In this episode in the series on aging, retiring and dying single, Peter McGraw dives into the world of early retirement with Pete Adeney, aka Mr. Money Mustache, and Jessalyn Dean. They tackle the unique challenges and perks of achieving Financial Independence, Retire Early (FIRE) as a single person. Discover how Solos can navigate life’s big financial decisions alone, find purpose, and embrace the freedom of early retirement.
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Listen to Episode #234 here
Aging Single #10: Retiring Early
We continue our series on aging, retiring, and dying solo with a special guest to discuss retiring early. He has many fans in the Solo community. Mr. Money Mustache is known for pioneering the FIRE Financial Independence Retire Early movement. He retired in his early 30s after optimizing his life for sustainability and intentional living. Through his popular blog by the same name, he shares strategies for achieving financial freedom, including living below one’s means, investing wisely, adopting a minimalist lifestyle, and keeping an abundance mindset. Welcome, Pete Adeney.
Thank you, Dr. Peter. My first appearance on Solo. Hopefully, I can do a good enough job to be a return visitor.
It’s great that we are off to a good start. He’s already stumping for a second visit. Pete and I met at TEDx Boulder. He did a Q&A with the organizer, Andrew Hyde, and I accosted him during the event, saying I wanted him to be on the show. The reason that I wanted him to be on the show is because of our special guest co-host, who was the first person to prompt me to talk to Pete. She may end up fangirling a little bit here. You may recognize or have heard from the Dating Hell/Help episode, the Aromanticism episode, The Relationship Design episode, and the first episode in this series on Aging, Retiring, and Dying Single. Welcome back, Jessalyn Dean.
Happy to be back, and what a strange series of events that you ran into Pete in Boulder. I love it.
Yes, it’s fantastic.
I didn’t know that background either, so thank you, Jessalyn, for being my advocate here.
Introducing Pete Adeney
Singles have both opportunities and challenges with finances in general and retiring specifically, and I want to explore them here. The first thing I want to do is for the reader who’s less familiar with you, Pete, let’s start with your story. How is it that you came to be a guest on the show to talk about this important topic?
I assume it was because I was an early retirement writer, and the reason I became that if we rewind a whole bunch, is that I was a normal Canadian guy growing up. I had a nice lower-middle-income upbringing, went through school, and became an engineer, like a software engineer because that was my natural interest in technology and stuff. Then I had a fairly good career, but being an engineer, I naturally liked optimizing stuff, so I thought, “They are paying me more money than I need, and I can have a lifestyle that’s a lot more abundant than what I grew up with,” but then, what do you do with the extra money on top of that? I didn’t realize, that in the United States, you are supposed to spend all the money you earn. I spent what I thought was reasonable and then saved the rest.
Having my career start pretty early, like at age 21, I had enough to retire before turning 31. Technically, I retired at 30. That’s the tagline that everybody quotes, and that was in time to get married and have a child. That was our focus as young people. We wanted to be stay-at-home parents. My wife at the time and I were both retired, and we were able to live what I thought was a great life and have full-time availability to be parents as well as engage in everything else we wanted to do, sometimes work which was optional, sometimes no work. After about six years of this, I realized that nobody else was doing it apart from my colleagues, and they were still working away and feeling almost paycheck to paycheck.
I thought I should maybe explain what I did, and if anyone’s interested in learning what early retirement means to me, then they can read this blog that I started, and unexpectedly it caught on, and now that thing’s been around for several years and there are 500 plus articles and a whole all different ways to absorb the content. Some people give me this credit for being the pioneer of the FIRE movement you mentioned. That’s not true. People have been doing this for a long time before I stumbled upon it. I happened to not know about that. I came about it in my way and then wrote about it, and then people say, “You sound a lot like Your Money or Your Life, for example, which is a classic earlier book and movement about early retirement as well. I happen to explain it in a way that some people enjoy reading about, and that’s been allowing me to have a lot of fun for the last more than a decade.
I have to ask why Mr. Money Mustache? People are probably wondering that.
That’s a common question, but unfortunately, I don’t have a good answer. It sounds funny. There may have been some early 2000s stoned musings where that name came to me, joking around with some friends, but, I’m not a super mustache-oriented individual, even though I have grown them for PR purposes in the past.
It also lent itself very well to people who are, let’s say, fans of Pete or follow Pete’s principles and can call themselves mustachesians like people who follow John Bogle, their Bogleheads. Like it lends itself to a pretty clever community focus outcome.
That was my intention. Nothing is serious with me. Things are not fun unless they are silly. That’s my personal life philosophy. Everything’s got funny names that go with it. From the beginning I wanted it to be like a fake religion/fake cult. That’s why I called it mustachesian philosophy instead of FIRE which came along later. Someone else invented FIRE. That’s a boring acronym, and therefore the people, the followers of this philosophy are mustachesians you can self-identify with that if you want, and I will have a good laugh because that’s fun.
Coming Across The FIRE Movement
Jessalyn, how did you come across this movement? You pushed me to stalk Pete. Tell us your story a little bit too because you are on a similar path of sorts.
I do not identify as a mustachesian. I tend to steer away from things that have cult or religious implications to them but as Peter said, I have, I have read lots of Pete’s content. How I got to it though, from readers of previous episodes of this show will know a lot of the early part of my life was about following social templates. Typically social templates of how you should have relationships with people, but there are other social templates out there like how you should save and spend your money. Earn, save, and spend it. This is quite interesting because my education is as an accountant and people incorrectly believe that accountants know how to invest for the future. That is not what accounting is. That is a different set of knowledge in a different education, and so I was much following the social template of “You work until you are 65 because that’s what the world says.”
There’s this magical thing that happens called retirement, and I don’t understand what that is, but I trust the template, so I’m following it. It was during COVID 2020 and 2021 when I was looking at my employment situation and thinking, “This is not it for the next twenty years. There’s something else out there for me.” I was in the driver’s seat of my career at that point, whereas in the past, I’d largely followed whatever people suggested to me. I had this pivotal moment to quit my job, become self-employed, and figure it out. I didn’t have a plan, but I would figure it out.
At the same time, I discovered this podcast called ChooseFI, and I don’t recall how it came into my sphere. Pete has been a guest on ChooseFI a few times. At first, I had not gone to read his content, but I was listening so much to the ChooseFI podcast, which is also about achieving financial independence. It’s crowdsourced knowledge, but the interesting connection to Pete’s content was every guest was always asked, what’s your favorite article, blog, book, or podcast you’ve ever heard that you want to share with the audience? Then it must be like 80% of guests would say Pete’s article, the Shockingly Simple Math of Early Retirement changed my life.
Finally one day I said, “I have to go read this article,” and it is shockingly simple, the way that Pete articulated a concept in such a simple way made the accountant in me go, “This is so obvious, but it’s also not because it’s not in the social template.” As a numbers person, it became obvious to me that I no longer had to work until I was 65 and hoped to have enough money. I could take these principles and live my life in a slightly different way without sacrificing how I was living my life and I could retire on a much shorter trajectory, which we’ll get into a little bit more detail.
I have been following the concept since 2021 and it has beenlife-changingg. The one core thing that first attracted me to the idea was it’s not this extreme deprivation, and while it can be retired early, if you learn from these concepts, it can simply be retired on time. Which is a great thing for many people who imagine they can never retire. If you even get, “I can retire on time out of it,” you have derived value from it.
Defining And Understanding Retirement
I want to hear about this shockingly simple approach, but before we do that, I want both of you to define this word, retirement. What does retirement mean to you?
I’d love to have Jessalyn, if you are willing to answer first before I maybe bias it because I have strong opinions on this and I even have a whole internet band of haters that I call the Internet Retirement Police that disagree with what I think of retirement.
We all have definitions. Let’s compare them.
