RPF0437-Mustachianism_101
00:00:00.000 | Today on Radical Personal Finance, Mustachianism 101, the philosophy of popular personal finance
00:00:09.420 | writer, Mr. Money Mustache.
00:00:29.700 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge,
00:00:33.060 | skills, insight, and encouragement you need to live a rich and meaningful life now while
00:00:37.820 | building a plan for financial freedom in 10 years or less.
00:00:40.820 | My name is Joshua Sheets and I am your host.
00:00:43.340 | Today we're going to talk about the philosophy of one of the leading personal finance writers
00:00:48.100 | online today who is very committed to the second part, well both parts, but especially
00:00:53.620 | that financial freedom in 10 years or less.
00:01:02.100 | I had promised this show a while ago in my recent episode where I interviewed Mr. Money
00:01:07.220 | Mustache.
00:01:08.220 | I ran it up with him in Gainesville a few weeks ago and was able to sit down and finally
00:01:12.260 | get him on the microphone.
00:01:13.260 | It was probably the most requested interview.
00:01:15.100 | It was episode 425 of the show if you'd like to go back and listen to it.
00:01:19.340 | It was the most requested interview where many of you wanted me to speak to him.
00:01:24.980 | Mr. Money Mustache's name is Pete if you're interested.
00:01:27.820 | But Pete said when I'd reached out to him several times he had done a bunch of interviews
00:01:31.260 | and he just wasn't interested in kind of rehashing the same old, same old.
00:01:34.700 | So finally I was able to catch up with him in Gainesville and I promised him, I said
00:01:38.380 | I won't make you go through and talk about what you say on the blog.
00:01:42.660 | I won't make you do it.
00:01:44.140 | What we'll just do is I just want to hear about what's going on currently.
00:01:46.580 | So that's why the tenor of that interview, episode 425, was not about his philosophy.
00:01:51.260 | It wasn't about what he does.
00:01:53.100 | It wasn't about even what he writes about.
00:01:54.620 | It was about him as a person because many of you will really, you're already familiar
00:02:00.260 | with his philosophy and what he teaches.
00:02:02.960 | But Pete has been an internet publishing sensation, especially in the world of personal finance.
00:02:09.580 | There are many, there are from time to time new personalities come along, new people come
00:02:14.320 | along and speak to people.
00:02:17.380 | And on a comparison of a scale, there would be no comparison between the impact thus far
00:02:24.420 | anyway of somebody like Mr. Money Mustache and his website as compared to say a Robert
00:02:29.500 | Kiyosaki of Rich Dad Poor Dad fame or of who else.
00:02:37.340 | I mean there are from time – there are other much more widely known personal finance pundits,
00:02:44.060 | somebody like David Bach from The Automatic Millionaire.
00:02:47.440 | These people have affected many huge, huge audiences, much, much bigger than Mr. Money
00:02:55.420 | Mustache's audience.
00:02:57.460 | However, Mr. Money Mustache has not gone out and tried to market his message.
00:03:04.060 | So with regard to a grassroots message where you just have a guy sitting down typing some
00:03:10.660 | stuff into his computer, it's hard for me to find somebody in the finance space who
00:03:17.380 | has had such a big impact.
00:03:19.700 | It's really hard.
00:03:22.260 | Pete to his credit has been – had a very authentic story and he has just simply sat
00:03:29.220 | down and written out his stuff and people have found it because it was good.
00:03:33.260 | One of the beauties of the internet.
00:03:35.140 | And today, I'm going to tell you a little bit about his philosophy, summarize what he
00:03:38.980 | teaches so that you can be aware because as even I interviewed many people who were there
00:03:43.320 | gathered for his conference or the conference that his community was putting on for him,
00:03:49.460 | many people were focusing and saying, "I'm a mustachian."
00:03:52.580 | So let me explain what mustachianism means.
00:03:56.320 | Before I explain the philosophy of Mr. Money Mustache though, sponsor of today's show
00:04:00.540 | is Paladin Registry.
00:04:02.740 | Paladin is the go-to place for you to start your search for a financial advisor.
00:04:07.180 | Now here's the catch.
00:04:09.620 | Some financial advisors will probably hold and be aware of some of the teachings of somebody
00:04:16.980 | like Mr. Money Mustache or somebody like Radical Personal Finance.
00:04:20.800 | Many of them won't be and that's one of the biggest challenges to finding a great financial
00:04:24.900 | advisor today.
00:04:26.220 | Most financial advisors are excellent in what I call the mainstream.
00:04:30.660 | They're not going to tell you to sell your car and ride a bicycle but they will help
00:04:33.900 | you figure out how to properly allocate your portfolio and how to draw income out of it
00:04:37.700 | from retirement.
00:04:38.700 | I think there's a place for both and I'd love to see more mustachian financial advisors
00:04:42.860 | emerge.
00:04:44.260 | But there are a ton of very competent financial advisors who are skilled planners and advisors
00:04:51.380 | and there's no reason why you can't take the knowledge that you bring from the perspective
00:04:56.220 | of Radical Personal Finance or Mr. Money Mustache, this type of hardcore stuff and integrate
00:05:02.700 | that with mainstream financial planning techniques.
00:05:05.860 | It's one thing to say I'm going to sell my car and buy a bike.
00:05:09.580 | That's great.
00:05:10.580 | It's another thing to figure out how do I live off of a portfolio for the next 30 years
00:05:14.500 | when I don't have several million dollars extra and I got to make sure that I structure
00:05:18.460 | this thing properly.
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00:05:56.980 | You can interview them.
00:05:57.980 | Can't promise you're going to find your next great advisor there, but I can promise it's
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00:06:05.780 | Thank you.
