How to retire early — 35 years early

[haha]

This fellow told me how this one particular religious cult would not let you out once they got you in. I asked him how did he know that. He said he read it in a book.

I told him I was in that cult and they told me to leave.

I guess what I'm saying is if one is to have an opinion about Mr Money Mustache, why not try to read a few of his posts. Won't take more than five minutes.

Not sure who you are addressing, but this does not fit me.

Ha

 

[Another Reader]

MMM should be publishing the family annual expenses for 2014 in a week or two. I don't think they will be much higher this year. The big savings are housing, for which he pays low Longmont taxes and insurance plus utilities (no A/C use and a deliberately low heating bill), and the two older vehicles, which are rarely driven. For the vehicles he pays for fuel, liability insurance (self-insures for other losses), and parts for DIY repairs. They do not eat in restaurants but shop in a local organic/high end supermarket that opened recently and the local chain supermarkets. They have internet but no cable or land line. Don't recall if they have the Netflix/Hulu substitutes for cable. Cheap cell phone plans from Republic are substituted for the mainline carriers. They drive to see family in Ontario once a year and take a car camping vacation occasionally. A lot of the other travel is paid for by others, such as the trips to Ecuador.


If everyone looked at their actual spending and substituted that level of expense for their spending on housing, cars, and entertainment, the effect would be dramatic. Other things that many here consider necessary to be happy are not included in the MM lives. Examining one's own spending with an eye to what is really necessary to have a happy and fulfilling life is the main message I get from the blog and forums. Having grown up in the late 50's and early 60's, I recall this was more like the middle class lifestyle then. And people were just as satisfied and fulfilled then as they are now.

 

[imoldernu]

I think it's great that people put the time and work into putting information, as well as their own stories, opinions and perspectives on blogs and websites, so that we regular folk have all kinds of reading material to browse and peruse at our leisure. For this reason, I don't like to be too critical, but there is one aspect to MMM's blog that I found a bit off-putting when trying to "get into it", and that was his attitude. Some might call it irreverence, but I find him a bit cocky. To a lesser extent, I had a similar reaction to Jacob's blog.

Andy Baird's writing style on his Travels With Andy site is much closer to the kind of narrative I enjoy reading. I much prefer material presented in a humble and personable style. It makes it easier for me to digest, rather than having to spend time and effort trying get past the attitude, before reaching the content.

+1

I read both MMM and ERE... and agree... strong ego, a little hard to take on a regular basis. Ach! mea culpa...

 

[2B]

I have trouble choking down too much of this "I live on acorns and tree moss" lifestyles when they are clearly making good money on blogging and book sales. After a point, describing opportunities and other approaches becomes more useful and justifies reading their blog. I am much more impressed when someone says "I took a leap of faith and retired. Now, after years without a real job I am still in great financial shape." Here's a link to John Greaney's latest article.

20-Year Update: Retired at Age 38 in 1994 -- Lessons Learned

 

[Major Tom]

Thanks for the link to that (very recent) article, 2B. It gives me much hope for my ER experiment.

 

[REWahoo]

I am much more impressed when someone says "I took a leap of faith and retired. Now, after years without a real job I am still in great financial shape." Here's a link to John Greaney's latest article.

20-Year Update: Retired at Age 38 in 1994 -- Lessons Learned

+1

A far better read than any of the "How to strain broken glass from peanut butter" blogs.

 

[dallas27]

I have trouble choking down too much of this "I live on acorns and tree moss" lifestyles when they are clearly making good money on blogging and book sales. After a point, describing opportunities and other approaches becomes more useful and justifies reading their blog. I am much more impressed when someone says "I took a leap of faith and retired. Now, after years without a real job I am still in great financial shape." Here's a link to John Greaney's latest article.

20-Year Update: Retired at Age 38 in 1994 -- Lessons Learned

Anyone notice the graph in this article doesn't match the graph in the source article referenced?


Sent from my iPhone using Early Retirement Forum

 

[2B]

Anyone notice the graph in this article doesn't match the graph in the source article referenced?

I'm not sure what you mean. John G. shows the performance for his interpretation of various versions of retiree portfolios. The article is Pfau's own graph using a 1% management fee. It's apples and oranges unless I'm missing something.

 

[dallas27]

I'm not sure what you mean. John G. shows the performance for his interpretation of various versions of retiree portfolios. The article is Pfau's own graph using a 1% management fee. It's apples and oranges unless I'm missing something.

My mistake, i was looking at the constant dollar version.


