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The fire movementís champions hidden realities..
Old 01-01-2019, 08:03 AM   #1
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The fire movementís champions hidden realities..

There is a Youtube video out there ďHow these penny-pinchers retired in there 30sĒ it exposes a reality about FIRE: In this instance a Champion of the fire movement peter Adeney a.k.a. Mr. Money Mustache (MMM). When asked how much he spends each year, he said it usually ends up being around $25,000 -the interviewer adds plus ďhealth insurance in the low thirties.Ē Which adds up to roughly $57,000. The fact that he pays roughly $32,000 in insurance confirms what we already know about MMM, the successful blogger has a MAGI (Modified Ajusted Gross Income) of more than 65,000 a year. If we use that $57,000 and apply rule 4% he touts, that means he needed a nest egg of $1.425 Million. A tidy sum indeed, But wait a minute, William Bergenís 1994, 4% rule is dated, ignores current Health Care realties. It concluded no one would run out of money before 33 years if the withdrew 4%. MMM is 44 years old if we take 44 + 33 = 77. The average life expectancy in America today is 80 for males 84 for females. MMM suggestion might leave you broke.

The fact of the matter is anyone 44 years old with 1.425 Million in his 401K has to continue to work. If we reduced the 4% to a 3% withdrawal rate (57,000/.03)=1.9 Million. Our young FIRE candidate would need to save another $500K. - which of course is no small accomplishment. $57,000/12 gives him $4,750 a month to live on before income tax We can estimate average tax on that $57,000 income is $5,840 federal and 2,393 Colorado or $8,233 a year or 686 a month. So if we start with $4,750 subtract Income tax of $686, Health Insurance of $2,667 and you are left with $1,397 to pay real estate taxes, buy food, clothes, insure the car and house and well you know. As a guy with 2 metal knees I can tell you insurance doesnít cover it all. I think the average deductible is like 5-10 grand.

Ah but one more thing MMM has a son and we all know what children can cost when they reach 18. Lets assume MMM son is a average kid with good but not brilliant grades. What will 4 college cost? I paid $100,000 per kid.

Now donít get me wrong I am a fan of MMM; I only wish I had figured out what he did when I was 25 but, the vision he is selling is a disingenuous one. It takes more money at 44 ten the 4% rule would suggest. Suzie Orman may have overstated it but she may have been on to something.

Saying to someone 44 you need 2.5 million or more doesnít sell books or bring you to podcasts or websites does it? Especially when 4 out of ten Americans are living paycheck to paycheck.
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Old 01-01-2019, 09:11 AM   #2
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Have you visited his site and reviewed MMM's expenses and income? I do understand that his blog has recently been a big money maker for him.
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Old 01-01-2019, 09:42 AM   #3
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I think he was at one point on an ACA plan. So mid-30's might be with the subsidized ACA plan. The numbers are broken out in the older years.

A lot has changed since those numbers were published on the blog. Supposedly the blog generates an estimated $400k a year, although that's an external estimate. And as he wrote yesterday, he and his wife are now divorced and living in separate houses. He stated that neither house has a mortgage and they both have enough money to be retired.

He also owns a commercial building in downtown Longmont. Not sure how much income that generates, as it is occupied by him and a lot of like-minded people as a "workspace."

Finally, he does not include his business expenses in his published spending numbers. There appears to be a lot of overlap between business and personal expenses from the outside, but who knows.

I think there are some much better examples of people that FIREd at a young age. Our very own FUEGO, who authors the blog Root of Good, is one. Go Curry Cracker is another. Take a look at what some of those folks are doing before you finalize your analysis. The key is not income, it's having very low expenses.
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Old 01-01-2019, 10:03 AM   #4
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I am not FIRED, but my family expenses have been in the $40-50K range for many years, though family income has gotten much higher. We are in a low COL area, and the last kid will finish college this May with no debt. It's all doable. You just need to manage spending.


I think MMM would say he is not retired, just FI. He certainly works, not only with his blog, but also with construction and other stuff.



I agree that healthcare costs are a big variable in the ER equation. I am nervous depending on ACA for reasonable HC costs, and I am not confident in our politicians will come up with a plan to prevent cost escalation.
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Old 01-01-2019, 10:41 AM   #5
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The only FIRE blog I read is Root of Good. I think there is a lot of transparency and I really appreciate the detailed expenses. I like to think we are doing pretty well (and we are) but the way he and his wife keep spending in check while raising children (and traveling!) is really inspiring to me.
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Old 01-01-2019, 10:55 AM   #6
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I have always thought if you add back the items MMM claims as business expenses or conveniently leaves out of his budget - realistic health and dental costs for a family; income taxes; umbrella liability insurance; savings for future expenses like college, car replacement and LTC; and travel and entertainment, he spends as much and likely even more than the average U.S. household. Those are many of our big ticket expense categories so sure if I left those out we'd have a pretty low budget as well.
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Old 01-01-2019, 11:32 AM   #7
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There's always a caveat emptor with blogs. I guess if a FIRE aspirant only reads a blog or two and doesn't really think about their actual expenses or test the assumptions, that's kind of on them. Regardless, most of the uncritical thinking and just taking things at face value seems to come from outside the club - from what I've read here and on the MMM forums the people who are actually working towards FIRE have a much more solid grip on the risks, benefits, and realities.
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Old 01-01-2019, 11:43 AM   #8
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I don't understand the animosity towards MMM. He has inspired so many to step off the consumerism carousel and start on this FIRE journey. Like Maenad above, I believe that the bulk of FIRE enthusiasts research this stuff and are quite grounded in reality.
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Old 01-01-2019, 12:04 PM   #9
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I am not FIRED, but my family expenses have been in the $40-50K range for many years, though family income has gotten much higher.
Same here, still about 5 years from retiring, but our current expenses are around 40K per year. My wife and I earn about 50-60K per year (varies), so the extra has gone into savings. Once we retire our living expenses should drop below 40K per year (no retirement savings, no parking fees, less gas, union dues, etc.), even with the addition of health care.
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The fire movementís champions hidden realities..
Old 01-01-2019, 12:23 PM   #10
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The fire movementís champions hidden realities..