00:06:06.780 | Please use that link, RadicalPersonalFinance.com/Paladin, and I will receive a commission when you fill
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00:06:12.300 | Thank you very much.
00:06:13.300 | All right.
00:06:14.300 | The philosophy of Mr. Money Mustache.
00:06:17.740 | The story of mustachianism very much parallels Pete's own experience.
00:06:24.620 | He is originally from Canada, and even his financial journey parallels much of the advice
00:06:31.500 | that he gives.
00:06:33.260 | He had, in many ways, a normal upbringing in Canada.
00:06:37.500 | He was born to a couple of good parents.
00:06:40.140 | He had a very straightforward education.
00:06:43.020 | He studied computer science in school, graduated out of college at the normal 22 years old,
00:06:48.580 | and got his first job.
00:06:50.700 | He started off on a good, solid foundation, but he was not rich.
00:06:53.980 | He didn't have any debt.
00:06:54.980 | He didn't have any savings.
00:06:56.460 | As he talks about in his writing, he graduated with a bike and a backpack and a diploma.
00:07:02.040 | He did not have any student loans, which was a tremendous benefit to him and also should
00:07:08.360 | be to all of us.
00:07:10.060 | But he started off with no student loans.
00:07:13.100 | He had a little bit of help from his parents.
00:07:15.500 | He got his scholarships.
00:07:16.500 | He had various high school and summer jobs, all of which helped him to start on a solid
00:07:21.700 | foundation.
00:07:22.740 | He came on down to the United States and, as he would tell, made many of the mistakes
00:07:27.780 | that many people make when starting off their life, buying fancy cars, going around and
00:07:35.060 | spending lots of money at bars and restaurants and basically living the good life.
00:07:39.660 | But over time, he did work really hard and he did get some raises of his income, transition
00:07:45.140 | jobs, and he always worked to keep his housing expenses relatively low by sharing roommates.
00:07:52.260 | So over time, he and his wife got together.
00:07:55.820 | At some point in time, they married.
00:07:57.940 | Both of them continued to live on a relatively small amount of money while earning good professional
00:08:04.100 | incomes and being without children.
00:08:06.940 | So in that context, they were able to save a significant percentage of their income.
00:08:12.340 | Along the way, he dabbled in some real estate on the side.
00:08:14.900 | He had a part-time business building houses and was able to put himself in a situation
00:08:21.540 | by working on some construction projects and also renting out some houses.
00:08:26.100 | That led to the point where, after about nine or ten years from graduating college at about
00:08:30.700 | 22 – it's called out at age 30, 31 – they officially declared themselves retired.
00:08:36.180 | They'd been able to save over that period of time somewhere around $800,000 and, I believe,
00:08:43.660 | pay off their original house.
00:08:46.220 | Because of their skill with spending a relatively low amount of money, they were able to consider
00:08:51.140 | themselves retired with that $800,000 portfolio.
00:08:56.260 | Pete subscribes strongly to the theory of the 4% rule.
00:09:00.020 | The idea of a 4% rule is if you have a portfolio of mutual funds and stocks, you can reliably
00:09:08.540 | withdraw about 4% of the value from that portfolio into perpetuity.
00:09:13.920 | So that means that with an $800,000 portfolio and a paid-off house, he and his wife were
00:09:19.300 | planning on living on an income of about $32,000 per year to cover their expenses.
00:09:24.540 | And to put themselves in that situation, as long as they had that money, they considered
00:09:28.460 | themselves retired.
00:09:30.540 | They were able to retire by the age of about 31 before they had their first child.
00:09:35.980 | Since then – that's been a number of years ago – things have continued to go on.
00:09:39.620 | He's moved, sold his house that he was living in, renovated another house.
00:09:44.140 | He and his wife have continued to pursue all kinds of different projects.
00:09:47.980 | He works on his blog.
00:09:50.660 | He does some building stuff that he enjoys.
00:09:52.940 | They have at times done home education for their son.
00:09:56.940 | They spend a lot of time with their son.
00:09:58.920 | His wife runs a small business on the side.
00:10:02.100 | And life is pretty good.
00:10:03.960 | He started writing his blog back in – his first post was made in April of 2011.
00:10:11.940 | Since that time, the blog itself has become a significant business.
00:10:16.020 | He releases numbers as far as his earnings in various places, at least he has in the
00:10:20.580 | recent years.
00:10:21.580 | Say he earns probably about a half a million dollars a year of profit from his blog, primarily
00:10:26.980 | from advertising.
00:10:28.540 | If he wanted to – now remember, he has the number one personal finance blog on the internet
00:10:32.360 | that I'm aware of.
00:10:34.180 | And if he – it is not optimized for making money.
00:10:37.620 | If he actually sought to optimize it and make money, he could make a lot more money off
00:10:43.380 | of it than he does.
00:10:44.380 | He does his – his revenues come in in a very unobtrusive way and that fits his personal
00:10:49.540 | philosophy.
00:10:50.980 | So I'm going to explain to you a few of the things that you need to know about the
00:10:55.660 | philosophy and a few of the areas that are understated.
00:10:57.500 | I'm going to walk through some of these major things and also tell you for whom does
00:11:00.940 | this philosophy work and for whom does it not work.
00:11:04.100 | It's important that you recognize up front that by all accounts, my own testimony included,
00:11:12.860 | it is who he says he is.
00:11:14.500 | He is a genuine guy.
00:11:17.020 | The guy that you meet in person is exactly the same guy that you meet online.
00:11:22.740 | I have seen him a few times.