Sent from my iPhone using Early Retirement Forum

 

[aida2003]

I'm glad to hear I'm not the only one who got tired of ego filled blog of MMM. Yes, at the beginning it was kind of interesting to read, but it was tiring to see the same 'as*holes, ****, f**k' etc. etc. in every single article it seems. It's overloaded with that kind of crap there. And I don't consider myself a prude, way way far from that.
I think I'm subscribed to his blog to receive a notification when something new is posted on MMM. If the title sounds interesting I'll go to skim it sometimes.
It's interesting how he analyzes budgets of other people. But he's lost interest in doing it because I haven't seen anything interesting lately.
I don't know how good the wine is that he drinks and how much of it, but I find hard to believe that organic, gourmet food, and wine can be included in the $25k overall budget. When he posts 2014 expenses, I'll have to take a closer look and try to figure out what we're doing wrong here in NC. It must be a very cheap and wonderful place he resides in CO.

 

[daylatedollarshort]

Home repairs and travel are a couple of our big budget items. If I omitted these from our budget and put them under business expenses, our budget would look a lot lower, too, on paper but it wouldn't change our actual expenses.

Also if I work part-time and make X and pay a mechanic to fix my cars, I am not really sure I would come out ahead monetarily by dropping the IT work and learning to change my own spark plugs, even though my on paper budget might be lower. In the Millionaire Next Door book one of the findings is that most millionaires are not DIYers, they focus on the one business they love and are good at. A lot of the stuff in the MMM blog is actually at odds with TMND, which is based on actual research of a large number of millionaires. Like in TMND, most millionaires actually buy new cars, not used cars that need more upkeep and they do not work on their cars themselves:

Millionaire Next Door Myth #4: Used Cars

I do agree with consuming less, saving energy and in general more sustainable living and of course saving money. I think those are great messages. But I don't think it makes sense to become a jack of all trades and master of none, and I don't think you can have the travel and lifestyle described in the blog for $25K without categorizing some big ticket items as business expenses.

 

[Sarah in SC]

Another note of thanks for the Greaney article. Good read and nice to know he's still doing well.

MMM is ok, I guess, but I'm thinking he's limited in his worldview. I love where I live, even though I have to drive to the store. Like a lot of young, enthusiastic converts, he doesn't always recognize that his ironclad rules don't work for everyone, nor does he give much credit to the folks, like Greaney, who have been doing this since he was in knee britches.

Now, get off my lawn...I've got peanut butter to separate from the shards of glass, and the Four Yorkshiremen to watch.


Sent from my iPhone using Early Retirement Forum

 

[Ronnieboy]

I think MMM is mostly an environmentalist, packaged up as a financial blogger. That's where most of his aversion to car usage comes from, IMO.

I enjoy reading the blog, even if I don't agree with everything he espouses.

+1

This was the feeling I got too.

From what he describes, I think the $25k budget is doable. He is in a cheap cost of living area, home is paid for, does his own repairs, bikes for transportation, never goes out to eat. Easy peasy

I just know I [-]couldn't[/-] wouldn't want to live that way.

 

[Elbata]

Thanks too for the Greaney article. He was one of my favorite guys to read during the Motley Fool heydays.

In regards to MMM, I'm surprised by the consensus of him in negative terms. I'm a huge fan of his. For me, my life is forever changed for the better from reading his blog.

 

[NW-Bound]

I have trouble choking down too much of this "I live on acorns and tree moss" lifestyles when they are clearly making good money on blogging and book sales. After a point, describing opportunities and other approaches becomes more useful and justifies reading their blog. I am much more impressed when someone says "I took a leap of faith and retired. Now, after years without a real job I am still in great financial shape." Here's a link to John Greaney's latest article.

20-Year Update: Retired at Age 38 in 1994 -- Lessons Learned

I visited this Web site a while back for something, but not recently. From his writing, Greaney is doing great and has had an interesting life.

Still, I could not help notice that he retired in 1994, and had 6 years of bull market until 2000. The market went straight up in those 6 years, and I do not know how much he had started with, but someone with $500K invested in the S&P 500 would have $1.69M in 2000. Inflation was reasonable at 15.5% cumulative, so that $1.69M was still worth $1.46M in 2000. If a retiree stays at 4% WR of original portfolio, he would have spent only 24%, and still watched his portfolio grow big time.

On the other hand, if he started out with $1M in 2000, by 2006 he ended up with $930K, which was $790K after cumulative inflation of 17.5%. And if he drew 4%/yr, the remaining amount would be roughly $550K in 2006.

It should be noted that in the 1st case, by sticking with 4% WR, by 2000 he would be spending only $20K x (1.155) = $26K in 2000 dollars while sitting on a portfolio of greater than $1M. The fellow starting out with $1M in 2000 would be spending $40K initially.

Sequence of investment returns matters greatly, as we all know. And the above example reminds me to not let my expenses grow too much if my stash grows. One needs to keep some reserves for bad years.

