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Meet Mr. Money Mustache, the man who retired at 30

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Re: Meet Mr. Money Mustache, the man who retired at 30

#151

Post by grosskur »

conroe64 wrote: post #135
grosskur wrote: post #128

For me, the most interesting part was: "Back in the day, I would just empty out my bank account after each paycheck and distribute it into my investments of choice: Vanguard's S&P 500 index fund, their small-cap value index fund, a bit went into paying off my mortgage early as well." While he could have diversified further by including international stocks, this simple investment strategy was surprisingly sound. This…

If you are not going through a tax free retirement account, I'd advise against mutual funds, since the profit is taxed every year. Instead, I'd recommend using a stock newsletter. There is a rating service that independently tracks the profits of 180 stock newsletters and has done so since 1980. It's called the Hulbert's Financial Digest. From this you can pick one with a good track record, and then invest directly i…

I agree mutual funds are less tax efficient. However, they have an advantage of trading at NAV, which means you don't pay a bid-ask spread when buying or selling.

According to The Bogleheads' Guide to Investing, the January 2001 issue of The Hulbert Financial Digest stated: "Among the 160 or so newsletters the HFD monitors, the market-timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis."

So statistically there are very few newsletters with a good track record. And assuming you pick one of the few that beat the market over the past decade, you have no guarantee it will continue to do so. Past performance is not an indicator of future returns.

I'd much sooner use ETFs than individual stocks to achieve tax efficiency. VT holds 4871 stocks worldwide in capitalization-weighted proportions. It would be too unwieldy to get this same diversification by holding individual stocks. And I'd argue that you really do want this much diversification. See The 15-Stock Diversification Myth:

http://www.efficientfrontier.com/ef/900/15st.htm

What you describe with selling the losers and buying similar stocks to replace them is known as tax-loss harvesting and is possible to achieve with ETFs as well. For example, you can hold VTI+VEA+VWO instead of VT, and tax-loss harvest into SCHB+SCHF+IEMG. It may not be as effective as with individual stocks. But I'd argue you it's hard to find a direct substitute for an individual company, so you take on more risk that way, whereas it's easy to find a nearly-perfect substitute for a broad ETF.

Overall, your strategy of holding individual stocks may work out very well for you. I just think you're taking on disproportionately more risk for the amount of gain you hope to get compared to an ETF-based indexing strategy. Also, I'm not sure how long you've held your portfolio, but we've had a strong bull market for the past four years and even VT has gained ~45% in that time:

http://ycharts.com/companies/VT/performance

Re: Meet Mr. Money Mustache, the man who retired at 30

#152

Post by timedoctor »

The idea of borrowing to buy a car is a ridiculously bad financial decision that most car buyers make. There are some exceptions (such as if you absolutely need the car for your business), however in most cases people would be way better off in buying a cheaper second hand car.

There are countless other examples. It annoys me greatly when people in the US state how the "cannot live on less than $100k per year". And these same people have no money saved in the bank. So they earn a very high salary and are still living month to month. Incredible.

Re: Meet Mr. Money Mustache, the man who retired at 30

#153

Post by jasonkester »

Swizec wrote: post #147
jasonkester wrote: post #138

Interesting how so many of the top comments thus far fall into a few categories: "He did this at a time when the market was going up"... therefore it's impossible and I don't need to try doing this and it's OK to just keep doing what I'm doing. "He could only do this by living in poverty "... which would totally suck, so I'm better off not doing this and just continuing the way I am. "He can only pull this off becaus…

As a counterexample, here is a list of things you should do before you turn 30: http://www.policymic.com/articles/7704/29-amazing-things-you... While many of the examples are silly, I agree very much with all the advice to travel a lot . That takes money. Actually most of the things on that list go way beyond "live cheaply", and I agree with that. Anyway, as my economics professor said in college. There are those peo…

> travel a lot. That takes money.

Not at all. If you talk to a few dozen people who "traveled a lot" before they turned 30 (including me, the person to whom you're replying), the single most common thread in all those stories will be how cheaply they did it.

Life on the road costs ~$500/month. Life in an apartment costs ~$2000/month. One of the simplest ways to save money when you're not working is to ditch all your possessions at home and go find a nice cheap tropical beach to park it on.

