Reader Case Study: I’m Rich and Life is Perfect – Now What?

My suggestion would be to do “fasting” once or twice per year – try to live frugally for 1 month (say $4K for 1 month) and see if your theory of being able to live of $3700 is true.

As an added benefit, you will be able to put away that month’s extras into your retirement fund – 1M net worth seems too low for your situation – especially considering that 1M includes your primary residence. I advise against including primary residence in your net worth unless you plan to live in a tent when you retire.

I’d like to see a case study (even a fictional one) based on what I thought this was going to be, from the title alone. Say, late 30s, $800k assets, $70k income, $25k annual spending, neither hate nor particularly enjoy their job. Sort of a take on the “what’s the point?” thread from the forum. (I wasn’t describing my own situation).

Hey MMM, I don’t know if you are gonna read this comment out from this crowd, but I just wanted to say that I respect you a lot more and that means deeply, after reading your reply to the guy. You really showed what you are made of.

I wish luck for the poster in his seek for meaning and satisfaction in life. I hope he finds life-long sustainable satisfaction and realization for him and his family, specially the children.

My advice would be, if you are not finding hardship in life, you should seek for it. If you need to, you should even pay to find difficulty. That’s the source of all personal growth and evolution, and that’s what does bring sustainable satisfaction in the long run.

Very cool to point out this profile. This is a very common profile in big cities like San Francisco and NYC as another pointed out.

$300,000-$500,000 in income is common after 10-12 years of work in the finance sector.

I hope people get inspired and know that there’s more money out there than you think. No need to make less when you can make more with the same amount of effort.

I recently discovered ERE and MMM: I’ve flirted with frugality, but not really believed FI was in my reach. My eyes are opened, thankyou so much, and plans are being forged. My upper lip will never be the same.

As a relatively high income earner I relate in some ways to the case subjects, and congratulate them on their hard work. He asks “what do you think?” If I were in their shoes I would:

1. Make spending more time with your teenagers a priority. They will be grown before you know it. Time is more valuable than money. Most people on their death bed say “I wish I spent more time with my family”. Often workers in your income bracket have no choice but to put in long hours, but I would try to be creative with coming up to a solution for this. There is a way for sure. You may drop income, but you can afford it.

2. Set a finite goal for FI. You may not need to try for a 200k FI: generating just half that (100k) really should be more than enough.. and if you keep working your nest egg will grow anyway. According to the MMM formula saving 50% will take 17years, but if you save 75% you are down to 7, and still living on 100k/year. You say you already are part way there, so it may not take that long. I believe it would be complacent to not take the opportunity to nail this in the near future: life circumstances are actually often out of our control, grasp the opportunity whilst you can.

3. Buying experiences can be as wasteful/addictive as buying stuff. You seem very grounded but just do a double check that you haven’t substituted buying experiences for stuff. “Experiences” are subject to hedonic adaptation just as much as “stuff”.

4. There’s a lot of fat in that budget…..plenty of options open to get 1. and 2. happening.

An acquaintance of mine watched his 6 year old daughter die crossing the road to school, struck by a car. He most regretted that he had been working long hours to get his business up and going, and had not spent enough time with her in her short life. He accepted invitations to talk about his experience and this was his message.

I’m super excited to hear that food money is going to organic foods. Mustachians are the best eaters in this country in terms of both health and frugality. Keep spending there and just work on buying as much of that organic food in the form of whole foods and cutting down on any packaging.

As Mrs. Subject of the case study, I am very happy my husband decided to come to MMM for some insight. I am impressed with many of the great ideas and perspectives people have offered. I’m looking forward to sitting down and drawing up a new family game plan.

I do notice the concern about our charitable giving. For as long as I can remember we have tried to follow Goethe’s advice: “If everyone swept in front of their own door step, the whole world would be clean.” By raising our children well and looking after our own, we feel we are relieving society of a potential burden. We do give locally, which is what you see in the charity category.

We have been more generous with family and friends (We do not put this in the charity category, since we cannot claim it against tax). We also follow Mr MM’s leading in strongly counseling people we know about the urgency of paying off debt; you would be surprised (or perhaps not) how many high income people still have piles of debt.

So here is a question back to you: is it better to give money to the traditional charities, or does taking care of those close to you count as charity? Or are you obliged to do both?

On a more philosophical note, we hear complaints that the American dream is dying, and that the middle class can no longer afford to live the good life. The thing I have noticed is that the American Dream is still attainable, as long as it is the 1950s dream of a 1300sq ft house with 3 beds, 2 baths on the edge of town. Where the family owns one car, does their own yard and housework, takes vacations camping in the national park.

The modern American Dream seems to be for a 5000 sq ft house with 2 high end new model cars where you outsource all of your home labor and vacation in Europe. That is difficult to attain and sustain even on a 1%-er income, and always was.

I would also just like to publicly say how much I adore my husband, he is the most amazing man I have ever met.

I’d like to say congratulation on earning a big paycheck and living a great life only a few people can. I do have some input.
You say you can cut down your monthly expense to $3200/month. Is this true? Can you really do it? It’s easy to say, but what happens if you really lose your job? That’s how so many people get into financial trouble right? Most of us can’t reduce our expense that quickly.
I also think you should save more for retirement. With your lifestyle, you will need a lot more than $1M.

