Why Should I be Frugal, When I’m So Rich?

Ahh, money. The more you have of it, the more you get to spend, right? Everybody does it that way, so that must be the right way to do it. We all agree that, sure, the debtors and the flashy live-beyond-their-means club need to rein things in. But for those honest folks who work hard and earn plenty of money – they might as well spend it on whatever they please. That’s the good life. They deserve it!

This is surely what people are thinking when they call Mr. Money Mustache “Extreme”.

“The triple M family retired with too little money for comfort, and that is why they are forced to live such a spartan lifestyle. They’re fooling themselves if they think they really are living well on $25,046 per year!“

To illustrate the point, let’s dive into the MMM Mailbag and consider a couple of recent letters from readers:

While this reader initially caught my fancy by throwing out words like ‘educated’ and ‘young’, the letter rapidly took a turn for the worse when it started talking about the $100k and the benefits. Because that transported me right back into the cubicle, with a thick layer of tinted glass between me and that expansive view of the Rocky Mountains and the accompanying fresh air that used to taunt me at work.

Why live a frugal lifestyle when I could instead go back to work in order to earn more so I could spend more? Because I love being free to do whatever I want… right now! Because I have a seven-year-old boy, my little pride and joy, who has way too many plans for us every day to ever let a job get between us. And because I couldn’t imagine spending any more money than we already do – our life is already an overwhelming conveyor belt of abundance and I can hardly keep track of all the tumbling boxes of luxury as it is.

Now let’s consider another email that offers an interesting counterpoint:

What’s going on here? Why would a man be frugal on a million dollars a year? And then seek out additional frugality measures to make his life more interesting?

Therein lies the whole reason this blog is useful to anyone. If I were telling you to spend less money just so you could get out of debt, save up a fortune, and then eventually spend loads of money (which I recall is a paraphrase of the Dave Ramsey slogan), the advice would be useless. Because that would imply that the lower-spending portion of your life is less good than the subsequent high-spending part. What if you never get to the high-spending part? What if you fail or die first? It would have all been a waste. Better to just keep spending all your money now, to get the most out of life.

While this has become the accepted wisdom of contemporary society, you and I are fortunate to have discovered at such a young age that it is all bullshit.

Spending more money on yourself can spare you from hardships. But hardship is just an unpleasant way of writing “effort”, and effort is really the only thing getting you out of bed in the morning. Effort is the spice of life. If you smooth over all possible difficulties with Benjamin Franklin Wallpaper, you end up with your enormous jello-like form sprawled in a hovering cruise-ship deck chair staring at an LCD screen while soft-spoken robots bring you drinks. Your life would be like playing a video game with infinite cheat mode enabled and the joystick taped to the right – you just coast through level after level perfectly straight while the bad guys explode as they touch you. Except in real life, you too die at the end.

Although I’ve never made a seven-figure income, I can still relate to the writer of that second letter. You see, a little-known fact about the MMM household these days, is that while we continue to live the lifestyle that many consider extremely frugal, we’re not actually short on income.

Try as we might to earn less money, our income has gone up almost every year since retirement in 2005. Rental income increases from the rental house, stocks pay dividends that are reinvested. People take up hobby occupations that end up delivering occasional windfalls. All in all, we are now at a point where we could probably triple our annual spending forever, without running out of money. And yet, I continue to ride my 2008 commuter bike everywhere, get filthy doing local construction projects, and buy everything used from Craigslist. Mrs. Money Mustache rides a 10-year-old mountain bike for her primary transportation, wears old clothes (that still look rather nice on her fine form) and spends about $50 per year on haircuts and beauty products. We’re even shopping around for a smaller house in the neighborhood, to downsize our space a bit. How could this possibly be?

It’s because our current life is already more than enough. We don’t want to lose the challenge and the spice that is part of life right now. I have only one digestive system, so I can’t eat any more spectacular food than I already do. My house is already big enough to hold everything I own, plus all my friends. My subcompact Scion hatchback can easily hold the whole family and our stuff, and exceed any legal speed limit. How could an even fancier car possibly make us any happier?

Another factor in happiness for me is the satisfaction that comes from efficiency. I love seeing things that are efficient, elegant, well-designed. And of course you’ve probably noticed my corresponding boiling rage for things that are not. Buying treats for yourself that aren’t truly necessary is inefficient. It’s unsatisfying.

Paul Allen’s 414-foot Octopus yacht has engines totaling 19,000 horsepower, which burn about 622 gallons of diesel fuel per hour at cruising speed. It’s currently off the coast of Australia, a journey which took about $780,000 of fuel to make. This is an inefficient way to have fun. A man skilled at having fun should be able to achieve equal bliss within walking distance of his own house. He could then invest the surplus funds to save a few lives, which are surprisingly affordable these days at only about $200 per human according to Peter Singer. Or you could start companies, fix cities, or even change countries. All challenging and effort-filled endeavors, that these days can be done just as effectively in thrift-store clothing as they can in Armani suits.

And so I’d like to issue a challenge that you consider deflating, rather than inflating your own lifestyle as you get richer. The desire for luxury, while very real and occasionally pleasant to satisfy, is actually a weakness that stands in the way of a happier life. Getting off of the path that society has beaten for you will lead to much better adventures. So I’d rather work towards strength as I get older, rather than striving for weakness.

After all,  which would you rather be, the man who requires 622 gallons per hour of diesel and a crew of 60 to have fun, or the one who can do it just by stepping out his front door?