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If you think working as a engineer and stashing a pitiful few thousand a year into the stock market is going to make you rich, you're so lost.

Maybe not rich rich, but well-off enough to retire in just a few years.

http://www.mrmoneymustache.com/

There comes a point when your lost time becomes significant too: http://www.mrmoneymustache.com...

Just to pile on, here's an article from Mr. Money Mustache about his Uber experiment and how the math worked out. Obviously he did this as an experiment and there may be some other tricks & benefits if you're "full time", but even so, the results are not encouraging for drivers. Ultimately his costs for his day (2 hours) of driving worked out to about $7/hr after expenses -- and that was in an electric car, not accounting for electric costs because he uses free charging stations wherever possible.

The F-250 XL gives me the Willie's. I have to have an XLT at the least.

Man, you must hate money. And/or financial freedom.

https://www.mrmoneymustache.co...

Quick summary: "The size of your truck is inversely proportional to the size of your wallet."

If the best thing you can think of to do with $50k of disposable income is to buy the depreciating luxury 4x4 armchair that is the F250... you need to get more creative. And learn to value your time more.

Tell that to this guy

See also how two-income families have bid up the price of houses in "good" school districts: http://www.motherjones.com/pol...
"Middle-class parents are stretched thin these days. Between health care costs, child care hassles, looking for a home in a good district, and paying for college, raising a child is becoming increasingly expensive. Little wonder, then, that married couples with children are more than twice as likely to file for bankruptcy as their childless counterparts, and 75 percent more likely to have their homes foreclosed. And the danger is growing worse by the year: In 2002 1.6 million people filed for bankruptcy, many of those middle-class parents. a record . As Elizabeth Warren and Amelia Tyagi note in their book, The Two-Income Trap: Why Middle-Class Mothers & Fathers Are Going Broke, having a child is now "the single best predictor" of bankruptcy. ""

Also, the increasing rich-poor divide makes life more difficult for almost everyone in the USA, since daily life gets more expensive as social trust breaks down because more and more income goes into security-related costs -- including sometimes things like private school or homeschooling. For example, a decade ago I talked with someone from CA who said, while California Proposition 13 had saved him some money in real estate taxes probably, he lost much more than he gained in paying for private school for his kids because he felt local schools were underfunded. (Of course, there are other reasons to avoid compulsory schooling kids in general, see John Taylor Gatto...)

And clearly much government spending (and related taxes) is questionable like for counter-productive military adventures abroad like Iraq and on bond interest from a refusal to just issue new money as needed by the economy instead of borrowing it.

All that said, there is lots of web content out there on "frugality" and wealth building; for example: http://www.mrmoneymustache.com...

It's also about getting more value for your dollar, and trying to avoid throwing away money.

It's a very Mustachian approach.

"Your current middle-class life is an Exploding Volcano of Wastefulness"!

Yes! It used to be, they recommended you get a good education so you could get a good job and move up the ladder in your career to a higher position of responsibility. Then sock away savings until you can retire on a pension.

The problem these days is, 1) your education may not enable you to get that job, 2) the good jobs are fewer, 3) it's harder to get hired for them, 4) there aren't enough management positions to go around, 5) they don't pay very well, 6) pensions are pretty much gone, 7) you are likely to get laid off or the company go under before you retire from that "career job."

Instead, use the job as a springboard to develop your skills and knowledge to run your own business(es). Turn your "side hustle" into a main hustle. Design your job around your desired lifestyle, not vice-versa.

https://forum.mrmoneymustache.com/mustachianism-around-the-web/the-incredible-secret-money-machine-book-by-don-lancaster/

What does your work truck say about you

Don't need to say more than that.

Price is now $3.99, but Mr. Money Mustache likes Pandora One: $3 Per Month: The Largest Possible Music Budget

Preach it, brother. Visit http://www.mrmoneymustache.com/ for some inspiration.

In 2001 I had a money market checking account that paid 6.5% interest. Then it dropped to 5.5%, 5%, 4%, 3%... you know the drill. It wasn't worth keeping money in the account anymore when I could make up the "interest" earnings by skipping my Starbucks a couple times a week. :-P

Not an easy thing to do in Silicon Valley.

The mistake is living in Silicon Valley to begin with.