Having "retired at 30", using the author's definition and a similar methodology, you'd be surprised at how much living I did along the way and have done since.

Re: Meet Mr. Money Mustache, the man who retired at 30

#154

Post by Swizec »

jasonkester wrote: post #153
Swizec wrote: post #147

Earlier quoted context omitted.

As a counterexample, here is a list of things you should do before you turn 30: http://www.policymic.com/articles/7704/29-amazing-things-you... While many of the examples are silly, I agree very much with all the advice to travel a lot . That takes money. Actually most of the things on that list go way beyond "live cheaply", and I agree with that. Anyway, as my economics professor said in college. There are those peo…

> travel a lot. That takes money. Not at all. If you talk to a few dozen people who "traveled a lot" before they turned 30 (including me, the person to whom you're replying), the single most common thread in all those stories will be how cheaply they did it. Life on the road costs ~$500/month. Life in an apartment costs ~$2000/month. One of the simplest ways to save money when you're not working is to ditch all your…

$500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least.

And I probably spend $500/month just on food and caffeine.

Hell, the basic government fees (insurance, pension etc.) to keep my sole proprietorship running costs me 300 euro/month. I really don't see how you could live on the road on $500/month, you're making stuff up.

Re: Meet Mr. Money Mustache, the man who retired at 30

#155

Post by tripzilch »

Swizec wrote: post #154
jasonkester wrote: post #153

Earlier quoted context omitted.

> travel a lot. That takes money. Not at all. If you talk to a few dozen people who "traveled a lot" before they turned 30 (including me, the person to whom you're replying), the single most common thread in all those stories will be how cheaply they did it. Life on the road costs ~$500/month. Life in an apartment costs ~$2000/month. One of the simplest ways to save money when you're not working is to ditch all your…

$500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least. And I probably spend $500/month just on food and caffeine. Hell, the basic government fees (insurance, pension etc.) to keep my sole proprietorship running costs me 300 euro/month. I really don't see how you could live on the road on $500/month, you're making stuff up.

> $500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least.

I'm from Europe (NL) and some friends of mine did pretty much that, during college. I don't know exactly how they did it, sorry, travelling's not for me so I didn't pay attention to all the details, but they did pull off travels for very cheap.

One trick is, there's a lot more to trains and public transport (also busses--yes it may not always be comfortable) than first meets the eye. Check out local and national train company websites, ask around at the station where they sell (sometimes you get a really nice person behind the desk, and they'll help you out way beyond expectations, pay attention to what they do and what it's called, so you can order that ticket again). There's probably a bunch of Internet forums sharing tricks as well. I've booked 17h return train trips to Vienna for about 70 euros.

Another trick is sharing rides, if you need to get around in Germany (to and/or from neighbouring countries), try mitfahrgelegenheit.de, it's a carpooling website. At first I thought it'd be crazy unsafe, but I've met the coolest people on those trips.

Re: Meet Mr. Money Mustache, the man who retired at 30

#156

Post by mediascreen »

Swizec wrote: post #147
jasonkester wrote: post #138

Interesting how so many of the top comments thus far fall into a few categories: "He did this at a time when the market was going up"... therefore it's impossible and I don't need to try doing this and it's OK to just keep doing what I'm doing. "He could only do this by living in poverty "... which would totally suck, so I'm better off not doing this and just continuing the way I am. "He can only pull this off becaus…

As a counterexample, here is a list of things you should do before you turn 30: http://www.policymic.com/articles/7704/29-amazing-things-you... While many of the examples are silly, I agree very much with all the advice to travel a lot . That takes money. Actually most of the things on that list go way beyond "live cheaply", and I agree with that. Anyway, as my economics professor said in college. There are those peo…

What takes money is to travel while paying for the things you're not using back home. If you get rid of your apartment, car, gym membership etc, it's normally cheaper to travel - et least if you are from high cost places like USA, Canada and northern Europe.

I traveled in relative luxury for more than two years in Italy, Asia and Argentina for less then my previous monthly cost. Depending on your profession it might be harder to earn money while traveling though.

Re: Meet Mr. Money Mustache, the man who retired at 30

#157

Post by futhey »

Swizec wrote: post #154
jasonkester wrote: post #153

Earlier quoted context omitted.

