Early Retirement in One Lesson (or How I Retired at 30)

thank you good evening fellow world dominators so i thought i'd start by explaining this nonsense which wasn't really part of my original talk but it's now officially saturday night and mr money mustache is not supposed to be seen on a stage delivering an f in powerpoint presentation on a saturday night so i thought at least i could enjoy a beer while i do this so last night at the party i set up this elaborate scheme with this guy that a cool neighbor of mine named jonathan and he was like yeah how about we'll get some beers and then i'll pass one up to the stage to you and then he'll be like this will help you out with your talkbeat and i thought that's great because that's totally in line with the community aspect of the wds i mean this is my neighbor helping another neighbor out while we're both here in portland but it turns out that uh you can't really do that on this particular venue on this night because some nonsense about like the liquor laws in oregon or something so you're gonna have to use your imagination every time i take a sip from this and i do need a drink sometimes when i'm talking just imagine this is a big frosty like portland's best pale ale of some sort and we're all having it together because i'm the last talk of the night and all this stress of me doing this work is going to be over we can all celebrate right after this the party starts right after this short 24-minute interlude all right so i figured with this being the world domination summit all i needed to talk that sounded similarly enormous so i created this one with not just one but two unicorns to represent its epic status it's called how to be rich happy and save the world because i figured that would be a goal big enough for unconventional people but really this is perfect for me too because on the internet i sometimes get categorized as a personal finance blogger because i have this blog talks about how to make personal choices that will make you richer but really now don't put this on twitter but i don't really give that much of a [ __ ] about your personal finances what i care about is how much better a world we're all going to get to live in if we all become a bit more rational uh with our money so all this because money is a really powerful thing it really has the power to like completely improve the world we live in or it could also trash it overnight just depending on what choices we make with that money a lot of power and it really boils down to only three amazing facts three amazing facts that will make you rich now we're going to begin with a quick list and then we'll get into the details of each one so we can put this stuff into practice in our own lives so for ready we shall begin fact number one almost everybody sucks at money and this includes the middle class the poor our financial advisors this is way funnier than they expected to be thank you most of our stock market traders and gurus and what we consider to be the rich people and of course even our presidential candidates and the mayors of our cities and the people who design our the cities that we live in they all suck at money but what do i mean by that you're gonna have to stay tuned because first we have to cover fact number two getting rich enough to retire only takes about 10 years none of this 45 year nonsense where you retire at 65 or 70 or never like they keep telling us in the newspapers and just an example here's my own story you can follow along with the arrows here's me at 21 years old drinking some beer with a buddy because we had just finished engineering school juice travis if you're watching this next here's me about halfway through my career at 26 rocking a little low-key satan costume in my cubicle one because it afternoon halloween halfway through my career then at the bottom there's me at 31 freshly retired enjoying a beach on hawaii with some friends on a kayak trip and then fast forwarding another 10 years here's me very recently on another beach with some more friends a bit less good looking but at least i'm still retired and still having a good time and it's not just me who has this early retirement superpower most of us in the united states and other rich countries have options like this open to us that's [ __ ] number two fact number three work is better when you don't need the money now it's wonderful to become rich enough to retire but what if you don't want to retire because you can't imagine yourself sitting around all day well i agree because you're watching this talk all of us are going to become quite wealthy at a surprisingly young age so congratulations on that but you're probably going to keep working you just might choose to do different work and you'll probably you're definitely going to have a lot more fun doing it because work is better when you don't need the money so before we go any further we should probably take a step back and i can explain to you who i am and why i could think i'm qualified to change the diapers of the entire rich world like this on the internet my name is mr money mustache and these days i'm an accidental part-time lifestyle guru and the leader of an ironic fake cult that is called mustachianism and 15 years ago i had a dream my girlfriend and i had been together for a while and things were getting serious and we were figuring we'd probably get married eventually and we'd probably have kids eventually but we both wanted to be free from the need to work before our first baby was born i wanted