A Millionaire is Made Ten Bucks at a Time

I was at a party recently and a lifelong friend walked up to start a conversation.  Although we had never talked about money before, it turned out he had secretly been reading this blog, and now he had a few questions for me.

“I understand now that even a family can retire on well under a million dollars*, but that is still a lot of money. Yet your blog talks mostly about small things like saving $70 a month on electricity or gasoline or coffee.

Aren’t these two different universes of savings that don’t even relate?”

My friend had a good question, of course. It is this perception of “small” versus “large” amounts of money that is the downfall of most of us.

It drives many to fantasize about lottery winnings, since that’s the only way to become a millionaire if your job title doesn’t include CEO, NFL or Notorious B.I.G., right?

And meanwhile, we buy $9.75 bottles of Kirin at the sushi restaurant and $12.00 movie tickets to see the newest Pixar movie with the kids in the movie theatre and pour $70.00 of gasoline into the family SUV so we can burn it up every couple of weeks running around town for relatively short trips. And we don’t become millionaires very quickly at all.

The solution to this is a change of mindset: It’s time to start getting excited about ten bucks again.

When I was eleven years old, I had to cut my parents’ enormous and hilly half acre lawn by pushing a fume-spewing 21-inch Lawn Boy for two hours. For this afternoon of sweaty torture, I would earn five bucks.

Then I would excitedly wait a week so the grass would grow and I could repeat this process to earn another five bucks. At this point, I would have ten bucks.

Sure, that was a long time ago. But even today, ten dollars will still buy about 9 pounds of delicious, kickass, nutritious, muscle-fueling rolled oats – still a solid staple food for many healthy millionaires, despite the fact that we can easily afford more expensive options. Or two gallons of organic milk. Or enough gasoline to drive over 200 miles in a good car. WEEKS worth of regular driving if you don’t have a ridiculous commute. Or enough natural gas to provide hot water for showers and dishwashing for a family for several weeks.

Ten Bucks is a lot of money. So you need to respect it.

Ten dollar bills are not just food stamps or amusement park coupons that you fork over by the dozen to get restaurant meals, smokes, strippers, drinks, tourist attraction admission, and assorted domestic services. Each Ten is a critical brick in the early retirement castle you are building.

So how can we get from ten dollar bills to six-figure sums required for early retirement? Think of it this way:

If you could somehow save $796 per week, and each week invest it to get a rather typical 7% compounded investment return after inflation, after just ten years, you’ll have about $600,000 sitting in your account. And to be more accurate, this money won’t be just sitting around – it will be 600,000 little employees working for you tirelessly in the background, producing thousands of dollars per month of passive income.

As you can see in the footnote section below, that is more than enough to start a nice early retirement, especially if your house is paid off. Maybe more than twice as much as you need, but since we do conservative calculations here at MMM, let’s roll with that number.

“But how the hell can anybody save almost $800 per week!?”

Suppose you’ve got two income earners working together. Now each one has to save only $398 a week.

There are 112 waking hours in each week. So to go from “broke” to “rich enough to retire early” in just ten years, each person has to make 40 successful ten dollar decisions each week.

Some of these decisions can be made automatically – like owning a less expensive car and driving it less ($100 per week per person), using less electricity and other utilities ($25), eating most office meals without going out to lunch ($50), not having cable TV and in general spending less time in retail establishments ($25). Now the remaining number is only $200 a week.

Most zero-savings people blow dramatically more than $200 a week just on random purchases. Spas, yoga, fingernail treatments, bottles of wine, sixpacks of beer, shoes, electronic gadgets, ice cream cones, movie tickets, plastic crappy toys for toddler birthday parties, books from Amazon.com instead of your local library, lawn-care services… whatever.

Those, combined with the automatic savings above, are the ten-dollar decisions that make the difference between the typical broke and indebted person, and the Mustachian Early Retiree.

If you start Respecting your Tens at age 20, you’ll be Retired by 30**.

Now, before the whiners start chiming in and saying it is no fun to spend zero money, you must realize that there is plenty of wiggle room for luxuries in my numbers.

Each person is saving $400 per week or about $20k per year on top of their house payments. Yet many of us have a take-home pay of over $30,000 per year. Sometimes way over that amount.

There is plenty of money to go around in this situation, and I’m even giving you a single family home to live in and a relatively quick 10-year sprint to retirement! If you have any issues with my numbers, make your own adjustments and the results will still be amazing.

But even with all this room for indulgence, it is important to keep your priorities in order, otherwise you are combining Luxury with Fantasy.

For example, it is absolutely ridiculous to buy even your first bottle of wine or restaurant meal if you do not yet have a good bicycle and a bike trailer.  It is insane to buy a luxury car if your house isn’t even paid off yet.  If you still have student loans, get them paid off BEFORE you splurge on that iPhone or overseas vacation.

You can still have these frivolous and fancypants things, some of which I admit to owning myself. But you need to have a rational definition of  “Can I afford it?”

Part of the Ten Dollar Philosophy is that you must pay for the current luxuries in your life before you start adding additional luxuries.  (Can you tell I love that word)?

I’d also suggest that since luxury spending is primarily for pleasure, you could try doing much of your purchasing for other people. Perhaps counterintuitively, it is proven that most of us get more pleasure buying a necessity that really helps someone else – for example, a bike for a family member who can’t afford one – compared to yet another luxury for ourselves – a $100 hairstyle or an upgraded china set for our yacht’s main dining room.

So there you have it – the way to become a Retired Millionaire using just those useless paper scraps in your wallet – by changing the way you think about them.

* A family of four in the US can live comfortably on about 24k per year plus having a paid-off house. With an nice conservative 4% annual withdrawal/return rate on your investments, you need $600k invested to generate this cashflow, inflation-adjusted, forever, plus your $200k house. $800k total. Or, if you want to get off your butt and work very occasionally to earn $12k per year, you can slice the $600k number down to $300k! Or you can save the $600k AND work, and keep saving more and more over the years – ending up a multimillionaire all while doing very little paid work.

** Holy shit, that’s quite a neat little verse I came up with there! Believe it or not, it happened completely by accident.

  • eva August 1, 2011, 6:57 am

    What you’re saying is absolutely true, for most people.

    But this: Yet many of us have a take-home pay of over $30,000 per year. Sometimes way over that amount.

    I WISH. But take note, those of you that make more than that–I make significantly less than 30K and still save 10K a year.

    • MMM August 3, 2011, 10:09 pm

      Excellent! Very glad to hear it and you are right – almost any amount beyond minimum wage is actually Sweet Gravy and allows some savings for most people.

      I remember as a University student I was fortunate to make $10k every summer, and from that I would pay for tuition, books, transportation, food, etc – everything except rent since I stayed with family members for most years. Sometimes in exchange for helping them out with house projects. So the $10k a year was already enough to graduate with no debt.. and would have seemed extremely generous if I didn’t have to spend half of it on tuition!

      • Rob May 24, 2014, 9:48 am

        For those strugling with nothing left over at the end of the month a simple idea. Financial planning 101 pay yourself first, no more worries about arriving to the end of the month with nothing left over.

        • RetiredToWin Alex March 21, 2015, 5:10 pm

          Paying yourself is far from being trivial. It is THE thing that will get you to FIRE and freedom. And how much you pay yourself determines how long it will take you to get to FIRE and freedom.

          This was so vital to me that I sat down and calculated just how much I would have to pay myself each month (i.e. invest) in order to reach FIRE by a specific target date. Then I made a commitment to pay myself that amount and work the incoming cash flow that was left over to cover my basic living expenses and even some discretionary spending.

          By Jove, it worked, don’t you know! I achieved earlier retirement as I had projected. (Actually, earlier.) And I could say it happened sort of “automatically” — thanks to my decision to automatically pay myself first… and pay myself enough.

