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The Simple Math Behind Early Retirement

mrmoneymustache.com

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Re: The Simple Math Behind Early Retirement

#201

Post by enraged_camel »

jeffdavis wrote: post #189

Cutting a spending habit without losing any quality of life is like an annuity and it increases your freedom. Getting a pay raise keeps paying you for a while, but has disadvantages like: * By definition, you have to keep working to keep getting it * Taxes go up * It may come with some implicit strings that require you to work more or carry more stress * arguably reduces your freedom In our field, getting a pay raise…

Cutting spending without losing quality of life is difficult. In the vast majority of cases, you'll be cutting from social spending (going out less), convenience, or leisure.

In every single case, getting an after-tax $10,000 raise is going to be overwhelmingly preferable to cutting your spending by $10,000.

Re: The Simple Math Behind Early Retirement

#202

Post by thenomad »

roc wrote: post #166

Maybe I missed it, but did the Shockingly Simple Math completely neglect that wages and thus lifestyle typically increase over a career? And that plausible-savings-rates go up as wages increase, as many lifestyle costs are regressive? [1] Calling out young professionals for $4 coffees is not only an act devoid of human understanding, it seems to be ignoring that many young professionals can only maintain their higher…

Superb comment.

I actually AM a filmmaker. I spent years making very low-budget films - some of which were quite successful.

But I've now spent a couple of years developing a parallel career to fund my filmmaking - because attempting to make films without any cash, frankly, sucks.

It's a very similar situation to bootstrapping a long-time-to-launch startup: you'll often find that having SOME income through consulting makes running the actual startup either a) much easier or b) possible at all.

Re: The Simple Math Behind Early Retirement

#203

Post by dinkumthinkum »

grecy wrote: post #191
dinkumthinkum wrote: post #187

Earlier quoted context omitted.

That's great for you, nothing wrong with that at all. However, this is pretty anomalous, you know that right. :) Also, from what you describe, do you really think that will let you retire at 35? If so, is that retiring at 35 living, still, very minimally? If you plan to have a long life, which I think you do :) then I don't know if that math works. But it might, just saying ... Anyway, the main point is this wouldn't…

Of course I'm different from others. I live on the other side of the world from my home country, I drove from Alaska to Argentina for fun, and I don't want to go to work for the rest of my life so I an buy stuff. As for retiring at 35, absolutely. I'll travel the world on around $15-20k per year for a long time, then see what happens. (before you tell me it can't be done, I've already done it for two years) Interesti…

Well, good for you and all that, I mean that seriously. But I'm not confused; I think it is a bit minimalistic to not have a cell phone. A new laptop could be some $500 Dell, a rifle could be anything, so not I wasn't thinking of that as something akin to a middle class style, especially if that's basically it. :)

Re: The Simple Math Behind Early Retirement

#204

Post by patmcguire »

chimi wrote: post #105
liber8 wrote: post #52

MMM has a philosophy that is mathematically sound, and might even work for some people. Unfortunately, it's proven to fail for just about everyone (the spend less, save more advice has been around since the industrial revolution, and it isn't working to well: the average American has $16k in credit card debt). The reason it fails is because it ignores basic psychology. The key quote in this article is: >>But simply c…

Yours is a very pessimistic view. You have no faith in your fellow human beings. There are a lot of smart enough people out there with sufficient will power to make these changes in their life if only they have the education and awareness of the opportunities. Sometimes all it takes is seeing the impact these changes have. One of the best quotes I have seen about finances is this: Poor people spend what they have and…

You seem to be doing this part time. I've seen other people (Rich Dad, Poor Dad) giving similar advice about real estate investments for years, but my question has always been: How is the market still that inefficient? I don't think you could do the same thing on stocks or bonds. Are there just a ton of localized laws and market quirks that keep the market from clearing?

Re: The Simple Math Behind Early Retirement

#205

Post by hudibras »

thenomad wrote: post #200
hudibras wrote: post #84

Earlier quoted context omitted.

And I get 21 HD TV channels over-the-air for free! Now let me tell you about my couponing...

If you can't learn to make better coffee than a Starbucks brew at home (where "better" is defined as "with more complex, refined tastes and less harsh, burned notes") you're doing something badly wrong. Decent beans, a set of digital scales, a cheap hand grinder and a French Press or Aeropress will do the job.

I see now that my remark about the coffee and my tv could be misinterpreted as sarcasm, but I was 100% sincere. I no longer get cable tv and I don't go to Starbucks anymore now that I have an Aeropress.

(The couponing mention was a joke, by the way.)

Re: The Simple Math Behind Early Retirement

#206

Post by grecy »

dinkumthinkum wrote: post #203
grecy wrote: post #191

Earlier quoted context omitted.

