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Interview with Mr. Money Mustache

blog.ycombinator.com

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Re: Interview with Mr. Money Mustache

#191

Post by stlHusker »

JoshTriplett wrote: post #160
barkingcat wrote: post #78

Earlier quoted context omitted.

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-...

"Third level of safety: optional part-time work."

Don't you find it hilarious that a blog on financial independence tries to talk about safety nets vs. risks and devolves to: Well, sh*t just get a job I guess, but call it optional because you are "retired"? I do.

It is how you end up with 80 year old wal-mart greeters.

Re: Interview with Mr. Money Mustache

#192

Post by froindt »

cheetos wrote: post #89
the_gastropod wrote: post #56

Earlier quoted context omitted.

I suggest just reading MMM. It's all about savings rate. As an example, I live in Brooklyn, NY (one of the most expensive places to live in the U.S.) In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career. Assume someone making $50k lives in not NYC, I imagine this scenario could be a lot better. For a more extreme version of MMM, read http://earl…

> In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career. Assuming a $50k income post-tax

Knocking off 18k for 401k and 5.5k for a Traditional IRA dramatically reduces the tax liability. I recognize 50k-32k = 18k (so the full 23.5k can't be executed in this case), but it makes a significant difference regardless.

And there are methods to pull this money out well before the standard ages without penalty, such as Substantially Equal Periodic Payments (SEPP).

Re: Interview with Mr. Money Mustache

#193

Post by jacquesm »

ahelwer wrote: post #126
jacquesm wrote: post #94

Earlier quoted context omitted.

I don't follow you but that probably makes me a complainypants.

Some critiques or thoughts occur to people near-universally upon exposure to an idea. For example, the HN comments section on scientific studies showing an association between X and Y are packed with people spitballing explanatory theories after a few minutes' thought. Given a certain level of legitimacy of the idea source, it is basically insulting to assume you've thought of a meaningful critique within minutes. Mo…

> Some critiques or thoughts occur to people near-universally upon exposure to an idea.

Indeed. And in some cases those critiques are spot on and shouting them down or inventing catchy names for those critiquing the ideas / principles / choice of definition of words does not necessarily mean that they are wrong.

This is an element of cult behavior where the cult is trained to respond reflexively to criticisms and in fact is egged on to shout down outsiders. See also: certain politicians.

I think this kind of behavior rather cheapens the whole MMM brand but if you feel that it strengthens it then that is your privilege.

In my not so humble opinion as soon as you resort to namecalling instead of reasoned debate then you probably would have lost the debate. MMM is rife with such traits and even though I very much subscribe to most of the basic tenets of the way he lives I would not respond to those who question my choices or choice of words by calling them names. Instead I'd try to figure out how our situations differ and to address the criticism directly rather than to try to drive a wedge between those that criticize and those that are 'true followers'. After all, if a critique is mundane then it is nothing a FAQ can't answer.

I dislike cliques, always have and probably always will.

Re: Interview with Mr. Money Mustache

#194

Post by nilkn »

yessql wrote: post #162
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…

Or god forbid, you work a little bit to supplement your nest egg during those 43 years.

Sure, but that changes the topic a fair bit. Part of the allure of MMM is telling people they can retire at age 30 to 40 with a relatively small amount of money if only they can keep their expenses under control and live frugally.

The reality is that as you get deeper into that 43 year period without pursuing your career, your marketable skills will diminish as well. Many careers don't "scale down" either. A person who was once making $50k may not be able to make $25k with half the hours. The choice in many careers is 100% or 0%. Programming is in many cases a wonderful exception, so that might be biasing folks here.

You may very well end up just getting a part-time retail or fast food job. In any area of the country where this plan is viable, the minimum wage is going to be quite low, possibly as low as $7.25/hour. You're going to find yourself working quite a few hours just for a "little bit" of supplemental income. Indeed, if you needed to cover all your expenses (but nothing more), that'd be a full-time year-round job at the minimum wage (and in fact you might have to work overtime).

Re: Interview with Mr. Money Mustache

#195

Post by jacquesm »

ForRealsies wrote: post #186
sliverstorm wrote: post #170

Earlier quoted context omitted.

It's a two step process. 1) Make lots of money 2) Don't spend it all You need to succeed at both steps to be wealthy. However doing well at either step will still improve your circumstances.

Yes! You need an incredible flow of income to become wealthy (selling your company, book you wrote becomes a hit, etc). You cannot accomplish step 1 through a job. Rich people telling you to invest in mutual funds and treasuries to become wealthy are frauds. That's what you do to MAINTAIN wealth, not to generate wealth.

> You cannot accomplish step 1 through a job.

Well, as the linked article and the various blog posts show, that isn't exactly true, especially not for people in IT.

In IT you can accomplish step 1 through a job.

Re: Interview with Mr. Money Mustache

#196

Post by msmart »

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.

It depends on the withdrawal rate. See https://en.wikipedia.org/wiki/Trinity_study. Accordingly, you can withdraw more that the 100$ dividends you are getting without reducing the inflation adjusted value of your funds.

Re: Interview with Mr. Money Mustache

#197

Post by abledon »

nilkn wrote: post #73
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.

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 ;)

Re: Interview with Mr. Money Mustache

#198

Post by ghaff »

yessql wrote: post #162
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…

Or god forbid, you work a little bit to supplement your nest egg during those 43 years.

Most people do not have a lot of good opportunities to supplement income in retirement. Yes, there's part-time retail--especially around the holidays--and, these days, there are the various gig economy jobs. I'm not sure that any of those are things I'd voluntarily do absent a pressing need for some additional money.

Re: Interview with Mr. Money Mustache

#199

Post by froindt »

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.

20k/year is tough to measure up to. From the Reddit community around financial independence, "build the life you want then save for it". [1] You might look at your expenses and decide "_____ really doesn't provide me much happiness. Maybe I should reduce or eliminate it".

If most people would look at their spending and eliminate the 5% that brings them the least happiness, they would be in substantially better positions financially in the long run. Many people spend 100% of their paychecks and have little to nothing to show for it.

[1] https://www.reddit.com/r/financialindependence/comments/58j8...

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