to be a super dad i've always idolized the idea of a super dad and she wanted to be a super mom now luckily we both grew up in canada so nobody had told us that this is actually impossible so we did it [Applause] we took the 10-year path to early retirement i graduated got a job worked really hard rode bikes rode my bike to work drank beers fixed up my house learned about the stock market and investing and was able to retire just before my 31st birthday and not too long after our baby boy was born so the goal was reached i was a super dad we were both super parents we played together as a family on the weekends but also on the weekdays we went on all these big trips together i read my little son hundreds of big books we went on i taught him how to read and how to ride bikes and later music and math and physics and all this stuff it's been a great dream it's been a wonderful 10 years together and now we have this awesome little 10 year old guy but it still wasn't very easy because it turns out that raising a kid is surprisingly hard who knew and i can imagine that raising more kids is correspondingly harder but [ __ ] we were sure glad we didn't have to commute to two office jobs and like perform in these mega software careers at the same time as trying to do all this stuff but meanwhile so all this was going on and instead of the 10-year path to retirement our friends and former co-workers were on a completely different path they were on the 10-year path to steal brooksville and that goes something like this you graduate with huge student loans and then you get your first job then you buy your first car but it's a brand new one so you buy it on credit and then you go out to friday night happy hour every friday and you go out to lunch every day and you spend hundreds of dollars every time eventually you might meet somebody special so it's time to get married and you spend 25 000 on a wedding then you buy your first house with almost no money down because who could ever save up 25 000 for a down payment then later you have to upgrade your house and then later upgrade your car to a bigger one with a bigger car loan and along the way you're probably getting yourself some nice treats like 2500 road bikes and 3 dollar mountain bikes and before you know it you're 30 years old and then 35 years old 45 years old and you still have no money and this might sound pretty familiar because it's what everybody does this is a standard definition of a prosperous american middle class life pardon me let's all have a drink so while this was happening a funny thing happened to me in the area of work and that strange thing is that i kept doing it i mean i worked all those years in the cubicle so i could escape the cubicle but once i retired it only freed me up to do stuff i loved to do even more in my case that was carpentry and building houses so i started this small house building company and then i ran that until it wasn't fun anymore and then more recently i built my own house which is this one in the picture and that was extremely fun so i'm going to keep doing stuff like that forever and somewhere in these 10 years since retirement i started started writing which has led to the part-time lifestyle guru career which has brought me here today and obviously that was worthwhile and all this video stuff like this picture on the bottom which is an event called camp mustache in seattle just back in back in june and of course some of this stuff over the years has lost money and other things have made money so overall i've been getting further and further ahead so i've really hit the big time now like complete financial freedom finally i don't have to be frugal anymore and with all this extra freedom what am i doing what i have been doing is just spending more time out in the hot sun doing manual labor because it turns that work is good for its own sake work is better when you don't need the money so with all that summary behind us we can finally move on press the rock and roll button and find out how we can all get rich back to part number one then what exactly do i mean when i say that you suck at money well it's simple any money that you spend that does not make you happier is wasted and research shows this ends up being most of our money the reason is that most of us predict the wrong stuff about our purchases to understand this it helps to a lot of it comes from a big misunderstanding about luxury itself most of us assume assume that luxury products and showing off our wealth is preferable to good old-fashioned hard work in solving our own problems we all say stuff like well of course a life of luxury is better if that weren't true why did they invent luxury in the first place kings and queens had figured this out generations ago even i used to think this like back when i was 21 years old my goals and hopes and desires were completely different from the stuff i value here at age 41 i was much more materialistic back then in fact if i hadn't changed my ways i'd probably be living in a huge fancy house with a four car garage right now maybe outfitted with high-end cars but i would have no money and i would probably be a lot less happy because i wouldn't have bought my freedom and i wouldn't have been able to enjoy those 10 years that we've done so much we've enjoyed so much these past 10 years i would be just another person who sucks at money so really to not suck at money it helps to think of it like this the purpose of life and work and dating and all this other stuff we do is logically