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how to divvy up your paycheck


using info from the bureau of labor statistics, kiplinger developed this guide to help us get the most out of our income.

how does it compare to your monthly spending/saving?  share your budget (actual or ideal) in the comments.


the minimum wage machine



as explained by its creator blake fall-conroy:

The minimum wage machine allows anybody to work for minimum wage. Turning the crank will yield one penny every 4.97 seconds, for $7.25 an hour (NY state minimum wage). If the participant stops turning the crank, they stop receiving money. The machine’s mechanism and electronics are powered by the hand crank, and pennies are stored in a plexiglass box.

this is a cool representation of how little the minimum wage really is.  even though the money is easy to make, i’d imagine people would stop pretty fast since you’re not making enough to really make your time & effort worthwhile.  on top of that, the work itself, which isn’t stimulating and doesn’t add anything to the world, isn’t worth your time and talents either.

does your current job remind you of this machine in any way?  if so, will you just keep “turning the crank” or will you make a change?

related: how to create your reason | what will you create to make the world awesome? | top 5 career regrets | how to find work that you love| are you multi-talented but under-challenged?how to live “meaningfully well”

how much do you know about bitcoin?  i first heard about the digital currency around 2009 when it was just starting up.  in the years since, it’s grown to the point where today 1 bitcoin is worth over 150 us dollars (also, fellow wordpress users might’ve noticed that you can now pay for site upgrades with it).  to get a better grip on what bitcoin is all about, check out duncan elms‘ cool informational video on it (some of the info is a little dated so supplement it with the bitcoin website, its wiki page, & your favorite news sites).

do you have any experience with acquiring/using bitcoin?  if so, share in the comments.  for those who haven’t used it before, would you consider investing in it in the future?

bitcoin explained


how to get filthy rich in rising asia



i know the saying. don’t judge a book by its cover. got it. still, it’s okay to be enamored by a book’s poster, right? the one above hooked me when i saw it on thesmithian. the title is interesting enough but each listed step made the story behind it even more intriguing (particularly loved the poetry in #9 & #10). after getting my hands on some of the novel, i quickly saw that my infatuation wasn’t misplaced.

read an excerpt from the book below (via the new yorker) and let me know what you think. you can also check out this interview with mr. hamid & pre-order the novel here:

One cold, dewy morning, you are huddled, shivering, on the packed earth under your mother’s cot. Your anguish is the anguish of a boy whose chocolate has been thrown away, whose remote controls are out of batteries, whose scooter is busted, whose new sneakers have been stolen. This is all the more remarkable since, wealth-obsessed though you will come to be, you’ve never in your life seen any of these things.

The whites of your eyes are yellow, a consequence of spiking bilirubin levels in your blood. The virus afflicting you is called hepatitis E. Its typical mode of transmission is fecal-oral. Yum. It kills only about one in fifty, so you’re likely to recover. But right now you feel like you’re going to die.

Your mother has encountered this condition many times, or conditions like it, anyway. So maybe she doesn’t think you’re going to die. Then again, maybe she fears it. Everyone is going to die, and, when a mother sees in a third-born child like you pain that makes you whimper under her cot, maybe she feels your death push forward a few decades, take off its dark, dusty head scarf, and settle with open-haired familiarity and a lascivious smile into this, the single mud-walled room she shares with all her surviving offspring.

What she says is “Don’t leave us here.”

She is addressing your father, who has heard this request before. That does not make him completely unsusceptible to it, however. He is a man of voracious sexual appetite, and he often thinks, while he is away, of your mother’s heavy breasts and ample thighs, and he still longs to thrust himself inside her nightly rather than on his three or four visits per year. He also enjoys her unusually rude sense of humor, and sometimes her companionship as well. And although he is not given to displays of affection toward his young, he would like to watch you and your siblings grow. His own father derived considerable pleasure from the daily progress of crops in the fields, and in this, at least insofar as agriculture is analogous to the development of children, the two men are similar.

He says, “I can’t afford to bring you to the city.”

“We could stay with you in the quarters.”

