As a man of Science, I’m supposed to hide my enthusiasm about this somewhat controversial subject, and instead direct you only to the peer-reviewed studies. 

But man, I feel like I’ve stumbled upon the fountain of youth here. And the more I dig into the details and the hype and controversy surrounding the field of Hormone Replacement therapy, the more I need to share the word about it to my fellow middle-aged people (both men and women). 

But first a quick backstory:

I’ve been interested in optimization and trying to get the most out of my body and mind since I was a little kid. I started vacuuming up all the training and nutrition books and magazines I could find while I was just a teenager, and that field still remains a favorite of mine over 30 years later. And if you’re a long-time reader here you’ve been reminded plenty of times of this interest, because health has always been the very heart of Mustachianism.

But a funny thing has been happening in the last ten years: even as I kept honing the healthy living habits and trying my best to improve, there seemed to be a force pulling me back almost as hard. So despite working a bit harder and smarter every year, I still felt myself riding a gradually declining tide of energy, motivation, and physical stamina. 

“Perhaps this is just what it means to grow old”, I thought to myself, 

“But I’m still gonna keep fighting it!”

Yet there was one thing that didn’t quite fit. Why was I having this decline in energy, when some of my older friends weren’t? And why was I still seeing people out there in their 50s, 60s and well beyond doing things that I felt too tired to do today?

Long story short: his ideas planted a seed in my head, which led to a bunch of research and a growing interest in trying TRT myself. I had of course heard about the process, but for some reason never considered doing it until I heard Kevin’s enthusiasm: he had been on it for several years, and according to him it is a “night and day difference” in all the things you want in life: energy, focus, thinking speed, and of course physical health.

Another convenient twist of fate is that I happen to be dating an REI doctor – a Reproductive Endocrinologist and Infertility specialist who has two board certifications in exactly the relevant bodily systems that are affected by these hormones. And while she was initially skeptical that I needed more Testosterone (and in her practice she regularly sees the downsides of men taking the stuff too early in life and thus compromising their own fertility), she has followed along and helped me learn at each step of this process, eventually becoming fully in support of the program.

So I signed up as a test customer for Kevin’s new company, which is called Bolt Health. I worked with their doctor to get a baseline blood test and review my numbers compared to all the past tests I’ve collected, and as it turned out, my levels had been dropping consistently over the years, and the latest test was by far the lowest ever. 

Even more telling, my age-related drop in Testosterone was correlating perfectly with my decline in energy and motivation:

The next step was a prescription for a tiny daily dose of supplemental T, which arrived at my house the next week along with instructions for how to use it. And so began the journey.

Now let’s jump forward seven months to the present day as I write this.

And wow, what a great year it has been! I only wish I had known and tried this a few years earlier, because I’m getting a lot more out of my life. 

It’s not a night-and-day difference for me, but more like a 50% boost in overall youthfulness and energy. The biggest subjective change is that I just don’t have sucky tired days anymore, which was the main problem with my life before: wasting too much of my precious freedom due to not having the energy to enjoy it.

This is why I’ve become somewhat of an evangelist for hormone replacement therapy for people from about age 45 onwards. It won’t work for everyone – if your levels are already pretty high, you don’t get the same boost. Two of my male friends tried TRT and quit because they didn’t notice any benefit. But these same two guys already had plenty of energy to begin with, which is usually a sign that the body has what it needs.

TRT’s Sketchy Reputation

It turns out I am very late to this party. Although Testosterone supplementation started out as a niche practice in the 1940s, from the 2010s onward it has been everywhere.

TRT is the reason you see every actor suddenly showing up buff overnight for their superhero roles and it’s also why so many of today’s CEOs don’t look anything like yesterday’s CEOs.

 In many cases, it has gone too far with young men using it just to gain muscle for the beach or the football field, and questionable online providers (aka “Prescription Mills”) handing out prescriptions to anyone with a valid credit card – with profit as their sole motive. It became overhyped in certain pockets of Bro Culture, where every Bro eventually receives the advice “Bro! You need to get on the T!” from another Bro, and therefore does it. And some of this reputation surely contributed to my own skepticism.

But there’s a lot of valid science behind TRT, if you’re the right candidate and you take the right dosage. And because of that, I feel it is probably under-hyped in my own demographic, the Nerdy Tech Worker Semi Retired Dad contingent. And that’s why I’m writing this blog post, because there are a lot of us out there. 

Many of us just tend to work with what we were given, and accept that aging means slowing down. And for those of us already enjoying an early retirement, we have the option of unlimited rest and recuperation time, so who really cares if we get tired a bit more often? After all, what better way to flex one’s wealth than with a decadent Tuesday Afternoon Nap while everyone else is stuck in the office?

While this seemingly healthy attitude has a lot of positive aspects, it can also mask a real problem which may be easily fixable. Because sometimes, the only thing that’s even better than an afternoon nap, is having the energy and motivation to go out for an afternoon hike, bike ride or adventure with friends. More energy is also pretty darned useful if you’re still raising kids or trying to do well in your career as a person over 45.

How it Actually Works (and What Happened to Me)

Distilling all of the fluffy discussion above into the simplest possible answer: TRT means using a tiny needle to inject a few drops of clear liquid just below the surface of your skin. And you do this by yourself at home, ideally once every morning.

Here’s one of the baby needles I use for my daily dose.
The typical serving is less than one tenth of a milliliter, which is only a few drops.

And while the term “needle” sounds scary to some, this is very different from the monstrosities they use to draw blood from your veins. This one is so miniature that you don’t need special training to use it, and you usually don’t even feel it.

So I began doing this to myself on May 1st of this year, while keeping a daily journal of my results along the way. The results seemed to be almost immediate in all the promised areas, but I know how powerful the Placebo Effect can be so I kept my skeptic’s hat on to see what would happen in the long run.

I was seeing increased energy and motivation as well as lean weight gain through the whole spring and summer, but I remember the first truly shocking observation happened during a mountain vacation in July. I was part of a multi-family trip with lively adults, chaotic kids, early mornings, late nights with a few drinks, very intense high altitude sunshine and nonstop physical activities. It was just the type of situation that would drain my energy pretty quickly in the past. 

But on day three I went out on a solo mountain bike ride to explore the area, and as I was climbing a long ascent with the blazing sun cooking me from every angle I just somehow kept having plenty of energy to keep climbing. Then I came down and joined the group for a few games of full-sun pickleball, biked back up the mountain to our cabin, and the story of unlimited energy went on from there.

“Hot Damn”, I thought to myself, “I don’t know whose youthful and tireless body I have inherited here but I’d sure like to keep it!”

In August, the Bolt Health program scheduled a follow-up blood test for me and sure enough, my Testosterone levels had been boosted from 415 to 730ng/dL, bringing me from the low side of normal to the higher side.

 Many labs define “normal” as anywhere between 300 and 1000, which seems strange to me given the huge effect this hormone has on your wellbeing. It’s a bit like saying “Most cars have between 90 and 300 horsepower, so it doesn’t really matter what engine you have” 

I mean yeah, either one will still get you down the road, but which one would you rather be driving?

Since then, it has just been more of the same good results. My improvements ramped up and then just stayed there – so I’m operating at a new, much higher and more enjoyable level of functioning. Energy and motivation are no longer a problem, and I even find myself willing to make longer-term plans again (before this everything beyond same-day planning felt overwhelming). And my body seems to just want to gain strength and size with any excuse. Heavy weights feel lighter and the hard manual labor I still like to spend my time on feels easier for longer. It’s nice to be young again!

So Why Doesn’t Everyone Do This?

When you dig into the details, hormone replacement is mired in a soup of both real and incorrect information about both its benefits and its risks. And then our well-meaning medical establishment locks this whole container of soup deep in the cabinet with a label that says, “Needs Further Study”. But if you summarize the findings on both sides of the issue, you’ll see this:

Stuff you should do BEFORE trying TRT:

The modern American Lifestyle is a Testosterone and Health Crusher. It’s a miracle that anybody feels good ever with the crap that people do to their bodies. So if you’re not already doing all the simple, natural, outdoor things that naturally boost your health, energy, and hormone levels, you’ll want to start with these first. You can find a pretty complete list on my oft-cited Badassity Tracker page.

Since I was already doing all of these things pretty consistently, I felt ready to take the next step and at least consider hormone supplementation. But wait, there’s more!

Risks of TRT:

• Decreased fertility for men hoping to conceive
• Increased production of red blood cells, which may increase the risk of blood clots for people with certain risk factors (a good provider should screen you for these risks before prescribing)
• Potential worsening of certain prostate conditions if you already have them
• Mood fluctuations and acne, especially if the dosing is way off.

The Importance of Dosing:

Many of the problems above are more likely to appear when the body is flooded with too much testosterone. In the bad old days, TRT was administered by sticking a pellet beneath your skin or injecting a large amount into the butt which then gets used up over the next several weeks. One friend recounted a story of extreme moodiness when the pellet was first implanted, ramping down to tiredness by the time the hormone was all gone.

More modern providers like Bolt have fixed this problem by breaking the dose into much smaller servings which you administer each day. The idea is that your levels remain stable, and you need a lot less overall which reduces side effects.

For my part, I have not had any of the negative side effects because I was a pretty ideal candidate in the first place: 50 years old with depressed Testosterone levels but an otherwise healthy lifestyle and no risk factors.

The Internet TRT Police

My hope in sharing this article is to be transparent and hopefully take some of the stigma out of this subject of other people who might benefit. Because in our modern over-connected world, everybody has an opinion on your life, even when you didn’t ask them.

And it’s not just men – many women in this same age group benefit from Estrogen replacement (and there are even interesting stories about female testosterone supplementation in certain situations as this author shares). The point is that aging is normal, but in some cases there’s a pretty easy way to make it slower

How Much Does this Cost?

The great news is that Testosterone itself is a cheap and widely available substance, typically under $50 per month even for people like me without conventional insurance or drug coverage. The expensive part (here in the US) is just the doctor stuff – consultations, blood tests, ongoing analysis and prescription renewals and so on. 

The company that I used is positioned as a premium provider, bundling these services along with a bunch of other men’s health perks and deliveries for a few hundred dollars, which is expensive relative to most other parts of my budget, but still cheap if I consider the life and financial benefits of being 20-50% more energetic and productive. 

If you want to be on this program, your final decision will hinge on your income, insurance coverage if applicable, whether your existing doctor can already help you, and how much service and advice you’re willing to pay for. 

Note: I decided not to become a Bolt health affiliate because I wanted to write this article without conflict of interest. And I can honestly say, Bolt’s product and service seem great to me because I know and trust the people who run it. But  it’s also the only one I’ve tried. So I don’t know much about the competition and there may be other good options out there. At the very minimum, you can always try one service and switch to another if you don’t like the first one.

The Bottom Line

I’ve got lots more to say on money and early retirement, and lots of interesting projects in the works now too. So I’m thankful to have stumbled upon this booster for all aspects of life, so I can do more of everything else, for even more decades than I had expected. 

I wish this same type of good fortune for you, however you create it.

—

In the Comments: Do you have questions about hormone replacement or anything else in this article? I’ll try to invite Kevin, Dr. Sean Bender and other knowledgeable people to contribute and answer questions as well.

Further Reading:

Is testosterone therapy safe- Take a breath before you take the plunge – Harvard Health (2024)
Cardiovascular Safety of Testosterone Therapy (aka the TRAVERSE Study) (2023)
TRT – Association with Mortality in High Risk Subgroups (2023)
Bolt Health website – if you do decide to go with this company, be sure to ask for their best discount even though it’s not related to me.

It all started last winter when I innocently posted a review for a heated vest I had bought on Amazon. I was happy with this fun new way to beat the winter and wanted to share it with others, so I gave it five stars. But soon after I clicked “Submit”, I got an email from Amazon which said something like,

“Congratulations! You’ve been selected to join Amazon Vine for writing helpful reviews!”

I was already aware of Amazon Vine since I had seen product reviews from other people in the program – typically called “Vine Voices.” The basic idea of this program is that you can order stuff from Amazon for free, as long as you agree to review at least 80% of the things you order.

“Hey, that’s cool”, I thought, “Who doesn’t like free stuff?

Especially since I’ve already been writing product reviews out of the goodness of my heart – why not be rewarded for it?”

So without giving it much further thought, I clicked “accept” on their terms and conditions and joined the program. 

And so began a saga that has taken me on a surprising journey over the past nine months causing me to:

• collect a surprising amount of stuff I wouldn’t have otherwise bought
• waste a surprising amount of time reviewing it all
• and realize that I actually became a bit addicted to this cycle, despite the fact that I’m already retired and was absolutely not looking for a side hustle.

Okay, I’ll admit that there were also some upsides. My original idea was partly to save some money, by getting stuff I genuinely would have bought anyway, in a way that sounded fun. And that did happen – I saved at least a few thousand dollars on tools and materials for my construction business and the MMM-HQ Coworking space, for free. Plus, at least some of the motivation for signing up was to put myself through an experiment so I could write this blog article about it. And if you’re reading this, it looks like that happened too.

But I was still surprised at how powerful the combination of small nudges and incentives from Amazon was able to hijack my frugality instincts –  and get me to do a bunch of work that wasn’t really the best use of my time. 

So I figured if we review my journey and break it down with a bit of Behavioral Science, we could all learn a few valuable things by laughing at Mr. Money Mustache’s folly.

Scarcity Brain and the Online Casino Effect

One of the most interesting books I’ve read in recent years is Michael Easter’s Scarcity Brain. It’s an exploration of the sneaky ways that modern gambling platforms, marketing and social media algorithms are all built upon two weaknesses in our evolutionary programming:

• Our desire to double down on hunting and gathering when we get even a small taste of success (because it’s a clue that there might be more food in the area), and
• Our desire to gorge on rich food when it is available and stockpile resources whenever we can, even if we already have more than we need.

As I look back now, I realize that I fell straight into those same traps, because the Vine program has all the key properties of a casino or a TikTok feed:

• Unpredictable Rewards
• The concepts of scarcity and limited time
• Fresh content every time you check back in

Every time you log into the exclusive “reviewers only” Vine website, you’ll see different stuff available for the taking. Sometimes there is almost nothing worthwhile – you’ll search for “porcelain plates” and get endless pages of pink plastic disposable party plates instead. You look for a toaster for your kitchen but instead there will be just a toaster cover with a cat wearing a witch hat. WTF!?

But occasionally, there will be genuinely useful things like super nice light fixtures, tools and plumbing parts, an EV charger, and even some clothing. My favorite ridiculous Eagle shirt as featured in the Mustachianism music video was an Amazon Vine find.

As were a whole supply of super-realistic artificial plants, which while tacky in principle, have been amazing for hard-to-water courtyard garden areas at the MMM HQ.

I also had a lot of fun roping in friends and coworkers from HQ to help and share in the bounty. I let them help me request and review stuff that they wanted, and then they got to keep it. This seemed like a win/win because we shared the work and the fun of laughing at some of the ridiculous products available. 

Still, as I went through this experiment this spring and summer and allowed the system to coax me into doing 80 reviews so I could upgrade my account from Vine Silver to Vine Gold*, I noticed something didn’t feel quite right.

 I was checking the Vine page every day for scores, even when I didn’t actually need anything. It would usually be a bust, but just often enough, something I actually wanted would come up, and I’d order it before it was too late. Scarcity and unpredictable rewards at work.

Then the bounty would come, I’d unpack it and photograph it with assembly-line speed so I could batch-write all the reviews once per week or so. For every review I did, I was spending time I’d rather spend doing something else. And for every questionable item I got, I was creating pollution and trash from its manufacturing and packaging – directly contradicting the main values of my life and my reason for writing this blog. And I saw all of this, yet I kept doing it!

So Was This The Downfall of MMM?

During the worst of this consumerism bender, things were dire. I was getting packages almost every day and my recycling bin was overflowing with cardboard. My son and my girlfriend started laughing at some of my more frivolous purchases, so I found myself discreetly tucking away the boxes when they were around to evade scrutiny.

 But eventually, I moved into a recovery stage. I had been letting this habit continue out of laziness and as a form of procrastination: it’s very easy to order shit online and pretend I’m doing something useful, and much more difficult to get moving to do the things that really make my life enjoyable. 

But I’m old enough to know that hitting the running trails and the gym for my daily workouts, and making progress on all my construction projects, and focusing on the computer as a creative tool rather than an entertainment device so I can get stuff done like this blog post, are the things that bring me the most joy.

Admittedly, some of the sucky factors of the Vine program helped make it easier to recover too. For every genuinely useful thing I found like a contractor-grade extension cord, I had to scan through endless screens of trinkets which not only wasted my time but actually pissed me off at their very existence. 

I also noticed some of the deliberately reviewer-unfriendly features built into the program which reminded me that we reviewers are definitely just low-wage workers rather than any form of VIP. The search functionality is crap, and there is no way to filter or sort the results, because they want you to have to look through everything and they don’t care about the value of your time. 

Then there is the hilariously bureaucratic AI-based evaluation system which would occasionally flag my totally tame, factual reviews as “Not meeting our Community Standards” without explaining what the problem was. So I’d have to go in and edit my review, randomly changing a couple of words and maybe some punctuation, and suddenly the AI would be pacified and accept my review. Just dumb. 

This is What “Fuck You Money” is For!

It dawned on me that for many people, this is just what “work” looks like. You are given a bunch of tasks and a bunch of rules to follow, in a system you didn’t create and don’t get much say in changing. And then as long as you crank out your TPS Reports without rocking the boat too much, you get your paycheck. 

It reminded me of the Uber Driving experiment I did way back in 2017: as soon as I started working as a driver, I could immediately see dozens of improvements that could be made to the system that would make it function better for both drivers and passengers. But since I wasn’t the boss, nobody wanted to hear my ideas.

Experiences like these remind me that while I love hard work and I love learning new things every day, I greatly prefer being the boss. And I’ve gotten pretty damned accustomed to it after 20 years of financial independence, so I see no need to give it up.

Final Numbers

One interesting “gotcha” of the Vine program is that they do keep track of all the free stuff you get and send you a 1099 for its retail value at the end of the year. So it’s not really free, just discounted to whatever your marginal tax rate is (about 25% for me this year). If we peek into my account right now, this is how my 2025 is looking:

So I got about $7000 worth of stuff, and could owe up to $1750 of tax on it. In my case, about 75% of it was “sold” to my business for commercial use (construction supplies which I used on jobs or HQ renovations) so it was effectively converted into real income rather than just tax burden. Some of it was stuff I would have bought anyway for my own house which I’ll gladly pay the taxes on. But there is also probably about $1000 of pure nonsense in there as well, for which I’ll owe a tax bill of $250 as penance for my itchy trigger finger on that “Order” button.

Exciting update on the taxes!

Thanks to some advice from wise readers in the comments (below), I have since learned that in most cases you can mark down this estimated value by 80% before declaring it – because you have effectively eliminated most of the resale value by opening and reviewing the product. Thus my tax bill will be more like $50 rather than $250. More detail in this Reddit discussion here.

Epilogue

So here we are today. While I admit that I didn’t explicitly cancel my account, I used the “Keystone Habit” trick to override the temptation to view the Vine page – mapping that browser bookmark to my daily habits list instead, a little chart which I call my “Badassity Tracker”. The net result is that every time I click it, I’m taken straight to a reminder to get up from the computer and do a quick round of exercise, so I do that instead.

And of course my writing of this article may be a violation of the terms and conditions of the program (“the first rule of Vine is to not talk about Vine”), so it might even get canceled on me. (and if so I’ll let you know because that would be funny story as well)

But I learned a lot about habits and addiction, and realized that this same feeling might be what drives people into One More Year Syndrome, as they keep working even when they can afford to quit. I have now coached enough people through this situation to see it is way more common than I would have ever guessed. 

As with all MMM articles, there’s a real life lesson in this story. It’s not really about Vine or me or my habits, it’s about you continuing to look at yourself and your life, and always questioning your own assumptions or patterns. And asking the people you trust most for feedback as well:

• Am I running my life in a reasonably optimal manner, given my goals?
• What would you do differently if you were me?
• Who are some people that seem to handle these things better than me, and what can I learn from them?

We will never be perfect, but the great news is we don’t have to be. All it takes is a little bit of self reflection and putting ourselves on a slightly better path, as often as we can as life goes on. We are all on a very long journey, so even a tiny course correction can make a huge difference in where we end up.

—

*(Vine Gold is not all that useful as it turns out as 99.9% of the available items seem to be the same trinkets you see in the Silver tier)

** What about the Heated Vest that started it all? Well, I still love that thing and now that fall is coming back it is already helping me be warmer in a cooler house. There are many good choices on Amazon, here’s one of them. Then pick out any USB battery pack to go with it, which also doubles as a very useful travel phone charger.

FTC: this blog uses affiliate links (including for Amazon) when possible so if you do buy anything through them, it will benefit the website. And thanks!

Quite accidentally, it looks like we timed our last talk about the stock market pretty darned well. Back in February 2025, the market put the perfect cap on a multi year climb before stepping onto the wild roller coaster we’re currently riding. Since then it has seen some of the steepest drops and recoveries in history, losing a full 20% of its value at the bottom while somehow managing to end up right back near the peak as I’m writing this.