Of course I'm different from others. I live on the other side of the world from my home country, I drove from Alaska to Argentina for fun, and I don't want to go to work for the rest of my life so I an buy stuff. As for retiring at 35, absolutely. I'll travel the world on around $15-20k per year for a long time, then see what happens. (before you tell me it can't be done, I've already done it for two years) Interesti…

Well, good for you and all that, I mean that seriously. But I'm not confused; I think it is a bit minimalistic to not have a cell phone. A new laptop could be some $500 Dell, a rifle could be anything, so not I wasn't thinking of that as something akin to a middle class style, especially if that's basically it. :)

Of course, you are free to think that not having a cell phone is minimalistic. I personally think of it as very liberating.

I bought a brand new MBA ($1300), Canon 60D+Lens (Right on $2k) and a Remington 700 30/.06 ($1200), so I'm not without stuff, I just pick and choose the stuff I want and don't want. We're all free to do that, and I think a lot of people forget that.

It seems like you'd much rather complain about how this isn't going to work for you than start working towards making it work for you.

Re: The Simple Math Behind Early Retirement

#207

Post by grecy »

cerebrum wrote: post #198
grecy wrote: post #191

Earlier quoted context omitted.

Of course I'm different from others. I live on the other side of the world from my home country, I drove from Alaska to Argentina for fun, and I don't want to go to work for the rest of my life so I an buy stuff. As for retiring at 35, absolutely. I'll travel the world on around $15-20k per year for a long time, then see what happens. (before you tell me it can't be done, I've already done it for two years) Interesti…

You work remotely? How did you find your current job? I'm aspiring towards a similar lifestyle yet not sure yet how to manage a stable income.

No, I'm sitting at my desk right now. I work for a large telco, so I just applied through the normal channels.

I have a flexible work arrangement now where I take every second Friday off, and I'm probably going to take a month or two of extra leave this year (unpaid).

When I travel, I outright quit and just live on my savings

Re: The Simple Math Behind Early Retirement

#208

Post by sethist »

jerf wrote: post #20
praptak wrote: post #5

Earlier quoted context omitted.

Covered here: http://www.mrmoneymustache.com/2011/06/06/dude-wheres-my-7-i... Google cache (his server seems not to take HNing well): http://webcache.googleusercontent.com/search?q=cache:UjYtrDk...

One of my favorite infographics ever: http://www.nytimes.com/interactive/2011/01/02/business/20110... As I say every time I link it, read it carefully ; it does not say what most people initially think it is saying when they first see it. In this particular case I bring this up to show that the "standard" 7% over a long term can be optimistic. As it happens that corresponds to the first light green color, and that is…

The problem with that graph is that almost no one invests that way. People just don't dump their entire life savings into the market, wait x number of years, and then withdraw it all at once. Dollar cost averaging and changes in investment aggressiveness will likely smooth out those numbers.

Re: The Simple Math Behind Early Retirement

#209

Post by grecy »

cerebrum wrote: post #196
grecy wrote: post #163

Earlier quoted context omitted.

Yep. No TV, No cell phone, a 25 year old car and I've never been happier. I'm a Software Engineer, and I save towards 70% of my paycheck. I still bought a new laptop, DSLR, rifle and other toys all in the last 6 months. I don't earn tons for a SE, if that's what you're thinking. It lets me do things like Drive from Alaska to Argentina for two years, simply because I wanted to[1] [1] theroadchoseme.com

So how much rent do you pay and what are your living conditions? Btw I never owned a car in my life and only have one cell phone which is prepaid and I almost never use it, so my expenses with it are minimal(around 10 $ every 3 months or so).

I pay $500 a month in rent for everything, and live with one other person who has become a good friend.

After work, I either go snowshoeing, cross country skiing, out walking for photos or mountain biking. On the weekends I am always out of town hiking/camping/hunting/canoeing/snowboarding/fishing/etc.

Besides cooking, eating and sleeping, I spent less than an hour a week at my rented house, so the fact that it's cheap works very well for me. It also has a grass backyard, so I sit out there and read books when the weather permits.

Re: The Simple Math Behind Early Retirement

#210

Post by ipince »

Mz wrote: post #162
chimi wrote: post #147

Earlier quoted context omitted.

You can actually get them for even less than that and get more in rent. The cheapest way is through Tax Sales. You can buy a 3 bedroom house at a Tax Sale for low thousands of dollars and rent them out Section 8 for $800/mo or more and the US Government pays you all or a portion of the rent so it's reliable residual. Of course it isn't that simple, sometimes the houses need a lot of work to get rent-ready and if you…

Please email me. (talithamichele at gmail dot com) It has been a long time since I read real estate books. I need to figure out how to buy a house cheap. I know it can be done but I don't know where to get the info I need.

And myself too, please. It would find it extremely helpful. (Email in profile).
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