I’m happy to go first. The word retirement to me is a completely fabricated and made-up word at this point. The word retirement is a social construct about this time in your life when you’ve peaked usefulness and you stop working so that other people who can provide more value than you have room to do that, and you go off into this world where you are no longer making money and maybe you sit around and read books and play golf. That to me was the word retirement, but now I have adopted the word retirement, I say, “Throw that thing out the window. I’m not focused on retirement, I’m never retiring.” What I’m doing is gaining financial independence, which is what retirement is meant to do, is to say, “I no longer need to use my physical or mental labor to earn the money that it takes to live the life I want to live.”
That’s what retirement in principle is, but there’s all this other social baggage attached to it. I prefer the term financial independence because work brings me value and it brings most people value. You could substitute the word work with effort, and there are things that I want to do in my daily life that maybe I get paid for, maybe I don’t. As long as they bring me joy and value to other people, I will continue to do that thing. Whether you call it work, effort, or volunteering, I will continue to do those things until the day I die. Financial independence means I no longer need to worry about whether it compensates me in fiat currency.
Mine is, and this is something I’m striving for and probably will not surprise a frequent reader, retirement is when you do what you want, when you want, how you want, and with whom you want.
Much more concise than mine.
Your point about financial independence is a critical element to that because a lot of work involves trading time and effort for money. The thing is, this is often the case you have to get paid to do that. There is a class of tasks associated with traditional work that people would not do if they weren’t getting paid in that way. I get that you could be working full-time and be retired according to my definition here. It doesn’t work with the normal perspective about retirement.
I like that. According to my definition, you are both correct. Those are what retirement means. In my article, I joke that I had to change the definition of retirement to accommodate this reality because the old definition of retirement was something quite stupid and something very few people would aspire to. It’s that you never do anything useful again, and it’s strictly like golf and television. There are so many fine points where people would argue, “That’s not retirement because you got paid for it,” or “It’s hard work. You are doing unpaid work, so you are not retired.” In that case, why would you ever want to be retired? The answer is, it’s very much you do what you want when you want.
My definition, which is similar to financial independence, is I don’t like all those syllables. I like something catchy and that sounds good. My definition is you have enough money that you never have to work again and you are aware of this. Many people have that much money, but they don’t think about it because they haven’t run the numbers and they don’t know how to run the numbers. If you are aware of this and you think about it, that means all of your work is done by choice, and hopefully, that makes you make some changes.
You might enjoy, for example, being a doctor but not enjoy 40 hours a week of work. Maybe 20 or 10 is the right amount for you. You consciously say, “This is what I’m doing, and if you don’t like it, then I’m not going to do this job for you.” The employer, like in the movie Office Space, as soon as you take the reins of power and stop giving a crap, they are like, “That’s how it is. Then there’s even more money, and you can have whatever you want and work under your schedule because now you have the power in the situation.”
That’s how I was. I quit my engineering job because that wasn’t my passion, but I almost immediately started another job, which was a self-employed house-building company. I ran that for a while and then realized, “This is not compatible with having a new baby.” I shut that down as quickly as possible and moved back and forth because I love working. I hate sitting still, and I found the right balance for me for work. Most of it is unpaid nowadays, but I have made money, including from my writing. The website, for a while, made a surprising amount of money, and people questioned my retirement because of that.
When they noticed that I was only posting four articles per year, they were like, “Maybe he isn’t doing this for the money.” That’s the definition. A lot of people get stuck in habits because they have worked in this career and are defined by their work. They might have $10 million or $20 million stashed away and think they still have to work because that’s human nature. You have to question yourself and say, “The work that I’m going to do, would I do this if the pay rate was zero?” You keep asking yourself that question, and if the answer is continually yes, then you are living the proper retired life.
Secondly, I also encourage people to think about their spending in this way because if you truly have financial abundance, then you are not going to cheap out on yourself. You look at something you want to purchase or do and say, “This is a little expensive,” but would I do this if the price were zero? If the answer is yes, then you should do it, even if it’s expensive, because you probably can afford it.
A lot of us who’ve been frugal our whole lives with an immigrant mentality think, “I can’t do that. That’s too expensive.” I’m used to making home cooking from Costco, so I can’t go out to this $100 restaurant, but I would go if the restaurant was free. I have had to train myself to spend more freely because my emotions haven’t caught up to the reality of how much savings I do have. That helps me feel more retired as well because I stop making decisions about money based on money entirely, whether it’s on the earning side or the spending side.
Identifying The Right Script In Life
One of the things that comes up a lot in my business, not the Solo business, but my behavioral eCon business marketing professor business is this notion that there’s a lot of what we call heterogeneity. There’s a lot of variance in the population. One of the things that seems rather clear, reflecting on both of you, is that there’s this person, and I would consider myself part of this group. There’s a scale, the tightwad-spendthrift scale. There’s this continuum of spending-saving behavior. The folks who tend toward minimalism tend to think hard about, “Do I need this thing?”
They have a save-first mentality, which seems a better fit for this goal than the person with a spend-first mentality. Their spending tends to be correlated with their income. They may borrow a lot, they may use their credit cards a lot not for survival purposes, but because they want things with a more materialistic approach. Do you find that to be the case with regard to this if you have the potential to reach this level of retirement, as we are describing it broadly, there are people who are a natural fit and people who are going to have to make more massive changes to do it.
My target audience is the spendy people who have more trouble because the frugal people are probably going to be fine anyway. What I find with my audience is it’s a 50/50 situation where the natural people show up and are like, “Here’s a guy writing about the stuff I already do, and he’s making it socially okay. Thank goodness, I’m going to keep reading this forever so I feel better.” Maybe I’ll get a few more frugal ideas, but that person was never going to have money troubles to begin with.
They might’ve had spending troubles, which I also want to help them with, like a balanced perspective, but my real target audience is the big-income, big-spender American consumer because I’m trying to create a behavioral change here in the richest country in the world. That’s the real secret mission of my blog it’s not a personal finance blog. It’s more of an environmental and social change blog, but I’m disguising it. Instead of using a stick, shaming people with, “You shouldn’t be such a consumer.” I am writing it from the perspective of a carrot, “Don’t you want all kinds of awesome money and freedom and happiness?” It’s not disingenuous because that’s true. That’s what it brings you, but that’s also why I want the biggest spenders to be attracted to these ideas. It’s going to benefit them more, and it’s going to benefit the rest of us more too.
If I could add to that respond to Peter, your question, and bring those two together, I agree. The person who spends a lot of money is going to be the harder audience. As a psychology expert, you’ll appreciate this point. We also live in a society where we have all these tools, widgets, and features pushing us to buy stuff at such a level of convenience that we stop thinking about it. People, in their sleep, start adding things to their Amazon cart because we’ve created these apps that make it satisfying to push the button, “Buy this now. Put it in the shopping cart.”
Sometimes it’s not that people need the things in the cart, but they are getting some psychological gratification from pushing the button. I use that as an example because I disagree with people who say you should automate your savings. A lot of people say, “Set up your paycheck so that $500 is automatically transferred over to your savings account. You never see it, and you never spend it.” That’s a great way to save money. I disagree with that for my own life. What I do is manually move all of my money because what I’m doing is recreating the experience of the shopping cart but with buying index funds. I manually move the money from my checking account to my brokerage account, then type in the fund I want to buy, the index fund, and add it to my shopping cart.
Hitting that purchase button gives me that same rush, that adrenaline, whatever cortisol, or whatever it is that people get when they add things to their Amazon cart. The spender may be spending because they like the consumer goods they’re purchasing, but they might also be spending because they are trapped in the tools of convenience that have encouraged them to do it. By rethinking my investment as, “I’m not buying the widget on Amazon, but I’m buying my freedom,” that’s where the rush comes when I hit the button.
I have an old project idea that never got out of the gate talking about naming things. Naming things is important. Talking about the use of a “freedom fund” and how putting money in your freedom fund provides a lot more satisfaction. There’s a lot more motivation than a savings account. I have to tag onto what Pete said, and this is an overall perspective that we have in the Solo community to question the defaults. It’s fine to follow the script, but the important thing is to ask yourself, “Is this the right script for me?”