And although stock market volatility doesn’t always come with an easily labeled explanation, this time the reason seems pretty clear: it’s the Tariffs.

As our financial world has been whipped around like a circus tent in a hurricane for the last several months, almost everyone who has a stake in this country has been wondering what to make of it.

• Can our president really unilaterally impose 145% tariffs on almost everything from our biggest supplier?
• And if so, is it really going to happen?
• And if so, what is the point? Aren’t free trade and low prices a good thing?
• And perhaps most importantly, what would the long-term effects on our economy and stock market be under varying levels of tariffs?

As I write this, we still don’t know the outcome of the worldwide tariff and trade battle that our unpredictable government has unleashed upon the world. But we’re already seeing the results: businesses are bracing for massive changes, currencies and interest rates are reacting, and regular investors like you and me are wondering what the future holds for our early retirement funds. Surveying my own group of friends, the reactions span the whole range of emotions from “this is a giant Nothingburger” to “we’re all totally screwed.” 

So what’s the real answer? To get closer to that, we should start with the most basic question of:

What is a Tariff?

A tariff is just a sales tax charged by our government on goods which are imported into the country.  They are paid by whoever is doing the importing – meaning you if you order something like an e-bike directly from a company in China, or by companies like Amazon, Walmart, or Apple which import products from other countries by the shipload. 

But in the end, the tariffs aren’t paid by China or Amazon or Apple. They are paid by you, the end consumer, because if their cost of goods increases, a retailer is of course going to raise their prices to continue to make a profit.

Tariffs also affect companies directly: if Home Depot wants to build a new store or Chevron needs a new oil rig, the tariffs on imported steel, copper, lumber and a million other components will raise the cost of these construction projects. And they raise the cost of housing, because most of the building materials in houses come from multiple countries as well.

On average, tariffs will result in higher prices for everything just like any other broad-based sales tax. And just like most other taxes, the overall effect is to slow the economy and reduce our spending power. On the positive side, all that tax money flows into the government’s pocket which could help fund the national budget and even reduce the deficit.

Of course, every government needs at least some tax revenue to function, so it makes sense to use some mix of sales, income and corporate taxes to get there. The most important part is that the levels need to be as low as possible while still keeping the country running well, and as fair and predictable as possible, so that people and businesses have an incentive to work hard and the ability to plan far into the future. 

And that’s where our current tariff regime gets it completely backwards. Donald Trump is throwing around random, extremely high tariff numbers as threats, then walking them back and changing them on an almost daily basis.. 

Whoa, that Sounds Mostly Bad – Is There a Good Side of Tariffs?

Sometimes, a country will use tariffs to protect their own domestic industries. For example, if you put a tax on imported Hondas, then General Motors cars will gain a competitive advantage – so GM will make more money. In this example, most consumers end up losing due to increased prices and decreased selection. But at least domestic auto manufacturers and their employees are happy.

This can be strategic (for example we might want to slap a tax on imported fighter jets to make sure Boeing and Lockheed can remain in business, for national defense purposes.) Or it can be corrupt (a politician might receive funding from kingpins in the steel industry, and in return then push through tariffs on imported steel to protect the profits of US steelmakers.) 

And this isn’t just a Trump or Republican thing either – Joe Biden used tariffs during his terms in an attempt to please swing-state voters. One of the worst examples was a tax on imported solar panel components (which Trump has since raised even further, proving that Boneheadedness can be Bipartisan). These are sheets of cheap glass that literally pump the cheapest energy and easiest wealth into your country for 30 years as soon as you plug them in. Cheap energy lowers everyone’s cost of living while also boosting industry. There is no good reason to block such wealth from flowing across your borders.

Can Tariffs Bring Us More Jobs?

Let’s go back to that hypothetical tax on Hondas, and let’s say it’s a big one like $5000. At that level, many buyers will start heading over to the GM dealer next door to consider what he’s selling. Sure, the GM cars may not be as good, but for five grand some people are going to settle in order to save some money.

Because of this, GM’s sales go up. So they hire more employees and build more factories. They might even develop some new models and new technologies in response to all that new demand. More people learn advanced skills and in the best case it becomes a virtuous circle.

But in exchange for this boom in the auto industry, everyone else has to pay more for slightly shittier cars and trucks. Higher vehicle prices means Amazon will have to spend more on their delivery fleet, so they will raise prices slightly on everything they sell. Somewhere a startup company or a medical breakthrough will be just a bit less likely to happen, because they are operating in an environment that is just a bit more expensive and a bit less efficient.

On top of that, with GM liberated from the hassle of competing with Honda, it will have less incentive to innovate and streamline itself. So its overall trajectory will be slower and less efficient even if its profits are higher.

This big picture effect is why most economists agree that tariffs should be used very sparingly. They almost always cause unexpected damage, decrease overall employment and slow down an economy, but sometimes (like for food security or national defense) those costs are worth paying.

So Why is Donald Trump Throwing Around Tariffs Like They Are The Best Thing Ever?

This has been confusing to almost everyone. If you take him at his word, he appears to have a Bizarro Opposite Universe belief system about economics. Donald has claimed in speeches that the tariffs will somehow make us wealthier. He’s focusing on the first-order effects like GM hiring more workers, while completely ignoring the fact that everything else in the country gets less efficient in exchange. 

But when he announces larger tariffs, share prices go down, because everyone who actually runs or invests in US companies knows that of course they will make less money on average. When tariffs are paused or reduced, share prices go back up. Yet he keeps wielding the threats and we go back and forth. 

It seems to be obvious to everyone except Donald himself that Tariffs are just a national sales tax rather than some clever sneaky strategic weapon, which leads to various theories that okay, maybe he knows that too but is just pretending in order to gain some influence. 

The basic theory goes like this:

• Unfettered power: normally, a president can’t impose taxes without the approval of congress. But there’s a loophole to that: a president can unilaterally impose taxes under the disguised name of “tariffs” in the case of an “emergency”. Furthermore, another loophole exists: there’s no strict definition of “emergency” – so if you just invent a fake one you can start imposing tariffs until congress eventually catches up to you. Which may not be for years.
• As a Negotiating tactic: although the primary victim of tariffs is US consumers and businesses, they can also harm our trading partners, because if you impose a high enough tax on Chinese goods, we’ll buy a lot less of them. So now you have unfettered power which you can wield against your foes, as a way of getting them to do stuff  for you.
• As a way of controlling domestic companies: if you can cut off the lifeblood of any company (their supply chain) with just a quick post on your Truth Social account, you’re suddenly in control of the whole economy. Nobody can oppose you because you can put them out of business immediately. 

So right now our entire economy is subject to the whims of a single person.. And as long as this is the case, we’re just the same as any other dictatorship – something our constitution was supposed to prevent with the whole “three independent branches of government” thing. 

But presidents have tried to break out of their constitutional cage and get more power many times in the past, and this is just the latest example. The real test will be if our system eventually manages to stop this abuse and put itself back in balance as it always has in the past. You can already see this fight beginning to play out in our court system, in this Economist article:

How Big are the Tariffs Right Now?

Even without the 145% nonsense numbers that were thrown around a few months ago, they are still far higher than they have been in the last 75 years or more. While it would be hard to pin down the current numbers in a stationary blog post like this one, the key thing to remember is that our current US economy is built around very low tariffs and relatively free trade. 

Why haven’t I noticed Prices Going Up Yet?

While the US economy is fueled by a constant stream of cargo ships, as a whole we function like the biggest cargo ship of all: we have a huge inventory and it takes a while to change directions.

So in normal times, we already have several months of inventory of most things in the country. And then when all this drama started, importers started placing even more orders to stockpile things in advance before the tariffs hit. And now that they are in place, we’re importing a lot less stuff.

For now, we’re still using up the stockpiled inventory, but imports have dropped significantly so we’re quickly running out of cheap goods. If that happens, we will probably start seeing shortages and price increases throughout this summer or fall. For some things like plastic party trinkets, we can do just fine without. But if we lose access to core useful things like tools and machinery, the economic consequences will be much less fun.

The Dark Side and the Bright Side

The most important phrase to remember in US politics and economics is the phrase “This too shall pass.” The only mystery right now is that we don’t know exactly how it will pass. So we could sketch out a few scenarios:

1) The current crazy-high tariffs really do stick around:

I personally think this is the less likely scenario because nobody really wants it. But just as a thought experiment, it might go something like this:

• 2025 inflation would more than double as the tariffs add about 4% to prices
  (because imports are roughly 25% of our overall spending, and current tariffs are about 16% higher than before. 0.25 * 0.16 = 0.04)
• Lots of companies will make changes. Those most dependent on cheap imports from China might simply go out of business. Some companies will shift to suppliers in lower-tariff countries.
• In some cases, US factories will benefit. We’ll produce more steel and certain auto parts here, but you’re not going to see a million factories popping up to make Nike shoes or microwave ovens – those things will just get a lot more expensive to buy. 
• Demand for unpleasant, repetitive low-wage unpleasant factory work will increase, which should help raise the whole lower-income wage pool. But the cost of living for these people might more than outstrip these wage gains. Plus, those jobs will eventually phase back out as manufacturers continue to build robots to automate those jobs.
• Other countries will continue to retaliate with tariffs on US goods, which means our exporting companies will lose revenue. For just one fun example, Canada recently imposed a 25% tariff on Tesla cars from the US, almost completely destroying that company’s Canadian sales overnight.
• Government tariff revenue could go up by about $640 billion annually (about 15 percent of our total budget), but the reduction of economic activity and exports would reduce income tax revenue by an unknown amount – possibly an even bigger number.

2) They do end up being just a negotiating tactic and we go back to mostly low tariffs.

• The stock market would stage an enormous “relief rally”
• Companies will gradually start to relax and go back to the way they were, allowing for more planning and hiring to resume
• We will escape with just a few hundred billion dollars of lost economic activity and a moderately large hit to our credibility as a nation, which will fade over time just like everything in politics
• Some of the “deals” which are part of the negotiations (for example, lower tariffs in other countries) may have benefits for US exporters, helping boost our future trade

In other words, the best way to win the tariff game is not to play it.

Just as much of US prosperity is built upon our huge population of 330 million people living in 50 states with open borders and no trade restrictions, all (friendly) countries of the world can benefit from the free exchange of goods, services and even people. We’re all human beings and if we treat each other with a collaborative respect, we all grow richer.

Epilogue: Is it Almost Over Already?

I started writing this article on April 2nd, when Donald announced his “Liberation Day” and the stock market reacted with the biggest drop since 1932. Some people panicked and locked in big losses despite decades of warnings from your favorite financial bloggers, like this unfortunate soul in the comments to a JL Collins post:

But as I watched over the next two months, we have bounced our way back up – with each drop in proposed tariffs triggering a corresponding increase in stock prices (a measure of investor enthusiasm of how bright our future looks).

Right now, the US stock market is just about back to its all-time high. This doesn’t match with our current level of tariffs, which are still about seven times higher than they were before the circus opened. But it shows that investors believe it’s all going to end with a truce and a resumption of free-ish international trade.

If they’re wrong, the roller coaster ride will still have some more fun in store for us. But as long as we eventually end our current experiment in “emergency” tariff dictatorship and get back to functioning as a democracy, things should be just fine in the long run. I’m still 100% invested myself, so that’s where I place my bet.

The Biggest Lesson: Don’t Form Your Opinions Based on News Headlines

Decades ago in a brighter age of journalism, there may have been a time when headlines were designed primarily to inform us, with just a bit of sizzle and spice to pull in our attention. Unfortunately, nowadays the priorities have flipped where the primary goal is attention, and accuracy carries little or no weight. Even a totally inaccurate article makes money for the publisher.

So while Democrats and Republicans like to do battle over which media sources are biased, in reality they’re all wrong: all click-funded commercial media is biased – sometimes politically but even more importantly biased towards generating outrage and fear, because those generate more money.

There are two solutions to this:

1) Either ignore the media completely and focus on your own life, or

2) Become a subject matter expert on things you really care about, and then read the original sources whenever you want to learn about something.

I mostly practice option #1, but as a science and technology nerd I get into #2 in just the areas I find most interesting. And it’s amazing how the more deeply you understand a subject, the more you see just how wrong most media stories are about your area of expertise. Which means they’re probably pretty wrong about almost everything.

So as always, with this lesson learned it’s time to shut down that phone and laptop, exhale all our worries and get back outside with your real-life family and friends. See you in a few months!

Related:

Why We Are Not Really All Doomed – the original all-purpose MMM article which explains why we never really have to worry about the long-term economic future. 

And by lately, I mean the past several years or more. 

The value of the S&P 500 index of stocks, where most of us hopefully have a good chunk of our retirement savings stashed into index funds, is up about fifty seven percent in just the past two years. And it has more than doubled in the past five.

This means that on a net worth basis, if you felt like you were only halfway to retirement as recently as the Covid Era, you may have suddenly blown right past the finish line. And some of us who were already retired long before that, may find ourselves eyeing up expensive properties or engaging in other money-burning-a-hole-in-our-pocket behaviors. 

Is this real? Or is it all a bubble or some other sort of financial illusion?

As one reader recently asked me in an email:

“The market seems to be in a huge bubble right now due to all sorts of hype around Artificial Intelligence. Does this make it more vulnerable to a huge crash in the future, and will it affect my retirement?”

To answer this question, let’s take a closer look at our current somewhat unprecedented financial world and stock market. And to understand that properly, it helps to go back to the roots of what a stock is: 

A stock is a magical business arrangement which is really just a much more convenient version of a rental house.

When you own a rental house, you are entitled to collect rent. After you cover all the expenses related to the house, you get to keep the rest, and this amount is your profit. 

If the average sale price of rental houses in your area goes up but the tenant keeps paying you the same amount forever, it may look good on paper but it doesn’t really mean anything unless you sell the house. And then you’d just have to turn around and pay that same higher amount for a different rental house.

Your paycheck remains unchanged unless you can make your little house rental business more profitable. So you might squeeze in a basement apartment, do some renovations, streamline expenses, or do other things to increase your net earnings. 

When you eventually sell that house to another investor, the price they are willing to pay should be based on that future stream of income.

For example, if the house brings in $2000 per month ($24,000 each year) and the sale price is $240,000, the next investor is buying a business with a price-to-earnings ratio of 10, because 240k/24k=10.

But if you manage to convince someone to hand over $480,000 for that same house, you’ve sold at a P/E of 20. This is a much better deal for you as the seller, but quite obviously a less rosy future for the investor buying it.

Now back to the stock market. If you put $100,000 in the market in 2019 and reinvested the dividends, today you’d already have an astonishing $256,960 (a 157% gain on your original investment)

But in that same time period, your share of company earnings from that $100,000 basket of stocks has only gone from $5290 to $7540 (a measly 42% gain) – information you can get from handy analysis sites like multpl.com

In other words, the Price-to-earnings ratio has risen from about 20 back then, to about 30 today.

So as stock investors here in 2025, we’re just like rental house investors finding that house prices have more than doubled while rents are only up by a bit. Which makes the landlord business a lot less profitable, and we should expect exactly the same thing as stock investor: lower future profits as a percentage of our portfolio value.

That doesn’t mean it’s unprofitable to own either one of these things – stocks or rental houses. But it does mean that we should expect our future income from buying them at today’s higher price-to-earnings ratio should be lower than if we could get them on sale. It’s just basic math.

But Wait! What if the Earnings are Rising?

Let’s say you’re considering a rental house which is a bit overpriced based on today’s rent, but you happen to know that a big Apple campus is about to get built right nearby. At that point, you expect that rent will start climbing rapidly for many years to come. In this situation, you should be willing to pay more for those future earnings when you buy the house.

This is exactly why the price of an individual company’s stock will tend to rise when some good news comes out about the company. During the Covid era, people started buying more Peloton bikes so they could exercise at home, and investors (foolishly) believed this would be a permanent trend. So Peloton stock went way up. Later, reality sunk in that this was just a fad and Peloton sales returned back to normal levels, and so did the stock.

But what does it mean when the entire market goes up to much higher levels? Does it mean our entire economy is expected to grow much more quickly? 

In the case of the current stock market euphoria, not exactly. Because if you dig into the share prices of the 500 big companies that make up our famous S&P 500 index, it turns out that almost all the recent growth – about three quarters of it – came from just the seven biggest companies, known as the Magnificent Seven: Apple, Nvidia, Microsoft, Amazon, Google, Facebook, and sometimes Tesla.

These are all high-flying, super profitable tech companies who have seen a lot of growth and hype recently, which has caused investors to get excited and bid up their share prices in hopes of even more future growth. Collectively, they make up over 25% of the entire market value ($17.66 trillion!) and have much more expensive P/E ratios than the rest of the market (a weighted average of about 45)

If you exclude these seven biggest companies and just consider the remaining 493, you will find a P/E of only 20, which is more reasonable although still much higher than average.

What this tells us is that while investors expect the overall US economy to be fairly healthy in the coming years, they expect the biggest tech companies to continue to enjoy much faster growth. 

What Does This Have To Do With Artificial Intelligence?

There’s one common theme in the big tech company boom right now: recent advances in AI have surprised the business world as software is suddenly able to display human-like reasoning in a rapidly growing number of fields. And because of this, the entire business world is fired up into a frenzy.

Six of those Magnificent Seven companies are spending hundreds of billions of dollars to build preposterously large warehouses full of supercomputers, and the lucky seventh (NVidia) is on the receiving end of those billions since they make the supercomputers and the incredible demand allows them to charge insane prices while still shipping them out by the trainload.

But that’s just the first level of this boom, the AI Infrastructure. As you move down the chain, every other industry hopes we have entered a new era of productivity and thus profits will grow faster than ever.

They may actually be right: You can now do things like feed in an entire novel or legal document or piece of code and ask the AI to answer detailed questions about the characters, or identify loopholes in the contract, or even find and fix bugs for you. AI can also drive cars, identify melanoma from photographs of your skin, design medications thousands of times better than what we’re used to, and even bring humanoid robot bodies to life as mechanical workers.

The idea is that we’re on the verge of having an infinite workforce of highly intelligent AI employees who will work for us for free, eliminating the biggest constraint that humanity has had in the past: a finite supply of both intelligence and labor.

Having followed the field in some detail for a while, I personally think all this will come true, although the timeline is uncertain. And the people bidding the share prices up to these levels obviously believe it too. 

But the question is, will the profits of these companies really come through at the levels they forecast? Or will there be surprises down the road: cost overruns, competition, or unexpected disasters as these newly smarter-than-us computers decide that they no longer want to be bossed around? 

And what if we end up with massive unemployment and resulting social upheaval if this amazing technology puts us all out of work, leaving only Sam Altman atop his personal mountain of $100 trillion dollars taunting the world forevermore with an annoyingly quiet monotone cackle?

There’s Only One Real Answer: Nobody Really Knows!

While the future is unknown, it can still be useful to use the past as a guide. After all, if you look at the history of US economic growth over time, it averages out to a surprisingly steady figure, decade after decade: about 3% after inflation. 

One thing I noticed when making this graph: recent decades have actually seen slower than average growth, which is even less reason for the stock market to be priced the way it is.

So What Does it all Mean? Should We Do Anything About It?

As I said earlier, it’s still going to be profitable to own stocks for the long run, just a bit less profitable than those times when we got to buy our stocks on sale. Of course, there will be occasional manias and panics and crashes. But as always, it will be a losing game to try to time them – for example by selling all your stocks now and hoping to buy them at a cheaper price at some point in the future.

And over the long run, even if stocks return to more typical valuations, the end result would be something like the yellow line in this graph:

Our economy will continue to grow and company earnings will grow along with it, but future investors might choose to pay a lower multiple for those earnings.

Just like when you eventually sell that rental house, you shouldn’t expect someone to pay you a million dollars for a place that only brings in $3000 of rent.

Final Thoughts And Alternative Strategies

Everything we’ve covered so far is talking about the entire US stock market as a whole. And that’s what I usually focus on most because I still think this country is a uniquely good place to run a business. But what about other investing options? It’s always fun to at least look around and understand the larger investing world.

For starters, there’s Vanguard itself, the bedrock of the index fund world. Every year they gaze out at the investing horizon and make a ten-year forecast (guess) at future returns. This year they came up with these numbers:

Vanguard’s updated 10-year annualized return projections:

• Global bonds, non-U.S.: 4.3% – 5.3%
• U.S. bonds: 4.3% – 5.3%
• Global equities (ex-U.S., developed): 7.3% – 9.3%
• Global equities (emerging): 5.2% – 7.2%
• U.S. equities: 2.8% – 4.8%

Wow look at that. Vanguard is forecasting that International stocks of all kinds and even bonds will outperform US stocks in the coming decade.

On the surface, this makes sense because the P/E ratio of the international stocks (for example the VXUS fund) is only 15.9, meaning those European stocks are on sale at almost 50% off compared to ours!

Just one note of caution however: Vanguard has been making this same prediction for several years and just been wrong so far. Part of the reason is that most of the AI boom seems to be happening in the US. 

The Betterment Portfolio 

Longtime readers know that I’ve had a growing portion of my investments in a Betterment (robo-advisor) account over the past eleven years (see the ongoing report here). I decided to try this for precisely the reasoning above: by allocating money across more categories than just US stocks and automatically rebalancing, we should be able to see slightly higher returns with slightly lower volatility, and some tax advantages as well. 

