Investing

Does Mr. Money Mustache technique work in GVA/GTA?

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Penalty Box
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Feb 21, 2013
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Does Mr. Money Mustache technique work in GVA/GTA?

mr. money mustache retired on $800K net assets. can someone still do that in canada gva/gta?
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Deal Addict
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Dec 8, 2010
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Can you live on $32k a year? If yes then yes, if no then no.
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Mar 1, 2016
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daverobev wrote: Can you live on $32k a year? If yes then yes, if no then no.
is that $32K in constant dollar, or level?
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Nov 2, 2013
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Never really cared for that site, seems more spammy and like an advertising avenue.

But in regards to retiring with 800K net assets, there are ways- but with employment alone, not likely.
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Dec 2, 2014
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I lived on less than that in Toronto before I bailed on the city.
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Mar 24, 2008
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You know what amazes me about early retirement websites is that these guys save money aggresively, change careers and call it early retirement. It's not retirement if you start replacing roofs, writing blogs or manage rentals instead of writing software (as MM does). MM also makes quite a bit of money from his website to which he actively contributes... that's work. IMHO, it's a change in career and not early retirement.

Now back to whether you can survive with 32k/year after tax in Toronto... you probably could if you don't have a family to raise and don't mind living with roommates. That or your spouse also makes 32k... a lot of people survive with similar incomes in this city.
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Mar 5, 2009
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I don't understand how money moustache can help you retire.

Assuming you have 800k invested with 4% dividends that you use to fund all of your life expenses. You have to rely on capital appreciation to help you stay ahead of inflation. There's no way a conservative couch potato portfolio can outpace inflation when dividends are not reinvested. The future value of that 800k will not be enough to pay for future expenses due to inflation.
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Jul 19, 2003
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serious7 wrote: I don't understand how money moustache can help you retire.

Assuming you have 800k invested with 4% dividends that you use to fund all of your life expenses. You have to rely on capital appreciation to help you stay ahead of inflation. There's no way a conservative couch potato portfolio can outpace inflation when dividends are not reinvested. The future value of that 800k will not be enough to pay for future expenses due to inflation.
This.

Its all b.s.
hi!
Jr. Member
Aug 19, 2016
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serious7 wrote: There's no way a conservative couch potato portfolio can outpace inflation when dividends are not reinvested.
Not disputing that it's pretty hard to live on $32k and that $800k leaves no room for error.

But if you really only spent the dividends and never sold the shares, it does seem like it would keep pace with inflation? The shares and dividends will go up with inflation.
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Aug 25, 2015
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Victoria, BC
No idea who Mr. Money Mustache is and what's his technique, but two variables that are always forgotten in this kind of discussion are how many years you plan on living and how much money you want to leave behind. There is no need really to only live off dividends and keep up with inflation if you don't mind digging through the principal.
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foreigncontent wrote:
daverobev wrote: Can you live on $32k a year? If yes then yes, if no then no.
is that $32K in constant dollar, or level?
4% safe withdrawal rate, adjusted by inflation each year.
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masterhapposai wrote:
serious7 wrote: I don't understand how money moustache can help you retire.

Assuming you have 800k invested with 4% dividends that you use to fund all of your life expenses. You have to rely on capital appreciation to help you stay ahead of inflation. There's no way a conservative couch potato portfolio can outpace inflation when dividends are not reinvested. The future value of that 800k will not be enough to pay for future expenses due to inflation.
This.

Its all b.s.
Google the Trinity Study. Shows that 4% when you're 40% bonds/60% stocks (I think, haven't looked at it myself) almost always succeeds for a 30 year retirement. In the vast majority of cases it grows rather than diminishes.

Stock market grows at ~6%; you take out 4%. All good. Averaged out over a lot of years. Obviously, if you can reduce your expenses or have a cash cushion for the really down years (ie, try not to sell anything in 2007/2008), the chance of leaving behind a massive inheritance goes up dramatically.
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ksgill wrote: You know what amazes me about early retirement websites is that these guys save money aggresively, change careers and call it early retirement. It's not retirement if you start replacing roofs, writing blogs or manage rentals instead of writing software (as MM does). MM also makes quite a bit of money from his website to which he actively contributes... that's work. IMHO, it's a change in career and not early retirement.

Now back to whether you can survive with 32k/year after tax in Toronto... you probably could if you don't have a family to raise and don't mind living with roommates. That or your spouse also makes 32k... a lot of people survive with similar incomes in this city.
Yeah, but if you compare writing a 1 page blog once a week vs 9-5 + commute + sitting in an office. One job seems a lot more interesting than the other. I'd rather learn to replace a roof, do it, and appreciate the effort that goes into it. Besides it's great to still stay active once you retire. If you just move to Florida and sip corona's on the beach, or sit on the couch watching law and order and playing candy crush you end up croaking a lot sooner than someone who stays active, even if by lightly "working".

My thoughts on the initial question though. You'd have to already have your foot in some Toronto real estate to pull off the MMM now. He has a paid off house, walked to work, and now ~1m in the bank. If you had all those things today, regardless of age you could likely retire in Toronto. While most of his stuff is out there or non-applicable to us; such as Biking to work in the winter. The one article I do take to heart is his simple formula of money in vs money out. Similar to working out to lose weight: calories in vs calories out. The same goes for your financial merit. $1M is adequate to retire on, so is $5M. It really comes down to what your annual spend is and how much you require to spend while in retirement.
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May 25, 2008
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I like to use the FIRE Calc method that I believe has been posted before, to get a rough idea. It gives you an evaluation of risk based on historical information. http://www.firecalc.com/

So 800K invested in "couch potato" portfolio of 75% stock index and 25% bond funds, for 30 years, withdrawing 32K/year results in a balance at the end of your retirement of $-320,789 to $4,543,580, with an average at the end of $1,476,391. The success rate 94.8%. have a look at the FIRECalc Results section for more details, but the risks appear pretty much in your favour if you can live on 32K/year.
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Mar 24, 2008
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Super_Chicken wrote:
ksgill wrote: You know what amazes me about early retirement websites is that these guys save money aggresively, change careers and call it early retirement. It's not retirement if you start replacing roofs, writing blogs or manage rentals instead of writing software (as MM does). MM also makes quite a bit of money from his website to which he actively contributes... that's work. IMHO, it's a change in career and not early retirement.

