By: Laura Walton AFC®
Financial Independence/Retire Early – how is this possible? Suze Orman says FI/RE “…is the biggest mistake, financially speaking, you will ever, ever make in your lifetime.” Mr. Money Mustache counters “as soon as you stop making excuses for why these ideas can’t possibly work for you, you can start actually doing them and seeing the benefits – today.” Touché!
Mr. Money Mustache (MMM) responded to Suze Orman’s objections. He’s definitely the glass-half-full guy. He sees possible flaws as misunderstandings; challenges as obstacles to overcome:
- Yes, high wage earners have an easier time of reaching FI/RE but it’s all relative. He makes the point that it’s possible to “blow almost any paycheck” and that it’s really about saving $10 at a time.
- And, it’s not really about early retirement! Instead, it means working hard at things that are important to you for the rest of your life. In other words, having the freedom to choose your work.
- We can be happy on ANY level of spending. He compares a $100 set of weights bought off Craigslist to a $2500/month personal trainer – both serve the same goal, fitness.
- It’s not about the stock market but rather understanding the role the market plays in your financial plan and keeping your life expenses low and controlled.
- Costs we all worry about (education and health care) challenge us to think outside the box, i.e. community college, scholarships, and going outside the country for medical care.
On the other hand, Suze says “you need at least $5M, or $6M…Really, you might need $10M.” Her glass-half-empty concern is that “things happen!” Yes, in a perfect world, we could get by with a few hundred thousand in the bank by spending just over $20,000 per year but who has a perfect world decade after decade? She goes on about unexpected expenses – accidents, illness, death, investment losses – to the point of fearmongering. In fact, MMM counters by suggesting hanging out with more optimistic friends!
I think the truth lies somewhere in between but they both agree on one thing – finding the right job for you. If you choose to work ‘til you’re 70, you better like your job (or create a great life outside your job – see my Nov 7 blog, “Your Job, Your Passion”). If you don’t like your job, you’d better start saving $10 at a time to give you the freedom to make a different choice down the road.
Many people in our 3rd DecadeTM program would like to retire early – say at 40, 50, or 60. And several of them are saving that $10 at a time on incomes that others would be pressed to save anything. They will achieve it and, I suspect, keep on working at something that’s more meaningful to them while keeping expenses low to continue to give themselves choices – the ultimate freedom.