From Zero to Wealthy in Two Years – With AirBnb?

Zeona M. enjoys a recent day at the office.

By this point you probably know all you ever wanted to know, and more, about Mr. Money Mustache’s long-ago path to early retirement. But my story is only one of an infinite number of possibilities, which means it is valuable to look around at how other people are doing it.

Because of that, I’ve been sharing more reader success stories recently, and I’ve been particularly excited to share this one for quite a while because it comes from a completely different direction.

I first met Zeona McIntyre just over two years ago, on a warm early summer day in Boulder. Without my knowledge she had created a Facebook group called Boulder Mustachians and already amassed a substantial collection of fun people before I even got word of it. We coordinated to hold a gathering in a beautiful riverside park downtown.

Late that night, after the main party and a smaller afterparty at a pub with a group of diehard survivors, the two of us were walking and talking the two miles across town to get Zeona back to her apartment, and me to the main road so I could bike back to Longmont. And she mentioned something vague and slightly mysterious about how much her life had changed, due to a new rental real estate business. I didn’t understand the details in full, but it sounded significant.

Fast forwarding to the almost-present, I encountered Zeona again. This time she was leading a session on real estate investing at the Camp Mustache Florida event in January*. By this point, she had the relaxed demeanor of an old pro. She owned at least four extremely profitable properties, bought at low prices and bringing in high rent due to the magic of AirBnb. She had more income and opportunities than she had time to think about. By my definition, she was already just about to hit semi-retirement at age 29, which means she had done it both younger and faster than I had.

Note: I have enjoyed AirBnb for years, replacing bland, expensive hotels with more interesting local flavor for both personal and business travel. But I only recently learned from Zeona that they give out substantial travel credits to both traveler and friend via their referral program. So here’s my link for $40 off of your first AirBnb stay.

Since Zeona’s story combines a bunch of hard work, sound business principles, relatively fearless thinking and involved some techniques that had never even occurred to me before, I thought would we could all get some benefit of having a little conversation with her. So let’s see what she has to say:

An Interview With the AirBnb Entrepreneur

MMM: Let’s start with a leading question on the basics first: your Mustachianism story. What was your financial and work life before you encountered this blog, what led you to it, and what changes did you make first?

ZM: My mother got me interested in personal finance right around the time I headed to college. I remember being home on school breaks, watching The Suze Orman show with her and renting books like “Rich Dad, Poor Dad”, from the library. Although I had already begun to amass significant financial aid debt, I already had the concepts of snowball payments and index fund investing, ingrained in me early on.

Sometime around 2012 after stumbling across your blog a few times, I became convinced and converted to hardcore Mustachianism at the ripe ole’ age of 26. I didn’t know how I was going to retire by 30, but I held the vision fiercely.

At the time, I was in massage school, working at a dispensary for $12 per hour, with something like 50K+ of student debt left in a Parent Loan. So I started to bike everywhere, trained my friends to cook meals with me instead of going out to eat, started a massage practice in my living room, lived with my mom for a bit, and put every extra cent towards debt paydown.

MMM: At some point you veered off the standard “work hard, save, invest” path and took a bigger jump into hosting a short-term rental as a source of income. Where did you get that idea?

ZM: My best friend from high school was living the high life in New York City with a stressful career and an expensive apartment, then suddenly found himself laid off. At a friend’s suggestion, he decided to try renting it out on AirBnb while he went off to travel for a while before starting again. His little vacation turned into a year living in Spain and South Africa and by the end of it, he told me that he made $50,000 off renting his apartment!

I decided I had to try something similar for myself.

MMM: What did your own AirBnB financial stuff look like initially? And from that point, how long did you let it ride and what did it feel like?

First, a disclaimer: I stumbled into Airbnb during the earlier days of the platform and with no knowledge of the rules. These days, things with AirBnb are much more formal. So some of this stuff (renting out rooms from within a rented apartment) is a gray area.

