Hi there. If we haven’t met, my name is Mr. Money Mustache. I’m the freaky financial magician who retired along with a lovely wife at age 30 in order to start a family, as well as start living a great life. We did this on two normal salaries with no lottery winnings or Silicon Valley buyout windfalls, by living what we thought was a wonderful and fulfilling existence. It was only after quitting the rat race that we looked around and realized why we had become financially independent while most people, even with higher incomes, end up stuck needing to work until age 65 or later.
I’m writing this post to use as kind of a permanent “Hello!”, since at any given moment in time, about half of the readers of this blog are pretty new, and casting around wondering where to start on a giant site like this with over 500 published articles. Most people arrive with the same question:
“I hear Mr. Money Mustache writes some useful stuff and many people are building happy, wealthy lives for themselves using his advice”, they are saying, “but I am a busy person. How can he make me rich Right Now!?”
Great question. Let’s begin.
We’ll start with a rant, which links to a bunch of other stuff. You can right-click any of those links and open them in a new tab for later. If you get through every link, you’ll be well-equipped to fix most of your life – just like that.
For almost nine years, I’ve been preaching a different brand of financial advice from what you see in the newspapers and magazines. The standard line is that life is hard and expensive, so you should keep your nose to the grindstone, clip coupons, save hard for your kids’ college educations, then tuck any tiny slice of your salary that remains into a 401(k) plan. And pray that nothing goes wrong in the 40 years of career work that it will take to get yourself enough savings to enjoy a brief retirement.
Mr. Money Mustache’s advice? Almost all of that is nonsense: Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more. Sound like a fantasy? Not to readers of this blog.
What happens when you can save more of your income? As it turns out, spending much less money than you bring in is the way to get rich. The ONLY way.
And the effects are surprising: if you can save 50% of your take-home pay starting at age 20, you’ll be wealthy enough to retire by age 37. If you already have some assets now, you’re even closer than that. If you can save 75%, your working career is only 7 years.
So remember my freaky magician story up in the first paragraph? There was not really any magic – my wife and I just saved about 66% of our pay without really noticing it, and in under ten years we woke up and realized we didn’t have to work for a living any more. Our son was born shortly afterwards, and he’s about to have his eleventh birthday party. And we’re still going strong.
But how can you save so much?
The bottom line is this: by focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States (and other rich countries) today. Happiness comes from many sources, but none of these sources involve car or purse upgrades.
No matter what the herd or the TV set tells you, this is the truth. Far from being a social outcast, this new perspective will make you a hero among your friends. This is not a fringe activity anymore – millions of people are fixing their lives these days. And the earlier you can accept it, the sooner you will be rich.
Is that all too fluffy and philosophical? OK, fine. Here’s how to cut your life costs in half. Start by getting rid of your Debt Emergency if you have one. Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bike wherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism.
That should do it – about half of your expenses, gone in one paragraph. Keep going, as many readers do, and you can save closer to 75% of what you make – especially for those with above-average incomes.
But then what do I do with all the money?
You invest it. In stock index funds, in paying off your own house, in rental houses if you are interested in local real estate, and in other sources as you continue to learn about making money work for you. As of 2016, my own retirement income comes from a dead-simple asset allocation: a bunch of index funds at Vanguard and Betterment which pay quarterly dividends.
How long will the money last?
If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever. Don’t worry about the details – just do the saving for now, and watch as your lifestyle transforms and your worries about safety melt away. This blog is not so much a financial nuts-and-bolts blog as it is a story about lifestyle and attitude transformation. And believe it or not, your attitude determines your lifetime wealth much more than your knowledge of financial nuts and bolts.
So welcome! I’m glad you’re here, and let’s get started. For the long-time readers – let’s keep going!
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How timely this subject is, as today is the 18th anniversary of my “retirement”. In 1995 I took a buyout from full time, permanent employment at age 34 and that date was my first day of being free. Yes, I have worked on and off since, having time off for other pursuits. I also found that although I wasn’t making as much money, my expenses dropped also. If, for example, my old model car was out of order I could take my time fixing it myself rather than have to throw money at the problem because I needed it for commuting.
I also found I had more time to manage my investments. For example, in 2007 and early 2008 when stock markets were high I took some profits from equity funds (I mostly had mutual funds in those days) and invested it in fixed income investments. Then the stock markets took a dive during late 2008 and early 2009 so I moved back into equities. To this day I hear or read of many people bellyaching about how they lost all that money during the 2008-09 financial crisis. That’s strange, I actually MADE money off the crisis! Buy low, sell, high, what’s so hard about that? Such may not have happened if I were still working full time and didn’t have time to manage my investments.
Now I am rearranging my portfolio to provide income, so I can FULLY retire once and for all, and do my good deed to society of freeing up employment for younger people who really need jobs.