In American culture in particular, there is a script that says you buy solutions, that you purchase solutions. A lot of people default to the idea of purchasing a solution when there may be solutions that don’t involve a purchase. The example I often use is about fitness. Someone’s like, “I want to get in shape.” Often the first thought is, “I need to join a gym.” That gym has an outlay of $50, $100, or $200 a month, perhaps. When there are free alternatives associated with that like walking, calisthenics, and so on, there are some ways that are as effective, get you outside, and are low or no cost in a sense. This notion of being intentional about how you approach how you save your money and how you approach how you spend your money seems essential to pursuing this notion of retirement that we are talking about.
If you take that philosophy on all aspects of life and that’s what a lot of my writing has been, especially the earlier articles it’s like all the things you can spend money on, like your housing, cars, fitness, food, even weddings. I even have an article on that. It starts with questioning the norm this is what Americans typically do, and here are some other alternatives that you might want to consider for other ways to meet these needs that happen to cost maybe three-quarters less.
A lot of times, they are better alternatives. A good example is I always love making fun of drive-thrus. Drive-thru everything is the stupidest idea. People sit in a line of twenty cars, suck in someone else’s exhaust so they can go up to a window to order the McDonald’s or whatever, and then wait longer so someone can hand the food through their window when you can leave your car in a nearby parking lot, walk in the door of that building, get the food faster, and then walk back out. You are still meeting the needs, plus you are getting some exercise, plus you are saving time. Plus, you are not being a clown trapped with a bunch of other clowns in this preposterous situation. If you think about it, it’s such a silly thing, but we do it because it’s a social norm, and most people don’t question the ridiculousness of the very existence of a drive-thru.
As it turns out, almost everything we do in American life is equally preposterous. There’s always a way smarter solution that’s better for your health and costs less money. If you identify these things, you are going to have this fantastic life where everything is better, and you have a huge surplus of money. That’s what mustachesism is about. It’s about questioning these things that happen to relate to earning and spending. With the proceeds, you get your freedom fund. You also get a lot more free time, and then you also have better physical and mental health because you are not doing all these things that are bad for you.
If I could add to that, there are two numbers that impact your ability to achieve financial independence or retire, how much you are spending and how much you are earning. If you think about how much you can control each of those things, increasing your income, there’s an endless amount of income you could increase, but your actual ability to control that is fairly illiquid is less available to you. There are a lot more steps to achieve greater amounts of income. On your spending, there’s a limited amount that you can shave off because you can’t get all the way down to zero without getting into the deprivation situation, but you have more control over it. On a day-to-day basis, you’ve got the fixed costs that you can’t easily get out of your rent, your utilities, your car payment, and then the variables that you can toggle. Even then, if you rent your car within a 6 to 12-month time period, you can control those costs.
Let’s not talk about car payment as an expense because nobody should have a car payment. That’s the most ridiculous but anyway, please go on. It’s a sore spot for me.
I thought I felt it, and Peter didn’t mention bicycling, which I lived in Amsterdam for a while so I’m very much Team Bicycle as my primary mode of transportation, but now I live in a city that’s not bicycle-friendly. That’s a different thing, but those expenses are the thing you have greater control of in the short term, even if increasing your income has unlimited potential in the long term.
The Shockingly Simply Math Behind Early Retirement
Pete, let’s get to this famous post. What is it called? The Shockingly Simple Math Behind Early Retirement.
The basic idea is instead of thinking about all the complex numbers like what 401k, 403(b), X, Y, Z plan should I have, and all these other things. Your time to retirement depends on only one thing, and that is your savings rate. That means what percentage of your take-home pay after taxes, you can save versus what you need to spend hopefully to have an enjoyable life.
In that article, I break it down with a chart. If you have, let’s say, a 10% savings rate which most Americans think is pretty good, saving 10% of your income, it turns out that’s not so good because you are going to have to work about 51 years until you retire, until you have enough money that your built-up assets are generating cash to cover your current expenses. If you slide up that scale a little bit, like going from 10% to 15%, then you are down to a 43-year career. You keep going up, and I’m more of a proponent of saving 50% or more of your take-home pay, so 50% results in only a 17-year career. If you start at 20, you are retired at 37. I happened to save between 60% and 65% of my income back in the day, like through my 20s. That results in a 12.5 to a 10.5-year career. I’m reading these numbers right off my chart, which is why I know them so well. Sure enough, that’s exactly what happened. I didn’t even know about this chart.
I hadn’t written this article or done this research. I spent the amount of money that I thought was fun and saved the rest. In retrospect, I went and ran the numbers. It turns out we were saving about two-thirds of our income, and that’s why we ended up financially independent after roughly ten years. Everyone can agree with those numbers if you know the basics of what investment returns typically are very conservatively, like the US economy and index funds.
The only place I get friction is when people go, “How can you possibly save half your income?” “I am not saving anything.” That’s why I have to get into more details. Like, “You have a car payment. You are paying $890 a month so you can drive around in a 500-horsepower farm truck that’s empty in the back. Did you know that there are other cars available that cost a quarter of that amount to drive, and they are more fun, cost less, and don’t waste money on gas?”
There are little hacks, like I said, with every aspect of life where you can have a better life that happens to cost three-quarters less. That’s where engineering comes in with the philosophy. I can’t help but optimize stuff. I thought everybody did this, but when I found out that most people take the default option and go to the drive-thru, that’s what made me realize, “I could write some stuff down, and this might be useful to people.”
Fundamentally, this is about being intentional. The default is about a high savings rate and then working backward from there to design your life to live in an affordable way, to live with the leftover versus what is the default, which is you have this pot of money that you spend and a small portion of it goes into savings.
My reaction to this is, we know you can do it because you probably made less money before and managed to live on that amount of money. My thing is, I always think about how little I had as a graduate student. I was living on a very small stipend, and I was living rather happily in that way. My life was not about material things. My life was about experiences, growth, and ideas. I was filling my time with exciting opportunities that crowded out the need to spend money on things to fill some void because I was bored or because I thought that these things would make me happy. I have to note that a new car will make you happy for a very short period of time, and then you’ll adapt to it. Then you’ll be thinking about, “How to get a 600-horsepower car with a better stereo system,” and so on because we are so good at adapting as humans, especially in positive situations in life.
The other thing is there’s a lot you can learn about psychology that we were not born knowing but there is so much that has been studied and figured out about human nature and what makes us happy. I like to refer to it as a series of happiness buttons, and the most obvious one is caring relationships in your life. We have all heard that, but some people forget about that and they might think, “I’m going to upgrade my Netflix plan so that I have access to more movies,” instead of thinking, “I’m going to downgrade my Netflix plan so I can go out and meet more people.” If you have a shortage of people in your life, then that’s going to be a much bigger factor in your happiness.
If you look at that, I like to read about happiness, and also I like to read about cognitive biases. There’s this nice chart of cognitive biases. It’s on Wikipedia, and each one has this super cool icon like loss aversion and all the other things like anchoring that we all do, and it’s like part of our evolutionary advantages in the past. It makes a clown out of us in modern society because marketing all plays upon these cognitive biases.
If you learn about that and you realize, “I’m a flawed human,” but if I learn about my flaws, then I can overcome them and hack my system in order to be happier without being part of the default marketing-driven lifestyle, then it’s an incredible advantage. The richer our society gets, the more of an advantage it becomes because even the so-called cheap options are way more than enough to make you happy.
I love to give examples because, like I’m a 50-year-old man. I have built up way more wealth than I could spend at this point, but my day yesterday consisted of hooking up a trailer to my homemade electric mountain bike. This is because I love engineering and making stuff. It seems silly. You might think, “Is that a homeless guy running around?” That’s my favorite thing to do. I could be on a tropical island, but instead, I towed my trailer at 30 miles an hour to Home Depot and picked up a 50-pound box of drywall compound. Then I towed that across to the commercial building that I co-own with some friends, and I did a day of drywalling and creating this new office in the coworking space that I own.
