I think there needs to be a balance. The trend of working crazy hours to save as much as you can, living overly frugal, etc. will not always lead to happiness or fulfillment. I like to think of it as how can I optimize my time and finances for "life" rather than retirement. That doesn't mean I don't have a nest egg, it just means that not everything is going into that nest egg.

This speaks to a common fallacy: the notion that happiness is a permanent achievement. Many people believe that you work hard so eventually you can achieve a position where you live "happily ever after". That's however not how the brain works. Happiness is a reward mechanism for effort bearing fruit. Once you stop doing things to become happy, eventually the happiness goes away because the brain adapts to its situation (this also works in reverse, you can get used to surprisingly horrible situations). The trick to being happy all the time is doing new things that make you happy all the time.

Achieving "Financial Independence" -- when a portfolio meets all basic income needs -- can greatly enable this. The question is why people postpone their own "freedom" in favor of little wins now like trying expensive restaurants, etc.

The risk is real, there's been excellent progress in crashworthiness.

The point is find eliminate spending on stuff that doesn't really make you happier, and focus on the things that do. Also, find cheap hobbies, reading, etc. etc.

for software guys like mmm I'd wager that it's better to take the time and energy used on frugality and instead try to develop alternative income streams, which ironically is exactly what mmm did.

regrets over $10-30 purchases seem like a complete waste of time to me... https://www.newyorker.com/magazine/2016/02/29/mr-money-musta...

And as far as I know, he and his wife earned their money in tech jobs. The math is believable: let's say your household makes $130,000 a year (which I haven't done), and lives on $30,000 a year (which I've done... not fully voluntarily mind you but it wasn't hell on Earth either). You're saving $100,000 a year. In about 10 years you're a millionaire and could continue living on $30,000 forever without working. (Assuming 3% interest, which is doable without much investing effort, luck or expertise.) That's financial independence. Keep working at that point, and you only improve your lot. You can earn $10,000 a year as a full-time musician and live on $40,000. Or stay in tech and put 100% of your salary into principal while interest or dividends pay your living expenses.

Increase your monetary needs, i.e. your financial dependence, and it takes longer. Which is what most people do.

Unless you meant 130k after tax (which is doable today for many engineers).

For example, the ability to contribute to a 401k plan can defer $18,500 a year from taxes per person (more if over age 50, and more if there is a company match). For someone with a $130k gross, the employer having a 401k plan or not could affect the choice of which job they choose.

As the other commenter pointed out, why do you think 401k limits are low?

of course not - there are no certainties

> It included massive bull runs that may not be repeated

it also worked through times like the great depression; on aggregate it's amazingly resilient

> A lot of research has predicted lower real rates of return

This is a SUPER-important thing for making your own FI models!

EDIT: Missed that this was for a fixed period of time - 30 years.

But... what happens if you live more than 30 years past your retirement? It would really suck to retire on $750,000 (or $1M) savings at 45, and live to be 100.

EDIT: Again, the rate quoted is for withdrawals in perpetuity. It doesn't guarantee your savings will outlive you, but it's highly confident it will.

https://www.bogleheads.org/wiki/Trinity_study_update

See, e.g. https://www.kitces.com/blog/adjusting-safe-withdrawal-rates-...

Much quicker than that if you invest it at 7% (average real return on the S&P 500).

Agreed, but try not to be the person who refuses to ever go out because you're too focused on being frugal. A few times here and there won't really hurt you in the long run (and having fun with friends is important and worth the money), but making it a habit every night will. Just avoid the latter.

> Frugal is buying an old reliable honda/toyota for $3,000 vs picking up a $40,000 entry level benz.

Definitely agree. Americans in particular tend to buy way more car than they need, and the difference in price is on an order of magnitude that really does matter in the long run for many of us (i.e. if you invest that marginal $20k, $50k, or $100k and wait 10-30 years instead of buying a quickly depreciating fancy car).

Not only that, they trade it in (sometimes with negative equity) every ~5 years.

I buy old, used Lexus'. Pretty much all modern features, quiet, and a fraction of the new price. Change the oil, and the timing belt if applicable, it will last forever. But people treat cars so much like appliances these days.

Also, there are some really modern features like rear-view cameras, sonar, etc., which are pretty cheap in newer cars but almost impossible to find in older ones

But, to run the numbers, get a the total cost of ownership (car payment, interest, and non-warranty or whatever maintenance) for a new/virtually new car, divide it over a span of the expected months of ownership (say, 60, 120, 180 months).

