Some tough-love money advice I missed before

Last Updated on July 17, 2017 by Dave Farquhar

I find little, if anything, to disagree with in this tough-love post from Mr. Money Mustache from February: Why the middle-class keeps giving itself the shaft.

I find several takeaways from it.

Our problem is with our spending, so of course it can not be solved with additional income. Agreed on all counts. He cites numerous examples, like pricey coffee and oversized, financed-to-the-gills pickup trucks and he’s right. Most of the places I’ve worked in the last decade have been long commutes for everyone who works there, and I see two types of vehicles there: compact commuter cars, and trucks large enough that a commuter car would fit inside somewhere.

I drive about 45 miles per day, so at 30 mpg and $3.50 a gallon, I’m spending $5.25 a day to drive to work. A truck would get about half that mileage, so a truck would cost me $5.25 more per day to drive. With 244 working days a year, I calculate that would cost me an additional $1,281 per year. That offsets all the work I’ve done to lower my electric bill. Not to mention my higher insurance and higher personal property taxes. At $40 per day, I’m better off renting a truck when I need one.

Not to mention the cost of a truck. I could spend $25,000 on a nice new truck, but $25,000 is a downpayment on a house. Houses make money. Trucks depreciate.

Your spending rate is not a percentage of your income. It’s whatever you want it to be, and your happiness grows right alongside the [skills] you develop every time you chop another thousand from what you thought was your “cost of living.” This is right. A lot of little things end up costing a thousand dollars a year. The example above is one, but there are many others. A brand new video game system and one new game per month will cost you a thousand bucks over the course of a year too. A $5 latte on the way to work 244 times a year will too. I’ve written about a lot of these nickel and dime things before.

Your retirement date is not “65” or “Never”. It is the day you have 25 times your spending invested. I’d never thought of it quite this way, but this illustrates the importance of having a budget. This doesn’t just tell you how much you spend and show you where you can cut, it also lets you figure out when you can retire. If you spend $2,750 a month, you can retire when you have $825,000 invested. Invest $17,500 per year, and you’ll save that in 22 years assuming a 7% average annual return on investment. Seven percent is a more realistic figure than the oft-cited twelve.

Can’t get your spending down to $2,750 a month? Work longer and save longer then.

No excuses. The article is peppered with things I hear people complain about on Facebook all the time: Food, parenting, the government, the rich, taxes, whatever. All of those are things we can work around.

I’ve won some and I’ve lost some. A decade ago, I was making about 2/3 what I should have been making, completely stuck in a junior sysadmin role and struggling to pay my bills. I asked anyone who would give me the time of day for advice. Few would give me any, but enough did that I was able to learn how to slash expenses and develop a debt repayment plan. By mid-2006 I was making what I was supposed to be making, which made debt repayment go that much faster. Five years ago I met a security professional who took it upon himself to mentor me if I showed any interest whatsoever, and by 2011 I had my 2004 salary doubled. In 2004 I hated my job; in 2014 I really enjoy it.

The people who wouldn’t help me don’t matter. And the things beyond my control paled in comparison to what happened when I listened to the people who would help.

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