Reader Case Study: The Long Road to Mustachianism

The battle of Mustachianism vs. Consumerism rages on, and we have made some serious headway lately, with almost a doubling of the blog’s readership in the past month and some funny appearances in major media.

But with new exposure comes new skepticism, and the need to explain the whole package from scratch to whole legions of people who have never heard of it before.

Can we crack through decades of established habit to allow people to lead richer, happier lives? Many newcomers to the blog don’t even realize how incredibly expensive (and inefficient) their lives are. To illustrate what we’re up against, check out today’s Reader Case Study:

Dear Mr. Money Mustache,

I discovered your blog a couple of weeks ago and have been reading it pretty much non-stop. I love your down-to-earth, practical and well-researched  advice and was hoping you might be able to do a reader case study on my situation.

My husband and I are 28 years old (married for 5 years) and feel like we’ve made a lot of good financial decisions. However, like many of your other readers, I’m sure, there is one out there that is still haunting us and preventing us from realizing our dreams.

When we were in high school, we were both given the opportunity to attend state schools free of charge through a state-funded scholarship program. However, being in the “I’m a teenager so I know everything” stage, we both chose to attend expensive private colleges where we thought we’d get better educations. Even with private scholarships and after having paid more than the minimums every month, we still owe a combined $150,000 on our student loans. We consolidated our private loans as much as Sallie Mae and the Federal Government would allow and are currently paying a 3.75% interest rate (variable of course… I think it’s prime+1%).

After starting to read your blog, we decided to try to pay off our student loans in 4 years. Doing the math, if he pays $2,000/mo. on his and I pay $1,000/mo. on mine, we can do it. Is this the right decision? Or should we be trying to invest some of that money? We currently have no money in stocks, bonds, or REITs, but have been considering starting small (until we get the hang of investing) and putting around $3K into the Vanguard funds you suggested in some of your posts.

Here’s what our financial picture looks like:

– Combined salaries: $157,000 before taxes ($86,000 me, $70,000 husband) (I take home around $2,200 every 2 weeks and my husband takes home around $1,800 every 2 weeks because health insurance comes out of his check)

– Savings: $31,000 ($25,000 of it is in a high-yield savings account earning .8% interest, while the other $6,000 is in a normal savings account earning a mere .2% interest). This is both our emergency savings and our savings for the downpayment on our next home (We are hoping to get to 20% so we don’t have to pay PMI next time around. Also, current market value on our house is approx. $10K-$15K less than what we owe).

– 2 cars (paid off) (I work 32 miles from home and husband works 40 miles from home. In our area, the jobs close to home pay less than half what we make traveling into the city.)

– Car insurance: ~ $140/month combined

– Mortgage and real estate taxes: $1675/month (unpaid principal balance of $206,029) (interest rate 5% + PMI). (As a side note, we tried to refinance but FHA regulations have changed since we originally got our mortgage and we were told there would be no significant advantage because our PMI would go up from $100/mo to over $300/mo, thereby cancelling out any savings) (We’re also hoping to move from our condo into a single-family home in the next 5 years)

– Internet + basic cable (cheaper to keep 5 channels of tv than to get rid of it due to cable company’s bundling) (husband works 2 days/ week from home, so high speed Internet is needed).

– Electric bill: ~ $120/month

– Gas bill: Between $6-$100 a month depending on how cold the New England winter is.

– Combined cell phone bill: $150/mo.

– Gas for the cars: ~$600/mo.

– Groceries: ~$500/mo.

Also, to throw another wrench in, I am going to community college part time to get trained in a completely different career. Anticipated remaining cost over the next 2 years is $16K.

Hopefully I’ve captured everything. I really appreciate your opinion and hope your readers can learn something from our situation.

Thank you,

All right, so we’ve got three main points here:

  • A fairly large student loan debt
  • The desire to save for a home
  • The desire to save for retirement

Balancing all this out, we have a powerful asset

  • An unusually large double-worker-no-kids income of $157,000 per year

How do you decide between these priorities?  Do we pay down the debt as a matter of principle? Do we save for retirement because the expected return is probably greater than 3.7%? Do we save for a downpayment to get into a bigger house?

All of these are good questions, but there’s one thing you need to do before any of that. You need to


I mean, HOLY. SHIT. The two of you are driving a combined ONE HUNDRED AND FOURTY FOUR MILES PER DAY, and yet ending up at the same place you started each night. WHY?? A commuting habit like this will cost you over $215,000 every ten years if you simply shift the money you currently waste on driving, towards paying off your student loans instead. In fact, your choice to live so far away from your work is a much bigger boat anchor keeping you from getting ahead than any amount of student loan debt could ever be.