Do the same for a $5,000-$10,000 quality used car that you can pay with cash.

The hard part is estimating repair and maintenance costs, especially for non-car-persons. But I believe that car reliability is so good for recent cars that it's wasteful to purchase new.

eg:

$20,000 new car

36 month loan @ 2% = $28,072.59

Estimated average maintenance/year: $500

TCO 60/120/180: $30.5k/$33k/$35.5

$7,000 used car

Estimated maintenance/year: $1,000

TCO 60/120/180: $12k/$17k/$22k

Now an older car will generally cost more over time, eventually, than a new one. But every 10 years or so it's much cheaper to purchase a used one.

And if your stereo is replaceable you can get a rear-view camera hooked up if you desire. They also have wonky standalone ones.

- you're including interest for the new car but not the old

- you're ignoring the residual values of the cars at the end of the 5/10/15 year periods

[edit: and the "cost" of that 3 year/2% loan is $623, not $8073]

So the corrected 60/120/180: $23k, $25.5k, $28k.

And true, it will be worth something after 10 years or so, figure $10,000@60, $5,000@120, $3,000@180 but it varies vastly with the brand, mileage, and condition.

Corrected again: $13k, $20.5k, $25k

Damn, looks like it's close to a wash after 10 years. But, consider that the used car is a Lexus with heated/cooled seats, leather, nice audio, power seats and windows, automatic wipers, etc. etc. and the new car is a base model Toyota Corolla.

Plus, the use car will not be worth zero, hopefully, after 10 years. I guess 60/120/180 would be something like $3k/$2k/$2k:

So for the used car: $9k, $15k, $19k

So a bit ahead again.

It looks like with these napkin calculations the $20-25k mark is the break-even point at around 10 years. So any new car more expensive than that is going to be more costly, obviously, relative to a used car.

Well it was a fun thought experiment.

There are reasons why cars depreciate, amongst which are the fact that they need more money put into them over time.

I drove my last car to almost 300k miles and my current is at 240k miles. Of course there are major maintenance items but well worth it. When my car hit 200k I changed the timing belt, water pump, seals, etc. This is on a Lexus LS430. As expensive as it can get. Cost $1800. If I had a cheap car, it will be a $1000 job. Now you have to understand. Do I go get another car or spend $1800? Easy $1800. I'm at 40k more miles. What else have I changed? oil, brakes, tires. That's it. Nothing else!

Does it have issues? Meh. Navigation sometimes acts up and freezes which I suspect is the DVD but I can't be bothered. I use my cellphone in those rare moments I need it. Everything else works. All power seats, windows, heated seats, traction, etc And here's the kicker, it's a 2001. 17yrs old.

Most cars will hit 200k miles, some reliable ones like toyota, lexus, honda, will hit 300k easy with minimal maintenance. I rather spend $5k-$6k and add another 100k miles. :D

Yes, you're taking more risk with a used car. But I have multiple cars, and am a mechanic so it doesn't bother me.

https://www.wired.com/2017/02/watch-terrifyingly-bad-car-saf...

There's a whole range there. You don't have to live on ramen. But you can be really aggressive about insurance premiums, utility bills, etc. You can learn home & auto repair & maintenance. You can make major life structure choices (Can your family live with one car?). These all can make a huge impact on your finances, and don't hurt the way perpetually living like a college student does.

Counterpoint: Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range.

If this is the "get rich without getting particularly lucky" advice, perhaps we should assume it's also the "get rich without getting particularly unlucky" advice. There's an endless list of terribly unlucky things that would ruin just about anyone, but don't generally bear planning for.

As someone who knows a lot about car and motorcycle maintenance, repair, and modification, this is not good advice, and I see it all over.

You're far better off simply buying a new, cheap compact and taking it to Walmart for oil changes. You will come out far ahead of the person who invests money in tools and space, and time into learning how to do something that is so easily outsourced.

The opportunity cost of maintenance is high. Don't get involved unless it's going to be a hobby that brings you satisfaction in and of itself.

Sure, learn some very basics so you don't get blatantly ripped off by unscrupulous shops (bringing you a filthy air filter that doesn't even fit your car is one example), but don't invest much time or energy.

For just the depreciation cost of a new vehicle one could purchase every home auto repair tool they would likely need for a very long time.

You are right, the cost savings on doing your own oil changes isn't particularly significant. Although it's also worth pointing out oil changes are the most commoditized, sometimes-loss-leader service in the business- if there's a cost savings to be had, it's in moderate repairs that are a little more involved but don't require lots of equipment. Replacing an oxygen sensor or alternator, for example.