It happens to have a loft, and it’s all creative and weird and Harry Potter style. To me, that was a super fun day. It didn’t cost me anything except for $12 for this pack of compounds. I spent the whole day talking to people who happened to be working there. I was doing manual labor and expressing my creativity. I probably made a few $100 or maybe $1,000 in terms of increasing the value of my commercial building, but I wasn’t even thinking about the money but that’s what all my days are like.
There are some random things that involve all these activities that happen to make me happy, which include physical activity outside, socializing with humans, and inventing stuff. I have been doing that throughout my years of retirement now working on projects, collaborating with friends, meeting new people, and raising my son. Unlimited time to be a dad. Most of these things I do don’t cost anything, or sometimes they create money, and I’m super happy. I don’t even know what I could be spending my money on because I’m so content running around in the super-free life of doing the things that already make me happy.
Peter, this is like a perfect moment to loop back. You use that Netflix example. I feel like it was the first episode we did on the Aging and Dying solo. We talked about the opportunity cost of the couch. Peter and I independently had these two different conversations, and what mine looked like was a conversation with some friends that I’d introduced to the concept of FIRE and financial independence. I was in their home one day, and they’d moved to a different house, and I said, “How was the move? How are you feeling?” They said, “We wish we hadn’t brought the couch.” I said, “Why do you say that? Is there a different couch you would want?” They said, “We were asking ourselves, do we even need a couch?”
I was immediately floored because I’d been doing the same analysis in my life, where I was following the social template, looking at all the furniture I needed to buy for a new apartment. A bed, a table with some chairs, and a couch. I stopped and asked myself, “What’s the opportunity cost of buying a couch?” If I buy a comfortable, expensive couch, I’m going to want to sit on it, and I’m going to want to sit on it maybe for a few hours watching some movies on Netflix. What would I have been doing with my time if I didn’t have the couch? Doing the things I’d rather be doing, which is out hiking, riding my bike, being with my friends. We have brought up the opportunity cost of the couch as a recurring theme.
I came to it independently, and you think about it like couches are designed to entrap you. I was thinking about this as you were talking, Pete, and it’s aspirational, but nonetheless, it’s a worthy aspiration, which is to create more than you consume. Once you are on the creation path, oftentimes creation is less expensive than consumption. It’s better for your health, mind, and relationships. It’s better for your wallet a lot of the time. Hearing you talk about your day brought joy to my heart because it was an act of creation, from beginning to end.
I encourage people to think the same way, be a producer of something you enjoy producing. It’s even better if it’s also something you enjoy consuming. Like for me, I happen to enjoy nice living spaces. I’d rather live in a nice, pretty, luxurious house than a frugal, cheap apartment, even though I could save money like that.
Lucky for me, I happen to like construction and carpentry is my favorite thing. I have built entire houses, and I also like working on upgrading houses in little ways. That keeps me busy, and some of my time I spend on my own house, so it gets nicer and nicer over the years, and it’s costing me almost nothing. I’m buying some materials, sometimes even from Craigslist, because if you live next to a rich city like Boulder, you can find multi-thousand-dollar doors for a couple of hundred dollars and then make this gorgeous entrance to your house or whatever.
I’m getting wealthier over time, even though that’s not my goal. Whereas a lot of people would spend $100,000 a year or more to do the type of upgrades that I do on my own house, I’m spending maybe $5,000 to $10,000 and my house gets that much more valuable. At some point, maybe I sell my house and move to a different one if I need more projects, but again, thankfully I don’t have to do that for the money. That frees me up to do it for creativity.
Understanding The Coffee Case Study
I want to run an idea past both of you, it’s something that comes up a lot in your world, and it’s the coffee case study. I want to see if I understand this correctly from your perspective. Please correct me if I’m wrong. There’s the school of thought, which is you go to Starbucks or your local coffee shop every day, and you buy your coffee of choice. A good cup of coffee is not inexpensive. Let’s be conservative and say it’s $5, but it could be $7 for some of these drinks. $5 across a year is $1,500 plus.
After-tax.
Yes, and also I throw on a $1 tip, so it’s $6.
What if you take a car there? Then you are adding a few more dollars.
It’s like your daily coffee is $2,000 a year. It seems to me some people are like, “You got to live, you got to enjoy your life. You are off to work. This is a moment of enjoyment. It’s a performance-enhancing device, and it’s worthwhile. Make some more money.” Other people are like, “You can do this at a fraction of the cost at home, and it’s an act of creation.” To our point earlier. It seems to me that whether you should make your coffee at home or go to your local coffee shop depends on your savings rate. If you are hitting a high savings rate and you have plenty of money left over to enjoy your $2,000 worth of coffee every year, go for it. If you don’t, make it at home.
It’s much like what we covered earlier in the same conversation it’s okay to do it as long as you’ve questioned yourself and poked fun at yourself. “Am I a lazy consumer clown for buying coffee at Starbucks every day, or whatever your coffee shop is?” Is it a purposeful decision? You go back and forth, be intentional. If that still passes the test, then you do it, and then you keep evaluating yourself like, “Is this still worthwhile for me? Was it a good choice?” You can always change. You are not locked in.
I used to make fun of nicer cars, and then my life changed to a point where I had more places to drive, and my old vehicle was not doing the job. I did buy an expensive car, and I made fun of myself for it, but at the same time, I could afford it. It was like a tiny percentage of my worth. It wasn’t going to affect my ability to remain retired, and it turns out that was a good decision because I use it all the time. It’s a Tesla that I got. It’s aligned with my values because I’m not burning gas. It’s fun to drive. I’ve had so many adventures in it. You can sleep in the back.
That’s an example of me changing my beliefs because both my wealth and my activities in life changed. A car was suddenly a tool that I could use. I’m not using my Tesla to go through the Starbucks drive-thru. I’m shooting over mountain ranges and camping in Arizona and doing other things that it’s genuinely useful for. That’s how every expense in life I try to suggest people think about these things, and then don’t even do it if they can’t afford it. A 21-year-old Pete would have had to borrow to buy a car of that value, and it’s unlikely that would have been a good choice at the time.
For me, I look at an expense, let’s say the cup of coffee and I take the next step and say, “What value is this expense giving me? What value do I derive from it?” Then I ask myself, “Is there a cheaper alternative that gives me the same value?” If there’s not, then maybe I keep doing the first thing. If there is, then I go to the cheaper one. Asking yourself what the value is, you need to challenge yourself. For example, some people are purely going in, getting coffee, and getting on the road. The value to them is, let’s say, the convenience factor but to Pete’s point, if you are sitting in a drive-thru line, you probably haven’t saved yourself any time.
It’s not convenient. It’s default.
The other value is a nice, tasty cup of coffee. There probably is a cheaper alternative to make it at home and take it in a to-go cup. In my experience, I did this evaluation when I first came onto FIRE and these concepts when I was living in Amsterdam. I would leave my apartment a lot and go across the street to a cafe called the Coffee Company, and I would order a €5 cup of coffee, with no tip because we are in Europe. I would sit and people-watch because I was working from home and had very little social interaction. I loved either going with my book or going with my laptop and people-watching. I asked myself, “If I make this cup of coffee at home, am I getting that value?” No, I’m stuck at home and haven’t left the house. Are there other ways to get social interaction with people? Yes, but they will cost more than a cup of coffee.
