as happy as he is. That's completely and utterly wrong. He doesn't/didn't need the success of the blog to continue to be happy or buy a shed or buy a Leaf or buy a commercial building on main street. He's still doing what he's always done: automate what are for most people the most expensive line items in life and watch as his wealth grows while meticulously spending his money in a way that benefits himself and his family the most. It's all about engineering a beautifully efficiently constructed life. It doesn't require lots of money. Lots of money is the side benefit.

No, he's getting "blasted" because people don't think he's been up front in his characterization of personal and business expenses.  Nobody is saying that he "needs these extra things" or spending intelligently.
Title: Re: MMM 2016 Budget
Post by: undercover on June 03, 2017, 01:19:16 PM
No, he's getting "blasted" because people don't think he's been up front in his characterization of personal and business expenses.  Nobody is saying that he "needs these extra things" or spending intelligently.

But how isn't he (upfront)? Or better yet, how is it relevant to the authenticity of the blog? It's total conjecture that if his "business" spending wasn't so high then his "personal" spending would proportionally go up. That's something that just can't be proved and in my opinion isn't the case at all given his personal expenses have remained low and virtually haven't inched forward at all in the past 6 years.

I guess you can argue that if he didn't travel so much for business then he might travel more for personal time but even he said that he would likely use that time camping and/or short haul trips versus cross-country or international flights. It's simply not the type of travel he would be doing on a personal level. The blog has just opened his doors up in so many different ways that he'd be an idiot to turn down every opportunity. To me that doesn't mean that his life would be significantly different with or without the blog, it's just a project he has that he tends to like anyone else has their own projects.
Title: Re: MMM 2016 Budget
Post by: sol on June 03, 2017, 01:21:24 PM
The blog has just opened his doors up in so many different ways that he'd be an idiot to turn down every opportunity.

Riches will do that for you.
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on June 03, 2017, 02:25:48 PM
I'd like to see Mr. Money Mustache and Suze Orman team up together and do a TV show on personal spending, lifestyle habits, and there also should be a lot of humor too. It could be along the lines of the "biggest loser"
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 03, 2017, 03:13:20 PM
I've always felt like the $25k year a life was really for showing people that are in debt or in the accumulation phase, that it's possible to have an enjoyable life even when expenses are tightly controlled. 

IMO, once you have a ton of money saved up and are FI, well, spend it on whatever you damn well please.  The key is being FI.  As long as you can afford it, then go for it.  It would be silly to save hard, become FI and then not actually enjoy your wealth. 

As long as lifestyle creep doesn't inch you past the 4% rule, you'll be fine. 

Personally I don't plan to change a lot of my habits after FI (in 13 years or so), because I agree with MMM that buying new shit causes harm to the environment and we can/should be good stewards. 
Title: Re: MMM 2016 Budget
Post by: soupcxan on June 03, 2017, 07:47:56 PM
I think the message is still clear.  You can live a happy life on $25k/yr if you so desired, but by doing so you may find yourself even wealthier over time considering the one more year syndrome and also other sporadic earnings potentials.

Most people (general America) have more money than they know what to do with and don't even realize it. Even more people are so bad with not knowing what to do with it that they blow it all from paycheck to paycheck. I don't think having enough money is really the problem in rich countries. The problem is (not) knowing what to do with it.

MMM getting blasted for doing intelligent things with his money makes zero sense when he's spending equally intelligently on the "core" things in life like travel/food/housing/transportation/etc. He could spend much more in the categories that most people foolishly/obliviously blow their money on but chooses not to because he realizes his money and happiness goes much farther elsewhere. I think that's what people are forgetting when they read his budget. They forget that the past MMM that's always made good choices and developed habits that lead to wealth and happiness has afforded him to have all of these unnecessary additional expenses that don't lead to a better life but simply allow him to do more things than he could or felt like he could before. That's all while still maintaining a 90% savings rate.

He's getting criticized here and elsewhere because people think that he actually needs these extra things above his "basic" budget or he wouldn't be as happy as he is. That's completely and utterly wrong. He doesn't/didn't need the success of the blog to continue to be happy or buy a shed or buy a Leaf or buy a commercial building on main street. He's still doing what he's always done: automate what are for most people the most expensive line items in life and watch as his wealth grows while meticulously spending his money in a way that benefits himself and his family the most. It's all about engineering a beautifully efficiently constructed life. It doesn't require lots of money. Lots of money is the side benefit.

No, he's getting "blasted" because people don't think he's been up front in his characterization of personal and business expenses.  Nobody is saying that he "needs these extra things" or spending intelligently.

If you make your living telling people that they don't need to buy stuff, and then it turns out you yourself actually like buying stuff, it hurts your credibility. A lot. And efforts to rationalize that spending as "investments" or "business expenses" are pretty weak.
Title: Re: MMM 2016 Budget
Post by: LadyStache in Baja on June 05, 2017, 10:06:48 AM
The shed is an expense in the same way buying the house was an expense. So we should look at how he calculated the house buying, and that will tell us how to account for this expense. I tried to find the post, but I couldn't, and I choose not to spend any more of my time looking.

But it was mentioned that the house he bought was cheaper than the house he sold. And the shed was a planned expense to make up for less square footage that still brought the total cost of the new house to less than the old house.

Therefore, it's not an expense, it's part of the transaction that brought his bottom line a net gain. House Sold > House bought + shed = net gain.

Regarding car, I don't know. He seemed to love his Scion. But he would have eventually needed a replacement car. I think he should have classified it as a personal expense. If he really wanted it to be a business expense, he could have bought the leaf to try it out, write about it, and then create some sort of giveaway where one of his lucky readers WINS a Leaf! How cool would that be? Then he could go back to using his Scion.

Regarding being out of touch, he should write some more case studies. That'll keep it relevant to us poor folk just starting out and not make us so sad that we can't afford cars and trips to Ecuador. ;)
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 05, 2017, 10:43:05 AM
It's always funny to me that people rush to his defense in these threads.  Yes, we all know that Pete's spending is not outstripping his income, commenters aren't advocating a 'save Ferris' collection, but his posts that show he actually doesn't know how much he spends aren't very Mustachian, IMHO.
Title: Re: MMM 2016 Budget
Post by: AlanStache on June 05, 2017, 11:12:07 AM
It's always funny to me that people rush to his defense in these threads.  Yes, we all know that Pete's spending is not outstripping his income, commenters aren't advocating a 'save Ferris' collection, but his posts that show he actually doesn't know how much he spends aren't very Mustachian, IMHO.

?
He has never really been about strict tracking of spending unless you are hair on fire broke.  A great many people do very well without budgets and simply think about what they are buying and if it will really make them happy or benefit there life in some way.  The only spending I really think about in dollars per month terms are what I spend on comics; everything else comes down to the "will it make me happier/is there a more cost effective alternative/is it this just a shiny widget that I will only play with once" tests?  And by and large that works well for me based on my total monthly spending levels.

"posts that show he actually doesn't know how much he spends", sorry am to lazy to go search now but I thought his 2016 budget was fairly well broken down.  Was there something unclear?  The only thing I can think of was his $1k in misc Amazon spending. 
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 05, 2017, 11:57:44 AM
In his footnotes on the shed, he specifically stated 'is this spending..?'.  So he admits he may be 100% or more off for 2016...  Nice problem to have, but not Mustachian
Title: Re: MMM 2016 Budget
Post by: AlanStache on June 05, 2017, 12:25:25 PM
In his footnotes on the shed, he specifically stated 'is this spending..?'.  So he admits he may be 100% or more off for 2016...  Nice problem to have, but not Mustachian

He is acknowledging that reasonable people may disagree on how to classify this (and other things).  He is being up front and not hiding anything (we know of... :-)  ).  If his food bill had tripped I would be right there with you but he sold a home and bought a new one with the idea of building an addition-he did this and came out in the black; I cant see kicking him out of the club over this. 

If you want to view this as spending and say he spent +60k last year I think it is a bit missing the forest for the trees but I guess ok.  Maybe I am just happier leaving the grey areas in and taking what I can from it all.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 05, 2017, 12:45:14 PM
You can also view this comment to mean he has several expenses (things he paid for in 2016) that he doesn't consider as
spending .  Reasonable people may disagree, but I take this to mean that there are a lot of expenses that he doesn't list / consider to be relevant (like his summer touring with his brother, the accountant, his remodeling business, his wife's business spending, spending on his son, etc).

Just for what he noted, his spending was actually about 100k for 2016.  Not Mustachian if you think you are living on 30k, is my point.
Title: Re: MMM 2016 Budget
Post by: AlanStache on June 05, 2017, 02:04:09 PM
You can also view this comment to mean he has several expenses (things he paid for in 2016) that he doesn't consider as
spending .  Reasonable people may disagree, but I take this to mean that there are a lot of expenses that he doesn't list / consider to be relevant (like his summer touring with his brother, the accountant, his remodeling business, his wife's business spending, spending on his son, etc).

Just for what he noted, his spending was actually about 100k for 2016.  Not Mustachian if you think you are living on 30k, is my point.

Third bullet point in the pic, I would read that in a limited context and not extrapolate its scope.

Looking at the numbers for his travel spending (personal and MMM) he has to be doing some travel hacking.  There have been several years when I spent $60k in fully reimbursed work expenses; you can get a LOT of hotel and airline points off that.  If he is getting points for MMM inc/house reno business/shed/Esty/etc he could be doing very well in reward points & with an email or two he can crash in a spare room most anywhere.  Is spending reward points real spending?  yes and no.  thinking about it I would be more inclined to call him on any CC point spending than the shed.  But this is 100% speculation and not worth a shrug in my AWFK life.
Title: Re: MMM 2016 Budget
Post by: anonymouscow on June 05, 2017, 06:01:06 PM
Why not just post everything? I don't care. You make 500k, you spend 100k, I don't care. Just don't say you spend 25k when you spend 100k. Put everything up in a credit / debit / GAPP format. Put down what you are actually claiming as business expenses. It looks shady to come up with your own "deductions". So what, have one column with all expenses, the next list out actual tax deductible business expenses, the next your capital expenses like your shed and car, and so on. Organic food and home renovations are not deductions.
Title: Re: MMM 2016 Budget
Post by: sol on June 05, 2017, 06:58:07 PM
Organic food and home renovations are not deductions.

The are "deductions" in the sense that they are optional spending, and his lifestyle would not change all that much without them.  For the purpose of trying to demonstrate to people how a family of 3 can live comfortably on $25k, I think it makes sense to separate them out.  His family of three isn't living on $25k anymore, but it's clear that someone else could if they followed the base budget MMM lays out each year.

He's stuck in a "do as I say and not as I do" situation because he makes so much money he no longer lives the lifestyle the blog was built around.  I think it's still useful to highlight "this is how I got here" but maybe not so useful to suggest "this is how I still live".
Title: Re: MMM 2016 Budget
Post by: TheStachery on June 06, 2017, 09:24:58 AM
Organic food and home renovations are not deductions.

Exactly.

The persona MMM only spends 25k, but Pete spends 100k. 

I can live on 20k a year, if I deduct any expense I deem as frivolous, or luxurious.   The point is REAL money was spent.
Title: Re: MMM 2016 Budget
Post by: dragoncar on June 06, 2017, 04:48:46 PM
Organic food and home renovations are not deductions.

Exactly.

The persona MMM only spends 25k, but Pete spends 100k. 

I can live on 20k a year, if I deduct any expense I deem as frivolous, or luxurious.   The point is REAL money was spent.

But of course, REAL money was also made.  I guess if MMM loses his fortune because he doesn't have liability insurance, he can go back to spending $25k/year.
Title: Re: MMM 2016 Budget
Post by: Chris22 on June 06, 2017, 06:05:52 PM
Organic food and home renovations are not deductions.

Exactly.

The persona MMM only spends 25k, but Pete spends 100k. 

I can live on 20k a year, if I deduct any expense I deem as frivolous, or luxurious.   The point is REAL money was spent.

But of course, REAL money was also made.  I guess if MMM loses his fortune because he doesn't have liability insurance, he can go back to spending $25k/year.

Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 06, 2017, 08:55:00 PM
Organic food and home renovations are not deductions.

Exactly.

The persona MMM only spends 25k, but Pete spends 100k. 

I can live on 20k a year, if I deduct any expense I deem as frivolous, or luxurious.   The point is REAL money was spent.

But of course, REAL money was also made.  I guess if MMM loses his fortune because he doesn't have liability insurance, he can go back to spending $25k/year.

Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...

Well, such an event would at least make the blog more relevant to the target audience.  At one point, MMM seemed to advocate giving away all of the excess.  Although he gave away 100k, it's a bit like an Olympian jogging a few miles (his net worth is around 3 million, given the paid off home, 600k should be worth at least 1.8M if indexed + additional investment 'experiments' and personal investment of 200 - 400k for a the last few years).  And his latest tweets (something about how using a car to commute is like eating cake) makes me think he is completely out of touch.  Or maybe just smoking too much of that legal Rocky Mountain high :) 
Title: Re: MMM 2016 Budget
Post by: obstinate on June 06, 2017, 09:46:59 PM
Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 06, 2017, 10:01:53 PM
Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.

But I understood Chris22's comment as shorthand for the idea that it takes increasing levels of luxury to produce the same response.  The idea that 'you can't go back' was an interesting conclusion that would need to be tested, and who better a guinea pig than MMM?  If he actually gave away a year of blog income, detailed his passive income (probably 50-90k in dividends and interest on a 2-3M portfolio) and better detailed all of his spending next year, that would revitalize things...
Title: Re: MMM 2016 Budget
Post by: Chris22 on June 07, 2017, 08:26:41 AM
Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.