Also, walmart f*cked my drain pan, so it had to be fixed for ~$150.

I will do my own oil changes now.

It's really funny to read that. It's probably very american to think 2 cars per family is the norm. I think if I group the 10 adults I see the most on average, we own 2 cars together. And we are all between 30 and 55.

I also get that, living in a city in France, it's easier to avoid having a car.

yet I note that you could have a motorbike. You could not have kids. You could move close to your work. You could move in an area requiring less car. You could change your job to one not needing a car. You could bike. You could care pool with friends/neighbors/coworkers. You could use public transports. Etc.

But the car is an important artifact of the american culture. You kinda build the country around it, not the other way around.

Keep in mind, the shift from farming being a major employment sector happened while the current US infrastructure was being built. The highways and population distribution were in part because of that. Also the US is one of the world's largest in area, and while urbanization is being pushed due to changes in the labor needs, it's something that happens over time not over night.

As for "you could do X" most of your statements aren't really proof of an American obsession with cars, just a different infrastructure choice relative to other nations.

http://www.nationmaster.com/country-info/stats/Transport/Roa...

The US has 27% more cars than France per capita. That's statistically significant and reflects difference in city planning/culture, but IDK that I'd draw the same conclusions as you.

Why is not having a car an ideal for you? Why do you have to bike? Can't you just walk places?

I don't have a car because society is telling me to have a car. I have a car because it's faster to get places I want to go; it's damn hot in the summer; and it's great for carrying around purchases and the family.

And on the flipside, cars are cheaper than kids :)

Yet we travel around the area to state parks, bike trails, etc.. every weekend. Even if I lived in a city, that doesn't mean I would want to be confined to the same 10 square miles my entire life. We live in a vast, beautiful country. Why isolate yourself to a tiny little block? Life is too short for that.

It's just a matter of priority and way of life, with constraints yes, but a choice none of the less.

In my neck of the woods, the average is probably 4-6 cars per family.

I always thought so funny the american TV shows depicting a 16 years old fighting his parent over his/her first car, and finally getting it.

My brother and I, we shared one small motorbike ^^

http://www.nationmaster.com/country-info/profiles/United-Sta...

So which is it?

816 per 1000 sounds reasonable when you consider how many are childern, live in big cities, are in the military, etc... There are some pretty big classes of people who own no vehicles whatsoever.

If you look at married suburban households the number will almost certainly be over 2. The most common case involves one person driving to work while the other shuffles kids around or has their own job. The public transport option may exist, but is likely inadequate (excessively slow) and undesirable.

Whoah, do you have evidence of this? I mean, yeah, some people have certain advantages, but if they are being paid for advocacy and if it's a trust-fund baby thing that would be really interesting.

On balance though, I'm not really opposed to a message to live frugally. We live in a culture that continuously bombards us with materialistic advertising, and this doesn't really lead to long-time happiness. I'm skeptical that being frugal implies some kind of deprivation or overwork. In fact if you're frugal then theoretically you can afford to work less.

As for the paid advocacy, have a look at their financials. You'll see a non-trivial amount of income from advertising on the website and speaking.

EDIT: The house wasn't inherited - he got it from a failed house building business. It's unclear if the costs of building came out of the business funds or his own funds.

> I'm skeptical that being frugal implies some kind of deprivation or overwork.

OP was advocating working multiple jobs and living frugally.

Because as we all know MMM's plan was always

1. Spend 20's saving 2. Save $600k 3. Quit job 4. Make blog 5. Make millions.

Yes, MMM makes bunches and bunches of money but he is pretty blatant about admitting the "early retirement" was a lie.

He never wanted to retire. He just wanted the option to not work and choose to work on what he wanted.

Fuck the modern web. Such a bunch of crap.

Someone needs to build a search engine for sites that don't carry any form of advertisement. charge subscription. seems worthy.

But i want to read content from people just wanting to write, without perverse incentives, as much as possible.

Frugal living are habits that accumulate gradually, as are any other habits one aims to develop. Eventually you don't have to think about them, things converge naturally. Some people might enjoy working two jobs, because everything syncs together that way.

Periods that are more frugal help you appreciate the pleasures of higher-end lifestyles while realizing that not having them isn't a catastrophe.

Plus the hedonic treadmill is a bitch. Someone earlier in this thread regretted his parents not having experienced certain things. Truly, it's a crying shame to die without having had truly fancy delicious dinners, for example -- that one time is almost priceless. But once a month is a nice, expensive habit. Twice a week you don't care anymore.