only one thing it's to be happy it's to lead the best and most satisfying life that you can possibly lead now you could argue other stuff like the purpose of life is reproduction you know we're a living organism we need to make copies of ourselves and that's kind of true i mean raising kids can be a factor in your happiness but there is such thing as enough kids kids aren't for everybody you could also argue that just thinking about yourself is selfish and you should help other people and this is true you really should help other people it's a great thing to do with your time but it turns out that helping other people and making them feel better makes you feel better too and feeling better is just a fancy way of saying being happy which brings us right back to the smiley face the actual logical purpose of life but what does all this have to do with money you can think of it this way imagine that you're this caveman stick figure you've got a nice nice fire there access to nature is it possible for this guy to be happy well maybe but maybe it gets freezing cold at night or maybe there's dangerous animals in the area so we expand his lifestyle just a little bit we'll give him some shelter is this a complete life for our caveman stick figure cheers well obviously not because one of the basic needs is not met which is food so we'll give some food to the men is this a complete life it's getting better but most of us benefit from companionship which i've represented here with this stick figure diagram of my wife now what you have here especially of these people are part of a village with strong social ties really is the complete picture for human happiness because they can laugh and love and learn and raise babies and actualize themselves and solve problems and create music together all this stuff and that makes sense because most of human existence has been spent in these conditions about 99 percent of it it's just that we weren't around to see that but just for a thought experiment let's expand it a little further suppose mr and mrs stick figure hit the big time and they expand their lifestyle a little more so now they've got a nice symmetrical mansion with a bentley and a mercedes and a fountain there are they happier now that they've left the village of the sick people well maybe but maybe not because they've probably suffered a lot of social ties when they moved out to the country like this but just to keep going let's see if we make things a little better for them what if they get a few more bentleys a few more benzes and some butlers to help out with all the hard work of maintaining this compound does this make them happier now that they have to put less effort into their lives and if so we should probably add a bed because what could be better than lying in bed and having everybody serve you stuff and you could just gaze out at your luxury empire and if that's better we should probably add a bedpan and a catheter as well because what could be better than lying in bed all day and never even having to get out of that bed and we could have a big tv so you could watch the world go by as you lie there now hopefully at some point this fantasy broke even though it's getting a little bit close to american life and that's because adding more fancy [ __ ] and taking away effort from your life is not the path to a better life and the reason is that effort and learning and all this other stuff that we've figured out by studying it in recent decades is really the stuff that makes us happier now if you check out this next slide i've put these things into hexagons so they look scientific these are these are the things the psychologists and a lot of thank you guys this is going way better than i expected [Applause] all right so the other things that psychologists have figured out actually have an effect on human happiness you've got friendship freedom health meaningful work there's that word again privacy a philosophy of life which is what helps you decide how to react when things go wrong and that's something that's missing in a lot of our lives and of course community access to a network of friendly people and as it turns out all of these scientific hexagons were covered way back here in the village of the stick people because they could laugh and learn and solve problems and have relationships and all that and meanwhile whenever i show up in the news poor old mr money mustache everybody starts complaining they're like that guy is crazy i could never live a life like i could never lead a life like that hardcore frugal i hear they try to live on 25 000 a year they must be leaving like leaves and rocks for the toilet paper which is obviously nonsense i mean here's a picture of me enjoying my brand new spatula and frying pan in this badass kitchen that i got to make myself this is way more than the stick people have and that's the whole point because even a life at the bottom of the u.s spending scale is still way more than enough to be happy as long as you spend it on the right stuff [Applause] and if my life at twenty five thousand dollars is enough to be happy what about all these people who spend fifty thousand or a hundred thousand or two hundred thousand dollars and up and still claim they can't make enough to reduce their stress levels or they'll never have enough to retire what are they missing what this means is that we are living in a trap it's so serious there should be a warning label on every luxury product like warning the dalai lama has determined this product does