I mean, it's possible for it to make sense if your strategy is "live like a college student, or even a hobo, while saving so much of your income (i.e., 66% or more) that you can retire completely to a decent house in a LCOL area in less than ten years," but since you've been there for 12 and you're still complaining that clearly isn't what you did.

When you're living paycheck to paycheck...

...you're already doing it wrong.

I wasn't living extravagantly - a tiny black and white TV getting its signal via the antenna was my major entertainment, for example. No car. Cheap junk furniture.

First of all, I never said somebody should be saving even during temporary emergencies, like unemployment. But if you were at your "normal" level of income when this happened then something was wrong with your budgeting.Were you renting a single room? Did you have a roommate? If the answer to either question is "no," then you could have been living even cheaper.

More importantly, how did you get to that point in the first place? Were you a teenager who suddenly got kicked out of your parent/guardian's home with zero assets (which would be a legitimate excuse)? Or did you become unemployed and wait until you realized you were having a hard time finding a new job before changing your lifestyle to cut expenses (which would not be an excuse)?

the median household income there is barely $20,000 a year

That's $1666/month. One possible budget for a two-adult household might be $500 housing, $200 utilities, $200 transportation (2 transit passes), $300 food, $200 misc., $0 income tax (assuming the EITC or other refundable credit more-or-less cancels out FICA), $0 healthcare (Medicaid) and $366 savings. That's completely reasonable, at least where I live (Atlanta) -- in fact, I left the utilities, food and transportation categories overly generous. In reality, you could cut transportation down to maybe $20/month or less by skipping transit and riding a bike instead.

Incidentally, I know this is reasonable because, as a mustachian, it's not far off from what my actual budget would be if I cut out the fat (figuratively and literally -- my grocery list tends to include more meat and dairy than necessary) and put my student loans in deferment. My mortgage is higher (about $700/month), but that's the only major difference.

Stop being a wage slave

This guy lives in a $400,000 home and spends roughly $25k a year while doing anything he wants, including several vacations a year.

Working more than 10-15 years of your life are for suckers who are bad at math.

I highly recommend reading the linked site, Mr. Money Mustache. Much of it is about finding ways to live the good life by eliminating wasteful expenses. As he puts it in this blog post:

"Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income."

I highly recommend reading the linked site, Mr. Money Mustache. Much of it is about finding ways to live the good life by eliminating wasteful expenses. As he puts it in this blog post:

"Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income."

But having a career that ends 20 years after you start is the worst part.

Who cares when you can easily save enough money to retire after 10?

Besides, the age discrimination thing and the 72-hour week thing are Silicon Valley (and maybe Seattle) issues, not industry issues. Stay the fuck away from the West Coast and it's better. In Atlanta, for example, I work 40-hour weeks and have bunches of co-workers in their 50s.

I use they as an impersonal pronoun since I don't know your gender or sexual orientation and so can't assign a gender specific pronoun to your partner.

"He" is gender-neutral and thus the correct choice when the gender is unknown. However, between the facts that my username is gendered ("Mr. Chaotica"), that I was talking about having kids with my spouse, and that most married couples are heterosexual, you should have been able to guess "she" from context.

Regardless of what you chose, you had a non-zero chance of offense. You just can't win! ; )

Anyway...

You can look forward to many years of disgruntled children...

So can every parent!

... who won't want to wear other children's cast offs and who might actually want to participate in the same kind of activities as their friends.

Again, it's all a matter of perspective: you call them "cast-offs," I call them "vintage" and "eco-friendly." By refusing to be a Consumer Sucka my kid will transcend such issues.

(And, of course, if all else fails I'll buy him the damn Pokemon backpack or Reebok pumps or whatever the fad-item-necessary-to-maintain-social-status is -- I remember how much it sucked to get made fun of growing up and am not a heartless bastard who wants to inflict the same on my offspring. However, minimal group conformity does not require head-to-toe Disney branding or other such ridiculousness!)

Also, who said anything about not participating in activities? Sure, I'm not going to let my kid sign up for sixteen sports, ten clubs and three different musical instruments and then also go to a birthday party at Dave & Buster's every week, but that doesn't mean he will be deprived like you imply.

