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The Tim Ferriss Show
#475: Mr. Money Mustache — Living Beautifully on $25-27K Per Year (Repost)
Oct 23, 2020
01:54:22
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Quick takeaways
- To achieve early retirement, optimize all aspects of your lifestyle for maximum fun at minimal expense.
- Financial independence can be achieved by saving 25 times your annual expenses in conservative investments.
- Make spending decisions based on happiness optimization and remove negatives from your life.
- Prioritize using surplus money for positive impact and community improvement beyond personal consumption.
Deep dives
Optimizing Lifestyle for Maximum Fun at Minimal Expense
The podcast episode explores the story and philosophy of Mister Money Mustache (Pete Adeney), who achieved early retirement at the age of 30. Pete and his family live a free-form life focused on interesting projects, side businesses, and adventures. They have optimized their lifestyle for maximum fun at minimal expense, with annual expenses totaling around $25,000 to $27,000. This is accomplished through efficiency in spending decisions, such as buying cheaper cars, optimizing transportation, and being thoughtful about purchases. Pete emphasizes the importance of removing negatives from life to increase happiness.
Financial Independence and the 25x Rule
Pete explains the concept of financial independence, which means having living expenses covered by non-work income. He introduces the 25x rule, which states that to achieve financial independence, you need to save 25 times your annual expenses in conservative investments. This rule is based on a long-term study of the stock market's performance and allows for a safe withdrawal rate of around 4% per year. Pete discusses how this rule challenges common beliefs about retirement savings and highlights the potential for early retirement.
Optimizing Spending Decisions for Happiness
Pete shares his approach to making spending decisions, focusing on optimizing for happiness. He starts by assessing whether a purchase would genuinely make him happier and considers factors such as space, potential breakage, and the removal of negatives from his life. Pete also emphasizes the value of time and aims to minimize time-consuming tasks and commitments through efficient choices. He demonstrates how optimizing spending decisions can lead to a more fulfilling life.
Using Surplus Money for Positive Impact
Having achieved financial independence, Pete discusses his approach to surplus money. He prioritizes leveraging his blog's attention for positive impact and envisions creating projects that could bring about significant change and community improvement. Pete wants to find ways to optimize resource consumption while donating to worthwhile causes. He highlights the importance of finding purposeful uses for surplus money beyond personal consumption and the potential for making a larger positive impact on society.
The Importance of Voluntary Hardship
Voluntary hardship can be a gateway to a fulfilling life. Embracing challenges and pushing oneself outside of comfort zones can lead to personal growth and satisfaction. By actively seeking out difficult experiences and pushing the boundaries of what is comfortable, individuals can discover new skills, strengths, and resilience.
The Power of Walking
Walking is an undervalued form of exercise and a key to happiness. Humans have evolved to walk long distances, and embracing walking as a mode of transportation and exercise can have numerous benefits for physical and mental well-being. By choosing to walk more and incorporating it into daily routines, individuals can improve their health and overall happiness.
Finding Balance in Achievements and Satisfaction
Balancing the pursuit of achievement with the satisfaction of the present moment is a challenge. Avoiding the extremes of relentless overachievement and passive complacency is key to finding fulfillment. By finding the right balance between pushing oneself and enjoying the present, individuals can lead more meaningful and satisfying lives.
The Journey to Happiness
Prioritizing happiness over maximum wealth and achievement is a mindset shift. Many traditional markers of success may not lead to true happiness. Reevaluating one's goals and understanding that happiness is multifaceted can lead to a more fulfilling life. Embracing experiences, building relationships, and finding joy in the simple things can contribute to long-term happiness.
6.
You Only Need to Accumulate Twenty Five Times Your Annual Spend to Retire Forever?
2min
16.
I'm Not Sure I'd Like to Reopen the Wound I Was Misquoted After Correcting Fact.
4min
Mr. Money Mustache (@mrmoneymustache — Pete Adeney in real life) grew up in Canada in a family of mostly eccentric musicians. He graduated with a degree in computer engineering in the 1990s and worked in various tech companies before retiring at age 30. Pete, his wife, and their now eleven-year-old son live near Boulder, Colorado, and have not had real jobs since 2005.
This begs the question of “How?” In essence, they accomplished this early retirement by optimizing all aspects of their lifestyle for maximal fun at minimal expense, and by using basic index-fund investing. Their average annual expenses total a mere $25-27,000, and they do not feel in want of anything.
Since 2005, all three of them have explored a free-form life of interesting projects, side-businesses, and adventures.
In 2011, Pete started writing the Mr. Money Mustache blog about his philosophy, which has grown to reach about 23 million different people (and 300 million page views) since its founding. It has become a worldwide cult phenomenon, with a self-organizing community and incredible news coverage. This episode explores his story, philosophies, and routines.
Please enjoy!
This episode originally aired in 2017. You can find the show notes here: https://tim.blog/2017/02/13/mr-money-mustache/
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Past guests on The Tim Ferriss Show include Jerry Seinfeld, Hugh Jackman, Dr. Jane Goodall, LeBron James, Kevin Hart, Doris Kearns Goodwin, Jamie Foxx, Matthew McConaughey, Esther Perel, Elizabeth Gilbert, Terry Crews, Sia, Yuval Noah Harari, Malcolm Gladwell, Madeleine Albright, Cheryl Strayed, Jim Collins, Mary Karr, Maria Popova, Sam Harris, Michael Phelps, Bob Iger, Edward Norton, Arnold Schwarzenegger, Neil Strauss, Ken Burns, Maria Sharapova, Marc Andreessen, Neil Gaiman, Neil de Grasse Tyson, Jocko Willink, Daniel Ek, Kelly Slater, Dr. Peter Attia, Seth Godin, Howard Marks, Dr. Brené Brown, Eric Schmidt, Michael Lewis, Joe Gebbia, Michael Pollan, Dr. Jordan Peterson, Vince Vaughn, Brian Koppelman, Ramit Sethi, Dax Shepard, Tony Robbins, Jim Dethmer, Dan Harris, Ray Dalio, Naval Ravikant, Vitalik Buterin, Elizabeth Lesser, Amanda Palmer, Katie Haun, Sir Richard Branson, Chuck Palahniuk, Arianna Huffington, Reid Hoffman, Bill Burr, Whitney Cummings, Rick Rubin, Dr. Vivek Murthy, Darren Aronofsky, and many more.
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