Interview with Mr. Money Mustache • Hacker News Board

Re: Interview with Mr. Money Mustache

#261

Post by _lbbz » Wed, Sep 27, 2017, 11:31 PM UTC

abledon wrote: post #197

nilkn wrote: post #73

Earlier quoted context omitted.

Assuming you only live to be 80, you'll have to stretch out that $375k nest egg for a whopping 43 years of inflation, rising healthcare costs, and unpredictable market conditions. And God forbid you reach 80, run out of money, and then... keep living, old and frail and weak with no job prospects. FIRECalc suggests a probability of about 20% of running out of money by age 80 with a 4% annual withdrawal rate (adjusted…

when you retire @ 37, you can start to do yoga/tai chi religiously, 1-2 hrs a day, so when your 80 years old your not old/frail. And IF you are tired of material existence, you have the means to end your life internally by simply controlling your energy, sending it up your spine into your brain ;)

It's just a strangely worded way of saying it. You can practice these forms without needing to retire and/or you can continue to practice them for however long you want whenever you retire. And it might not be a matter of starting, if you've already started before you retire.

Many people (myself included) practice yoga and other internal martial arts for at least 1-2 hours a day while also having a full-time job and family.

Re: Interview with Mr. Money Mustache

#262

Post by [deleted] » Thu, Sep 28, 2017, 1:09 AM UTC

avenoir wrote: post #223

tonyedgecombe wrote: post #139

Earlier quoted context omitted.

Are you paying a lot in fees? I would have expected a better return than that.

Very possible since this is a managed account. I am terrified of doing anything in the stock market, unfortunately.

[deleted]

Re: Interview with Mr. Money Mustache

#263

Post by astura » Thu, Sep 28, 2017, 1:17 AM UTC

avenoir wrote: post #37

How much money do you have to have in index funds to live comfortably off dividends? Isn't it an astronomical amount? I have ~$100K in index funds and i'm making about $100 (if even that)/month right now which just gets reinvested. You'd have to have at least half a mil to get any kind of serious money out of this.

You also should "count" capital gains as well as dividends since dividends offset capital gains.

Re: Interview with Mr. Money Mustache

#264

Post by auxym » Thu, Sep 28, 2017, 1:22 AM UTC

komali2 wrote: post #150

astura wrote: post #44

Earlier quoted context omitted.

MMM is too smug and pushy for a good portion of the general public. His writing can awfully hostile, it could be toned down a bit and his message would get further - some of his advice is very sensible. The problem with frugal blogs (in general) is they do one or more of the following; push penny pinching 24/7, "if you aren't eating lentils everyday and living in a cardboard box you're fucking up," they are too conde…

> I have experience being both very high income and very low income. See, I could do the same thing, but the blog would really boil down to a single post - "stop fucking around and just learn web dev." I really don't see a more accessible route to go low income to high income.

MMM does have this:

http://www.mrmoneymustache.com/2013/07/25/50-jobs-over-50000...

Web dev is great for a lot of people, perhaps not for everyone.

As for MMM is general, I personally love his style. I remember back in grad school, I stumbled upon his blog, I think from an HN comment. I was hooked. I read through years of blog posts in a few months. I probably factored heavily into my decision of not going for the PhD (stopped at MASc).

Although I still think he makes a lot of good points, my take on frugality and my personal finance goals are a bit more, um, nuanced these days. For anyone who'd be interested in a quick intro to his core ideas, I highly recommend this 28 min talk, it's a really fun watch:

https://vimeo.com/183016901

Re: Interview with Mr. Money Mustache

#265

Post by auxym » Thu, Sep 28, 2017, 1:49 AM UTC

froindt wrote: post #174

nilkn wrote: post #73

Earlier quoted context omitted.

Assuming you only live to be 80, you'll have to stretch out that $375k nest egg for a whopping 43 years of inflation, rising healthcare costs, and unpredictable market conditions. And God forbid you reach 80, run out of money, and then... keep living, old and frail and weak with no job prospects. FIRECalc suggests a probability of about 20% of running out of money by age 80 with a 4% annual withdrawal rate (adjusted…

On a longer timeframe you'll need to have a lower withdrawal rate, but not a huge amount more. The 4% withdrawal rate is based on the Trinity Study [1] which was looking at 30 year time periods. (edit: added the link) Per cFIREsim, with "success" defined as having more than 0 dollars at the end of the time period 375k -> 84.62% success 425k -> 96.15% success 450k -> 99.04% success Additionally, the median portfolio v…

To add on to this, I found the recent reddit AMA with Bill Bengen (first author on that Trinity paper) highly interesting:

https://www.reddit.com/r/financialindependence/comments/6vaz...

Re: Interview with Mr. Money Mustache

#266

Post by GiorgioG » Thu, Sep 28, 2017, 1:56 AM UTC

the_gastropod wrote: post #227

garettmd wrote: post #64

Earlier quoted context omitted.