I thought differently. What are other ways I might look at setting up my life? I’m not getting social interaction during the day because I’m stuck in my apartment working from home. Maybe I should do one of those coworking things, a little WeWork action, or alternatives to that. A monthly desk. That’s easily $200 to $300 a month, and I’m locked into that contract. I can’t flex it on and off each day or each week when I’m traveling. I’m locked into the contract. I could get the value of social interaction with people by hot-desking now and then, but the cup of coffee at the coffee shop across the street gives me that, and I can toggle it on and off day, week, and month as I need to. I did that evaluation and was honest with myself about what’s the value and what’s the cheaper alternative. Spending $5 on a cup of coffee is fine, what Pete said when you’ve thought about the value and you’ve considered the alternatives.
Where To Start Saving Money
There are two sides to this equation. There’s the saving side and then the spending side, as you’ve mentioned. Pete, you have pushed the mustachesians to up their savings rate much higher than the world is telling them, much higher than is intuitive. Let’s talk a little deeper about what that looks like. What is your philosophy about what they should be saving into? How do they start making this change? Let’s talk at a high level. For some people, their first reaction is, “I could never do that.” Let’s give them some guidance.
There’s one step that you could also think of as shockingly simple, and that’s to look at your spending. Most people don’t summarize their spending. They just do it. You take out your credit card when it’s time to pay for something, some things are on autopay from your bank account, and then you balance the money. If you have a bit extra, you spend more.
The easiest thing you can do is grab your credit card statements from last year. Some banks will even do the summarizing for you. It’s like “Download the annual report,” and with this being December, it’s a good time to think about this because you’re going to get these offers for the free report from your bank. I enjoy looking at those, and they break it all down like groceries, $3,000 for the year, or whatever the numbers are.
Look at that and see what that total number is. For some people, it’s going to be $60,000. For some people, it’s going to be $200,000. I did mine because I was curious. I hadn’t added it up in several years, and I was surprised that my spending was still under $30,000 even when I thought I had this blowout year with crazy restaurants, flights, hotels, and stuff like that. It’s because my default things are so cheap. Like that drywalling da,y I talked about. It takes me effort to go out and spend money, and it’s always fun when I do it. That’s what I want everybody to get. I want their default life to be a life of healthy, creative activities that aren’t very expensive and are super enriching. You are spending time with people you love, and then that frees up your money to do deliberate things with money when you’re ready to do it.
Getting off on a bit of a tangent, but the real answer is to look at your spending over the course of a year and see where it all went over the past years in categories of food, restaurants, cars, housing, all that stuff. Then read some blog articles, read some FIRE stuff, and compare that to the spending levels of people who are good at it and see where you differ. If you see that you are different in an area then try to learn how you might optimize that a little bit.
About cars, as being in the United States, the first easy, low-hanging fruit, because most of our behaviors around cars are so incredibly expensive and so incredibly inefficient that you can cut that one down easily by half, and then there’s your first $6,000 a year for free. You haven’t compromised anything. You’ve traded in this clownish 10-mile-per-gallon jeep and you’re not even an off-roader for something good at driving on roads, and it cuts your car costs in half. From there, there are many other ways to fix up the other categories.
The second step that I took was once I do exactly that. I sat down and said, “How much does Jessalyn cost to exist in a year?” Life is lumpy, emergencies happen and things come up, so you always need a little budget for that. That next step was harkening back to my I’m like a fraud of an accountant. I’m a fraud of a CPA because I realized I did not understand anything about investing, and I use myself as a threshold. If I’m this good at math and I’m a trained accountant, I’m a CPA, and even I didn’t understand these things, then the average person was not going to necessarily have intuitively thought of these things, but once it was presented to me, it was simple, and that’s the keyword.
When I looked back at what I’d been doing with investing in the past, which was typically employer-driven. They presented me some investment opportunities for my 401k or maybe I talked to a financial advisor and they told me to buy some stuff and do this 80-20 thing with bonds and all these words I didn’t understand.
I realized that there was too much complexity in what I was doing. I, therefore, had no idea what I was doing. The principle I follow now is if I invest my money or do something with the savings if I cannot explain to you in less than 4 or 5 minutes what that thing is and how it earns money, then I shouldn’t own it. Part of my job was simplifying what I was doing with my money, and that’s been very successful for me. That’s a very typical conversation in the FIRE community, and the concept is these things called index funds, where if you own all 3,000 American publicly traded companies, history is telling you you are going to do fine.
None of us are Warren Buffet, none of us can pick stocks. We don’t need all these fancy emerging markets, long-term debt, funds, bonds, and things. When you simplify it, it becomes far more comfortable. When I’m going to add to my cart and hit purchase, I feel confident that I understand what I have invested my money in and how it earns money, how it adds value to my life and the world.
That’s true. My last answer was talking about how to easily cut your spending, but you need to do something with the money you save. Jessalyn answered that. The answer is you invest it. You don’t put it in your checking or savings account because that’s not going to grow, and that’s not investing. You don’t buy Bitcoin and this stuff because that’s speculation. You are not investing in dividend-creating companies that are there for the long run.
A quick answer is you buy one index fund, which is the entire US stock market in one, and Vanguard has one that’s called VTI. That’s an exchange-traded fund. That’s like the three-letter answer. If you are the type of person who wants to know why this works and why that’s the best choice, then you can read this book called The Simple Path to Wealth, written by my friend Jim Collins, who’s a good writer. JL Collins is what he goes by.
That explains why this is a good idea. Everybody who reads that book enjoys it and they get a whole background on what wealth is and finance and investing in history, but neither of those answers works. I’m fortunate that when I started my career, right after I moved to the US, I met somebody who said, “Vanguard Index Fund is what you do. That’s how you become rich,” and so I started throwing all my surplus income into that and that turned out to be the right answer, and then I went back and learned why that was the right answer in the coming years.
One of the reasons for that is that it is a very low-cost fund. The fees associated with it are very low, which allows you to put more money in earlier and thus get some of the extra benefit.
Equally important is that it’s not a gambling fund. It’s not trying to be the crackerjack cowboy beating the market fund, which everybody claims they can do, but then they temporarily look like they are successful, and then over the long term they underperform the market. The best solution is to own the entire market, but that’s not flashy and the advisor doesn’t get paid a bunch of money to do that. Very few people recommend that professionally.
Most financial advisors won’t recommend that because they want to be showing like, “I’ve got skills, we can beat the market,” but on average the definition of the market is everybody’s performance average, and you never know in advance who’s going to beat the market, and the people who do beat the market, it’s usually because of luck.
That’s what I’m quoting from The Simple Path to Wealth now. If you want to know this explanation well, read the book. That’s why investing has always been to me the most simple possible pile it into index funds and eventually you’ll be proven, and that’s what we are seeing right now with the stock market doing a whole bunch of rising every year over the last several years. All the people who made bets earlier in their lives and made these deep boring investments, are like, “It does compound over time.”
One of the principles here is the amount matters, but also early matters, and so the earlier you can start doing this, the better off you are going to be in the long run.
Although I emphasize the oiliness less than other people because I’m an early retirement guy. Some people are like, “If you save $50 a month and only 45 years, you’ll have $1 million or something.” They are like, and I’m like, “Forty-five years. Do you realize how old you are going to be if you start?” I turned 50 and thank goodness I retired when I did because like the 20 years of freedom that I have had have been like the best years ever.
I would be so disappointed to still be mandatory clocking to that cubicle at this age. I’d be embarrassed to have not figured out my money by this point at that income level, which a lot of people still are. There are a lot of 50-year-old dudes in the US and people who still don’t have any savings, and so in other words, I’m still not at the point where that compounding would be paying off if I was only saving these small amounts. That’s why I talk about the amounts being big. We should be talking about thousands per month or if you are high-income, tens of thousands per month that you are saving if you want your early retirement freedom.