not bring extra happiness it's because they've neglected this basic truth that extra luxury products are not bringing us happiness but yet every financial advisor and newspaper journalist and politician is still stuck in this assumption that they do they're all saying stuff like well i forgot my next line okay anyway the next part is we have wasted trillions of dollars on stuff like suburban highways and like sprawling suburbs with no no soul in them and stupid cars and trucks to drive back and forth on them every day when really we would have been happier just living in a small village or living in smaller places within walking distance of each other and what access to nature and that means most of our personal spending and our government spending could be much more efficient if we could just learn not to suck at money so much so with that all behind our belt we're ready to move on to part two can i really become rich enough to retire in 10 years instead of 45 years and if so how the feather could i possibly do this and the secret does not require a huge income and it's not to become a fancy genius stock market investor and it doesn't require you to buy my amazing books or courses or dvds dvd sets because i don't have anything for sale the secret is just to spend much less than you earn and it's probably like oh is that the answer because everyone says well i can't do that that would make me sad i love my pickup truck but that's wrong we already know we already established that happiness is the only logical pursuit and we also established that buying extra luxury stuff does not bring us more happiness and this is where something comes in that i like to call the shockingly simple math of early retirement and what this tells us is that your mandatory working career depends on only one factor to understand it you might consider the following story on the one side you have this hard-working carpenter guy who happens to look a lot like my friend mike now mike works hard and part-time and maybe brings in about 40 dollars a year and he has a happy life that cost him about thirty six thousand dollars a year which leaves him saving four thousand dollars on the other side we have a wealthy doctor guy named george george brings in 400 000 a year but because he has a doctor lifestyle it's very expensive he has a giant house a fleet of lexus suvs golf club memberships and so on but he doesn't manage to spend all of it and still there's forty thousand dollars left over at the end of each year ten times as much as mike is saving given this information which one of these two guys do you think would be wealthy enough to retire assuming they want to continue living their same lifestyle lifestyle after retirement the surprising answer is they would have the same retirement date exactly the same how could this be well to understand that it helps to take a look at this next graph which is my favorite retirement calculator or a prison sentence calculator straight off my website and as you can see it's a long list of bars that start out huge on the left and slide nicely down as you move to the right now this is a graph of how long you have to work it turns out the only thing that controls how long you have to work is how much of your paycheck you can save after tax as a percentage of your take-home pay now if you look carefully one of these bars says united states on it and it's around six percent that means the average american saves six percent of their income spends the other 94 and thus is on track to retire in about 60 years which is the same as never the only thing that saves us is our social security program or inheritances or little corner cases our savings rate is not big enough and therein lies the problem but if you just start making small changes like just switching from the ridiculous cars and trucks that most of us buy with an average price of thirty thousand dollars something reasonable like buying a used honda off craigslist for example with money that maybe you actually have can already bring you up to a savings rate of twenty percent which cuts 20 years off of your prison sentence learning to make a good meal at home and not going out to dinner five to seven nights a week like many people do in my kind of age range makes another big notch learning to ride a bike and designing your life so you're not commuting back and forth 15 000 miles like the average american actually does according to the statistics brings you up another giant notch and just making a few other changes like not air conditioning the crap out of your house 24 hours a day and doing 50 loads of laundry for one person will bring you the rest of the way there and if you can get to a savings rate around 64 just as an example that puts you to a career that's under 11 years and that's exactly what i did during my career in software using only my superpowers as naive canadian man i mean here i was think i was living this big fancy life in my new american job but because i only managed to spend part of my paycheck on fancy stuff the rest of it built up and that left me free to retire before my first baby was born now if i can do that this actually works at almost every income level by the way and lower incomes it's even more important to become efficient at saving but it's almost effortlessly easy for those of us with higher incomes and yet somehow the higher income people are still almost as broke and stuck working almost as long as those of us with average incomes so if you got all that down pat you're finally