 

[Teacher Terry]

I also enjoyed reading I retired 20 years ago. I think MMM provides a valuable service & for many on his forum it provides motivation to keep going since many do not get the same support from their friends, family, etc. At age 60 I was raised frugally & raised my family the same way. I also think some things he does like the bike riding is for the environment & the exercise. He continues to work when he wants to because he enjoys it which makes sense to me. HIs dramatic style is really the hook to pull people in to reading his blog which is fine. I think this is especially true for younger people. My hubby & I are actually doing more things now & spending more $ because we want to enjoy ourselves while we can-you never know what will happen. We tend to spend on experiences versus things because that is what we value. Some on the blog are retiring young at a bare bones budget & I would think that would grow old with time but maybe not.

 

[daylatedollarshort]

Thanks too for the Greaney article. He was one of my favorite guys to read during the Motley Fool heydays.

In regards to MMM, I'm surprised by the consensus of him in negative terms. I'm a huge fan of his. For me, my life is forever changed for the better from reading his blog.

What changes did you make in your own life after reading his blog? Many here are older and were already fans of previously published books like the Millionaire Next Door and Your Money or Your Life, so perhaps the LBYM message was not as new to the old timers here.

That leaves the INTJs time to pick mercilessly on the specifics of any new ER material that comes along and look for any and all math flaws, logic flaws, not factoring in sequence of returns risks, not factoring in the costs of yourself (increasing health care costs, LTC, help around the house) or your kids getting older (eating more, insurance costs, braces, prom, sports, college), poor tradeoffs between money and personal safety (riding bikes in heavy traffic, putting a roof on a house if you are not an experienced roofer) and all the other stuff pointed out here, Bogleheads, fatwallet, Reddit, even the naysayers on the MMM forums, etc.

 

[phil70]

I read MMM's blog for motivation/ideas, but you have to take it with a grain of salt. Some facts about his financial situation to keep in mind:

1) He owns his home, worth about $400k I think, and it is paid off, so no rent.
2) He has had rental properties in the past which generated income. May be down to his last one or sold them all by now, but that also generated some additional capital.
3) Claims to not need a car, which I can believe if you live in a small town and don't have a job.
4) Claims to travel using credit card miles and looking for discounts. Believable.
5) I asked him about health insurance on his blog and he does not have it and does not budget it as an expense for retirement. He self insures. This is the biggest departure from mainstream financial advice. He is definitely one bad diagnosis away from financial ruin.
6) By his own admission he is not saving a lot specifically for his kid's college. He can probably get away with that. Colorado has a good state university system and maybe he is counting on scholarships and his kid borrowing money.

So, I cannot copy his plan, but his philosophy is very helpful. Whenever I buy something now, I ask myself, do I really need this or is it just a luxury. MMM's blog has helped realize that I have WAY MORE than I need.

 

[retiredunder50]

" I asked him about health insurance on his blog and he does not have it and does not budget it as an expense for retirement. He self insures. This is the biggest departure from mainstream financial advice. He is definitely one bad diagnosis away from financial ruin."

That runs contrary to what is actually on his website. It seems that he indeed has health insurance and has had it for years.

Our New $237/month Health Insurance Plan

Obamacare: Friend of the Entrepreneur and Early Retiree

 

[phil70]

Retiredunder50 - my mistake. He told me he does not budget for health insurance when I asked about his long term retirement plan. I took that to mean he was self-insured.

 

[MooreBonds]

4) Claims to travel using credit card miles and looking for discounts. Believable.

Maybe for the first trip...but spending $25k/year doesn't rack up too many airline miles for future trips.

In regards to MMM, I'm surprised by the consensus of him in negative terms. I'm a huge fan of his. For me, my life is forever changed for the better from reading his blog.

In my view, MMM is kind of like Dave Ramsey - both have really awesome advise and encouragement to live a thrifty/fiscally sound lifestyle in the here and now, in order to have fiscal independence and strength down the road.

However, MMM's trumpeting of the 4%SWR is just as dangerous as Dave Ramsey's "you can save and assume 12% annual mutual fund returns" - or, perhaps even more dangers than Dave Ramsey. Also, IMO, MMM is more of a snake-oil salesman in his story not quite being a complete picture and adding up (for example, things like his Hawaii vacation where he provided construction labor in exchange for a place to stay - which, as one person pointed out, is in violation of IRS rules and regulations).

MMM has MANY young people on his forum drinking the 4% SWR kook-aid without realizing what exactly is in the brew, and convinced with unshakable faith that anyone can retire on 4% in their 30s on a budget of $12k-$15k/year, and many are locked in on doing just that. But what MMM (and even MMM's wife) have failed in is abusing the 4%SWR references.