Now back to whether you can survive with 32k/year after tax in Toronto... you probably could if you don't have a family to raise and don't mind living with roommates. That or your spouse also makes 32k... a lot of people survive with similar incomes in this city.
Yeah, but if you compare writing a 1 page blog once a week vs 9-5 + commute + sitting in an office. One job seems a lot more interesting than the other. I'd rather learn to replace a roof, do it, and appreciate the effort that goes into it. Besides it's great to still stay active once you retire. If you just move to Florida and sip corona's on the beach, or sit on the couch watching law and order and playing candy crush you end up croaking a lot sooner than someone who stays active, even if by lightly "working".
...
Sure, but you aren't retired if you still work *fulltime* as he does replacing roofs, writing blogs and managing rentals. BTW, his blog makes 6 figures per year by some estimates.
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Dec 8, 2010
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ksgill wrote:
Super_Chicken wrote:
ksgill wrote: You know what amazes me about early retirement websites is that these guys save money aggresively, change careers and call it early retirement. It's not retirement if you start replacing roofs, writing blogs or manage rentals instead of writing software (as MM does). MM also makes quite a bit of money from his website to which he actively contributes... that's work. IMHO, it's a change in career and not early retirement.

Now back to whether you can survive with 32k/year after tax in Toronto... you probably could if you don't have a family to raise and don't mind living with roommates. That or your spouse also makes 32k... a lot of people survive with similar incomes in this city.
Yeah, but if you compare writing a 1 page blog once a week vs 9-5 + commute + sitting in an office. One job seems a lot more interesting than the other. I'd rather learn to replace a roof, do it, and appreciate the effort that goes into it. Besides it's great to still stay active once you retire. If you just move to Florida and sip corona's on the beach, or sit on the couch watching law and order and playing candy crush you end up croaking a lot sooner than someone who stays active, even if by lightly "working".
...
Sure, but you aren't retired if you still work *fulltime* as he does replacing roofs, writing blogs and managing rentals. BTW, his blog makes 6 figures per year by some estimates.
It's called FI/RE - Financial Independence/Retire Early. You're what MMM calls the "Internet Retirement Police" - saying what he's done is false/fake because he doesn't just sit around doing nothing, or play golf all day.

MMM is FI. He could be 100% retired on the passive income he gets, excluding the blog stuff which - it's true - makes loads and loads of money. What he is trying to get across is: you don't have to work to 55, 60, 65 *as a middle or higher income developed-world living person*. If you don't spend on dining out, new cars, and McMansions, and rather save and invest, you can be done with *having* to work in ~10 years.

Is it harder if you live in a HCOL area? Of course. Less of your income can go to investing. If you want to *retire* in the same HCOL area? Even worse. But that's a choice. The whole point of the blog is to try and jolt some of the people who just, UNCONSCIOUSLY, fritter away all their money into taking a look at their finances. What YOU do is entirely your own responsibility. But it IS possible to save, invest, and retire on a modest income early.

Pointing at MMM himself and yelling "fraud" because he still "works" is, as I said, missing the point. It's not about him; he just uses himself as an example for some things. It's about you, and your consumption.

Want to spend $3k a year at Starbucks because you love it? Cool - as long as you're aware how many extra years you have to work to fund that. It is, after all, your life. But just being suckered into it mindlessly is a problem. It's education, knowing that taking an action has a choice. Taking your lunch to work rather than eating out could be $2-3k a year invested. It's huge.
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Mar 24, 2008
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Where do you see me calling him a fraud?
Retirement rəˈtī(ə)rmənt/ (noun)- the action or fact of leaving one's job and ceasing to work.
Don't get your knickers in a bunch, I didn't define the term. Perhaps I should move to Thailand and "retire" with my mid-six figure portfolio while working full-time in the tourism industry. What a joke.
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Jun 10, 2008
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double post....
Last edited by barricuda on Aug 22nd, 2016 3:56 pm, edited 1 time in total.
Deal Addict
Jun 10, 2008
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ksgill wrote: Where do you see me calling him a fraud?

Early Retirement rəˈtī(ə)rmənt/ (noun)- the action or fact of leaving one's job and ceasing to work for The Man.

Don't get your knickers in a bunch, I didn't define the term. Perhaps I should move to Thailand and "retire" with my mid-six figure portfolio while working full-time in the tourism industry. What a joke.
fixed.
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Mar 5, 2009
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inside wrote:
serious7 wrote: There's no way a conservative couch potato portfolio can outpace inflation when dividends are not reinvested.
Not disputing that it's pretty hard to live on $32k and that $800k leaves no room for error.

But if you really only spent the dividends and never sold the shares, it does seem like it would keep pace with inflation? The shares and dividends will go up with inflation.
Past performance is not an indication of future performance. Reinvested dividends played a really big role in index investing performance. Taking that out of the picture leaves a lot of questions about the ability for the principle to keep pace with inflation. There's unfortunately a pretty good chance that it either will break even with inflation or fall short.

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