I’ve been reading, researching, and writing about personal finance for a little over ten years now. But even before I started formally sharing my financial thoughts, I spent the earliest years of my life thinking through the implications and trade-offs of how I structured my financial and economic decisions. I’ve always had a knack for finding (and utilizing for my advantage) market inefficiencies. I enjoyed saving, accumulating, and investing even early in my middle school years. I’ve certainly noticed my life and consumption have continually evolved over the last thirty years.
I started this crazy process of learning as much as I could about personal finance somewhere around 2000. I spent several years plowing through every single personal finance book at our local library and followed the research and pop-press through my entire doctoral program in financial planning. Although I read Your Money or Your Life and all of Jacob’s ERE stuff, it wasn’t until Mr. Money Mustache (MMM) came along that the movement in my brain had a coherent structure. MMM is a master at putting a ‘why’ behind the choices it takes to peruse an optimal life and efficient spending. I’ve even had Pete, the Mr. Money Mustache himself, sit with me and discuss many of the topics on this blog.
Getting To Work
I worked for a large local university for about ten years. It was a great place with lots of opportunity to learn and grow. I had an incredibly supportive set of coworkers and plenty of mental room to research and write. It was there I really started to implement many of the basic tenets of a Mustachian life. My wife and I, despite having a couple of young children, lived a relatively simple life not too unlike many of the college students around us. It certainly helped that we lived a few blocks from campus and, for most of my employment, I was also a student of some type. My closest friends from school were mostly recent educational immigrants living on minimal graduate assistantships.
It was in this stage of life where we really began to flex our Mustachian habits. We started out well, saving around half our income, and peaking somewhere around 70%. Most of our entertainment was linked to university events (art and sports). I was able to live a few blocks from campus and walk, bike, or scoot to work each day. We shared a simple electric car and lived in housing with an average of about 200sf per person. We paid off our little house when we turned 30 and our simple life was pretty efficient. We even had a pretty nice garden, some chickens running around the backyard and lots of easily accessible parks and trails that backed up to our home. I generally worked about 30 hours a week and Ms. SE stayed home with the kids. Our income topped out around 45k combined but our life was super efficient. In the ample free time I had, I enjoyed fixing things, reading, writing, and working out. Our life was a shining example of what a simple mustaschian life could look like even on a relatively low budget.
The Big Transition
When I finished up my PhD I thoroughly debated staying in academia teaching about investing, spending, and behavioral economics. The idea is still attractive, but I was limited due to the fact that I wanted to stay in the little university town where we currently reside. I certainly had the option of continuing on my job as an economist and teacher, but I also had the call of the wild to try my hand in the private sector. I didn’t want to jump into the wall street world filled with sharks, heavy pressure, and commission based products. In fact, although I love helping people make efficient financial decisions, the traditional career paths into the planning world are fraught with conflicts of interest, forced insurance sales, and bad apples. (Not too unlike the conflict many of my friends who went the law school route). It wasn’t until I met a friend at a local fee-based planning company that I decided to make the jump into the private financial management world. I actually took a significant immediate compensation cut (and an extremely high opportunity cost) to do what I’ve wanted to do- work for a great company and be a non-commissioned financial planner.
Shaving off the Stache
Our money mustache is slowly being shaved off in a three prong approach: We decreased our compensation, increased our expenses (including moving to a dramatically more expensive, inefficient area of the city), and I’m working longer hours with a longer commute. In addition, my activity level has changed and I’m taking fewer walks, significantly fewer bike rides, and spending what little workout time I prioritize in a small local gym. My days are spent mostly in an office and my evenings are spent swinging a hammer on our suburban home remodel.
Our expenses are going up. We’ve just stepped on the fastest moving hedonic treadmill we’re likely to experience for the near future. I ruthlessly track all of our expenses and we have conscientiously decided to consume more. We have almost doubled our expenses for the near term. The hardest part for me personally is not seeing the wealth build as it did a few years ago. We are spending more on groceries, our kids, housing, and transportation. We’ve even taken on mortgage debt to finance our new fancy lifestyle and a home that is three times the size and twice as expensive as the old one. We’re spending more on eating out because it is convenient and our time margins are being squeezed. The question remains if all this additional consumption will make us happier than our stache-filled days?
First, don’t feel too bad for us. Each decision was carefully weighed and evaluated against the trade offs noted. And- they are all part of the master plan. The long term mustache growth is coming, it is just taking a little efficiency detour in the name of experimentation and transition. We’re still saving well above typical averages but less than even the 50% we had before. The new job is much more demanding than the old but much of that is due to the learning curve of starting any new activity. My commute is now about 15 minutes or so in a car (vs 10 before). There are already aspects of the job that I’m much more efficient at now than a year ago. Although the initial compensation is much lower than I could get in the academic market, the long term prospects are fantastic with very little downside risk. In fact, the role I’ve developed at the firm leaves me with plenty of long term strategic flexibility to ensure I am helping as many people as I can achieve and structure their financial independence. Lastly, I’m learning a ton. I’m learning so much about the nuances of how the financial world works. About the incentives in the tax code. About the specifics of every different type of retirement plan. About human psychology and providing value. I’m learning more and more every day.
Are The Trade-offs Worth It?
Although I’ve initially relegated myself to selling out to the suburbs, I’ll enjoy many of the trade-offs and being able to build some efficiency around the hundreds of acres of woods and trails (to be) around our new home. I’m enjoying the process of personally dismantling the old house we bought and customizing it to the way we want it to work for our family. In fact, if anything, I’ll be experimenting on a new lifestyle that is so familiar to many upper middle class readers of this blog or MMM. I’ll be dipping my toe into the other side to see if the means justify the end. And the best part is that nothing is permanent. If we decide that any of the lifestyle changes we made are unsustainable or unfulfilling, we have the resources and ability to make any changes needed to living a fulfilling life. Who knows, I may be writing again next year talking about our awesome move back to our tiny house in the city.