00:11:25.500 | Started when – a few years ago, immediately after I had left my – closed my financial
00:11:30.340 | planning business to start Radical Personal Finance, I traveled out to Colorado and to
00:11:35.540 | visit my family.
00:11:36.540 | I wanted to go out and visit my grandmother.
00:11:39.020 | And so my wife and I, we traveled out there and we were on our way passing up through
00:11:43.300 | from Denver headed north into Wyoming, which would be passing through where he lives in
00:11:48.700 | Longmont, Colorado.
00:11:50.080 | And so I sent him a note and said, "Hey, I'm coming through town.
00:11:52.740 | Could I come by and connect with you?"
00:11:55.260 | And he said yes.
00:11:56.260 | He was very gracious about that.
00:11:57.620 | And my wife and son and I went by.
00:11:59.620 | We spent the evening with a couple of other of his readers.
00:12:03.700 | He had scheduled a public event and a couple of others of his readers.
00:12:07.500 | We went on a bike ride and then wound up visiting with him at his home and he very graciously
00:12:12.100 | invited us to spend the night.
00:12:13.340 | So my wife and I spent the night in his basement back when he had a basement, saw his project
00:12:17.260 | when he was working on it.
00:12:18.900 | And Pete, his wife and his son are just really great people.
00:12:22.780 | He is genuine to the core.
00:12:24.420 | I've met him and interacted with him a number of other times and I think if any of you met
00:12:28.420 | him, you would understand that he is who he says he is.
00:12:31.920 | When he talks about doing his writing because he just wants to do it, he really does.
00:12:37.100 | When he talks about not wanting to be part of the system, he really is.
00:12:41.620 | He's a genuine guy.
00:12:43.300 | And I love that about him.
00:12:45.580 | I applaud that.
00:12:47.060 | It's fantastic.
00:12:49.140 | It's also important that you recognize that his style of writing and his humor tends toward
00:12:55.680 | self-deprecation.
00:12:57.980 | And this is one of the challenges because you have to filter through the language of
00:13:03.540 | self-deprecating, humble language to try to understand is this really possible for a lot
00:13:10.740 | of people.
00:13:11.740 | Now, if Pete were listening to this, he would say, "Of course it's possible for a lot of
00:13:15.020 | people.
00:13:16.020 | What are you talking about?"
00:13:17.660 | The problem is you do need to have a significant – you need to have significant skills and
00:13:23.260 | competencies.
00:13:25.240 | No matter how disarmingly casual his language is about his approach, he is an extremely
00:13:30.740 | hard and industrious worker.
00:13:34.560 | There are a number of lessons that you can take even from his specific story that can
00:13:39.780 | be applied to many of our situations.
00:13:42.740 | Here are just some lessons.
00:13:43.940 | Number one, when he started off out of college, he didn't have any debt, no savings and he
00:13:48.900 | was very flexible.
00:13:50.620 | He didn't own a lot of stuff and so he was able to go and put himself in different positions.
00:13:56.060 | He worked hard.
00:13:57.060 | He got a degree in something that's actually useful.
00:13:59.500 | He got a degree in computer engineering and it's much easier to get a high-paying job
00:14:04.380 | with a degree in computer engineering than with say a degree in the humanities.
00:14:08.980 | He was a serious worker.
00:14:11.340 | For example, if you read his story, he talks about how he skipped his university graduation
00:14:15.620 | ceremony and because he didn't want to miss any work, he had already moved away to a new
00:14:19.860 | city 300 miles away from the university.
00:14:22.460 | So he skipped walking across the graduation ceremony.
00:14:25.860 | So don't let the persona of, "Oh, I'm kind of a slacker," fool you.
00:14:30.700 | The man works hard and he's a hard worker even now.
00:14:34.360 | You can't be lazy and have this type of philosophy work.
00:14:37.580 | Yes, he bought a car but it took him a year to pay off his car after he borrowed about
00:14:42.940 | $16,000 from it.
00:14:44.260 | So he was focused from the very beginning.
00:14:46.500 | He talks about how – disarmingly talks about, "I flaunted my new salary around town with
00:14:52.380 | bar and restaurant hopping and computer equipment and furniture and accessories for my car."
00:14:58.420 | But the reality is, yes, his level of flaunting was nothing like what the average person was.
00:15:03.220 | He was working hard at paying off debt.
00:15:06.460 | Certainly he got better over time but he was working hard at paying off debt.
00:15:10.720 | In his first time in a year in the tech market, he increased his salary from $41,000 to $57,600.
00:15:19.540 | That's a 40 percent raise.
00:15:21.940 | They don't hand out 40 percent raises to people who A, aren't in a good industry.
00:15:27.060 | He was in the computer engineering industry during a rising tech market.
00:15:30.740 | B, they don't hand out 40 percent raises to people who are slackers.
00:15:34.940 | So all of these things.
00:15:36.540 | He moved to the United States to get a job.
00:15:38.300 | That's one of the most important things, increasing his income.
00:15:41.540 | He and his wife met early and they joined finances early.
00:15:44.500 | That makes a huge difference to the ability to save wealth.
00:15:49.120 | Being a two-income household where expenses are less because of the shared efficiency
00:15:56.700 | of expenses, this is a big, big deal.
00:16:01.620 | To add her income to his income and have the ability to enjoy more frugal activities together,
00:16:08.620 | these things are a big, big deal in terms of actual results.
00:16:12.740 | Eight years out of college, he was earning $125,000 a year and his wife was earning $70,000
00:16:18.780 | a year.
00:16:19.780 | So that allowed them to significantly increase their savings very, very quickly.
00:16:26.740 | I hope in that you see, and I'm trying to cut through the casual, catchy, self-deprecating
00:16:33.900 | humor to see that don't let that stuff fool you.