One important thing to mention is this concept of early, if a reader is saying, “I’m 50 years old and I have $0 saved, I heard that early is better, I’m screwed. I don’t even need to try,” I don’t want people walking away with that because it’s all relative. If you started in your 20s, then yes, you could be retired by your 40s, but if you are 50 years old and you have nothing, save. If you look at, let’s say this table that’s on Pete’s blog and you would do a little look up the chart and look over the chart and say, “In 15 years I could be financially independent if I started right now from 0,” 65 you are right on time. There is no “too late” when you compare whether is it better to do nothing and have to work every single day until you die or hope that someone’s going to chip in and help you. No. If you are 50, add 15 years, 65, and you made it on time. The early concept, yes, it’s much easier if you are in your 20s and you figured this out, but 50-year-olds reading right now, go to the table and it’s possible.
I like to emphasize that we are not talking about something that only benefits you when you get there. Benefits begin immediately. I only write about things that make your life better now that also happen to save you money. If there’s something that makes your life worse in exchange for money, it’s usually not worth it. I don’t want that because your whole life has to be good. I’m not willing, especially when you are young. Why would you want to have a terrible youth in order to save money so you can have a better old age when there are so many choices available? Especially the richer your country is, the easier this gets. That’s why the US is a complete comedy playground of early retirement because everything, once you learn to see through the matrix of marketing, is so cheap relative to our incomes here.
Even with our minimum wage income, you can do very well if you understand which choices to make. I’m promoting these things to make your life better and you’ll also save some money. If you are 50 years old with no wealth, let’s start by improving your life. Like you are going to get outside more often. You are going to get healthier. You won’t be idling in your pickup truck in the Starbucks drive-thru anymore, and also, you are going to be able to save money a lot better and your lifetime costs will go down. Why wouldn’t you do that?
Getting Rid Of Unnecessary Expenses
Let’s talk about some more of those things. Let’s pivot to the expenditure side. I hear you formulating in the mind of the reader an active mindset where you are questioning the default and you are asking, “Is this serving me and is this serving my wallet at the same time?” There are many free to low-cost options for the kinds of things that people often default to, especially within Western culture. What are some other examples that you would give? You mentioned the car, we have talked about coffee, we have talked about couches and Netflix. What are some of the others?
We could move next to food. The default thing in middle and higher incomes is to think of restaurants as a source of food like, “What are we going to do for dinner tonight? Let’s go out.” I like to think about that as the opposite. Everybody should have cooking. First of all, everybody should have a Costco membership, and they should keep their house stocked with a huge array of the most healthy stuff you can find at Costco like the raw ingredients. Not the prepackaged foods, not the protein bars and granola bags, and stuff like that.
I’m talking about meat and vegetables and whatever meets your dietary needs. Then, you should be able to cook, and you should be able to batch cook. Even though I don’t know how to do it. You should be able to do it, and you should be able to feed yourself super nutritious meals at the snap of a finger so that you never think of a restaurant as what you do for calories when you are hungry.
You can still go to restaurants if you can afford it, but it’s a conscious and luxurious choice. I have been going to restaurants more in an attempt to spend more money, and it works. It’s 10 or 20 times more expensive to eat out than it is to make your food. When I do it, I think, “This is amazing. I can’t believe I can afford this. I’m going to blow $100 like light $100 on fire in order to be out with my friends or on a date or whatever it is at this nice restaurant.”
It makes a huge emotional impact on me in a good way because I enjoy the experience, I enjoy the food, and then it’s memories being created, partly because I don’t do it that often like, “Tonight, I’m not going to go out for dinner. I’m hanging out with my son.” We like to eat together here in the kitchen. We have candles, and we talk and whatever. Sometimes we’ll go out to dinner, but it’s not our default choice, and that saves a lot.
That’s about a $4,000 to $10,000 per year choice depending on where you live, how much you would have gone out, and what restaurants you like. For many people, that’s enough to double their savings rate from 10% to 20% because they might’ve been saving $5,000 a year and suddenly they are saving $10,000 a year. You’ve cut like ten years off of your mandatory working career by getting a Costco membership and learning how to use it.
I will add other things such as DoorDash and Uber Eats.
You can’t afford that either.
It’s the worst of the options because you are eating at home anyway. You are not getting the fun enjoyment and experience of going out. The premium to have someone deliver this food to you is absurd. I have made this pivot in my life, Pete, where I now cook at home. I like to say I can prepare food. One of the other benefits that I will add to this is you eat healthier at home than you do in restaurants, and you can control what you are putting in your body. You can control your portions, and you can meal prep. You can create a life where you are eating a simple, tasty diet that’s low-cost, and you can save time for future prep if you do it right.
It’s fast. It takes a long time to go to a restaurant.
I will throw in one as an example, and it’s particularly useful to solos, and then I want to take a broader response to Peter’s question. In Amsterdam, I used an app called Peerby. Peerby is probably not the app that Pete would use because Pete particularly loves home maintenance and building things and engineering things, but I, as a person who does not do that, don’t need to own a hammer, a shop vac, and a table saw, but now and then I need these things like a tall ladder. Peerby is an app where you can connect to neighbors and borrow stuff from your neighbors for the time you need it, and they are usually charging a pretty nominal fee. The app costs $2 a month to be a member, and I borrowed someone’s paper shredder once to shred down a whole box of paper, and he didn’t even charge me. As a solo person who doesn’t need to own stuff, that app was fantastic for me.
It’s social too. You are meeting people and that’s a huge plus. That’s why I love the Craigslist transactions of meeting people sometimes.
Meeting neighbors, getting to know them, and social-cultural connections. If I step back to answer Peter’s question about some of those toggles, I do track my expenses to see where I have gotten out of hand on a certain month, but I don’t hyperfocus on, “My budget for coffees was $300, and I spent $310. I’m a bad person.” Month by month, my little expenditures on self-care, coffee, and these little things are not going to move the needle on me reaching financial independence.
There are 4 to 5 big-ticket items, food, Pete already mentioned, rent, transportation, and utilities which typically have some relationship to your rent or your mortgage, how much house you buy, and maybe medical or 1 or 2 other items. Outside of that, I’m not focused on my little expenses here and there because they simply don’t move the needle.
I’m looking at my 4 or 5 big items and saying, “Could I live in a different place? Could I live in a different neighborhood? What value do I get from this neighborhood? Is there one where I could pay half the rent?” Transportation if I’m using this, how often do I use this car? Would it make more sense to borrow one when I need it or rent one when I need one?
I have not owned a car in years. I rent cars when I need them, and this is beneficial to me because if I need a car and it’s $200, I think, “Do I need the car for the weekend?’ If I do, then I spend the $200. In the long term, renting a car for a couple of weekends is still cheaper than if I had owned the car because I have the express outlet at that moment, I question it a lot more. I look at the big items and don’t focus so much on the little budgetary items month by month.
Cost Opportunities Of Early Retiring Singles
Let’s pivot to talking about singles specifically. We have been agnostic about these principles with regard to someone who might be married or married with kids versus the traditional reader who is single, though they may have children either on their own or from a prior relationship. What are the opportunities and costs that singles have as they pursue this early retirement, as we have conceptualized it if they are investigating the FIRE philosophy more generally?
I will go first because that’s why you invited me to the show. After all, I have been married in the past, but I am unmarried these days. I have been through both sides of it. I feel it’s not as much of a difference as many people think. What it boils down to is housing is the biggest thing. If you are married, you are very typically cohabiting with your partner. You are each sharing the housing expense, dividing it between two people. If you’re two incomes, you’re both paying into that. If you are solo and paying for all of your housing expenses by yourself, that’s going to be higher. It could be as high as double, but it depends on your choice.
That’s my answer to this question. I don’t think there’s a huge difference between solo living and married or couple living because if you are intentional, which is the theme of this conversation, then you can make all these choices in a way that works for you, your budget, and your life. It doesn’t have to be more expensive unless you choose it to be, and for me, I am choosing it to be that way. I have a three-bedroom house for myself because I like that.
I value space and like being able to have friends come and stay comfortably for an entire week. I also like having my millions of tools and stuff. I have a two-car garage, but it’s filled with tools and a workshop. I can’t even fit my car in there and that’s how I like it. I could save money by getting a smaller house or an apartment, but I’m choosing to spend more, and that was my intentional choice at this stage of my life.