“I share my room with the driver. He’s a masturbating, chain-smoking, flatulent sisterfucker. There are no families in the quarters.”

“You earn ten thousand now. You’re not a poor man.”

“In the city, ten thousand makes you a poor man.”

He gets up and walks outside. Your eyes follow him, his leather sandals unslung at the rear, their straps flapping free, his chapped heels callused, crustacean-like. He steps into the open-air courtyard situated at the center of your extended family’s compound. He is unlikely to linger there in contemplation of the single, shade-giving tree, comforting in summer, but now, in spring, still tough and scraggly. Possibly he exits the compound and makes his way to the ridge behind which he prefers to defecate, squatting low and squeezing forcefully to expel the contents of his colon. Possibly he is alone, or possibly he is not.

Beside the ridge is a gully as deep as a man is tall, and at the bottom of that gully is a slender trickle of water. In this season the two things are incongruous, a skeletal figure wearing the tunic of an obese pastry chef. Only briefly, during the monsoon, does the gully fill to anything near capacity, and even that is an occurrence less regular now than in the past, dependent on increasingly fickle atmospheric currents.

The people of your village relieve themselves downstream of where they wash their clothes, a place, in turn, downstream of where they drink. Farther upstream, the village before yours does the same. Farther still, where the water emerges from the hills as a sometimes gushing brook, it is partly employed in the industrial processes of an old, rusting, and subscale textile plant, and partly used as drainage for the foul-smelling gray effluent that results.

Your father is a cook, but, despite being reasonably good at his job, he is not a man obsessed with the freshness or quality of his ingredients. Cooking for him is a craft of spice and oil. His food burns the tongue and clogs the arteries. When he looks around him in the countryside, he does not see prickly leaves and hairy little berries for an effervescent salad, tan stalks of wheat for a heavenly balloon of stone-ground, stovetop-baked flatbread. He sees, instead, units of backbreaking toil. He sees hours and days and weeks and years. He sees the labor by which a farmer exchanges his allocation of time in this world for an allocation of time in this world. Here, in the heady bouquet of nature’s pantry, your father sniffs mortality.

Most of the men of the village who now work in the city return for the wheat harvest. But it is still too early in the year for that. Your father is here on leave. Nonetheless, he likely accompanies his brothers to spend his morning cutting grass and clover for fodder. He will squat, again, but this time sickle in hand, and his movements of gather-cut-release-waddle will be repeated over and over and over as the sun retraces its own incremental path in the sky.

Beside him, a single dirt road passes through the fields. Should the landlord or his sons drive by in their S.U.V., your father and his brothers will bring their hands to their foreheads, bend low, and avert their eyes. Meeting the gaze of a landlord has been a risky business in these parts for centuries, perhaps since the beginning of history. Recently, some men have begun to do it. But they have beards and earn their keep in the seminaries. They walk tall, with chests out. Your father is not one of them. In fact, he dislikes them almost as much as he does the landlords, and for the same reasons. They strike him as domineering and lazy.

Lying on your side with one ear on the packed earth, from your worm’s-height perspective you watch your mother follow your father into the courtyard. She feeds the water buffalo tethered there, tossing fodder that was cut yesterday and mixed with straw into a wooden trough, and milks the animal as it eats, jets of liquid smacking into her tin pail. When she is done, the children of the compound, your siblings and cousins, lead the buffalo, its calf, and the goats out to forage. You hear the swishing of the peeled branches the children hold, and then they are gone.

Your aunts leave the compound next, bearing clay pots on their heads for water and carrying clothes and soap for cleaning. These are social tasks. Your mother’s responsibility is solitary. This is not a coincidence. She squats as your father is likely squatting, a handleless broom in her hand instead of a sickle, her sweep-sweep-waddle approximating his movements. Squatting is energy-efficient and better for the back. But, after hours and days and weeks and years, its mild discomfort echoes in the mind like muffled screams from a subterranean torture chamber. The pain can be borne endlessly, provided it is never acknowledged.