          • Vess the Best June 2, 2020, 4:45 am

            I hear this phrase “paying myself first” but it is difficult for me to understand its concept. I think I should be paying my rent and bills and food first, no? Or is that somehow implied in the “pay yourself first” credo?
            I also had some questions about the assumption of cheap living cost. MMM is generously assuming that people have paid off their (modest and unrealistic at 200K) mortgage and are living at home only paying (modest) bills and property tax. But as someone who moves for work with an unstable job (I’m currently on a 2-year contract on another continent!), I have no other option than to pay rent. And houses in my home town are so expensive (over $500K) that it’s financially impossible to go back anyway.
            So, I get that if you’re living at home and your property tax is low you can save. But on a $30K salary if you live on rent and you don’t own property, the calculation changes to a less cheerful one… and the “pay yourself first” and “save 75% of your income” somehow doesn’t make sense to me or at least feels like it’s for other people’s (more fortunate) situations and simply doesn’t apply to me. Or am I missing something? Please advise…

            • Ramshackle June 2, 2020, 7:51 am

              Hey you’re right that some of the advice given won’t be overly helpful to someone without the income necessary to take advantage of them. Personal finance is difficult to write catch-all articles for because it’s by definition personal, and situations vary widely. While MMM may disagree, I don’t think saving 75% of a $30k salary is feasible (but a good challenge if you’re up for it)

              “pay yourself first” is a mentality of setting a savings goal, and fitting your spending around that. Meaning a monthly budget would set aside x amount for savings before looking at housing/food/bills. This is to give a mentality that your apartment, food and bill spending are not locked in. In practice some bills are locked in, there is a floor on what you can spend on food and few will realistically choose a life of camping in order to save the extra $. In the short term, you’re right that you can’t just decide that you’re saving before paying rent, but long term you can find a lower rent situation (for example).

              I do agree with you that at $30K the FIRE movement is a serious challenge, but making steps to a frugal lifestyle has benefits retiring early. I would encourage you to look into some of the steps that do feel manageable for your situation and reevaluating. Biking was my gateway, and that’s is a relatively affordable first step

            • Vess the Best June 3, 2020, 7:16 am

              Thank you so much for replying and explaining the concept. It wasn’t obvious to me. I think I’ve lived it partially by having the principle of always having a rent that will allow me to save money instead of end each month at zero. I have stayed true to this idea even during my student years when I was living on a $8000/year scholarship (lucky to get one!). I quickly learned to be extremely frugal (thank you, rice and beans!).
              But this comes with a cost. I only looked at the nominal prices of everything. But better neighborhoods are better for a reason. My principle mentioned above meant living with roommates.
              After a fair share of bad housemate/landlord episodes over the years, now I see rent (and some other commodity) prices as more complex, including my safety, my mental, social, and physical health and my time. Factoring these in can significantly change the equation.
              Everything else you say makes a lot of sense too, and gives me a bit of reassurance that I’m not a total failure for being unable to quite fit into the MMM model. For example, my long-term goal is finding a cheaper, more rural town to live, which will allow biking as transportation. But that means completely changing professions, which in itself means more insecurity and low pay buffer time.
              Still trying to figure life out…
              thanks again for your input!

            • Bill G June 2, 2020, 8:32 am

              Congratulations Vess, you have made a great example by demonstrating your willingness to move to where the work is. The next step is to raise your earning potential. Three years ago I retrained as TEfL teacher and was earning circa USD 30k in Tokyo. It was a comfortable life but it wasn’t going to make me FI.
              I had the option to tinker round the edges by offering private lessons on the side, and/ or moving to a cheaper area of Japan, but I chose to look at moving to a new territory with greater earning potential.
              My options came down to South Korea or, for a really big increase, Saudi.
              In your current industry where is the equivalent of my Saudi and what do you need in terms of qualifications or experience to get there?

            • Vess the Best June 3, 2020, 7:40 am

              Thank you so much for replying, Bill. Congrats to you as well for the brave decision to change jobs! It’s a huge investment of time, energy, and money that can really stall your savings. That’s what happened to me too (a few times).
              I hope you like it! As a non-native speaker I can say that the single biggest impact anyone outside my immediate family has ever made in my life, that was my English teacher. Learning a language is a humbling experience at any age past 10 and language teachers make a real difference.
              Your post comes serendipitously as I just found my “Saudi” a few days ago and the difference in pay blew my mind (their starting salary is better than my current experienced salary). I just don’t know if I’ll qualify for the job because it must be much more competitive too. And if I don’t make it, I’ll be looking for a change of sector that is better paid — something to look forward to instead of ruminating past failures in a worse off domain!
              This last thought alone is a big revelation to me. I am in a sector where leaving is very stigmatized and considered a failure. Until just recently I fully bought into this thought, and I still have days of doubt. Everyone who has spent an unhealthy amount of time stuck within one received frame of mind (be it a job, education, relationship, town…) will know what I mean… It’s hard to imagine stepping out, let alone thriving, on the outside when I’ve been steeping inside for years.
              thanks again!

      • Tom July 2, 2014, 4:36 pm

        I was quite the party boy in college and for a year(ish) out of college and have now left myself with a lot of debt. I currently have about $30K in non-mortgage debt (student loans and vehicle loan). I’m 26 years old, and have recently been very focused on reducing my debt. I pay about $1,200/month towards all of my loans, excluding my mortgage, which is about $600 above my minimums. With using so much of my income to pay off debt, I don’t actually have a ton left over to beef up my actual savings (I’ve got about $30K stashed away in my 401(k)). Do you consider my aggressive debt payments to be roundabout “savings,” or do you believe that even with such aggressive debt reduction habits, I should still be able to save about half of my salary?

        • Mr. Money Mustache July 3, 2014, 8:02 pm

          Yes, debt repayment is definitely savings, and one of the best kinds of it there is. Keep up the good work!

        • Jim Hogan October 18, 2014, 9:12 pm

          Tom, You could always work part-time somewhere and bank that money. It would be building your nest egg one $10 brick at a time. That is what my wife and I did before we were married 25 years. The only difference is the part time job paid for our honey moon to Haiwai. 25 Years later I am sitting on my balcony at Aulani in Hawaii for our anniversary. Work hard and smart when you are young it will be easier in the long run. Jim

    • Garrett June 14, 2017, 8:34 am

      Eva, you said 6 years ago that you make significantly less than $30,000 / year. Hopefully you’re making way more than that by now.

      Have you looked at MMM’s posts about the jobs that give you $50,000+/yr with no college education?

  • Oskar August 1, 2011, 8:00 am

    Living frugaly is a mindset and once you have it it is not that hard. We did a lot of driving to see the beautiful US when we lived there a few years back, we did not have kids and were able to do a lot of driving. In total we saw 28 states in 2 years (including Alaska) during this time we saved a significant amount of money much of it came from eating out a lot less than our friends (still ate out a couple of times a week) and other frugal decisions like staying at a Motel instead of a 5 star hotel. We did more than most with a lot less money and I think it was the basic mind set that made it possible.

    A note on coffee which is so popular to discuss, we were often on the road and ‘had’ to buy coffee….obviously this is a luxury but still we wanted coffee. We found that the large coffee (latte/cappucino/etc.) cost about 20% more than the small one and was twice as big? Why not share??? The most frugal decision would always be ‘don’t buy the coffee’ but how much fun is that….you have to allow luxuries just be conscious about them. The day when you think buying coffee at S-bucks is a need then you are in trouble.

    • Mighty Investor June 1, 2017, 11:06 am

      Great idea about buying a large cup of Joe and sharing. Why not ;)?

      I’m fascinated by how much ink is spilled over whether or not to buy coffee at a cafe. I think it’s because we all love going to cafes.

      I agree with MMM that wealth is built $10 at a time, but I do think that spending scales with assets and income (more the assets). By that I mean that at a certain wealth threshold these calculations shift some. You can see this at work even in MMM’s yearly spending “exposed” posts. The spending is going up as he sails well north of $1 million in net assets. I think that’s totally normal.

      I wish the discussion wasn’t so much about do this or don’t do this–but recognized that these decisions depend on your financially circumstances and values.

      BTW, I wrote this comment from a Starbucks — one of the five busiest in the U.S. ;).

    • Lisa Fargo June 15, 2017, 6:37 am


      See the beauty wherever you are! We have been living and driving all over Germany these last two years and doing it with kids in a small sedan (Prius). We’ve flown when it has been dirt cheap as well. 28 countries in two years. The same frugal decisions always apply…taking a picnic, shopping for food at a grocery store, and finding a good but less expensive place to stay.

      Cheers and frugal travels!

      • Garrett January 31, 2018, 2:05 pm

        “We have flown when it was dirt cheap as well”

        When thinking about flying ‘dirt cheap’, please don’t do a ton of flying just because it’s cheap on your wallet. Consider the massive environmental footprint that flying creates.. especially if people are flying only when it’s ‘cheap’.

    • Time Hedge June 19, 2017, 11:57 am

      I think one of the greatest investments you can make in yourself is traveling. As you pointed out this can be done frugally. The National Parks Service has an annual pass for about $80. I used it to see over 10 National Parks last year. They are wonders to be seen, and most have great affordable campsites. The value for the money spent is unmatched and you can really see what you get for every $10 you spend at the parks.

  • Ginger August 1, 2011, 8:30 am

    You are saying $400/week or $16,000/year but those two don’t work together. $400/week is $20800/year and $16,000/year is $307.70ish a week. Which one is it?

