4 ms·

The mustache guy is at the poverty line? You have read http://www.mrmoneymustache.com/2012/06/01/raising-a-family-on-under-2000-per-year/ http://www.mrmoneymust

The mustache guy is at the poverty line? You have read http://www.mrmoneymustache.com/2012/06/01/raising-a-family-on-under-2000-per-year/ http://www.mrmoneymustache.com/2012/06/01/raising-a-family-o... right? To quote the Princess Bride, "I do not think that word means what you think it means." To be fair to your actual point though, he is in your third category considering some great luck on cashing in startup options and other investments. Although he lost a lot on real estate too. I agree passive income has much more of a luck/hard to define or acquire skill element than its proponents are letting on.

nilkn 13y ago
I've read that article, and I still believe that their income classifies them as near poverty. They have two "tricks" that give them that lifestyle: (1) Prior to 'retiring' they were making upwards of $200k combined (IIRC), and this is probably what allowed them to purchase the house. So they weren't always near or at poverty. (2) The house was renovated by hand, every single meal is cooked by hand, and in general they are so tight with money that the wife wrote an extremely anxious post once about the crazy expensive experience she had when her father took her and her son out to get ice cream one day. Having to be super anxious about very minor expenses is pushing you close to poverty in terms of income. It's also worth noting that he only says the home is presently worth $400k, not that they gave $400k for it. They may have purchased it for half that or less and did significant personal renovation to raise its value.
- Robin_Message 13y ago
  I don't think they are "tricks"; they're sensible money management strategies that enable them to be rich and missing them causes other people to be poor whilst still having a larger income. (1) I think this is a basic terms/mindset issue. Income is not wealth. Most things you own are liabities (costing you to keep them), instead of assets (earning you money by keeping them.) The point is, they aren't and never were near poverty. But now they invested enough of their income so that they don't need to work to live comfortably, they are pretty much rich. For example, they purchased their house. They actually own it, so they are never going to get kicked out of it, even if they never work again. What proportion of people you know with >$20-30K incomes own their home outright? Still sure your measure of poverty is correct? (2) The return on doing those kinds of things is great, and as MMM says, you learn useful skills, get fit, and most people find the activities enjoyable. You can always subcontract some of it without really changing the thesis, just not all of it [1]. On the ice cream, I got the impression she was anxious because it was super weird to waste all that money on extremely fleeting and pointless pleasures, but I'll give you that attitude might be unpleasant and socially awkward. Still don't think I'd call it poverty though; more like extreme thrift/being a tight bastard. $400k - so? What relevance does its market value have? I think it makes much more sense to see a house as a useful liability (everyone's got to live somewhere, and you've got to pay taxes and upkeep even when you own it, so its costing you, not making you money), instead of pretending it's an asset (and it's a shitty one due to lack of diversification even if you were happy to sell it tomorrow and live under a bridge). Genuine point: do you really think this? What's your financial education/understanding like? MMM being rich just seemed obvious to me, which is why I'm arguing so hard. Thanks for joining in! [1] http://www.ribbonfarm.com/2011/12/08/acting-dead-trading-up-and-leaving-the-middle-class/ http://www.ribbonfarm.com/2011/12/08/acting-dead-trading-up-... for an interesting take on the collapse of the middle class and trick of mixing fancy with not.
  - dev_jim 13y ago
    > MMM being rich just seemed obvious to me, Do you actually believe he is rich or are you just saying this to be contradictory? You make a big deal of owning his home outright, but it's actually not that much money when you think about it. A $320k mortgage for a $400k home is $1,200 in interest a month at 4.5%. That's an extra $15k a year and that's not nothing, but even adding that to his $27k puts him below the U.S. median family income. And that's why things like ice cream freak them out. $27k/year, even with a paid for home, is not a lot of money. Another way to think about this is seniors. Social security isn't too far off his income level. A lot seniors own their home outright. If that's your only source of income then sure you can live a simple life in Florida, but no one would call this "rich".
    - VLM 13y ago
      We're running into sociological class issues WRT definitions. These are generalizations, but pretty accurate: Lower class people in the USA think being rich is high spending. Middle class people in the USA (a shrinking breed...) think being rich is having a high income. Upper class people in the USA think being rich is owning nice assets. Its funny how if you look at an economics equation like "assets" = "sum of income" - "sum of spending" each social class thinks success for everyone (although actually only valid within their own class) is maxing out a different variable. Its no great surprise they're confused as heck when they talk to and with each other. For example this is the legendary tightwad rich dude trope. Poor dude doesn't understand why rich dude doesn't spend constantly like a drunken sailor because thats how he defines success. On the other hand, rich dude doesn't care about spending, it doesn't show up on his cultural radar, all that matters to him is nice assets. And thats why all of us have to sit thru the tiring stereotype whenever hollywood wants. Boring! Look at attitudes toward higher ed. Lower class doesn't see poor starving students spending bling, therefore its a negative to be avoided. Middle class fixates in it as a high income jobs program, all that matters is getting the credential for the job. Upper class sees an education as a lifetime asset, gives you something to think about for the rest of your life, if you do it right. The three usually don't understand each other or their desires at all.