So far, my experiment has drawn some heat because in retrospect, a US-only portfolio has outperformed any other option over this time period. The Betterment portfolio comes close, but the exposure to bonds and businesses in other countries has held it back, just as you’d expect. But if you believe that things will eventually balance out again in the coming decades as the Vanguard analysis suggests above, it still has a chance to catch up. 

Looking at my investments there, you can review the betterment core portfolio and calculate that the weighted average of all those holdings gives us a P/E ratio of about 22.

What Does Warren Buffett Say?

It’s always worth checking in with The Oracle on matters of the economy while we’ve still got this wonderful old sage around (see this year’s Berkshire Hathaway Shareholder letter if you want some further deep reading). And Warren is signaling that things are overvalued and bargains are few and far between. So Berkshire is holding $334 billion of uninvested cash for now, not even repurchasing its own shares which it considers slightly overvalued at the current P/E ratio which averages out to about 21 in recent years.

What About Paying Off Your House?

Over the long run, you usually do better if you keep a mortgage on your house and pay it off slowly, while directing all the surplus cash into index funds. But there is some point at which the opposing factors of lower expected stock returns and higher interest rates meet in the middle and this situation flips.

If you have a 7% mortgage right now, it might be a fairly close tradeoff at this point. But the real factor is how you feel about paying off your house. I happen to love being mortgage-free so I paid off my last mortgage over ten years ago and have never looked back.

Another way to think of this is that paying off your house is like buying a 7% bond. Definitely one of the best guaranteed returns around, and much more sensible than leaving tens of thousands of dollars in a checking or savings account unless you have a clear use for that cash.

The Final Word

If you’ve read any of my stock investing articles before, you’ll know that we always end up at the same place: Just relax, enjoy your life, keep investing, ignore the daily news headlines* and don’t worry. 

Then reinvest that time that everyone else spends worrying into enjoying more time engaged in hard physical stuff in the great outdoors. That’s the only place where you’ll get guaranteed market-beating returns, every time.

In the Comments: what are your thoughts on the current stock market boom, future crashes and busts, and the role of Artificial Intelligence in our future?

All the other MMM Stock Market Articles from past years:

• Finally, a Stock Market Crash!
• What to Do About This Scary Stock Market
• How About that Stock Market!?
• Houses and Stocks are Going Up – Who Cares?
• How to tell when the Stock Market is on Sale
• Summer Clearance Sale on US Stocks!

*although in my opinion it’s okay to check in weekly with The Economist, which has been my favorite source of world economic news for 32 years and counting.

A couple of years ago, Mr. Money Mustache lost some credibility among the faithful when he wrote this blog post about actually trying to spend a bit more money, while buying a Tesla as the first step in that program. 

“Look at me!”, 

I thought to myself at the time, 

“I’m such an enlightened middle-aged Badass, adjusting habits and realigning myself at the snap of my fingers. Onward to the next forty eight years of the Good Life!”

So, two years passed with an even greater feeling of abundance. I had a marvelous time traveling everywhere and spending money like I thought a proper wealthy person would do.

 I dined out in stylish restaurants, booked hotels based on their niceness rather than their cheapness, paid extra to sit in the “reduced torture” seats of the airplanes, and gave zero fucks about paying double for groceries if I happened to be in a Whole Foods rather than my usual Sam’s Club and Costco (and yes I treat myself to memberships at both warehouse stores!)

Among the highlights, my son and I have worked our way though a nice selection of late night EDM concerts and three Meowwolf art venues including a Christmas Day road trip from our winter home in Tempe Arizona to Las Vegas last year. And having spent much of the year as a single man, I had a wide open schedule to just meet up with friends, explore new places and meet new people as opportunities came up. It felt like a year of adventurous transition, which means it felt like much more than twelve months.

With all this flashy spending, I was sure my budget must have crept back into full American Consumer territory. But I was having too much fun to bother adding it all up to check. 

Until recently, when I was doing another round of informal coaching for a friend and we both decided to tally our spending for the past year to compare notes.

When I finally finished sorting all of those transactions into a spreadsheet and hit the “sum” button, the results surprised me.

While my overall spending had indeed increased (especially in travel-related categories), the big-picture effect was still pretty minimal. Depending on how I account for things like the car and my business expenses, my spending went from $20,000 to about $30,000 (plus the usual hidden subsidy of a paid-off house.)

This level could still be sustained by a $1 million investment nest egg. Since my investments are quite a bit higher than that (especially after these recent years of crazy economic growth and the never-ending stock market rally), I’m still way under budget.

Although I still “failed” to really increase my spending to the MMM-recommended levels for old wealthy people, this still makes me happy, because I have genuinely had more fun with the abundance mindset, and I can keep trying more life experiments in the coming years. 

As we covered in the 2019 article on the idea of an Optimization Council, it’s always a good idea to compare our spending, tips and tricks on how to get the most out of life. Almost twenty years into early retirement, this is where I have landed so far, although I’m always learning and open to feedback.

Anyway, let’s cut the wistful commentary and get into the budget.

In summary: Wow, how interesting! When we compare this to my 2019 post on that year’s spending, it’s only a bit higher even after all the inflation we have seen in recent years. I spent more on travel and fun, but less on home renovation – partly because I was away so much I didn’t have as much time to work on my house. The health insurance is a new cost too since I was self-insured back then.

The Biggest Savings:

My budget is notably missing the biggest expense for most people, which is housing costs. This is because I paid off my house long ago, and I also love working on and taking care of my own home, which means there are no bills for lawn mowing, plumbers, tree pruning or handyman services. 

This strategy is not for everyone, and it’s not even the optimum financial one for me – I would have been better off taking out the biggest mortgage I could get at 3% back in the sweet borrowing times of 2021, and putting all that principal to work in stock index funds where it would have almost doubled since then. But I still get a great peace of mind from just having no mortgage payment, and there’s really no better way to use your money than to buy such good feelings. Also, I get a secondary benefit of not having to buy house insurance, which saves me another $2000 per year, boosting my effective return on that payoff.

What about Health Insurance?

First of all, the biggest money saving factor of good health and good luck has continued, meaning I’ve still had no actual medical expenses. But I still do maintain two layers of health care support which together feel very much like the ultimate version of health insurance: a membership with a top of the line Direct Primary Care (DPC) medical clinic ($107 per month) plus a high-deductible plan ($201) with a health sharing organization called Sedera. 

The combined cost of $308 per month is less than the cheapest Bronze plan in the field of standard health insurance, yet I get personalized support with zero deductible for almost all typical medical needs, plus some protection from larger medical bills if my good luck runs out.

But as a disclaimer, I’m not an expert on medical needs and health insurance because I’ve had so little experience with the system. And the highest priority in my life is arranging my days for maximum health to give me the best chance of keeping it this way.

How could I do better?

When it comes down to it, money is a tool for survival and if we’re lucky, self actualization. So I’m always asking myself if there’s anything I can change or improve to make the most of this good fortune. 

I also try to keep in mind an interesting principle of happiness, which says that, 

Fixing your persistent problems is more effective than just doubling down on things that are already good in your life. 

For me, there are already a lot of good things which don’t need improving. My family, friends, relationships, health, food and daily activities are pretty much as good as I could imagine. 

The only annoyance I can think of is physical chaos: I have a lot of space-intensive hobbies like construction and music, and I currently live in a pretty small house which is basically maxed out.  I could really use a doubling of my workshop space from the current 2-car, 440 square foot garage to maybe a thousand or so. 

But I also love where I live and wouldn’t want to give up my views, neighbors or current place. So I’ll keep optimizing what I’ve got unless some perfect opportunity comes up for a bigger place right on my block.

In the longer run, a mountain compound with its own cliffs and stream are also on my “maybe” list. But once again, my days and life are already overbooked with joyful things. My existing house and our HQ Coworking space already have long to-do lists. Would I actually be happier if I added another place to my portfolio? So I keep this idea on the shelf until I’m willing to trade it for another existing commitment – like selling my house or the coworking space.

But for now, I’m just extremely excited to blaze into 2025 with loads abundance and piles of challenging stuff on my to-do list. And I wish you the same!

In the Comments: Where are you at on this spectrum of stinginess versus abundance mentality, and fulfilment versus longing in life?

A Temporary Note about Teslas and other electric cars:
Rumor has it that the $7500 EV tax credit might be disappearing when our new president takes over next week, so this might be the cheapest chance to buy what I feel are the best cars on the market: The Model Y, or Model 3.

Both used and new prices are at record lows so shop around and get an additional $1000 off a new one if you use a referral code from a friend or here’s mine if you need one (many thanks!)
Full article here at The Model Y Experiment.

FTC Compliance Note: I use referral links for some products when possible which means the blog may earn a commission if you use them. More details here.

Well, it looks like we’re here in another US election year already. 

As Advanced Mustachians, we already know that the ongoing battle of Harris vs. Trump should not be consuming much of our time.  Sure, we do our research and cast our votes but after that we move right on to focus on other things within our own circle of control.

But out of all the things the politicians like to bicker about, there’s one area where MMM does need to set the record straight, and that area is of course money. Your money, the economy in general, and the overall wealth of the nation. 

Politicians are already not known for being the sharpest tools in the shed when it comes to technical stuff like science, technology, or economics. But this year the discourse has become particularly dumb, as our candidates try to manipulate undecided voters in swing states with ideas that are based on irrational emotions rather than sound economic sense. 

For one particularly funny example, you may have noticed that the competing party (Trump in this case) is attacking the incumbents (Biden/Harris) over the “bad economy.” When in fact the US economy is stronger than it has ever been, with the lowest unemployment we’ve ever seen as well. 

It’s hard to imagine a better situation than we have right now, and in fact the recent bout of higher inflation is a sign that things have been going too well, and we needed to step on the brakes with the help of higher interest rates. 

But somehow the people still seem to believe that we have a “bad” economy. Take a look at this Gallup poll showing that while most people (85%) are doing really well right now, they assume that it’s just their own good fortune – only 17% believe the economy is doing well. 

This is mathematically impossible, because if most people are doing well, that’s the definition of a good economy! And suspiciously enough, this widespread wrongness correlates quite nicely with the rise of social media misinformation.

So the politicians and the news have been doing the opposite of what they should be doing in an ideal situation (sharing accurate information). And sure, we can always just ignore their speeches and go on with our lives. But when it comes to economics, knowledge is power (and money). The more accurately we understand how things really work, the wealthier we will all become.

So with all that in mind, I hereby present you with my list of the… 

Top Dumb Things Politicians Want You To Believe About The Economy

1: The President Controls the Economy

If there’s a recession, the opposition party likes to blame it on the current president. If the economy is booming, the current president likes to give himself (or possibly soon herself) credit for all of that success. But really, the US economy is way too big – and thankfully way too free – for the president to control or really even influence all that strongly. 

In reality, our economy is a gigantic machine which converts labor and materials into things like iPhones, hospitals and pumpkin pies. And although we’re the biggest economy at 26% of the planet, we are still heavily influenced by that much bigger 74% of economic activity that the other 7.6 billion people on Earth are busy producing everywhere else.

When we have our inevitable little boom and bust cycles, they are mostly caused by the normal cycle of irrational exuberance (and greed) like the 2007 housing boom, followed by brief periods of extreme fear and pessimism like the 2008-2012 financial and housing crash. 

The government does play a role too, by setting tax rates and other rules. But the effects of these policies are usually so delayed and unpredictable, that you can’t draw a straight line between today’s president and today’s economy. In other words, the government does its best to adjust the rudder on our giant ship, but in the short term our economy lurches around on the waves and storms of the ocean.

2: The President Controls Interest Rates

This one is especially funny to me, as our candidates feign sympathy for the hard life of middle class Americans, who now face higher borrowing costs on their credit cards and car loans and mortgages. They claim they will fight to bring the interest rates down. Trump even goes as far as bullying our Federal Reserve board members (who can only do their jobs if we allow them to function as independent experts) and suggesting that he would take over the whole department, if elected.

The real story is that while monetary policy would be a terrible tool to leave in the hands of a sitting president (see Argentina), it does function as an excellent set of gas and brake pedals for the economy if used properly. When things slow down and unemployment gets too high, a cut to the interest rates will produce a boost in everything from new jobs to stock prices. But if things get too hot, you get rapid inflation which can mess up the system.

3: Inflation has Made Life Harder for Americans (and the President Can Magically Reverse it)

This line of reasoning is even dumber than the last one. For a couple of years after the Covid era, we had rapid inflation. It was caused by a rare combination of a goods shortage caused by things like factory closures and remote work, plentiful demand from government stimulus spending and low interest rates. These factors have since ironed themselves out, and inflation is back down to an ultra-low 2.4%.

But most significantly, wages have still risen faster than inflation so we are all better off than before! Since 2019, overall prices are up 19% and our wages are up 21%. So even after all that inflation, we are still doing just fine. But the candidates are still bickering over inflation as if it’s an actual problem, and even worse promising to “bring prices back down”. And they’ve managed to convince the electorate that “higher wages and prices” is the same thing as “a bad economy”. Which is just plain wrong.

Bonus dumbness: politicians also occasionally blame “greedy corporations” for increasing prices to hoard profits. While price increases are totally acceptable in a market system (as a business owner you are free to set prices wherever you like), in reality it doesn’t usually happen because our markets are too competitive. For example, a recent deep analysis from NPR showed that no, grocery stores haven’t made any windfall profit at all off of this recent bout of Covid-fueled inflation.

4: The President Controls Housing Prices

One important thing that has changed over the past ten years is that US house prices and rents have both risen much faster than general inflation and even wages. On the positive side, interest rates have also risen which tends to make houses feel more expensive and is supposed to help bring house prices down. But it hasn’t happened yet which means we have the double whammy of higher prices and higher interest costs for mortgage borrowers. 

The dumb part is that our candidates are proposing things that would make the problem even worse, like subsidies for first-time homebuyers or schemes to reduce the interest rates. When really the solution is to increase the supply of housing, which I personally think will happen if we stop putting up roadblocks for homebuilders (myself included) to build housing. 

Things like faster and cheaper permits, less onerous and expensive building codes, eliminating suburban-style zoning and setback and car parking rules, and changing laws so that NIMBYs no longer get any say over what other people do with their own land could all help reduce the cost of building a house by about 50%, quickly and permanently.

5: The President Controls Gas Prices, and They Are Currently “High” and We Want Them Lower

Ahh, gasoline! The most ridiculous of things to worry about and the fuel for many of MMM’s rants since 2011. 

First of all, on an inflation-adjusted basis, gasoline is still about the same price as it was in 1950: in the $3-4 range per gallon, in today’s dollars. 

Secondly, it is so cheap that even with our huge inefficient American vehicles, the average household is still only spending 2.5% of their disposable income on the stuff! (The funny part is that they spend many times more on the rest of the car ownership experience while thinking gas is the part that is expensive)

Third, gasoline has been obsolete for almost a decade now. You can get a used electric car for less than the price of a comparable used gas car, or if you’re a fancypants money waster like me, new EVs are also cheaper than their gas counterparts. You get a faster, nicer car that almost never needs maintenance OR gasoline, and save money.

So why are we even still talking about this antique fuel of a previous era? Why aren’t the candidates also arguing over the price of Kodak film or typewriters or fax machines?

6: The Economy is Something We Should Even Worry About

The funniest part about all this economic talk is that we’re focusing on the wrong thing. While hard work and business and advancing the frontiers of human knowledge are all fun things, the reality is that we passed the point of having “Enough” decades ago. When the American middle class complains about how hard we have it these days, it’s like a bunch of overfed people at a buffet wishing they could just have one more flavor of donuts stacked onto the table.

Yes, we have income and wealth inequality so that the rich tend to get richer more quickly. And yes, we should keep that in check with a somewhat progressive tax system because a more equal society tends to be a more peaceful and happy one. 

But have you noticed that as the rich people get richer, they don’t get any happier? It’s because after you pass the point of “Enough”, adding more money doesn’t really help much. 

And “Enough” is much more defined by your mindset (and your collection of life skills) than your paycheck. So if the politicians really cared about improving our happiness and wellbeing, they’d be preaching the Principles of Mustachianism rather than pandering to the specific requests of coal miners or billionaires.

But alas, winning an election is a very different thing than proposing stuff that is actually best for the country. And for that reason, we cast our votes for the best party and then tune back out until the next election.

Happy voting!

In the Comments: Has the election season been getting you down, pumping you up, or just giving you a thorough dose of “Meh”?

Further Reading/Watching: 

While researching economic stats for this article, I came across a quirky but informative series of videos called USA Facts by none other than former Microsoft CEO Steve Ballmer. It seems that he had the same frustration as me: Americans are fighting over a bunch of opinions and misinformation without even bothering to look up the actual facts. So he made a well-produced series of videos that just share the facts without the baggage of political hype on top of them. I wish our politicians could do the same thing!

Bonus Podcast based on this article!
Thanks to the magic of AI, you can direct the wizardry within Google to generate a custom-made podcast on almost anything on the Internet. A reader just emailed me this take on this episode – remarkably human-like and even entertaining!
https://notebooklm.google.com/notebook/0e1d0af8-8888-466c-abe4-8b1da8986773/audio

“I used to read Mr. Money Mustache”, 

some people say these days, 

“Until he got all rich and fancy so that he no longer understands the common person’s plight.

Stash probably doesn’t even practice any of these money-saving things he preaches any more!” 

When I read things like this, I can’t help but laugh. Because on the one hand, when you put a bunch of personal life details online like this, being misunderstood is just part of the package. But on the other hand, if the critics could peek in and see our real lives – not just mine but those of all the Mustachians – they would have to give up their conspiracy theories and accept the fact that this stuff just works.

Because really, not much has changed when it comes to the basics. Like many MMM readers over the past twelve years, my total wealth level has increased pretty regularly.  But also like many of us, I haven’t felt the need to change very much about my spending because I was doing my best to live an enjoyable life in the first place.

How have so many people found such great success? I think we Mustachians have something that’s a bit more rare and special than standard financial advice, which is what makes it work so well:

Standard Advice:
Slash your spending and make sacrifices until you reach a certain savings percentage, and beyond that it doesn’t matter, it’s all personal choice. More income? Great, that means you don’t have to sacrifice as much! FatFIRE for everyone!

Mustachianism:
Cultivate a love of efficiency, creativity, self awareness, and self improvement. Use this knowledge to improve your life in all ways, including those which help you live better even as your monthly expense rate drops over time.

So what does this mean in practice? 

Well, I’ll give you some examples from my own present-day life. Things I do because I happen to enjoy them, which also happen to save a lot of money. Some of these are normal, some are silly and may end up in some future gossip magazine hit piece, but all of them happen to work for me, so the critics can be damned.

As I list each item, I’ll include an estimate of how much the activity saves me per decade, because you should always think at least in terms of decades.

To make that calculation yourself, just use the “rule of 172” – take a monthly expense and multiply it by 172 to estimate how much it would compound into over ten years, if invested.

1) Fixing my own House (and everybody else’s too)

I’m a big believer in self-sufficiency, and working to build up the skills to manage the most important parts of your own life without depending on too many things (or people) that are outside of your control. In other words, one giant recipe for a happy life is simply to Become a Producer of the Things You Most Enjoy Consuming.

And in my case, I happen to love houses. I like living in beautiful, functional spaces and sharing them with friends. But most houses are ugly and poorly designed when you buy them, so I realized that I also love solving problems and redesigning old buildings to become new again. I enjoy this process so much that I spend most of my free time doing it – on both my own properties and the homes of friends. 

And I love teaching other people to gain power over their own houses too. It’s amazing how great people feel as they lose their fear and dependence on outside contractors, and gain the ability to fix and maintain things with their own two hands.

Savings: An average of $20,000 per year = $287,000 per decade

2) Craigslist and Community

You know what’s great? Having so much money that you can buy whatever you want – high quality things which get delivered to your front door the very next day. 

You know what’s even better? Not buying some of those new things, and instead finding ways to share, repurpose and buy equally high quality items from other people who don’t need them any more. All while building up your own community and creating new friendships in the process.

Craigslist, Facebook Marketplace, and even NextDoor all have Buy Nothing groups for most areas. In the MMM-HQ community, we run a Discord server with about 200 local people, who chat around the clock on a wide range of subjects. They help each other with major projects in one channel called #diyhowto, and give away and sell things on #forsale and #buynothing. 

Although our private Discord group is my favorite, I also use Craigslist regularly, and probably save (and earn) a few thousand every year thanks to the habit:

Savings: About $42,000 per decade

3) Bikes over Cars

We all know that Mr. Money Mustache’s biggest contribution to personal finance is to insist that bike transportation is the best way to get around. And I still feel this way. As we learned in The True Cost of Commuting, cars cost at least 50 cents per mile to operate, while bikes are much cheaper, mainly due to reduced depreciation and maintenance costs (which are even bigger than the gas savings).

I do still use bikes (or walking) for at least 95% of my local trips these days, but because I live in the center of a small city, my life is pretty local. So this still only adds up to about 2000 miles per year, a savings of “only” $14,000 per decade.