00:16:36.540 | A lot of times people that are very smart will conceal that smartness behind an image
00:16:42.980 | that will help to not get such bad results.
00:16:47.300 | In our society, for whatever reason, people tend to be – seem to be more jealous of
00:16:51.420 | people who are successful.
00:16:53.300 | And so those of us who are successful, we often learn to engage in self-deprecating
00:16:58.620 | humor, kind of a "Ah, shucks, ma'am" type of attitude and Pete does exactly those
00:17:02.940 | same things.
00:17:04.240 | If you follow those lessons, however, you can do what he's done.
00:17:08.780 | The basic philosophy of financial independence that Pete espouses is a high savings rate.
00:17:14.500 | Earn a lot of money and save a high percentage of it, ideally 50 to 75% or more of your income.
00:17:22.660 | You can see how, based upon his own experience, that would be the simplest path to financial
00:17:28.500 | independence.
00:17:29.660 | If he was earning $125,000 and his wife was earning $77,000, that's over $200,000.
00:17:35.820 | Now ignore taxes for a moment.
00:17:38.600 | If he were spending 25% of their income, they're living a $50,000 and saving $150,000.
00:17:44.300 | Again, ignoring taxes temporarily.
00:17:48.580 | They're saving – that would allow you to save 75% of your income.
00:17:52.900 | And if you're spending $50,000 a year, you're living at what the median income is in the
00:17:58.220 | United States of America.
00:17:59.220 | You can live a great life.
00:18:00.840 | And when you bring that and add to that the lessons and skills of frugality that he embraces,
00:18:07.160 | you can live a great life and you can become financially independent very quickly.
00:18:12.700 | This is the approach that he is so powerful at articulating.
00:18:17.200 | My experience, the people who most resonate with the philosophy of Mr. Money Mustache
00:18:21.880 | and his approach are those who are high-income earners who are just sick of what they're
00:18:27.260 | doing, sick of their job and wanting to do something different.
00:18:32.340 | And for that person, his writing is addictive.
00:18:37.060 | I've known so many people.
00:18:38.300 | They start at the beginning and they read the entire volume of his blog.
00:18:42.740 | And I did that one.
00:18:43.740 | The first thing – generally, one of the things that I do when I find something is
00:18:46.220 | I read the whole archives, try to really understand.
00:18:49.500 | So I've read every article he's ever written in the past but not recently.
00:18:55.060 | I've read recent articles but in the past, I read all those things.
00:18:58.540 | And so that helps you to grasp the knowledge.
00:19:00.860 | And if you are a high-income earner, which most of you are, if you're a high-income
00:19:05.900 | earner, six-figure income earner and you're feeling stuck, you probably need a face punch
00:19:13.420 | from our friend, Mr. Money Mustache because Mr. Money Mustache has the ability to get
00:19:21.180 | you excited about living on $2,000 or $3,000 a month.
00:19:26.380 | Really, really remarkable, his skill with that.
00:19:30.300 | He is a skillful writer.
00:19:31.860 | He brings a sense of – I'm failing for the word.
00:19:40.460 | Insubordination, there's a better word for it.
00:19:42.700 | Just the sense of like, yeah, we can figure it out on our own terms.
00:19:46.740 | So he is a phenomenal writer to the upper class, to the high-income earners.
00:19:52.820 | And that's his intended audience as best I can imagine.
00:19:56.780 | He wants to help six-figure income earners recognize, "Listen.
00:20:01.060 | You can do this."
00:20:04.000 | This also shows the weakness of some of his philosophy because in many ways, if you're
00:20:11.660 | feeling stuck, you don't have a high income or you have other expenses.
00:20:18.940 | Perhaps you're caring for your parents, aging parents, or perhaps you're caring for children
00:20:23.300 | and you have committed yourself to certain courses of action that make your decisions
00:20:28.420 | a little bit different.
00:20:30.420 | People find it harder to really resonate with his message and with his methodology.
00:20:37.060 | Not that you can't learn, and I'm going to go through some other things that he is consistently
00:20:40.900 | teaching.
00:20:41.900 | You can learn, but it won't resonate with you quite so much.
00:20:45.900 | If you think back to the interviews I've played in recent days here on Radical Personal Finance,
00:20:50.140 | many of the listeners are high income, no children, young working professionals.
00:20:57.260 | It's no accident because this type of person can get extremely, a huge amount of value
00:21:04.340 | from him and from his philosophy.
00:21:06.700 | Now, he's not exclusively limited to just save all your money.
00:21:10.140 | He gives additional ways of doing it, much of which is a mindset.
00:21:16.180 | One of the real strengths to the philosophy of mustachianism is bringing intelligent design
00:21:22.980 | to life.
00:21:24.340 | Reid is an engineer, and so he brings that engineering skill set to the simple and the
00:21:31.060 | complex things of life.
00:21:34.900 | Probably what he's most well known for is his, I want to say hatred, despisement.
00:21:41.500 | He despises people who he would affectionately call car clowns, people who drive a lot.
00:21:48.660 | If you think about his approach, this is very normal for an engineer.
00:21:51.780 | An engineer looks at a problem and says, "How can we set something up for maximum efficiency?"
00:21:56.540 | Especially a computer engineer who needs to understand how to make the code the simplest
00:22:01.920 | possible so that it loads quickly and so that it works effectively.
00:22:05.800 | What he looks at is the massive simplicity and effectiveness of your making a choice
00:22:10.860 | to live right next to your work.
00:22:13.460 | That is so valuable.
00:22:15.660 | Many people don't think about that, and that's applicable no matter whether you're a high
00:22:18.900 | income earner or whether you're a low income earner.