He definitely insinuates, if not outright claims, that you don't go backwards in lifestyle.  Which I've honestly always felt is a little bit backwards.  For instance, while working, I might buy a new car every 5 years, but once retired, due to less usage and less income, I would probably not continue that habit.  Whereas MMM would tell me I've inflated my spending so I require more of a nestegg to support it in retirement.
Title: Re: MMM 2016 Budget
Post by: smedleyb on June 07, 2017, 08:59:55 AM
The way I see it, the 9K spent on the Leaf, and the 4K for MMM travel are the only "grey" areas in the budget.  The Etsy business expenses, and studio build, have zero business being in the everyday spend column. 

So Pete maybe spent roughly 44K last year when all is said and done. 

And this makes him a sell-out and a victim of consuma suckaism?  GTFO. 
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 07, 2017, 10:01:14 AM
Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.

He definitely insinuates, if not outright claims, that you don't go backwards in lifestyle.  Which I've honestly always felt is a little bit backwards.  For instance, while working, I might buy a new car every 5 years, but once retired, due to less usage and less income, I would probably not continue that habit.  Whereas MMM would tell me I've inflated my spending so I require more of a nestegg to support it in retirement.

"Save enough so you have 80% of your income in retirement".  That's the standard line everyone gets from the mainstream retirement industry.  But that's not true.  What you need is 100% of your expenses covered.  So not buying a car every 5 years keeps you expenses down and lets you get to 100% expenses covered, faster. 

Why do people want new cars?  Group think and hedonic adaptation.  When you think "hey, this is what successful people do" and "I work hard so I deserve something nice", well then you have lifestyle creep and much higher expenses (and thus need to save a lot more before FI).  Only by letting these 2 ideas go, can you dial down your lifestyle without feeling deprived. 


The way I see it, the 9K spent on the Leaf, and the 4K for MMM travel are the only "grey" areas in the budget.  The Etsy business expenses, and studio build, have zero business being in the everyday spend column. 

So Pete maybe spent roughly 44K last year when all is said and done. 

And this makes him a sell-out and a victim of consuma suckaism?  GTFO. 

QFT.  I think the people that are carping don't live anywhere near a $25k lifestyle, and more to the point, don't WANT to live that life, so any chance they see to poke holes, they will take.  Speaking for myself, I am planning on a $50k with house paid off, so I'm no MMM, but you don't see me taking pot shots at someone who's trying to do something admirable with their life.
Title: Re: MMM 2016 Budget
Post by: Chris22 on June 07, 2017, 10:15:47 AM
"Save enough so you have 80% of your income in retirement".  That's the standard line everyone gets from the mainstream retirement industry.  But that's not true.  What you need is 100% of your expenses covered.  So not buying a car every 5 years keeps you expenses down and lets you get to 100% expenses covered, faster.

But again, the key is you need 100% of your RETIREMENT expenses covered.  My retirement expenses will be different than my non-retirement expenses.  I understand the effect spending has on my accumulation rate, but I think there is a tendency to assume expenses currently = expenses in retirement, and that just isn't the case.  I might live on $75k while working but plan to retire on $50k, partially by cutting the frequency of purchases of capital assets like cars.   

Quote
Why do people want new cars?  Group think and hedonic adaptation.  When you think "hey, this is what successful people do" and "I work hard so I deserve something nice", well then you have lifestyle creep and much higher expenses (and thus need to save a lot more before FI).  Only by letting these 2 ideas go, can you dial down your lifestyle without feeling deprived.

Some people like cars.  Some people like biking and gardening and going to the library.  Some people like boats or riding horses or what have you.  Assuming shallow motives like "I deserve it" and "to look successful" to my interests while assuming some purity or nobleness in yours is, frankly, offensive.


Quote
QFT.  I think the people that are carping don't live anywhere near a $25k lifestyle, and more to the point, don't WANT to live that life, so any chance they see to poke holes, they will take.  Speaking for myself, I am planning on a $50k with house paid off, so I'm no MMM, but you don't see me taking pot shots at someone who's trying to do something admirable with their life.

You're right, I don't aspire to live a $25k lifestyle.  But apparently neither does MMM!  Because he uses FakeMath to claim that he does.  Again, I don't give a shit what he spends, never has, never will.  But if you tell me "I spend $25k*"  "*does not include all this other great spending" I'm going to throw the bullshit flag. 
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 07, 2017, 10:21:36 AM
Some people like cars.  Some people like biking and gardening and going to the library.  Some people like boats or riding horses or what have you.  Assuming shallow motives like "I deserve it" and "to look successful" to my interests while assuming some purity or nobleness in yours is, frankly, offensive.

Dude, you seem to have a bug up your ass about cars.  Go buy your cars and be happy, nobody gives a shit.
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on June 07, 2017, 10:46:04 AM
Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.

But I understood Chris22's comment as shorthand for the idea that it takes increasing levels of luxury to produce the same response.  The idea that 'you can't go back' was an interesting conclusion that would need to be tested, and who better a guinea pig than MMM?  If he actually gave away a year of blog income, detailed his passive income (probably 50-90k in dividends and interest on a 2-3M portfolio) and better detailed all of his spending next year, that would revitalize things...

Asked and answered as he is already living on $25k (hence not inflated his lifestyle) and providing a detailed breakdown of his spending, so waiting until next year for the same breakdown won't change it.  Oh wait, that is what this discussion is all about ;)

Title: Re: MMM 2016 Budget
Post by: Raenia on June 07, 2017, 11:24:45 AM
QFT.  I think the people that are carping don't live anywhere near a $25k lifestyle, and more to the point, don't WANT to live that life, so any chance they see to poke holes, they will take.  Speaking for myself, I am planning on a $50k with house paid off, so I'm no MMM, but you don't see me taking pot shots at someone who's trying to do something admirable with their life.

That's not entirely true.  I lived on >25k last year (18k of expenses, plus taxes, and that's including housing, which he doesn't include), and I'm on track to spend even less this year (extrapolating out, about 12-15k expenses), and I still have an issue with the creative accounting.  I think it misrepresents the lifestyle you can have on 25k, and I think that when new readers realize that, it's a big turn off.  It calls into question everything else he's written - i.e. if he fudged the numbers for this, how can we trust the rest of his numbers?  For those who haven't really gotten into the math of early retirement, it's discouraging enough to turn some off from reading more.  I know that, because it happened to me and several other people I know, most of whom haven't come back to give it another chance, and I can't really blame them.
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on June 07, 2017, 11:36:55 AM
......and I think that when new readers realize that, it's a big turn off. 
 

I hear ya, but it can't be that much of a turn off if he is making $400k....that takes some pretty impressive stats to drive that kind of revenue.
Title: Re: MMM 2016 Budget
Post by: Raenia on June 07, 2017, 11:47:31 AM
......and I think that when new readers realize that, it's a big turn off. 
 

I hear ya, but it can't be that much of a turn off if he is making $400k....that takes some pretty impressive stats to drive that kind of revenue.

I don't know, at least two people I know read the entire site after concluding it was nonsense, just to search out more things to nitpick at.  Not that I'm saying that's a majority of traffic, of course :)  I do think a fair amount of people may read the site as a curiosity, though, without really understanding that it can apply to them too.
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 07, 2017, 11:56:22 AM
I don't know, at least two people I know read the entire site after concluding it was nonsense, just to search out more things to nitpick at.  Not that I'm saying that's a majority of traffic, of course :)  I do think a fair amount of people may read the site as a curiosity, though, without really understanding that it can apply to them too.

I think the MMM message won't resonate with everyone (of even most people).  That's OK.  Also, some people really don't want to change.  They are already settled/comfortable with how their lives are.  People like that will look for any reason to not change and thus, nitpick. 

For example, 2 years ago the big stink was that "MMM is not really retired", and thus people said "It doesn't work so I won't even try".  Now, it's "MMM spent $50k!"  and again they say "It doesn't work so I won't even try".

That's fine though.  People aren't obligated to change, even if/when they really ought to.  I know for me it took a period of extended unemployment and not enough savings to cover our costs really made me aware that my very nice shit won't help me pay the mortgage when SHTF.  Without that, I probably would not have made any changes either. 
Title: Re: MMM 2016 Budget
Post by: Laura Ingalls on June 07, 2017, 03:06:57 PM
Organic food and home renovations are not deductions.

Exactly.

The persona MMM only spends 25k, but Pete spends 100k. 

I can live on 20k a year, if I deduct any expense I deem as frivolous, or luxurious.   The point is REAL money was spent.

But of course, REAL money was also made.  I guess if MMM loses his fortune because he doesn't have liability insurance, he can go back to spending $25k/year.

Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...

Well, such an event would at least make the blog more relevant to the target audience.  At one point, MMM seemed to advocate giving away all of the excess.  Although he gave away 100k, it's a bit like an Olympian jogging a few miles (his net worth is around 3 million, given the paid off home, 600k should be worth at least 1.8M if indexed + additional investment 'experiments' and personal investment of 200 - 400k for a the last few years).  And his latest tweets (something about how using a car to commute is like eating cake) makes me think he is completely out of touch.  Or maybe just smoking too much of that legal Rocky Mountain high :)

Yep, I personally would feel better about giving to a real charity of my choice vs a personal injury attorney.  It would be a test of resilience and I think they would do fine.  It would make having his bike ripped off seem like a walk in the park.
Title: Re: MMM 2016 Budget
Post by: dragoncar on June 07, 2017, 06:42:10 PM

Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.

Of course you can "go back" -- that's almost the entire point of the blog.  The vast majority of readers came from high-spending lifestyles and lowered their expenses after discovering MMM.  Hedonic adaptation works both ways, and many of us here have adapted to spending less.
Title: Re: MMM 2016 Budget
Post by: obstinate on June 07, 2017, 08:27:20 PM
I don't know, at least two people I know read the entire site after concluding it was nonsense, just to search out more things to nitpick at.  Not that I'm saying that's a majority of traffic, of course :)  I do think a fair amount of people may read the site as a curiosity, though, without really understanding that it can apply to them too.
Plenty of my friends decided it was nonsense when I first started reading it in 2013. So . . . I don't know what you want me to tell ya. He's clearly getting more attention and credit than ever. A few more people on the forum nitpicking his expenses, but that has also been going on for years. ¯\_(ツ)_/¯ Meanwhile random people I talk to tell me about how they're following MMM's message without me bringing it up in the conversation.
Title: Re: MMM 2016 Budget
Post by: obstinate on June 07, 2017, 08:31:13 PM
Can he?  He preaches all the time about hedonic adaptation and how once you are used to luxury you can't go back...
That is definitely not what hedonic adaptation means, and I'm 80% sure he has said nothing like that in the history of his blog.
He definitely insinuates, if not outright claims, that you don't go backwards in lifestyle. 
No, he does not. It honestly makes me wonder if you've really read much of his stuff that you're claiming this. What would be the point of the blog if he believed that? To catch college kids before they get into bad habits? That is so clearly not what happening that if you think he believes that's his work, then you're basically calling him a fool, since the message obviously appeals more to people once they've been working for a few years and know the horror that is the modern job.

Also he very explicitly talks about getting people to downsize, ran a number of case studies at various points . . . I dunno. I get that you're reading something into this, and that's your right, but where you see implications in one direction, I see explicit statements and action in the other.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 07, 2017, 11:17:31 PM
I don't know, at least two people I know read the entire site after concluding it was nonsense, just to search out more things to nitpick at.  Not that I'm saying that's a majority of traffic, of course :)  I do think a fair amount of people may read the site as a curiosity, though, without really understanding that it can apply to them too.
Plenty of my friends decided it was nonsense when I first started reading it in 2013. So . . . I don't know what you want me to tell ya. He's clearly getting more attention and credit than ever. A few more people on the forum nitpicking his expenses, but that has also been going on for years. ¯\_(ツ)_/¯ Meanwhile random people I talk to tell me about how they're following MMM's message without me bringing it up in the conversation.

I'm still interested to see how the community fares in an inevitable bear market.  None of the Mustachian philosophy has really been stress-tested since it has all ultimately been bull market from day one.  I'm sure those that can will tighten their belts another notch and figure it out.  Others that have never seen 20% or more of their net worth vanish on paper might also begin to think all this FIRE stuff is 'nonsense'.  I know exactly what to expect (although I don't look forward to riding the roller coaster down for a third time...) but I'm not so sure all of the 90 - 100% equity folks do.  I'm sure we'll get a few of these posts - http://www.mrmoneymustache.com/2012/05/09/houses-and-stocks-are-going-up-who-cares/ - but that might not be so effective when it is a downturn.  Time will tell I guess...
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on June 08, 2017, 07:45:55 AM

I'm still interested to see how the community fares in an inevitable bear market.  None of the Mustachian philosophy has really been stress-tested since it has all ultimately been bull market from day one.  I'm sure those that can will tighten their belts another notch and figure it out.  Others that have never seen 20% or more of their net worth vanish on paper might also begin to think all this FIRE stuff is 'nonsense'.  I know exactly what to expect (although I don't look forward to riding the roller coaster down for a third time...) but I'm not so sure all of the 90 - 100% equity folks do.  I'm sure we'll get a few of these posts - http://www.mrmoneymustache.com/2012/05/09/houses-and-stocks-are-going-up-who-cares/ - but that might not be so effective when it is a downturn.  Time will tell I guess...