I began my Airbnb journey in August 2012. My mother decided to move back to Hawaii, so I got a two bedroom apartment and a roommate who could help with rent. I furnished it with all the stuff my mom and I had, knowing that I could sublease it for more to a roommate if it was furnished and because I was curious about trying out Airbnb.

My new roomie was only around part-time, which allowed me to test the Airbnb waters a bit while she was living there (I gave her a cut) and then see if I wanted to get another roommate after she left. I never did.

I started by renting my room, renting hers when she was away, and renting both when she moved out. I would stay in whatever room wasn’t rented, stay with friends, basically whatever I had to do to make it work. I also did all the cleaning myself.

The rooms rented between $45-90/night each including the cleaning fee, and my portion of rent was only $575 so it covered it rather quickly. At the time, I had begun a massage practice by donation, out of my living room, which covered food/gas/bills and Airbnb covered my rent/utilities.

Luckily, I knew how to live frugally; I’m a bit shocked looking back at how little my earnings were to start and proud that I figured out a way to live job-free. I remember feeling so rich with freedom during that time in my life.

In September, after just a month of sampling AirBnb entrepreneurship, I knew I wanted to expand. So I took on a lease on a second apartment, furnished it in a weekend and I was off to the races. That place  was basically training wheels. I made a ton of mistakes and only made a couple hundred a month after expenses. And in December, a neighbor alerted the landlord to what turned out to be a violation of the lease policy, and he asked me to leave.

Although the apartment was relatively painless to dismantle and I got my entire deposit back, I was really shaken up from the experience and thought I might be done with the whole Airbnb experiment. Luckily, my father insisted that I pick myself up and try again, so I did.

My next place was a one bedroom condo that I was renting for $1025/mo, and this experience was much better. I averaged $500-1500/mo. profit from this location, while continuing to rent out rooms in my own home, going to school, doing all the turnover cleans, and doing some massages on the side. Although it sounds busy, it was really fun and flexible. Every day was different, and I only worked a couple of hours a day.

MMM: What was the next step in the expansion? What tricks did you learn and use to make it successful?

ZM: My experiences taught me that there was more profit to be made renting a home as a whole unit, instead of renting single rooms. At the same time, I found myself traveling more often, which forced me to seek out a cleaner that could cover me when I was away.

Looking back, this was a huge and somewhat obvious move towards expansion, and yet it took me awhile to realize. I was very focused on being a “true” mustachian: not hiring out if it was something I could do myself**. Although there is merit to this way of thinking, if you are attempting to scale up, at some point you have to let go and delegate.

I also tested a new vacation rentals software company that responded to guest inquiries/emails/questions if I was out of range for too long. This was the beginning of the automation that presently rules my business, and that same company is the one that I circled back to years later when I pushed to 5+ properties.

Although I mention specific settings that can be used to optimize your Airbnb listing on my blog, I don’t know if there are many “tricks” and I want to be clear in saying that I think it is a very accessible profession for anyone who might have an interest in hosting and hospitality. Thinking of it as a hospitality business rather than a turn-key real estate investment was a significant perspective shift I learned along the way. It is important to consider what sort of experience you are creating for the guest and how you can continually work towards improving that.

MMM: Did you notice any significant change in your life, once you realized how different a semi-passive income like property rentals can be, when compared to a purely active income like a massage practice?

ZM: Yes. In the Fall of 2012, just a few months after I started dabbling with Airbnb, my mother was diagnosed with stage 4 breast cancer. I was pulled away by my mother’s illness and started taking multi-month leaves of absence to support her. Near the end of 2014, I knew I could no longer be away from home so I brought her back to Colorado to live with me.  The grief of losing my mother and one of the closest people in my life forced me into a sort of the “early retirement”. This is when Airbnb saved me, because the rentals were still working for me when I could not work myself.