So I’m going to start by having you move close to work. Like, right now. I mean your husband should be shopping for apartments on Craigslist even as you finish reading the rest of this article. You can shout the rest of it across the room to him as you read and he searches. It’s that much of an emergency.

You can rent out your current condo, and find a new rental in the city. Eventually the condo can be sold. Your new place might be smaller, but that’s fully appropriate right now – you are in debt, so it’s emergency payoff time, not luxury time.

Your new apartment can be at the midpoint between the two jobs, thus you can both bike, walk, or take the subway to work. In the worst case, one person can walk, while the other drives a short distance. This change alone will make the difference between “broke” and “millionaire” over just a portion of a typical working career. And yet it will change your whole life for the better. You’re about to get all your free time back! You get to experience the feeling of ending your workday, biking home, and still having some time in the evening to actually accomplish something. From this point forward, you will not give a shit about what the rush hour traffic on the interstate looks like. And you never will again, for the rest of your life! Congratulations!

Compounding the savings, you’ll be able to sell both of your cars, which are probably fairly new and expensive, and have between zero and one not-quite-as-new, efficient cars which don’t require collision insurance coverage.

Whew, that was intense, but I feel a lot better, don’t you? Without the outrageous drain of a crazy commute, you’ll finally have the chance to start keeping some of your own money.

Since your income is similar to that of  Mr. and Mrs. Money Mustache during our own Prime ‘Stashing Years, you’ll probably find that you have almost $100,000 per year available to save after expenses. To make the most of your high taxable income, contribute the maximum possible amount to tax-advantaged savings accounts like 401Ks and IRAs, using low-fee index funds as the vehicle.

Next, take your $25,000 emergency fund and throw it into that student loan. Your new lifestyle will be much lower cost, and you’ve got two incomes (plus the unemployment insurance system) backing you up, so there is no need to keep such a high buffer. That will save you about $925 per year of interest, further accelerating the payoff.

Meanwhile, you’ll have time to brush up on additional skills, such as

plus, miscellaneous training sessions for your Frugality Muscles, including

If you make these changes, you’ll magically find that within just 2-3 few years, you have wiped out the whole student loan. This will allow you to turn your attention to the house downpayment. At that point, the 20% savings will show up within a year and you will finally be in a position to really buy your first house.

But don’t feel rushed to do so – if your active urban lifestyle is as fun as I predict it will be, you might choose to continue renting for much longer and using the money you’d normally spend on a house for investments instead. Perhaps even until you are financially independent 7-10 years later! At that point, you will be able to move to the locale of your dreams, buy a house with some of the spare change in your pocket, and let the good times roll.

This reader did not mention whether or not kids are planned for the future, but if they are, changes like this are even more powerful if they are made at this stage in a person’s life. It is far easier to change your habits for the better and create a more efficient and less stressful lifestyle Right Now, than it is to do so once you have the added full-time job of one or more children around requiring all of your focus. Starting a family is much better done when you’re out of debt and not dependent on multiple incomes for survival.

There are many paths you can enjoy, thanks to your new Mustachian take on life.. but all of them lead through the same initial bottleneck: eliminating your life-draining commute, and getting out of your Debt Emergency before making any more major purchases.

Best of  luck, and if you like, keep us informed of how things are going  as you make progress!

(And if any of our old case studies are out there reading, please write in through the contact form and let me know how things are for you too – many people have been asking about how you’re doing!)


  • tracy September 27, 2012, 8:35 am

    Visiting the school and talking to the principal and teachers does help give a true picture of the school, but you can’t ignore the standardized test. I have given presentations in almost every elementary school in our area and one of our r presenters retired from teaching after 30 years. I see the correlation between behavior issues and the schools that perform poorly on the standardized tests. When a teacher is constantly stoppung the lesson to discipline the class, the lesson doesn’t get taught, the kids learn less and as a result they do worse on the tests. There are always other factors, but generally the schools with the higher tests scores have better behaved students and the teacher has more time to teach.

    • Mrs. Money Mustache September 27, 2012, 9:11 am

      I think there’s a lot more to it than that. I understand what you are saying, but I do find it frustrating when parents focus on test scores alone and ignore other factors (this happens a lot in my neighborhood, which is why a huge long rant is about to follow — sorry!).

      Our son goes to a school that has lower test scores than some of the other schools around here. The reason for the lower test scores is that many of the children at the school do not speak English as their first language. This can obviously have a huge impact on test scores. Those kids are not mis-behaving — they are just trying to learn and having a harder time. They receive extra help and eventually catch up, but I’m sure this is very common in many of the schools in the US, particularly at an elementary school level.

