One of my posts was recently pulled into a forum from a member of Mr Money Mustache. The site is quite well known in the ‘early retirement’ crowd as he has some legendary status as being a guy who ‘retired at 30’. I have to say, I like a lot about this guy and the concepts, but I think that some people are missing the mark when they seek to replicate. I’m going to go into some of the good and bad that I saw in that site here.
Oh and my post was put into a subforum called ‘the Wall of Shame’ because the poster felt my travel of 2013 was ‘anti moustacian’…. check it out here:
Let’s start with some basic concepts. In my Burn post I detailed my trips for 2013, I took 8 trips (plus that again in weekend jaunts) and burned 1,500,000 miles and points in the process. Additionally I spent about $11,000 including all costs (airline change fees, taxes, meals and incidentals, diving, martial arts training in Japan etc) I purposely included the number to highlight that things weren’t free when ‘travel is free’.
I also am hesitant to claim how much ‘value’ that year of travel garnered, because I certainly would not have paid real money to stay in the hotels I stayed in, so claiming $1000 per night for this or that is just silly to me, but I was away for 42 nights of travel, and realistically I would spend about $100 per night on a 3-4 star hotel in most places where possible, so that is a minimum of $4,200 there, plus a lot of miles flown. I flew about 50% business class, but I wouldn’t have paid a business class ticket so I would claim those flights in the equivalent cost in economy.
Clearly, I have saved money on achieving the travel that I wanted to achieve, but the Moustachian view shown on that forum is that any such travel is a luxury, and that money could be instead spent on saving for your ‘retirement’.
Here’s where we differ in opinion. I don’t want early retirement if it considers travel to be a luxury that you must avoid. Nor do I want one that includes eating less meat to save money, nor do I want to not drink the occasional bottle of good wine from a good winery.
My concept here in Saverocity is to achieve the quality of life that you desire in a more efficient manner. The tools are the same for everyone, the underlying topics I discuss are:
- Earn more income – I explore concepts such as credit card arbitrage, setting up brokerage accounts filled from manufactured spending.
- Spend less money – I talk about bringing wine on a cruise so that you can experience things you like at a much cheaper price.
- Substitute Costs – I talk about traveling with miles and points rather than cash, and furthermore how to be more effective about spending them to squeeze out the best experience from the same cost.
This is the major difference between the ‘Moustachian’ crowd and myself, they seem to seek to reduce all costs at the expense of quality of life in order to improve quality of life. Me, I would say let me travel, and if I hate my job so much let me quit and set up my own company.
Things I like about the Moustachian’s
- They advocate saving – a lot.
- They seek to avoid wasteful spending.
Things I dislike about the Moustachian’s
- They are moochers. All of their financial plans involve retiring ASAP (say at 30 or so) and then relying on the Affordable Care Act and Social Security and welfare. That’s not only bad for society but going to bite them in the arse when the rules change.
- They don’t all show understanding of value, just money saved as a cash amount.
- Some of the financial plans are too lean, and they are at serious risk of being in trouble later in life.
I like MMM the man, he seems like a hard working guy who knows what he wants in life. A hard working retired guy. I myself see retirement in the same way he does, it involves ‘work’ but being happy to do it.
If you want to retire early the steps are simple:
- Decide what you want from life, what is important and what is not.
- Calculate the cost of achieving this passively.
- Factor in Monte Carlo simulations to account for events such as inflation rate changes, stock market crashes, social security changes, and unforeseen medical costs. Make sure your plan is watertight.
- Save like crazy.
- Find ways to earn more money, even in retirement through setting up businesses and side gigs.
- Enjoy the life that you want to live.
- Decide if you want your kids to enjoy the life you led as a kid, or in your retirement, and if you want to plan them into things or not.
I’m gonna keep shaving for now, but will be keeping an eye on those crazy Mustachian’s to see what I can learn from them.
Relying on the aca and welfare…for RETIREMENT?!?!?! Way to advocate doing the right thing mustaches!
I am not too familiar with the mustaches but they forget a few things – like some people like to work! And while early retirement may suit for some, I bet that many of these guys do not actually retire that young. Too many people I know – both friends and family – died too young and sometimes quite suddednly. Postponing travel and good wine to the future can also be a recipe for never getting to do it at all!
I think that’s a big part of it, people are drawn to these super early retirement sites since they hate their jobs and want to escape, I’d rather just get a job I love, or make a job I love and be happy.
The whole idea of a wall of shame is ridiculous.
That being said, the idea of early retirement is incredibly empowering, though perhaps early financial independence is a better way of describing it. ( I love my job too)
My take is that free travel is excellent, as is saving for your future.
The thing that MMM really helped me to see was that spending is a choice. You’re choosing gratification now at the cost of later financial freedom. If the bottle of wine is worth it, who could possibly have a problem with it?
I also think that implying that the early retirement movement is all about freeloading on society is painting with an overly broad brush.
It might be true for some, but it’s certainly not true for all.
Hi Alexi,
We agree on the wall of shame, and also about the benefits of early retirement, I do think it is a great idea.
Regarding the free loading… I got the impression that people wouldn’t be able to afford to retire as early unless they took advantage of the ACA and that their plans all included taking Social Security despite exiting the work force after contributing as little as possible.
Have you encounter Mustachians that will refuse to rely on such subsidies as part of their approach to retirement? I personally haven’t but haven’t been around the site very much to be fair.
Matt,
I think the core of the early retirement ethic is fairly conservative if anything.
Living on less income leads to The biggest loophole of all: The ability to pay almost no taxes in retirement because investment income below a certain level (I believe about $77,000 a year per couple) is not subject to taxes.
The ACA hasn’t even gone into affect yet. So it is a stretch to say that this is central to the philosophy.
Social Security cannot be collected until you’re 59 1/2 unless you’re disabled, so again not much help to the early retiree.
You have no reason to feel shame for your financial philosophy. It is a sound one.
But neither does the person who pursues early retirement.
Live well and save more.
Now there’s a slogan!
Hey Alexi,
When browsing through the forums I saw several references to the ACA which is why I brought it up, as mentioned I don’t know for sure that it is integral to their planning but I think it is.
I mean, how can it not be? The central theme (that I saw in my short time there) seemed to be to reduce costs to the minimum and stop earning income ASAP. To avoid a program like the ACA in that would be at odds with that theory.
Furthermore, the mooching comment and welfare was more aimed at the Social Security, but it does equally apply to other credits. Basically by choice a person stops earning as much, so stops delivering tax receipts to the government, and starts claiming the maximum benefit for a low income earner.
The conscious choice to do that is not good for society as a whole, the way that welfare systems work is that the needy should be supported by the wealthy. The people racing towards early retirement are the wealthy, but by pulling themselves out of feeding the system and instead relying upon they do harm to the equilibrium and it harms social welfare systems.
I’m not saying I wouldn’t necessarily do it myself, but it is valid I believe.
PS I like your response post, and I am just a confrontational type of guy 🙂
Matt,
No need to post this comment if you find it inappropriate, but I am going to explore this conflict more completely in my own blogpost at milesdividendmd.com. Check it out!
Alexi
I dont see how using ACA subsidies is any different from using any other tax credit or deduction. We all plan all the time to lower our tax burden and make plans based on that reduced burden. How is ACA subsidy/fine (dubbed taxes by SCOTUS) planning any different?
Because social welfare doesn’t support early retirement. I’ll write a little something up on the matter to explore further.
Informative and some of getting help us,
Something great info who sharing us! Thanks.