I think that's the value of having this forum, is to help each other to cope and get the bigger picture when the downturn comes. I didn't have that forum in 2008/2009 though I was able to withstand selling, and I even bought some more (though not a lot more) stock index funds. Nonetheless, it would have helped to have the data that is found from posters on these forums.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 08, 2017, 09:02:39 AM
I frequented Early-Retirement.org and Bogleheads back then.  It was very interesting in real time.  You can still read the posts if you search, but it's not the same.  You just had to have investments when TARP failed to pass (a blank cheque to Wall St. really should have failed, but it passed the second time around), then the markets really tanked, money market funds breaking the buck, Lehman declaring bankruptcy, and too big to fail banks being unable to cover their short term obligations...  It is helpful to have seasoned experts around for sure, but still to tough to stay the course.  You really do begin to wonder how long it will take to get back to even from the day after day losses...
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on June 08, 2017, 10:36:39 AM
I'm still interested to see how the community fares in an inevitable bear market. 

This will be interesting for sure, not just for this community but for all of the FIRE blogosphere.   I had some money when the last downturn happened and it did not feel good....but I was nowhere near or even really thinking about FIRE, so was more job-income focused.  I have quite a bit more now and probably could FIRE if a tightened up a bit, but still not perfectly sure how I will feel about a big downturn (bc those would be much bigger losses now - although my AA is also quite different now).

That said, I have prepared myself mentally for a 25% portfolio decline (which is really larger loss on equities due to bond/cash allocation). Of course I am also in the 3% SWR camp so my 25% decline will translate into a 4% SWR after the fact - kind of cheating I guess but I am good with it.

Not that I want to experience a big decline but I really do look forward to the blogosphere when that happens.  It is so much easier to SAY you will be ok during a downturn when you are in a rising tide environment than actually living through a decline, especially for those that have never even been through any downturn with a meaningful asset level - translation....pretty much anyone who is under 30 has no f'in clue whatsoever bc they would have been still in school or on parents dime and anybody in the 30-40 group would likely have seen it, lived through it, but probably didn't have significant assets in the market so they probably don't know what the f*ck they are talking about either.  Bc for both age groups it has been a rising tide since they either started or got to a point of having meaningful assets. 

FWIW....I am just over the upper range and pretty convinced I still don't know what the f*ck I am talking about when it comes to how I feel if it happens again. 

But as you said.....

Time will tell I guess...
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 08, 2017, 11:06:33 AM
Re: downturns - I take the same view as I do with my house valuation.  It's not "real" money until I sell.  So my house value going up or down has no affect on my as long as I'm still living in it.  In the same way, VTSAX going up or down has no effect on me until I'm ready to retire.  Which is 12 years from now, at the earliest. 
Title: Re: MMM 2016 Budget
Post by: BeanCounter on June 08, 2017, 11:32:24 AM
Re: downturns - I take the same view as I do with my house valuation.  It's not "real" money until I sell.  So my house value going up or down has no affect on my as long as I'm still living in it.  In the same way, VTSAX going up or down has no effect on me until I'm ready to retire.  Which is 12 years from now, at the earliest.
I totally agree, and this is how we handled the last downturn. It didn't matter because we were still a long way off from FIRE and we knew we had enough time for our stache to bounce back. Plus that meant we were buying everything on sale.
But it's not so easy if you HAVE to draw from your stache in a downturn. This is why it is so important to allocate your stache appropriately with a few years of draw downs in cash and bonds so your current portion is stable and the rest can ride out the downturn.
Or at least that's my plan.
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 08, 2017, 12:05:26 PM
Re: downturns - I take the same view as I do with my house valuation.  It's not "real" money until I sell.  So my house value going up or down has no affect on my as long as I'm still living in it.  In the same way, VTSAX going up or down has no effect on me until I'm ready to retire.  Which is 12 years from now, at the earliest.
I totally agree, and this is how we handled the last downturn. It didn't matter because we were still a long way off from FIRE and we knew we had enough time for our stache to bounce back. Plus that meant we were buying everything on sale.
But it's not so easy if you HAVE to draw from your stache in a downturn. This is why it is so important to allocate your stache appropriately with a few years of draw downs in cash and bonds so your current portion is stable and the rest can ride out the downturn.
Or at least that's my plan.

It's also why I plan to have a paid off home before FIRE.  Other expenses are easy to dial up or down, but mortgages, not so much.  And I don't want to have to tell my family "Oh, market's down, we have to move".
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on June 08, 2017, 12:57:23 PM
In the same way, VTSAX going up or down has no effect on me until I'm ready to retire.  Which is 12 years from now, at the earliest.

That's exactly how I viewed it during the last down turn...as I said, I didn't like how it felt but just left everything alone and kept adding along the way. 

The question is how will you feel in 12 years, because when you start withdrawing I am certain it will feel like real money.
Title: Re: MMM 2016 Budget
Post by: tyort1 on June 08, 2017, 01:15:23 PM
In the same way, VTSAX going up or down has no effect on me until I'm ready to retire.  Which is 12 years from now, at the earliest.

That's exactly how I viewed it during the last down turn...as I said, I didn't like how it felt but just left everything alone and kept adding along the way. 

The question is how will you feel in 12 years, because when you start withdrawing I am certain it will feel like real money.

I have a few things I'm planning on using just in that case.  First, 4% will be $50k for me.  And I'll have a paid off house.  $50k and no house payment is pretty ridiculous, we can cut that down to $30k pretty easily.  The other thing - I plan to keep 1 year of living expenses in cash.  I also don't mind picking up a part time job if the market is taking a hammering. 

The other thing - I'm close to 90/10 stocks/bonds right now, but I'm going to shift more toward 70/30 so I could cash out the bonds if we see a truly extended downturn.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on June 11, 2017, 01:50:11 PM
I'm still interested to see how the community fares in an inevitable bear market. 

+1
Indeed.   Very curious how all these retirement blogs discuss our next recession. 
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on June 12, 2017, 05:33:07 PM
I'm still interested to see how the community fares in an inevitable bear market. 

+1
Indeed.   Very curious how all these retirement blogs discuss our next recession.

Recessions are amazing wealth building opportunities for those with liquid capital and flexibility of time.  These boards will likely be filled with ideas and discussions about different ways to capitalize.
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on June 12, 2017, 09:12:40 PM
I ER shortly before the Great Recession and lost about half of my networth pretty rapidly. Pre- FIRE I had set myself up to be able to live on a small barebones income once FIREd and also had some laddered CDs that I could live on so could leave the stash alone. I had no other income source at that time but about $450/month from the VA for a disability. With a bit of belt tightening I was able to ride out the recession nicely and even buy some highly discounted stock as well as an inexpensive foreclosed home in a HCOL area.

 I had some other options to increase income if needed like get a couple of roommate as I lived alone in a 3 bedroom house, sell or rent the paid off house, or get a job (horrors!) but didn't have to do any of those things. I did have free health care though thru the VA which was huge in keeping expenses low but otherwise if you have some flexibily in your expenses and have low enough expenses I think most people here will do fine as long as a recession isn't too long lasting. And what's a few years or less of belt tightening when you'll be retired for decades.

Very impressive! You walked the talk.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 12, 2017, 09:29:01 PM
Maybe this is an instance of the Anna Karenina principle (https://en.wikipedia.org/wiki/Anna_Karenina_principle).  In other words, we are hearing from those who turned previous downturns into success (eventually, at least).  I'm not immune to this selective memory, but I am aware that no longer seemed difficult, since it is now almost a decade since that last bubble rapidly inflated in 2007, then even more rapidly spiraled into chaos.  But it would be interesting, right now, if it were 2009 to hear the real heroes grimly hanging tight in the face of uncertainty after what would be over a year of losses culminating in the S&P at 676 (http://money.cnn.com/2009/03/09/markets/markets_newyork/).  It's easy to say that it was a money-making opportunity in hindsight, but it wasn't until several years later that all the 'unhappy families' began to recover.  In other words, it would have been more instructive to hear from these who claim to have been 'happy' at that time, back then.  Makes me wonder if I have any posts on Bogleheads from 2009... 
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 12, 2017, 11:51:00 PM
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.

I was happy too, better off than I'd ever been in my life, but I'll admit that I was a little worried.  Not so much for myself as WTF the US government was doing (TARP (troubled asset relief plan / throwing a big plastic sheet over our problem) didn't make any sense, and still doesn't).  When the Feds blank check passed Congress, I lost a little faith in the idea that I was playing in a fair game.  CEO's from investment banks were getting 'bailed out' after Lehman collapsed, and the financial institutions were suddenly 'too big to fail'.  Basically, robbing a bank for a million could get you life in jail, but leveraging the bank for a trillion in Credit Default Swaps got you a corporate jet and some leverage with the Federal Reserve. 

We are all riding high again now, but the system isn't 'fixed'.  It is only a matter of time until all of this debt created by low yields gets a little more expensive in order to compete with how cheaply risky equities can borrow.  It would also be nice if someone would call on the Fed to reduce their balance sheet (https://www.federalreserve.gov/monetarypolicy/quarterly-balance-sheet-developments-report.htm) further and increase rates while the door is still wide open, but the rest of the world apparently has too many other fish to fry.
Title: Re: MMM 2016 Budget
Post by: jim555 on June 14, 2017, 02:34:29 PM
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.
My spending now is more barebones than when I first ERed.  But it doesn't feel any different in life quality.  So spending doesn't buy happiness.
Title: Re: MMM 2016 Budget
Post by: EnjoyIt on June 15, 2017, 10:59:53 PM
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.

This is great.  It sounds like you had excess so that you had room to spare to go bare bones.
There are plenty on this forum who talk about FIRE on a relatively low cost lifestyle already and may not have as much wiggle room. Truth be told, I think the average mustachian is more likely to do well as compared to the average person in the same situation.

  Makes me wonder if I have any posts on Bogleheads from 2009...

I'm a big fan of the US stocks in free fall thread that seams to come up from time to time.  That was started in 2011.

Some of the posts from 2009 are very informative regarding the fear people had.  Many really believed that this time it may be different.

Our next recession will be the first one for me where I have substantial assets to lose. Due to growth and contributions my investments today are 1900% of what they were in 2009.  I am pretty sure I would be thinking very differently during the next go around.
Title: Re: MMM 2016 Budget
Post by: Spitfire on June 16, 2017, 08:41:41 AM
I guess if MMM loses his fortune because he doesn't have liability insurance, he can go back to spending $25k/year.

Agree with this, and this is probably the main reason why his budget doesn't bother me. I also feel his disclosure was adequate. Everyone may have different takes on what they consider "spending," but the information is available in the blog post.
Title: Re: MMM 2016 Budget
Post by: secondcor521 on June 16, 2017, 11:55:14 AM
I enjoyed the more barebones life compared to the more spendy life and that its the life I'd choose even if I had a gazillion dollars.

@spartana, what do you think are the keys to this viewpoint of yours?  Do you think everyone who went through what you did would feel similarly, or not?

I am on a similar trajectory in that I have everything I need and don't think that spending more or doing more luxury (of the marketed kind) would make me any happier.  I spent six dollars at Target yesterday on four spoons - my house was mysteriously running out - and that made me pretty happy.  Part of I think what has helped me is that I have had luxury on rare occasions - I've driven a Lamborghini and flown business class on Emirates.  It is usually nicer, but not worth the 10x or whatever price tag, and the economy version is just fine.  I could see general attitude and how one was raised would be helpful too.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 16, 2017, 12:42:27 PM
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.
My spending now is more barebones than when I first ERed.  But it doesn't feel any different in life quality.  So spending doesn't buy happiness.

Interesting how many times I hear 'spending doesn't buy hapiness' (that' s basically the tagline of Mustachianism).  I think we all agree and I'm not sure why people feel like we need to keep saying it.  What was a revealtion, should be stated more often, and doesn't get stated enough, is that financial secuirty 'buys' happiness.  Sustainability.  Knowing that you can live just fine (affording health, dental, reasonable food, shelter, etc.) through thick and thin without having to sell your time or freedom for a paycheck.  How you get there (reduced spending, side-hustle, passive income, etc.) are all just details and personal choices (which leads to all the distraction and discussions).  And I'm not sure people are evaluating their sense of financial security accurately when they are so accustomed to a steadily and consistently rising market.
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on June 16, 2017, 08:49:13 PM
Interesting how many times I hear 'spending doesn't buy hapiness' (that' s basically the tagline of Mustachianism).  I think we all agree and I'm not sure why people feel like we need to keep saying it.  What was a revealtion, should be stated more often, and doesn't get stated enough, is that financial secuirty 'buys' happiness.  Sustainability.  Knowing that you can live just fine (affording health, dental, reasonable food, shelter, etc.) through thick and thin without having to sell your time or freedom for a paycheck.  How you get there (reduced spending, side-hustle, passive income, etc.) are all just details and personal choices (which leads to all the distraction and discussions).  And I'm not sure people are evaluating their sense of financial security accurately when they are so accustomed to a steadily and consistently rising market.

What you are talking about here is the fragility of a financial security plan.  Even if 4%SWR gets hit with a sequence of return that may make it fail in the future, I would argue that a 30-40 something early retiree is still very anti-fragile, even if the capital base takes a 50% hit year one.  That theoretical person still has 12.5 years of annual expenses saved, that's a long time to figure out a way to make ends meet in the future.  Not FI forever, but having a decade or more to come up with some alternatives to maintain security is amazingly far above and beyond the average Western-world household.  When we think about the "risk" of asset failures, the above scenario it about as bad as it could get, its still pretty frigg'en OK.
Title: Re: MMM 2016 Budget
Post by: EscapeVelocity2020 on June 16, 2017, 10:10:12 PM
Kudos for using the term 'anti-fragile (https://en.wikipedia.org/wiki/Antifragile)', maybe you are accustomed with Nassim Taleb?  In which case, I agree that those who are sophisticated and adaptable, who learn from each successive failure will be fine.  But those just introduced to the business cycle?