Your mother cleans the courtyard under the gaze of her mother-in-law. The old woman sits in shadow, the edge of her shawl held in her mouth to conceal not her attributes of temptation but, rather, her lack of teeth, and looks on in unquenchable disapproval. Your mother is regarded in the compound as vain and arrogant and headstrong, and these accusations have bite, for they are all true. Your grandmother tells your mother she has missed a spot. Because she is toothless and holds the cloth between her lips, when she speaks it sounds like she is spitting.

Your mother and grandmother play a waiting game. The older woman waits for the younger woman to age; the younger woman waits for the older woman to die. It is a game both will inevitably win. In the meantime, your grandmother flaunts her authority whenever she can, and your mother flaunts her physical strength. The other women of the compound would be frightened of your mother were it not for the reassuring existence of the men. In an all-female society your mother would likely rise to be queen, a bloody staff in her hand and crushed skulls beneath her feet. Here the best she has been able to manage is, for the most part, to be spared severe provocation. Even this, cut off as she is from her own village, is no small victory.

Unsaid between your mother and your father is that on ten thousand a month he could, just barely, afford to bring her and his children to the city. It would be tight but not impossible. At the moment he is able to send most of his salary back to the village, where it is split between your mother and the rest of the clan. If she and you children were to move in with him, the flow of his money to this place would slow to a trickle, swelling like the water in the gully only in the two festival months when he could perhaps expect a bonus.

You watch your mother slice up a lengthy white radish and boil it over an open fire. The sun has banished the dew and, unwell as you are, you no longer feel cold. You feel weak, though, and with the pain in your gut it is as if a parasite were eating you alive from within. So you do not resist as your mother lifts your head off the earth and ladles her elixir into your mouth. It smells like a burp, like the gases from a man’s belly. It makes your gorge rise. But you have nothing inside that you can vomit, and you swallow it without incident.

As you lie motionless afterward, a jaundiced village boy, radish juice dribbling from the corner of your lips and forming a small patch of mud on the ground, it must seem that getting filthy rich is beyond your reach. But have faith. You are not as powerless as you appear. Your moment is about to come.


from $0 to retirement in 9 years


I have been asked many times to provide some more gritty details on how I became Mr. Money Mustache at such an early age. Commenters and email writers have asked me to provide salaries and savings amounts through the years, as well as describe any windfalls or unusual maneuvers that made it all possible.

I have hesitated to share the details until this point, mostly because I didn’t keep a written record through the years and it seemed pretty complicated and imprecise in my mind. Also, it’s embarrassing to walk around in your monetary underwear in front of thousands of people. But many financial bloggers have graphs of their net worth right on the front page, so the least Mr. M. can do is provide a vague summary of some ancient history.

And for my own benefit, it is worth sorting things out just for the record, so doubters can be convinced, voyeurs can be entertained, and aspiring Mustachians can compare their own progress. So here it is, my best effort at retelling the story.

Year 0 (1997): The full-time working career begins. Mr. Money Mustache has just finished a grueling computer engineering degree and is now ready to party. He gets right to work in early May, skipping even the university graduation ceremony because he doesn’t want to miss any work (he had already moved to a new city 300 miles away from the university). Age: 23. Starting salary: $41,000. Student loans: zero — due to low spending, about $10k of help from parents, and good high school and summer jobs.

But also absolutely ZERO net worth. No bank balances, never owned a car, just a bike, a backpack, and a diploma.

Year 1: In this first year I foolishly started out by buying a three-years-new 1994 Ford Probe GT sports car for $16,000 with tax. And I borrowed money from my older sister to do it (what a clueless young man!!!). It took most of the first year to pay off that loan. I also flaunted my new salary around town with frequent bar and restaurant hopping, purchases of computer equipment and furniture, accessories for my car, and a trip to a resort in Mexico.

Fortunately, I did enroll in my employer’s retirement savings plan. I also worked like a crazy company slave, enjoying weekends and late evenings in the office. Because of this, and a rising tech market in general, I got a raise to $57,600 at some point in the first year, resulting in a Year 1 ‘stash: $5,000 (in a retirement account).