I second the suggestions that this family should try living on their version of a shoestring budget (maybe minus changes to schooling, for obvious reasons), just to make sure that they can actually do it / stomach it.

Who knows, they might like the little dose of asceticism so much that they stick to it…

Since a reasonably large portion of the commentary to this post involved the public v. private school debate, I’d like to provide the perspective of someone who has experienced both options. I’d also like to point out that the most significant factor in the decision (which the MMM community seems to have glossed over) is the quality of the public schools locally available.

I was raised in a family of modest means and attended public school through the sixth grade. Through fourth grade we lived in North Carolina, where the schools are about average compared to the nation as a whole. I had no particular problems in the North Carolina public schools and would probably have stayed in them through high school if we had remained there.

However, in the summer before fifth grade we moved to South Carolina. My parents, as you would expect, enrolled me in public school there.

And this is where reality differs quite starkly from the Mustachian ideal of public schools. South Carolina public schools are among the worst in the nation, ranking 49 of 50 almost every year (thank you, Mississippi). And in schools such as these, there is no ability to “pick your problems.” Far from it. Your problems pick you.

I was a reasonably studious child, but also athletic and physically competent. By no means was I a kid who invited victimhood. But I couldn’t hide the fact that I was relatively undersized (I grew later), and I was new.

From the first day, I had at least one fight a week. These ranged from relatively minor scuffles to full-blown punchouts involving black eyes and bloody noses. Against kids my own age I won more than I lost, but all that meant was that I would attract the attention of some older, meaner kid. I can still vividly remember the process of getting my ass kicked by a seventh grader who was at least eight inches taller than me.

At the same time the learning involved in the school was nonexistent. Some of the teachers might have been trying — I couldn’t tell you. The mere fact that I could read and regurgitate basic facts meant that I was one of the best students in school. I wasn’t a problem academically, so I required no further attention, not when there were so many disruptive and truly challenging kids to deal with every day.

This went on for two years. The fighting dropped off somewhat once I established my spot in the rankings. But the education never picked up in any way.

In the summer after sixth grade I took a test for a scholarship at an elite prep school. My parents did care and suggested that I take the test, even though they couldn’t afford private school. Although I actually came in second on the test, the first place finisher was unable to accept the scholarship due to a family move and I, as first alternate, received the scholarship instead.

There is no way to adequately convey in this short format the difference in environment that I found when I arrived in seventh grade. No, not all the kids were nice. There was a definite social pecking order based on money, with me, as the scholarship kid in my hand-me-down clothes, at the very bottom. But no one physically attacked me. The teachers were not one level above the public school teachers, but many levels above. And scattered throughout the student body were the kids who, though I didn’t know it at the time, would become my best friends for the rest of my life, kids who, though they came from money themselves, truly didn’t care what my background was. Along with this came an education and opportunity for experience that can only be described as phenomenal, superior in many ways to even the excellent public university which I later attended.

So I have first-hand experience with decent public schools, terrible public schools, and a top-flight prep school. But even though my wife and I can afford private school now, we aren’t knee-jerk about it. Currently we’re fortunate enough to live in a part of the country with some of the best public schools in the entire nation, and my kids attend public school. We are very happy with it. If I lived in Longmont, CO, with MMM then my kids would be in public school as well. But if we moved somewhere where the public schools are abysmal, my kids would be in private school the next day.

Don’t kid yourselves. If you live in an area of average or worse public schools, there is no comparison whatsoever with a top private school. Of course not all private schools are created equal; if you pick one where the emphasis is on teaching the kids that Jesus is coming back tomorrow, then don’t expect a high-quality science curriculum. But if, like the subject of the original case study, you live somewhere that the schools are bad (and they are bad in most of the American south, where he lives), then an excellent private school is a very worthwhile investment.

Kudos to him for making it a sufficient priority to spend the money.

Lots of good comments. Three thoughts here – first, if you are actually doing things with your dog, it is easy to spend $200/month. There is food, regular ongoing medical costs (i.e. vaccinations),say $40 -60 depending on the size of the dog, and then the activities – puppy kindergarden, obedience, agility, flyball,herding, whatever you and your dog like doing together. This is not the “show dog” scene, although showing a dog in conformaiton can be fairly inexpensive or incredibly expensive, just depends on how it is done. We spent $100 every 5 weeks for agility classes, and they were worth every penny. Second, there are lots of reasons for private schools. Our daughter went to public French immersion (Quebec) for elementary school, but both the English and French High Schools in our town were good, not great. We invested $3000/year to send her to a private French school, and she came out so bilingual that French kids think she is bilingual French. She has never had a problem finding a part-time job during her College and University years, employers in our area love bilingual people, Third, the children’s activities. Hockey is expensive. Some dance activites (think Irish dance, Highland dance) are expensive at competitive levels. Riding – a friend of our daughter’s was into competitive jumping, and that is inrcedibly expensive. That was all she did outside of school, the whole family supported her goals.
So without knowing the activities and priorities of the case study family, we may look at some of their expenses as high where they may actually be low in context.