Influence #2: Mr. Money Mustache

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Following up on my previous discussion on influences, I have to mention Mr. Money Mustache, hereafter abbreviated as MMM. This guy’s got to take credit for popularising a more frugal lifestyle in a way that someone as hardcore as Jacob from ERE can’t do. MMM’s profile’s been slowly building and in fact he was even the subject of a feature in the New Yorker recently. Of course, any time the trashmedia kraken picks up the topic of frugal living the whiners crawl out of the woodwork to talk about how hard it is to make the loan payments on their ridiculous cars on a salary of merely $85k a year. But I digress. Also, it’s probably unfair to categorise the New Yorker as a tentacle of the kraken.

Where MMM differs from many other financial independence writers, in my opinion, is his emphasis on relentless optimism and really pushing the idea that teaching yourself to live with some discomfort is good for you. This is vital to your life if you’re going to reach financial independence earlier than others do. After all, by not spending money to consume all the nice material goods that are available these days you’re sacrificing, right? I use this in the sense of giving something up as a tradeoff for something you want more, not in the sense of giving something up period. By recognising how awesome things are right now and how much better they’re getting (optimism), and also that by enduring discomfort you’re building up an internal fortitude that means you’ll be stronger later, you can be happy in your frugal living. Anyway, making good choices that will help you in the future won’t make you an unhappy person.

MMM’s also really good on noting that lowering your consumption is a good environmental choice. In more recent years, he’s explicitly stated that his goal is not just helping people get their finances into better shape, but convincing people to stop wasting so many of the earth’s resources, in a very broad sense.

I was actually trying to think of a few criticisms of MMM to make this article less of a glowing review, but none are really jumping at me just now. There is something that bothers me a little regarding the community that’s grown up in his forum, but I’m not going to hold the guy directly accountable for that. After all, holding people accountable for user-generated content on the net is usually a bad move.

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Influence #1: Early Retirement Extreme

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This is my first influence post. I will have a series of these, and discuss in brief some of the other authors and resources that have led me to trying to live a simpler life.

Early Retirement Extreme

I don’t actually recall how I stumbled upon this website, but I think it was the first that started me on the road towards simplification. I know that at the time I was working a job I was unsatisfied with, but I don’t actually remember googling for early retirement strategies or similar, so it must have been something more tangential. In any event, I read through the archives of the site slowly over several months, and eventually bought and read the book.

Early Retirement Extreme (ERE) is a book about how to become independent of the need to work a salaried job in order for one to secure sufficient resources to keep living. This is fairly straightforward, right? Many people have written self-help books about how to get rich. But ERE is not about getting rich. Rather, it’s about reducing your reliance on an external marketplace to provide for your needs – and hence, if you don’t need to fulfil those needs by buying solutions, you need less money to do the buying. Less money needed = less time spent working a job and saving money for retirement. The idea is to question what it is you actually need to live a satisfying life, and also build up skills so that you can replace most needs for external solutions by providing your own (internal) solutions.

Just to cure any curiosity out there in the blogosphere – I’m not actually on the path to early retirement extreme, for better or worse. I’m just not extreme enough. With that said, I really like this book’s coherent philosophy and emphasis on strategy. ERE is not a list of ‘tips and tricks’ to save money and retire early. It does not give any more than very rudimentary advice on finance. Rather, it relentlessly draws attention to the necessity of ensuring all aspects of your life harmonise in order attain a specific goal, in this case, retirement (or financial independence). Too often (and you will see this easily if you look at any personal finance websites), people focus on saving harder and getting better investment returns only to attenuate those gains because other areas of their life do not harmonise with their goals. Example: a three-person family unit wants to increase their savings, but simply cannot contemplate living in a smaller than four bedroom, double garage house with multiple air conditioners.

Although I am not on the path to saving 70% of my income and retiring in 7 years or so, Mr. Fisker’s comprehensive lifestyle philosophy has certainly made me question and realign a number of my habits and goals. It has helped me to conceptualise and make progress towards a lifestyle that is more robust to negative shocks from the external economy, because I have internalized some of the production for which most people pay others. It has helped me to ask questions about what is possible within (and beyond) the bounds of a consumption-driven economy, and whether the fact that so few do something (attain financial independence) really means that it is particularly difficult. I recommend the book thoroughly to anyone who is open-minded about detaching themselves from the consumer economy (to a greater or lesser degree).

Why am I simplifying my life?

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I describe, briefly, simple living in my about me page. But I’ve been spurred to expand upon why I am attracted to simple living by this post by Mike Burns.

People are attracted to simple living for a variety of reasons. These could be reducing stress, environmental concerns, or a desire for more free time that the practice of owning and accumulating stuff takes away from you. For me, though, the primary concern is flexibility.

I was originally drawn towards simplicity by a desire to become more independent financially, and this in turn came from the fact that I was unhappy at my job. After a long period of fruitlessly searching for a different employer, I slowly began to realise that I might need to take a substantial pay cut to find other work, take a short-term contract or part-time position, or even just totally get out of employment for a while in order to get away from the anxiety my work was causing me. The prospect of a reduced income made me consider what I could afford in an ongoing sense. That is to say, I had savings in the bank, but what were the long term implications of living the way I was living, day-to-day? Was it sustainable with a lower income or a period of unemployment? I realised that simplifying my life, downsizing my possessions, and reducing some of my commitments would leave me more adaptable and able to deal with disruptions to the steady employment that I was used to.

In the end, I did successfully find a different, more interesting job and didn’t ever take a pay cut, but the desire for flexibility stayed with me.

In the course of my job search I also looked for opportunities abroad. This finally culminated in me actually getting one of those opportunities and moving, although that came much later. In considering all aspects of a potential international move, I realised the obvious: being internationally mobile is more difficult the more possessions you have. I’m not a minimalist for minimalism’s sake. In fact, I’m not a minimalist at all. I’m only interested in holding onto fewer material things to the extent that it makes it easier for me to get up and move for more interesting opportunities, or more pessimistically, in the face of natural or economic disaster. As an added bonus, it makes the house easier to clean.

I wouldn’t be existentially bothered if I owned two cars, a dog, a mortgage on a four bedroom house full of stuff, and a subscription to a gym and a golf club. But accepting all of those things into my life would mean a huge reduction in my ability to adapt to changes.* My interest in living a simpler life grew out of a concern for flexibility in the face of uncertain employment prospects, but from there it’s grown to encompass other disruptions as well: social, environmental, family or whatever else may occur. Maintaining a simpler life, being careful of what I allow into my life, affords me flexibility to respond to new opportunities and allows me more options in the face of adversity.

*The subscriptions, maybe not. I’m generally pretty good at avoiding the sunk cost fallacy, but reminding myself to not consider sunk costs does take some mental effort.