Year 2: Through both of these first two years, I lived with roommates by sharing a series of nice houses, which we called Nuthouse 1, 2 and 3. The rent averaged about $350 per month, plus some negligible share of utilities. With the unnecessarily expensive car paid off and the higher salary, I was able to save more: $5,000 into the retirement account, $3,000 into an employee stock purchase plan, and $10,000 in cash. Year 2 ‘stash: $23,000 ($13k cash/shares, $10k retirement).

Year 3: This was late 1999, and both the job and stock markets were on fire. I got a new job and moved to the United States for a salary of $77,000. I drove the ol’ Probe GT down to Boulder, Colo., and used the local newspaper to find another nice roommate situation, so my rent was only $400 a month.

I decided to buy a house — but was disappointed to learn that I would need $47,000 in cash for a down payment on a starter home, which would cost a minimum of $235,000. I cashed out the stock purchase plan shares from Year 2, which were now worth $10k, and saved up a few of my new higher paychecks. After a few months in the new job, I had the down payment. Year 3 ‘stash: 67k ($47k home equity, $10k retirement, $10k cash).

Year 4: My future wife graduated from her longer and more meandering education up in Canada and decided to join me in Boulder. She drove down in her 1993 Civic hatchback, and hunted for a job. She found one for $44,000. And I was recruited to another nearby high-tech company for the ridiculous salary of $83,000. Now things were getting crazy in the income department, although we weren’t thinking about early retirement yet. During vacations, we toured much of the U.S. including Hawaii, and took a trip to Australia and New Zealand at some point too.

I saved 20% of my salary in the 401K and got a $5k match from the company, as did the girlfriend. We both started Vanguard accounts to capture any extra cash. We also made some extra mortgage payments occasionally. Year 4 ‘stash: $150k.

Year 5: We both scored raises. I earned $100k including company bonuses, and she earned $60k. I was also working heavily on the house renovations this year. We hosted many great parties at that house, and life was grand. That year, I foolishly took a $10,000 step backward by buying a brand-new motorcycle. But the investment gains on stocks started accumulating, adding about $10k to our earnings this year. So we still ended up increasing the savings by close to $100k after tax. Year 5 ‘stash: $250k.

Year 6: Salary went up slightly because of an unexpected company bonus, and girlfriend earned a raise to $65k as well. And we didn’t buy anything silly that year. In fact, I finally wised up and sold my car, and we became a one-car couple. I didn’t miss the second car for a moment. Investment gains on the existing savings contributed another $20k. It is complicated to remember what portion of income was taxable salary, and what was nontaxable gains inside of retirement accounts and such. But a reasonable estimate of the total is Year 6 ‘stash: $365k.

Year 7: No increases in salary, but similar amazing earnings and moderate spending, combined with $30k of investment gains. Year 7 ‘stash: $490k. 

Year 8: A raise to $70k for the now-wife(!). Meanwhile, I actually switched to four-day-per-week work that year in exchange for a 20% pay cut — my first test of the waters of early retirement. But it was still a bumper year for me due to cashing out stock options, stock purchase plan, and annual bonus. My earnings must have been something crazy like $125k that year. Investment gains $40k. Year 8 ‘stash: $600k.

Year 9: I quit my job!!! And I started a small house-building company as a semi-retirement job. It earned me about $50k in the first year, and wife still worked for part of the year until the baby came, earning $60k. In addition, we moved to a new town and bought a cheaper house, renting out the first house for a very high positive cash flow due to a low mortgage and its increased value.

At this point in the accounting, we will add in the appreciation of this house — which was about $100,000 after subtracting for the cost of the materials I used to renovate it. About $50,000 of this was due to market appreciation, and 50k due to renovation appreciation. Investment gains continued at about $35k. Year 9 ‘stash: $720k.

Sometime during Year 9, we declared ourselves as “retired!” as we quit full-time work to care for the baby. The rent from the previous house was more than covering the mortgages on both houses. However, part-time work also trickled in after the first few months of baby raising. Eventually we moved one more time to our current house and had two rentals. Eventually both rentals were sold and the gains were put elsewhere. And I became even wiser and sold my motorcycle, to free up both cash and garage space for my greater love: my workshop. Year 10 ‘stash: 800k or so.