> travel a lot. That takes money. Not at all. If you talk to a few dozen people who "traveled a lot" before they turned 30 (including me, the person to whom you're replying), the single most common thread in all those stories will be how cheaply they did it. Life on the road costs ~$500/month. Life in an apartment costs ~$2000/month. One of the simplest ways to save money when you're not working is to ditch all your…

$500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least. And I probably spend $500/month just on food and caffeine. Hell, the basic government fees (insurance, pension etc.) to keep my sole proprietorship running costs me 300 euro/month. I really don't see how you could live on the road on $500/month, you're making stuff up.

Eurobus is so comfortable and inexpensive, I frequently found myself opting to spend more nights asleep on the bus when a comfortable hostel bed was available. I've done less than $500/mo in South America and S.E. Asia (Much nicer tropical beaches and interesting places).

Also, American's wouldn't be spending 300 euro / month on insurance / etc. (Presuming this because the figure was quoted in dollars).

I really liked the link though. I think I've done almost everything on that list.

Re: Meet Mr. Money Mustache, the man who retired at 30

#158

Post by Swizec »

tripzilch wrote: post #155
Swizec wrote: post #154

Earlier quoted context omitted.

$500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least. And I probably spend $500/month just on food and caffeine. Hell, the basic government fees (insurance, pension etc.) to keep my sole proprietorship running costs me 300 euro/month. I really don't see how you could live on the road on $500/month, you're making stuff up.

> $500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least. I'm from Europe (NL) and some friends of mine did pretty much that, during college. I don't know exactly how they did it, sorry, travelling's not for me so I didn't pay attention to all the details, but they did pull off travels for very cheap. One trick is, there's a lot more to trains and public transp…

> I've booked 17h return train trips to Vienna for about 70 euros.

Yes, and that's about $100 :) Well okay, it's $91.

Anyway you're right about carpooling. I've noticed that when you're traveling in a group of more than 2 and less than 5, a car is always the best and cheapest option.

Re: Meet Mr. Money Mustache, the man who retired at 30

#159

Post by mike_esspe »

Swizec wrote: post #154
jasonkester wrote: post #153

Earlier quoted context omitted.

> travel a lot. That takes money. Not at all. If you talk to a few dozen people who "traveled a lot" before they turned 30 (including me, the person to whom you're replying), the single most common thread in all those stories will be how cheaply they did it. Life on the road costs ~$500/month. Life in an apartment costs ~$2000/month. One of the simplest ways to save money when you're not working is to ditch all your…

$500/month? But a simple train ticket that takes you 600km away will set you back $100. Here in Europe at least. And I probably spend $500/month just on food and caffeine. Hell, the basic government fees (insurance, pension etc.) to keep my sole proprietorship running costs me 300 euro/month. I really don't see how you could live on the road on $500/month, you're making stuff up.

When you travel on budget, you usually don't take trains, but hitchhike. And you can always get a bed with couchsurfing.org

Re: Meet Mr. Money Mustache, the man who retired at 30

#160

Post by tripzilch »

jamesaguilar wrote: post #121
PKop wrote: post #111

Earlier quoted context omitted.

But why? Seriously, why can't he come to his own conclusion about said lifestyle choices? You don't have to agree with him, but why can't he judge certain lifestyle choices as better or worse? Just as you have done for yourself. I think if he doesn't clearly define what he thinks is better and why, then what advice is he really providing? People can choose to agree or not, without taking it as a personal insult.

It's not really the same. If I pick a lifestyle for myself, that's not a judgment on other people's lifestyles. If I pick a lifestyle then start calling other people wasteful, that is a judgment on others. Be it true or not, that rubs some people the wrong way. Personally I don't care if he judges me. He's living within a few tens of percent above the poverty line (based on his comments in this article). Of course th…

> Be it true or not, that rubs some people the wrong way.

Huh? If it is true and it rubs some people the wrong way, is that bad?

> He's living within a few tens of percent above the poverty line

I'm not sure what living a few tens of percents above the poverty-line really means, unless you mean tenths of percents? Still, that is not what poverty is. There are more than enough people in the US living in actual poverty but I'm pretty sure this guy has it pretty good. This is because, and that is part of his message, that how good you have it in life is only in so far dependant on how much money you have to spend. It depends on all sorts of factors of relative wealth, of which he has collected a great amount in various ways.

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