    • MMM August 2, 2011, 6:35 am

      You are right! $400 per week, 20.8 per year. I have fixed that sentence.. Thanks!

  • Michael August 1, 2011, 8:48 am

    Right now, I am putting most of my effort into paying off my mortgage. Can I accomplish that goal and still retire early?

    • MMM August 2, 2011, 6:34 am

      Sure! Paying off a mortgage is just another form of investment with a guaranteed cash return equal to your mortgage rate. Statistically investors have earner higher returns over long periods with stocks, but for someone coming up on early retirement in just a few years, I highly recommend a paid-off house. The psychological benefits are great too.

      • Matt July 6, 2016, 11:22 pm

        My wife and I (41 and 44 respectively) are wondering what we should focus on first. We have our mortgage paid down to $35,000.00, and we are currently only investing 10% of our gross income ($1,100.00 monthly into IRA and 401K accounts). We want to save more money, but we have been paying double and triple payments on the mortgage for the last couple of years. Here is the issue: our ARM is only 2.25%, so if that is the rate of return for paying off the mortgage, wouldn’t I be better off saving more money in retirement accounts at a higher (perhaps much higher) rate of return, and paying off the house more slowly? I know that the ARM rate can adjust, but only once per year, and only up to one full percentage point at a time. It has stayed at 2.25% for the past two years, and our required payments are only about $450.00 monthly (though we double and triple that amount). Right now, between our two Roth IRAs and 401Ks, we have just over $100,000.00. I would appreciate any wisdom imparted here.

        • Brian August 15, 2016, 3:24 pm

          Personally, I would pay into the 401k up to the amount matched, max out the IRA for the year and after that, dump all the remaining cash into retiring the mortgage. Once that sucker is gone(paying triple, might be 3 years-ish), you can dump that entire amount per month now into whatever you want to invest in. I like rentals as do many here, but it isn’t for everyone. Even so $1350/month(i’ll bet you can find more) into your new investment account will bring you nice returns. That’s $16.2k/year without considering any rate of return. At a 7% rate of return, your money will double in roughly 10 years. So by the time you’re retired, you’ll have a nice chunk.

        • AT January 6, 2017, 10:03 am

          Hi, I hope I am not too late to reply to your inquiry. First of all some background on me and my wife. I am 34 and she is 33 and we have a 4 year old son. We moved into our first and only home in 2014 May with a 5 year fixed mortgage at 3%. We had a 330K CAD mortgage when we moved in. Since our son (1.5 years at that time) was growing and we also planned to have my and her parents over in the summers we planned to buy a new car too. A Toyota with best-in-class mileage which had a bit more room in the back. It was bought at 0 down 0% interest for 5 years. We also decided to keep our 1999 Hyundai Elantra manual hatch-back with us, which we had bought for cash at $2600 in 2011, though because we both worked at the same location we dropped the insurance on the Elantra and had it gather some dust in the garrage. The day we signed the mortgage document with the bank we both made this conscious decision that we will hack the mortgage and be debt free by the end of the term. We chose a mortgage which gave us a 20% annual prepayment privilege. I am happy to inform that we have been exhausting our prepayment privilege every year so far and have one more of these to make in 2017. Once that is done sometime in Q3 2017, we will only have the regular mortgage payments to take care of until May 2019. And the car’s payments till August 2019. We look forward to being debt-free and FI once that all is done. The reason why I mentioned the Hyundai is this. In October 2015 my wife’s and my work schedules changed and we had to start using two cars. Our solution? Got the insurance going again on the Hyundai and it was ready to hit the road again within the blink of an eye. Of course its a bit old now and needs some maintenance, but it is still cheaper than the monthly payments on a new/used car. Though I am a bit less experienced than you in life, I would suggest that you continue to hit the mortgage until it is down to 0. You don’t want a hanging debt on your head in case things turn for the worse. As for us, we have been working for the last 10 years now. saving like “crazy”, some may say. We don’t smoke, don’t drink. Don’t have expensive gadgets No cable. Take lunch to office each day. The one thing that we grant ourselves is eating out once a week. There is a particular restaurant that our son absolutely loves. We go there once a week, and that is our special treat to ourselves.

          • brownbrady February 4, 2019, 1:22 pm

            Wow congratulations to you on your financial accomplishments. I’m also from Canada. I was wondering if you have an update now that it is 2019?

  • Kevin M August 1, 2011, 10:18 am

    $24k is about what we live on not counting our mortgage. I am eagerly awaiting the day we pay that bad boy off! We are a family of 4 and live quite comfortably – It is totally do-able. Preach on, MMM!

    • Dean July 14, 2014, 10:22 pm

      Please explain how a family of 4 lives off that amount? I don’t doubt your numbers, but would really like to know how you’re doing it?

      What about child care, food, taxes, etc.

      • Eldred October 29, 2014, 9:50 am

        Actually, $24k doesn’t sound too bad. That’s $2000 per month. If both parents work outside the home, then child care is likely their biggest expense besides their mortgage. But let’s use these numbers:
        Food – 600(likely less if they don’t like expensive foods, or if they’re good with coupons)
        Utilities – 300(of course that depends on the size/efficiency of their house)
        Auto gas – 300(depends on how close they live to job/attractions)
        Entertainment – 200
        Child care – 500
        That’s only $1900. The extra $100 could go towards things that you don’t need to spend on every month – clothing, auto insurance/repairs, etc.
        So I can see it as entirely possible. Maybe not EASY(or exciting), but possible.

        • Pam November 22, 2014, 10:11 pm

          When I look at my numbers, and your numbers, I see my numbers just don’t work out and the breakdown of expenses is missing major output. I have two huge blood sucking expenses and I don’t know what to do about them. My taxes are extremely high. I pay around $400/00 month for state of IL and federal. This is due to my middle income of around $42,000/ per year in alimony plus capital gains and dividends on my often sinking portfolio I got from my divorce. The taxes are high due to capital gains when my mutual funds turn over stocks. At my income, i get no help with insurance so it is $525/00 month. My deductible is 1500. Since I had minor surgery last year, and need a procedure this year, I”ll either pay for the deductible or the high monthly. The procedure is $5000.00. So taxes are $400/mos and insurance 525./month. I take public transport to grad school in the city, that is 120.00/month. My re taxes are $5500/year for my condo. Dues are $185.00/month. MOrtgage with taxes: $1468.00/month. Electric/80. Gas: 50. Internet $50.00; cable added in for $2.50/month. I drive an old car, got a blowout last winter/$250.00. I pay around $70-80/month in gas for car. Other than the train, I try to ride bike most days for errands and to the train. Food is $300.00/month. I could save there but I eat fresh veges and fruit. Then, there is the baby showers, weddings, kids birthdays, Christmas, fundraisers. I waste a lot of money on lunches out when I don’t make time to pack a lunch. Any ideas? The insurance is killing me as are taxes. In general, I spend 2k out of savings every month to live because my income was reduced from 60k. I don’t see how anyone lives on 27000 year.

          • Eldred November 24, 2014, 10:26 am

            Make food at home on the weekends, and take leftovers to work. And nobody says you HAVE to spend money on baby showers and weddings… As for kids birthdays and Christmas, how many kids do you have, and how much are you spending on each? 2 kids with 2 gifts of $50 per year(birthday and Christmas) is only $200 for the whole year. Not much at all.
            But the thing that’s killing you(IMO) is your mortgage. $42K in salary is $3500 /mth. Subtract the $400 you mention for taxes and that’s $3100 net per month. So your mortgage is HALF your take-home pay! Yeah, it’s going to be difficult to build wealth with that kind of expense. If you were at the suggested 25-30%($775), you’d find it a lot easier with an extra $700 to save… If I didn’t bowl in a couple of leagues each week, that would be $400 less per month and I could live on $24K take-home. If I was retired with a paid-off house that would $820 on mortgage and my fuel expense would drop from $400 to maybe $100. Which would be another $1100 less going out per month. So yeah, $27000 is do-able, but you’re going to have to make some hard choices to DO it.

          • chris October 30, 2015, 11:07 pm

            We have 3 kids and live happily and healthily on between 25 and 30k per year. We paid off our house back when we were making 50k so my husband could leave a terrible wirk environment and start his own business. We keep our expenses low to let the business grow and save money, but still have extra to save and give. I stay home with the kids and make that money work hard. It is possible because of choices. We choose to live in an affordable city, in a modest house with affordable taxes. We choose to buy used. We choose to write a grocery list based on loss leaders and coupons. We choose to turn down the thermostat, drive old cars and cut the cable. Actually…our internet is much cheaper if we bundle it wuth basic cable…cheaper than either of those things alone, but the cable isn’t even hooked up to the TV. Lol! When my kids go to a party that present was purchased on sale and/or with a coupon and no one knows or cares. Our sons are growing up strong and smart, aware of the value of money and how to be careful with it AND have a great life. My husband is no longer stressed and sick…he loves working for himself and for ys and the phenomenal growth of the business reflects that passion. We will be able to double our income by next year…but we won’t. We will continue to live this way and invest the rest. We will be semi-retired within 10 years. Making less than 60k a year. With three kids.

