How Frugal is Frugal?

Mrs. PoP and I consider ourselves pretty frugal, but I was blown away when I took a glance at two blogs- Early Retirement Extreme and Mr. Money Mustache. Both of these guys have their budgets dialed in WAY more so than us. For a bench-mark, the PoPs get by on about $4k a month, including food, housing, entertainment, debt repayment, etc, which puts us almost exactly at the national average (for a cool breakdown of average national spending as of 2009, check this out!). So how much lower are the budgets for the these guys? In the last year, Mr. Money Mustache household came in at $28K spent (husband, wife, child), and Jacob from Early Retirement Extreme only spends about $7K per year!

Both of these guys have low budgets, very high-net worth, and seem like happy and fulfilled human beings who lead an interesting and low-stress life style…definitely something to aspire to. They have gotten to the end-point of early-retirement in different ways, Jacob has seemingly always had a sky-high savings rate on an average salary (something like 75% of net on a 40k gross for the first few years I think), never purchased real-estate or gone into debt, and is an active stock market investor. Mr. Mustache on the other hand had what would be considered a high salary (low 6 figures I think) for a number of years, is a fan of set-it and forget-it investing, and has taken on debt at different points to invest in real-estate.

It’s heartening to know that a person or family can take different paths to financial independence, but even with their very different personalities I sense some commonalities.

  • First, regardless of salary, both have a savings rate that is pretty enviable. The high-savings rate is necessary, but not sufficient condition to financial independance.
  • Second, both are a fan of DIY; they cook instead of eat out, repair something instead of throw it away, and tend to buy good tools. Does this really add to their savings account, or is it just an accident of psychology?
  • Third, they are both life hackers; they look at the way the world is structured, break it down into its component parts, and reassemble it in a way more pleasing to themselves. While most people drive, they bike; Jacob chooses to live in a RV, and Mr. Money Mustache is a home-brewing internet sharing blogger.

I’m not sure the path that Mrs. PoP and I will follow to FI, or if we’ll get there at all. But as I sit on my deck with a cold beer, watching the sun set on this last day of the Memorial Day Weekend, financial independence seems like a pretty noble goal…

1 comment to How Frugal is Frugal?

  • Prob8

    Yeah, those two set the bar pretty high. Or is it low? When reading their blogs it looks easy. From their perspective, I’m sure it is. I’m shooting for $37k annually with a spouse and 2 kids. We’ll see.