I disagree that everyone can rely on the 4% rule more and more.  If it is true that index investing guarantees the 4% rule, then folks using leveraged loans (https://www.wsj.com/articles/SB117526592394154636) can game the system and use the 5% rule, right?
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on June 16, 2017, 11:54:26 PM
I heart Nassim. 

If I could get large scale, 50 year term non-callable leverage fixed at 4% with interest only monthly payments I'd take it in a heartbeat! Wouldn't you?  :)  Other than that, I'll stay leverage free.

4%WR is more than good enough to play the game, I'll probably pull the plug at 5%.  However, I doubt I will rely on the capital alone and I bet most early retirees will have other diversified skillsets as well.  Side-hustles, part-time work, new interests that turn to income generation or reduced expenses, ect.  But it doesn't hurt to have a some of the assets invested at extremes (barbell) like Taleb would suggest.  My comment was more to point out that even in a worst case, someone who starts with 25X spending will be a couple of standard deviations above the average in any economic climate, black swan or otherwise.  We talk about assets like this so much, it's too oft forgotten how much security capital at these levels actually provide. 
Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on June 17, 2017, 06:51:07 PM
I personally believe that more people out their ARE like me but just don't know it yet. So brainwashed by society and media telling us wanting more, bigger, better, costlier things and lifestyles are the only things that will bring us joy. And maybe that's true for some people but I don't think most.

^This in concert with other psychological factors.  I happen to know quite a few middle class/upper middle class spendypants who are running away from poverty in youth though accumulating stuff. 

The way in which each individual views their finances is very different, a MMM, YMOYL and ERE folks look at finances more like a business would.  Getting "x" value from money spent and invested, greatly dissociated from what makes life worth living.  Consumers look at spending as, "somethings not right in life and buying this [insert totally unnecessary consumer good/service here] might fix me".  A logical vs feeling paradigm maybe? 
Title: Re: MMM 2016 Budget
Post by: Captain and Mrs Slow on September 12, 2017, 01:00:09 AM
Only posting here because Mustache posted this thread on twitter (link below) but there are a gazillion other blogs out there if you feel that he doesn't speak to you anymore!

To me money is purely a means to an end. Been retired for a few years now and am back to work at my own business and absolutely loving it! You can only watch so much TV a day before your brain starts to melt.

if the business is as successful as I think it will be the extra money will allow my wife to take a buyout in 2020 (age 57) rather than working to her planned retirement date of 63.

Secondly and much more importantly it will allow us to pursue our dream of first class travel. You can couch surf with friends I want fly first class and stay in 500 dollar a night hotels. That's my idea of FI.

good by and so long

https://twitter.com/mrmoneymustache/status/907423680061304832
Title: Re: MMM 2016 Budget
Post by: gargagnam on September 12, 2017, 08:16:38 AM
I think that there are two main lessons in MMM blog, and some people in this topic are missing the second.

First lesson is that by working hard, saving a lot and having a life that's frugal but still extremely enjoyable (maybe even more enjoyable than the average high expense life) you can retire early and live an even more enjoyable life.

I have no doubt that this is the exact path that brought MMM to early retirement and to start his blog.

The second lessons is that retiring early doesn't mean lying on the couch for the rest of one's life, but that you'll find yourself involved on more activities you love and that some of them may even bring in money. You can use the money to stash even more, give to charities or live a less frugal life.

Does the second lesson invalidate the first? No
Does the fact that MMM may have lately decided to be a little less frugal on something invalidate the first lesson? Of course not, quite the opposite: it demonstrates that through a highly enjoyable frugal life you can reach financial independence and even allow some occasional (unnecessary) luxury.

The frugal life is not the end, it is a mean to the end. It frees up time and money for the people and the things you really love.
Title: Re: MMM 2016 Budget
Post by: rscore on September 12, 2017, 08:36:44 AM
"Seems like a fair bit of jealously, and nitpicking whining in this thread. Oh, no, new people might get the wrong idea... Yeah sure you are worried about new people, you just want a reason to cry your eyes out."


Right?  I love the assumption that he needs to answer to others.  Has his blog helped you?  It has done wonders for my life.  Why fault him for what he does, ask if he helps, or hurts, or is neutral.  If he helps, keep reading.  Hurts, stop.  Neutral?  Well then, I guess it depends on if you can read without becoming a complainypants. 
Title: Re: MMM 2016 Budget
Post by: tyort1 on September 12, 2017, 10:52:54 AM
I think that there are two main lessons in MMM blog, and some people in this topic are missing the second.

First lesson is that by working hard, saving a lot and having a life that's frugal but still extremely enjoyable (maybe even more enjoyable than the average high expense life) you can retire early and live an even more enjoyable life.

I have no doubt that this is the exact path that brought MMM to early retirement and to start his blog.

The second lessons is that retiring early doesn't mean lying on the couch for the rest of one's life, but that you'll find yourself involved on more activities you love and that some of them may even bring in money. You can use the money to stash even more, give to charities or live a less frugal life.

Does the second lesson invalidate the first? No
Does the fact that MMM may have lately decided to be a little less frugal on something invalidate the first lesson? Of course not, quite the opposite: it demonstrates that through a highly enjoyable frugal life you can reach financial independence and even allow some occasional (unnecessary) luxury.

The frugal life is not the end, it is a mean to the end. It frees up time and money for the people and the things you really love.

YES!!!!!  This is precisely how I understand MMM and that message strongly resonates with me. 
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on September 12, 2017, 11:12:52 AM
I think that there are two main lessons in MMM blog, and some people in this topic are missing the second.

First lesson is that by working hard, saving a lot and having a life that's frugal but still extremely enjoyable (maybe even more enjoyable than the average high expense life) you can retire early and live an even more enjoyable life.

I have no doubt that this is the exact path that brought MMM to early retirement and to start his blog.

The second lessons is that retiring early doesn't mean lying on the couch for the rest of one's life, but that you'll find yourself involved on more activities you love and that some of them may even bring in money. You can use the money to stash even more, give to charities or live a less frugal life.

Does the second lesson invalidate the first? No
Does the fact that MMM may have lately decided to be a little less frugal on something invalidate the first lesson? Of course not, quite the opposite: it demonstrates that through a highly enjoyable frugal life you can reach financial independence and even allow some occasional (unnecessary) luxury.

The frugal life is not the end, it is a mean to the end. It frees up time and money for the people and the things you really love.

YES!!!!!  This is precisely how I understand MMM and that message strongly resonates with me.

+1
Title: Re: MMM 2016 Budget
Post by: nereo on September 12, 2017, 11:23:11 AM
Someone brought this thread back from the archives.   

(https://ci.memecdn.com/6713795.jpg)

yay?
Title: Re: MMM 2016 Budget
Post by: dragoncar on September 12, 2017, 05:25:50 PM
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!  (https://twitter.com/mrmoneymustache/status/907426783728869376)

Well shoot
Title: Re: MMM 2016 Budget
Post by: nereo on September 12, 2017, 05:31:09 PM
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!  (https://twitter.com/mrmoneymustache/status/907426783728869376)

Well shoot
I know... i was a bit bummed to read that.  Guess I'm uninvited to the next MMM cookout, eh?
Title: Re: MMM 2016 Budget
Post by: aperture on September 13, 2017, 08:09:39 AM
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!  (https://twitter.com/mrmoneymustache/status/907426783728869376)

Well shoot
I know... i was a bit bummed to read that.  Guess I'm uninvited to the next MMM cookout, eh?

For anyone that is not aware, Pete tweeted a quote from this thread and made the comment quoted above. 

I have not read this entire thread and do not intend to, but I have no doubt that there are comments made here that no one would make to Pete's face.  Thus has always been the internet.  Obvious netiquette rules like 'play nice' rarely are observed by everyone.  Happily, my experience has been that this community is mostly positive, and supportive.  I have been thrilled to meet so many people willing to share their experience and expertise. 

I applaud Pete for reading this thread.  As he says, there is a "good point" made here. I suspect Pete struggles to (1) remain transparent about finances and (2) live the life and opportunities that present themselves and (3) tell a story that continues to be relevant to the lean FIRE community.  I think the "good point" made here is that when he became a media star and disclosed the tornado of money coming off of this blog, MMM became someone that was no longer relatable as a peer to people pursuing lean FIRE.  Pete continues to live a stoic frugal life, but MMM can buy a Prius and a storefront as experimental tools and then not even bother to update his blog on how that is going.  (Most other bloggers in this space are so hungry for success they are falling all over themselves to post regularly and get their comments in early on everyone else's posts). 

I am excited that Pete/MMM are doing interesting things with the $s that come off of the MMM blog.  The Prius and the storefront and the backyard office are starts of some really interesting stories.  I hope those stories get told, and I do not really care about being able to relate to Pete, the man that lives a rich amazing life on $25k per year - I mean I do, but the successes make that difficult.

Example: I drive through Longmont at least once per month - right down main street past the MMM temple.  I search for Pete on his bike, I look through the windows of the storefront, but I do not stop and bug anyone.  If Pete had just put up his blog and it was 2013 again, I would find him and have a beer/coffee with him.  It is 2017 now and Pete is still the same person, but he has 10,000s of people that would love to sit and have a beer with him.  That changes things.  I cannot relate to the fame or the wealth and that is OK. 

best to all - especially Mr. and Mrs. MM as well as the young Master MM.  - aperture
Title: Re: MMM 2016 Budget
Post by: nereo on September 13, 2017, 08:47:38 AM
Prius?
Title: Re: MMM 2016 Budget
Post by: I'm a red panda on September 13, 2017, 10:31:26 AM
It's always funny to me that people rush to his defense in these threads.  Yes, we all know that Pete's spending is not outstripping his income, commenters aren't advocating a 'save Ferris' collection, but his posts that show he actually doesn't know how much he spends aren't very Mustachian, IMHO.

By definition, isn't everything he does Mustachian? 
The platform has just changed a bit.


(I however am on the side that he is spending more than $25k a year and rationalizing a lot of it in ways that doesn't make sense to me.  But he can do whatever he wants. He doesn't owe me anything.)
Title: Re: MMM 2016 Budget
Post by: mizzourah2006 on September 13, 2017, 10:38:09 AM
I honestly have no problem with Pete's success and if he wants to spend it all good for him, he earned it and deserves it. I just get a little frustrated by the slippery slope of not counting something as an expense because it could become a good long term investment down the road.

- I put in new kitchen countertops this past year. Is that an expense or an investment? I know that when the contractor asked for the money it needed to come out of my pocket.
- Many here paid for advanced degrees. Is that an expense or an investment? I know that when the school wanted their money every semester I had a bill come due. Did it help me get an education that provided me the opportunity to get a high paying career, I enjoy? Sure, but it was still an expense IMO.
- What about a riding lawn mower? You could rationalize that as an investment in time as I could cut my lawn in 15 minutes with one whereas it takes me 60 minutes with a push mower.
- If you bought a Prius for work why isn't that an investment in 'your business' as your business is providing a service to a company in exchange for pay.

Essentially everyone here could rationalize almost all of their expenses as an investment in themselves or their children, but at the end of the day money still leaves your hands to pay for it. So, IMO it is an expense.

That being said, I still see Pete as someone that can be emulated by a large majority of society and still see him as very relatable to people starting the FIRE journey. So I suppose you could say I'm nitpicking, but if so, my expenses are drastically lower than I have been counting these past 2 years as many of them are actually 'investments'. When I look at my FIRE # it has to be able to support those 'investments' on the front end or the # won't last because they appear on paper the exact same as an expense until I realize the return.
Title: Re: MMM 2016 Budget
Post by: dougules on September 13, 2017, 11:11:37 AM
I don't understand why everybody seems to think the MMM blog is all about extreme frugality.  Pretty much every post is about how luxurious his life is, and how even his supposedly low spending is still an explosion of luxury.  What I hear is about cutting out ridiculously wasteful spending, but still keeping the luxuries that actually affect happiness.  It's sort of like the concept of the Middle Way in Buddhism.  If he were a super-frugal ascetic he would move to a little shack in Mexico and farm his own food, but he lives in a fancy house in Colorado, owns several nice bicycles, and buys fancy food that he didn't have to grow. 
Title: Re: MMM 2016 Budget
Post by: I'm a red panda on September 13, 2017, 11:28:26 AM
I don't understand why everybody seems to think the MMM blog is all about extreme frugality.  Pretty much every post is about how luxurious his life is, and how even his supposedly low spending is still an explosion of luxury.  What I hear is about cutting out ridiculously wasteful spending, but still keeping the luxuries that actually affect happiness.  It's sort of like the concept of the Middle Way in Buddhism.  If he were a super-frugal ascetic he would move to a little shack in Mexico and farm his own food, but he lives in a fancy house in Colorado, owns several nice bicycles, and buys fancy food that he didn't have to grow.

I don't think he is about extreme frugality. But he is showing a line item budget that shows extremely low spending, while talking about a luxury lifestyle. But much of what makes his lifestyle luxury he puts into his business budget, or subtracts from his personal budget to show that low spending number.

The guy is a multi-millionaire and lives a very basic lifestyle for one. It is a lifestyle to aspire to. But he subtracts out all his luxuries to hit a $22k "no frills" number. But ANYONE could show a super no frills budget if they subtract out all those things they don't need. The problem is spending money on things you don't need.