        • Anna December 10, 2014, 3:38 pm

          As a side note, I snorted when I read “childcare- 500” Unless you are lucky enough to have relatives or friends watching your children, this cost is MUCH higher. In my area, it’s about $1350-1800/month per child for full time child care (ages 6mo – 5yrs). You can of course try nanny sharing, which could bring the cost down a bit. But $500? That’s $3/hr! Are you talking more about older children who may need a babysitter here and there?

          • Clay May 9, 2016, 11:44 am

            Agreed. Childcare in our area is anywhere from $800 to $1500 a month per kid. I don’t know anybody that gets full time childcare for $500/mo. We have two kids and the total cost is about $2000/mo. But…we still save $3-$5K per month because we both work and have other side income.

            • Brian August 15, 2016, 3:31 pm

              I hope that you’re both making over 24k/year each after taxes. That equates to about a 30k/year job.


              Otherwise, it might be better for one of you to stay at home and work on the side income and see if that can’t be raised. If you’re making significantly more than that, then good for you.

  • JJ August 1, 2011, 10:36 am

    I’m not givin’ up my strippers Mack.

  • jessica w August 1, 2011, 12:51 pm

    here is a fun handy calculator where you can add in your own numbers
    I had a blast playing with this;seeing it here with a graph even makes it easier to wrap my head around.

    • Lori September 11, 2014, 9:54 am

      That is a great calculator. We are better off than I thought! Yahoo!! It makes me even more excited to see the longer term effect of the changes we have put in. This will be great to share with my husband! I’m looking at the road left and saying, heck yeah, we can do this!

  • Sarah August 1, 2011, 1:09 pm

    I love your blog : )

  • Marcia @Frugal Healthy Simple August 1, 2011, 3:26 pm

    I always try to mind my $10.

    When my coworker shakes his head at my prepaid phone, I think “2 prepaids is $200/year, two Smartphones are $2000/year”.

    And this weekend, we were invited out to dinner. We passed (mostly because I didn’t read the invite until I was an hour into cooking enchiladas). But regardless, dinner cost me $14 and gave leftovers. All in all, I think the enchiladas plus side of veggies will cost $22 for 5 meals for 2.5 people. Or a little over $4 per meal.

    Had we gone out, it would have been $40. Easily.

    • MMM August 3, 2011, 9:47 pm

      Hmm.. you’ve got me thinking on the prepaid phone idea. I do have a fancy iPhone right now, although the total monthly cost to me is only $35 since it’s part of a family plan. However, this is still a ton of money. And wi-fi hotspots are getting more common all the time.

      I’m thinking that in one year when the contract expires, I might keep the phone, and use it for everything I do right now, except for voice calls. Which I rarely do anyway. Then I can have a prepaid phone for those rare voice calls. To keep the all-in-one functionality, however, I’d have to duct tape the prepaid phone to the back of the iphone. For a savings of over $300 per year, however, I just might do it ;-)

      • David Baillieul August 4, 2011, 10:32 am

        Just get a new prepaid SIM and put it in your iPhone. Use the free wifi at home, work and from hot spots to run apps, browser stuff and Skype. Use the prepaid SIM for the occasional voice or text message.

      • JJ August 12, 2011, 8:08 pm

        I have an iphone on a t mobile prepaid plan. Granted, back then you had to jailbreak your phone which requires a little bit of tech savvy, but now jailbreaking is a lot easier, plus they sell unlocked iphones now if you don’t want to void your warrenty. I pay about $12 a month for my telephone service and use wifi wherever i can get it. I’ve stopped telling people about it since people get so confused about the fact my iphone only has data when there’s wifi.

        “But it’s like just like an ipod touch” they say.
        “Yes, like an ipod touch that can make calls” I say
        “But that’s an iphone”
        “Yes it’s an iphone but it doesn’t have data”
        *confused look*

        • MMM August 13, 2011, 7:12 am

          Fantastic!! Thanks for those tips on using an iPhone in prepaid mode. I am DEFINITELY copying your idea next August when my current contract expires.

        • Luxerus November 2, 2014, 5:52 pm

          Now try explaining to them that you can use voip over wifi so that you could call even without a voice plan! I have a voip account which costs $1 a month per number and $0.01 per minute everywhere in Canada, and I can access it over wifi, so I don’t have to use my prepaid minutes.

          The voip at home also allows me to call 1-800 numbers for free, and a good old handset is more comfortable than smart phones.

          • Philo October 9, 2015, 10:23 am

            Why not use Google’s Hangouts app for free VOIP calls? I think I had to sign up for a free Google Voice phone number first (which makes it look like I’m calling from a number other than my cell phone number,) but who cares. It actually worked in my favor since my cell number is out of the area. I chose a Google Voice number that was local.

            You have me thinking about looking into the prepaid idea. I’m on Ting now, which is cool, but still runs about $30 per month with my usage.

      • Abigail July 17, 2014, 3:20 pm

        About to forcibly do that by moving to China. I refuse to pay a cancellation fee for the contract to which I stupidly agreed, so I’ll pay 10 bucks a month and use the iPhone on wi-fi in Beijing until my AT&T contract expires in February. Then I’ll legally unlock the phone and do the prepaid SIM in Beijing.
        Meanwhile, if I really need it beyond my Skype calls, I’ll buy a cheap prepaid phone to get me through August-December.
        Prepaid & wifi are great. Now, if I can translate my love of economy cars and small efficient spaces to somehow wean off my Apple addiction, I’ll have it made!
        Cost of living in Beijing is cheap, thankfully, except for rent. Trying to alleviate that by renting a room instead of a whole place to myself (sorry for the rabbit trail).

        • Abigail July 17, 2014, 3:22 pm

          P.S. I adore the new look. If it’s been around longer than a few weeks, I apologize for not stopping in sooner!

      • Claudia September 12, 2016, 1:44 pm

        Someone should make a really cheap mobile pre-paid phone that clips onto an existing iphone as sort of a case.

        • EarningAndLearning April 12, 2017, 2:35 pm

          Great idea, Claudia!

          I have a paid-for iPhone 6s Plus (big one, and I’m good for a few years with this one). I pay $61.60/month (month-to-month, no contract) with Bell, here in BC, Canada. I’ve been with Bell for 12 years, but they “can’t” seem to lower that monthly bill. All this MMM reading (from the beginning!) is making me see this is a mo they cost I should lower.

          I’ll have to see if a pre-paid SIM is an option here in Canada, and just use the smart phone parts while on Wifi (I don’t need 1G of data but Bell says there is no option to pay less for only half a gig).

          Any Canadian readers know anything about taking a paid-for iPhone and getting a great month to month deal? (I’m done with contracts, never again!)

        • EarningAndLearning April 12, 2017, 2:38 pm

          Great idea, Claudia!

          I have a paid-for iPhone 6s Plus (big one, and I’m good for a few years with this one). I pay $61.60/month (month-to-month, no contract) with Bell, here in BC, Canada. I’ve been with Bell for 12 years, and have called about lowering this cost, but they tell me that’s the lowest possible (yah whatever). All this MMM reading (from the beginning!) is motivating me to attack this monthly expense.

          I’ll have to see if a pre-paid SIM is an option here in Canada, and just use the smart phone parts while on Wifi (I don’t need 1G of data but Bell says there is no option to pay for only half a gig).

          Any Canadian readers know anything about taking a paid-for iPhone and getting a great month to month deal? (I’m done with contracts, never again!)

  • Des August 1, 2011, 3:31 pm

    This is the most inspirational blog post I’ve read in a really long time. I’ve been coming back to it all day because it makes me feel pumped to re-work our budget. Thanks!

  • Heidi August 1, 2011, 7:15 pm

    wow. I love your writing. I laugh at each and every post. The brick image is great. My husband follows ERE which allows him to sink into deep thoughts but that always left me a bit behind, now we meet in the middle.

  • Liz August 1, 2011, 9:20 pm

    Health care insurance premiums need to be factored in. That unpredictability is what worries me.

    • MMM August 3, 2011, 9:42 pm

      Sure, factor them in however you like! As mentioned in the earlier insurance article, I’m a fan of minimal coverage and high deductibles, which minimizes monthly cost. Then you put high priority on staying in top health and have a large amount of savings in case anything does ever come up. In the health department, I am worry-free.