    - sokoloff 13y ago
- VLM 13y ago
  I also read "the mustache guy" blog and a perspective that might help you understand him better is he's all about controlling the location of his personal poverty line, not convincing himself that living at some supposedly universal poverty line is cool. By working the system and thinking really hard (well, by median american standards) his personal poverty line is probably a quarter of mine. That's how both of us live pretty well, despite him getting only about 1/4 what I do. He travels around the world about as much as I do, we both have similar goal of eating high quality food. The other thing he's really hot for is self control. He spends like a drunken sailor; its just he only spends like a drunken sailor on things that are worth spending like a drunken sailor on. There's a lot of insight in the old unsourced W C Fields quote "I spent half my money on gambling, alcohol, and wild women. The other half I wasted." Ice cream just shows up on the "wasted" list. The saga of the ice cream is a perfect example of sophistry as an attack mode. He was using it as a great individual example about philosophy. The folks attacking him piled onto the tree and completely missed the forest. For our educated HN readers, imagine a modern Plato telling the "allegory of the cave" and a bunch of people declaring Plato an idiot because they personally don't live in a cave and they use lightbulbs not camp fires, therefore the whole story and everything it implies is completely useless to everyone. That's a pretty good summary of the negative reaction to the ice cream saga. I don't think that flexible creative thinking, and self control, fit in very well with the modern mass media advertising narrative; Its an existential threat to them. Can predict he would get intense pushback from the drones, and in practice, he does. There's an old saying about Americans would rather die than think. Well, if you make fun of them for doing something stupid, the loud ones get belligerent.
  - nilkn 13y ago
    I appreciate your offering an alternative perspective, but I disagree with almost everything you've written. > By working the system and thinking really hard (well, by median american standards) his personal poverty line is probably a quarter of mine. That's how both of us live pretty well, despite him getting only about 1/4 what I do. He travels around the world about as much as I do, we both have similar goal of eating high quality food. This sounds unreasonable and incorrect. I've read a lot of his blog and I don't think he has discovered some obscure loopholes or anything like that. He just lives very frugally. I trust that you're a smart fellow, so I believe that if you were given the same base amount of money as MMM you could easily replicate his lifestyle. You know how to cook your own food. I'm sure you could figure out how to maintain your home and renovate it, especially with all the extra time you'd have to focus on that. If you quit your job, you wouldn't have to live wherever you're currently at, so if it's an expensive area you could move to a cheap area. The only thing holding you back is desire. Your "poverty line" isn't at the same place as his because you don't actually desire the life he leads. > He spends like a drunken sailor I have to disagree with this as well. I don't think I could ever regard somebody living on at most $27k for a family of three in a medium COL city in the United States as spending like a drunken sailor. You'd have to change the usual meaning of that phrase. To me, this is just simply not true. It doesn't matter if he spends most of that money on just a small number of things important to him. The set of medium COL cities in the US is sufficiently well-defined that $27k for a family of three is under no circumstances spending like a drunken sailor. > "I spent half my money on gambling, alcohol, and wild women. The other half I wasted." This is a funny quote, but I disagree with you that it's actually practically useful. If you take it too literally, you'll realize it's just a tautology. This justifies any and all spending and therefore cannot possibly be a discriminating strategy for personal finance that applies to multiple people. But the exploration of such strategies is exactly the purpose of MMM's blog, so I think there's a bit of irony in relating MMM to a quote which, if taken too literally, undermines his own blog. > The saga of the ice cream is a perfect example of sophistry as an attack mode. Except it's not, because I wasn't attacking anybody. The ice cream "saga" comes up often because it shows a lot of people that they don't actually desire the lifestyle he and his family lead. It takes all the persuasive rhetoric of the site and really brings it down to reality, showing the reader what the lifestyle is really like. People reacting strongly to that "saga" are, in general, not being judgmental at all, not on a personal level anyway. They're simply having the epiphany that this isn't the lifestyle they want. > Plato telling the "allegory of the cave" and a bunch of people declaring Plato an idiot because they personally don't live in a cave and they use lightbulbs not camp fires, therefore the whole story and everything it implies is completely useless to everyone. That's a pretty good summary of the negative reaction to the ice cream saga. This is all overly dramatized and, as I explained above, I don't think it's a good summary either. I for one have gained a lot of benefit from MMM's blog and regard it as having very high value, but I still don't covet his actual lifestyle. I've also never declared MMM an idiot. I wouldn't even consider myself a detractor, but I imagine that even among his true detractors very few would go so far as to call him an idiot or not appreciate any of the personal finance lessons he has to teach.

