A Canadian man named Pete who goes by the online blog alias, Mr. Money Mustache, is noted as a post-recession personal finance expert, and he has a very different way of looking at the ‘how to get rich quick’ theory, because no one wants to end up working until age 65 with very little to show for it. His ideals have been coined as “Mustachianism”, making him a successful modern day economist. Instead of the typical advice: save 10-15 of your earnings, skip the daily latte at the coffee shop, eat out less, etc., Mr. Money Mustache takes savings miles farther. He contends that in order to become wealthy as fast as possible, he recommends saving income in the range of 50-75% per paycheck, very disciplined frugality, and extensively considered and mapped out savings on purchases. Pete himself was able to save around two-thirds of his income during his working years, which brought him to have enough money so he could and his wife could retire in their 30s, and no, there was no help from the lottery or wealthy family members. This lifestyle is something that Pete and his wife created for their family all on their own by quitting the rat race. They now have a 7 year old child and are moving along with strength. Mr. Money Mustache teaches readers how to travel cheap, eat cheap, invest, live on investments, and live well below their means. He also proposes the ideas of living a natural life and one in touch with the community by riding a bike instead of driving a car, doing exercise outdoors instead of at the gym, and living with roommates. His blog states,
“For almost two years, I’ve been preaching a different brand of financial advice from what you see in the newspapers and magazines. The standard line is that life is hard and expensive, so you should keep your nose to the grindstone, clip coupons, save hard for your kids’ college educations, and save any tiny slice of your salary that remains into a 401(k) plan. And pray that nothing goes wrong in the 40 ears of career work that it will take to get yourself enough savings to enjoy a brief retirement. Mr. Money Mustache’s advice? Almost all of that is nonsense (MrMoneyMustache, 2013).”
Money Mustache’s blog posts are optimistic and relaxed while promoting anti-consumerism and environmental sustainability. His outlook on money, in a sense, brings humans back to thinking resourcefully and embracing their natural habitat, as if living before the times when currency began to rule lives. He also integrates a philosophical perspective on happiness and how much material items do not have to do with what cultivates happiness in life. The blog glamorizes the idea of radically cutting back on spending, seeing that as its own sort of luxury—the luxury of freedom. All this is not about comfort. In fact it is more about hard work than anything, but not hard work for your employer, hard work on your own budget. Mustache’s two cents: by truly focusing on happiness, “you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States today (and most of the other rich countries). Happiness comes from many sources, but none of these sources involve car or purse upgrades (MrMoneyMustache, 2013).” Wasteful spending according to him in a 7-passenger SUB, trips to Disneyland, exclusive private schools for children. The only ones truly profiting out of those “necessities” are the clever entreprenuers and companies who rake in all of the cash from human excess.
Here are a few of Mr. Money Mustache’s commandments:
-get rid of debt
-live near work
-don’t borrow money for cars, and don’t buy stupid cars
-ride a bike wherever you can
-let your kids achieve greatness without being pampered
-get rid of overpriced cell phones
-appreciate the joy of using your own body to get things done
Mr. Money Mustache with his happy (yet incredibly smart) views is a religion, with its own (very specific) following. New York Magazine reports that a poll regarding the blog determined that, “most of the blog’s visitors have a net worth of over $100,000, and about 10 percent are worth more than a million.” It is clear that it is not just anyone who pays attention to this man. Those who practice what Mr. Money Mustache preaches are evidently doing it because they see a return. How does one attain said return, you ask? Mustache has a very simple answer: once you have all of that money set aside, invest it. The answer does come along with an attitude adjustment as well, because happy people just get farther in life.
Mustachian’s have been naturally cultivating after the recession. New York Magazine reports,
“Younger consumers, for instance, have shown no interest in buying mammoth exurban homes, even if they can afford them. They have turned their backs on credit cards and have less interest in owning cars. The sharing economy (overblown though it might be) has also fast eroded the notion that every family needs to have its own name-your-consumer-good…And there is a profound truth to his notion that middle-class expectations have in many ways immiserated Americans. One major explanatory theory for the recession is that when incomes started stagnating in the aughts, we all kept on spending in order to keep up with each other, but could only do so by going into the red. We took out mortgages we could not afford, and then loans against the value of those mortgaged homes. We spent more on credit, and that debt became hugely, societally ruinous”.
It seems that the recession has scared the luxury out of Americans on a massive scale.
On Real Estate
Mr. Money Mustache understands the very important value in Real Estate and how it can build wealth very simply and easily over time. He highlights the importance of downsizing and using less idle space, and how fixer-uppers (when reasonable analyzed) can be a great way to save. He sees the value in a spot that encourages its inhabitants to spend time outdoors versus indoors, and one that is situated in the right spot for the temperature, with enough shade in areas with hotter climates, and more sun for colder climates that call for more heating. Mustache states, “for the typical nonmillionaire, a house is the biggest purchase ever made, and thus the opportunities for both grand mistakes and massive scores are plentiful” (MrMoneyMustache, 2013).
First rule: do not put the carriage in front of the horse, meaning do not waste money thinking about furnishing and decorating the home before you are actually in the home, otherwise, your ‘dreams’ can carry you too far down the financial drain.
Second rule: pick a location before the house, strategically looking for proximity to work, the grocery store, the school, and the library. This will help minimize the car usage and expense.
Third rule: Determine whether you should rent or buy. The plus to buying is that you can build equity in a home that you own, versus never seeing it again in a rented property.
Fourth rule: Consider a fixer upper, unless a newly renovated house is on sale.
Fifth rule: Pay less attention to the small details and more to the big one. Small details such as the pantry or bad carpets can easily and cheaply be changed, but big details such as whether the home faces the sun and how much living space (discluding hallways, staircases, unnecessarily massive bedroom) that the home has.
Sixth rule: Take your time, and do your own research online. Mustache notes, “if you spend 50 hours researching houses, but save $50,000 on a purchase because of it, what is your hourly rate?”. However, it is crucial to work fast when necessary, meaning to shop around for 6 + months to find the proper home, and when you have found it put in an offer as soon as the listing hits the internet.