Get Rich or Live Trying

It’s been said there are two ways getting rich: Make more or spend less. If you’re planning on incorporating the latter strategy–or combining it with the former–there are few better resources than a blog called Mr Money Mustache. MMM covers a range of financial topics from housing to insurance to diet to philosophy. MMM–the author’s pseudonym and site’s namesake–instructs readers how they can achieve financial freedom like he did, retiring at the age of 30 with his family.

Similar to the book “Your Money or Your Life“, the MMM blog dolls out doses of financial realism along with practical advice. Unlike the book, it’s doled out in easy-to-digest blog-post portions and written in a very funny prose style.

He lays out the problem, which is the common idea 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 years of career work that it will take to get yourself enough savings to enjoy a brief retirement.

Instead, he proposes that our lifestyles are the problem, saying:

Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more.

He elucidates the particulars of this wasteful behavior and shares the tools that have enabled him to get his household expenses down to $27K/year. He also runs through case-studies submitted by his readers.

His prescription is more or less as follows:

Getting rid of your Debt Emergency if you have one. Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bike wherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism.

All of the above topics he expands on at length in his highly readable style.

If you don’t think MMM is on point, consider that the average American household carries $7,073 of debt, according to the US Census. If you just look households that carry credit card debt versus all households, that number rises to $15,162. Average household mortgage debt is $147,967 and average student loan debt is $33,445. These hefty numbers are coupled our current 3.7% personal savings rate; compare that to the 7.5% in the early 1950s and 10.5% percent in the early 1980s. Real incomes have increased over the last several decades, but the income distribution has been far from equal, with small populations enjoying the bulk of the increases, so many people find it hard to get in the black.

While rising costs for things like health insurance, housing and school surely account for much of the rising debt and falling savings, much of the blame–according to MMM–is attributable to our fiscally uninformed, lavish, consumer-obsessed lifestyles whose spending behavior is grossly mismatched with our income. It’s also mismatched with our values–spending money on stuff that has little bearing on our long-term happiness.

Check out more at www.mrmoneymustache.com

Image Rain of Money via Shutterstock