Mixed in with those later years, but left out for clarity, was this house-building business of mine. It was a firecracker of success in the first year, then a firehose of disaster in the second year. I’ll save the details for another time, but the end result is happy: I’m just stuck with one newly built house, which we rent out, that is tying up a certain percentage of our retirement savings.

Nowadays I do not build full houses and try to sell them. I closed the old company and the Mrs. and I started a cozy new two-person company that does whatever we want it to do. Custom renovations and finish work only for local, nice people on my side, and real-estate sales for local, nice people on her side. This low-stress career agrees very well with us, and keeps me from sitting on the couch typing to YOU all day.

Some people will say, “But wait! You just said you still work sometimes! That’s not retirement!” To these people, I can only say, “You’ll see.” Because when you quit your corporate job, you end up with even more energy, which means you want to do more stuff! If some of this stuff happens to earn you money, so be it.

I define us as retired, because that is a novel word to throw around for those under 50 that sounds much more interesting than “financially independent.” Also, the cash flow from investments is much higher than our spending, so work is only done for fun and on our own terms. For example, this year I stopped taking on carpentry work altogether and just started typing my blog and doing other unpaid work like school volunteering. Other years, I may accidentally earn hundreds of thousands of additional dollars by starting another company. Who knows!? Even then, Mr. Money Mustache will still be retired, so there.

Since Year 10, several more years have passed, and because the rental house pays all bills and we still do some work on the side when the boy is in school, the investment gains and income have just been building on themselves. We also paid off the mortgage on the primary house.

So, even if we refuse to let ourselves do any more enjoyable part-time work from this point onward, at some time in our lives we will either have to drastically increase our spending, or more likely, do some generous and worthwhile things with the surplus money to put it to good use.

Frugality plays a part

Isn’t that weird? That I would rather give money away completely, than spend it to hire a bunch of guys with noisy gas mowers and leaf blowers to cut my lawn for me every week so I could sit inside and watch them? Yes, folks, I point this out to show how frugality can grow on you, to the point that you’d rather live an efficient and self-sufficient life even if money were not an object.

I’m sure the questions will come about where these investment gains came from. Most of it was just plain old dollar cost averaging and dividends. And the amount saved from capital gains is still small compared with the amount saved from old-fashioned not buying things. The fundamentals of this plan mostly involved the two of us living on a shared $30k to $40k of spending money per year, including housing costs, and saving the rest. The biggest single factor producing this low living cost was probably deciding to live close to work and not commute excessively by car.

Other people will scoff at the high salaries involved, compared with the U.S. median level. I won’t deny that. More normal salaries, of course, would require some adjustment to this plan. You might decide to settle down in a house that costs less than the $400,000 that is tied up unproductively in my current house, for example. Or you might decide to work as late as 40 or even 45! But in almost any middle-income situation, retirement is something that can be earned drastically earlier than age 60-65, if you start early enough.

20 ways to spawn million dollar ideas

05/10/11 3 Comments

just 8 years after its initial launch, skype was sold today to microsoft for $8.5 billion.  the good folks at marc and angel hack life offer some good advice to help you develop your own cash cow idea:

  • Generate lots of ideas. – The more ideas you create, the more likely you are to create an idea worth a million bucks.
  • Fail a lot. – All of the ideas that don’t work are simply stepping stones on your way to the one idea that does.  Sometimes you have to fail a thousand times to succeed.  No matter how many mistakes you make or how slow you progress, you are still way ahead of everyone who isn’t trying.
  • Consume information consciously. – Some of my friends think it’s wasteful that I spend so much time reading books and blogs.  It’s not.  It’s what gives me an edge.  I feel engulfed with new ideas and information.  And I’ve actually used what I’ve learned to launch a few successful websites.  When you read things and interact with people, take off your consumer cap and put on your creator cap.  There are million dollar ideas (or at least some really good ideas) all around you waiting for discovery.
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