MMM: That’s a sad story, but I remember feeling the same way when my Dad was on his way out last winter. It would have been much harder to make those international trips on short notice, and to deal with the sad times, if I also had to maintain a chipper and productive face, managing a team of software engineers back at the cube farm.

So anyway, as with any type of success, it takes a certain type of personality and skillset to build a successful business of this type. What general skills, traits, and unusual passions do you think you ended up having, which in retrospect are making this thing succeed.

1. Flexibility, I would say is the number one skill that really made this work. For years, any booking took priority over my plans. If someone was willing to pay for my house, I was out. I would either move over to my other apartment (I lived between two condos for 3+years) or stay with a friend. It sounds easy enough but it was ungrounding and quite exhausting.

2. Organization – Scheduling multiple cleans and juggling bookings from multiple sites, gave me a crash course in building systems. My former weirdo obsession with spreadsheets helped me keep track of all my earnings / expenses.

3. Optimization – I was careful not to waste time, resources, supplies, etc.

4. Negotiation skills – Everything is life is negotiable: rent, airbnb rates, cleaner fees, etc. I did my best to maximize earnings.

5. Communication skills – As a manager I really need to listen and keep a cool head. I am frequently responsible for sorting out the needs of guests, property owners, cleaners, you name it. I lean on the side of over-communicating, as I need to check in with everyone to make sure we are on the same page.

6. Believing / Visualizing – I have a uniquely limitless outlook on life. I like to believe that anything I put my mind to is possible and I feel challenged rather than discouraged when someone tries to doubt me or project their limitations on me.

7. Being a Risk-Taker – For as long as I can remember, I have had a large appetite for risk. The way I see it is that I am really thorough in doing my research and after checking out all the possible outcomes, things that look risky from the outside feel like a safe bet.

MMM: What’s the current state of your operation?

ZM: I now own four properties in St. Louis Missouri – single family houses purchased for an average of under $70,000 each. Plus an apartment in Boulder bought long ago for $162,000. On top of this, I manage another 10-20 properties for other property owners for a fee (a practice called co-hosting).

To handle it all, I have hired a team of several people: an assistant, receptionists, management software, cleaning teams, co-hosts working under me, etc. My goal is to take myself completely out of the picture.

After just a year of co-hosting other properties, my business went from $4,000-$6,000/mo. gross, to today, my biggest month to date: a whopping $18,000 (likely $13,000/net). I work about 8-10 hours a week now and I’m excited to ramp down.

Although I have built my business to a place of near automation, I am still called on sometimes and I have a few jobs left to outsource. I am happy to no longer be pulling the 40+ hour work weeks that I did for a few months during the build and I see Early Retirement coaxing me over to her spacious arms again.

MMM: So what’s the future? Have you given up other sources of income? Faced an existential dilemma of what to do with your life if there is no point earning additional income?

I find that as the “earning and spending money” side of life becomes solved, it opens up a whole new can of worms. It can be a very joyful way to live, but you have to be careful because it also gives you the option of sitting around doing nothing, which is not joyful at all. Seen any pitfalls?

ZM: The future is getting myself as close to full retirement as feasible, ASAP. I am still the big boss so I expect an occasional problem to come across my desk, and yet, I feel the key to happiness for myself is having the lowest amount of stress and responsibility on my plate as possible.

Last November, I finally gave up my massage practice in totality. It was strangely difficult to do. I was only making a couple hundred dollars a month and yet, it felt like some sort of safety net. Now, I am experiencing that same fear in letting go of taking on new clients myself (I defer them to my team for a smaller percentage) and running this Airbnb business directly. Although I have hit my “enough” number with my investments, transitions can be scary to make.

At the moment, I am looking forward to more space and time with myself. The two years that I spent essentially retired, gave me great practice at keeping myself entertained. I quickly realized that I had to find another way to derive meaning from my life than working or productivity. I was fortunate enough to find that being there for the people in my life gave me that.