Of course, as a very very rich guy- he can spend tons of money on extras all he wants.

Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on September 13, 2017, 01:27:43 PM


Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.

If I had the ability to use my own labor to build additions, solar energy to my rooftop, and a highly efficient radiant heating system then I would be willing to spend money on the materials to make that happen. Essentially, he is using his own sweat equity to vastly increase the value of his home. You can't get more mustachian than that. If it meant that the spending was above $22k as a result then what difference does it make?  That extra spend is now an increase in value of the asset of his home, business building, etc. That's what I call an investment!
It doesn't preclude anyone else from keeping to the $22-$24k spending to attain the frugality in order to save for early retirement - like he did successfully for many years.
Title: Re: MMM 2016 Budget
Post by: I'm a red panda on September 13, 2017, 01:42:41 PM


Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.

If I had the ability to use my own labor to build additions, solar energy to my rooftop, and a highly efficient radiant heating system then I would be willing to spend money on the materials to make that happen. Essentially, he is using his own sweat equity to vastly increase the value of his home. You can't get more mustachian than that. If it meant that the spending was above $22k as a result then what difference does it make?  That extra spend is now an increase in value of the asset of his home, business building, etc. That's what I call an investment!
It doesn't preclude anyone else from keeping to the $22-$24k spending to attain the frugality in order to save for early retirement - like he did successfully for many years.

Other things subtracted were tuition, donations (though not the $100k in donations, as obviously those weren't subtracted from a $33k budget, since I guess that was business donation because it was for the blog), travel, crossfit, and luxury food to show from his $30k to $22k "no frills" budget.

That was entirely different from him not including the $30k renovation at all in his budget, or $14,000 Leaf, or his travel as Mr. Money Mustache (since that was not personal travel). 


When we refloored our house, it was part of our budget. My husband did all the labor, but just because it increased the value of our home, it doesn't mean it wasn't a renovation we spent money for. So it's odd to me he doesn't include the $30k renovation in money spent.  It's AWESOME and admirable he didn't spend way more than that paying for other people, but he still spent money. And he's not even trying to call it a business expense like the leaf.  So even if we call the Leaf and the international trips business expenses, it still seems to me he spent $60k.

And, I don't understand the "no frills" budget as an exercise. I DO believe he could cut back to that if he needed to; but as a learning tool, I think it is dangerous, because the problem is most people can't. So to say "I'm doing ok, but if I needed to, look at all these things I could cut back".   I think just showing the $30k (or $60k because it was an unusually expensive year) budget is enough for most people to be like "wow, I could live pretty well on $30k if I can just get this house paid off."
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on September 13, 2017, 02:09:40 PM

And, I don't understand the "no frills" budget as an exercise. I DO believe he could cut back to that if he needed to; but as a learning tool, I think it is dangerous, because the problem is most people can't. So to say "I'm doing ok, but if I needed to, look at all these things I could cut back".   I think just showing the $30k (or $60k because it was an unusually expensive year) budget is enough for most people to be like "wow, I could live pretty well on $30k if I can just get this house paid off."

Showing the no-frills budget is very important. If one is FIRE, and being a bit spendypants within one's financial ability to be, it's actually very helpful to know that if the stock market took a jolt for the bad, one could survive on a much lower safe withdrawal rate if needed.
His breakdown of his budget illustrates the flexibility available for severe curtailing of spending if there was a financial hurricane going on. 
Title: Re: MMM 2016 Budget
Post by: I'm a red panda on September 13, 2017, 02:16:47 PM
Then what's the point of ever cutting spending? 
Because can't everyone just always say "but I can cut spending later if I need to".

I'm also of the opinion that it is perfectly fine to say "I have millions of dollars, I can spend what I want, and relative to my net worth I spend very little money."

But if you are going to detail every cent, own it. His lifestyle isn't "everyman" achievable when lots of what makes his lifestyle enviable gets written off to business.

I think he has a lot of great things to teach people about financial independence, I'm happy to read his blog- and thrilled he hosts us all here on this forum.
Title: Re: MMM 2016 Budget
Post by: DavidAnnArbor on September 13, 2017, 02:22:57 PM
Then what's the point of ever cutting spending? 
Because can't everyone just always say "but I can cut spending later if I need to".

I don't think the point was ever to be frugal for the sake of saying, "I'm frugal."

I think the point was here's a path toward FIRE. This is how it can work.

One has to remain flexible with changing circumstances, not stay stuck in the same way of looking at things. One has to remain open to new ideas and opportunities.
Title: Re: MMM 2016 Budget
Post by: FireLane on September 14, 2017, 10:25:29 AM
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!  (https://twitter.com/mrmoneymustache/status/907426783728869376)

Well shoot

Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.
Title: Re: MMM 2016 Budget
Post by: dragoncar on September 14, 2017, 10:36:41 AM
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!  (https://twitter.com/mrmoneymustache/status/907426783728869376)

Well shoot

Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

I thought you said a lot of nice things in that post!  So maybe that was the "good points" portion
Title: Re: MMM 2016 Budget
Post by: AlanStache on September 14, 2017, 10:44:35 AM
quote for easy refrence

While I don't want to say a word against our gracious host, it always bothered me that stuff like his trips to Ecuador weren't listed on his annual spending reports. I thought it was shady to exclude them by classifying them as "business" expenses. Business expense or not, they scratched an itch for travel and fun that he would've had to pay for one way or another. I'm glad that he's being more transparent about this.

That said, I don't begrudge MMM a single bit of his success. He could have gone into a peaceful stealth retirement and never written a word. Instead, he chose to spread a philosophy that's changed countless people' lives, including all of us here. As far as I'm concerned, he deserves every dollar he's earned through his blog.

Besides, isn't this the point of FIRE? He's comfortably retired, he has way more money than he'll ever need, so why not have a little fun with it and launch some moonshot passion projects? There's no rule saying you have to spend only 4% of your savings. Anyway, his life is way more modest than most people with his income. I mean, a shed in his backyard and a midrange electric car? In the grand scheme of things, that's barely any lifestyle inflation at all. We're not talking caviar or private planes here.

Regardless, even though it's not in any way his fault, his newfound fortune does make his situation less relatable.

When I found out about MMM, his articles on frugality, simple living and Stoicism struck a nerve with me. It was just what I needed to hear. It all seemed so simple and straightforward, it convinced me that I could live a lifestyle like his. If I'd discovered his site today, with articles about donating $100,000, or starting an S-corp to funnel his taxes through, or buying a storefront in town to launch his own business, I might not have stuck around.

If I was directing someone new to MMM's site, I'd tell them to start with the oldest articles first, and consider skipping most of the posts from 2016 onward, about the time his blog output started to drop off.

All in all that seems very mellow and thoughtful.  But maybe Pete had some points - I will have to, for the first time, click a twitter link :-(
Title: Re: MMM 2016 Budget
Post by: dougules on September 14, 2017, 10:52:29 AM
I don't understand why everybody seems to think the MMM blog is all about extreme frugality.  Pretty much every post is about how luxurious his life is, and how even his supposedly low spending is still an explosion of luxury.  What I hear is about cutting out ridiculously wasteful spending, but still keeping the luxuries that actually affect happiness.  It's sort of like the concept of the Middle Way in Buddhism.  If he were a super-frugal ascetic he would move to a little shack in Mexico and farm his own food, but he lives in a fancy house in Colorado, owns several nice bicycles, and buys fancy food that he didn't have to grow.

I don't think he is about extreme frugality. But he is showing a line item budget that shows extremely low spending, while talking about a luxury lifestyle. But much of what makes his lifestyle luxury he puts into his business budget, or subtracts from his personal budget to show that low spending number.

The guy is a multi-millionaire and lives a very basic lifestyle for one. It is a lifestyle to aspire to. But he subtracts out all his luxuries to hit a $22k "no frills" number. But ANYONE could show a super no frills budget if they subtract out all those things they don't need. The problem is spending money on things you don't need.

Of course, as a very very rich guy- he can spend tons of money on extras all he wants.

Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.



And, I don't understand the "no frills" budget as an exercise. I DO believe he could cut back to that if he needed to; but as a learning tool, I think it is dangerous, because the problem is most people can't. So to say "I'm doing ok, but if I needed to, look at all these things I could cut back".   I think just showing the $30k (or $60k because it was an unusually expensive year) budget is enough for most people to be like "wow, I could live pretty well on $30k if I can just get this house paid off."

Showing the no-frills budget is very important. If one is FIRE, and being a bit spendypants within one's financial ability to be, it's actually very helpful to know that if the stock market took a jolt for the bad, one could survive on a much lower safe withdrawal rate if needed.
His breakdown of his budget illustrates the flexibility available for severe curtailing of spending if there was a financial hurricane going on.

He could have just as easily run into the sequence of returns risk, and that's what he would have gone down to if he had.  He's trying to show it's no problem if you are one of the people that does.

I think another point that I see is that if you retire early, there's a decent chance you'll go on to do something else as a hobby and end up very successful.  I'm not sure how true that is, but it's not a bad theory. 

I do think his accounting is a little questionable about what is and isn't a business expense, but the basic point still stands. 
Title: Re: MMM 2016 Budget
Post by: mathlete on September 14, 2017, 11:21:26 AM
I think I understand the frustration here. If you're a dual, high income couple like Pete and his wife, or a lot of people on this forum, a large part of the blog is a success story that is realistic and repeatable. Even if you're not high income, there are great lessons to be learned.

But the economy can only support a relatively small number of celebrity bloggers who make money writing native advertising or passing out referral links. Chances are, you will not be one of them.

As such, Pete's more recent blog posts can seem alienating. And many readers find themselves at a crossroads. It was great in the beginning, watching the dramatic impact on your FIRE date that could be had by cutting out expensive things that, as it turns out, you don't actually value that highly. But eventually, you get to a point at which cutting expenses becomes undesirable. It becomes a bad trade-off. Living a shittier working life so that you can live a shittier retirement a few months sooner.

The MMM blog can't help you here. People write what they know, and what Pete knows, is retiring early by living simply, with a high savings rate (helpful, repeatable), and running a popular blog that brings in income and allows the expensing of an exciting and adventurous lifestyle (less helpful, not repeatable).

If you're saving 50%+ of your income and you're still not on the path that you want to be on, you probably need to make more money. Spending time reading about how to advance your career or start a business is probably more helpful to you than reading MMM at this point. You're just going to find yourself annoyed by naval gazing at MMM's hypothetical expenses and frittering over what should or shouldn't be listed.

This place is (jokingly) referred to as a cult for a reason. I think we could all stand to cool it on worrying about what is or isn't, "Mustachian". You have to set your own metrics for happiness and success. Getting input from the blog, or from others on this forum can be a huge help, but ultimately, you're the only one who matters.
Title: Re: MMM 2016 Budget
Post by: Roe on September 14, 2017, 11:46:47 AM
I think I understand the frustration here. If you're a dual, high income couple like Pete and his wife, or a lot of people on this forum, a large part of the blog is a success story that is realistic and repeatable. Even if you're not high income, there are great lessons to be learned.

But the economy can only support a relatively small number of celebrity bloggers who make money writing native advertising or passing out referral links. Chances are, you will not be one of them.

As such, Pete's more recent blog posts can seem alienating. And many readers find themselves at a crossroads. It was great in the beginning, watching the dramatic impact on your FIRE date that could be had by cutting out expensive things that, as it turns out, you don't actually value that highly. But eventually, you get to a point at which cutting expenses becomes undesirable. It becomes a bad trade-off. Living a shittier working life so that you can live a shittier retirement a few months sooner.

The MMM blog can't help you here. People write what they know, and what Pete knows, is retiring early by living simply, with a high savings rate (helpful, repeatable), and running a popular blog that brings in income and allows the expensing of an exciting and adventurous lifestyle (less helpful, not repeatable).

If you're saving 50%+ of your income and you're still not on the path that you want to be on, you probably need to make more money. Spending time reading about how to advance your career or start a business is probably more helpful to you than reading MMM at this point. You're just going to find yourself annoyed by naval gazing at MMM's hypothetical expenses and frittering over what should or shouldn't be listed.

This place is (jokingly) referred to as a cult for a reason. I think we could all stand to cool it on worrying about what is or isn't, "Mustachian". You have to set your own metrics for happiness and success. Getting input from the blog, or from others on this forum can be a huge help, but ultimately, you're the only one who matters.

Well put.

I also think part of the reason the forum tends to dwell on definitions of "Mustachianism", and part of the reason for the culty vibes, is that we are an analytical group. Lots of lawyers and engineers. Can't just throw out a statement about what something is, without properly defining it, assigning it a value.

Still, MMM changed my life. I don't care if Pete decides to rent a yatch and lounge around the tropics while a servant handfeds kobe beef to an army of chihuahua to make them wag their tails enough to create a gentle breeze. My life is still changed, no matter where he budgets the chihuahuas.
Title: Re: MMM 2016 Budget
Post by: moof on September 14, 2017, 02:51:38 PM
Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

I thought your comment was on point and matched my own opinion as to where his self-reported lifestyle has gone vs. the frugal eco warrior depicted in the first few years of posts.  I don't fault him for his wealth or subsequent lifestyle, but the 2016 budget post felt very hollow to me as well, full of denial, and a bit of angst.

His bare bones budgets leave out house maintenance and renovations for example, while my planned budget keeps $5k per year to cover roofing, painting, fences, floors, windows, eventual kitchen overhaul, etc.  Basically there were a few too many posts about what he is up to that were grossly absent from the budget, too much for me to continue my willful suspension of disbelief.