By the way, keep in mind the hypothetical premise of this conversation: the original claim was that people can save because they can live comfortably close to Federal poverty level. Well, poverty level is defined based on household size, and is $346.67/month higher for a three-person household than it is for a two-person one. That's plenty to afford food, clothes, a modicum of toys and a reasonable activity or two!

You'll find it takes 20 years to get where you want even saving 50%.

Yeah, to hit it in 10 years my savings rate needs to be closer to 66%. I'm working on it.

I just wish I had the patience and lack-of-laziness to do solid real estate investing

My priority so far has been (1) max tax-advantaged accounts (HSA, 401k, IRA), (2) pay off student loans, then (3) save up down payments for investment property. I haven't gotten to step 3 yet, but I'm working on that too.

So basically you have a decent paying job (for now)

A minimum-wage job pays $7.25 * 40 * 50 = $14,500/year. That's already above the poverty line ($11,770/year for a 1-person household). By that standard, literally any job is "decent paying" as long as you can get 40 hours/week.

...managed to not be priced out of the housing market for the first decade or so of your working life...

Yep, that was some damn good luck. (On the flip side, the same economic situation that enabled my wife and I to buy the house also caused us to spend a lot of time unemployed. We were never in danger of foreclosure, but that's because we budgeted to live on less than the smaller of our two incomes.)

However, I could still do the same as a renter, or buying a house now. It would just add a little bit of time (less than a year, probably) to the process and I probably wouldn't be living in quite as nice a neighborhood. (It's not as if I can count my home equity as an investment anyway, since if I sold it to fund living expenses I'd be homeless. All that really matters is the difference in monthly cost between my mortgage and what rent would be.)

...and hope to have half a million or so*...

I assume a 4% safe withdrawal rate (SWR), so I'll need about 25x annual expenses. Depending on what I want my expenses in retirement to be, I'm shooting for somewhere between $600K and $1M ($36K - $40K annual expenses).

...before the next crash...

Preferably after the next crash, actually. Sequence-of-returns risk is the biggest danger to my strategy.

can't even see the poverty line if you're putting that much away

My income is high. My spending is (or at least, could easily be if I cut the extras) close to poverty-level. I've relaxed it a little recently, but a few years ago my household budget (not including student loan repayment) really was about at the poverty line.

...still need some serious odds on your side to reach your goal...

Only the odds that the world economy won't permanently collapse (e.g. due to nuclear war or something). Otherwise, 7% average annual stock market growth (note: I said "average," and am well aware that there's a lot of volatility) is actually a pretty safe bet.

To claim that everyone should invest all their money apart from the bare minimum to survive on sounds like a mixture of let them eat cake and striking naivety.

Why? I can do it, so everybody else can too. All it really takes is a little self-control and a shift in perspective. (For example, I'm sitting here looking out the office window at the freeway jammed with traffic, thinking that all those poor saps are fucking insane to be wasting gigantic amounts of money sitting in traffic in their $30,000 steel-and-gasoline cages, while I enjoy the sun, breeze, and un-congested multi-use trail while saving money riding home on my $100 bicycle. But they think I'm the crazy one...)

The point is, my "massive luck" will allow me to retire super early. However, even a below-average person working a shitty McJob should still be able to have some non-zero level of savings, if he structures his lifestyle carefully and stays away from TV commercials. He won't be able to retire at 30 like Mr. Money Mustache, but "regular" early retirement at 50 or so should be doable.

First of all, only an idiot tries to live off "interest" from "savings" -- at today's interest rates, that's unsustainable. Living off "returns" from "investments," on the other hand, is entirely reasonable. The key difference is that you accept risk and own productive assets with higher returns (e.g. stock index funds with a long-term average return of 7% or so).

Second, I'm not living off investments yet. I've only been working for a couple of years, and at my >50% savings rate, have maybe 10 years of accumulation yet to go.

Third, I'm living in option 4: a three-bedroom house in a middle-class neighborhood in a normal American city (albeit one I bought cheap in the middle of the housing crash). I bike to work, keep food expenses low, don't have cable TV (which means I don't watch commercials and am therefore not tempted to buy tons of consumer shit) and generally keep spending to a minimum.