I now travel nearly five months out of the year, have a good social circle and a lot of interests to keep me delighted for years to come. And the worst case scenario? I can always create some new business to tinker with down the road.

Looking forward, I see finding a compatible partner and creating a family as my next challenge to embark on, as well as developing creative pursuits. I really love writing. I would like more time to dedicate to my blog and am toying around with the idea of writing a book at my own leisurely pace. I am also quite terrified of public speaking, so the idea of doing a TEDx talk, sounds like a healthy way to confront that.

(note: you can find Zeona’s personal/business blog at

MMM: One of the unusual things about you is the number of interesting trips you take. Can you tell us about some of the most interesting ones, and how this plays into the house-sitting and informal sharing economies?

ZM: I just got back from a birthday month away. I dog sat in St. Thomas, Virgin Islands for 2.5 weeks, had a layover in NYC with some friends, sailed for a week in Greece, then caught up with a friend who just moved to Portugal and did a road trip in her Sprinter van from Lisbon to Porto.

I bought the flights with miles, stayed for free everywhere except on the boat, which I got on a half price, last minute tip; all while renting out my homes and car to support my eating out habits.

I guess you could say I am a poster child for the share economy. When I’m out in the world, I rent my car on turo and my homes on airbnb. I travel hack to cover the flights. Promote Airbnb for travel credits. I’m a huge fan of house/pet sitting which still seems to be underground and I use that method to stay in awesome homes for free (and sometimes even get paid) all over the world.

MMM: Thinking about the bigger picture, what is your own definition of a life well lived, and what (if anything) do you think people in your peer group might be overlooking, if they don’t happen to encounter the right teachers early in life?

ZM: I’m all about quality of life. I believe a life well lived is one with lots of love and laughter. People to hug, share delicious food with, and have adventures with. I believe creativity is born out of free time, which Americans especially are deficient in. I think it’s important to spend a lot of time in nature and with the unique opportunity of discovering yourself. The real work is within. I find that people especially my age, are so distracted with things outside of themselves / needing to prove something.

The biggest set back I see around me is limiting beliefs. I see a lot of people telling themselves old stories that keep them stuck in patterns that aren’t serving them. I really enjoy sharing my experiences to show others what is possible. I think the biggest compliment I can ever receive is that I inspired someone, if I’ve done that for even one person, my job is complete. Nothing I’ve done in my career is out of reach to the average person, you’ve just got to believe.

MMM: Thanks for sharing your life with us Zeona!


*Yes, you may be noticing a one-dimensional theme to my social life these days, but hey, it’s hard to beat Mustachians if you’re looking for interesting people to hang out with.

**For the record, Zeona was actually being totally Mustachian here – hiring employees to expand a profitable business. My policy is that you’re not allowed to hire people just to facilitate your own convenience and consumption at home, because you could probably benefit from the extra exercise and learning – along with the extra money.

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Electric Car vs. Winter

Just a few days ago, I got a surprise in the mail. It was a very expensive registration renewal bill* from Boulder County, reminding me that my brand-new 2016 Nissan Leaf was already a whole year old.

The car has now been through the full cycle of Colorado’s interesting driving conditions including blazing sunshine, blowing blizzards, rough roads and high mountain passes. More importantly, it has carried large loads of heavy people and one hatchback-busting load of cargo after another as I used it for endless construction projects as well as shuttling around visitors and even a few paying passengers as part of a related Uber-driving experiment.

Since I bought the car primarily so I could tell you about the experience**, this one year anniversary presents the perfect opportunity.

Electric cars have been getting better and cheaper very quickly. Even a year ago, they were competitive with gas cars (especially after applying the various tax credits available here in the US). And as of late 2017, Nissan has just announced a thoroughly updated 2018 Leaf with longer range, new styling, and even semi-autonomous highway cruising, at the same list price.

Halfway through my time writing this article, General Motors announced that it is totally giving up the gasoline engine and switching to a 100% electric fleet in the foreseeable future.