ready for part three we're on the home stretch work is better when you don't need the money now it's wonderful to become rich enough to retire as i said and a lot of people when presented with my unavoidable logic that early retirement is not as difficult as they thought they pull out one final excuse they're like but i like my job i'm a doctor an entrepreneur or some other cool thing i can never retire i don't know what i'd do if i retired so i can keep spending all my money on crap right and of course the answer is no you ignore mr money mustache's advice at your own peril because no matter what your job it gets way better if you don't need the money i mean put it this way what if you woke up tomorrow and found a billion dollars sitting next to you in a bag on the hotel bed would you change anything about your job maybe at least award yourself three day weekends or flexible work hours or would you consider saying yes if your favorite sister or your best friend called you up and invited you on a life changing three-month vacation and you had to take off quickly if you're an entrepreneur would you consider maybe being a bit more innovative with your company or treating your employees or your customers a little bit better well it really depends on how much you love your work because we're really talking about two different things when we talk about work and money the purpose of work is to create is to fuel your soul whereas the purpose of earning money is to have enough money how much is enough well enough to max out your happiness after that getting any more money will not make any difference in your happiness now the good news is this is not the death belt of your career it's more like the birth announcement because if you're still working when you don't need the money you have no choice but to do that work truthfully almost done now i like to call this concept authenticity and it's the most powerful form of marketing you can put that on twitter if you want it is your customers can smell it a mile away and that's how i feel about this guy i mean if people sense that you're not sucking every last dollar out of every transaction when you're conducting business with them and you don't really even seem to care about making too much money on on them they come to realize holy [ __ ] this person is doing this out of love and that's how i feel about the guy in this picture elon musk because elon yeah right on elon had over 165 million dollars in cash when he sold paypal back in 2002 the guy was like 31 years old now then and that's about the same i i was when i quit my career as a software engineer with obviously much less money now 165 million dollars is more than enough money to do whatever you like for the rest of your life in style like elon could be floating around in a jet-powered hot tub filled with filled with attractive people like sipping martinis and looking down at us right now over the cloud tops but instead of that he plowed all this money back into stuff like tesla motors solarcity spacex to do what he felt would be the best thing to positively impact the future of humanity now whether you agree with his business strategies or not you have to agree that this guy is for real and his customers feel the same way too and as investors and this is why tesla is worth about the same amount as on the stock market as general motors even though gm still sells 300 300 times as many cars as tesla for now people are excited about an authentic entrepreneur they line up to buy your products like the lineup of raving customers to buy the tesla model 3 when it came out earlier this year this is way better than just being another internet trickster who builds a deep slippery email funnel and sells 300 e-books about how to sell 300 e-books to anybody if you can get yourself financially independent not only does it give you the power to eliminate most of the [ __ ] from your life but it forces your life's work to become more truthful now this [ __ ] really matters because in the world today there are people who grind away like little gears until they die and then there are people who do pretty well for themselves but leave nothing more than a trail of conspicuous consumption like empty champagne bottles depreciated luxury cars and yachts and vacation homes and then there are people who leave a lasting difference now there's a classic greek proverb which goes something like a society grows great only when the old people plant trees even when they know they won't be around to enjoy the shade of those trees and that's why the title of this talk ends with and save the world because if you can get yourself free from the need for money you have no choice but to do work that is better for you and better for the world i mean sure people will like you more and you'll be richer and happier but if you're doing it for love instead of money you'll have no choice but to do a better job thanks guys

Channel: Mr. Money Mustache

Views: 709,070

Rating: 4.9197044 out of 5

Keywords: early retirement, how to retire early, financial independence, mmm show, mmm, mr. money mustache, mr money mustache, investing, FIRE movement, fire

Id: 8-Li_sFNc4Q

Length: 28min 1sec (1681 seconds)

Published: Sun Sep 06 2020

Reddit Comments

[u/SketchesFromReddit]

TL;DW:

Work for 10 years and save 2/3rds of your income. Mathematically this is enough to retire if you continue the same standard of living/spending.

[u/ziddyzoo]

10/10 classic of the genre

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