  • Sorbet August 2, 2011, 6:56 am

    Good post. It really is a change of mindset.

    I remember when I started paying attention to the little things (the 10$ bills), my expense-tracking spreadsheet showed an over 40% reduction in spending within a month. And this is with very little change in lifestyle, aside from the fact I was paying attention to how I spent money.

  • Oskar August 2, 2011, 7:41 am

    I have to agree with Des, I have now come back to this blog post several times. I have an issue with frugality that I have to start working on which is that while more frugal than most, when I have budgeted a certain amount for something can be 5$ for coffe, 100$ a night out or 10 000$ for a family vacation for the most part I end up spending the whole budget even if there could have been a way to save some of that money. I am great at budgets because I stick to them….I do not overspend them but also hardly ever underspend them…..

    Maybe it is time to challenge the budget all over and take out 10% and see what happens???

  • Martin August 3, 2011, 12:32 pm

    Did you count in the inflation at the 4% withdrawal rate? If you are invested in stocks, this perhaps doesn’t matter so much, but you can’t get a constant income out of stocks…

    • MMM August 3, 2011, 9:24 pm

      Hi Martin.. YES, all of my examples are adjusted for inflation, unless otherwise noted. In this case, I was suggesting you could withdraw 4% of a retirement nest egg’s principal each year and the remaining amount would still grow at least as quickly as inflation. The exact amount of withdrawal you can do safely varies widely between investment types and how much you are willing to adjust your withdrawals in a bad year.. but 4% is on the conservative side.

      You CAN still get a consistent income out of stocks – simply by using the dividends for your spending money, and if that amount is too small, selling an additional amount of the actual stocks each year to cover the difference. Since the stocks grow along with the economy, which grows faster than inflation, you are still covered as long as you don’t sell too great an amount each year.

  • Oskar August 3, 2011, 2:45 pm

    Maybe i will try, it is always fun with a challenge:-) I have previously toyed with the idear of trying to live on the absolute minimum (whatever that is….beans rise and water:-) for a short period of time just to challenge the budget and realise how much luxuries we still have in our frugal lifestyle.

  • abrown August 8, 2011, 9:11 am

    Hey MMM, I love your blog. It’s been really instrumental in helping my wife and I plan our finances!

    Keep it up!

  • Brooke Trout August 10, 2011, 4:35 pm

    Love the straight talk on your blog! I see that you have read Your Money Or Your Life. I just read it myself and it totally changed my perception of money. In the book money is equal to life energy. One of the exercises is to track incoming savings versus spending for a month. I made sure to calculate all the money coming in and out of my life every day that is typically taken for granted; freebies, gifts, discounts, lucky pennies or coupon savings – it adds up! I was surprised to see how much I save doubles my earning power. I’m currently reading The Bogleheads Guide to Investing and the eye opener there so far has been that you can potentially earn more money by being debt free than investing! I hope to be debt free by the end of the year so I can start growing my Frida style money moustache!

  • Poor Student February 8, 2012, 2:20 pm

    I love the random button you have or else I never would have seen this article. It is a philosophy I may have already known subconsciously but you articulate it to the forefront of my mind.

  • Elaine February 9, 2012, 12:36 pm

    I just found your website last night and I must say I am impressed. Definitely some really worthwhile stuff here to apply to my own life.

  • Heath April 27, 2012, 5:50 am

    Wow. This is definitely the page I’m going to come back to in the future. I’m also going to forward this one to people who try to call me “cheap” or that I “worry about money too much” or when I begin to bring my wife into the fold :-)

    The whole concept of spending money to get joy is one that gets most people, and makes it hard for them to save. I know you went over this before, in another post. But I’m going to try to replace that with joyful thoughts of my future early retirement (though I’m nearly 30 and just starting, so it’s going to take a while…). Delayed gratification really does seem to be the key here!

    Loving the blog :-)

    • Heath April 27, 2012, 5:51 am

      Oh man, forgot to check the “notify” button. Reply to THIS comment if you want me to see it :-)

  • Clint August 15, 2012, 1:00 pm

    This post should have hundreds of comments, so I’m leaving mine now even though I found it months ago. I’ve referred it to friends, family, other bloggers and blog commenters. Truly one of your best!

    • Heath August 15, 2012, 1:48 pm


  • A.J. January 7, 2013, 1:26 pm

    Good stuff. Now if only I could convince the wife that ten bucks is really a decent amount of money. :-) Around here it’d buy about a week of natural gas for water heating & cooking, but that’s certainly nothing to sneeze at.

  • sean June 7, 2013, 1:41 pm

    Hi MMM,
    I have been thinking of asking what your opinion on the below critical issue.

    paying of mortgage(with extra monthly principal) or funding retirement accounts

    If Real estate boom comes down, the price of home comes down and if stock market comes down, my retirement funds will be reduced.

    So in these scenarios, which option is best for an average person.


    • TomTx May 5, 2014, 3:16 pm

      If you don’t sell your paid off house, a real estate crash means nothing. You still live in a warm, safe, dry house that meets your needs. Heck, I was happy as my house value dropped. I wasn’t selling, and my property taxes went down with the value. Win for me

      • ElysianFields October 18, 2014, 9:42 am

        If you haven’t paid off your mortgage, you still win. You still only owe the next month’s payment, which isn’t dependent on the change in home market values.

  • Silvie July 25, 2013, 3:01 pm

    Hey MMM I found out about this blog yesterday when I saw it on Yahoo. Great stuff! My first impression is that we have it a little easier in the Netherlands with all commuting costs fully covered by the employer and mortgages being tax-deductible but still there’s so much here too learn. Thank you!

  • UncleCharlie April 28, 2014, 7:00 am

    $24,000/year in warm Colorado. We are moving back to Canada, London Ontario. I keep hearing how expensive Canada has become with heating costs, gas, insurance, food. Any idea of how much our costs for a family of three will be? My wife is very apprehensive about the move. We have about $300,000 in savings but I haven’t worked in Canada for ten years. We are considering having university homestay students (ESL) to help with the costs for at least the first year back. I plan on paying cash for a 6 year old Civic or similar car. We plan on renting our first year back. But back to the original question: living costs for a family in Canada with a very frugal Korean wife?

    • Mr. Money Mustache April 28, 2014, 8:03 am

      Mr. Frugal Toque is an expert at that – search the site for some of his articles or maybe we can query him directly. He lives at around $30k for a family of 4, in a large paid-off house in expensive Ottawa.

      The two countries aren’t all that different, if you shop carefully. Driving is more in Canada, so you drive less (which is a win anyway, and you can bike year-round). London’s climate isn’t overly punishing, so with a well insulated house you should be fine. Health care is free, which will cover the difference in groceries. Costco still exists, and the savings is even larger there, because the competitor is overpriced Loblaws.

      I’d estimate that recreating my exact $25k life here would cost $40k in Ontario. But an equally good but different life could be crafted for $25k back there.

      • Ottawa April 28, 2014, 11:43 am

        Mr Frugal Toque may jump on this too – but another Ottawa perspective here. We are a family of 3 in a paid-off 4bdrm townhouse within the greenbelt (i.e. in the city proper). We are currently at $32K annual spending. Based on MMM’s lifestyle, as inferred from his writings, we live similarily luxuriously. By the end of this year we will be below $30K as our child care expenses taper somewhat. Although I don’t believe it would be too difficult to get to $25K, I would suggest $30K is similar to MMM’s $25K (Not $40K).

        • Mr. Money Mustache April 28, 2014, 12:01 pm

          Very nice perspective, Ottawa, and the right way to think!

          When estimating $40k, I was figuring in things like the travel we do (flights are much cheaper in the US), the large house within walking distance of downtown, the home renovation parts, eating lots of cheese, etc.

          These things are expensive in Canada and just happen to be cheap here, so we consume a bit more than we should. But they are completely not necessary to live a good life, so you are doing wise substitution of goods – more of some things, less of others, and ending up right at the same level. Excellent!

    • Kenoryn April 28, 2014, 10:39 am

      My partner and I live for about $32,000 in Peterborough, ON, which includes $12K for the mortgage – one car, no kids, three cats.

      For specific expenses:
      – our car insurance for a 2007 Matrix is $900/year.
      – Heat – I spent $760 last year for heat & hot water for my 120-year-old totally uninsulated 1000sq ft house with a high efficiency natural gas furnace.
      – Gas costs depend too much on how much you drive to say, but gas here is currently $1.35/L, and seems to be about $.3.35/gallon in Colorado. That means gas is about 1.5x as expensive here.
      – Groceries – we spend about $400-$500/month at this time of year and buy everything organic. In summer and early winter we are eating mostly food we’ve grown and spend a lot less.