Changes like these will get even more people asking questions, and it will surely trigger even bigger discounts on the 2017 and earlier models of electric cars. In certain areas, you can get a brand-new 2017 Leaf for well under $14,000 and a 2013 from Craigslist for under $8k.

So let’s get into the report. All year, people have been asking what the electric car experience has been like.

  • Is the car reliable? Any unexpected hiccups?
  • How has the range and performance been in various use scenarios?
  • How good does an electric car like the Nissan Leaf handle in the snow?

Life with a Leaf

If you just want the overall summary, the car has been Excellent. Although I did my best to maximize the mileage we accrued on this car over the year, the total still only added up to 3500 miles (5600 km). But what a blissful 3500 miles those were. The car served us generously, requiring nothing in return beyond refilling the windshield washer fluid once.

 It is hard to believe the night and day difference between gasoline cars and electric ones, in terms of sheer driving pleasure and convenience. The difference is so stark, that I now feel utter disbelief that any car company is still making gas-powered cars, and that anyone is buying them for anything other than long roadtrips (and for those, why not just rent a car?) Even the most luxurious gas cars, of which I’ve driven a few, are complete dinosaurs in comparison to an entry-level electric car like Nissan Leaf.

Now, this is definitely my Wussypants Consumer side speaking, displaying signs of Tiny Details Exaggeration Syndrome. Even the cheapest 30-year-old gas car offers incredible speed, comfortable seats and an environmentally controlled seating area. So what’s the point of scaling that ladder of luxury even further?

The short answer is “Car Culture” : the only real purpose of a car is convenience and comfort – people buy them because they can’t or don’t want to do the work of pedaling a bike, and to carry their little kids in safety, and to stay out of the weather. So if you’re going to buy a car, you are presumably looking for those things, which electric cars deliver in exceptional quantity.

The Leaf is Swift. Tight. Precise. It drives like a very sporty car and jumps ahead when you touch the accelerator as if it weighs nothing at all. But it’s also hushed, refined, and serene inside. As you accelerate and leave all the gas cars far behind in your wake of clean swirling air, you hear just a distant whirring turbine sound as the electric motor picks up speed. On the open road even at the vehicle’s RPM-limited top speed of 93 MPH, the ride is quiet and controlled.

The Leaf is also big. It’s relatively long and tall, which makes it roomy inside. I think of it as more of a crossover SUV, with its cabin big enough for five six-foot-tall men, and a hatchback big enough to hold two more of us. If you fold down all the seats, that same area is long enough to close the door on two bikes or numerous ten-foot plumbing pipes. The 17″ wheels are bigger than those on my enormous Honda van, which gives it great rough terrain and snow abilities (a larger wheel diameter improves both traction and obstacle traversal.)

The Stash-inlaws (in Ottawa, Canada) also bought a Leaf after experiencing ours. Their Leaf easily navigates the rough dirt trail to their cottage in Quebec, carrying five people and their gear.

And it’s cheap to operate. Three dollars of electricity fills up my battery, which is good for about 110 miles of mixed driving, or closer to 90 when blazing along at 75MPH on the highway. Charging time (and finding charging stations) is rarely a concern, since  the car is always waiting at 100% if you just plug it in when you go to bed.

As part of my research on charging efficiency, I bought a (used) Chargepoint 240 volt charger and installed it on my house. This made home charging really fast, but the unit doesn’t get much use: as a form of treasure hunt I still find myself using the many free public stations here in Longmont, to the extent that over 50% of my fuel for the year was free.

Charging map for Longmont+Boulder and some of my recent charging activity (mostly free!). Ignore the charge times – in many cases the car reached 100% and just sat there until I picked it up. You get about 25 miles of charge per hour on public “level 2” stations, and peak rate of almost 200MPH on a Level 3.

