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Interview with Mr. Money Mustache

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Re: Interview with Mr. Money Mustache

#151

Post by TACIXAT »

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.

The general rule that people use is the 4% rule. If you take your comfortable living amount and divide by 0.04, you will get a rough estimate on how much you will need to retire. This is based off of market returns, primarily invested in index funds. If 40k / year was comfortable, then the target would be 1,000,000.

Re: Interview with Mr. Money Mustache

#152

Post by mywittyname »

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.

Re: Interview with Mr. Money Mustache

#153

Post by mod »

TylerE wrote: post #84
hammock wrote: post #46

Earlier quoted context omitted.

To apply MMM's ideas, on a 50K salary assuming monthly expenses of 1,250 (that's the hard part), if you put away 50% every year you can retire on a 375K nest egg (4% safe annual draw) after 15 years, or age 37. Roughly.

Where are you LIVING on that kind of money? Even in a small town you're looking at probably at least $750/month for a place that's not a roach motel.

Estimate is off. $500 if the town is small enough. Additionally, typically lower-income people aren't trying to pay the whole of it (family lives with them and contribute).

May or may not be relevant in the context of this discussion.

FWIW you can buy a lot more than you'd expect for a small amount in very rural areas. Homes and acreage for well under $100k, which gives you a pretty small mortgage. Much, much smaller than $750.

Re: Interview with Mr. Money Mustache

#154

Post by dceddia »

the_gastropod wrote: post #63
ramphastidae wrote: post #51

Earlier quoted context omitted.

That's an exaggeration, even for frugal people. Retiring at 50 means ~30 years of working life finished and ~30 years of retirement remaining. At $50k per year * 30, that's $1.5m. Spread out over 60 years that's $25k per year before tax. I wouldn't say it's "relatively easy" to save for retirement, pay for healthcare, live somewhere safe, have children, etc. on that, even with investment returns over that time frame.

You're ignoring investment income. I suggest reading MMM. It's a trove of great information.

I second this. He has a ton of blog posts though, so it can be like drinking from a firehose. Start with this one: The Shockingly Simple Math Behind Early Retirement - http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

Re: Interview with Mr. Money Mustache

#155

Post by stefantheard »

sidlls wrote: post #113
stefantheard wrote: post #95

Earlier quoted context omitted.

What avenue is there to retire at 30 if you make 200k by 25? I must be missing something massive.

Depends on what you mean by "retire." Having complete financial independence is unlikely. However a person with no debts or children can live a nice middle-class life as a single person or partner/spouse even in the Bay Area and still save $50k/year or more. With conservative investments that $250k in savings over five years can easily be used to have a few thousand a month in income. It won't replace a $200k per yea…

I see, I hadn't considered the "lean fi/re" approach. I guess by that definition you can retire much much earlier than you would think normally. I can't imagine living off of only 20-25k per year during my retirment.

Re: Interview with Mr. Money Mustache

#156

Post by KGIII »

uberstuber wrote: post #117
KGIII wrote: post #68

Earlier quoted context omitted.

There should probably be another word for it? I'm financially secure and will be for the rest of my life. But, I still generate an income, mostly by ownership but I still do physical labor. I do quite a bit of my own labor, as well. I can easily pay someone to do it for me, but I like it. I just helped harvest the blueberries. Next, I'll be filling my own freezers during hunting season and I'll be guiding others to h…

Financially independent is the phrase I'd use. Enough money so you don't 'have' to work to survive

That works. Anything I make, at least for money, gets donated or given away, pretty much. Some of the things I do result in my being given things like lasagna and fresh baked bread as payment. I eat that. I'd be crazy not to.

Re: Interview with Mr. Money Mustache

#157

Post by lsmarigo »

CodeCube wrote: post #79
branchless wrote: post #70

Earlier quoted context omitted.

He has several rentals and lives off other families. We can't all do that. It's not a real, scalable solution. It's not genuine.

Personally, I find rent-seeking landlords to be an unethical pursuit. I know that's not a mainstream thought, and is the underpinning of many people's income strategy ... but I can't support the idea of letting a family live in a property for decades, and then something happening, and they're on the street with nothing to show for the tens of thousands of dollars they have given in rent.

I'm with you and need someone smarter to make a better argument against renting than I can formulate on my own. All

What I was taught: Renting is often times optimal, totally fine, the right choice for a lot of people!

What my experience has taught me: Renting is for suckers or the incredibly wealthy that want to be able to move to a new city on a whim. I was a sucker for many years, and paid a very rich man 100k+ for the luxury of paying down his mortage. Never again.

Re: Interview with Mr. Money Mustache

#158

Post by vasilipupkin »

imgabe wrote: post #85
vasilipupkin wrote: post #48

Earlier quoted context omitted.

Beautiful. Since we get to make up our own definition of what retired means, I guess I am also retired. re·tired rəˈtī(ə)rd/Submit adjective 1. having left one's job and ceased to work.

You can substitute "financially independent" if it makes you feel better. Many people continue doing things that generate income even though they don't need the money. It's worth noting the difference between someone working because it's what they enjoy doing vs. someone who is compelled to work by financial necessity.

if they have enough money that they don't actually need to work and yet do work that generates income why don't they take that income and fully donate it to charity? if MMM doesn't do that, it means he needs that income - not different from just having a job

Re: Interview with Mr. Money Mustache

#160

Post by JoshTriplett »

barkingcat wrote: post #78
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…

Also, doesn't take into account healthcare costs and things like hurricanes and floods and disasters that afflict a lot of people.

> Also, doesn't take into account healthcare costs

See http://www.mrmoneymustache.com/2012/11/01/our-new-237-per-mo... and http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-...

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