I suspect that on average the opportunity cost of leaving your six months of expenses uninvested exceeds the risk-adjusted cost of taking a loss during a poorly-timed emergency. Not to mention, there's no reason you couldn't temper that possible loss by investing in something like a balanced index fund (as opposed to a total stock market fund).

Besides, for me, six months of expenses would only be $12,000 or so anyway. (I'm on the "live inexpensively so I can retire super early" plan.) Even so, I've opted for springy debt instead.

I suspect that on average the opportunity cost of leaving your six months of expenses uninvested exceeds the risk-adjusted cost of taking a loss during a poorly-timed emergency. Not to mention, there's no reason you couldn't temper that possible loss by investing in something like a balanced index fund (as opposed to a total stock market fund).

Besides, for me, six months of expenses would only be $12,000 or so anyway. (I'm on the "live inexpensively so I can retire super early" plan.) Even so, I've opted for springy debt instead.

[$769,002 is] not too far off my net worth, and I'm a late-30-ish developer wondering if that will be enough to allow me to retire at 65 (hoping it will double to $1.5M or $75K/year by then and inflation stays low). It certainly isn't enough to let me quit my job if I want to keep my house, car, kids in sports, etc.

You are incredibly pessimistic. More to the point, you could be retired right now if you wanted.

If you are trying to imply that an average worker can become one of the wealthy elite by simply saving better than average you are: 1) a fucking moron 2) trolling 3) ...

Or you are 3) this guy. Or this guy. Or this guy. Or any number of other people who executed similar plans, but didn't blog about it.

(These are all people who became millionaires simply by saving more than 50% of their middle-class salary, and retired in their 30s. If they wanted to be in the deca-millionaire range instead they could have just kept working and investing 100% of their salary for another couple of years. Considering that they live off withdrawals that are designed to be safe in the worst-case scenario, under most non-worst-case scenarios they'll end up with tens of millions eventually anyway.)

the article in question: http://www.mrmoneymustache.com...

> You literally can't understand that sometimes there is nothing left to save.

If you are really and truly poor, then that's true. If you have a lower-middle-class life in America, almost anyone can live on 95% of what they're currently spending.

I get inspired by Mr. Money Mustache who discusses many ways to save more by economizing. Your middle-class life is an exploding volcano of wastefulness.

> You literally can't understand that sometimes there is nothing left to save.

If you are really and truly poor, then that's true. If you have a lower-middle-class life in America, almost anyone can live on 95% of what they're currently spending.

I get inspired by Mr. Money Mustache who discusses many ways to save more by economizing. Your middle-class life is an exploding volcano of wastefulness.

If I could give some advice to my past self, it would be to immediately start living on half of my income. That way, I could have paid off debt immediately and started saving.

I wasn't interested in finances back then, but great blogs have cropped up since, like Mr. Money Mustache.

It's about early retirement and I'm not so much interested in that. But after ten years of working for the Man, I wanted to start freelancing. Turns out that if you have a family, you want to have quite a bit of money stashed away when starting.

So I kept working in a job I lost interest in, just to save half a year of income. Only then could I make the step towards starting a business for myself.

So, in addition to "affordable" housing, in your ideal world, the poor will also be provided (by someone) with "affordable" Priuses?

Perhaps you've heard of this thing called "transit"?

Which, when done right, gets used by everyone, not just the poor. It was not so long ago a culture shock for me, as a Texan, when my (New-York-based) CEO would take the subway; now, as a transplant to Chicago, I'm very much happier not owning a car at all; my work is a 10-minute walk (hooray for urban high-rise living!), Costco a 20-minute bike ride (hooray for cargo bikes!), my more distant friends in town (or the corporate office, if I need to visit it for some reason) a $2.50, 40-minute train ride, during which my time is free to read, make notes, or otherwise do as I please.

Back to point -- no, setting up your urban environment in such a way that the poor need to drive expensive-to-maintain, expensive-to-fuel vehicles a long distance is not a necessity. Transit systems are subsidized at a higher rate than roads, but not by as much as you might think -- use taxes on highways are under 50% of their costs -- and adding capacity to a roadway system in an urban environment is prohibitively expensive -- particularly compared to adding capacity to preexisting urban rail. And if you look at the economic payoff from that subsidy -- by way of increasing folks' access to jobs -- it's an extremely clear win.