00:22:21.380 | Live close to work and you'll save time.
00:22:24.340 | There's a reason why for years, President Trump, before he was President Trump, his
00:22:30.180 | office and his house are in the same building.
00:22:32.820 | Just go up and down the elevator, and still, I guess his office and his house are in the
00:22:35.580 | same building.
00:22:36.620 | It is incredibly efficient.
00:22:37.900 | I love having my office and my house in the same building.
00:22:40.820 | It is really, really valuable.
00:22:43.140 | Pete brings that philosophy of engineering to almost every aspect of life, and I think
00:22:47.980 | that's something that we all should take and model.
00:22:52.060 | Test the assumptions.
00:22:53.060 | Look at the situation and say, "If I were starting with a fresh blank slate, how would
00:22:56.580 | I design this to make it better?
00:23:01.100 | What is my actual goal, the end that I have in mind, and how can I bring intelligent design
00:23:06.540 | to this particular concept?"
00:23:09.300 | Another thing that Pete is really well – that I see as far as one of his fundamental strengths
00:23:17.300 | is he embraces adversity.
00:23:20.860 | I would say that he is influenced although – he aligns well.
00:23:26.300 | If you're familiar with the fundamentals of Stoic philosophy, the philosophy of Stoicism
00:23:30.780 | is gaining a real resurgence in the young – I think primarily men, young men really
00:23:39.980 | seem to be resonating with the philosophy of Stoicism.
00:23:42.860 | Although I don't know how deeply Pete has delved into Stoicism as a philosophy, he models
00:23:48.780 | the values of it, the embracing of adversity.
00:23:52.140 | He wrote a post years ago about his embrace of having his house be hot by not putting
00:24:00.100 | air conditioning in the house.
00:24:02.020 | This is a really useful mindset to go out and tackle adversity and take it as something
00:24:07.500 | that's powerful.
00:24:08.500 | When I was with him a few weeks ago, we got together over breakfast and he was talking
00:24:12.620 | about the cold shower that he had just taken, the place where we were together had run out
00:24:17.660 | of hot water and so they'd taken a freezing cold shower.
00:24:21.380 | But he wasn't complaining about it.
00:24:22.740 | He had tackled it as a benefit about what a rush, what a wake up to have a freezing
00:24:29.060 | cold shower in the morning, I feel really good right now.
00:24:31.700 | That's a tremendously powerful life skill.
00:24:35.780 | You don't have to embrace Stoicism to embrace that.
00:24:39.220 | I don't embrace Stoicism.
00:24:40.540 | I reject the philosophy, not as not having some useful points but personal reasons for
00:24:45.620 | it.
00:24:46.620 | But I want to embrace the same philosophy.
00:24:48.220 | I really love that and I think that's so powerful to embrace adversity.
00:24:52.620 | He writes about going out and riding his bicycle in a blizzard, in a snowstorm, all through
00:24:57.340 | the winter or of learning how to fit in small spaces, learning how to live in less.
00:25:03.660 | All of these things, if you turn it into an adventure, it can change your experience of
00:25:10.020 | life.
00:25:11.460 | That philosophy is applicable to everybody.
00:25:13.700 | You don't have to be rich or poor.
00:25:15.220 | Just embrace adversity and embrace it as an adventure because you can grow out of it.
00:25:22.180 | Really really useful.
00:25:23.380 | Again, he's big on being able to live big on little amounts of money by nixing stupid,
00:25:34.380 | by cutting out stupid stuff out of your life.
00:25:37.580 | That's something that's applicable no matter who you are, rich, poor, high income, low
00:25:40.900 | income, no matter where you live or your situation.
00:25:43.420 | You can do really well by living large on just a little bit of money.
00:25:49.380 | Pay attention to the details.
00:25:51.860 | His writing is a good mix of philosophy and practice.
00:25:55.660 | He does a good job of writing an article that is very philosophical, talks about very motivational
00:26:01.940 | and then in the next article, here's how you install a shower or here's how you tackle
00:26:06.220 | your, here's how you save money on your cell phone plan, things like that.
00:26:16.140 | Big on again dumping the car and embracing the bicycle.
00:26:19.580 | It's valuable no matter whether you have a high income or low income and these things
00:26:22.340 | start to flow together.
00:26:23.720 | You can see how his philosophy is so powerful because if you design your life intelligently
00:26:30.460 | by focusing on how close your house is to your office and you embrace adversity, that
00:26:36.700 | makes you more likely to be willing to ride your bike even if you get a little sweaty
00:26:42.680 | or a little cold.
00:26:44.340 | All these things save you money.
00:26:45.720 | It's good engineering.
00:26:46.720 | It's very, very efficient and it cuts out a significant expense by having extra cars
00:26:51.140 | or extra car costs out of your budget by just simply making some things different.
00:26:56.100 | Now this again is applicable whether you're rich or poor.
00:26:59.180 | In my area, just like probably in your area, a lot of the poor people ride bicycles and
00:27:04.460 | what Pete is doing is by embracing adversity, teaching people to become rich by changing
00:27:11.020 | the perception that riding a bicycle is cool.
00:27:15.660 | It's not just for poor people.
00:27:18.420 | One of the real strengths of his philosophy is embracing do-it-yourself skills and doing
00:27:23.860 | this for multiple benefits by tackling home repair, by tackling car maintenance, by tackling
00:27:31.860 | learning new skills like web design.
00:27:34.300 | You are able to save money but you're also able to become a more well-rounded person.
00:27:40.020 | His basic investment scheme is simple, index funds and rental real estate.
00:27:46.560 | He really doesn't ever delve – excuse me, also peer-to-peer lending.