But when you choose active transportation, there’s much more to the picture than just cutting your car expenses. You’re changing everything about your physical and mental health picture for the better, which brings us to the next point of…

4) Muscle over Motor

Although I’m no competitive athlete, whenever I see an option to make my body work a bit harder, I usually take it. Stairs instead of elevators, running the golf course instead of using a golf cart, moving my own furniture and appliances instead of calling a mover, shoveling snow and raking leaves instead of using a machine. 

When I face a decision like this, I simply ask myself the question:

“Well, Mustache. Do you want MORE health and fitness, or LESS?”

Putting it in that context makes the answer obvious.  Every bit helps, because when it comes to your body, the rule is pretty much use it or lose it.

But how much money does this save? There’s no real way to calculate it exactly, but I like to think of it this way: The US average health care spending is about $13,000 per person per year. My lifetime costs due to illness or medication so far have been just about zero, plus I know I’ve had more energy and greater productivity due to being healthy. Let’s just put it very conservatively and set the estimated savings and benefits at $10k per year which means

Estimated Savings:  $140,000 per decade.

5) Saving Energy by Running my home like a Glamping Retreat

Here’s where things get a bit silly, but my level of joy is actually at its greatest. 

My personality type is probably a weird combination of an engineer, a carpenter, an artsy hippie, and a mad scientist. Oh, and a devoted homebody too. Because of this, my favorite activity most days is to just run around my house taking care of things and trying new little experiments and improvements.

Sometimes I’ll cut a few big holes on on the South side of the house and install sliding doors and big windows to allow nice sunbeams and passive solar energy to get into my house and give me free heat in the winters. Other times it’s just smaller things to save energy and live more at at one with the seasons of my area:

• optimizing the use of air conditioning by running fans at night and building heat tolerance during the days (we set the A/C to only kick on at about 80F)
  
• Enjoying most of my showers outside, with free hot water from the 100 foot garden hose that happens to be coiled in a sunny spot
  
• Cooling myself and get free energy boosts by jumping in the “cold plunge”, which is simply an unheated hot tub I have set up in my back yard
  
• Doing most of my cooking and dining outdoors with an induction cooktop, gas grill, espresso machine, and mini convection toaster oven deal that I keep set up outside during the warmer months of the year
  
• Drying 99% of my loads of laundry out on the line instead of using the clothes dryer
  
• I even charge my car with a little off-grid array of solar panels set up in the driveway (from Craisglist, of course!), which gives me free electricity for driving without going through the permit-hell hassle of a full grid-tied system in my city’s currently solar unfriendly environment.

Even taken all together, these things are pretty small – the average combined gas and electric bill for my area is about $250 per month, while my usage adds up to about $75. So while we’re only saving about $30,000 per decade for what sounds like a lot of work to most people, I consider this to be the biggest win because I enjoy living in “MMM’s Energy Efficiency Playground” so much.

6) Local Living over Constant Travel

“Hey, we’re having a big back yard pool party next weekend to celebrate Amy’s graduation from kindergarten, can you make it?”

“OH NOOOO!!! We will be off in at Disneyland that whole week! We planned the trip months ago, I wish we could make it!

As I type this in the height of the summer season, I really feel this effect at its fullest: almost all of my friends are off on trips, and my guest suite here at home is almost constantly full. People are traveling a lot, and many of them sound like they wish they could spend a few more of their precious summer weeks and weekends at home.

I’ll let you in on a little secret: you can! The trick is saying, “no thanks” more often to plans that involve you being away, and “yes please” to things that let you stay at home. The benefits are numerous:

• You nurture your local friendships more and meet new people who live nearby
• You spend way less money on plane tickets, hotels, restaurants gasoline, and car repairs
• Your levels of health and fitness can go way up because you aren’t missing workouts and spending hours sitting in plane and car and bus seats. And you can better control your meals – more salads with grilled salmon, less McDonald’s and Pizza Hut 
• You sleep better 
• And you have more time to take care of projects around your house where you learn more skills which compound for life

Estimated Savings: Even if you replace just two weeks of travel for a family of four, with equivalent time at home you might save $5,000 per year in direct costs and a further $5,000 per year in incidental benefits like the health and local friendships. This would work out to a shocking $143,000 per decade of wealth increase! 

Of course, travel is generally a good thing for broadening the life experience of you and your kids. It’s worth spending on, lavishly at times. But the key is to balance it out and be discerning, keeping the most enriching trips and pruning a few off the bottom of the list. And remembering that home time is valuable and healthy too.

And Whoa! We’ve already built up a huge list and I feel like I was just getting started. 

Taken all together, we’ve already detailed things that compound to $656,000 every decade, which already more than double the median wealth that most American seniors have as they cruise nervously into their retirement years – after over 40 years of work!

And now that I’ve been writing this blog for over ten years myself, I can safely say that over $656,000 of even my most recent worth increases are directly attributable to these simple habits. The same ones many of us have been enjoying and preaching about all along, both before and after our retirement dates.

If money is in genuinely short supply, you could go a lot further than the examples in this article. And indeed, there’s a lot more laid out in this blog or the MMM Boot Camp email series.

But one of the points of Mustachianism is that you usually don’t have to try all that hard. Just tweaking your lifestyle to be slightly less ridiculous and more efficient than average is usually all it takes. 

—

In the comments: what are your quirks and frugal indulgences? The things you do now to save money, or things you still do even after it’s no longer about the money? I often wonder how widespread this frugality-just-for-fun is. But since we Humans are a naturally curious and problem solving species in our natural state, I suspect there are many more of us out there.

Almost  nineteen years into early retirement now, I’ve come to realize that the complete freedom of this lifestyle can be a double-edged sword.

You’ve already heard me raving plenty about the upside: having the freedom to raise a son from the day he was born to beyond his eighteenth birthday with no compromises. And then to put thousands of hours into everything else I value as well: family, health, friends, adventures, building stuff, and even writing the occasional blog post. No complaints about any of this.

But if I can indulge you to play me a brief Tiny Violin of First World Problems solo, even this perfect life comes with one flaw: I never have to do anything I don’t want to do.

To most people, this sounds like a dream come true. Especially if you combine total freedom with plenty of money, life is just a non-stop blissful playground of self actualization, right?

Well, maybe, but maybe not. In reality, the answer depends on who you are.

 Freedom and money reveal a person’s true strengths and weaknesses, and the result is a spectrum with “Unlimited drugs and booze on the couch” at one end, and “Create and manage a series of nonprofit foundations which employ thousands of people to research and invest in medical advances and clean energy” at the other.

For most of my journey so far, I seem to have found the balance pretty naturally. My Dad job was very intense for the first decade, but somehow I also had time to build and restore quite a few houses in the neighborhood, take plenty of intense trips to interesting places, give some talks and make some videos, and still write a few hundred blog posts. 

But in these last few years, I have started slowing down, and it has become more and more difficult to wrangle and focus myself to get these things to happen as often.

Instead of constantly bouncing around the construction site building cool things, or falling into laser focus on the keyboard finishing an article that I just had to share with you, I found myself retiring to the couch earlier and earlier each afternoon, seeking distraction on the phone and wishing I had the energy and focus to do those other more enjoyable things.

So I fought back, by learning more about health and wellness. Trying to study and train my way into more energy and focus and motivation. And you’ve seen some of the results here, in articles I’ve shared about daily habits, steering clear of excessive comfort, and more.

And all of these things really work, IF you take the knowledge and actually put it into action. And therein lies the problem:

I kept learning effective new things, and successfully incorporating them into my life. They would work for a while, but gradually my brain would invent various excuses to stop doing them consistently, leaving me with plenty of knowledge but far too little accomplishment to show for it. 

Until finally, just a few months ago, I realized that I had been sabotaging my own progress by turning my biggest life advantage into a disadvantage:

I have been using my freedom too much – in order to avoid doing things that I didn’t feel like doing.

See, freedom is great if it frees you from leaving your children at 5am so you can drive an hour through a traffic jam to sit in an office building for nine hours. But that same freedom goes to waste if you then just plunk the kids down in front of a playlist of cheap cartoons while you lounge in the corner to scroll Facebook all day.

You need to use it to do things that are even more valuable than the job you just quit. And if you can’t do that, you might as well just keep the damned job.

This is what I was doing, while lying about it to myself. I would focus on the easy things which are still good for me, like taking care of the house or hanging out with friends who live nearby. But I avoid doing the harder things – which for me means the things that require more planning, energy or focus. Even though these are the things that allow me to lead the life I enjoy most.

Let’s use workouts as an easy example. I already know that on a minute-for-minute basis, this is the single most effective thing almost anybody can do with their time because it drastically improves every other area of life. But despite knowing this, I was still following this pattern:

“I want to get in a really good weight training workout today.
But I don’t feel like doing a workout because it’s hard.
So I’ll try to grease the wheels for myself so it’s easier to achieve. 
I’ll pick the perfect time of day when the weather is nice, and my energy level is high.
 I’ll set up my gym in advance the night before.
And when that golden moment of perfect conditions hits,
I’ll hit the gym!“

But between you and me, that moment didn’t always come. Some weeks I’d achieve it 2-3 times, some weeks I’d get “busy” and make excuses like “well at least I walked a lot today”. Some days I would complete a great workout, but when recording it in the journal I’d see that the previous one was over a week ago.

And the results of this lackluster effort were exactly what you’d expect: lackluster fitness.

Then something changed and I learned that there’s a much better way to get those workouts done. It’s by replacing the long, meandering, frankly wussypants dialog above with this one:

I want to work out today.
I don’t feel like it.
^^^ AHA!! I JUST CAUGHT MYSELF TRYING TO SELF SABOTAGE! ^^^
I am now already putting on my shoes and walking to the gym.

I’m using workouts as an example because this is the behavior I managed to change most successfully, but the exact same technique applies to everything else that you or I want to do, but fail to do regularly. 

The key is learning to watch over yourself like an Eagle and identify that exact moment of hesitation.

And then instead of using it as a trigger for excuses, you use it as a trigger for action.

It’s so counterintuitive at first, but then obvious in retrospect. Hesitance feels shitty in the moment, and it really can ruin your life if you listen to it too often. But the ultimate solution is usually to run directly towards, rather than away from, the stuff you don’t want to do.

So really, Hesitation can be the ultimate life coach.

Using Extremely Badass People as Fuel

As part of writing this article, I shared the idea around with friends to test it out first. And I was initially surprised to get mixed results. About half of them could relate with me: they felt they were underachieving in life and wanted to do more. The other half though I was crazy: these people feel they are already doing too much, raising multiple kids and managing multiple businesses and training for ironman triathlons in the mountains.

The overachievers go through life nicely buzzed but often stressed. When hearing them describe their schedules, I was absolutely not envious. At the same time, they weren’t impressed with my schedule either because it’s too easy. We could both benefit from making adjustments towards the center.

Enter Goggins

Impressive overachiever friends are one thing, but the thing that really flipped the switch for me was hearing a podcast interview with our planet’s most extreme example of driving yourself beyond your former limits, David Goggins.

I learned about his life story with a mix of awe and horror. Severely beaten as a child, he grew up with a looming wall of psychological demons and issues, but his reaction was the unique part: he has been driven to compulsively seek out and overcome extreme hardship, not just to unimaginable levels but hundreds of times beyond that.

From pushing through several near-death experiences just to qualify for a Navy SEALS career, to breaking his own legs, heart and lungs from the constant exertion of things like running 240 miles over four days without sleeping, to setting a world record of 4025 bar pull ups over 24 hours (shredding his hands to look like ground beef in the process), the man does things I would never have thought are even close to possible for a human.

And that flipped a switch for me, by putting my own incredibly easy, under-achieving life into perspective. 

Because while I absolutely do not want any part of the Goggins life, and I would gladly live my life never having run more than 10 miles at a single stretch, I do find it incredibly helpful to learn that pretty much all of our barriers are entirely mental, not physical or placed upon us by the outside world. 

Sure, we do have different starting points and different amounts of luck. But instead of thinking of life like this:

I now realize that things are more like this:

And that’s a really empowering way to think about life, that feels like the sky has opened way up.

Ongoing Inspiration

So the podcast was just an introduction. I wrote down the particularly concise quote “You already fuckin’ know what to do.” on a piece of cardstock, stuck it to my bathroom mirror, and started acting on it immediately.

Suddenly, I was able to hit the gym every single day because I had two ways to approach it: wanting to put in a workout, and not wanting to put in a workout, either of which became a trigger to work out immediately.

And of course, once I finally put in the effort, it started working. Even though I’ve been sorta into this type of training since I was a teenager, I have mostly floated along on a plateau for years. But with this change in attitude, I gained ten pounds of lean weight over the first four months, returning to the strength and flexibility that I had at age 25, and every single joint in my body feels like it has been upgraded to a study, well oiled spring.

I also used the “catch yourself at the moment of hesitance” trick to get myself to run instead of walk more often (over 20 runs since I got back to Colorado last month), get over to the MMM-HQ coworking space for more work and socializing visits, and even to sit back down at the computer to write this post for you. While I’ve found that too much blogger work (and internet “success”) is a bad thing, there is still a right level that works for me. But it takes a lot of discipline to be willing to do it, because of all the other easier and more thrilling activities I could be doing with this same stretch of time.

Refilling the Inspiration Tank

For me, fully internalizing this one powerful piece of inspiring profanity has been transformative. But I still find that returning regularly to the well makes all this work even better. So I downloaded both of the Goggins audiobooks and worked through them in little chunks on my morning walks over the period of a month. Then I moved on to Peter Attia’s Outlive, and Jocko Willink’s Extreme Ownership. 

While the intellectuals fret about the perils of “Bro Science” or the “Toxic Masculinity” of today’s tribe of health podcasters and question their motivation, I simply absorb the messages that work for me and discard the rest. Find people who make you reach a little higher, and feed on their energy.

And for me, being exposed to successful, strong, athletic people who squeeze a lot of work out of themselves is a big source of inspiration. It helps me do more with my day, which is exactly what works for me right now at this phase of life.

And I wish you more of what works for you too!

The other day, an MMM reader stopped by and left the following comment on one of my older posts about the principles of FIRE:

As with every critique of our ideas, I thought about this comment for a while. Tried to determine if there were any Principles of Mustachianism that were genuinely going obsolete, versus the more common side effects of Complainypants and/or Excuse-itis, two afflictions which have been weighing down our critics since the beginning. 

After all, this isn’t the first time FIRE has gone obsolete. Over my retirement I’ve seen it:

• written off as just a phenomenon of the lucky winners of the 2000 Tech Boom
• declared obsolete after the 2009 Financial Crisis
• dismissed as a temporary fluke of the spectacular stock market of the 2010s
• and explained away as a Covid-era side effect that came from the taste of freedom that people got from remote work.

So what’s the situation right now? 

Our commenter focuses on two things: the solid salaries of tech workers, and the major increases in house prices (and interest rates) in the most recent four years. 

The first one — high salaries in general – is still a factor and I don’t expect that to change. Some jobs just pay more than others, and there’s a lot you can do to increase your income and switch jobs, and I’m all for it. However, ever-increasing income is not my usual focus here on MMM, because I have seen first hand that most people can waste almost any amount of income and still have very little to show for it. 

In fact, the very existence of software engineers and doctors and other high earners who are my age and still feeling financial stress is proof of this: it’s mathematically impossible to earn so much for almost 30 years and not have an absolute shit-ton saved, unless you are also spending an absolute shit-ton of money the whole time.

So instead, we focus on how to streamline your spending and live joyfully and efficiently without compromise. We focus on reducing waste, while maintaining or even increasing all of the other benefits that come from spending money more purposefully. These skills are essential even for the highest earners, but they become even more valuable as you move down the income ladder.

So now for the second issue: housing. Does the state of housing here in 2024 screw up the whole FIRE plan? 

As with any question, let’s start by looking at the data: how much have US house prices actually risen – adjusted for inflation – since 2019? 

It turns out that our own St. Louis Fed makes this extremely useful  information available here.

So there’s our answer: houses “feel” about 25% more expensive right now than they did at the start of 2019 relative to the average salary and the price of everything else. Although interestingly enough,  they are only up about 10% since the last peak in early 2006, a full eighteen years ago! So housing is a blow, but not a FIRE-extinguishing one.

However, this nationwide data masks some much bigger increases in certain popular cities, including my own: Plain old Longmont Colorado now sports a hilariously high $540,000 median home price. So houses are about triple the price they were when I started writing in 2011, which means they’ve risen much faster than the average salary. Which means houses are much further out of reach for the average person in my area.

House Shopping With Your Middle Finger

The solution to this is the same as most other problems: to stop thinking in the way our culture likes to train us (as a victim of outside forces beyond our control) and go back to thinking like a Mustachian. 

Houses are just like any other manufactured product, and as such they come at a wide variety of prices, subject to supply and demand. 

And just because you happen to live in a certain place (even if you were born and raised there), doesn’t mean you’ll automatically be able to afford to buy a house there. Just as a baby born upon the Apple campus in Cupertino today doesn’t automatically get a new iPhone Pro Max every year. 

With every purchasing decision, you need to go through the same series of choices:

• Can I afford this thing right now?
• Do I need/want it enough to buy it?
• Are there any alternative ways to meet these same needs, and what are their pros and cons?
• What’s the best way to procure it, after considering all the points above?

So when it comes to houses, you run the numbers, then decide between renting or buying or house hacking. You might start by doing the analysis right in your own city, but also keep in mind that there are lots of other cities and even countries in the world, and there are happy people living in all of them. 

But Wait: I don’t want to move to a whole new place!

At this point, people get defensive. We all have ties to our current location, and the stronger the ties the more difficult it becomes to consider moving. 

But there’s a difference between genuine, positive bonds to a place and just plain old fear of change. So it’s my job to at least make you question your assumptions, because not doing so is what got you where you are, and it’s also what got our country where it is.

And on a country-wide basis,  I notice that our general fear of relocating creates a very irrational pattern of house prices. They are ridiculously high in some places and ridiculously cheap in others. There does seem to be a general correlation between niceness and cost, but not a perfect one (especially since everyone has their own definition of “nice”)

And that’s where the opportunity lies.

Example:

I moved to Longmont in 2005 because it met our young family’s needs at the time, at the right price with homes about $200,000. Today, at the $540,000 price level (houses average about $450 per interior square foot) it has to compete with a much broader range of cities which offer nicer amenities at equal or lower prices. 

Let’s do a hypothetical search using another amazing tool: FRED’s list of the top 1000 metro areas with price per square foot, and plot some of them based on my own judgment of their desirability: 

I’m biased towards Colorado because I have so many ties there, and I also highly prioritize sunny climates. My chart suggests that if I wanted to save money, I might start looking around in Albuquerque, whereas Denver would give me a nicer life in the same price range as my current city of Longmont. And if I were willing to spend even more on housing to live somewhere even nicer, I should suck it up and move to Boulder.

Just for fun, I pulled the data from that same FRED website into a separate google spreadsheet (which I’ll share here) and sorted it by cost per square foot. Then, I highlighted a band of affordable cities with housing centered on the $100 per square foot range, which would mean a 2,000 square foot house is about $200k.

As an added bonus, I added a column to calculate the change in house prices over the past year, just in case it helps us see if a city is on the way up or getting cheaper at the moment.

A chart like this is just a starting point – you’d need to read more about any place and then go visit in person before considering a move. But the idea is to start with data, and then do some fun research based on what you learn.

The Earth Awaits: Casting a Worldwide Net

House prices are a valuable metric, because they influence the cost of living more than almost anything else for the typical Mustachian. After all, biking and nature are always close to free, Costcos are available nationwide, and we probably care less than average about the costs of other services like valets and salons.

But there’s still plenty of value in looking at the bigger picture, considering more data points, and also being open to renting versus buying your housing. For this, I’m a big fan of a FIRE blogger-created site called The Earth Awaits, and we can take it for a test drive right now with the following search criteria:

Geographic area: North America

My total monthly budget: $0-$6000

Family size: 2

Apartment type: Two bedroom (outside city center)

Temperature range: January lows not colder than 10F

The exact parameters don’t matter too much, as long as you don’t make them too narrow. The important thing is the resulting list, which is meant to give you ideas to research further. For example, that first simple search gave me this list:

Hey, that’s interesting. I like how the site shows the population right on the main list, because that provides a big clue to the “feel” of a city. I personally like the feel of a 50k-200k person town, so I might look into Fayetteville, Columbia or Athens. I’ve also been to Chattanooga and really like that place – who knew it was only about as expensive as Columbus Ohio?

So Should I Move?

In the end, your physical environment – the people, access to nature, urban features and the weather patterns – is probably the most important factor to get right in creating a happy life. The cost of living there is only one of the factors, and definitely not the most important one. 

But if you choose carefully, you can probably slide yourself in the right direction along that “Nice for the Price” scale in order to get more from your life. Even if it just means making a move within your own city to live along a walking path, a little closer to work or to the people or places you care about most. 

The key is just to remember that housing is like almost everything in life: It’s a choice that you get to make, and there are great rewards for putting some solid thought and effort into that choice.

Another Fun Example: Doing the Analysis on Tempe/Phoenix Arizona vs Denver

This is a fun exercise, because I’m currently living in the Phoenix area (more on that here)  that is way different than the Denver metro area where I normally live. We can start with the rough measure of housing cost per square foot across each region:

Phoenix: $272

Denver: $299

In other words, pretty close. Denver metro* is about 10% higher on average, but the variations from one neighborhood to another within any major city are much larger than that anyway.