My parents said this quite a bit.

Of course, my dad did blue collar labor for an inflation-adjusted $30 per hour (the same position today pays around $11 an hour), plus overtime and a pension. My mom was a part time waitress to pay her way through 4 years of college.

It was surprising how quickly they stopped saying that when they looked at the cost of a new house because they had to move. Or when they looked at what it would cost to put their granddaughter through the same college my mom went to.

Similar to complaints about how one's parents were able to afford a house in Silicon Valley, why can't I? Well, gee, fifty years ago Silicon Valley was an orchard.

I started college in about 1992. My in-state tuition at the University of Utah -- a major university, not elite, but not community college -- was, I think ( * ), less than about $1500, which is about $2700 in today's dollars. In-state tuition today is $8,824, reflecting a substantial reduction in state support -- a 3.2x real dollar increase.

People in my generation and older who say "work your way through college", or "don't take out loans" need to make sure they've updated their mental model of the cost of college.

(*) I can't find historical data going back to '92; In '98 it was $2711: https://www.chronicle.com/interactives/tuition-and-fees which is $4203 in today's dollars.

I'm so glad I went to school 15 years ago. Students today are totally screwed.

It is extremely difficult to make $50k/year with no degree or experience. That is almost the house hold median income in the US (2 people working). (Currently: $59k/year)

This is wrong.

$30k - $12k standard deduction = 18k taxable, 0% tax on 0-$10k, 12% tax on $10k-$18k = -960 taxes owed, then you get 2500 American Opportunity Credit or $2000 Life Long Learning Credit. So if you earn 30k as a "full time student" you would take home ~$31k less 0-10% state income tax on $18k

Looks like the median for tuition and fees at state 4-year schools is around $10k. My contention: if you can make ~$15k per year, you can put yourself through school.

First, you can start at community college, which is very cheap in most states. And many states have a deal where you are guaranteed admission and transfer to the 4-year system if you get good grades at community college. So that'll save you some money.

Second, many states (and possibly the Federal government) offer grants to help defray these costs. You can also apply to tons of private scholarships.

Third, you can live very frugally in terms of lodging and food. Not fun, but doable.

Fourth, you can take out a little bit in loans. If you take out $5k / year in loans, you'll have $20k at graduation. Hardly crippling.

I actually did this, though I also had the GI Bill so I didn't have to do the loans part, so don't tell me it's not possible. It's not easy or fun, and I'm not saying we can't improve it, but today's students are hardly totally screwed.

Note: I'm not saying that we shouldn't do a better job of funding higher education, but this level of debt is not crippling. The real issue to me is people who run up high five figure or low six figure levels of debt for low-quality degrees or institutions, or who don't finish, or who are being trained for a career that will never make enough to have that be a positive ROI.

Average student debt of those who borrow is in the 20s-30s of thousands at most schools. $75k of debt for an undergraduate degree would be an outlier anywhere. https://lendedu.com/blog/student-loan-debt-statistics-by-sch...

This belief could cost you a lot of money.

Watching something that once was a "sure bet" go bust is very humbling. Watching those speculators go bankrupt by the hundreds is very sad. It made me realize that this particular dinosaur could be very real.

Yeah, if you are dumping money into a bubble hoping to cash out at the top, you are taking a major risk. If you’re investing long term in an asset with literally centuries of history of growth, then you’re probably going to be okay.

And realistically, what’s the alternative? I guess government bonds?

Even if you believe that in your lifetime the human race will collapse under the strain we’re creating on the planet, investing is still the appropriate hedge for your doomsday “die in a catastrophe” plans. You can refuse to call it “investing”, but then you’re just arguing for a pointless definition that no one else really agrees with.

according to that definition, your parent poster would be correct, even if (or maybe once) your fears come true.

This is not to say I don't think we are in a large bubble.

So there's no point in worrying about such scenarios.

I'd like to see how you came to this conclusion.

Painting with broad strokes, one can retire after working in tech for 15-25 years. Start at 25 and they are done by 50. Current death rates for dying between 25 and 50 are less than 0.7% [0]; that's not even correcting for the fact that the wealthy likely have a reduced mortality rate [1].

[0] - https://www.cdc.gov/nchs/products/databriefs/db293.htm#age_s...