00:27:51.520 | He does some peer-to-peer lending projects.
00:27:53.380 | Beyond that, he really doesn't dig into investing any more than that for good reason.
00:28:00.140 | It works and it's simple.
00:28:04.300 | More than anybody, I think he does a great job of really modeling the cumulative value
00:28:08.640 | of small steps.
00:28:10.240 | He wrote an article called A Millionaire Has Made $10 at a Time which focuses on the power
00:28:18.120 | of little decisions.
00:28:19.660 | I think it's so important to constantly remember little decisions, lots of little decisions
00:28:24.660 | add up to the long run.
00:28:30.060 | So there is a lot that all of us can learn from his writing.
00:28:39.440 | His writing – he's popular because of the power of his ideas and also even his style.
00:28:48.400 | He's an interesting writer.
00:28:51.240 | He writes.
00:28:52.240 | He's very colorful, writes with very colorful language.
00:28:55.880 | He is a wordsmith.
00:28:57.640 | He's very poetic, very skilled at bringing words together in a poetic way.
00:29:03.920 | This really, really helps people to be able to engage with him.
00:29:09.040 | He's also meeting a need at a particular moment in time.
00:29:13.880 | We've reached an age in which consumerism has become one of the major religions of our
00:29:19.880 | day.
00:29:21.200 | Yet consumerism is leaving many millions of people without a sense of meaning.
00:29:29.080 | So there are many people who are casting around saying, "Where do I find a sense of meaning?
00:29:34.760 | Where do I find meaning after consumerism?
00:29:38.040 | What do I do?"
00:29:39.880 | He writes to that audience and does a tremendous job of saying, "Look, there can be meaning
00:29:44.260 | after consumerism because you don't need it.
00:29:47.480 | Financial independence is going to provide that meaning."
00:29:50.820 | This unique cultural moment, I think, is also very key in understanding the rise of his
00:29:56.840 | success as a writer and as a voice in the personal finance space.
00:30:01.920 | What worked in the past doesn't really work now and doesn't seem to work now.
00:30:05.480 | There are many people who are looking at their parents and recognizing, "My parents aren't
00:30:09.080 | happy.
00:30:10.080 | This idea of working an entire lifetime and then quitting, it's really not working for
00:30:16.840 | them."
00:30:17.840 | So the way out seems so simple.
00:30:20.280 | If I become financially independent in short order, then I can do what I want to do.
00:30:25.480 | And this is powerful.
00:30:26.480 | So you put these things together and you put together his skill, the strength of his philosophy,
00:30:31.840 | and the skill as a writer, this unique cultural moment, and it helps me to understand his
00:30:39.720 | success.
00:30:40.720 | It really does.
00:30:42.280 | Now, Pete and his writing are not without controversy and they're not without weakness.
00:30:47.180 | Weakness is all in the eye of the beholder.
00:30:48.600 | I think for his audience, his intended audience, which is six-figure income, working professionals,
00:30:56.480 | I don't know that he has a weakness, certainly, especially in two of my complaints, that perhaps
00:31:02.560 | the third one would be there.
00:31:04.600 | But for my audience or for the general public, there are three major weaknesses that I think
00:31:13.640 | are found in his message.
00:31:15.680 | Again, weaknesses, you have to be careful because the most skillful and effective of
00:31:21.240 | people are speaking to their tribe.
00:31:24.400 | And Pete has created a powerful tribe, done it very, very powerfully, where his followers
00:31:30.940 | and fans will self-identify as Mustachians.
00:31:34.680 | This is powerful language.
00:31:37.920 | But so don't think that somebody's a failure just because they don't speak to all people.
00:31:42.280 | The most powerful people don't speak to all people.
00:31:44.660 | But here would be three things I want you to be aware of.
00:31:47.320 | The biggest flaw in his philosophy and in his approach is if you don't fit that profile
00:31:55.560 | of high-income professional.
00:32:01.660 | If you aren't earning six figures or if you're not at a stage of your life where it's appropriate
00:32:11.100 | for you to make significant pivots, it can be easy to find his writing frustrating.
00:32:18.460 | Because of his extreme casual, "This is so great, everyone should do it," attitude, which
00:32:25.460 | is very motivating to those for whom it is appropriate, it can be very frustrating for
00:32:31.460 | you to read some of his advice, read some of his approaches.
00:32:36.700 | Because if you're earning $50,000 a year, somebody telling you that it's easy, it can
00:32:43.260 | be frustrating.
00:32:44.260 | Or even if you're earning more than that, but your expenses are higher due to reasons
00:32:48.040 | that aren't as simple as changing to a different cell phone, it can be very frustrating.
00:32:53.940 | So you need to focus on increasing your income.
00:32:57.320 | That might not be easy.
00:32:58.320 | You need to focus on recognizing that sometimes you're just at stages of life where you've
00:33:02.040 | made certain commitments that aren't worth giving up in order to get out.
00:33:10.760 | It's okay to simply decide, "I'm not willing to give these things up in order to get out
00:33:21.660 | and be financially independent."
00:33:25.700 | So if you have a lower income, focus on your income.
00:33:28.180 | You should learn from Mr. Money Mustache and others because lowering money on your cell
00:33:32.460 | phone plan is still valuable.
00:33:33.960 | Building DIY skills is still valuable.
00:33:36.280 | But look past the "easiness" of it and recognize that you have an income problem and an expense
00:33:43.760 | problem and you're going to need more than moving close to work to save you money.
00:33:49.560 | Moving close to work is something you should probably do and you should probably think
00:33:51.920 | about, but you're going to need bigger benefits.
