How to Go from Middle-Class to Kickass

73-year-old Jacinto Bonilla demonstrates what happens when you defy preconceived notions of your society

Dear Mr. Money Mustache,

Sure, I’m interested in becoming rich and maybe even having the option of early retirement. But nobody ever got rich by clipping coupons or skipping lattes. Shouldn’t I concentrate on boosting my income?


A member of the Middle Class

A few days ago, I had the opportunity to go out to lunch with a dozen of my old coworkers from the high-tech company. It was quite a reunion, as I hadn’t seen many of these gentlemen since September 2005 when I retired from my engineering job. Everybody seemed just like I remembered them. A few distinctive silver strands had sprouted from many of the heads and beards. Many of them had moved on to jobs in other local companies. But the most notable thing to me was that they all still had jobs.

Since the Mr. Money Mustache identity has become quite a fun little part of my life, I let some of them in on this secret of what I’ve been doing with my free time. But invariably, when you talk about early retirement with a person who gets by on a high middle-class income, they become baffled by how small things like riding a bike or understanding electricity consumption can make such a big difference. To a standard office worker, early retirement is what happens if you win a lottery, get a huge inheritance, or have ground-floor stock options in a company that makes it big.

I was baffled in the opposite way. I imagined what would have happened if I had stayed at that company for all these years. I would have earned an average of perhaps $110,000 per year in salary, as well as cashing in about $200,000 in stock option profits (I gave up quite a few in-the-money options upon departure, with strike prices set during the tech crash of

the early 2000s).  The company’s generous benefits plan would have further saved me some out-of-pocket expenses, like the cash we paid to the hospital when our son was born.

All in all, I would have earned at least $1 million since then. And assuming Mrs. Money Mustache had kept working, she would have earned close to that amount as well. $2 million before tax, which would have gone straight to the bottom line and compounded since income from investments was already covering our expenses as of late 2005. In short, as we added that income to our existing savings, we would be ridiculously wealthy by this point.

But yet many of these coworkers, most of whom are older than me and were already working before my career, continued throughout my career, and are still doing it seven years and counting after my career, still somehow need to work, according to their own accounting. Some people in this situation are even living from paycheck to paycheck.

Quite accidentally, this group of coworkers has formed a nice control group for the study of Mustachianism. They have a wide variety of incomes, but all live in the same area, so the base cost of living and the tax rates are held constant. But one participant in the study tweaked only one variable while leaving the rest unchanged: the spending rate.

Somehow, Mr. Money Mustache maintained an outwardly-normal appearance among this peer group, showing up at work in acceptable clothing, achieving similar job performance, earning an average amount, and participating in all the usual social activities, yet adjusted his spending downwards enough to make a drastic difference in his financial outcome. How could it be?

The answer is as simple as the following table. Observe the monthly spending of a Typical Fancy Professional Worker versus a Future Early Retiree. To be fair, let’s adjust the spending estimates to assume we are comparing two double-income families with two school-age kids.


Category: Forex

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