I don't fault him for adding a hobby building, buying a business building, or the multitude of other extravagances at a personal level, but it clashes with self-portrait he chooses to continue to paint.  He is rich (good for him!), and if he totaled up all the REAL total spending (no magic asterisks) it would be hard to argue he wasn't a well funded spendy-pants who just bought a brand new car, on credit (subsequently the financing details were removed from the post?), despite railing against such behavior as a central pillar of Mustachianism.  I don't see any of that as a reason to not break bread with him, or even the multitude of others who have very different financial situations and habits than me, but the post came off as disingenuous and counter to the usual up-front blunt style he usually uses, and he apparently took the well founded criticism as as an un-deserved face punch (isn't that what we wer taught to do to spendy-pants'?).

It would have probably been better to just not have posted the 2016 budget at all.  I am still eternally grateful for his early posts, which inspired me to go from a ~20% saver to a ~45% saver within a pretty short span, to re-double my bike commuting efforts from ~50% commuting to 95%, and become much more mindful of my spending in general.
Title: Re: MMM 2016 Budget
Post by: Kathryn K. on September 14, 2017, 05:14:18 PM
Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

I thought your comment was on point and matched my own opinion as to where his self-reported lifestyle has gone vs. the frugal eco warrior depicted in the first few years of posts.  I don't fault him for his wealth or subsequent lifestyle, but the 2016 budget post felt very hollow to me as well, full of denial, and a bit of angst.

His bare bones budgets leave out house maintenance and renovations for example, while my planned budget keeps $5k per year to cover roofing, painting, fences, floors, windows, eventual kitchen overhaul, etc.  Basically there were a few too many posts about what he is up to that were grossly absent from the budget, too much for me to continue my willful suspension of disbelief.

I don't fault him for adding a hobby building, buying a business building, or the multitude of other extravagances at a personal level, but it clashes with self-portrait he chooses to continue to paint.  He is rich (good for him!), and if he totaled up all the REAL total spending (no magic asterisks) it would be hard to argue he wasn't a well funded spendy-pants who just bought a brand new car, on credit (subsequently the financing details were removed from the post?), despite railing against such behavior as a central pillar of Mustachianism.  I don't see any of that as a reason to not break bread with him, or even the multitude of others who have very different financial situations and habits than me, but the post came off as disingenuous and counter to the usual up-front blunt style he usually uses, and he apparently took the well founded criticism as as an un-deserved face punch (isn't that what we wer taught to do to spendy-pants'?).

It would have probably been better to just not have posted the 2016 budget at all.  I am still eternally grateful for his early posts, which inspired me to go from a ~20% saver to a ~45% saver within a pretty short span, to re-double my bike commuting efforts from ~50% commuting to 95%, and become much more mindful of my spending in general.

I agree that the post cited in MMM's twitter comment was on point and fair.  For someone who's all about doling out the facepunches, MMM isn't very good at taking criticism himself...
Title: Re: MMM 2016 Budget
Post by: BeanCounter on September 14, 2017, 07:01:20 PM
That Twitter post is just pissing me off. He doesn't get it.
I've been critical of his budget posts for several years. It's not because I'm jealous. Or that I'm part of the IRP. It's because I'm very close to FIRE myself. In fact the 'sat he has long since passed the total that MMM retired at. But we have not RE'd yet because I keep looking at the future wondering if we can really retire for >30 years at that spending level. I'm looking to him for an example. So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.
I think it would be more authentic and helpful if he would just include everything but categorize it by necessity. List all the things that were necessary expenditures against what the 'stache earning were but then just explain that since there was extra money from market earnings of the blog or whatever, we also spent X,Y &Z.
Title: Re: MMM 2016 Budget
Post by: idahofire on September 14, 2017, 07:28:32 PM
That Twitter post is just pissing me off. He doesn't get it.
I've been critical of his budget posts for several years. It's not because I'm jealous. Or that I'm part of the IRP. It's because I'm very close to FIRE myself. In fact the 'sat he has long since passed the total that MMM retired at. But we have not RE'd yet because I keep looking at the future wondering if we can really retire for >30 years at that spending level. I'm looking to him for an example. So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.
I think it would be more authentic and helpful if he would just include everything but categorize it by necessity. List all the things that were necessary expenditures against what the 'stache earning were but then just explain that since there was extra money from market earnings of the blog or whatever, we also spent X,Y &Z.

Been reading the blog since 2012. Totally agree. Nowadays I go back once in a while and read some older posts for motivation. Those older posts have inspired me tremendously.
Title: Re: MMM 2016 Budget
Post by: CanuckExpat on September 14, 2017, 09:34:15 PM
So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.

I think you need to work on your definition of critical spending a bit more :)
You are welcome to spend on what you want to (within limits) but no one has ever died or suffered an acute crisis from lack of new car, travel, or a lot of what home maintenance can cover, so I'll take you to task on specific wording
Title: Re: MMM 2016 Budget
Post by: BeanCounter on September 15, 2017, 04:14:23 AM
So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.

I think you need to work on your definition of critical spending a bit more :)
You are welcome to spend on what you want to (within limits) but no one has ever died or suffered an acute crisis from lack of new car, travel, or a lot of what home maintenance can cover, so I'll take you to task on specific wording
Canuck,
You are exactly right. But that is why I'm here. I'm at the point in my FIRE journey where I'm trying to figure out what things are really critical to me. And that will give me a better idea what my number needs to be. Having a working car and the ability to afford some travel a few times a year are pretty high on the list. Not being able to afford it would not be an acute crisis, but I don't want to get 10-20 years into my retirement and find my returns aren't covering how I want to live.
Title: Re: MMM 2016 Budget
Post by: idahofire on September 15, 2017, 09:04:20 AM

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.

Cash flow, income, and net worth all matter. I was just trying to say that buying a finished studio is different than consumption. People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense. That's all. It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing.

I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

But if you run a whole web site predicated on the idea that your life is better if you spend a lot less than you're able, don't be surprised when people bitch if you aren't really honest with how that spending translates to the good life.

EXACTLY!
Title: Re: MMM 2016 Budget
Post by: idahofire on September 15, 2017, 09:47:58 AM


And I would argue that there is no way a Tesla is a better value because you're paying way more for most of the same practical benefits. The additional pros of the Tesla fall into the luxury category which mustachianism values at 0. And remember the actual price difference is after tax credits so in his case it would be $60,000 vs. $14,000.

Here's my thought on the Leaf, or him buying ANY new car. Based on his budget and blog, he almost NEVER drives. You could make a very solid argument that paying $14,000 for a depreciating asset that you hardly ever use is pretty wasteful and luxurious. I mean I think he buys what 2 or 3 gallons of gas in an entire year he once said? That would mean I walk more in 2 weeks than he drives. (I walk or bike everywhere). In that case, how do you justify the purchase?

To me that's the thing. You can't have it both ways. Yes it's environmental, and yes he's an influencer. I get all of that. But he doesn't NEED it. He almost never drives anywhere. So how is this not wasteful spending?

I mean what if we put his Mustachian math to his numbers? How much money is he paying per mile to drive that thing? (Forget gas!) If he only drives 200 miles in a year and he owns it for 8 years, how much did he REALLY pay to own it per mile of use? That's the part I'm stuck on and no one seems to ever talk about this aspect of it.
Title: Re: MMM 2016 Budget
Post by: moof on September 15, 2017, 11:20:48 AM
So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.

I think you need to work on your definition of critical spending a bit more :)
You are welcome to spend on what you want to (within limits) but no one has ever died or suffered an acute crisis from lack of new car, travel, or a lot of what home maintenance can cover, so I'll take you to task on specific wording

Your savings rate or your FIRE spending amount should be based on your ACTUAL spending each year, even if some of it ends up turning into assets.  The theme among a lot of FIRE advocates is to adjust your REAL lifestyle down and save until your Stache is 25 time your actual spending.   Saying I only spend $20k/year is just fraudulent if I happened to factor out dining out because I can always cut back later, or my kitchen remodel because it is an "investment" I'll recoup *later*, my facepunch worthy financed new car because of "research", etc.

Large expenses should get averaged out and budgeted for in a realistic fashion, but I don't say that my saving rate for last year was not 42%, but 60% because the $14k I spent last year on a new roof does not count somehow.  I don't use this years expenses (with no major house work so far) as my typical spending for calculating my *number*, I must reasonably add in my estimated average lumpy expenses.  Claiming a $27k spending rate while ignoring $39k of spending on his hobbies of choice (being an Uber driver and building an out building for fun), and who knows how much on a business location and renovation is just mind blowing.

And now I feel like I am part of the Internet Retirement Police, where I can't see how you can magically ignore buying a business building in your finances as not being spending, but still claim your are retired in any sense of the word.  He is just a few employees away from claiming he is not a boss.  I give huge props for saving a lot, being retired to spend time with his wife and kid for a few years, but it looks more like a pause while doing a career change rather than even the most stretched meaning of "retired" I can come up with.

I feel dirty.  Why am I upset at this stuff?  Argh.
Title: Re: MMM 2016 Budget
Post by: KeithTax on September 15, 2017, 05:28:32 PM
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?

b/c if you're going to do something why not make some extra cash doing it if its possible.  also MMM didnt FIRE

he left his job to start building houses <-- career change
then the housing market colapsed.  <--- if this doesnt happen we may never know about him.  he may just keep building houses making a killing.
then the markets crashed. <---- butt hole pucker time.

anyone in that situation would likely be looking to bring in extra income if possible so he blogged and monetized it.

I don't disagree with your above sequence of history, but doesn't that also undercut that the message of "the 4% rule will see you through" that is a cornerstone of the MMM philosophy?

When one is basically preaching a philosophical system, not being consistent to it yourself is not the best way to get others to buy into it - especially when the philosophy itself promotes black and white thinking about its key concepts.

i 100% agree thats the side i'm on with the whole thing.  If he really wants to show this works every dime he makes should be given away.  (but who the hell is gonna do that)  the insurance is worth so much just to have that cash there for the healthcare what ifs the end of life what ifs.

it'd be really cool to see some one FIRE and 100% live on the 4% rule with a roth ladder and blog about it ... but when that happens and then it gets popular then it makes money and that money is now a safety net and you're no longer retired.  you see where this is going. its an infinite cycle.

That could be gotten around by a blog owner seeking out those who are FI but don't have a blog themselves (maybe this is already out there somewhere?). Would be more of one-off or occasional check-in but I think it would be extremely valuable to see how how the FIRE concepts play out when there's not a firehose of blog income as a back-up.  Of course there are FIRE'd forum members here but don't know how publicly some of them would want to share all their details.

Why does MMM monetize at all? All I can say is:

https://wealthyaccountant.com/2017/08/09/you-still-get-paid/

or

https://youtu.be/mj5IV23g-fE
Title: Re: MMM 2016 Budget
Post by: JN2 on September 15, 2017, 05:31:18 PM
About 5 years ago I was expecting to retire at 65. I came across MMM and did a spreadsheet, reduced my expenses accordingly and two years ago FIREd at age 57. Thank you MMM for 8 years of my life.

I spend $30k per year, including everything. I rent (costs $10k per year; I have zero property) and spend approx $7k on travel. I am a bon-vivant with no side gigs and no intention of working again. Life is good :)

PS It helps that I live in a country (UK) with free health care.

PPS MMM may have gone astray but leaders often fail to live up to expectations. Take what works for you and cut him some slack :)
Title: Re: MMM 2016 Budget
Post by: Kay-Ell on September 18, 2017, 12:31:44 PM
Come on guys...

The Studio is an investment.  It's no more "spending" than purchasing stocks or buying the new house is "spending."  He built a 50k shed for 30k by DIY-ing a lot of it.  Whether it was a financially good investment or not remains to be seen (I think it probably was), but there is no denying that it is an appreciating asset that increases the over all value of his property.  He sold one asset (his larger house), bought, renovated and enhanced another like-kind asset (his new house + studio) and still came out ahead.  How is there any confusion on whether this represents $30k of additional spending in his 2016 budget?

The car was spending.  Sure, he can deduct is as a business expense on his taxes if he wants to.  But it replaced his personal car.  We can argue that it's anti-mustatchian all we want but, we'd only be half right.  There's zero way that buying a brand new Leaf is the most cost effective vehicle for his family.  But finding the cheapest way to do something has never been the entire MMM philosophy.  The equation balances living the good life, with finding the most cost effective short cuts.  He wanted a leaf and he mustache'd the hell out of the transaction to bring the cost of the car down as low as possible.  So he spent $9000 somewhat unnecessary dollars, to replace a car that was still good.  It's a depreciating asset that, if past habits hold true, should probably be amortized over 12 years, increasing his spending by roughly $750 a year.  That's not even counting what it will be worth when he does eventually sell it, or any income the Leaf generates in his new Uber hobby.

I feel like the 2016 budget is leaving a lot of people with a sense of betrayal.  That maybe you can't cut your spending down to the bare bones, making no provisions for future purchases, leave yourself no safety margin and expect the 4% rule to take care of you.  But when has that ever been the MMM message?  Does anyone here really think that his ability to replace a 12 year old car with one costing under 10k, or sell his old house for a profit that was more than enough to covers the cost of buying a new one (and building a studio) is because he's a celebrity blogger? Does 2006 Pete get no credit for building a safety margin into his calculations, long before the blog was a factor?  Sure he gets invited to speak at various places now, and travels to Ecuador sometimes.  Those are perks of writing a one in a million blog.  I guess I missed the part where the blog ever suggested we could/should be just like him with all of the exact proficiencies and opportunities.  Is there a post someone can link me to that says "you can retire early, live comfortably on 25k per year, AND fly around the world speaking at events because of your hugely popular blog, if you just get your savings rate up to 50%."  It's never been part of the deal.  It won't be a part of most of our lives.  And I, personally, don't see any reason why that should be disheartening to anyone here.
Title: Re: MMM 2016 Budget
Post by: I'm a red panda on September 18, 2017, 12:40:38 PM
Come on guys...