00:33:57.500 | Another major weakness of his philosophy is just the investing ideas, simplicity of investing
00:34:03.640 | ideas.
00:34:04.640 | I think he misses a major area of potential return.
00:34:07.760 | Again, not a problem.
00:34:09.860 | If you're a high income earner, you probably shouldn't be dabbling in creative investment
00:34:14.760 | ideas.
00:34:15.760 | If you're a lawyer and you're earning $250,000 a year, your best use of your time is to figure
00:34:20.980 | out how to go from 250 to 450 and you shouldn't be figuring out how to make a higher rate
00:34:25.960 | of return here on the side.
00:34:29.000 | But if the best use of your time is not in your income, there are alternative investment
00:34:36.880 | ideas that are worth your consideration.
00:34:39.480 | So you probably should go and study and research your investment philosophy and try to see
00:34:44.900 | if there's another way that you can get higher returns from your personal approach to investing.
00:34:50.400 | Buying index funds and mainstream traditional rental real estate are not the only ways to
00:34:55.920 | build wealth.
00:34:57.600 | You can embrace entrepreneurship.
00:34:59.620 | You can embrace inside investing.
00:35:02.000 | There are all kinds of creative ways.
00:35:05.960 | When your income is not so high and if you don't have significant prospects there with
00:35:10.640 | your job prospects, then you should consider other approaches.
00:35:16.080 | Then third and finally, what I think is probably the biggest weakness, which should be obvious
00:35:24.220 | from the speech that I released on the show, the speech that I gave to the mustachionism,
00:35:28.680 | is simple.
00:35:30.960 | What's the point of retiring?
00:35:33.720 | One thing I don't understand, I haven't asked him personally, at some point I will, but
00:35:37.040 | I don't understand what the point is of this aggressive pursuit of retirement.
00:35:44.260 | It sounds good and I get it.
00:35:47.100 | Maybe I'll get it more when I'm actually financially independent.
00:35:51.240 | I'm not financially independent.
00:35:53.240 | I can't live on the dividends of my portfolio and so maybe I don't understand it.
00:35:57.680 | But intellectually, I don't get why this retirement thing is a big deal.
00:36:05.360 | Pete right now earns more money than he's ever earned in his life.
00:36:10.560 | To his credit, he doesn't seem to spend a ton more.
00:36:13.640 | He spends a little bit more, but he doesn't spend a ton more.
00:36:16.900 | But he could do that whether he was retired or not retired.
00:36:21.880 | You can have control over your schedule, over your life, over what you do, whether you have
00:36:26.120 | $800,000 in the bank in a paid off house or whether you have $100,000 in the bank and
00:36:32.000 | you have your own business.
00:36:34.960 | So this obsession with financial independence, I don't understand and I don't understand
00:36:41.320 | the point of it.
00:36:43.600 | What's the point of it?
00:36:45.460 | Is the point hedonism?
00:36:47.400 | I think this is a major philosophical weakness that his philosophy is that happiness is the
00:36:53.960 | only logical pursuit of life.
00:36:55.480 | That's a loose quote of one of his essays, that the only point of life is to be happy.
00:37:01.440 | I don't ascribe to that for philosophical reasons, but what is it that makes you happy?
00:37:06.440 | That's a deeper question.
00:37:08.600 | And I fear that the common tendency, I don't think this for Pete.
00:37:13.000 | He has different – he's more thoughtful than that.
00:37:16.420 | But for many people, the basic meaning of that is hedonism.
00:37:19.000 | I want to sleep in or I want to just be able to do what I want.
00:37:23.240 | Yeah, but what are you going to do?
00:37:25.680 | And my listening to people who've achieved financial independence confirms my fear that
00:37:35.040 | it's a hollow victory.
00:37:36.520 | It can be a hollow victory.
00:37:39.080 | So what's next?
00:37:41.800 | I feel this is probably the biggest weakness of the pursuit of financial independence.
00:37:45.840 | But pursuing wealth and financial independence for its own sake, it's a poor master.
00:37:53.200 | What's the point?
00:37:55.320 | There should be something beyond that.
00:37:58.360 | The pursuit of financial independence as an expression of character, of stewardship, of
00:38:05.640 | self-discipline, I think that's good.
00:38:09.160 | But then what?
00:38:10.160 | What are you going to do when you're financially independent?
00:38:14.160 | That to me is a major question.
00:38:16.000 | There's this intense fixation.
00:38:18.040 | I had Bill, a reader of Mr. Money Mustache who I met.
00:38:23.920 | I had Bill – it was episode 416, Bill on the show and he was focusing and talked about
00:38:29.680 | how he retired at age 42.
00:38:32.240 | One of the key hallmarks is he talked about how maybe he should have done it earlier and
00:38:36.120 | he recommended to other people they should have retired earlier.
00:38:39.440 | Pete, Mr. Money Mustache has written various essays telling people, "You should retire
00:38:44.200 | right now."
00:38:45.200 | I don't get it.
00:38:47.000 | I don't get what the benefit of retiring is.
00:38:50.080 | If somebody's – I don't get it.
00:38:52.480 | I don't see work as an enemy.
00:38:54.720 | This would be just a deep philosophical difference.
00:38:59.760 | Work is good.
00:39:00.760 | Work is helpful.
00:39:01.760 | Work is important.
00:39:03.120 | So I don't view work as the enemy.
00:39:04.800 | Now again, I want to be very clear.
00:39:06.360 | I build that on a philosophy of – a biblical philosophy.
00:39:10.840 | That's how I seek to have my philosophy formed and the Bible teaches that work is
00:39:14.680 | good.
00:39:15.680 | Man is built for work, built for service, and is seeking to build for something that
00:39:19.480 | goes beyond his own lifetime.