[1] - https://scholar.harvard.edu/files/cutler/files/jsc160006_01....

to get the probability of dying before 50 you have to look at the total number of deaths/pear, distributed by age: https://www.statcan.gc.ca/pub/91-209-x/2013001/article/11867...

the area under the curve for 0->50 looks about 1/10 of the overall, so I'd say the op is about right.

Yes, which is why I took the sum of those numbers for ages 25 to 50.

>the area under the curve for 0->50 looks about 1/10 of the overall, so I'd say the op is about right

You're describing the conditional probability that, given you have died, you are under the age of 50.

this means that out of 100k 25-50 yr olds 726 died during 2016. This is the probability that you will die during this year, given that you are a 25-50 year old, which is different from the probability that you will die before the age of 50. (the prior number ignores the cumulative probability that you have died as a <50 yr old during all years prior to 2016)

Given that all of us will die, the only question is the age at which we die. The conditional probability that, given you have died, you are under the age of 50 is exactly what we should be looking at.

Ah you're right about that. Looks like I'm probably way off. This random thing google turned up [0] says that a 25 y/o male has like a ~70% chance to make it to 50!

>Given that all of us will die

Something doesn't feel right about this, but I can't figure out what. I'll let it simmer and assume you're correct in the meantime.

[0] - http://flowingdata.com/2015/09/23/years-you-have-left-to-liv...

just intuitively though, a probability of .7% for dying before 50 seems way too low

Start at say 25 and that's going to give you a much better than 1:10 chance of being able to very comfortably retire someplace cheap. If nothing else 1 year of work = 1.5 years not working, but at 4% return (over inflation) and 15% investment taxes you can retire in 15 years.

If you’re not making enough, and having financial flexibility is important to you, then considering a career change is in order. You might need to go down before you go up. Invest in yourself through education and experience and leverage that to get into a higher paying path (see more on this here: https://ramenretirement.com/2018/04/30/wealth/)

Once you have some real savings and wealth, then it’s all about investing it properly to generate inflation protected passive income (IPPI). I prefer real estate for this (see here for more on RE investing: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). I don’t think enough people consider alternative investments. Putting all your eggs in public markets is a low cash flow proposition, along with lower long term returns (see how returns compare here: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). If you have excess savings, you don’t need all that liquidity and should consider less liquid investments that might have higher returns: https://ramenretirement.com/2018/02/23/youre-too-liquid/

Lastly, people talk about the 4% rule, but that’s bullshit for a whole host of reasons: https://ramenretirement.com/2018/01/21/4-percent-rule/

Save money. Build wealth. Invest it wisely, considering alternatives other than the stock market. That’s the path. Simple, but not necessarily easy.

Agreed. A few follow-up points:

1. Frugality isn't a binary state. There's a balance to be struck. Some people really do waste money on frivolous things that don't actually bring them much real satisfaction, and in that sense being more frugal is definitely worth it. But once you've eliminated most of the excessive spending habits, the payoff of frugality really starts to drop aggressively as you cut out more and more (diminishing returns). Skipping your $4 latte isn't really gonna change the game for you if you're trying to become Bill Gates.

2. Frugality to me is kind of the "lowest common denomitator" of financial strategies, which is why so many "experts"/"gurus" tend to preach it. "Spend less than you earn" is a dead-simple concept and worthy advice to a certain extent. But trying to increase wealth more and more by cutting out less and less is not really a great long-term strategy, especially if you're interested in achieving significant gains in wealth. It's arguably much more effective to invest time and energy into things that will increase your earning potential over time rather than fretting about small guilty pleasures or trying to squeeze a couple more basis points of return out of your portfolio of mutual funds. Things like: gaining a valuable skill that's in-demand; honing and improving those skills over time; taking on leadership/management responsibilities; starting a business; meeting and forming relationships with people who are smart & successful or at least aspiring to be; etc.

See also: https://xkcd.com/947/

Also, after being a small time landlord for a while, I've decided the true magic of interest is, over those ten years you didn't have to lift a finger. If you've got money to park while the rest of your life is chaos, interest is the totally-hands-free option, and I am coming to see that as magical.

If you're having $4 lattes once a week, they're worthless. If you have a $100 dinner twice a year... man, those are nice.

Your mileage will vary. Personally, I love a good latte: it gives me a great deal of pleasure, especially when I can hang out at an inspiring 3rd place, read a good book or get some work done.

I've been hearing that forever. Yet still the market goes up an average of 7% per year after inflation.

> Any failure in your investment strategy

You'd still be doing well with a diversified portfolio even living through the 2000 and 2008 crashes. The 100% guarantee of failure is to do nothing.