      • NICO May 8, 2014, 7:33 am

        The hubby and I spend under 33K in Ottawa for a family of 3. We RENT but have no other Debt. We Sold a few year ago. Renting in Ottawa is currently cheaper then getting a Mortgage when all costs are taken into account (Interests and other cost not going towards principal). Our rent is 1200$monthly and our Hydro/Gas/Sewer/Water bills are approx 200-250 monthly. So other than housing related expenses we live on less than 16K (We do have a car also).
        Things that cost more in Canada, Housing (especially after the US Crash and the fact we are in a housing bubble here in Canada), Gas, Groceries, Transportation, Construction Material, Heat, Hydro, A lot of consumer products are also more costly (books, baby items, health products ect).

  • Edith April 30, 2014, 9:11 am

    I’m about to start a financial compromise paying 130 dollars a month to a pension plan to ensure my father has a modest retirement in a few years. He’s almost 60 and, being far from mustachian all of his life, will soon find himself broke without my help (I’m an only child). At first, I saw this money as an amount taking me farther away from my own retirement, but seeing it as a source of pleasure and happiness, like you wrote here, makes me feel way better. I also spend 30 dollars a month to help feed and neuter stray cats. I felt guilty about it when I first discovered your blog, but maybe it is just another way to make me happy without buying crap.

  • Gobbly April 30, 2014, 1:20 pm

    A million dollars is just saving $10 100k times!

    • Garrett July 25, 2021, 7:12 pm

      Depending on your timeline, it might even require fewer than 100k x $10, due to the magic of compound interest. :)

  • Aaron May 1, 2014, 7:13 pm

    Just started reading your blog a month ago and it already has started to change my life! I’m finishing up my student loan payments, just got my moto g in the mail from Republic wireless and am ditching my 100$ cell plan for a 25 dollar one, and I’ll be biking to work starting next week! I’m planning on downsizing from the apartment I rent now (1k a month) to one that’s 750 a month. I still have some anti-mustachian habits to kick in the future (probably the 120$ for crossfit and the 110$ for cleaning service per month need to go) but I am excited and glad I found this blog; keep up the good work!

  • UncleCharlie May 5, 2014, 10:52 pm

    Thanks for the responses about Ontario. I’m shocked by the Kenoryn’s heat and gas bill. I was under the impression that Canadians were spending $500+/month during the cold months. Are you in some special town that doesn’t use provincial power? Or is it all due to the energy efficient furnace?

    For your Matrix insurance, do you only have collision coverage?

    Great, great, great to hear that $24,000/year is possible in Canada! I think we will have no housing related expenses (small mortgage+2 homestay ESL to pay the insurance/property tax/small mortgage payment), and a paid off used car. With my MRSMM and her frugal ways, and my wannabeMMM-self, I’m looking forward to going full mustache, Canada style.

    • Mr. Money Mustache May 6, 2014, 8:25 am

      $500 per month!? I guess it all depends on house size and of course the area (Ontario’s winter climate varies from moderate by Lake Ontario to semi-brutal in Ottawa, even colder in Timmins, and polar bear permafrost if you make the 50 hour unpaved drive to the Arctic wilderness near the top).

      My mom lives in a 1200SF, 120 year old mostly uninsulated house in downtown Hamilton and I think her winter gas bill peaks around $200.

      • NICCO May 8, 2014, 7:40 am

        Our previous 15years old two-level home in the Ottawa area was also around 1200SF plus basement and we peaked at 300$ for heat in Jan-Feb (Gas) and we were careful not to have it over 20C.

        • MelD May 19, 2014, 1:05 am

          Is it stupid to ask why someone in Canada would have a non-insulated house?!! Nobody in Switzerland (where I live, similar climate) would dream of paying high heating costs before solving the insulation problem… No wonder we Europeans just shake our heads at the poor building quality abroad!

          • Rob May 24, 2014, 3:35 am

            Non-inslulated houses are the standard in Spain. Had a friend first year in a house, he went through a 1000l tank of oil a month.

            That’s a 1000€ or so a month for heating


          • Priscilla January 19, 2015, 12:45 pm

            I think what MMM might mean in describing his mother’s house is in reference to its age. Old houses can be poorly insulated, or inefficient through leakage of heat via those big tall windows, etc. I live in an old house in upstate NY…very similar climate as Hamilton, Ontario ( just a couple of hours drive away from us). Our house leaked a lot of heat through poor insulation which we have mostly fixed. So an old house might be described as “mostly uninsulated” but that is just saying that “tongue in cheek.”

            In answer to your question, no one in Canada or upstate NY for that matter would live in a truly uninsulated house. They don’t even make them that way because of the climate.

    • Markham June 27, 2014, 12:49 pm

      Howdy, wife (plus her parents) and I live in Markham. City north of Toronto. Family of four.

      Just to give you an idea of costs near Toronto.

      For the first 6 months this year, natural gas cost us just under $600. Most expensive months were January (mid-December to mid-January) and February (mid-January to mid-February). Approximately $125 each. We have the thermostat at 19C because wife and in-laws complained it was cold (they are used to coal fuelled heated homes in winter). Anyway, in June (mid-May to mid-June), gas bill was $60. The monthly gas bill includes a cost for the hot water heater rental. Gas will continue to go up since Enbridge ran out of gas during the unusually long and cold winter and had to buy gas at market rates. Hydro so far in the first 6 months is $425. Rates have gone up compared to last year. We pay hydro and water every two months, so the most expensive month for all utilities was January and March. We paid around $325. Currently, averaging $200 a month.

      Our insurance rates are crazy. Around $430 a month for two cars. Wife doesn’t want to deprive her parents a car. Government promised to lower car insurance rates by 15% a couple years ago. So far only 5% done. It feels like the insurance companies are taking their time to implement the decrease.

      We try not to drive so much. Gas is around $120 a month. This month I’ve only filled up once. Not bad for two cars. But that probably means I’ll need to fill up more next month. Currently, gas is around $1.42/L.

      Our yearly expenses are around $46k. Without a mortgage, it would be around $27k. $24k is certainly doable in a city further from Toronto.

  • NZFrells May 7, 2014, 11:03 pm

    Wow – the US is sooooo cheap!! NZ is crazy expensive, house prices are insane. Petrol, power and food out of this world expensive. Still I love the website, it has meant we have paid off all our crazy debt and can now concentrate on mortgage paydown mission. Thanks for keeping it simple! :-)

    • Me June 6, 2014, 10:06 pm

      Asia is cheaper. I’m in Kuala Lumpur, Malaysia and our power bill for 4 people.. was $50. Water was $10. A month. You can eat out (great atmosphere and food!) for about 50 cents. Soda (refillable!) and a hot dog is about $1. Tropical climate means no heating costs.

      This is the place to be if you are poor and want to live well on very little money.

      • mekN April 15, 2015, 11:07 pm

        This reply comes quite late. But, eating out at 50 cents (in USD), what can you have? With 50 cents (conversion 1 USD = 3.6 MYR), you can only have a small portion of ‘nasi lemak’ or a piece of ‘roti canai’ with a glass of plain water (both are Malaysian favorite meal, commonly for breakfast and also available all day long). A typical decent meal for eating out (lunch/dinner) cost around MYR10 as minimum, most of the times more than that. Food oh food, Malaysians are always busy eating or thinking about what to eat or/and where to eat. Thanks to our multiracial country, the bonus from that we have the luxury of big variety of foods. Still not enough for us, we also welcome other countries cuisine to here as well. Thus, sticking to healthy eating plan and diet is really hard here… :)

        “This is the place to be if you are poor and want to live well on very little money”

        Hello ‘Me’, I guess you are an expatriate staying here in Malaysia. Yes, to expatriates (and many retires abroad who have chosen to stay here), the cost of living here is much cheaper to them as compared to their home countries. In fact, that is one of the reason Malaysia is one of the top five countries chosen for retirement ( http://internationalliving.com/2015/01/the-best-places-to-retire-2015/). But for us local people, relative to our earnings, the cost of living here is not cheap and we really have to be mindful with our spending. The major financial hurdles are of course – house and car, both are expensive. Especially for the house, the price skyrocketed increases to double now as compared to a few years back (year 2010) in prime area (Kuala Lumpur and Penang), making owning a house are beyond reach for many people. Yet, I still believe what MMM is preaching in this blog is doable; by living within means or better below means, eliminating all the ridiculous spending and being badass in certain area. Cheers :)

  • Russell May 8, 2014, 7:34 am

    I’m 32 and just paid off my house! My work takes care of my cell phone and I drive an 07 Civic financed out at .99% interest so no reason to pay that off in my mind. I have a 79k HELOC and want to use it to me more Mustacian. Any advice? Currently I’m working with a real estate agent and some young contractors to research flipping houses. Is there another way to go that will give better results or anything that i could do to diversify?