The Studio is an investment.  It's no more "spending" than purchasing stocks or buying the new house is "spending."  He built a 50k shed for 30k by DIY-ing a lot of it.  Whether it was a financially good investment or not remains to be seen (I think it probably was), but there is no denying that it is an appreciating asset that increases the over all value of his property.  He sold one asset (his larger house), bought, renovated and enhanced another like-kind asset (his new house + studio) and still came out ahead.  How is there any confusion on whether this represents $30k of additional spending in his 2016 budget?


If I replaced my ugly carpet with hardwood floors, would that be spending? Or investing?   
I mean, probably my house will sell for more with the wood floors, but maybe not. So I guess it remains to be seen if it was a good investment or not.  I'd spend LESS because we'd DIY it, but I'd still be spending.

Nope, not buying it.  The shed was an expense.  He spent $30k. It's awesome that he didn't spend $50k.

If he can later sell it for more, awesome.  But can't I say that about anything?  I just sold a video game for 3x what I paid for it in 1990. Does that make it an investment when I bought it? Can I call all my video games investments now instead of spending. I guess it will just remain to be seen which ones were good investments.

I'm not saying the guy is a consumerist sucker. He spends on pretty reasonable things. But it is still spending.
Title: Re: MMM 2016 Budget
Post by: mizzourah2006 on September 18, 2017, 02:18:36 PM
Come on guys...

The Studio is an investment.  It's no more "spending" than purchasing stocks or buying the new house is "spending."  He built a 50k shed for 30k by DIY-ing a lot of it.  Whether it was a financially good investment or not remains to be seen (I think it probably was), but there is no denying that it is an appreciating asset that increases the over all value of his property.  He sold one asset (his larger house), bought, renovated and enhanced another like-kind asset (his new house + studio) and still came out ahead.  How is there any confusion on whether this represents $30k of additional spending in his 2016 budget?


If I replaced my ugly carpet with hardwood floors, would that be spending? Or investing?   
I mean, probably my house will sell for more with the wood floors, but maybe not. So I guess it remains to be seen if it was a good investment or not.  I'd spend LESS because we'd DIY it, but I'd still be spending.

Nope, not buying it.  The shed was an expense.  He spent $30k. It's awesome that he didn't spend $50k.

If he can later sell it for more, awesome.  But can't I say that about anything?  I just sold a video game for 3x what I paid for it in 1990. Does that make it an investment when I bought it? Can I call all my video games investments now instead of spending. I guess it will just remain to be seen which ones were good investments.

I'm not saying the guy is a consumerist sucker. He spends on pretty reasonable things. But it is still spending.

How it's accounted for in an accounting budget is different from how it is accounted for in cashflow. It can be an investment with regards to networth changes, but the cashflow is certainly impacted until you sell. The issue I and it seems you also have is that FIRE is based on a safe withdrawal rate and hence is a cashflow based model.

Building the shed may improve the value of his home and thus be a networth neutral move, but that doesn't change the fact that it requires cash to do it, so it is an expense as far as outgoing money is concerned.

If you retired with 1 million as a nest egg and used a SWR of 4%, but you made upgrades to your house and rental properties of $15-$20k/yr would you calculate your expenses as a 4% withdrawal rate or a 6% WR?

The only reason he can do this is because he doesn't have any long term concerns about cashflow issues. It's similar to people here that compare themselves to living like they are working poor. Sure you can have expenses of $20k/yr, but if you had an emergency your cashflow could easily cover another $5-$10k in a few months if even your emergency fund could not.
Title: Re: MMM 2016 Budget
Post by: Kay-Ell on September 18, 2017, 02:34:19 PM
The only reason he can do this is because he doesn't have any long term concerns about cashflow issues.

I would say the only reason he could do this is he sold his larger, more expensive house and used the profits to buy a smaller house, renovate it and build a studio, while still coming out ahead.  It goes without saying that if a 4% SWR gives you $25,000 in annual income you can't afford to retire with a $25,000 per year budget, let alone build a 30k shed.
Title: Re: MMM 2016 Budget
Post by: Kay-Ell on September 18, 2017, 02:41:04 PM
If I replaced my ugly carpet with hardwood floors, would that be spending? Or investing?   
I mean, probably my house will sell for more with the wood floors, but maybe not. So I guess it remains to be seen if it was a good investment or not.  I'd spend LESS because we'd DIY it, but I'd still be spending.

I buy houses and use them as rentals.  I put wood floors in all of them.  It's always been a good investment :-P
Title: Re: MMM 2016 Budget
Post by: mizzourah2006 on September 18, 2017, 02:44:05 PM
The only reason he can do this is because he doesn't have any long term concerns about cashflow issues.

I would say the only reason he could do this is he sold his larger, more expensive house and used the profits to buy a smaller house, renovate it and build a studio, while still coming out ahead.  It goes without saying that if a 4% SWR gives you $25,000 in annual income you can't afford to retire with a $25,000 per year budget, let alone build a 30k shed.

IMO that's still an expense. If I had 1.2 million in investments and a $200k mortgage and tomorrow I decided to pay off the $200k mortgage with $200k from my investment portfolio would that be an expense in your opinion? It's actually a networth neutral move and I had specifically saved the extra $200k above my SWR for that purpose, just like he was able to build the shed because he bought a cheaper home and thus had additional money left over from the sale of his old home. Again it depends on how you look at it and from an accounting perspective, sure, it may have been neutral, but the cash did have to leave his pocket and I would consider that an expense regardless of whether or not you had the extra cash from a profit elsewhere.
Title: Re: MMM 2016 Budget
Post by: I'm a red panda on September 18, 2017, 02:47:11 PM
If I replaced my ugly carpet with hardwood floors, would that be spending? Or investing?   
I mean, probably my house will sell for more with the wood floors, but maybe not. So I guess it remains to be seen if it was a good investment or not.  I'd spend LESS because we'd DIY it, but I'd still be spending.

I buy houses and use them as rentals.  I put wood floors in all of them.  It's always been a good investment :-P

Our last house it didn't help the value, sort of. I mean, the house sold for more than the house next door- but there was a major market drop, so we didn't recoup the cost.
Title: Re: MMM 2016 Budget
Post by: moof on September 19, 2017, 12:31:04 PM
Hard to re-read this post:
https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/ (https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/)
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on September 19, 2017, 03:13:41 PM
Come on guys...

The Studio is an investment.  It's no more "spending" than purchasing stocks or buying the new house is "spending."  He built a 50k shed for 30k by DIY-ing a lot of it.  Whether it was a financially good investment or not remains to be seen (I think it probably was), but there is no denying that it is an appreciating asset that increases the over all value of his property.  He sold one asset (his larger house), bought, renovated and enhanced another like-kind asset (his new house + studio) and still came out ahead.  How is there any confusion on whether this represents $30k of additional spending in his 2016 budget?

The shed may or may not add value to the house just like adding a $50k pool may or may not (BTW typically doesn't unless you are in places like AZ, SoCal, etc).  But I agree 100% with the bolded part - yes its spending but he did it by selling a house and redeploying it into a smaller house that he made some improvements to - my guess is he still has a surplus for the house sale.  The only caveat is that when he got on his soap box about downsizing for the greater good only to retrench and build a $0k shed for more room....oh and now a commercial property for more room.
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on September 19, 2017, 03:19:09 PM
How it's accounted for in an accounting budget is different from how it is accounted for in cashflow. It can be an investment with regards to networth changes, but the cashflow is certainly impacted until you sell. The issue I and it seems you also have is that FIRE is based on a safe withdrawal rate and hence is a cashflow based model.

Not necessarily, from an accounting view it could be argued that the cash went out today but the accrual is spread over 30 years.  Personally, I funnel $400/month into an account just for home repair/upgrades and don't count it in my net worth.  Some years I have had $10k in costs come up and others very little.  I take the money out of the account to pay for it and that's that so my cash flow year in year out is only impact by $4800 even though I may have spent $10k.  That's kind of what he did here with the funds from his other house.

Title: Re: MMM 2016 Budget
Post by: mizzourah2006 on September 19, 2017, 04:17:49 PM
How it's accounted for in an accounting budget is different from how it is accounted for in cashflow. It can be an investment with regards to networth changes, but the cashflow is certainly impacted until you sell. The issue I and it seems you also have is that FIRE is based on a safe withdrawal rate and hence is a cashflow based model.

Not necessarily, from an accounting view it could be argued that the cash went out today but the accrual is spread over 30 years.  Personally, I funnel $400/month into an account just for home repair/upgrades and don't count it in my net worth.  Some years I have had $10k in costs come up and others very little.  I take the money out of the account to pay for it and that's that so my cash flow year in year out is only impact by $4800 even though I may have spent $10k.  That's kind of what he did here with the funds from his other house.

Now we are getting into semantics. I would argue regardless of whether or not you count it as part of your networth it still counts. A sinking fund is still your cash. You either count it as an expense as it goes into your sinking fund or an expense when it all comes out, but it is an expense at some point down the line. We did the same thing when we redid our kitchen counters last year. I saved money up in a savings account and then when the contractor needed money I paid him. I counted it as an expense the month the bill came to me, but I could have just as easily counted each month's savings as an expense and never counted the bill in its entirety. The bottom line re-doing kitchen counters will almost certainly add more value to my home than a shed in my backyard would. I still counted it as an expense, it my be recouped later, it may not, but when I sell my home or if I get it appraised and it is valued higher then I would increase my networth, but it does nothing to increase my ability to produce cash at until I sell the asset, which is very illiquid in the first place.

The way I look at this and why I see this as 'fabricating' is that we are all working on the premise of a SWR which will produce a certain amount of income for us each year. To say that upgrading your home or buying a new car isn't really a cost, but is actually an investment ignores the fact that it takes some of your income regardless if it is networth neutral or not. If you are living off of $40k/yr (1 million invested) and a $10k expense comes up, like re-doing your bathroom, you can't just ignore the fact that for that particular year your withdrawal rate is 5% because it is actually networth neutral or slightly networth positive given a new home appraisal. Now he did say he had the additional money leftover from downgrading his house, but I would still consider that an expense, just as I would consider taking $200k out of your 1.2 million in investments to pay off the remaining $200k of your mortgage an expense to leave you with no mortgage and a $40k/yr SWR. You definitely could afford that expense given that it will still remain networth positive, but it is still an expense in my book. If you are saying that building the new shed with a profit from the sale of his old home isn't an expense then using $200k from your profits on your investments to pay off your mortgage isn't really an expense.  Thus really the only expense in a mortgage payment is the interest. I consider the payment in its entirety an expense (part of which is networth neutral) because I know at the end of the day I can't tell the mortgage company I'm not going to pay the principal this month. The bill still comes due.

But again, I'm thinking about it from supporting all expenses that come due on a specific SWR, so I count all one time expenses as an expense (even things like child birth) and I separate out recurring 'lifestyle' expenses from total expenses, but I still count them all. Given that at this point MMM doesn't even need to use his nest egg he has the luxury of not worrying about it, he's essentially still employed, but many of us won't end up in his situation. I say that with no ill-will at all, I think it's awesome what he has done and am happy for him that he has gotten even a little bit back for everything he has provided most of us, including a community to discuss this with like-minded individuals.
Title: Re: MMM 2016 Budget
Post by: obstinate on September 19, 2017, 09:48:00 PM
Hard to re-read this post:
https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/ (https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/)
Why? Even supposing MMM's mindset has changed, does that invalidate the mindset he had three and a half years ago? Is anything in that post less true than it was the day it was written?
Title: Re: MMM 2016 Budget
Post by: Kay-Ell on September 21, 2017, 10:35:16 AM
Hard to re-read this post:
https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/ (https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/)
Why? Even supposing MMM's mindset has changed, does that invalidate the mindset he had three and a half years ago? Is anything in that post less true than it was the day it was written?

This is the problem with idolizing a person instead of utilizing their message in a way that works for you individually. I've learned a lot from MMM, I've enjoyed finding a community of people who view money and lifestyle in a similar way to me.  I think Pete sounds like a cool guy that I'd enjoy being friends with.  And if he decides to move to a tropical island and hire a staff of people to change his catheter and bed pan, so be it.  I've still gotten a ton of enjoyment and value from reading the blog and forum.
Title: Re: MMM 2016 Budget
Post by: dougules on September 21, 2017, 10:43:15 AM
Hard to re-read this post:
https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/ (https://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/)
Why? Even supposing MMM's mindset has changed, does that invalidate the mindset he had three and a half years ago? Is anything in that post less true than it was the day it was written?

This is the problem with idolizing a person instead of utilizing their message in a way that works for you individually. I've learned a lot from MMM, I've enjoyed finding a community of people who view money and lifestyle in a similar way to me.  I think Pete sounds like a cool guy that I'd enjoy being friends with.  And if he decides to move to a tropical island and hire a staff of people to change his catheter and bed pan, so be it.  I've still gotten a ton of enjoyment and value from reading the blog and forum.

Also it seems like people forget that MMM is a persona/caricature.
Title: Re: MMM 2016 Budget
Post by: rweba on September 22, 2017, 06:57:31 AM
Obviously plenty of people are upset, and I thought about it and i think I understand why.