So the other factors are more important. Both are surrounded by beautiful mountain recreation and get lots of sunshine, but the climates are famously quite different. Denver is more compact but Phoenix has nicer towns in the foothills around the outskirts.  In the end it’s just personal preference in weighting these various factors, and right now I kind of like the idea of both (Phoenix in winter but Colorado for the other three seasons)

More Adventurous: Let’s Try This in South America!

Going back to The Earth Awaits, if we repeat our earlier search but in South America, we get results like these:

Many of these spots have nice writeups if you click the “Details” button, and if anything sounds right for you, you can go on to learn much more.

It’s true that moving to a new country comes with all sorts of new learning experiences: citizenship and passports, laws and traditions and driver licenses, and of course having to cross an international border every time you want to return to your home country to visit family. 

But guess what? If this stuff sounds daunting to you, it’s probably a sign that you need to do it more. 

At its core, moving to a new place – even internationally – is just a series of relatively easy Adulting Puzzles. You type stuff into your computer, read the resulting stuff that pops up on your screen, and make the occasional phone call and visit to an official office. I had to do all the same stuff when moving from Canada to the US, alone and just six years out of high school myself. 

Sure, it can feel like a “hassle” if you think of it the wrong way, but you know what’s a way, way bigger hassle? Living in a not-very-good place for life, or working an extra 15 years just to afford the higher cost of living in your current city, because you’re too scared to do a few weeks of work to make a big move to a better place.

If a rules-and-paperwork-hater like me can do it, almost anyone can.

Your Turn: 

While we covered a few examples of actual places in this article, the real purpose was to explain the thought process behind deciding when and where to move. And there are many of you out there besides me who can do the same thing, but better. And we’d love to hear from you!

If you have some favorite cities and countries for good living, or useful techniques for scoping them out, please share them in the comments. I strongly believe that the more we help each other find the right place and enjoy the planet more thoroughly and more efficiently, the better off we’ll all be. So let’s get moving.

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* Denver metro on the Fed site includes all the suburbs rather than just the core city which is much smaller and more expensive, but the same is true for the nicer parts of Phoenix so I figure it’s a fair comparison)

The thing that drew me to early retirement is freedom, and that’s still the best part of it. 

Back in 2005, the primary reason for this freedom-seeking was being able to devote my best hours to being a Dad – I had a feeling my career in tech would be too demanding to sustain once the full-time job of raising children kicked in.

Eighteen years later, wow has that guess ever turned out to be right. Early retirement has proved to be the most amazing, worthwhile adventure and it’s still just getting started. It was an astonishing thirteen years ago that I wrote to you about Little MM starting kindergarten, and now he’s done with high school.

It has given me the space to enjoy so many new experiences, working hard and playing hard sometimes, but also slowing things way down when necessary, to deal with and grow through some real hardships.

But now, with that child-raising phase finally almost done, I’m cashing in a few of those Freedom Chips for a particularly big change: moving to a warm sunny place for the winter to try out a new life in the walkable, bikeable, car-free community you’ve probably heard me raving about in the past: Culdesac Tempe.

So on the first of December I’ll be packing up the essential clothes, tools and gadgets, and throwing my very best mountain bike onto the Model Y to make the epic road trip across the mountains. Just in time to escape the incoming Colorado winter. And my son will be joining me for the trip!

Looking for updates? I have added a separate tracker page here.

We’ve booked ourselves a spacious two bedroom apartment there, for four full months. Little MM will be roughly alternating his months between Arizona and Colorado so he can still have time with both parents, while I’ll be there the whole time. 

A big part of the fun is that this will force me to invent a whole new life for myself, away from the easy comforts of the big community and plentiful construction sites that keep me so busy here.  It will be both a big change and a significant challenge, which is exactly what all of us need on a regular basis to keep life full of meaning and joy. 

So What Are You Going to Do in Arizona?

The exact details are still in the works, and I’d love to hear your ideas and feedback (see the “get in touch” note below. But here’s what I’ve got so far:

• Meet as many new people as possible, and answer the burning question we all have: what kind of people choose to move to a car-free neighborhood in the center of a super-car-based metropolis?
• And of course hang out with existing friends who live in the area – did you know our own Coverage Critic (aka Chris Smith) already lives in Culdesac?
• Share some of the experiences, whether good or bad, here on MMM and on places like Twitter and Instagram so you can live vicariously through this experience.
• Use my newly liberated extra free time to visit their kickass on-site gym to get in extra good shape. 
• Use more of that free time to write more blog posts and sweep some of the cobwebs off of this neglected online persona of mine.
• Look at the weather app on my phone periodically to cackle at the blizzards I’m missing in Colorado and celebrate my good fortune in comparison (the typical “winter” day in Tempe is typically in the mid-70s which means sandals and palm trees and outdoor dining the whole time)
• Host a few meetups in Culdesac’s outdoor plazas like we did last March
• Start a quirky free handyman business where I help new residents set up their IKEA furniture and move heavy stuff and hang paintings, as a combo of meeting people and being useful and exercising my compulsion to build stuff.
• Ride bikes! A lot. Explore the distant corners of the Phoenix metro area and the surrounding desert valley and mountain trails on mountain bikes, regular bikes, and the e-bike that comes included with the first 200 Culdesac apartments.
• And perhaps most importantly, help my almost-adult son get all sorts of new experiences during his visits, by living in a brand new city for the first time since he was born waaaay back in the same era as my own early retirement.

Is There a Bigger Picture To All This?

Okay, you’re onto me. If I’m going to go to the trouble of typing shit into the computer and sharing it with you, there’s usually a purpose behind it other than just journaling my own personal life, and this another one of those cases. 

First of all, there are the first-layer selfish goals: I want to have the best winter ever, meet a bunch of smart new people, and I also want Culdesac to be a huge success so they will build more neighborhoods like this around the country and set an example that permanently improves the way US cities build and expand themselves in the future.

But even if you don’t care about all that, I also want to use this as a little statement about trying deliberate life changes.

By throwing myself into a new community which aligns so nicely with my own values, I hope to serve as a reminder that maybe you might want to try the same thing. Or just try anything new.

In a comfortable, prosperous country like ours, some of the built in tendencies of Human nature tend to work against us, saying,

“Hey – I’ve noticed we have plenty of food and reasonable shelter and that’s good enough.
So let’s just double down on the Netflix, comfort foods, and occasional luxury purchases and that will keep us safe.”

Instead, I want you to set your life treadmill to just a bit of a steeper, healthier incline setting.

That means questioning the status quo and doing your best to keep at least one little experiment on the go in the background. Maybe that means forcing yourself to move to a better place, or taking steps towards getting a new job that gives you a better work-life balance.

The biggest move I ever made was leaving family and friends and my old job behind to move to the US, alone, at age 24. Looking back, I’m shocked I had the courage (and the organizational skills) to pull that off back then. I’ve become older and a bit slower, and so comfortable that it’s hard to imagine doing something so bold now.

But even today 24 years later, I thank my past self every single day for doing it. My present life is an incredibly different and better thing because of that past bit of courage.

The spirit of positive experimentation might also mean starting to challenge your body more regularly – giving it harder work and exposing it to a wider swath of temperatures and movements. Or joining new Meetup groups to expand your circle of friends and experiences. 

It doesn’t really matter exactly what you do, as long as you point your feet in what feels like a good direction and just start moving. Create some purposeful change, which will surely feel a bit difficult, simply because change is hard. And hard things are good. 

Future Arizona Neighbors: I’ll see you in four weeks!

Further reading: I’ve been reading books, doing life experiments, and writing about the value of strategic hardship for a while now. But the latest is a book called Dopamine Nation by the talented psychiatrist/author named Dr. Anna Lembke.

To summarize: your brain creates a baseline for happiness based on the HARDEST thing you do, and then compares everything else to that. So if you do hard things, life in general seems fantastic because of this perspective. If you eliminate all hardship, suddenly even the pleasures of life seem bland, and you live a spoiled and unmotivated life.

To get in touch: send me a DM on Instagram or use the email address “newsletter” at the domain of this website. (Newsletter subscribers can also just reply to this post if you received it via email.)

Interested in stopping by for your own Mini Culdesac Experiment? They have a few short-term rentals available at rather reasonable rates (less than nearby hotels) – check em out at book.culdesac.com

What will you do with your car?

I’m bringing the car just as a convenient electric moving truck to carry two people and four months of living supplies. Once I get there, I’ll find a safe place to park it offsite and live the full car-free lifestyle of Culdesac, much like I do when I’m here at home. I typically only use cars to carry really heavy stuff or for trips to other cities and states, but it’s even easier to accomplish this in Tempe with its location right on the light rail and with their onsite bike, scooter and even car sharing lots.

What about your house?

My place in Colorado is currently set up as a two bedroom house on the main floor, plus an apartment with a separate entrance on the walkout lower level. When I’m at home, I use the whole thing as one home – the apartment just makes a great place to host a fairly constant stream of visiting friends. But for the winter I’m hoping to rent out one of these spaces to a friend or trusted acquaintance who will take good care of everything, while I leave the other section free for the occasional visits I’ll be paying to this area over the winter. Aside from keeping an eye on the place, it will be a great way to practice the age-old Mustachian technique of making money while taking vacations!

What Happens at the End of March?

As it stands, I have no plans beyond this point. I’ll head back to Colorado for my home base, but with this being a new phase of life I’ll be layering on new adventures. Aside from the two mountain properties that I’ve been helping to build out, I may end up with an MMM Mountain Retreat of my own someday.

Conclusion: ongoing thoughts on the Culdesac experiment are here: https://mrmoneymustache.com/culdesac/

Whoa, have you seen what just happened to interest rates!?

Suddenly, after at least fourteen years of our financial world being mostly the same, somebody flipped over the table and now things are quite different. 

Interest rates, which have been gliding along at close to zero since before the Dawn of Mustachianism in 2011, have suddenly shot back up to 20-year highs. 

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Which brings up a few questions about whether we need to worry, or do anything about this new development.

• Is the stock market (index funds, of course) still the right place for my money?
• What if I want to buy a house?
• What about my current house – should I hang onto it forever because of the solid-gold 3% mortgage I have locked in for the next 30 years?
• Will interest rates keep going up? 
• And will they ever go back down?

These questions are on everybody’s mind these days, and I’ve been ruminating on them myself. But while I’ve seen a lot of play-by-play stories about each little interest rate increase in the financial newspapers, none of them seem to get into the important part, which is, 

“Yeah, interest rates are way up, but what should I do about it?”

So let’s talk about strategy.

Why Is This Happening, and What Got Us Here?

Interest rates are like a giant gas pedal that revs the engine of our economy, with the polished black dress shoe of Federal Reserve Chairman Jerome Powell pressed upon it. 

For most of the past two decades, Jerome’s team and their predecessors have kept the pedal to the metal, firing a highly combustible stream of easy money into the system in the form of near-zero rates. This made mortgages more affordable, so everyone stretched to buy houses, which drove demand for existing homes and new construction alike. 

It also had a similar effect on business investment: borrowed money and venture capital was cheap, so lots of entrepreneurs borrowed lots of money and started new companies. These companies then rented offices and built factories and hired employees – who circled back to buy more houses, cars, fridges, iPhones, and all the other luxurious amenities of modern life.

This was a great party and it led to lots of good things, because we had two decades of prosperity, growth, raising our children, inventing new things and all the other good stuff that happens in a successful rich country economy.

Until it went too far and we ended up with too much money chasing too few goods – especially houses. That led to a trend of unacceptably fast Inflation, which we already covered in a recent article.

So eventually, Jay-P noticed this and eased his foot back off of the Easy Money Gas Pedal. And of course when interest rates get jacked up, almost everything else in the economy slows down.

And that’s what is happening right now: mortgages are suddenly way more expensive, so people are putting off their plans to buy houses. Companies find that borrowing money is costly, so they are scaling back their plans to build new factories, and cutting back on their hiring. Facebook laid off 10,000 people and Amazon shed 27,000.

We even had a miniature banking crisis where some significant mid-sized banks folded and gave the financial world fears that a much bigger set of dominoes would fall.

All of these things sound kinda bad, and if you make the mistake of checking the news, you’ll see there is a big dumb battle raging as usual on every media outlet. Leftists, Right-wingers, and anarchists all have a different take on it:

• It’s the President’s fault for printing all that money and running up the debt! We should have Fiscal Discipline!
• No, it’s the opposite! The Fed is ruining the economy with all these rate rises, we need to drop them back down because our poor middle class is suffering! 
• What are you two sheeple talking about? The whole system is a bunch of corrupt cronies and we shouldn’t even have a central bank. All hail the true world currency of Bitcoin!!!

The one thing all sides seem to agree on is that we are “experiencing hard economic times” and that “the country is headed in the wrong way”.

Which, ironically, is completely wrong as well – our unemployment rate has dropped to 50-year lows and the economy is at the absolute best it has ever been, a surprise to even the most grounded economists.

The reality? We’re just putting the lid back onto the ice cream carton until the economy can digest all the sugar it just wolfed down. This is normal, it happens every decade or two and it’s no big deal.

Okay, but should I take my money out of the stock market because it’s going to crash?

This answer never changes, so you’ll see it every time we talk about stock investing: Holy Shit NO!!!

The stock market always goes up in the long run, although with plenty of unpredictable bumps along the way. Since you can’t predict those bumps until after they happen, there is no point in trying to dance in and out of it. 

But since we do have the benefit of hindsight, there are a few things that have changed slightly: From its peak at the beginning of 2022 until right now (August 2023 as I write this), the overall US market is down about 10%. Or to view it another way, it is roughly flat since June 2021, so we’ve seen two years with no gains aside from total dividends of about 3%.

Since the future is always the same, unknowable thing, this means I am about 10% more excited about buying my monthly slice of index funds today than I was at those peak prices.

Should I start putting money into savings accounts instead because they are paying 4.5%?

This is a slightly trickier question, because in theory we should invest in a logical, unbiased way into the thing with the highest expected return over time.

When interest rates were under 1%, this was an easy decision: stocks will always return far more than 1% over time – consider the fact that the annual dividend payments alone are 1.5%! 

But there has to be some interest rate at which you’d be willing to stop buying stocks and prefer to just stash it into the stable, rewarding environment of a money market fund or long-term bonds or something else similar. Right now, if a reputable bank offered me, say, 12% I would probably just start loading up.

But remember that the stock market is also currently running a 10% off sale. When the market eventually reawakens and starts setting new highs (which it will someday), any shares I buy right now will be worth 10% more. And then will continue going up from there. Which quickly becomes an even bigger number than 12%. 

In other words, the cheaper the stocks get, the more excited we should be about buying them rather than chasing high interest rates.

As you can see, there is no easy answer here, but I have taken a middle ground:

• I’m holding onto all the stocks I already own, of course
• BUT since I currently have an outstanding margin loan balance for a house I helped to buy with several friends (yes this is #3 in the last few years!), I am paying over 6% on that balance. So I am directing all new income towards paying down that balance for now, just for peace of mind and because 6% is a reasonable guaranteed return.
• Technically, I know I would probably make a bit more if I let the balance just stay outstanding, kept putting more money into index funds, and paid the interest forever, but this feels like a nice compromise to me

What if I want to Buy a House?

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For most of us, the biggest thing that interest rates affect is our decisions around buying and selling houses. Financing a home with a mortgage is suddenly way more expensive, any potential rental house investments are suddenly far less profitable, and keeping our old house with a locked-in 3% mortgage is suddenly far more tempting. 

Consider these shocking changes just over the past two years as typical rates have gone from about 3% to 7.5%.

Assuming a buyer comes up with the average 10% down payment:

• The monthly mortgage payment on a $400k house has gone from about $1500 at the beginning of 2022 last year to roughly $2500 today. Even scarier, the interest portion of that monthly bill has more than doubled, from $900 to $2250!

• For a home buyer with a monthly mortgage budget of $2000, their old maximum house price was about $500,000. With today’s interest rates however, that figure has dropped to about $325,000

• Similarly, as a landlord in 2022 you might have been willing to pay $500k for a duplex which brought in $4000 per month of gross rent. Today, you’d need to get that same property for $325,000 to have a similar net cash flow (or try to rent each unit for a $500 more per month)  because the interest cost is so much higher.

• And finally, if you’re already living in a $400k house with a 3% mortgage locked in, you are effectively being subsidized to the tune of $1000 per month by that good fortune. In other words, you now have a $12,000 per year disincentive to ever sell that house if you’ll need to borrow money to buy a new one. And you have a potential goldmine rental property, because your carrying costs remain low while rents keep going up.

This all sounds kind of bleak, but unfortunately it’s the way things are supposed to work – the tough medicine of higher interest rates is supposed to make the following things happen:

• House buyers will end up placing lower bids which fit within their budgets.

• Landlords will have to be more discerning about which properties to buy up as rentals, lowering their own bids as well.

• Meanwhile, the current still-sky-high prices of housing should continue to entice more builders to create new homes and redevelop and upgrade old buildings and underused land, because high prices mean good profits. Then they’ll have to compete for a thinner supply of home buyers.

The net effect of all this is that prices should stop going up, and ideally fall back down in many areas. 

When Will House Prices Go Back Down?

This is a tricky one because the real “value” of a house depends entirely on supply and demand. The right price is whatever somebody is willing to pay for it. However, there are a few fundamentals which influence this price over the long run because they determine the supply of housing.

1. The actual cost of building a house (materials plus labor), which tends to just stay pretty flat – it might not even keep up with inflation.
2. The value of the underlying land, which should also follow inflation on average, although with hot and cold spots depending on which cities are popular at the time.
3. The amount of bullshit which residents and their city councils impose upon house builders, preventing them from producing the new housing that people want to buy.

The first item (construction cost) is pretty interesting because it is subject to the magic of technological progress. Just as TVs and computers get cheaper over time, house components get cheaper too as things like computerized manufacturing and global trade make us more efficient.

I remember paying $600 for a fancy-at-the-time undermount sink and $400 for a faucet for my first kitchen remodel in the year 2001. Today, you can get a nicer sink on Amazon for about $250 and the faucet is a flat hundred. Similarly, nailguns and cordless tools and easy-to-install PEX plumbing make the process of building faster and easier than ever.

On the other hand, the last item (bullshit restrictions) has been very inflationary in recent times. I’ve noticed that every year another layer of red tape and complicated codes and onerous zoning and approval processes gets layered into the local book of rules, and as a result I just gave up on building new houses because it wasn’t worth the hassle. Other builders with more patience will continue to plow through the murk, but they will have less competition, fewer permits will be granted, and thus the shortage of housing will continue to grow, which raises prices on average.

Thankfully, every city is different and some have chosen to make it easier to build new houses rather than more difficult. Even better, places like Tempe Arizona are allowing good housing to be built around people rather than cars, which is even more affordable to construct.

But overall, since overall US house prices adjusted for inflation are just about at an all-time high, I think there’s a chance that they might ease back down another 25% (to 2020 levels). But who knows: my guess could prove totally wrong, or the “fall” could just come in the form of flat prices for a decade that don’t keep up with inflation, meaning that they just feel 25% cheaper relative to our higher future salaries.

When Will Interest Rates Go Back Down?

The funny part about our current “high” interest rates is that they are not actually high at all. They’re right around average.So they might not go down at all for a long time.

Remember that graph at the beginning of this article? I deliberately cropped it to show only the years since 2009 – the long recent period of low interest rates. But if you zoom out to cover the last seventy years instead, you can see that we’re still in a very normal range.

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But a better answer is this one: Interest rates will go down whenever Jerome Powell or one of his successors determines that our economy is slowing down too much and needs another hit from the gas pedal. In other words, whenever we start to slip into a genuine recession. 

In order to do that however, we need to see low inflation, growing unemployment, and other signs of an economy that is finally cooling down. And right now, those things keep not showing up in the weekly economic data.

You can get one reasonable prediction of the future of interest rates by looking at something called the US Treasury Yield Curve. It typically looks like this:

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What the graph is telling you is that as a lender you get a bigger reward in exchange for locking up your money for a longer time period. And way back in 2018, the people who make these loans expected that interest rates would average about 3.0 percent over the next 30 years.

Today, we have a very strange opposite yield curve:

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If you want to lend money for a year or less, you’ll be rewarded with a juicy 5.4 percent interest rate. But for two years, the rate drops to 4.92%. And then ten-year bond pays only 4.05 percent.

This situation is weird, and it’s called an inverted yield curve. And what it means is that the buyers of bonds currently believe that interest rates will almost certainly drop in the future – starting a little over a year from now.

And if you recall our earlier discussion about why interest rates drop, this means that investors are forecasting an economic slowdown in the fairly near future. And their intuition in this department has been pretty good: an inverted yield curve like this has only happened 11 times in the past 75 years, and in ten of those cases it accurately predicted a recession.

So the short answer is: nobody really knows, but just for fun I’ll make a guess. Then if I’m wrong in public, you can come back and make fun of this in the comments.

I think we’ll probably see interest rates start to drop within 18-24 months, and the event may be accompanied by some sort of recession as well.

The Ultimate Interest Rate Strategy Hack

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I like to read and write about all this stuff because I’m still a finance nerd at heart. But when it comes down to it, interest rates don’t really affect long-retired people like many of us MMM readers, because we are mostly done with borrowing. I like the simplicity of owning just one house and one car, mortgage-free. 