Smart urban planning -- to avoid the need for commutes in the first place by making housing as dense, and nearby to shopping and employment, as possible -- is, of course, even better.

(Back on the "expensive" part of long commutes -- you might find The True Cost of Commuting a worthwhile read, in terms of putting some actual numbers into play).

Our IT guy actually packs a bag lunch and drives a beater car, and he's actually helpful and knows his shit...

To be fair, instead of being severely underpaid he might just be badass.

Sounds like you need to visit Mr Money Mustache.

http://www.mrmoneymustache.com...

Good ideas on how to reduce your spending and live frugally.

you literally can't get more than 40 hours of work out of people anyway.

Try 20.

For most of our existence as a species, 18-24 hours of work per week has been the world-wide average time spent satisfying our basic needs. All the rest was leisure, endeavours in curiosity and socializing. This observation still verifies with the few primitive tribes still around. It also verifies in our records of ancestral agricultural tribes. That's the intensity of work our bodies have attuned to over hundreds of thousands of years of recent evolution.

From my professional experience too it verifies, and I'm curious about what other people may want to report about that. People around me may log long or short hours over the days but once you substract the pauses, all the staring at the screen in a blank mind right after lunch or at the end of the work day, all the heated discussions about this hot topic or that, all the trying to figure out or motivate yourself about what you should be doing next, and concentrate on the actual, value-adding focus and thinking and doing, that's hardly more than 3 to 5 hours a week-day, typically 1-3 hours around 10 in the morning and 2-3 hours around 3 P.M. Even middle management types who try to commit, who show up first and leave last everyday, spend most of their time socializing rather than actually organising things up (basically they're downrate, modernized tribes' chiefs).

If you've got a flexible enough mind, it's a lot more efficient for you (and healthier and easier and saner and...) to wake up without an alarm clock, and not rush to the office, help yourself with organising your tasks with basic methodology, then get stuff done in those 4-5 hours. And outside of those hours relax, talk with your colleagues, allow yourself to enjoy your lunch, etc. There's litterally no point trying to force it beyond that.

Also, you'll benefit immensely from cutting the crap out of your life at home too. Stop inflicting incessant news updates, FB status updates, tweets and 24/7 information TV on yourself, your brain is NOT built for that kind of abuse. Stop thinking in terms of pain/gain balance: an hour of treadmilling is not compensating a handful of cupcakes, not in any way you can measure utility for yourself, ever ; and similarly inflicting huge stress and deadlines and job abuse on yourself so you can then indulge in a more wasteful home and car and lifestyle is NOT balanced either.

That one most precious but limited resource that you have in a basically fixed amount for life: your time... stop throwing it away so liberally. You just need to spend half as much as your income (give or take a quarter of your income, there's quite a margin) and then you can get retired in your 30s (or 40s if you're already late in the game), even on a $40-50 000/year job.

The problem is simple, right out of the first chapter of a high school economics class. "wants" are infinite. Consider our daily lives in today's world. The "working poor" among us live lives right around the "poverty line". Yet they can generally afford motor vehicle transportation (even if it's the bus), to spend most of their time in air conditioned environments (even if it's the workplace at McDonalds), can call anyone on the planet in theory (even if it's from VoIP at a library), and so on. Even the shittiest life is the life of a king a thousand years ago.

There are plenty of people (some of the most prominent of which can be found here and here) who would claim that even poverty-line levels of spending produce a lifestyle that's decidedly not shitty.

Source: (read the article for full details)

http://www.mrmoneymustache.com/2013/06/13/bicycling-the-safest-form-of-transportation/

Biking vs. Driving

Driving a car at 70MPH for one hour:

20 minutes of lifespan erased
$35.00 per hour of money burned

Riding a bike at 12MPH for one hour:

4.5 hours of lifespan gained
$100 of monetary gains secured

On a Per-Mile Basis:

Car: Lose 50 cents and 18 seconds of life
Bike: Gain $8.33 and 1350 seconds of life

I'd like to see more efficient travel, and where it's available I'll use it, but choosing not to travel is right up there for me with choosing not to use the internet. If you want to argue for more efficient travel, I'm interested. If you want to argue for a lack of travel, I'm not hearing you, and maybe you should leave the conversation to those who want to travel. I mean, if nobody traveled, we wouldn't need roads, just some sort of rail that could handle our freight. Maybe you need a job where you live upstairs from your desk.