00:39:22.760 | So in that context, that would be the biggest difference.
00:39:25.240 | Now you don't have to buy into that if you don't want to, but to me I think this is
00:39:30.440 | one of the major weaknesses of retirement.
00:39:33.920 | Been saying that for three years since I've been doing this show and I haven't – I
00:39:39.360 | still haven't seen any evidence that would convince me to change my mind.
00:39:43.080 | That is my analysis of the philosophy of Mr. Money Mustache.
00:39:46.840 | I would encourage you to learn from him.
00:39:50.040 | He is a powerful writer.
00:39:51.520 | He's just a tremendous wordsmith.
00:39:54.600 | He's a poet.
00:39:56.040 | That's his best skill set.
00:39:58.040 | He's very unassuming in person.
00:40:00.760 | I would encourage you even just the lesson, Pete is a brilliant writer.
00:40:06.640 | He struggles to communicate verbally.
00:40:08.440 | He said that publicly and so I'm not criticizing him.
00:40:12.040 | He struggles to communicate verbally in the sense of being able to speak clearly, speak
00:40:15.960 | publicly.
00:40:17.840 | Play to your strength.
00:40:19.480 | His strength as an introverted thinker is in writing.
00:40:25.520 | And so for you, you should learn from his example of what he does and how he's built
00:40:30.160 | it.
00:40:31.160 | Learn from his skill with words to build a tribe and a community around a central idea.
00:40:35.520 | He's built a cult, a leaderless cult as he says, a cult of ideas and it's powerfully
00:40:42.440 | influential.
00:40:43.520 | Learn from that.
00:40:44.560 | Learn from his experience and learn from – don't let again the unassuming nature turn you off.
00:40:53.340 | Learn from what he actually did right.
00:40:54.680 | He's a very smart man and his path has been intentional and designed.
00:40:59.880 | Some of the things have been things that I haven't even heard him mention.
00:41:04.380 | But you can't get away from hard work.
00:41:07.160 | Worked very, very hard.
00:41:08.800 | So learn from those things and then think how you can apply those techniques to your
00:41:13.120 | own life.
00:41:14.420 | On his blog, there are gems for all of you, all of us.
00:41:20.200 | Don't let the things that might be frustrating to you, don't let those dissuade you.
00:41:27.240 | Life is all about going places, picking out the good and spitting out the bones.
00:41:30.600 | I hope that you make that a constant habit.
00:41:35.520 | So Pete's blog is MrMoneyMustache.com.
00:41:41.080 | Hopefully you have a better introduction to the philosophy.
00:41:44.560 | It is certainly influential here in Radical Personal Finance because I seek to serve among
00:41:48.040 | others.
00:41:49.040 | I seek to serve the early retirement financial independence community or the so-called FIRE
00:41:52.400 | community, financial independent retire early community.
00:41:55.640 | So I seek to serve that.
00:41:56.640 | So you got to pay attention to the philosophy.
00:41:58.560 | Hey, that's right.
00:42:00.120 | If you save 75% of your income, seven and a half years you'll be financially independent.
00:42:04.760 | So if you make 200 grand, live on 50 and in seven and a half years you'll be financially
00:42:09.080 | independent.
00:42:10.080 | We'll see.
00:42:11.080 | You can tune in to Radical Personal Finance in the coming decade and we'll see if I change
00:42:14.360 | my mind on retirement.
00:42:15.400 | I don't expect to because I don't expect to ever retire and don't expect to ever quit.
00:42:20.120 | But you never know.
00:42:22.760 | Life has a way of teaching us new things.
00:42:25.280 | At least that's been my experience.
00:42:27.280 | Thank you so much for listening to the show today.
00:42:29.240 | As we go, I want to remind you, please, if you haven't done so already, please take a
00:42:36.000 | moment and record a quick three minute, two to three minute story on your phone and send
00:42:41.640 | me the file.
00:42:43.000 | Record just what Radical Personal Finance has meant to you, how it has helped you and
00:42:48.460 | what you've done with the advice and insight and education encouragement you've received
00:42:53.160 | on the show.
00:42:54.160 | I want to hear your stories, want to profile that for episode 500 of the show so that the
00:42:57.680 | audience can hear more of the stories.
00:43:00.120 | As you're emailing that to me at Joshua@radicalpersonalfinance.com, as you're emailing me that audio file, Joshua@radicalpersonalfinance.com,
00:43:07.760 | email me also a picture of you and your family, please.
00:43:10.680 | Just for me personally, I'm going to put these up as a screensaver on my computer to let
00:43:14.720 | me know who I'm talking to every day.
00:43:16.560 | That's so helpful.
00:43:17.720 | Email that to me as well.
00:43:18.720 | And finally, as we go, I want to thank the patrons of the show.
00:43:22.640 | There are 260 individual patrons of the show who send me, put together $1,625 per month.
00:43:31.600 | Receive some other income from my personal consulting services, from advertisers, et
00:43:35.680 | cetera.
00:43:36.680 | But this is so important to me to have Radical Personal Finance be reflective of you, the
00:43:41.240 | community.
00:43:42.240 | So if you'd like to support the work here and add to that 260, please come to radicalpersonalfinance.com/patron and show your support for the show.
00:43:50.680 | Thank you very much.
00:43:51.280 | Thank you.
00:43:52.280 | Thank you.
00:43:53.280 | Bye-bye.
00:43:54.280 | Bye-bye.
00:43:55.280 | Bye-bye.
00:43:56.280 | This show is part of the Radical Life Media network of podcasts and resources.
00:44:01.280 | Find out more at radicallifemedia.com.