nilkn 13y ago

I've read that article, and I still believe that their income classifies them as near poverty. They have two "tricks" that give them that lifestyle: (1) Prior to 'retiring' they were making upwards of $200k combined (IIRC), and this is probably what allowed them to purchase the house. So they weren't always near or at poverty. (2) The house was renovated by hand, every single meal is cooked by hand, and in general they are so tight with money that the wife wrote an extremely anxious post once about the crazy expensive experience she had when her father took her and her son out to get ice cream one day. Having to be super anxious about very minor expenses is pushing you close to poverty in terms of income. It's also worth noting that he only says the home is presently worth $400k, not that they gave $400k for it. They may have purchased it for half that or less and did significant personal renovation to raise its value.

Robin_Message 13y ago
I don't think they are "tricks"; they're sensible money management strategies that enable them to be rich and missing them causes other people to be poor whilst still having a larger income. (1) I think this is a basic terms/mindset issue. Income is not wealth. Most things you own are liabities (costing you to keep them), instead of assets (earning you money by keeping them.) The point is, they aren't and never were near poverty. But now they invested enough of their income so that they don't need to work to live comfortably, they are pretty much rich. For example, they purchased their house. They actually own it, so they are never going to get kicked out of it, even if they never work again. What proportion of people you know with >$20-30K incomes own their home outright? Still sure your measure of poverty is correct? (2) The return on doing those kinds of things is great, and as MMM says, you learn useful skills, get fit, and most people find the activities enjoyable. You can always subcontract some of it without really changing the thesis, just not all of it [1]. On the ice cream, I got the impression she was anxious because it was super weird to waste all that money on extremely fleeting and pointless pleasures, but I'll give you that attitude might be unpleasant and socially awkward. Still don't think I'd call it poverty though; more like extreme thrift/being a tight bastard. $400k - so? What relevance does its market value have? I think it makes much more sense to see a house as a useful liability (everyone's got to live somewhere, and you've got to pay taxes and upkeep even when you own it, so its costing you, not making you money), instead of pretending it's an asset (and it's a shitty one due to lack of diversification even if you were happy to sell it tomorrow and live under a bridge). Genuine point: do you really think this? What's your financial education/understanding like? MMM being rich just seemed obvious to me, which is why I'm arguing so hard. Thanks for joining in! [1] http://www.ribbonfarm.com/2011/12/08/acting-dead-trading-up-and-leaving-the-middle-class/ http://www.ribbonfarm.com/2011/12/08/acting-dead-trading-up-... for an interesting take on the collapse of the middle class and trick of mixing fancy with not.
- dev_jim 13y ago
  > MMM being rich just seemed obvious to me, Do you actually believe he is rich or are you just saying this to be contradictory? You make a big deal of owning his home outright, but it's actually not that much money when you think about it. A $320k mortgage for a $400k home is $1,200 in interest a month at 4.5%. That's an extra $15k a year and that's not nothing, but even adding that to his $27k puts him below the U.S. median family income. And that's why things like ice cream freak them out. $27k/year, even with a paid for home, is not a lot of money. Another way to think about this is seniors. Social security isn't too far off his income level. A lot seniors own their home outright. If that's your only source of income then sure you can live a simple life in Florida, but no one would call this "rich".
  - VLM 13y ago
    We're running into sociological class issues WRT definitions. These are generalizations, but pretty accurate: Lower class people in the USA think being rich is high spending. Middle class people in the USA (a shrinking breed...) think being rich is having a high income. Upper class people in the USA think being rich is owning nice assets. Its funny how if you look at an economics equation like "assets" = "sum of income" - "sum of spending" each social class thinks success for everyone (although actually only valid within their own class) is maxing out a different variable. Its no great surprise they're confused as heck when they talk to and with each other. For example this is the legendary tightwad rich dude trope. Poor dude doesn't understand why rich dude doesn't spend constantly like a drunken sailor because thats how he defines success. On the other hand, rich dude doesn't care about spending, it doesn't show up on his cultural radar, all that matters to him is nice assets. And thats why all of us have to sit thru the tiring stereotype whenever hollywood wants. Boring! Look at attitudes toward higher ed. Lower class doesn't see poor starving students spending bling, therefore its a negative to be avoided. Middle class fixates in it as a high income jobs program, all that matters is getting the credential for the job. Upper class sees an education as a lifetime asset, gives you something to think about for the rest of your life, if you do it right. The three usually don't understand each other or their desires at all.