<b>walkinwood: I don't understand the animosity towards MMM. He has inspired so many to step off the consumerism carousel and start on this FIRE journey. Like Maenad above, I believe that the bulk of FIRE enthusiasts research this stuff and are quite grounded in reality.</b>


I applaud and recognise all good heís done but his numbers simply dont work. They didnít work when he retired at 35.

My concern is If one of his deciples hits that spend/.04 amount and retires -They may run out of money just when it is most difficult to do anything about it.

Thatís the thing about bad Financial advise - it can have devastating consequences.

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Old 01-01-2019, 01:23 PM   #11
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I applaud and recognise all good he’s done but his numbers simply dont work. They didn’t work when he retired at 35.

My concern is If one of his deciples hits that spend/.04 amount and retires -They may run out of money just when it is most difficult to do anything about it.

That’s the thing about bad Financial advise - it can have devastating consequences.
Those numbers didn't work even before the divorce, at least not without the ongoing business / blog income. Add in a divorce and they just aren't realistic at all, not for the kind of lifestyle he describes in the blog with international travel and home upgrades.
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Old 01-01-2019, 01:33 PM   #12
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People love to read fiction.

Maybe all his readers will follow him retire to write blogs about early retirement. A million ER blogs and less clicks for the mustache.
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Old 01-01-2019, 01:37 PM   #13
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In my movement to retirement, I stumbled across MMM and this site. Of course from a practical point of view, this site has been far more helpful. However, MMM was and is an interesting read because it’s another way of enforcing Your Money or Your Life, a book I read many years ago. The concept of getting tough and doing things yourself along with spending less because you need to focus on your needs and limit your consumerism is a good message for someone that wants to get off the treadmill. I think his message is that you can live a better life, not necessarily that you can stop working early. As was pointed out, he works a lot.
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Old 01-01-2019, 01:44 PM   #14
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My concern is If one of his deciples hits that spend/.04 amount and retires -They may run out
Yes they might, out of sheer stupidity, by making major life choices purely off taking one blog at face value, and ignoring the other plethora of choices on FIRE.
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Old 01-01-2019, 02:31 PM   #15
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For all you folks that don't think this is possible, go look at FUEGO's Root of Good blog. It's feasible if you are very frugal, and have low overhead such as low income and property taxes, one older vehicle bought with cash, and a paid for house. In FUEGO's case, he pays almost nothing for health insurance. He goes on cruises, buys some toys, and eats relatively well. Look at his lifestyle. It might not work for you, but it does for him and his family.

And he has given thought to college expenses. The kids will go to local state schools. They seem to get good grades, so they may get scholarships and financial aid, but he has factored in the family share of the cost.

To be fair, most of this generation of FIRE-ees benefited from the last ten years of the bull market. Buying a house in a close in, not so great but gentrifying neighborhood at the bottom of the market helped a lot of people, including FUEGO. The next ten years may not be as favorable.
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Old 01-01-2019, 04:00 PM   #16
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We can estimate average tax on that $57,000 income is $5,840 federal and 2,393 Colorado or $8,233 a year or 686 a month.
You are really bad at taxes. His taxes with $57,000 in income would be pretty close to zero. More than 40% of US families don't pay any income taxes. I see no reason why a family making $57,000 especially not working would pay any income taxes.
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Old 01-01-2019, 05:24 PM   #17
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MMM has been more full of it than a manure spreader pretty much from the start as even a casual examination of his claims should make clear. This is news?
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Old 01-01-2019, 05:48 PM   #18
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You are really bad at taxes. His taxes with $57,000 in income would be pretty close to zero. More than 40% of US families don't pay any income taxes. I see no reason why a family making $57,000 especially not working would pay any income taxes.

I didnít guess.
https://neuvoo.com/tax-calculator/?i...egion=Colorado
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Old 01-01-2019, 05:51 PM   #19
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I didn’t guess.
Garbage In; Garbage Out

1. He is not single.

2. Big difference between earning $57,000 from a job and getting $57,000 in dividends and other investment income.

3. Child tax credit.

4. What else? Oh, deduction for paying for health insurance.
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Old 01-01-2019, 06:03 PM   #20
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I am not FIRED, but my family expenses have been in the $40-50K range for many years, though family income has gotten much higher. We are in a low COL area, and the last kid will finish college this May with no debt. It's all doable. You just need to manage spending.


I think MMM would say he is not retired, just FI. He certainly works, not only with his blog, but also with construction and other stuff.



I agree that healthcare costs are a big variable in the ER equation. I am nervous depending on ACA for reasonable HC costs, and I am not confident in our politicians will come up with a plan to prevent cost escalation.
If anything can be said about MMM, its that he considers himself retired.
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