I think this is partly MMM's own fault. He created this exaggerated persona of MMM, denounced consumerism and portrayed himself as "The Ultimate Frugal Guru" (although he has always admitted that people like Jacob Lund Fisker of ERE spend much much less than him).

So he built this expectation that people should see him as a role model. In this light it's understandable people are going to say "You're a hypocrite! You make $400,000/year, go on fancy foreign trips, buy brand new cars and build $30,000 sheds that you don't count as expenses, and call yourself frugal! You're a fraud and a liar!"

But I would argue that IT DOESN'T MATTER WHAT MMM DOES!

What matters is how sound the ideas are and how effectively you can apply them to your life.


There are a couple of ways you can evaluate the principles independent of what MMM does:

(1) Check the Math

It ultimately boils down to a simple math problem:

Under reasonable assumptions, can an "average/typical middle class American/Westerner" save up enough assets so that within 10-20 years the long-term income from their assets is greater than their typical spending?

You can evaluate this math completely independently of what MMM does and see if it makes sense to you. A lot will depend on what kind of assumptions you are willing to make, your risk tolerance and your personal circumstances.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

(2) Look at others
There are many people other than MMM who have achieved FI at an age less than 50. Some of them post in the MMM forums and others have blogs. If you can't relate to MMM maybe you can relate to them.

https://forum.mrmoneymustache.com/post-fire/

http://rootofgood.com/zero-to-millionaire-ten-years/

So maybe MMM isn't relatable to the average person anymore. That doesn't mean the basic principles aren't still applicable.
Title: Re: MMM 2016 Budget
Post by: moof on September 22, 2017, 02:16:49 PM
He financed a new car, then hand waved away any accounting of it.  He did major work on his home and hand waved the cost away.  We're I too do the same with how I calculate my annual spending I would be FI now by this insane logic/accounting.
Title: Re: MMM 2016 Budget
Post by: Fomerly known as something on September 23, 2017, 06:04:35 PM
The only reason he can do this is because he doesn't have any long term concerns about cashflow issues.

I would say the only reason he could do this is he sold his larger, more expensive house and used the profits to buy a smaller house, renovate it and build a studio, while still coming out ahead.  It goes without saying that if a 4% SWR gives you $25,000 in annual income you can't afford to retire with a $25,000 per year budget, let alone build a 30k shed.

IMO that's still an expense. If I had 1.2 million in investments and a $200k mortgage and tomorrow I decided to pay off the $200k mortgage with $200k from my investment portfolio would that be an expense in your opinion? It's actually a networth neutral move and I had specifically saved the extra $200k above my SWR for that purpose, just like he was able to build the shed because he bought a cheaper home and thus had additional money left over from the sale of his old home. Again it depends on how you look at it and from an accounting perspective, sure, it may have been neutral, but the cash did have to leave his pocket and I would consider that an expense regardless of whether or not you had the extra cash from a profit elsewhere.

I recently changed houses.  I didn't really change sizes but I did on value.  I have a portion of the profit set aside to cover the expenses of a planned renovation.  Will I get 100% of my "investment" back if/when I go to sell, maybe but it's still a budgeted expense for the year.  I could have put the difference in more Total Stock Market shares, or made a down payment on a rental property, but I didn't.  I'm choosing to spend it.  If it was a flip or a rental I'd likely have a different opinion but like MMM this is my primary residence.   
Title: Re: MMM 2016 Budget
Post by: tooqk4u22 on September 25, 2017, 03:42:33 PM
How it's accounted for in an accounting budget is different from how it is accounted for in cashflow. It can be an investment with regards to networth changes, but the cashflow is certainly impacted until you sell. The issue I and it seems you also have is that FIRE is based on a safe withdrawal rate and hence is a cashflow based model.

Not necessarily, from an accounting view it could be argued that the cash went out today but the accrual is spread over 30 years.  Personally, I funnel $400/month into an account just for home repair/upgrades and don't count it in my net worth.  Some years I have had $10k in costs come up and others very little.  I take the money out of the account to pay for it and that's that so my cash flow year in year out is only impact by $4800 even though I may have spent $10k.  That's kind of what he did here with the funds from his other house.

Now we are getting into semantics.

Maybe

I would argue regardless of whether or not you count it as part of your networth it still counts. A sinking fund is still your cash. You either count it as an expense as it goes into your sinking fund or an expense when it all comes out, but it is an expense at some point down the line. We did the same thing when we redid our kitchen counters last year.

Any money out is an expense/cost/investment etc.  but its about smoothing the cash flow.  You can't count a sinking fund in your net worth bc then you would be double counting - its effectively prepaid expenses.  So yes, I recognize the sinking fund payments as an expense but I also track the actual expense to be sure they line up over time.

I saved money up in a savings account and then when the contractor needed money I paid him. I counted it as an expense the month the bill came to me, but I could have just as easily counted each month's savings as an expense and never counted the bill in its entirety.

I think both might be wrong.....a big one time expense in a single month/year or even saving up for it in a short time for something that will last many many years and won't need to be redone...should be spread out over a period of time.  And its optional.  Even still, I estimated the remaining life of most of my big items (including some optional stuff like baths and kitchens) costs then started a sinking fund with that amount ($5k roof that should last 20 years from new but is 10 years old =$2.5k initial deposit)  then do monthly payment with the annual amount included in my FIRE calc spending.  I don't think homeowners think enough about this stuff even on this site.  Typically it just builds up but sometimes it gets drained and for the optional stuff it can always be pushed back if needed. 

The bottom line re-doing kitchen counters will almost certainly add more value to my home than a shed in my backyard would. I still counted it as an expense, it my be recouped later, it may not, but when I sell my home or if I get it appraised and it is valued higher then I would increase my networth, but it does nothing to increase my ability to produce cash at until I sell the asset, which is very illiquid in the first place.

Yeah I am not giving credit for possible value creation - people generally have no clue what that even means but yes your counters are probably better than a fancy shed.


The way I look at this and why I see this as 'fabricating' is that we are all working on the premise of a SWR which will produce a certain amount of income for us each year. To say that upgrading your home or buying a new car isn't really a cost, but is actually an investment ignores the fact that it takes some of your income regardless if it is networth neutral or not. If you are living off of $40k/yr (1 million invested) and a $10k expense comes up, like re-doing your bathroom, you can't just ignore the fact that for that particular year your withdrawal rate is 5% because it is actually networth neutral or slightly networth positive given a new home appraisal. Now he did say he had the additional money leftover from downgrading his house, but I would still consider that an expense, just as I would consider taking $200k out of your 1.2 million in investments to pay off the remaining $200k of your mortgage an expense to leave you with no mortgage and a $40k/yr SWR. You definitely could afford that expense given that it will still remain networth positive, but it is still an expense in my book. If you are saying that building the new shed with a profit from the sale of his old home isn't an expense then using $200k from your profits on your investments to pay off your mortgage isn't really an expense.  Thus really the only expense in a mortgage payment is the interest. I consider the payment in its entirety an expense (part of which is networth neutral) because I know at the end of the day I can't tell the mortgage company I'm not going to pay the principal this month. The bill still comes due.

So you pay off your mortgage to retire then you suddenly need $6,000,000 to FIRE ($200k mortgage + $40k Spending x 4%) - that sucks, I think I would rather keep the mortgage and fire off of $1.2-1.3mil (depends on interest rate) ;)

But again, I'm thinking about it from supporting all expenses that come due on a specific SWR, so I count all one time expenses as an expense (even things like child birth) and I separate out recurring 'lifestyle' expenses from total expenses, but I still count them all.

Oh, so you are fabricating like the rest of us. Your FIRE number shouldn't be based on a year with large one time expense or on a year with none of them - it should be matched with the expected number over the span of the FIRE period.  Say you have a roof and HVAC replacement in a single year above your $40k spend that could take that year to $50-60k and require $1.25-1.5mil vs. $1mil.  That doesn't make sense. 

If you downsize your house and pocket $300k then go and buy another house for $200k and put $100k into it then it is neutral to FIRE - did you spend the money sure but that's like saying every day I decided not to sell my house so I must be making a decision to buy my house....damn, I spend $300k every day.....I am never going to FIRE.

Again the 4% rule needs to cover inflation adjusted expenses for the period of your FIRE. 


Title: Re: MMM 2016 Budget
Post by: Classical_Liberal on September 27, 2017, 02:04:36 AM
If you downsize your house and pocket $300k then go and buy another house for $200k and put $100k into it then it is neutral to FIRE - did you spend the money sure but that's like saying every day I decided not to sell my house so I must be making a decision to buy my house....damn, I spend $300k every day.....I am never going to FIRE.

It's not neutral to FIRE because a buy-sell of equal value real estate transaction can cost upwards of 15% of the homes value.
Title: Re: MMM 2016 Budget
Post by: mizzourah2006 on September 27, 2017, 09:50:33 AM
Oh, so you are fabricating like the rest of us. Your FIRE number shouldn't be based on a year with large one time expense or on a year with none of them - it should be matched with the expected number over the span of the FIRE period.  Say you have a roof and HVAC replacement in a single year above your $40k spend that could take that year to $50-60k and require $1.25-1.5mil vs. $1mil.  That doesn't make sense.

This doesn't make sense. If I had a roof and an HVAC repair the same year I would cut expenses elsewhere.

So you pay off your mortgage to retire then you suddenly need $6,000,000 to FIRE ($200k mortgage + $40k Spending x 4%) - that sucks, I think I would rather keep the mortgage and fire off of $1.2-1.3mil (depends on interest rate) ;)

I have no clue what you are trying to say here.

Where are you getting the needing 6 million to FIRE? If I have a $200k mortgage and 1.2 million and I pay it off I still have the 1 million remaining? Which would support a $40k/yr lifestyle, I'd just have more discretionary spending instead of paying my mortgage. Not sure where you got the 6 million from.

Again, my main point is I track all of my spending each year. I don't depreciate my couches lifespan. I just know that in X amount of years I might need a new couch, a new roof, etc. That might involve spending less in one year and having a bit more left over or it might involve not going on a couple trips, etc. but either way it is an expense that needs to be accounted for. Even using a sinking fund approach you would need to account for it as an expense at some point, would you not? You can count for it monthly over 24 months, or as a lump sum there really isn't a difference when it comes to looking at how much you spend. The only difference is developing arbitrary cut points (a month, a year, 5 years, etc.) and determining how much you spend during that given time period.

If you downsize your house and pocket $300k then go and buy another house for $200k and put $100k into it then it is neutral to FIRE - did you spend the money sure but that's like saying every day I decided not to sell my house so I must be making a decision to buy my house....damn, I spend $300k every day.....I am never going to FIRE.

We saved $10+k by not buying a house with granite countertops and instead putting in quartz in the one we wanted. So should I count that as a profit because it only cost us $5k?

I don't see the difference between realizing a profit on a home sale and realizing a profit on an index fund sale. So, to me it is not neutral. If it is to you then the same can be said about realizing profits in all investments to purchase something. So if you realize $90k in index fund profits to purchase a Tesla it is neutral, right?
Title: Re: MMM 2016 Budget
Post by: bufar on October 01, 2017, 12:15:19 PM
Me personally yes, but I don't go around telling people but that I have the one true way of living and you're a consumer sucka if you don't agree with me.

MMM has been all about how his ideals are more important than money so there seems to be some cognitive dissonance there. Would MMM really have used some of these things if there wasn't the potential payoff down the road? As an earlier poster said, there's now no way to be sure so it does dilute his message.

I guess it might dilute his "message" in some people's minds, but I think those people are getting the wrong message. What I've gotten from MMM is that you don't need a lot to live fancy, and you don't really get any more happiness or much more fancyness past a certain level of spending. His message is aimed at the six-figure set: after $40-50k of spending, you're really just accumulating useless stuff that doesn't make you happy. So stop, save, and quit working in 10 years. If you want true frugal blogging for the average salary family, then there are way better options than MMM.

I honestly get the impression that Pete is a dude that writes some shit in a computer, and he got lucky that it became popular. Once popular, he monetized because, why not? Then he probably got bored with doing too much of that. Now, he barely writes shit in a computer anymore, but when he does, it seems to be whatever happens to be swirling around in his head, which is different in many ways from several years ago.

First, like I said, there is very little monetization. Really, he has like the least monetization I think reasonably possible for a blog other than zero. He's SUPER lazy on that side. Second, this blog has some massive expenses you don't see. He is probably paying several thousand dollars a month in server costs and technical support (which, it seems, some would expect him to include in his "spending"). He needs some minimal amount of monetization to cover those costs. And that pretty much is what he has. The traffic is just so large that that minimal amount of lazy monetization covers costs AND makes extra bank. And then the asshole has the audacity to write six-figure checks to charities with some of that extra bank.

Accept it: Pete is some random rich guy that started writing some shit in a computer at just about the perfect time and got lucky. Some of that shit may work for you, some may not.

Believe me, I've accepted it. I am very happy with my Prius for example, but am not planning to move into town or start riding a bike down my rural gravel roads anytime soon.  However, since Pete puts himself out there as Mr. Money Mustache, the expert on frugal and optimized living, I am also free to call out where he is not consistent with what he himself espouses. This site seems to be all about critical thinking other than when it touches on MMM/Mustachianism itself.

Overall, I think it might be time for Pete to hang up his MMM cape rather than getting more and more convoluted in his justifications for spending (or he could always just be more honest about when he's not consistent with his own past statements).

The other area is politics. You had better not espouse ANY political opinions which a certain political persuasion doesn't embrace.