      The reason we chose to send our son there is because the school is our neighborhood school (most kids walk/bike to school and the kids live near us) and the school has a lot of diversity which was important to me and MMM. Unfortunately, many of the schools with higher test scores do not have such diversity.

      Finally, the school has phenomenal teachers, which obviously has a huge impact on education. As a way to help the Spanish-speaking kids, the school has become an IB World School, which I think is a great way to incorporate the culture and variety at our school and turn it into a meaningful tool. Getting to learn about Community and the Environment in a hands-on and action-based way has a big impact on the kids. The school also has a whole slew of very dedicated parent volunteers to help since funding is low right now.

      Kids get an education at school, but they learn a whole lot more too. They learn about the world, about society, and about their peers. Especially in the primary school years. I was talking to a friend of mine who sends his child to a school that has very high test scores. He expressed concern to me at one point because he felt like his kids weren’t seeing the real world. The kids that his kids played with all lived in giant houses in the suburbs and they were all white, middle class kids. They received a lot of homework and the curriculum was very strict on academics.

      When our son gets to High School, I want to ensure that it is a safe environment, but I would also be very interested in schools that have excellent music and art programs and/or offer something else that is unique.

      Also, as a parent, I see it as my job to educate my child beyond what school offers them. Our son is ahead in many ways because we spend so much time teaching him at home. Going to school helps him in other ways — teaching him things that I could never teach him at home on my own.

      • Mr. Money Mustache September 27, 2012, 11:47 am

        Another point I’d like to add is the fact that if you have an academically-oriented kid, they will learn Jack Squat in elementary school anyway!

        I feel that the reading and math stuff is way below them until they hit the last year or two of high school – and I’ve seen this across a spectrum of cute little prodigies in schools of all calibers.

        So I think of school as the place where my son gets to meet friends, but also learns to deal with other kids, hardship, and the illogical rules of society, and put up with them. Then when he comes home, we do the REAL learnin’ together.

  • earlybird October 1, 2012, 12:32 pm

    “Irishmam September 15, 2012 at 10:10 pm #
    Please check the job situation for RN’s in the New England area. As an RN and RN educator in the New England area, I am currently advising adults who ask about going into nursing as a second career to carefully check the job situation. There are not many jobs out there for ASN RN’s. Most hospitals require a BSN and many new grads are having difficulty in securing jobs. Of my senior students that graduated this year with BSN’s, only 2 got jobs in the New England region. The rest of the graduating class had to go out of state. Of my ASN students, community college educated, second career, most got jobs in doctor’s offices. Nice hours, but not the salary you are expecting to achieve. With your current high income it will take you many more years of education to attain that same salary as a nurse. I am sorry to give you this reality check, but unless you have the flexibility to move away from New England, or are willing/able to contend with lower salary than you currently make, I would seriously think about your career change.”

    What she said….

    I’m an RN (BSN prepared) with 23 years of hospital experience. I live in the Southeast and the situation here is almost exactly the same as she describes above. Last November I moved within my state from the largest city to the 2nd largest area. There are at least 4 different hospital systems here. It took me 6 months to find a job! There is such a glut of RNs here that the hospitals can be very picky about applicants. Just getting through to the interview stage was incredibly difficult. Thankfully I landed a great job at a great hospital.

    I’d like to add that although my career has enabled me to support myself I would not choose it again. I would highly encourage you to rethink your decision to pursue nursing unless you would like to work in a doctor’s office or nursing home. Most acute care settings (hospitals) in larger cities where the higher salaries are, will only choose BSN prepared RNs. FYI, I make $30/hr on day shift. That’s after 23 years! And I’m pretty much topped out now.

    Also, another post stated that student loan debt was the responsibility of the surviving spouse. That was not the case for me. My hubby died with $95K left to repay (we had many years before consolidated all of his $125K loans with the USDOE) and his entire remaining debt was forgiven upon his death. Please check with your lender.

    Best of luck to you and your husband!

  • Alex Martelli December 1, 2012, 6:29 pm

    I just discovered this blog and I find it extremely interesting — esp. because of deep agreements mingled with occasional deep discord. In this case my discord (and urge to post) was triggered by the issue about the best time for starting a family. I did so in my mid-20’s — ink still fresh on my MSEE, career just started, wife still in school; we probably relied on our parents’ help more than is just (but we were Italians — as in, born and grown up in Italy — where parameters are quite different… our parents were absolutely delighted to help us a lot as we got started, in exchange for getting grandkids!-), and it still took a lot of effort, sacrifice, &c.