If I was 21, I wouldn’t do this by myself, and that applies to every solo person getting what’s right for you. If you want more space, you can simulate the benefits of marriage by having roommates or owning a multi-unit building that you rent out apartments from so that your net contribution to your housing is zero. You might even make a profit in exchange for managing this duplex or fourplex property or whatever. Maybe Jessalyn and Peter could chime in to see what I’m missing, but, I don’t see a disadvantage now that I am doing this on my own with a single-person budget.
From an expense perspective, I can nitpick, there are some things I could disagree with, but largely, yes, housing is the primary issue. I’m going to get real stretching into the social template here. There’s getting creative about the way we think about tax savings because married couples access certain tax benefits that a solo person will not. I am a solo person who does not want to be married and does not have, and will not have children, but I would consider marriage for very legal, practical, and tax benefits if the right situation presented itself. Where I had a person in my life who was not trying to make this about romance and finding one true love, and developing, and we’re some cohesive unit together.
I have very deep friendships with people in my life where we have talked about the possibility of marriage for very technical legal tax benefit reasons, and there’s nothing wrong with that. It’s apples and oranges to say, “That’s not what marriage is for.” There are plenty of people in marriages that are loveless, sexless, and romanceless. Why are those any different than what I have suggested and proposed?
Yes, if you are, you might be anti-marriage for some principles and would never consider this option, but solos can look at the depth of loving relationships that they have with people in their lives that may have no romantic or sexual component to them, and consider if there are some financial benefits they might want to access from that. Put it on the table. I have put it on the table. Strong prenup.
One of the things that is fascinating about this suggestion is that, in many countries, what you are suggesting, Jessalyn, is illegal. It’s shocking how the relationship escalator is meant to be pursued in only one way. The government is expecting you to have romance and sex and to have this intimate bond with your financial partner.
Wasn’t it Sweden that had a court case where two people got married and had no sex or romance? Maybe one of them died, and the person was meant to inherit the benefits? Either Sweden or Norway concluded that the relationship does not have to have sex or romance for this to be considered a companionship relationship that should be eligible for these social benefits. I fist-pumped when I read that article.
It was a platonic partnership between two women that had gone on for 30 years or so. The surviving partner was able to get the same outcomes that a spouse would have been able to, but that’s not the case. I’m not suggesting people do anything illegal, but I do want to point out the fact that it points to the issues we have been dealing with in this show about the high status of this particular style of relationship. In the United States, there are over 1,000 legal advantages given to it, and what, Jessalyn, you’re suggesting is that you may be able to recreate this partnership and gain some of those advantages many of which are financial.
I would only suggest it for like we mentioned, these long, deep relationships that already have. I’m not suggesting anybody go out and find someone and say, “Do you want to get married so we can get some tax benefits?” It’s those relationships that, after so long, if you are hesitating to proceed because you are caught up in some social feeling of, “I’m solo, I don’t get married,” you don’t need to be that strict with yourself. As long as it’s not illegal, then leave it on the table.
I want to add that having, for example, a second income is a hedge. There is a chance you are sharing expenses, to the point where housing is the number one but it could also be one car that you are sharing expenses, hotel rooms. Even meals that overlap and so on. That is an advantage that married people have to greater or lesser degrees.
Single people have an advantage, that, first of all, when you are solo, you are not worried about a partner’s spending. If they are a shopaholic, alcoholic, or a gambling addict, you don’t have the risk of a divorce, which can devastate your savings. Also, and probably more apt to this conversation, is that what Pete is suggesting is fundamentally a different approach to living than the one that is scripted in most of the cultures of the people who read this blog.
There are these trappings that go along with marriage, the American dream, which is the big house, which is keeping up with the Joneses, which is the vacations, and all these things. When you are solo, you only have to convince one person to make this change in life. When you have two people and possibly children, it can be hard to do. You are able to be non-traditional as a solo more easily than as a couple. I’m speaking generally here, but in that sense.
It’s true. I enjoy that, especially if you are the type of person who might be the more frugal member. If you were to be in a marriage, would it be your partner who’s doing all the spending, or you? If you are the frugal one, then that makes the solo more easily worked out financially because you are not subsidizing a different person’s lifestyle.
I take three-minute showers. If I were married, somebody might like taking 25-minute showers. My son does that anyway, but things like that. Just little things, but sometimes it’s big things. I like riding my bike all the time. If I were married, somebody might want us to have a Cadillac SUV and only use that to get around. That certainly helps.
Also, if you happen to be a high-income person, then if you are solo and your finances are solo, all that income goes to you. Whereas if you are in a partnership, then it’s 50/50. Everybody contributes to the pot and then splits the wealth 50/50. Especially if you do end up in a divorce, then that pile gets split regardless of who contributed which amount. If you meet later in life and have a good prenup, then it mitigates it somewhat, but not really because even assets that were built up during the marriage period, usually have to be split up even if one person earned more than the other. All those things are advantages to having your finances solo, but I still think it’s not a huge problem either way.
Even if you do things and don’t optimize them, and you don’t have to do a strategic non-romance marriage, you are still going to be fine if you are intentional about the rest of your choices. The simple reason is that our world has been getting richer for a century, or multiple centuries, and the cost of basics goes down relative to our income overall, and our standard of living rises. That means it’s easier and easier to meet your happiness needs, and you don’t have to be particularly cutting edge to meet them and still have a lot of money left over.
As a solo who is pursuing this, I would also add that being a solo has given me the freedoms that I did not have when I was back in previous versions of Jessalyn when I was partnered with someone. I have geo-arbitrage, which means I live outside the United States and can live in low-cost living cities or maybe not-so-low-cost living cities, but places where I get a tax benefit for bringing my business there because I’m self-employed, and so I don’t have another person to consider.
When I was in a relationship escalator, I was dating a literal rocket scientist, and he couldn’t transfer his work to the Netherlands and start working for the space agency there. His career is with Lockheed and NASA, and that’s his career path. I was limited in my ability and now have the freedom to pick up and go wherever I like to and toggle my expenses that way and that’s also related to the second point, which is about my career choices.
I have the freedom as a solo. I have increased my income exponentially because of my freedom that I don’t have this other person. I don’t want to say they are weighing me down, but we have to collaborate on choices together. It’s just me. If I needed to consult with another person and consider the impact on their career, mine may not have reached where it was, and my income level, therefore, would not have achieved the level that it has. It’s not to say one is better than the other, it’s to say I can nitpick and complain about expenses that I have as a solo person, but one of the greatest reasons I have exponentially grown my income is because I’m solo, and that has offset any increase that I experience in the expenses area.
Retiring Abroad The Right Way
I want to wind down here, and I want to invite both of you to do two things for me. The first one is reflecting on this conversation, is there something that you feel we haven’t covered that you think’s important for the reader? The second thing is, for the person who’s feeling inspired, what would you say their first step should be? For some people, this is going to be a total change in how they go about not just spending and saving, but how they go about seeing their life.
The thing that we haven’t covered that some readers are curious about is that whole, “Tell me about retiring abroad. Jessalyn mentioned geo-arbitrage. Tell me more about that.” The thing that I want to say about that is super key, having been an American living outside the United States, you should move abroad and live in a place because you want to live there, not because it’s the cheapest place you can find. Find places you want to live first and then narrow that down based on which one saves you some money. Do not start your research with, “I want to save some money, so I’m going to move abroad.” It will only end in frustration. Moving countries and moving cultures is a huge burden on your mental health. You need to want it, and you need to be where you are.
A lot of people get this thing in their mind, “I’m going to move to Portugal because it’s cheap and I can save a bunch of money.” I want you to ask yourself first, “Do I want to live in Portugal?” Then only then do you perceive the financial piece. The step that people should walk away with, is their first action. Pete mentioned it earlier, so I’m going to reinforce it because we learn best when we hear things repeatedly. Know how much it costs to exist.
