Mr. Money Mustache, one of the well-known FIRE movement figures, joins Jillian to discuss how to optimize money so you can create the life you only dream of.
More About Mr. Money Mustache:
Mr. Money Mustache (MMM) is the pen name for retired software engineer Peter Adeney. He retired at age 30 by living frugally and investing the majority of his take-home pay. MMM is known within the Financial Independence Retire Early (FIRE) community for his cornerstone article The Shockingly Simple Math Behind Early Retirement.
His blog and early retirement story have been featured on ABC News, Market Watch, CBS News, The New Yorker and the recent Playing with FIRE documentary. MMM is a self-described family man who believes you can start a life that is better than your current one and costs less.
- Evaluate your daily life, then eliminate the stressors
- Focus on your passions, instead of the things you aren't buying
- Mr. Money Mustache's reason for retiring early
- Being good with money is a process
- Why FIRE is about opting in, not out
- Finding win-win situations to optimize your life
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What Does A Good Day Look Like To You?
To start optimizing your money, Mr. Money Mustache suggests that you look at your day to day life when it's not a vacation or the weekend. Make a list of the things that bring happiness and the things that cause stress. For example, if a long commute with traffic causes stress, consider moving. You can save money and gain sanity.
Moving is a big step, but Mr. Money Mustache reminds listeners that you can start to optimize your money in small ways too. Such as cleaning up the kitchen and garage so you can enjoy your home and engage with family. Taking the time to do this might mean you choose to skip the weekend ski-vacation, but it'll be worth it to set up your environment to match your life goals.
Look at how you spend your time and money. See what changes you can make in all areas from work to fitness to make every day a reflection of your values.
You can do this stuff to your whole life, and suddenly the expenses start melting away, even as you're getting happier.
Jillian couldn't agree more. Often there is a belief that having low expenses and simplifying means life is hard and menial. This isn't true for either Jillian or Mr. Money Mustache who liver happy and fulfilled lives by creating space for what they value. This could be walking the kids to school or waking up naturally. These are the kinds of luxuries that are hard to buy. It takes a different approach.
How would you like to be healthy, have more free time and have fun? That's what you're really putting back into your life by cutting out expensive frills.
Mr. Money Mustache says not to even worry about the numbers when you first think about optimizing money. Think about the things you want to do each day.
You design a good life, and then you realize that it doesn't cost very much.
Choose Time And Freedom
Learning how to optimize your money to make life easier and reduce pain is exactly what Mr. Money Mustache excels at because of how he grew up. He was born and raised in a small town in Canada. There was not a high bar of wealth surrounding him. Having a car, bike, and good music all made him feel like he was living a luxurious life.
Mr. Money Mustache focused on his passions, instead of the things he wasn't buying. Now, as a father, he hopes to instill the same principles about daily luxuries and working for your life rather than what society dictates.
He recalls the summer after 12th grade as one of his best childhood memories. He and his friends spent their days in good conversation, playing cards and drinking beer around the campfire. It was unscheduled social time that Mr. Money Mustache describes as essential to humans. He now tries to recreate these moments by bringing people together to have long discussions and create lasting friendships.
There's not enough of that in U.S. culture… we are either at work or on organized vacations, we're not just hanging around in a group of 20 people very often.
Time and freedom is what makes the summer after 12th grade something he can re-create today.
Mr. Money Mustache's Inspiration For Early Retirement
Mr. Money Mustache didn't only want to create comfortable social environments for friends. He had a goal be the best parent possible. This was his main drive for pursuing Financial Independence and Retire Early (FIRE). At work, he witnessed the conflict parents encountered when they couldn't be home with their sick child or go to a game. Mr. Money Mustache wanted to have the time and freedom for his future child.
By the time I have kids, I want to be free from mandatory work so I can be a super-dad.
Because of Financial Independence (FI), he was able to quit work and put his child first, fulfilling his promise to be the best parent possible. This meant choosing a home in a neighborhood that would give his son a safe and relaxed place to run around in a pack with his friends.
Being Good With Money Is One Of Life's Most Important Skills
Being good with money enabled Mr. Money Mustache to re-create the best parts of his childhood and be a present parent for his son. If you feel a resistance to the idea of being good with money, think about the narrative behind that feeling. Do you think you'll be considered greedy or have a boring life? These are common beliefs that feed this resistance. The reality is, being good with money gives you the ability to live a life that makes you happy.
Your dollar bills are little green employees that will stay with you for life. They will keep working for you as long as you keep them, meaning you have them invested doing something. Or when you spend them, you're giving them away to be someone else’s employees.
Mr. Money Mustache says you need to find the balance between spending your little green employees and investing them. Money is useful if you don't spend it. It can compound to create passive income which sustains the life you choose to build.
FIRE Allows You To Opt-in
A common misconception is that early retirement is about opting out. Jillian and Mr. Money Mustache don't agree. Creating the life you want through passive income (by investing) is exactly what the FIRE movement is about. You get to opt-in to all the things you love because of it.
You're opting into awesomeness…or at least to things that are happy for you and good for your own mental health.
Mr. Money Mustache was able to make his life optimal because he was good with money. He now extends this to his local community. He purchased an old building and turned it into a co-working and event space. The space has all the amenities of a coffee shop plus the added benefit of socializing within the local community. People in this FI oriented space help each other with life including renovations and business projects.
Mr. Money Mustache was only able to opt-in to this people-centric way of life because of FIRE.
One Choice Can Improve Your Financial Life
Life optimization didn't happen overnight for Mr. Money Mustache. Being good with money by paying off debt and investing takes time. It could take 10 or even 20 years. That's daunting for anyone just starting to take control of their finances.
When we use the word Financial Independence it's not such a good thing because it scares people off…'good with money' is something that can happen overnight. You can suddenly be a little bit better with money. Every single choice you make can be a destructive choice or a productive one…I'm going to choose to pay this debt off or I'm going to choose to add to my debt. Those are really small easy decisions and the benefits begin immediately.
Mr. Money Mustache continues to say that one choice can improve the rest of your financial life. You're building up a series of good financial decisions that will start to make you less stressed. Over time, these decisions can give you more freedom so you can lean into every season of life.
The Joy Of Optimizing
When you're learning to be good with money, Mr. Money Mustache suggests you always look for win-win situations. That's how you can optimize. At his first job out of college, he and his five friends rented a beautiful home in an expensive neighborhood at the heart of the city. Because they shared rent it cost about $300-$400 a month. He describes this as a win-win situation that allowed him to live the life he wanted and pay less.
I like to seek out those win-win situations where I'm saving money, but having as much fun as possible too. When you look around there are ways to this in almost every area of life.
Easy, fun and frugal is possible. It might take some digging around to find that win.
There is always a win a short distance from your house, and it's always going to be what your friends aren't doing…but those are the things that will get you ahead.
Being good with money translates into wealth. At some point, you will have to do less expensive activities to help build this wealth. This doesn't need to be a chore. The joy of optimizing can add richness and purpose to your life.
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In this episode, Jillian recommends Noom. If you made a New Year's Resolution to eat better or lose some weight and you're finding you could use a little extra support, check out Noom. You can start a 2 week trial for just $1.