Granted, I haven't read MMM's postings or blogs recently and he may have started making correct statements, but for the first, say, 18 months of his site getting up and running, he bandied about the 4% SWR reference and statements of "You, too, can retire in your 30s on just a 4% SWR of whatever budget you want....JUST LIKE I DID" enough to make you sick of hearing it. And when I called his wife out on it in one message thread about the errors of their ways in miseducating people about the 4% SWR, MMM's wife tried to defend it by saying the 4% SWR meant you never have to touch your principal, and someone could retire in their 30s/40s with a 4% SWR and never worry. I pointed out the grave errors in her understanding, but she never replied to my post.

Furthermore, he never points out many serious implications of people calling it quits on a microbudget of $12k-$15k/year with a 4% SWR. With such a tight budget, it doesn't matter how resourceful you are, as you are just 1 health issue away from a potentially MAJOR derailment of your entire retirement plans. Not to mention a plethora of other possible things that could happen to such a tiny budget (car accidents, stuff needing fixed around the house, car maintenance, the list goes on and on). By making people insanely sensitive to ANY fiscal shock, it makes their entire 50+ year retirement like living on eggshells.

Imagine spending 40-50 years of your life, every year/month/week/day, just waiting for the inevitable whammy (or two, or three) that shows up to force you back to work at a moment's notice. Some pollyanas might be fine without a care in the world and simply struggle to find a minimum wage job if they are forced back into the working world at age 45, or 55, and then work the rest of their lives until they are simply physically unable to work anymore (and be subject to whatever nursing home accepts medicare)....but I fear that many of MMM's disciples are blindly following the Pied Piper without realizing that his tune has them walking on an incredibly narrow bridge that is more like a tightrope, where just the slightest unexpected gust of wind will send them falling into the abyss of fiscal calamity, impacting the rest of their lives.

Could they sail through life without issue on their micro budget and a 4% SWR? Sure....but I definitely am not betting money on it.

Some will point out that some people do, in fact, eek out a living on $12-$15k/year....but those are the same people who live in poverty, and are just one accident/incident/unforeseen problem away from bankruptcy (or have already filed for bankruptcy once/twice/multiple times).

 

[haha]

Some will point out that some people do, in fact, eek out a living on $12-$15k/year....but those are the same people who live in poverty, and are just one accident/incident/unforeseen problem away from bankruptcy (or have already filed for bankruptcy once/twice/multiple times).

Actually, it is quite a bit worse than for people who are genuinely below the poverty line in the US. These people all qualify for numerous benefits in cash and goods, that a middle class person(ie one with assets) will not be able to get. Also, people who are like their neighbors can live cheaply in bad neighborhoods, share information about welfare, etc.

Some "retired" millionaire or $400,000aire or even $40,000aire is in a whole different position. To my eyes, it is worse position and I cannot understand why anyone might choose it. Of course I couldn't understand why many young people back in the 70s emigrated to Jonestown.

Just believers in fantasy I guess. Everybody needs to carry a shovel to help avoid getting buried in horse manure,

Ha

 

[iam21177]

For someone who claims to be so happy living simply, I sense an attitude in his articles, like crankiness sometimes. Or "everyone else is pretty much an idiot but me and my kind." I've read a lot of the articles. Sure there are some things to take away from it too that will be useful to others. Heck I have a Republic Wireless phone deal for $10/mo with WIFI/text/calls, so that was worth it!

I did post a scenario some time ago in the forum "Do you need advice? Do you like helping others? Post your financial or life dilemma here and see if MMM or one of the other readers can help!" and man I was ripped a new one because I had $60,000 in yearly expenses (which included several big ticket one-time items). It was down right hostile and unfriendly so I did not feel posting over there again.

 

[Fermion]

Ok, in defense of the one medical bill wiping out someone out who lives on 15k a year, they might have their money safe in a 401K or IRA.

Example. Fred quits work at age 38, has $500,000 in a IRA, $100,000 in a Roth and lives on $15,000 a year. He starts withdrawing his contributions from his Roth, tax free, and also converts $20,000 of his IRA to Roth each year. This gives him $20,000 of MAGI which allows him to qualify for a heavily subsidized silver ACA plan with additional cost sharing.

At age 43 he starts taking out the Roth conversion amounts he started when he retired (at 38) tax free. He uses these for living expenses.

At 49 he is found at fault in a car accident and gets sued for $2,000,000 but declares bankruptcy with no change in his financial condition since his IRA is protected from creditors.

Not seeing the problem here...

 

[Sarah in SC]

I did post a scenario some time ago in the forum "Do you need advice? Do you like helping others? Post your financial or life dilemma here and see if MMM or one of the other readers can help!" and man I was ripped a new one because I had 60,000 in yearly expenses (which included several big ticket one-time items). It was down right hostile and unfriendly so I did not feel posting over there again.

Gina, thank you for posting this...it is a good reminder for us here in the kindlier (I hope) environs of E-R.org to be respectful of our fellow members, regardless of whether their expenses are higher or lower than ours, and remembering that everyone falls on a different spot on the spending spectrum.