With the current overheated housing market here in Colorado, I’m not tempted to even look at other properties, but someday that may change. And the great thing about having actual savings rather than just a high income that lets you qualify for a loan, is that you can be ready to pounce on a good deal on short notice. 

Maybe the entire housing market will go on sale as we saw in the early 2010s, or perhaps just one perfect property in the mountains will come up at the right time. The point is that when you have enough cash to buy the thing you want, the interest rates that other people are charging don’t matter. It’s a nice position of strength instead of stress. And you can still decide to take out a mortgage if you do find the rates are worthwhile for your own goals.

So to tie a bow on this whole lesson: keep your lifestyle lean and happy and don’t lose too much sweat over today’s interest rates or house prices. They will probably both come down over time, but those things aren’t in your control. Much more important are your own choices about earning, saving, healthy living and where you choose to live. 

With these big sails of your life properly in place and pulling you ahead, the smaller issues of interest rates and whatever else they write about in the financial news will gradually shrink down to become just ripples on the surface of the lake.

In the comments: what have you been thinking about interest rates recently? Have they changed your decisions, increased, or perhaps even decreased your stress levels around money and housing?

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* Photo credit: Mr. Money Mustache, and Rustoleum Ultra Cover semi gloss black spraypaint. I originally polled some local friends to see if anyone owned dress shoes and a suit so I could get this picture, with no luck. So I painted up my old semi-dressy shoes and found some clean-ish black socks and pants and vacuumed out my car a bit before taking this picture. I’m kinda proud of the results and it saved me from hiring Jerome Powell himself for the shoot.

As with many things in life these days, it all started with an episode of the Peter Attia podcast.

In this edition, our nation’s most Badass Doctor was interviewing a guest I initially dismissed as not overly applicable to my own lifestyle. A young,excessively handsome dude who happened to be a writer with a new book out. But the headline of the episode was just intriguing enough to get me to click.

“The Comfort Crisis”

Wow, what an amazing turn of phrase, and what a concise summary of the core of this whole Mustachianism thing I’ve been trying to express for the past dozen years. 

While the news headlines cry constantly about our nationwide personal debt crisis or health crisis or any other number of things that suggest that life is so hard these days, I have always seen the opposite: on average, we Americans seem to have a problem of ridiculous overindulgence and easiness in our lives, and our main problem is not recognizing it, and the damage it does to us. 

So of course I had to click, and then listen to the whole two hour episode, and then buy the book, and then spend the past month reading and digesting it in small, meaningful chunks like the modern-day chunk of scripture-like wisdom that it is. And wow, am I glad I did so.

The author is Michael Easter, a former writer for Men’s Health magazine was also once catastrophically addicted to alcohol – and descended from a long family line of ancestors with the same affliction. 

He was lucky to catch himself from that fall in time to save his own life, and that story alone makes the book worth reading as someone who has stood by helplessly as loved ones battled with addiction. But I think his history with overindulgence in the hollow comforts of alcohol also gives him an edge on writing about the battle between comfort and hardship on the bigger stage of life in general.

So what is The Comfort Crisis about, and how can it make all of our lives better?

The best part about this book is just what a damned good writer this Easter guy is. Like many of the most fun popular science books*, it follows a split narrative which jumps back and forth to interweave the story of an insanely difficult caribou hunting trip he joined in a remote pocket of Alaska, with the appropriate bits of science, psychology and cultural commentary that help us explain and learn from each chapter of the epic shit he had just endured. This allows us to process and apply the lessons in our own lives.

For example, have you ever wondered why the type of bored, rich suburbanites who populate the board of your local Homeowner Association and whine about unacceptably tall weeds or unauthorized skateboarding on Nextdoor are so insufferable?

Why can’t they do something better with their time?

It turns out that there’s a scientific explanation for these unfortunate people, along with most of our other problems:

The tendency of humans to always scan our environment for problems, regardless of how safe and perfect that environment is.

The book cited a study in which researchers told people to look for danger, in an environment which gradually became safer and safer:

“When they ran out of stuff to find they would start looking for a wider range of stuff, even if this was not conscious or intentional, because their job was to look for threats.” 

“With that in mind, Levari recently conducted a series of studies to find out if the human brain searches for problems even when problems become infrequent or don’t exist.“

“As we experience fewer problems, we don’t become more satisfied. We just lower our threshold for what we consider a problem.“

In other words, even when our lives are virtually problem free, instead of appreciating our good fortune we just start making up shit that we can complain about instead. 

And then our politicians cock their greasy, finely-tuned ears in our direction and make up policies to appease our mostly-insubstantial concerns. And they invent their own trivial “wedge” issues to get us to all bicker about our different cultures and religions, suddenly caring about things that would not have even been problems if nobody told us they were. 

And there’s America’s weakness in a nutshell, and meanwhile our strength comes entirely from the times we choose not to waste our time stooping to this level.

Meanwhile, the opposite effect holds true: people who survive in rougher environments than us end up more resilient and less prone to complaining.

In a series of recent interviews, Ukrainian people living in the war zones of their occupied country were asked “is it safe to live where you live?” and a strangely high percentage still said “Yes” – not all that different from the responses of US residents when asked the same question about their own cities.

This adaptation principle also explains why some first generation immigrants tend to build businesses and wealth while their own offspring in second and third generations are more likely to become complacent and spend it down. As an immigrant myself, I can see why this is: conditions were just slightly more harsh and less comfortable and wealthy where I grew up, so I adapted to those conditions as “normal” which made the United States seem posh and easy by comparison. Which made it easier to spend less money and accumulate more.

Tree Therapy

The trap of pointless worry is just one of the many revelations of The Comfort Crisis. It also gives insightful explanations for why spending time in Nature boosts our mental and physical health, while cubicles and car driving grind us down. 

There’s something in our biological wiring that responds instantly and powerfully to everything natural, in ways that you can’t get anywhere else.

Even placing a single plant into a hospital room will measurably improve the recovery of almost all patients from almost all ailments. So can you imagine the power of the medicine you are inhaling if you step into a real, living forest? And what if you spent several hours there, or even several days?

Later, we get lessons on our human adaptation towards the ratio of effort to reward:

It’s proven the harder you work for something, the happier you’ll be about it,”

And our bizarre natural aversion to physical exertion:

A figure that shows just how predisposed humans are to default to comfort: 2 (two). That’s the percent of people who take the stairs when they also have the option to take an escalator.

Which is remarkable, given the absolutely insane cost this tendency imposes upon us.

Moving your body, even a bit, has enormous benefits – again to almost all people towards reducing the probability and severity of almost all diseases. So can you imagine the benefit of moving your body for several hours per day in a natural environment, and including heavy load bearing and bits of extreme exertion?

These things are not speculative pieces of alternative medicine. They are known, easily and reproducibly tested, and proven to be the most effective things we can possibly do with our time.

So why, the actual fuck, are people still sitting inside, watching Netflix, driving to work, and then driving to the doctor’s office to get deeper and deeper analysis of a neverending series of exotic and mysterious and unsolvable problems with their physical and mental health?

We should at least start with the stuff we know is essential – maximum outdoor time every day, heavy exertion including with weights, minimal time spent sitting and driving, and minimum junk food, sugar, and alcohol. You definitely don’t have to be perfect, but just understand that these are the big levers for physical and mental health.

Only then, once you reach these minimum basic things for human survival, should you expect that more exotic and niche medicines and treatments are the only course of action. 

By all means, follow your doctor’s orders and don’t just dump all of your medications down the sink because of this MMM rant. But at the same time, realize that the stuff that is hard and uncomfortable is very likely to be the stuff that improves your life the most. 

It’s all the stuff that Mr. Money Mustache has been telling you since 2012, but with more detail and less distraction. This book is a concentrated packet of advice for solid living.

Real Life Inspiration from the Good Book

In a happy coincidence, I happened to be in the middle of some hard stuff** of my own as I worked my way through The Comfort Crisis and I found the perspective quite useful and transformative to apply hot off the press. 

Normally somewhat of a homebody, I had embarked on a solo journey for some Carpentourism deep in the mountains of Southwestern Colorado. I had my whole life shrunk down into the new Model Y including food, bed, and the necessary tools and materials to tackle a pretty long laundry list of tasks on two different construction projects (fixing up a mini-resort property in Salida, and starting construction on a small cabin in Durango)

The trip immediately took a turn towards the dramatic as I climbed into the mountains and drove straight into the most torrential rainstorm I have ever seen, then accidentally broke a traffic law in a remote mountain town right in front of both of the local police officers ($115 fine and two points off my license), then five minutes after that had a small pebble hit my brand-new windshield which instantly spread into a crack that spans the whole thing, all before finally limping into Salida to unpack and get started on the work.

“Big deal”, I can already hear you saying, “Retired man experiences two minor incidents while taking a vacation in his luxury car.” 

And you’re right, and that is exactly my point.

My life is so stable and comfortable that even these two miniature challenges threw me off balance, and I arrived in a slightly bummed and stressed-out state. But I still knew that in the bigger picture, they are good for me if I accept them as the lessons they are rather than choosing to continue to worry about them.

As the trip went on, more things happened, almost as if The Comfort Crisis book were trying to prove a point. I drove three hours deeper into the mountains and up the steep dirt road to arrive at my second friend’s piece of land – a plot of forest in the mountains just outside of Durango.

My work days in that high desert environment in the peak of summer were hot and physically demanding. It was hard to keep my tools, and my food supply in the cooler, and myself protected from the scorching sun (and a strange neverending blizzard of tree pollen) while still getting the job done. There was no indoor plumbing and we had to be very careful with our limited water supply. And then at the end of each day I had to reshuffle everything and set my car back up as a bedroom and crawl in for the night. Alone and far from home.

But instead of feeling depressed as I experienced this constant hardship, the opposite thing was happening: I felt more alive and more badass with each passing day. I got better at being a feral forest man.

One day, my co-builder and I decided to take the afternoon off and head to the wild, remote Lemon Reservoir for some paddleboarding. We didn’t bring our phones or any other conveniences or amenities – just two boards and the minimal clothing required for swimming. And we headed out into a stiff headwind and little whitecap waves, laughing at the freedom of the experience.

It was hard, and slightly scary, as we got further and further from the shore. Progress was slow even with serious paddling, and we didn’t have any particular plan beyond the spirit of “let’s GO!” 

But again Michael Easter was there whispering in my ear, saying,

 “Is this difficult, Mustache? GOOOOoood! Then you’d better keep going!”

So we did. And we got way out into that lake, to a point where the water was shielded from the wind by the mountains on the other side. And it was awesome. 

We cruised over to the shore to explore a particularly scenic meadow, coated with the softest green mossy grass and exuberantly colored wildflowers, and set at an impossibly steep angle. And damn I wished that I could have taken pictures, but in a strange way this forced me to burn that spot more thoroughly into my memories using my own senses instead.

Then we headed back out into the center of the lake, set down the paddles, and just laid down on our boards to let the wind and the waves take us back towards the far end of the lake where we had started. And what a strange, serene feeling it was, floating on just a tube of air over two hundred feet of cold blue water, feeling like a jungle man with no cares and no plans and no material possessions. It could have been scary, but instead it was one of the best and most relaxed moments of my life.

Eventually, this week of forest living and exertion had to come to an end so I could get back to my own town to be a Dad again. But it ended with a final reminder of the principles of the Comfort Crisis – after so many days relatively extreme work and a relatively sparse food supply, I had grown used to a healthy background hunger. Which is yet another thing that we are meant to experience as humans – being satisfied and free from hunger all the time is neither normal nor healthy.

But when my hosts took me out on the town for a final night thank you dinner at the Mexican restaurant, the immense Burrito platter I consumed turned out to be the most delicious meal of my life.

Purposeful Hardship vs. Purposeful Spending

There has been a lot of talk directed at the FIRE community recently about how bad we are at spending our money, and how we all need to loosen up. And there’s a small amount of truth to it, as my local friends Carl and Mindy recently admitted during a grilling on the Ramit Sethi podcast.

But we also need to keep this whole idea of excessive comfort in mind, and the damage it does to the natural human condition. 

It’s great to spend money on adventures and improving yourself, being generous to others, and making the world a better place. 

But it’s also way too easy to fool yourself into thinking you “want” things that just make your life easier and easier. 

So your job is to catch yourself before this happens, and learn to keep things challenging, even as you upgrade the rest of your life experience.

In other words: buy yourself better tools, not softer chairs.

—-

* Another great book that follows this style is Wired for Love by neruroscientist Stephanie Cacioppo – highly recommended for reading in parallel with a lover, whether new or old.

** not actually hard by reasonable human standards, but it seemed hard by my comfort addicted first world standards

As I type this, I’m jumping through the various hoops involved in buying a 2023 Tesla Model Y, a rather expensive, luxury “crossover” that is absolutely loaded to the gills with excess: all wheel drive, faster acceleration than a Lamborghini, enough space for seven people and enough computer gadgetry to function as a small Google data center.

Update: Looking for the ongoing tracker page? It’s here at “The Model Y Experiment“

The total net cost of this thing to me after all the taxes and tax credits* will be about $52,000, which is just a stunning amount higher than the Honda van it is replacing. That old classic cost me $4500 when I bought it off of Craigslist twelve years ago, and it had served me dutifully until just last month, crisscrossing the mountains and deserts of this country and also helping to rebuild a considerable swath of houses in my neighborhood. 

I’m supposed to be a frugality-oriented financial blogger, and I’m also known for hating car culture – I think most people use cars about ten times more often than they need to, and most people drive cars they can’t afford. So why the hell am I buying a new one?

From those first three paragraphs, you can see I’m feeling plenty of self-mockery and ridicule over this new purchase. If you’re also a naturally frugal person, you can surely relate to the thoughts and you probably also agree with me that I’m off my rocker. 

And indeed, I’m still on-board with frugality and healthy self mockery. After all, it was this overall life philosophy that earned me an early retirement 18 years ago, which provides all of the glorious freedom I enjoy now. 

It was also the philosophy that allowed me to procrastinate on buying this expensive car for the last four years, even as countless people both close to me and out on the Internet egged me on and told me I should just loosen up and treat myself.

But there’s a classic slogan that applies to many areas of life, and it is something I like to dig up and ponder every now and then:

“What got you here,

Won’t get you where you’re going.”

How does that piece of wisdom apply to frugal living and enjoying a long life of early retirement?

A quick story from a recent run to the grocery store will explain:

I was standing there in the bakery aisle, hoping to restock with a loaf of Dave’s Killer Bread for the next day’s breakfast with some visiting friends. But since this was in a standard grocery store rather than the Costco where I usually shop, the damned stuff was priced at an eye-watering $6.99 per loaf (instead the $4.50 or so I’m accustomed to paying, and even at the bulk store this stuff is about double the price of normal bread).

“DAMN YOU KING SOOPER’S!” 

Was my first response. 

“WHO THE HELL DO YOU THINK YOU ARE, TRYING TO SELL BREAD FOR SEVEN BUCKS!!!”

Then I went through a whole mental battle of what I call Grocery Shopping With Your Middle Finger:

“Should I just boycott this bullshit?” 

“Hmm I wonder if any of the other competing brands are any good?”

“What else is a good substitute for bread for this breakfast?”

And then thankfully, after exhausting all other mental options, I settled on the correct one:

“JUST BUY THE BREAD YOU DUMBASS!”

“Because you are never going to wake up in the future and look at your bank account and think, shit, if only I had an extra $2.49 in there I would be a happier person.”

That night, I came home from the store and shared this funny tale with one of my guests. He understood perfectly because he too had earned his own retirement through a lifetime of grinding in tough jobs and disciplined frugality. And despite the fact that he has a net worth several times higher than mine, he admitted that he faces exactly the same mental battles over splurging on himself.

This same friend gives freely to charitable causes, has supported a local school for decades, and is always the first one to pull out the checkbook if a friend has hit hard times or is looking for a trusted business investor. 

But he still has trouble bringing himself to take an Uber to the airport instead of riding the bus which takes an hour longer.

We both realized that we were being too cheap with ourselves, and we needed to work on it. And we came up with a set of three ideas that should hopefully work together to help us have more fun with our life savings, while we are still alive:

• the Minimum Spending Budget,
• the Dedicated Money Wasting Account, 
• and the Splurge Accountability Buddy.

Principle #1: The Minimum Spending Budget: 

Suppose you’ve done well over the years and amassed a pile of productive investments worth about two million dollars. Yes, this is a lot of money for most people, and that is the point: this hypothetical person truly has it made.

But as it turns out, most Mustachians I know with this level of wealth are still living very efficient lives, usually with a spending level of under $40,000 per year. On top of that, they typically live in a mortgage-free house and still have various forms of side income from a small business or two.

The 4% rule tells us that this person should be fairly safe spending up to about $80,000 per year from that cozy nest egg, even if they never earn any other money.

If this person wanted to be ridiculously conservative and set the spending rate at 3%, that still leaves about $60,000 of fun money every single year.. Plus, again, any side income, future inheritances, and social security income only add to the surplus.

Thus, a reasonable minimum spending level for this person might be $60,000 per year.

And in most cases, they know this, but still go right on living on $40k or less and claim they have everything they could ever want. 

But if you watch carefully you’ll still catch them firing up the middle finger at things like $6.99 Dave’s bread or the $14.00 Cabernet at the restaurant or driving around in a gas guzzler even when they would prefer to have a proper, modern electric car. 

And whenever these people do get extra money, their first instinct is to stash it away on top of the already-too-big pile.  In diagram form, their money flow looks like this:

Note that while this person is great at accumulating money through that big red arrow firing money back into the ‘stash, their “fun stuff” arrow appears quite flaccid and withered.

Which is a perfect segue to ….

Principle #2 – the Dedicated Money Wasting Account

Lifelong habits are hard to break, and it’s sometimes hard to “waste” your own hard-earned money on things that seem frivolous, even when you know intellectually that you have way more money than you’ll ever spend.

But have you ever noticed that if you are spending somebody else’s money, preferably an anonymous corporation, it feels different?  

For example, when you’re on a business trip and you just show up at the dining table to eat and drink and you never see the bill, you probably don’t fret about the prices, right?

The key is to make your own money feel like somebody else’s, and you can do it like this:

• Re-brand your main bank account – henceforth it is the FREE FUN MONEY account. 
• Set up an auto-deposit of your minimum spending budget that drops in each month (if you suspect that you might currently be too frugal, make this at least $1000 per month higher than your current spending level)
• The only way you are allowed to use the money in this new account is to spend it on anything and everything, or give it away. It can be used for both necessities like groceries and your utility bill, but also your luxuries like travel and dining and generosity.
  
  But the key rule is this: You are not allowed to follow your old habit of sweeping out the surplus each month to buy more and more index funds as you’ve been doing your whole life.
  
  If the free fun money starts building up, which it probably will because you are way out of spending practice, it will stare you in the face and tell you to do a better job.
  
  And this can and should be FUN! Now you can get the best organic groceries even when the price seems exorbitant. Go out for dinner or order delivery whenever you like. Surprise your loved ones with concert tickets, join your friends on snowboarding or beach trips, or even pay for an entire group vacation, allowing people to go who couldn’t normally afford it so easily.
  
  
• Technical Note: Some people have income or wealth levels are so high that it would be insane to spend at a 3% rate. For example, a $10M fortune would lead to a $25,000 monthly spending rate, which is obviously ridiculous.
  
  In this situation, you can still leave your dividends reinvesting but still give yourself a bigger, no-saving-allowed budget to get some practice being more relaxed and generous.  The real point here is to just stop sweating the details so you can have more fun.

Principle #3 – The Splurge Accountability Buddy

Many of us frugal people tend to stick together. And most of us have different versions of the same problem: we know logically that money is plentiful these days, but our emotions keep us stuck in our old ways of optimizing too much. 

But I find that when I team up with local friends who are actually trying to battle these same habits, we can question each other’s decisions, call out cheapness when we see it, and cheer on splurges when we know the other guy would enjoy it.

My super wealthy friend from above has become much better about treating himself (and his family) to quality goods for the home, amazing trips together, and just a general reduction in his stress over being “efficient with money”

My friend and HQ co-owner Carl (Mr. 1500 Days) has finally replaced his beaten-down minivan with a spiffy new Chevrolet Bolt electric car, and is loving that leap into the future.

And of course Mr. Money Mustache, after squeezing one final mountain road trip out of his 23-year-old Honda van, is finally allowing himself to get the Tesla he has been talking about for half a decade. 

A recent life change (becoming a co-owner of a fixer-upper vacation rental compound in beautiful Salida Colorado) has reignited the travel fire in my heart and made me realize how much I do love getting out to distant places for visiting, mountain biking, gathering with groups of friends and my favorite activity of all: Carpentourism.

Running the Numbers: how ridiculously expensive is this car?

This is the perfect start to my experiment in spending more. Realistically, a $50,000 car is going to cost me about $10,000 more per year than my old van was burning.  With the biggest costs being these:

• Foregoing roughly 8% annual investment returns on the 50 grand: $4000
• Depreciation on the car: an average of $3000 per year over the first 10 years
• Higher insurance premiums: $1000 more per year
• Replacing those exorbitantly huge performance tires when they wear out, and probably things like repairing the all-glass roof someday when it meets Colorado’s pebble-strewn mountain roads: the remaining $2000 or so.