  - sokoloff 13y ago
VLM 13y ago
I also read "the mustache guy" blog and a perspective that might help you understand him better is he's all about controlling the location of his personal poverty line, not convincing himself that living at some supposedly universal poverty line is cool. By working the system and thinking really hard (well, by median american standards) his personal poverty line is probably a quarter of mine. That's how both of us live pretty well, despite him getting only about 1/4 what I do. He travels around the world about as much as I do, we both have similar goal of eating high quality food. The other thing he's really hot for is self control. He spends like a drunken sailor; its just he only spends like a drunken sailor on things that are worth spending like a drunken sailor on. There's a lot of insight in the old unsourced W C Fields quote "I spent half my money on gambling, alcohol, and wild women. The other half I wasted." Ice cream just shows up on the "wasted" list. The saga of the ice cream is a perfect example of sophistry as an attack mode. He was using it as a great individual example about philosophy. The folks attacking him piled onto the tree and completely missed the forest. For our educated HN readers, imagine a modern Plato telling the "allegory of the cave" and a bunch of people declaring Plato an idiot because they personally don't live in a cave and they use lightbulbs not camp fires, therefore the whole story and everything it implies is completely useless to everyone. That's a pretty good summary of the negative reaction to the ice cream saga. I don't think that flexible creative thinking, and self control, fit in very well with the modern mass media advertising narrative; Its an existential threat to them. Can predict he would get intense pushback from the drones, and in practice, he does. There's an old saying about Americans would rather die than think. Well, if you make fun of them for doing something stupid, the loud ones get belligerent.
- nilkn 13y ago
  I appreciate your offering an alternative perspective, but I disagree with almost everything you've written. > By working the system and thinking really hard (well, by median american standards) his personal poverty line is probably a quarter of mine. That's how both of us live pretty well, despite him getting only about 1/4 what I do. He travels around the world about as much as I do, we both have similar goal of eating high quality food. This sounds unreasonable and incorrect. I've read a lot of his blog and I don't think he has discovered some obscure loopholes or anything like that. He just lives very frugally. I trust that you're a smart fellow, so I believe that if you were given the same base amount of money as MMM you could easily replicate his lifestyle. You know how to cook your own food. I'm sure you could figure out how to maintain your home and renovate it, especially with all the extra time you'd have to focus on that. If you quit your job, you wouldn't have to live wherever you're currently at, so if it's an expensive area you could move to a cheap area. The only thing holding you back is desire. Your "poverty line" isn't at the same place as his because you don't actually desire the life he leads. > He spends like a drunken sailor I have to disagree with this as well. I don't think I could ever regard somebody living on at most $27k for a family of three in a medium COL city in the United States as spending like a drunken sailor. You'd have to change the usual meaning of that phrase. To me, this is just simply not true. It doesn't matter if he spends most of that money on just a small number of things important to him. The set of medium COL cities in the US is sufficiently well-defined that $27k for a family of three is under no circumstances spending like a drunken sailor. > "I spent half my money on gambling, alcohol, and wild women. The other half I wasted." This is a funny quote, but I disagree with you that it's actually practically useful. If you take it too literally, you'll realize it's just a tautology. This justifies any and all spending and therefore cannot possibly be a discriminating strategy for personal finance that applies to multiple people. But the exploration of such strategies is exactly the purpose of MMM's blog, so I think there's a bit of irony in relating MMM to a quote which, if taken too literally, undermines his own blog. > The saga of the ice cream is a perfect example of sophistry as an attack mode. Except it's not, because I wasn't attacking anybody. The ice cream "saga" comes up often because it shows a lot of people that they don't actually desire the lifestyle he and his family lead. It takes all the persuasive rhetoric of the site and really brings it down to reality, showing the reader what the lifestyle is really like. People reacting strongly to that "saga" are, in general, not being judgmental at all, not on a personal level anyway. They're simply having the epiphany that this isn't the lifestyle they want. > Plato telling the "allegory of the cave" and a bunch of people declaring Plato an idiot because they personally don't live in a cave and they use lightbulbs not camp fires, therefore the whole story and everything it implies is completely useless to everyone. That's a pretty good summary of the negative reaction to the ice cream saga. This is all overly dramatized and, as I explained above, I don't think it's a good summary either. I for one have gained a lot of benefit from MMM's blog and regard it as having very high value, but I still don't covet his actual lifestyle. I've also never declared MMM an idiot. I wouldn't even consider myself a detractor, but I imagine that even among his true detractors very few would go so far as to call him an idiot or not appreciate any of the personal finance lessons he has to teach.