  • JenSF May 8, 2014, 2:08 pm

    Long time reader, first time commenter. This is my ALL TIME favorite post, and I’ve read all of them. I come back to this one whenever I need a little motivation to stay on track. This blog (and the ideas in this post in particular) has completely changed my relationship with money. I discovered the blog about a year ago at time of big transition for me. I had just turned 40, was recently single, got a new, higher paying job, and had finally paid off my student loans. It would have been a very easy time for lifestyle inflation to hit! Instead, I maxed out my 403B and Roth last year, am saving for a downpayment on a rental property, and I’m on track to retire at age 52. And I’ve done it all $10 at a time!

  • Kathleen May 14, 2014, 9:29 pm

    I told a friend recently that every $20 she *already had* and *didn’t* spend meant a day longer she *didn’t* have to work.
    Very rough maths, but it had a definite impact! Five days later, and we’re now working out how she can retire early!

  • Jeff May 17, 2014, 8:16 am

    I agree with most of what you said although the 7% compounded IRR is hard to do for most people in today’s age of ads touting 1% CDs and 0.01% savings accounts. Eventually we’ll return to more normal interest rates, unless we become Japan.

    • Mr. Money Mustache May 17, 2014, 12:25 pm

      Thanks Jeff, but keep reading – I’m hoping this blog convinces you to forget about the very existence of savings accounts and CDs. Among the ways to put the money to more productive use:
      – Lending Club is easy to exceed 10%
      – REITs pay over 6% dividends
      – stocks will tend to return 7% after inflation over the long run (since even at today’s high prices the S&P has a 2% dividend yield).
      – Paying off your mortgage “yields” 4%, paying off
      – other debts (student loan, car, credit card) may have even higher paybacks when you nuke them
      – owning a rental house or apartment can easily exceed 10% on invested cash as well

      and most interestingly, having cash-at-hand allows you to make smarter unpredictable purchases. Snap up a house down the street with cash that is drastically undervalued but needs work. Buy a bargain Prius on Craigslist when you find one, then take your time selling your previous car for a good price. On and on – 7% overall is easy for a Mustachian.

      • CT Mommy November 14, 2014, 5:26 pm

        I’m a brand new reader and probably not your target audience, our combined take home pay of about $60,000 for a family of 3 living in the “megalopolis between Washing DC and Boston” I think you called it with about $50,000 in high interest consumer debt (about $3000 in principle paid off since July 2014). But it has given me hope that I won’t be working forever as I previously thought but I can pay off the rest of the debt in about 3 years buy a house in 5 years and then save, invest, and pay off the mortgage in about another 15 years, resulting in retiring in about 20 years from now while not even having to change our current lifestyle (spending minus debt repayment ($1400 and rent $1000 per month) is about $25,000 to $30,000 per year with a ton of room for improvement. We make $60,000 so we would eventually be able to have a 50% savings rate on what is a modest income for our area. It is freaking amazing that if we stay on exactly the track we are on now, which is not a great one, we can retire at 52! If our income goes up and our savings rate increases we can retire even sooner, if I can make the husband aka Mr Spendy Pants see the light even sooner, or after the fire of debt is paid off and I can focus on increasing my hourly rate and working only while my son is in school, make the yearly income I make now and be around to be with him while he still wants me around (personally my favorite option) we can still retire at age 52. The possibilites are endless! While I feel like we are a little late getting into the game, there is still plenty of time to play it. So Thank You!

        One question… We live in an area with crazy housing prices, although the price per square foot is double what it is here a mere 10 miles away coupled with higher property taxes, the question is should we focus on buying a house now while ther is still a good inventory of houses on the market and interest rate are low, then pay off the debt, to avoid getting priced out of the area? Or should we focus (as we are now) on paying the debt and buy a house when the flaming hot death trap of debt is gone?

        • Dang December 10, 2014, 7:06 am

          I think the big answer to your question is a couple of smaller questions:
          Do you want to be tied to the area? Will this be your forever/long term house?
          How much in cash do you have saved up?

          I’m in DC and was able to get in at the dip 7 years ago but the dip was still higher than houses were 10 before that. The debt severely limited us in how much house we could get and we ended up with a smaller house (making it a non-forever/long term house). While interest rates are low, they only matter if you spend 30 years paying it off, if you attack the new mortgage with the same intensity as the deb fire then a 1-2% interest rate increase may not mean as much as settling for a worse house.

          TL;DR Go after the debt as its a better return than mortgage interest rates and it limits you on the house you can get.

          • ChantelCT December 11, 2014, 12:56 pm

            Thank you for the response. It would be a long term house (probably 10-15 years, then I would be inclined to rent it out if the crazy high rental prices in our area continue.) The other factor that is making me want to buy a house is that it is much more expensive to rent in our area than it is to buy. We would like to move to a neighboring town where a lot of our friends and family live, that has a walkable down town, great public school system and much more of a community feel than where we are now. For example condos in a complex we are looking at would cost about $1400/ per mon for mortgage, taxes and hoa fees for a 2 bed 2 bath unit and for a 3 bed 3 bath unit about $1700-$1800 per month (many of the 3 bed units are in a newer part of the complex and sell higher than the older units of the same size.) To rent a 2 bed 2 bath is $1600-$1750 per month depending on updates and I have not seen a single family rental house for under $1600 per month. We do rent now but the landlord gave us $500 off the rental price in exchange for spin our own yard work, garbage removal and snow removal.

            But overall I do think that the wiser choice is to aggressively pay down the debt and buy a condo/house in a few years.

  • Cap_Scarlet June 24, 2014, 3:15 pm

    I love articles that tell me a family of four can live comfortably off $24,000 per annum. My plan has us living off about $125,000 per annum and I still wonder whether we have enough margin for safety.

    This is absurd position is driven by a couple of factors. Firstly, we have been earning a large amount of money for a few years but make some monumentally bad decisions a few years back which caused us to lose a lot of money (around $250,000 – dont ask) which has left us worried about making more bad decisions and running out of money!

    But never mind – what I wanted to say is that there is a middle way. Our middle way involves not “wasting” on take away lunches (I take sandwiches) or frothy coffees (we drink freeze dried) but having expensive cars and paying for the childrens education.

    Anyway I am not completely “mustacheod” (if that is a word) but we will retire next year (age 50) and look forward to a “semi” frugal retirement!

  • Sophia June 24, 2014, 10:33 pm

    Dear MMM, I cannot thank you enough for taking the time to keep your blog up. Out of pure anger of having paid debt off 2 times I came back to look for help online to see what we were doing wrong to end up in debt again. I finally get it. Our focus was always on making more, which my husband has been great at. But we spend like crazy on the little things…food, entertainment etc., kids activities… I cannot believe that I could not figure this out on my own.

    After 11 wonderful year home raising my kids, I have started working so I can get rid of the debt ASAP and get back to my kids. I had no idea that all those years of ignoring the details would cost me time with my children.
    Thank you!

  • Rob July 3, 2014, 8:46 am

    Just need to vent a little: The amount you suggest I save is more than I earn in a week. This is just one of many recent reminders I’ve been getting recently that it really is time to find a new job.

    Great article, great advice, great wisdom. I can tell that this is one that I’ll be pondering for a while.

    • Kira July 15, 2014, 12:47 pm

      Rob, you can always get creative and look for supplemental part-time work as well (obviously I don’t know what your job situation is). Deliver pizzas, barback at a busy bar, etc.

      This is (at least) the second time I’ve read this article and now I’m thinking I need to do the math… At first I was thinking there’s no way I can save $400/week, but if I factor in my reimbursement accounts I might be able to. Avoiding restaurants (including the work café) is by far the easiest way to cut expenses, but not $400/week worth so I’m challenging myself…

  • Mouse July 9, 2014, 6:31 pm

    If you start Respecting your Tens at age 20, you’ll be Retired by 30**.

    Well, I don’t know about that sir. I definitely respect my 10’s… my 5’s and even my 1’s to be honest, but I am still not saving anything for retirement. At 24, every penny saved goes toward my tuition. I’ve been in university for 6 years because I go part-time/full-time on an alternating basis to keep making money (always working full-time). Working like this, I’ll graduate almost debt-free (I didn’t have the same mentality or job at 18, so I took loans back then) but at 26K CAD per year, I wont’ be retired at 30… I’ll be graduating at 30, hah! (not quite but close).

    And no, these aren’t anti-mustachian excuses. Like the lady who makes 30K and saves 10K, I do the same. But when talking about young people you’ve got to start accounting for school expenses! Bah!!!!!