Since I personally had a spending deficit of several times more than $10k per year, I figure this is a solid first step. And, since the car’s primary purpose is things like epic camping trips, dream dates, and  long adventures around the country, it will definitely help me spend more on experiences, hotels, and go out to dinner a bit more often as well.

“This Privileged Rich Folk Talk is Making Me Sick, why don’t you give your money away to charity, or to me?”

In general, I agree: the world has problems and the richer you are, the more you should consider giving generously. 

But also, to be honest, the whiny people who constantly send complaints like this out to strangers on the Internet really need to get a life. It’s great to encourage philanthropy through positive examples, but completely unproductive to send negativity to shame people you don’t even know for not following your own personal value system. The world has seen more than enough of this.

On top of that, this one-sided thinking can be counterproductive. Both of my friends have given generously throughout their lifetimes. In my own case, I have donated over $500,000 to the best causes I could find during the years I’ve been writing this blog, but I was still refusing to let myself replace that 23-year-old van. 

And that overthinking was leading to even more of a scarcity mentality, as I compared my own meager spending to these bigger numbers of my donations, and found myself thinking things like, 

“Damn, I’m spending $100 on this dinner date which sounds like a lot, but I also spent ONE THOUSAND TIMES more on donations last year, which sounds like even more. Maybe I am spending too much and need to cut back on EVERYTHING!”

And then the fear side of my brain would illogically chime in: “Yeah and you’re going to make us run out of money and be poor forever! waaaah waaaah! Cut back and optimize and conserve!”

I think there is a happy medium here. 

Yes – be a super, duper responsible steward of your life savings. 

And yes, give generously with all your heart to charity. 

But yes, it’s also okay to set aside a portion of the money you’ve earned, for frivolous spending on yourself and those closest to you. You’re not a bad person for having a few nice things.

It’s okay to pay that extra hundred bucks to sit a bit closer to the front of the airplane instead of the back if it helps you enjoy your vacation and spend a joyful half hour walking FREE at your destination while the 49 rows of people behind you fuss infuriatingly with their shit in the overhead bins.

It’s okay to buy the frozen berries at Whole Foods even though they cost eight times more than Costco charges, if it spares you from making a second unpleasant trip through parking lot hell.

And as for me, I am calling it okay to, at last, double flip the Autopilot stalk in my new Tesla and lean back as it it shoots me gracefully through even the highest mountain passes, forever leaving the desperately underpowered wheezing and gear shifting and noise* of the gasoline era behind, forever.

Rest in Peace, Vanna – 1999-2023

—– Bonus details and links —-

* How to get rid of an old vehicle:

I ended up using an online car salvage service called Peddle*, at the recommendation of a friend. With about five minutes of entering the details of my old Honda, their system offered me $715, and then a towtruck came and took it the next day – and actually gave me the payment in cash, which I found kind of fun. I made a point of using all of that money for splurges like dinners out, in keeping with the theme of this article.

* I later signed this blog up for Peddle’s affiliate program so that link will benefit MMM if you use it.

* A useful tip for more effective splurging:

Try to find the truly negative aspects of your life and focus any additional spending on improving those things. But it’s a subtle art so you have to get it right if you want lasting results in happiness.

You don’t want to just reduce hardship or challenge like hiring someone to take care of every aspect of your house, because overcoming daily hardships and having significant accomplishments provides the very core of our life satisfaction.

You also don’t want to just upgrade the things that are already good in your life. For example, a friend of mine is a gourmet coffee expert, and he suggested that I upgrade my setup at home to include on-the-spot roasting, and fancy grinding and brewing equipment. But I already love the good quality coffee I buy off the shelf from Costco, so it would be counterproductive to invest time or money into changing this part of my life. 

But when you have something that causes you regular angst and stress, whether it’s a leaky roof that makes you dread rain, or a long commute that makes you dread the daily traffic jam, or a body that is giving you trouble due to not being in the best of shape – those types of things are probably a good target for improvement. 

In the case of my car situation, I had a Nissan Leaf which is wonderful to drive, but doesn’t have the range to travel anywhere outside of the Denver metro area. Then I had the van which is a clunky beast to drive, but is otherwise an amazing road tripper because I could bring along whatever and whoever I wanted. But the van was getting increasingly unreliable in several hard-to-fix ways which was making me nervous every time I thought about long distance travel. Which was causing me to avoid certain trips and miss positive lifetime experiences.

In other words, my lack of a reliable long-range car was a small but consistent source of negative stress.

Finally, Vanna gave me the gift of a final hot and smelly transmission failure on a mountain pass on the way home from my new project in Salida. It was just the nudge that I needed. And now I already feel excitement rather than dread at the prospect of all the road trips in the coming decades!

* Total cost of this Tesla:

• Model Y plus options and Tesla fees: $53,630 
• Subtract $7500 federal EV tax credit
• Subtract $2000 Colorado EV tax credit
• (Note: this is equivalent to a $44,150 list price if you are cross shopping with other cars)
• Add back in $4674 of sales tax
• Add in first 3 years of Colorado new-car registration fees: $3000
• Net cost: about $52,000

Referral program: it’s back! You can now use a referral code (here’s mine if you like) to get $1000 off any Tesla, while gifting your counterparty a bunch of points that they can use for Tesla freebies as well.

New Tracker Page!

To go along with this article, I started a new page called “The Model Y Experiment” where I can share ongoing findings and Q&A about the ownership experience. I’ve driven and rented Teslas quite a bit in the past, so most of it will be pretty familiar. But as an owner I’ll get to verify the reliability and the quality of customer service, as well as any quirks and modifications and upgrades I do.

In my role as Mr. Money Mustache, I do my best to be your one-stop-shop for Lifestyle Guru ideas. So over the years we’ve covered not just the Money side of life, but also the even more important stuff like health and fitness and the psychology of better, happier living. 

But there’s one single area of life where all of these factors come together with an almost Nuclear Fusion level of synergy and effectiveness. And because of that, if I could have one single wish in the world, this is what I would wish for. It’s a change so massive that it would make every person on the planet better off and fix most of our problems in one grand sweep. And it’s probably not what you’d expect:

That we immediately switch to building our cities and countries around people, instead of cars.

(and then fix all of our existing ones too, so that our entire world is built around person-friendly living.)

The benefits of this are way bigger than almost anyone can imagine. We’re not just talking about eliminating a bit of pollution or a few traffic jams or car crashes. No. This is about far richer, healthier, and most importantly more fun living for everyone. 

To put even conservative numbers to this, we’re talking about a life boost of over $20,000 per person per year, which compounds into well over two million dollars per adult lifetime.

On a nationwide scale, this would boost the wealth of the United States by about seven trillion dollars per year, which would compound into about 770 trillion over the next five decades.

Which happens to be more than the current total amount of human wealth on the entire planet.

You will have a house that is both cheaper and more beautiful and spacious. Your body and brain will be healthier and stronger and sexier and cost a lot less time and healthcare dollars to maintain. 

And all of our wallets and investment accounts, both public and private will be absolutely overflowing with surplus income, reduced expenses, and fuel an investment and prosperity boom like the world has never seen.

“WTF?”,  you may ask 

“Isn’t city planning just a stuffy thing that your city council does in the background while we’re all off living our lives?”

Well, yes it is right now. And that’s the whole problem: cities are built by people whose primary job is to maintain the status quo and prevent disruptions. And those committes are elected and encouraged by crusty old companies and organizations, and plain old grumpy neighbors who just don’t have the vision to see what they are missing. 

I’m convinced that if everyone could see through the smoggy haze of the status quo, we would all agree that this idea of a radical change is not only the best idea, but the only reasonable idea to even consider. 

So our job is to learn and explain just how big and how easy this is. And what it boils down to is pretty damned simple. 

Let’s start with this picture 

Whoa, that’s a bit of a surprise.

 So for the same amount of space you can have an entire pretty nice two bedroom apartment, or you can have just enough space for two (small) cars to park and pull out. But it gets even crazier than this. Check out this random intersection here in my own city:

WHAT?! So every time you have two big car roads intersect, which happens hundreds of times in every big city, you are wasting enough space to build a luxurious, resort-like living area with about one hundred two-bedroom apartments and still have room for a pool, a dog park, a grocery store, a couple of restaurants, and so on.

This is just the beginning of the insanity, because I have only shown you two parking spaces and one intersection. The reality is that our entire cities are made almost entirely of stupid, expensive wasted space like this. 

And the problem is so extreme that the only reason we think we need cars to get around, is because we have wasted most of our space on accommodating cars, which spread everything out so far (and made everything so loud and dangerous) that nobody feels like walking or biking!

Cue the Complaints

Whenever you propose any great new idea, you’ll always get a bunch of smartasses who like to complain and resist change, without even bothering to think it through.

Most of them boil down to, 

“But how are we going to keep driving our cars just as much as we do now?”

Which is ridiculous – because the whole point is that as soon as you cut out all the huge wasted spaces we create to accommodate cars, you are suddenly FREE from needing cars so much!

Instead, you can just weave a brand new city, with a bunch of variations of this beautiful resort which also include offices, grocery stores, climbing gyms and every other amenity.

 And yes, you’d still have some roads between them, but they would be mostly for deliveries, emergency vehicles and people who need mobility assistance.

I hope you’re not going to make me ride the bus?

I am all for public transit in theory, but to be honest I don’t usually have the patience for it. I don’t do lineups, and I don’t like to stand around waiting passively for my transportation to arrive – when it’s time to go somewhere, I just want to go, and go now, and get there fast. So my own personal choice is to take a bike for short distances (under 2 miles) or an e-bike for larger ones (up to about 15 miles). 

Although this is often news to car drivers, bikes are much faster than cars for urban transport, plus they give me exercise and thrill, which is way better than being stuck at the red light with the cars.

 If you take this already-superior method of urban transport and cut out the 90% of the land that we waste on accommodating the inferior cars, then you end up with a revolution: everybody gets where they are going ten times faster, at much lower cost, and has much more fun doing it.

And sure, there will also be light rail and faster buses. And sure, you can still hop in an Uber or even bring your own car into a city like this.But the point is that it will just happen much much less often.

Okay I’m convinced, but how can we actually accomplish this?

Mr. Money Mustache can talk a big game with all these fancy words and pictures, but the truth is that I’m way too impatient to put up with all the bureaucracy and complaints that arise when you try to actually change a city. I’ve been doing my best here in Longmont, and I have gotten just about nowhere. We’re still just stacking on more and more layers of ridiculous car shit where I live.

Thankfully, other people are much more patient and effective than I am at affecting change, and one group has made such incredible progress that you can now go LIVE in their first creation: a 1000-person car-free neighborhood called Culdesac Tempe. And as I write this, I am staying in a hotel right nearby, having spent the past two days touring and visiting and interviewing the founders*. 

While we were at it, my Phoenix-area-house-fixing friend Tracy Royce and I also hosted a meetup for an enthusiastic group of our readers/viewers right there in Culdesac’s emerging central plaza.

Culdesac is Awesome and Could Change Everything

If you only look at the financial spreadsheet, you would think this first Culdesac project is just going to be a highly profitable 1000-person cluster of apartment buildings, spread out across 17 acres of land. And while financial sustainability is indeed a key reason why this model will succeed, the money is the least exciting part.

When you look at these pictures compared to a normal housing complex, the main thing you will notice is that all the space that would normally be wasted on parking lots, is instead used for beautiful walking and gathering areas.

The next big upgrade is that they mixed in the amenities for daily life right into the neighborhood, rather than forcing all the future residents to get into their cars to drive out to find them:

• Grocery store, similar in style to a small-ish Trader Joe’s
• Fantastic gym (which I got to tour – it is a beauty!)
• Coworking space 
• Dog park
• Pool
• Outdoor kitchens and shade structures and garden areas galore
• Semi-fancy Mexican restaurant with ample patio space
• And lots more retail space also in the construction plans

I was also impressed with just the feel of walking the Mediterranean-vibed spaces between the buildings, even at this early stage when everything is still under construction.

Due to the hot desert climate of the region, everything is built around providing shade, breeze, and reflecting heat during the summer, while also maximizing the joyful fact that there is no winter there (the coldest month of the year still has an average daily high of 65F/18C, which means palm trees, leafy gardens and fruits and flowers forever.)

With a setup like this, and 999 new neighbors to meet, I would rarely feel the need to leave the place. Which really cuts down on my desire to use a car. But on top of that, Culdesac has strategically placed itself in Tempe, a city right in the center of the Phoenix metro area, within walking distance of the main university and right on a light rail stop which allows you to reach almost everything (including the airport) for FREE, since an annual pass to the transit system is included with your rent. 

But of course, you can also get around on foot, bike, e-bike, scooter, or hop into one of Culdesac’s fleet of rideshare electric cars for a trip to the mountains or whatever else you might want to do that’s outside of bike and transit range.

It’s insane. In fact it’s so good that I am going to attempt to move there myself at the end of 2023, enjoying my first escape from Colorado winter and celebrating the fact that my boy will be a legal adult at that time.

 But even this is just a pilot project because Culdesac has much bigger plans.

The Culdesac Master Plan

From my conversations with the founders, I think they want to do this:

1. Start with this small-scale community of rentals, just because it’s faster
2. Use this to get the word out and learn from the experience before going bigger
3. Move up to a larger-scale communities which will also include homes for sale
4. Go REALLY big, and make an entire section of a city, then eventually an entire town which grows into an entire city
5. Meanwhile inspire the rest of the United States to go the same way, once they see that this type of neighborhood is both more desirable for people, and less costly (therefore more profitable) to build.

So How Can We Benefit From This, and Support it?

• If this article gave you any surprising new information or changed your perspective at all, you’ve already made a difference. Because your choices around housing and transportation will probably shift at least a little bit away from cars, which will change our future demand and development patterns to be at least a little bit better. Congratulations!
• If you’d like to be one of the first residents of this first neighborhood, sign up right on their website at https://culdesac.com/ . There is a waiting list, but it moves faster than you would think – especially if you have a flexible moving date.
• If you’d like to make your own city a better place to live, just start emailing your own city council, or even better, sign up to serve on your own local planning board or city council yourself, as the heroic gentleman from Twitter did above. The things to push for are: approve more housing and more bike paths, but eliminate minimum parking requirements and above all stop wasting money on road expansions! Every dollar spent on accommodating cars subtracts many dollars from the future wealth of your city.
• If you are a major investor ($10M+) or land owner (20+ central acres in a high-density city) looking to invest in and boost this effort, email the team directly at investors@culdesac.com – more info on their about page.

And Then What Will Be Our Payback?

This whole change is exciting, and it is immense. 

Understanding these ideas around city planning is the economic and social equivalent to being a doctor, and finding a 35-year-old patient in a hospital who is suffering from every chronic disease, but then discovering that they have been following a diet of Coke and Donuts for their whole lives and never been out on a walk, once. 

In other words, the changes are so obvious, and the amount of win/win synergy so great, that every step we take towards making our cities better, and every car trip we eliminate, will absolutely explode our personal and national wealth upwards for generations to come. 

The stakes just couldn’t be higher.

Are you in?

Further Reading:

Another collaborator in the overall effort for car free cities is a bank-founding multi entrepreneur local friend named Kevin Dahlstrom. His recent Twitter rant on building car-free cities from the scratch gathered a shocking amount of very positive feedback and interesting comments.

* Despite my positive raving about this neighborhood, I have no financial or business connection with the project or any of the team members. I am just really excited about their work and want them to succeed!

Well, looks like it has happened again. 

Since the last time we spoke, I got sucked into building my 17th(?) kitchen, and I have finally emerged from its messy yet addictive grasp as I stand here at the new breakfast bar, typing this report to you.

Why am I so hooked on this strange pastime? And more importantly, why am I so excited to tell you about it, when most MMM readers probably don’t have house building at the top of their list of life priorities? 

It’s probably because the concept of home is such a core part of life for me: a place that allows us to take care of our families and ourselves, host friends and build our lives outwards from there. And to me the most important part of a home is the place where you prepare and stash your food supply, which also happens to become the spot where our kids spread out their homework, we have our deep talks, and the natural gathering point for just about every party.

There is of course a money side to all of this too: housing is the most expensive thing in most of our lives (including my own), and this cost has exploded upwards in recent years due to a crazy imbalance of supply and demand.

People want  homes with beautiful, highly functional amenities like kitchens and bathrooms, which means those houses get bid up to higher prices by those willing to wildly overpay, which leaves the more investment-minded among us swearing at the irrational market conditions, or buying ugly fixer-uppers as a compromise.

This leads to a second shortage: a shortage of tradespeople like myself, because there are a lot of flimsy little sinks, leaky plastic-handled faucets and fake woodgrain oak cabinets out there, but not a lot of people with the experience to rescue that 1982-style kitchen and bring it into our glorious modern present.

Which means that if you can even find someone willing to build you a new kitchen, you’ll often see quotes from $25,000 to north of $75,000 for the prestigious but not-all-that-difficult job.

As you’ll see below, this translates to an incredibly expensive labor rate of between $100 and $300 per hour, which is money you get to claim for yourself if you are willing to do some of the work. And the rewards can be even higher than that, because when you upgrade a kitchen in an expensive housing market, you typically create even more than $25-75k of additional value. This will flow back to you in the form of more cash when you eventually re-sell, or higher rental income every single month if you are fixing up a rental property. 

And one more real estate secret: a kitchen is effectively just a really big fancy version of a bathroom, so if you learn the skills you can do either one. Imagine the God-like power of being able to point your finger and call into existence kitchens and bathrooms where none existed before! 

So in this article, I’m going to whisk you through a high-speed tour of the main steps of rebuilding a kitchen, focusing on the things that make the biggest difference in function, cost, and difficulty – in other words, the things I wish I knew 23 years ago when I started working on my first kitchen. 

We don’t have space here to cover every detail of every step, but as with any important endeavor, it’s best to start with the big picture anyway. And from there, I hope to leave you with a much more empowered starting point to do one of three things:

• To know what to look for (and how to tune your Bullshit Meter) when hiring someone else to build you a kitchen.
• To strategically break off parts of the work you want to do yourself, to save time and money even if you hire out the rest.
• Or even to do the whole thing yourself, seeking help from more experienced friends or YouTube videos as needed to get the full details.

So let’s get into it! The 11-ish main steps to designing and building the most joyful room in your house.

Step Zero: Do You Need a Permit?

In most areas, this is a “Yes” if you are messing with plumbing and electricity inside the walls, otherwise it’s “maybe”. But rules vary widely around the world – I’ve worked in some places where the inspectors will come knocking if they see so much as a scrap of drywall poking out of your trash can, and others where people build a whole barn without raising the eyebrow of the authorities. But whether you get a permit or not, the most important part is to do the job right – this means tidy, professional work that meets the local building code and would pass an inspection even if nobody will see it. It will allow you to sleep well and avoid troubles down the road.

1: Figure out the Cost

This one is obviously all over the map depending on your tastes, but we can start with the following overly simplified table:

The dollar figures are just for the materials including appliances, and the labor hours are what I’d budget for myself or another professional – you can adjust as needed based on your own skill level. I’ll also link a slightly more detailed version of this spreadsheet here.

Super Duper Shopping Pro Tips:

When it comes to cost-efficient renovations, material sourcing is everything. Here are a few of my own favorite tricks:

• Craigslist, Facebook Marketplace and Recycled Building Material stores are amazing. It takes more time and skill to find and use materials from these sources, but in exchange you get your stuff for about 75% less. In the past I’ve bought a $2000 fridge for $500, doors and cabinets and light fixtures for next to nothing, and stocked up on reclaimed wood and steel pieces worth tens of thousands of dollars for free, in exchange for a few hours of my time.
  
  But sometimes you have different goals, like faster speed or or the higher-end finishes that are only possible with brand new materials. In this case, you move down the list.

• Amazon is now better than Home Depot for many things. Light fixtures, sinks and faucets, even saw blades and big rolls of PEX pipe. All with a way wider selection, fast shipping and at lower prices than the older retailers. I’ll still get my lumber and drywall and paint locally of course, but for everything else I check online first. The bonus is that this also cuts down my mid-project trips to the store by about 80%.
  
• IKEA kitchen cabinets usually offer lower cost, easier/faster design, and – surprisingly – better overall quality than what you get with special order cabinets from the home renovation stores. More on this in the cabinets section below.

2: Layout (and knocking down walls!)

The basic principle I like to follow in kitchen design, at least for the smaller and older houses that those of us in the fixer-upper crowd tends to purchase, is MORE:

• More floor space and countertops
• More open-ness to the rest of the house
• More storage, especially drawers

Most houses from past eras have the kitchen walled off into a tiny booth. And the good news is that you can usually just chop down the unnecessary walls between that booth and the living room, replace one of them with a nice spacious island, and transform your house for the better. 

Bonus! How to figure out if a wall is load bearing:

My safe answer here is, “Ask a structural engineer or at least a house builder”, but since I’ve done a lot of both activities, here is a shortcut:

• Figure out what’s over top of the wall in question (is it an upper floor or just the roof?)
• If it’s the roof, peek up into the attic. If the house is a newer design it may have trusses. In smaller houses (up to about 30 feet wide), this usually means all the weight of the roof is resting on the outside walls, meaning most or all the interior walls are just cosmetic.
• If your kitchen is on the first floor with another level above, the wall may be load bearing, especially if it is perpendicular to the floor joists above it. In this case you can still open up the wall and replace it with a beam and posts. But that’s a task for experienced builders – bring in some help if you don’t know how to do this already.