There's travel and then there's travel. A road trip to see the scenery has value, but sitting in a traffic jam because your job is located inconveniently is worthless.

By the way, consider this

How much shorter is the commute? That alone will add "pay" to the new position. I think a lot of people fail to recognize just how expensive car commuting is. If the new work place is close enough that you can bike, you can really save a lot of money.

These days, when considering what a job pays, you can't just look at the salary. I really recommend reading Your Money Or Your Life . Yeah, the language is kind of mushy and touchy-feely at times, but the general points are important. All for-pay jobs should be considered in terms of their real pay. Which is your salary, minus taxes, minus commuting expenses, minus work incidentals (uniforms or other equipment you personally need to buy), etc etc. Any non-reimbursed expense that you must incur as a result of your job must be subtracted from the advertised salary. IOW, would you spend this money if you didn't have to work? Furthermore, you need to break that real pay into an actual wage, i.e. what is your effective per-hour pay? Take the salary, minus all the expenses I mentioned, and divide by hours spent on work---including your commute, forced breaks, overtime, etc. (So, for example, consider two otherwise identical jobs, but one with different commute times. The one with the longer commute has a lower overall real wage.)

Consider also health insurance benefits. If you're single, it's probably less of an issue. But if you're married and have kids, then it becomes a big deal.

I will say this: I've now had two positions in my career, and in both case I was part of the "expense" structure. In other words, the stuff I worked on was necessary and provided real value to the company, but was not the primary revenue generator. So management views it as an expense, and cost-cutting is the name of the game. How little can we spend and still get the same result? But when you're dealing with a part of the business that is directly responsible for the profits, management tends to be a little more flexible, and willing to take bigger risks. Just something to consider: if you're moving from a position where you work on your company's end product, to one where you are simply part of the "support" structure, you may find the new environment to be frustrating.

FWIW, I was faced with a loosely similar situation: I had a relatively stable job at a big company. It paid a decent wage and I more or less liked it. But from a friend's invitation, I took a chance on a completely new job in a new city at a startup. The startup has been quite successful, and I'm making considerably more money. But I'm not particularly happy with the job itself; not miserable, but it's certainly not something I'd do for free. I stay for the pay. But I don't regret my choice; even if I knew then what I know now, I'd still take the job. The way I look at it, I'm "buying" greater future freedom by sticking with the not-enjoyable-but-high-paying position for now.

My first link in this comment was from Mr Money Mustache, a blog about facilitating early retirement through frugality and saving money. The retirement goal isn't so much of being able to sit around and do nothing, but being financially independent so that you're no longer a wage slave---you can strictly chose what you do based on the fulfillment factor, rather than worrying about putting food on the table. IOW, you can find the job you like so much you'd do it for free.

Do you know anything about the department/group you'd be managing in the new position? What are the people there like? Are they naturally happy and motivated to do good work? Or is it a sweatshop, where your job will be to crack the whip? Are they struggling right now, and just looking for a patsy to take a big fall?

Ultimately it's a personal decision, no matter how many details you provide about each

Here is a man that raises his family of four on 27K/year: http://www.mrmoneymustache.com/2012/06/01/raising-a-family-on-under-2000-per-year/.

Look at his budget and then read through the line items. Hes talking about feeding a family of $450 / month. Where I live, Ramen, Chef-boy-are-dee, and Penut Butter and Jelly Sandwhiches run me that much for just me. Insurance $600 for car + home? My insurance is $1000 just for the house. Taxes, 0.6%? WTF, my home taxes are 3% and climbing, and anyone who thinks renters dont pay property taxes is just foolish. Health care $100 / month? My employer pays 80%, and my 20% for a family of four is $300 / month. Gas 316? for the year? Thats, what, all of ten gallons a year. Must be nice to live within biking distance of work, but all of that housing where i live is out of my price range by a wide margin.

So in short, he's living in an area with less than half the average cost of living, and saying that anyone can live on $30k? Fuck you Asshole.

-=Geoskd