Take your twelve months, figure out your expenses, and categorize them into what they are. That is step number one and even I did not know how much it costs to exist as Jessalyn when I first did this, and I’m an accountant. That is step one. Figure out how much it costs to exist because that number forms the basis for everything else, your savings rate and how much money you need in order to be financially independent in the future.
A couple of quick comments about this. I have an episode about retiring abroad that will likely be published before this one, and your point about wanting it is part of that conversation is using your gut to decide to be excited and happy about this change. I don’t know my burn rate. I don’t know how much I spend a year, and I did that consciously because I spent the first 40 years of my life knowing exactly every penny that I spent, and I found it liberating not to. As I’m contemplating making a change with regard to my career, I realize that I have to do this, and it’s on my to-do list.
I’m pretty terrified to figure out how much I spend on the Solo movement because I’m afraid it can become demotivating. My solution to this thus far is that this is my charity, that this movement is the money that I would be giving to the Red Cross or to the Arbor Day Foundation or whatever it is as part of my yearly giving anyway.
It adds a lot of value to your life.
Getting More Happiness For Your Dollar
It does indeed. It’s changed my life. No doubt. I don’t have any regrets about it all, but it’s also nice when it’s a nebulous amount rather than a specific one. Pete, what haven’t we covered? Besides knowing your burn rate, and how much you are spending per year, what would you suggest for folks to start?
It depends on people’s attention span and how much time they want to put into it. If you like the idea of getting better at money, that’s how I like to summarize it. It’s not about early retirement or financial independence, it’s about being better at living and money and getting more happiness for your dollar. We mentioned the ChooseFI Podcast. That’s one fun thing to do because they have had hundreds of episodes, and they are all guest-based, or many of them are guest-based. You can look through the list, and you’re like, “This person is talking about what it’s like to be an accountant,” or “This person’s talking about living abroad,” or all these other subjects. That’s a fun way to absorb it if you are an audio podcast enjoyer.
If you want something short, I have an older talk on YouTube where I tried to summarize my entire writing history for Mr. Money Mustache in one talk, and it’s called something like Early Retirement in One Talk, but How To Retire By 30 Mr. Money Mustache. If you look that up on YouTube, you’ll see it’s roughly a 25-minute talk that I gave at a conference once.
I’m not the best public speaker, but I’m still proud of how concise that one is. If you want a little bit more, I have a boot camp email series. It’s free, a non-commercial deal where I took what I thought was my best articles, and you get one automatically once a week for a year, roughly, I think that’s good because it’s pretty passive and it lets you absorb it at your own pace. If you look up Mr. Money Mustache Bootcamp, you will find that. If you like learning about investing, The Simple Path to Wealth book is a fun one. It’s easy to read. It’s not very finance-heavy.
I have also read it. Great suggestion.
JL Collins is a storyteller at heart, and that’s why I recommend that book. I wrote the foreword for it, which I rarely do for any book because I thought it was so good. For people with short attention spans like me, that’s the perfect book and that’s about it. Gradually learn about happiness, and optimizing your life. We’re not even talking about money so much, we’re talking about making more conscious choices that are a win-win and they probably make your money situation better. Hopefully, you’ll make progress, and a year from now, you’ll think, “I can’t believe I was even worried about having enough to live on or retiring early,” because the whole money subject is not so much a consideration anymore.
Financial Planner/Coach/Advisor Recommendations
I want to ask one follow-up question and then we’ll wrap it up. As you two are describing, it is a very DIY process. A do-it-yourself process. There are those people who need some professional help with this. I’m a big advocate for financial planners who are fee-based. You pay them for their hourly work but is there a particular type of financial planner or coach who specializes in this particular perspective that people might want to seek out should they need a little bit of extra help?
There is
Yes. This is a very DIY thing. There are lots of things in the middle, where I have a financial advisor, but I pay him $8 a month, and he guides me through my DIY, and most of the bad decisions that we make are not bad money decisions. They are bad emotional decisions. I like the concept of getting into the field of financial therapy at some point, getting a therapist or a coach of some kind. There are courses out there that act as an interim advisor to get you on your feet of DIY, to learn what you need to know to find the right advisor for you. You don’t know what you don’t know. How can you find an advisor if you don’t know what you are looking for?
I love the boot camp from the Rebel Finance School, Alan and Katie Donegan. They have British accents. It’s UK-based, but everybody can take the basic concepts from their boot camp and their school, and it’s completely free because that’s what people that reach FIRE have all this free time and they give it away for free. That’s one example, but I’m sure there are lots of equivalents out there. A boot camp helps you to learn the things you don’t know so that if you do decide that an advisor is still the right fit for you, you know the right questions to ask them.
Just to give a shout-out to some local people. There are some members of my coworking space who are professional financial advisors who have this perspective like the FIRE and early retirement perspective, which is very helpful because the conventional advisors will sometimes be based on an inflexible lifestyle. They say you have to replace 80% of your peak earnings, otherwise, you’ll be dead and worried and stuff. They are called Downshift Financial.
I have a feeling that that’s going to be for people with a fair amount of wealth that they want to decide what to do with it. You pay them only for their time but it’s not going to be super cheap because they are professionals and they are in high demand. I wish that I had a coaching business because I enjoy helping people, but I’m too retired for that, so I don’t. I have tried a little bit, and I sometimes dabble with it, but it’s not something I want to do professionally because I just want to hang around and be a carpenter and be a dad.
My person. Money Amy, Amy at Money Sense. She doesn’t specialize in this, but if you tell her this is your goal, she can help in that way. She’s helped me alone for many years shaping my financial future, and so that’s the other person I would add to this.
If we are naming names, I have to shout out my actual financial advisor, Mark Zoril. He got featured in a Forbes article some years ago, and he blew up. I don’t know if he’s still accepting clients. I think he even hired more people, so that’s my subscription guy.
Jessalyn, great to see you as always. Thank you for contributing to the Solo movement as you do in many ways, both with your voice and also behind the scenes.
Glad we could loop back to the cost-benefit analysis of the couch.
Pete, Mr. Money Mustache, I’m so happy that I crossed paths with you, and thank you so much for taking the time to do this. You don’t have to do anything you don’t want to do, and so the fact that you decided to do this, I have a great deal of gratitude for the lives that you are going to change within the Solo movement and then also the lives that you’ve changed around the world with regard to your work.
Thank you. It’s been an honor.
Cheers.
Important Links
- Mr. Money Mustache
- Dating Hell/Help Episode
- Aromanticism Episode
- The Relationship Design Episode
- Aging, Retiring, and Dying Single Episode
- Your Money or Your Life
- Shockingly Simple Math of Early Retirement
- The Simple Path to Wealth
- Early Retirement in One Talk
- Mr. Money Mustache YouTube Channel
- Mr. Money Mustache Bootcamp
- Rebel Finance School
- Downshift Financial
- Money Sense
About Pete Adeney
Peter Adeney (aka Mr. Money Mustache) is known for pioneering the FIRE (Financial Independence, Retire Early) movement, he retired in his early 30s after optimizing his life for frugality, sustainability, and intentional living.
Through his popular blog by the same name, he shares strategies for achieving financial freedom, including living below one’s means, investing wisely, and adopting a minimalist lifestyle.
About Jessalyn Dean
Jessalyn Dean is a financial literacy and tax consultant currently based in Milan Italy with her two cats though is frequently on the move as a self-proclaimed “serial migrant”. She spent her teenage years and 20’s searching for “the one” only to realise once she found him that it wasn’t what she was meant for.
Jessalyn got off the relationship escalator in 2017 and now designs her relationships using autonomy as a compass and removing hierarchy from all of her relationships. She is currently working towards early retirement and traveling full-time as a solo nomad. In her free time, she coaches friends on doing the same.