And assuming there are no bad events in your life which drain your savings, like health issues

Best thing you can do to protect yourself from bad events like health issues is to have a cushion of cash! The strategy is the same: spend less, so you can save more money.

You can't protect yourself from bad events like health issues with a cushion of cash. I mean not unless you have hundreds of thousands of dollars in the bank. My son was diagnosed with Type 1 Diabetes at 19 months old (4+ years ago) and with what we spend on hospital, health insurance, supplies, etc we could buy a new Toyota Camry every single year. Let that sink in for a minute. I have been a contractor for quite a while so we've been able to weather it, but if I was making a 'normal' salary (I'm in the Southeast US) we'd be drowning in credit card bills to pay for our son's care.

Re: Interview with Mr. Money Mustache

#267

Post by auxym » Thu, Sep 28, 2017, 2:01 AM UTC

stefantheard wrote: post #164

macNchz wrote: post #138

Earlier quoted context omitted.

I'm not a subscriber to this strategy, but the theory goes that if you save, in that scenario, 80% of your take home pay (annually saving ~$100k, spending ~$20k), you'll have, say, ~$500k invested in 5 years and can safely withdraw 4%/$20k per year indefinitely. Then you can quit your 200k job, 'retire', and enjoy the same lifestyle as you lived while employed. Personally I agree with the message about the power of s…

I agree with your approach and that is what I have implemented so far as well. As much as I would love to have the 40-60 hours a week I work back to myself, it is just much too difficult for me to live off of only 20k or less per year. I am not interested in living like that anymore, I'm too familiar with it.

GP's example of 5 years is a very short timeframe, however. A big part of achieving financial independence is compound interest returns on investments in low-fee index funds.

Try a quick spreadsheet for yourself. You can assume 5-6 % real returns. Play around with savings rates, GP suggested over 80%, which is more agressive than I've ever heard. Try 60%, which would leave you with 60k disposable, and you'll see things go up very fast in the 10-15 year range.

In fact, MMM shows that it actually all reduces to a really simple calculation, and with that 60 % savings rate, you're 12.5 years away from retirement (if you start at 0 net worth).

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

Re: Interview with Mr. Money Mustache

#268

Post by woobar » Thu, Sep 28, 2017, 3:00 AM UTC

lkbm wrote: post #237

woobar wrote: post #219

Earlier quoted context omitted.

> average cost of car ownership in the US is something like $8k/yr The number you've quoted is about new cars. For used cars it could be 10 times less.

It definitely can be a lot less, but national average for insurance alone is $815[0]. Obviously a lot of people have costs below average, but a car is going to be a major expense. If you can do it (legally) for under $1000/yr, you're probably driving very little, taking some risks (in having minimal insurance) and doing a lot more maintenance/repairs yourself than most people know how to. Under $8000 is easy, seeing…

I was just pointing out that the reference used by GP is specifically about new cars.

Also, your second reference is also about new cars. I cannot believe anyone spending ~$1000/year on a maintenance of a 'new' car. First three years while it is still covered by warranty you will need an oil/filter change once a year and no new tires. $50/year at the official dealer was the maintenance cost of the last four new cars I owned.

Re: Interview with Mr. Money Mustache

#269

Post by devinj » Thu, Sep 28, 2017, 3:25 AM UTC

mywittyname wrote: post #152

avenoir wrote: post #37

How much money do you have to have in index funds to live comfortably off dividends? Isn't it an astronomical amount? I have ~$100K in index funds and i'm making about $100 (if even that)/month right now which just gets reinvested. You'd have to have at least half a mil to get any kind of serious money out of this.

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... Yields 2.99% - 0.15% for expenses. So you'd need roughly 34 times spending to get by on dividends alone.

SEC yield already includes expenses, so it's just 2.99%. (The actual dividend yield is 3.08%. I don't know where the other .06% comes from, but IANAA).

Re: Interview with Mr. Money Mustache

#270

Post by kamaal » Thu, Sep 28, 2017, 3:59 AM UTC

joeax wrote: post #19

I've been reading his blog for a few years, and he does some have some insightful advice on shedding unnecessary expenses and living on a frugal spending diet. I've been able to get down to one car that is almost paid off, and double my savings and investment portfolio. My favorite article from him is living close enough to work to bike (although working from home is most ideal). However, his blog comes with a bit of…

>>good luck trying to retire as a welder or car mechanic making $50k

I know a few people here in India who as cooks and welders have retired early. You have to ruthlessly put your interests on the top. Things like frugality etc, are qualifying conditions. But the necessary conditions are keeping an endless watch on your income, learning new skills and to a degree being able to move on from your jobs to ones that pay well.

That also involves doing things like getting into renting, and squatting useful real estate by buying way in advance and having others pay for your investments later.

In short you need to consider your financial interests as the only things that matter, and do what it takes. More often than not, it will usually create a situation where you trample on others along the way.