Mr. Money Mustache

There was an article on Yahoo! Finance about Mr. Money Mustache.  If you haven't heard of him, he is known for having been able to retire at the age of 30.  In the article, it says he had amassed $800,000 in cash and investments by the age of 30.  Mr. Money Mustache now runs a popular blog by the same name.

I wrote a post about these stories of early retirement, or more accurately, very early retirement.  I find them fascinating.  I think we can learn a lot from these stories.  In the case of Mr. Money Mustache, he says he saved about 70% of his income.  I'm not sure if this was after-tax income or not.  I'm also not sure how much he earned, but I'm guessing it was well above average.  It is easy to save 70% of your after-tax income if you are earning a few hundred thousand dollars per year.  I am not saying he was making this much in his 20's, but I think he was definitely doing better than average.

While his focus is on savings, or perhaps lack of spending, we should consider the investment side.  I think we can learn the most from him and others when it comes to their savings habits.  But, it is important to realize that Mr. Money Mustache must have earned very good returns on his investments to amass this much money in such a short time period.

It is no coincidence that Mr. Money Mustache accumulated his savings and investments during a boom time.  He is 38 now.  He would have been 30 in 2005.  So if he invested in stocks in the 90's and real estate at the turn of the century, then his timing was pretty good.  It is not like somebody who is 30 now and started investing in 2006 at the peak of the housing boom and just before the stock market tanked.

I have read studies showing that timing does matter.  Bill Gates and Steve Jobs got started in the 1970's, just before the boom of the 80's.  While I'm sure these two would have been successful regardless, they may not have ended up billionaires if they had been born during a different time period.

I'm not saying that you should use this as an excuse to not save and not be successful.  I am saying that things are probably more difficult right now.  For a young adult in their early 20's right now, it would be almost impossible to accumulate $800,000 by the age of 30, unless the person is a great entrepreneur or very lucky.  The average person will not come anywhere close to this amount of money, even following the frugality advice of Mr. Money Mustache.  Someone right out of college is lucky to find a decent paying job.

But again, this shouldn't be a reason to find excuses.  Someone starting out with almost nothing in their bank account can still have goals and attempt to live frugally.  Maybe someone who is 22 years old can't get $800,000 by the age of 30, but maybe he can get to $200,000 by the age of 30.  You can set realistic goals for yourself and you can do this at any age.

In conclusion, I think it would be almost impossible to imitate Mr. Money Mustache today.  Life is simply too expensive.  But you should still read his commentary and take his advice where it can help you.  In order to become wealthy, you have to spend less than you earn.  There is no escaping that bit of math.