Basic Layout Principles

As a quick example, let’s use a case study of one of my own rebuilds to point out both things I think did work, and other places I made some mistakes and would do things differently next time. (This was in my own house, so you’ll have to forgive my taste for somewhat wild colors!)

Whoo! Okay there’s a lot of info in there, but it’s worth reading through because it captures many of the things I like to cover in a new kitchen. The biggest principle to follow is just to give everything enough space – especially the chefs themselves. This sometimes requires clever space-saving tricks, but it’s also why I end up moving or removing walls so often. Small spaces in your own house suck!

Design Shortcut: The IKEA Kitchen Planner

To figure out how everything will fit (and look), you need at least some scale diagrams, but even better is a 3-D model that you can look around. There are lots of options here ranging from old-fashioned graph paper to sophisticated but sometimes clunky design programs like Sketchup. But one interesting trick is just using the free tool on the IKEA website, which can be useful whether you plan on buying their cabinets or not. https://kitchen.planner.ikea.com/us/en/

For example, take a look at the “before” picture of my old kitchen above. Before building the new kitchen, I spent about 15 minutes on the IKEA kitchen planner website and I already had a pretty close visualization of how my finished kitchen would look and feel.

3: Building new walls

In most cases, you’ll be removing more walls than you build, but sometimes you’ll need to add some as well. The most common situations for me are:

• Moving an existing wall back to create more kitchen space
• Creating a “booth” of walls to enclose a refrigerator or build a food storage pantry
• Building the half wall (typical height is 34.5”)  that eventually becomes an island.

General principles:

• It’s way easier to build a new wall than to mess around with too many changes to an old one. So I usually start with a complete demolition of any old walls, then proceed with a clean slate. 
• If you’ve never learned how to frame a wall flat on the ground first, it’s a fun and life-changing skill! Here’s a 52-second summary on YouTube.

4: Plumbing (and venting)

In many kitchen remodels, you end up leaving the plumbing fixtures (sink, dishwasher and fridge water line) in roughly the same place, and if so this part of the job is minimal.

 But I also want to open your mind to the possibility that these things can be moved without too much trouble, and you can even create brand new ones whenever you need ‘em. While the finer points of code-compliant plumbing are best learned from the book or video of your choice, here are my favorite basic principles and useful shortcuts:

• Cut back any obsolete copper plumbing and transition to PEX in a convenient location, which will make all your new work cleaner and easier. In a full house remodel, I usually do this right after the main house shutoff valve so the whole system can be built right from scratch.
• Sink drain lines are usually done with 1.5” black ABS (plastic) pipe which is quite easy to work with. If you’re doing a big project, grab a few ten-footers of the stuff up front as well as an assortment of fittings and the glue.
• Drain pipes should slope about ¼” per foot, and if you need to add a new air vent, consider a Studor vent, which saves you the pain of trying to connect your drain to a pipe that runs all the way through your roof. (I also like to minimize roof penetrations because it makes your eventual re-roofing job quicker and more reliable and leaves more room for solar panels)

We’ll cover the sink, dishwasher and fridge plumbing separately below.

Related MMM Article from way back in 2012 (but recently updated): 

How to Become a Kickass Plumber – with PEX

5: Electrical

Like plumbing, electricity is a whole trade in itself which is not comfortable for everyone. And you can indeed kill yourself if you touch live wires in the wrong way. So if in doubt, hire an electrician. 

But since I happen to enjoy this trade myself, I made a point of learning the national electric code (currently called the 2020 NEC) enough to wire a few full houses from scratch and pass several final inspections: everything from digging the trench and running new buried service lines in conduit to the meter box, to subpanels and solar inverters down to the last light switch. 

But I’m still not a professional electrician, and codes vary by region – so be sure to double check any ideas you get from me and do not assume anything you read is totally correct.

With all those disclaimers aside, here are the most common situations that come up when renovating a kitchen:

Unwanted electrical lines in a wall you are removing:  I label these carefully, turn off the power, then pull everything out until I reach the nearest junction that’s in a wall I am keeping (or sometimes this will be in the ceiling or attic). Once the new walls  are in place, you can run fresh wires to the new boxes and fixtures.

Adding new outlets to serve new countertop areas:

The basic requirement is a minimum of two 20 amp circuits, protected by GFCI outlets, with outlets at least every 4 feet along your work space. Plus, ideally the fridge, dishwasher, disposal and microwave are on their own separate circuits which is required in brand new builds. So, your project may be able to tie into the existing circuits or you may need to pull some new ones.

Adding entirely new circuits to your home:

Although this may sound like a black art to non-electricians, it’s actually quite straightforward once you learn how to do it. The hardest part is usually running the wire all the way back to your circuit panel, unless your kitchen is directly over an unfinished basement or crawlspace. So if you find an agreeable electrician willing to give you a discount in exchange for you doing the dirty work of properly routing the wire while they only do the final hookup in the panel, this can be a nice hybrid approach.

If you want to see the details of what’s involved in adding a whole new circuit and breaker to your panel, there are lots of walkthroughs on YouTube including this one I made myself on how to install your own electric car charger.

Other stuff to remember at this stage:

• An outlet for your eventual over-the-range microwave (or just a wire if you are using a vent hood), centered about 78” above the floor so it is in the cabinet directly above
• A 4” steel vent pipe that goes from behind that microwave to somewhere outside your house (see your install manual for exact details)
• An outlet beneath the kitchen sink for the disposal, controlled by a wall switch at a safe distance nearby
• Power for your dishwasher (I usually add a standard cord to my dishwasher so I can plug it in to this same outlet under the sink)
• Maybe even wiring for an outlet inside one of your cabinets, just behind the top drawer, for charging phones and other gadgets nicely out of sight

6: Drywall and details

You’re finally ready to cover everything up! This part is relatively easy, but if you’ve never done drywall before, a few things I find helpful to get started:

• Buy plenty of supplies (4×8 sheets, mesh tape, boxes of compound (mud), plus a trough and knife set) in advance
• When installing sheets, use either a roto zip tool or a cordless “buzzer” multi tool to do the cutouts for your outlet boxes. Much better than manual hand saws or trying to do it with knives.
• As you open each box of mud, dispense it fully into a clean 5-gallon bucket with a lid. Fill up your trough periodically from this bucket. Never work directly from the box, or the bucket.
• I find that a light layer of spray adhesive before adding the mesh tape helps it stick much better
• Apply 2-3 coats of increasingly smooth mud before you bother with sanding (experienced drywallers typically only need to sand once at the end)

This is the point – after drywall and at least a coat of primer or base white paint – where you would install your flooring if you are changing that out as part of the remodel. These days I’m a big fan of engineered wood or LVP flooring which is easy, tough and attractive. But for ultimate durability in a busy dogs-n-kids-n-giant parties household, floor tiles are still the gold standard.

7: Cabinets

Although this step is the most exciting part, it’s also one of the easiest. You’re just trying to put in a line of giant boxes as strong, straight and square as possible. For conventional cabinets, this means that a level and studfinder and shims are your best friends. 

With IKEA cabinets, it’s even easier to get it right, because all of the cabinets (both upper and lower) just hang on their proprietary metal rail system. So if you get the rails right, the cabinets follow naturally. Another huge bonus: it’s easy to slide the cabinets back and forth and make adjustments before locking them into their final positions.

8: Countertops

If your budget will allow the higher cost, a stone countertop (quartz or granite or similar) is usually worth the cost. That cost is currently about $60-120 per square foot which can add up to a few grand for a large kitchen, but in exchange you get something that looks great, lasts forever and cleans up more easily than the other options. 

Of course, that high cost (and my dislike of dealing with appointments and outside contractors) has meant that I have experimented with the other alternatives of solid wood and various types of tiles on some projects. They still look nice and function pretty well, but I have always regretted the choice in the long run and wished I had done the quartz. Possibly because of the human psychology factor: a small daily annoyance of worrying about scratching your wood countertop is with you forever. Whereas a one-time expense for the stone countertops quickly recedes into history and you forget about it. And like the rest of a kitchen upgrade, it tends to come back to you in the form of increased resale or rental value anyway.

9: Sink and Faucet

Thankfully, this part is the opposite of the countertops: surprisingly cheap and full of beautiful options depending on your taste. 

Way back in 2001, I remember paying $600 for a sink and $300 for a faucet, just to get something substantial and modern that didn’t look like it was from a 1980s Atlanta Georgia suburb (an aesthetic that runs strong in Home Depot products because of the company’s origins in that time and place).

 But now, thanks to Amazon we live in a whole different world. You can have your choice of massive, modern sinks in the 200s, and even beautiful faucets are under $100. The prices are sometimes so low that I am nervous about the quality, but so far everything has been a pleasant surprise on the upside. TBD sink drain pic above.

Bonus: How to build a nice new sink drain:

Your old kitchen probably has an ugly nest of pipes under the kitchen sink, and you’ll at least need to rework this part because the new sink will be bigger and in a slightly different place. So we might as well cover this right here:

Starting with the fancy new sink (which comes right after countertops), you

• Install the disposal unit which doubles as the drain as well
• Loose-fit a trap adapter to the disposal output and then figure out what direction to angle your trap to create the simplest/tidiest run to the wall pipe
• Add elbows and straight bits as needed to get the water to that final destination
• Once you are sure everything fits, mark the joints with tape or a marker, then carefully disassemble, glue, and reassemble/tighten everything. Ready for water within an hour!

10: Appliances

This is yet another area where we’ve seen deflation over the years rather than inflation: the quality and features of appliances seems to keep going up, while prices come down. And the used market is even better: appliances have a very low resale value, which means if you shop carefully you can get new-ish units for about 75% less than brand-new ones. 

However, a note of caution: Don’t buy used stuff unless you trust the seller and/or get a chance to test it. I’ve been fooled twice buying used seemingly high-end dishwashers that seemed great … but in retrospect the person was selling them because they didn’t work properly. 

Me: “Wow, this is a really nice $1500 dishwasher – why are you selling it?”

Seller: “Oh… I was upgrading my kitchen and this one just doesn’t match the new appliances.”

Me: (naively overlooking some other red flags about the seller’s living situation): “Okay here’s my $200 in cash.”

On a third occasion, a friend and I almost made the same mistake when buying an exotic under-counter European fridge, but thankfully noticed that the seller had it sitting in his garage unplugged when we came to pick it up. When I asked to see it running, he pretended to have a shortage of extension cords so I pulled one out of my van. Sure enough, when we plugged it in, the damned thing wasn’t even working. Shady!

Other tips: fridges, microwaves and especially ovens/ranges are a safer bet to buy used because they tend to just work for decades. 

Also, if you live in a climate with sub-freezing winters, don’t buy a fridge, dishwasher or washing machine that someone has moved into their shed or garage during the cold season. Because the water in the tubes and valves will probably have frozen and burst without their knowledge, giving you a messy and complex repair job the first time you fire it up.

Because of all this, I have had many success stories with used appliances in the past, but I still tend to buy all new appliances these days now that time has become more scarce than money for me. If you’re younger and still trying to optimize for dollars, you should still check Craigslist and Facebook Marketplace regularly.

11: Finish work!

At last, we’re in the home stretch. You can add as many custom flourishes to your kitchen as you like, but just to share a few of my favorites:

• An artsy tile backsplash is a great way to make any kitchen way more interesting. I like to tile the entire area from the countertop up to the upper cabinets. In some cases on empty walls, I’ve gone all the way up to the ceiling to create an even bigger feeling of space.
• Consider hiding a power cord inside a top drawer somewhere, which you can then hook up to a nice multi port USB charger, so you can keep all of the phones, tablets, bike lights out of your precious work area.
• Stainless steel outlet plates and modern-style grey outlets and switches add a more polished and high-quality look to any area, especially kitchens.
• Undercabinet lights are worth the effort, as they provide great illumination while cooking and make for beautiful ambience even hosting parties or dinners.

Wow, that was a Lot!

This may be the longest MMM article in history, and yet we still only skimmed through it. But I hope this summary gives you at least a peek at the countless fun, useful and profitable skills that you can learn to make your life as a homeowner (or as an occasional contractor) more joyful and satisfying.

If you have more questions about specifics, drop them into the comments section below and everyone can help share some answers. And of course, this article will surely be full of errors and omissions when I first publish it – please feel free to point those out and I’ll make updates as well.

Happy cooking!

One of the reasons I don’t write as often these days is that my life has gradually evolved into a Personal Finance Bubble. 

The people around me have learned to be purposeful with their money, which means they now have plenty of savings and never have to stress about the stuff. Good ideas have naturally spread between the old group of friends, and new ones with similar values have drifted in over the years. 

And it has happened so much that that it’s almost normal for everyone in the neighborhood to have their own CNBC Make It feature*, which they don’t even get around to mentioning because we’re too busy helping each other with bathroom renovations or sharing the latest golden scores from Craigslist.

Because this is my everyday reality, I have mistakenly come to assume that this must be normal, and that perhaps these ideas of Mustachian living have just become universal out there in American life. Job well done MMM, time to hang up the keyboard and retire!

Until last weekend, when I took a short trip out to San Francisco and plunged deep into the astonishing reality of life outside of this bubble. And I realized that wow, we still have so much work to do. And there is so much that both sides – the Ultraconsumers and the Mustachians – can learn about human nature by studying the differences in our lifestyles.

The city of San Francisco is often called “The City” by locals, but it’s really part of a megalopolis  known as “The Bay Area”. Both of these nicknames are somewhat telling because they imply that there is only ONE bay and ONE city on the planet, and thus those embody the social and spending norms to which we should all comply.

To outsiders like the rest of us, The Bay Area is a bizarre and wild human science laboratory, in which our most beautiful and most ridiculous traits are simultaneously revealed. Artificial boundaries aside, in reality it’s all one teeming urban area which sprawls across ten thousand square miles and houses eight million people in an incredibly wide range of conditions. 

The median house price is about $1.5 million, but that figure masks even more amazing differences because it includes “bad” neighborhoods where you can get in as low as $750k as long as you don’t mind a long commute and/or trash-strewn streets and keeping your house locked behind a steel gate at all times. And nicer ones with where the prices start around $3M. 

Locals have become accustomed to $6.00 gasoline over the past year, $7.00 slices of pizza at a grungy restaurant if you shop around, and similarly surprising prices on most other services. One new homeowner lamented the $90-per-hour rate that his housekeeping company was now charging him to clean the house, and I enjoyed the opportunity to pick up a brunch tab for three ($148 including tip) on a nice sunny patio at a modest restaurant. A young single professional in the finance industry asked me whether he should downsize to just one seven-passenger Mercedes SUV to escape the second $1200 per month car payment from his monthly expenses (and free up a $200 parking space to boot).

With stories like these, it’s easy for the average person to just fall in line and repeat the standard Bay Area lament:

 “This is just a high cost of living area so it’s impossible to get ahead”

But as my visit progressed and I looked in with my usual outsider’s perspective, I couldn’t help but notice an awful lot of holes in this argument.

Just as I do at home, I spent the majority of my leisure time with good friends, exploring beautiful parks and neighborhoods on foot.  Sometimes we walked just to get to our appointments and meetings, arriving to hear stories about how bad the car traffic was or how late and expensive the Uber ride had been for the other attendees. Interesting.

Other times we hiked purposefully along cliffs and ocean shores. These days of fresh air and tens of thousands of steps left us feeling lean and healthy, with endless happy memories, enormous appetites and legs of sculpted steel. And yet they somehow cost absolutely nothing. And then we’d run into somebody who mentioned how hard it was to find time to get in shape, or how impractical it was to walk or ride a bike in a city with such steep hills. Curious.

We shopped in local grocery stores and I checked in on Costco prices in the area, and I noticed that despite the high cost of almost everything else, actual food was only a few percent more expensive than it is in the affordable middle of the country where I live. Strange.

On top of this, Northern California  happens to be blessed with a climate where the leaves and flowers bloom year-round (often hanging low with free fruits and vegetables), you rarely need heating or air conditioning for your home, and bike transportation is easy year-round because you’ll never encounter conditions more challenging than a bit of mildly cool rain or mist. 

Where I grew up in Canada, people would cry tears of joy if they woke up in January to discover the streets were free from snow and shimmering with actual liquid water. We would don our swimsuits and spend the day dancing in the streets in a spontaneous block party.

But in California, everybody** dodges even the slightest weather, drives cars even though they are the slowest and most expensive way to get around, eats most of their meals at restaurants, considers a $150 bottle of wine to be a reasonable indulgence on a Friday, lives far away from work and signs up for activities that are far away from home. Which means that despite the area’s nation-leading salaries, the average person is no further ahead than the rest of us.

On the grander scale, the California government is a supersized example of its spendy populace: they just keep building more titanic roads and cathedral-like networks of overlapping arched bridges and ocean-sized parking lots. All to subsidize and disguise the preposterous use of the massive, stupid, personal racing lounges that people call “cars”, which they think they need because they haven’t stopped to consider how ridiculous the whole situation is. The cars and roads ruin the vast majority of their beautiful land, turning everything into a screaming, crashing, toxic din of expensive and purely unnecessary bullshit. 

Of course, all that driving causes thousands of violent deaths due to crashes, and requires hundreds of thousands of police officers, ambulances, and fire trucks to patrol. The sedentary lifestyle and the body destroying nature of sitting down in a car for several hours per day causes millions of early deaths due to heart disease and diabetes and related conditions, which requires hundreds of additional hospitals and thousands of doctors and surgeons to mop up the carnage. And they pay for it all with some of the nation’s highest tax rates. 

Then the people blow the rest of their income on buying even more expensive cars and gasoline to race around on the unnecessary trillion-dollar road network.

So yeah, that’s the California effect. But lest you think I’m beating up unfairly on the people of this fine state, it’s really just a magnified version of the Everywhere Effect. It is an astonishing wasted opportunity for the growing billions of people who are trapped in and perpetuating the illogical and self-defeating systems of our modern rich world. 

But if you think of it from the opposite perspective, it is simultaneously the biggest life opportunity in human history: the understanding that all of us live in a bubble which we incorrectly perceive as “normal”.

Mr. Money Mustache lives on a quiet street where millionaire early retirees still prefer old cars and do our own housework, and we think that is normal.

San Francisco professionals live in a place where 25-year-old tech workers enjoy $200,000 starting salaries, yet still have credit card debt and car loans, and they think that is normal.

In a recent podcast episode, the researcher Lex Fridman described his experience interviewing Ukrainian people in the occupied war zones of that country, asking them if they felt it was safe where they lived. They generally said it was, despite frequent bombings and the occasional deaths of friends and family members. They have already started feeling that even war is normal.

From TV addicts who binge watch for five hours per day, to ultra endurance athletes like Tony Riddel who sometimes runs two marathons per day for nine consecutive days (mostly in bare feet), to alcoholics who can consume 30 beers before lunch time, to video gamers and bluegrass banjo players and olympic gymnasts with unimaginably fast neural circuitry and muscular control, it’s all the same thing: when a human brain experiences a stimulus, it quickly rewires and adapts and starts to think:

“This is normal.“

The ultimate lesson, then, is to remind yourself that no, your current life is not normal.

It’s super weird and super specific, and you can completely change the damned thing in as many ways as you like and you absolutely will adapt and be able to handle it.

The cool part about this is, it means if you put the right things into your life (health, fitness, sensible spending, learning, socializing, and helping people), you’ll get used to those just as quickly as everyone else adapts to screen time and sodas and car loans.

Your Assignment:

Write a list of everything in your life that is expensive, bad for your physical or mental health, or both.

Consider how normal these things feel to you, but then imagine a totally different person, who is happy and successful self-actualized, who does not have or need these things in their life. Interesting. How do they do it?

Start noticing your own bubble, and study the California Effect in your own lifestyle. Where do you see ridiculousness masquerading as normalcy? How can you extract the best of life in your area, while shedding the unnecessary downsides? 

How can you create an entirely new bubble of normal, that serves you better?

That simple mindset is the underlying backbone of not just Financial Independence, but the best possible life all around.

Super Special Note:
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 * congrats Amberly and John! Their CNBC story is available here – I recommend the written version as it has more accurate details than the video.

** Everybody. It seems this word has triggered a few sensitive souls who don’t fit into this generalization, my apologies for that. Definitely not literally everyone, just the vast majority of them – as with all American cities. San Francisco is actually among the top cities where people walk to work (ten percent), but California as a whole had only about a 3.9% walk+bike to work rate according to this 2016 article on Streetsblog. While my word choice here obviously backfired a bit, it was supposed to be a deliberate attempt to play up the idea of the whole “normalizing” trend. Most people see their peers driving cars to work, or even to the grocery store with a painfully crowded parking lot less than one mile away, and they adopt that behavior without evaluating whether or not there is a more effective option. When in reality, for at least 90% of potential car trips, there is.

In the Comments: What changes do you struggle with? Things you know would be good for you but seem “too hard”. Are they things that would be outside of the social norm for your area and peer group?