    BUT — I’m now in my mid-50’s, and I get pay-back: my eldest son followed my example, so I’m now the youngest grandfather around, with many somewhat-youthful in front of me to enjoy spoiling my grandson (and perhaps other grandkids to come). Not conveniently for now (I’ve moved back from Italy to the US a few years ago pursuing my own career, my son has moved back from Brazil to Italy in pursuit of his own, so it’s quite a long plane flight to visit;-) but with all of us in the family switching continents (mostly Europe and America, but Asia ain’t ruled out!) every few years towards ever-better career and/or entrepreneurial opportunities, that may be a transient issue;-).

    My gist: start your family whenever it makes the slightest sense, if you are so inclined; there will be hell to pay — but the hedonic returns make it worth it, and, hedonic habituation appears not to apply there, at least in my case (all my four children give me unstinting amounts of joy, way plenty to repay all the effort, sacrifice, worries and occasional heart-aches).

    If one counts the costs of everything and the value of nothing, having kids is absurd (like having pets — which I also do — but orders of magnitude more;-). But if one sometimes just follows one’s heart (and as an Italian I think I’m inclined to do that a lot;-), well… the heart has its reasons, that reason knows not (yeah, I’m also part-French by ancestry, though only very minutely;-).

  • Sam Silvers February 17, 2013, 8:05 pm

    I tried to follow Triple-M’s rules for leaving a comment but I can only speed read so much – so if This is redundant, I apologize. One thing I didn’t see mentioned in the post or ensuing comments is the awareness that by consolidating school loans TOGETHER as a couple, you are on the hook for your spouse’s loans should s/he die (or there is a divorce). So a crucial piece of advice is yes, by all means, consolidate the loans for a better rate, but do it separately under each name. That way a deceased spouse’s loans won’t prevent you from reaching FI. (I see people younger than me die all the time so I have different view on this – just ask Gayle RN)

  • Frank Hinde July 17, 2013, 2:02 pm

    So I have an 80 mile one way commute…. not ideal.. true!..But..

    I took this job which last year paid nearly 50% more than my last job and my last company paid me 14mos salary into my 401k after 28 years..

    My Wife works near where we live in our house (paid for) on 5.5 acres, view of the mountains and cheap RE taxes ($1700 a year vs 5k+ where I now work).

    I stay overnight 2 nights a week with friends close to where I work so that cuts down the commute. The car does 35 to the Gallon and I paid $350 for it and rebuilt everythig for less than another $1100.. It looks and drives like brand new..:)

    I am planning on retiring in the next 1 to 3 years.. assuming I have enough cash.

  • Jimmy September 1, 2013, 7:14 pm

    Ok so help me understand how google voice works . I’m currently with airvoice wireless with $10 a month plans. I could add google voice onto my phone and under my same number use airvoice and google voice together. Google voice could send texts and calls while we are in wifi and not use our airvoice wireless money/minutes. When we dont have wifi the phone will use the airvoice wireless service? Is this correct?

  • European Dave January 28, 2016, 1:26 pm

    Hey All,

    Reading all this is nice – and I think I have a unique situation. I live in a small country called Hungary where things are a bit different. Let me tell you about it , in hope of you shedding some light on a positive future and early retirement;

    I am 25, living with my GF and dog.
    together we earn 1000 USD/month after taxes
    We put away into a savings account : 200 USD
    own our apartment:
    – utilities cost : 200
    – gym: 30
    – groceries: 300
    – public transport: 50
    – gifts for occasions like birthday, etc: 50

    Usually we have left over about 200 USD.
    An apartment costs 100.000 USD

    I am really not sure how to use the saved money the best effective way, to be able to retire early?

    • A February 15, 2016, 3:29 am

      Hi Dave,

      You save 20% of your take home salary which is a good start.
      If I was you I would look into your groceries expenses. I live in Sweden with ridiculous grocery prices but I still do not reach even half of your expense.
      Start tracking your grocery-costs. Don’t buy unless it is on sale.

      And you need to start investing in stocks and funds. You do _not_ want all your money on a saving account.
      You want to invest in something resulting in at least 5-11% annual yield. And stocks are probably your best bet.

      And don’t buy a house unless you are settling down for good. A house is not as good investment as most people say it is (unless you rent it out ..). It mostly just follows inflation.

  • Drew February 2, 2016, 10:30 am

    Great Case Study. This really resonated with me since my wife and I are in a similar situation (same age, similar salary and student loan debt). We have been maxing out the 401ks, but I had questioned if it made more sense to pay off the student loans first. This case study has helped convince me to keep on our current path.
    And, yes, an update would be great to hear.


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