    • Dang December 10, 2014, 7:27 am

      Mouse, one thing to settle your mind is that University graduates earn significantly more than non graduates. Completing your education with no loans accelerates your retirement by what could be 10 fold or double!

  • T August 5, 2014, 3:22 am

    In New Zealand we don’t pay interest on our student loans and there is no incentive to pay them off quick. Due to inflation I have been advised merely to pay the minimum rate. Thoughts?

    • Rob from NZ November 18, 2014, 7:13 pm

      Unfortunately you missed the boat on the voluntary repayment bonus, so the advice you have received is correct. Just pay the minimum and watch inflation do some of the work for you. Three possible exceptions:

      1. You feel a moral obligation to pay it off quicker. (I didn’t…)
      2. You won’t be saving the money you would otherwise be using to pay off the loan. (You should!)
      3. You plan to move overseas, triggering interest payments. (Don’t pay it off until just before you move)

    • Catprog February 15, 2019, 5:26 pm

      Same here in Australia. (Although it still goes up by inflation)

  • Karl August 13, 2014, 9:00 pm

    Another poignant article. I am frustrated on a daily basis by people who moan about not having enough money to pay bills and other necessities, but they are the exact same people that drive a ridiculously large and overpowered vehicle multiple short trips each day, running a clothes dryer constantly even when it is fine weather outside, get take-away food even when there is perfectly good left-over food going to waste in the fridge, buy a $4 coffee on the way home even when there is delicious coffee ready to be brewed at home which would cost 50 cents instead, and so-on.

    We all know these types. They can’t see the forest for the trees so to speak. Constantly wasting small amounts of money here and there, and then complaining that life is so tough and expensive! Meanwhile I am cruising along as I have made being ‘comfortably frugal’ and naturally thrifty my way of life. I have enough money to travel and not need to work for the next few years if I desired. So many people comment that they are jealous of my travels and wish they could do the same, but they make excuses instead of accepting the fact that they are wasteful and poorly disciplined.

    A dollar saved is a dollar earned!

  • Tim September 5, 2014, 10:41 am

    “A family of four in the US can live comfortably on about 24k per year plus having a paid-off house. With an nice conservative 4% annual withdrawal/return rate on your investments, you need $600k invested to generate this cashflow, inflation-adjusted, forever, plus your $200k house. $800k total. Or, if you want to get off your butt and work very occasionally to earn $12k per year, you can slice the $600k number down to $300k! Or you can save the $600k AND work, and keep saving more and more over the years – ending up a multimillionaire all while doing very little paid work.”

    This is about the most succinct summary of MMM I have seen. I suggest you put it on the homepage.

    • Steve December 28, 2014, 4:14 pm

      I don’t understand how you think a family of four can live on 24k – I have almost 14k in insurance alone (health, homeowners and car) then we have 200 a week in groceries (over 10k) there’s your 24k and we haven’t started on utilities. auto fuel, clothes etc etc etc. We definitely could cut out some spending but our baseline budget is 4000 per month.

      • Mr. Money Mustache December 28, 2014, 4:26 pm

        Hi Steve, welcome and I hope you keep reading!

        Just a few of our own costs:
        Health insurance $273: http://www.mrmoneymustache.com/2013/10/28/obamacare-friend-of-the-entrepreneur-and-early-retiree/
        Groceries about $100/week at the core, but we sometimes spend more due to sloppiness and surplus these days: http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/
        Car costs are minimal because we decided to live somewhere close to the stuff we do most often. (Insurance $350/year and annual fuel not much more than that)
        Clothes barely show up on there too, since they’re pretty cheap these days and last a long time..

        More on our annual spending from 2014: http://www.mrmoneymustache.com/2014/01/12/exposed-the-mmm-familys-2013-spending/

      • Kelly May 22, 2018, 9:51 pm

        As a single dad with three kids that live with me full time, I can say it is completely possible to live on 2K a month. We make it on about 1500 a month, and that includes having ridiculous transportation costs (30 miles one way for groceries), not to mention how much my teen driver wastes, but even so I save about 50% of take home currently and will be quickly bumping that up to 70% after applying some more tips from here, ERE, and plain old math and stoicism. Yes, there are unique things about my situation, (housing, insurance, etc.), but these are only unique because I sought them out and made it happen.

  • Paul October 29, 2014, 10:00 am

    Another Canadian perspective. Back in 2011 I tracked all my expenses no matter how small. I did this so I could see how much money I was spending and where I was spending it. What I found was that my 3 biggest expenses were my mortgage, house renovation costs (one time major renovation that year), and saving for retirement. Once I eliminated these three items, I was living on $27k for the year in Toronto. I’m single but some of those expenses such as utilities and property insurance etc. do not increase or at least not a lot for having additional people living in the same house. There would be some extra expense for food and maybe entertainment, although my entertainment budget was my 4th highest expense. I have a couple of expensive habits such as golf, playing hockey, and travel. I also have a car which I drive to get back and forth to work (over an hour commute, traffic in Toronto is grid lock), so gas and insurance are expensive but my car is 10 years old, paid off, and still runs well.

    For the savings I have less than $500k saved but I picked up some solid dividend paying stocks when they were depressed and currently get almost $24k per year in dividends. This doesn’t even consider that the value of some of my investments have appreciated nicely, others haven’t increased as much but still pay nice dividends back to me. So it is possible to achieve decent returns without having millions of dollars saved. And I’m also eligible to receive CPP once I reach the required age, still a ways off, but that will add another $8k to $10k to my income every year.

    So living a reasonably good life on an income of $30k a year in Canada is very possible. The big item you have to adjust for is housing, do you own or rent or still have a mortgage payment. You will need to factor all of these items into your income planning.

  • Robert December 14, 2014, 6:10 am

    Hi everyone. I am 28 and served in the Marine Corps for 8 years. I get 100% disability rating which is $2,858 a month tax free. I am single and working for a security contracting company that works with the State Department. I’m averaging about $2,800 every 2 weeks so I am saving about $7,000 a month. The only issue I have right now is some credit card debt and a loan that I currently own is $7,200 and a medical deferred interest card that pretty much is interest free unless I pay the money by that certain time which is usually a year. I have no house or other payments other than my insurance on my 2005 truck and a lease of a 2014 car which is around $450 a month which is steep, and since I don’t use right now since I am working out of state right now and usually go over seas a lot to work. Also my phone bill has been around $95 a month since I had a payment plan for the new phone a while back. After it should go to around $75.
    I see clearly what I must do, but if I can get some more input or advice not just from you, but from anyone else thst would helpful and great. I appreciate everyone’s time to read and provide advice on all of these posts.

    • Patrick December 31, 2014, 10:37 am

      You are doing great Robert

  • David December 31, 2014, 9:12 am

    I love re-reading this article every few months. It is a welcome reminder on how little things make a BIG difference. One of my all time favorites MMM.

  • dojo January 18, 2015, 11:24 am

    I personally know high earners who have no savings (only HUGE debt) and people who almost earn ‘nothing’ and have thousands of bucks saved. It’s all about finding the balance. There are few things you can ‘splurge’ on, but you need to be frugal in others. Little efforts made consistently can add up to some outstanding results.

  • EarlyRetirementGuy January 20, 2015, 8:44 am

    An absolout classic post which really does hammer home the point. You don’t get rich by spending and every self-made millionaire begins with making their first single dollar. These small savings all add up and compound.

    If we were to subtract our mortgage costs; my partner and I would live an extremely lavish lifestyle on $24k! Our current non-mortgage annual spending is around half that amount. We are fortunate to have negotiated a work from home contract and company car.. however we both worked to be in the positions to do so and continue to work at lowering expenses.

  • GDP January 29, 2015, 5:30 am

    I have been trying to keep this in mind lately when thinking about spending money on something. I have just started on my own early retirement path. Not as easy as one might think. Or at least for someone like me who LOVES to spend money.

  • BCB February 5, 2015, 9:15 pm

    When I came to my savings calculation at the end of this post (http://www.businesscasualbiker.com/monetary-impact/) I thought of this article. Someone who drives a somewhat new SUV can save a lot of 10 bucks pretty quickly by ditching the stupid thing!

  • Trevor April 13, 2015, 4:25 pm

    Hello Mr Mustache, I have no problem with the saving numbers and agree with your points. But on your point “that is more than enough to start a nice Early Retirement, especially if your house is paid off”. Isn’t that unrealistic for most lets say 20-30 year olds? Basically for your numbers too work you need to first pay off a mortgage which for me in Vancouver to buy even the lowest end Condo in a bad part of town would be $600,000, it would basically tack on an additional 10 years to your calculation.


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