Since the first member of my local friends bought a Leaf, the trend has spread through the community and there are now at least a dozen of the things in the area immediately around me. A friend calls the neighborhood ‘Leafmont, Colorado’. The inlaws back in Canada also bought one. People are using these cars for long daily commutes to Boulder and beyond, shuttling kids, shopping, and all the other stuff people shouldn’t really be doing with cars, but are going to regardless of what I say. They love their electric cars. The reviews are almost universally raving.

And all of this is aside from the biggest benefit, which is the hidden one that you’re not burning fossil fuels. The US power grid is down to 30% coal and getting cleaner every day, and you can personally improve that number simply by buying renewable power from your local provider as I do here in Longmont.

So, if you do need to use a car on a regular basis for around-town use, there’s really no reason not to use an electric one.

What about Winter Driving?

Luckily, if you turn off Traction Control, you can still do great Reverse Donuts in snowy parking lots.

The Leaf and other electric cars have big advantages over gas burners in this area as well.

  • The electronic traction and stability control systems work much better with an electric motor, because it can be controlled more precisely. In practice this means that while a normal car would dig itself into a rut, the Leaf applies just enough power to get through the snowbank. Or it stops the wheel, giving you a chance to reverse and give it another go.
  • There’s no cold-cranking worries or waiting for a cold engine to warm up. You press the button, the car is on, and cabin heat is instantaneous.
  • The heated seats and steering wheel make the experience even more luxurious (and reduce the need for cabin heat).
  • Remote heating with an in-dash timer or from an app on your phone means your car can be heated and defrosted (or cooled in summer) before you even reach it in your driveway. Without even consuming battery power, if you have the car plugged in.
  • Big wheel diameter, low center of gravity and 50/50 weight balance make for better handling and traction.
  • Front-wheel drive prevents fishtailing, and is every bit as safe as all-wheel drive. Adding snow tires in winter turns the Leaf into a monster snow crusher.

The Bad Stuff

No story (except perhaps one about bike commuting) could possibly be this universally positive, could it? Does Nissan have Mustache secretly on their payroll? Where’s the real meat of this story?

The only bad side of my experience has been finding that Nissan is a Big, Dumb, Old company to work with. To be fair, this is probably true for all car companies except Tesla, but when it comes to new technologies like electric cars, it helps to have someone who is on the ball.

I get the impression that somewhere, deep in the heart of Japan, there are some clever engineers who designed and built this car. Then their work was wrapped up in a thousand layers of bureaucracy and they were never allowed to talk to customers or improve their product again, until the next “product cycle”.

For example, although I spent $14,000 of my own money and a year of my time to promote their car for free, even helping MarketWatch adapt and re-run the story for free multiple times to their huge nationwide audience, possibly boosting the car’s sales quite noticeably, I couldn’t get access to a single Nissan engineer to discuss the details of the car’s battery management with me. While my local salesman is a rock star, very few other people in the company even know what a kilowatt-hour is. Perhaps they’re still riding the gasoline wave of the Nissan Armada and Titan megatrucks, which provide most of their profits.

Because of this, there are a few obvious brain-dead things about the Leaf:

  • There’s no battery temperature management. This means that in cold weather (15F), you get about 20% less range, even though you could heat the battery to room temperature with just 0.5 kWh (under 2%) of its energy. Or simply use wall power when it’s plugged in. A 20% penalty in cold climates to avoid adding a $100 heater. Why!??!
  • The phone app is horrible. I don’t mean this in the snooty way that cell phone review sites compare each year’s identical batch of high-end-phones, it really is bad. On the positive side, you can run a slightly less crappy aftermarket app called “Leaf Manager” which at least makes it usable.
  • Nissan doesn’t seem to care about its past electric car customers: The 30 kWh battery from 2016 will not fit into a 2015 Leaf, and I’m out of luck if I want to upgrade my car to any of these juicy 2018-and beyond batteries which have been improving at a rapid pace. You can upgrade to a fresh replacement of your current battery, although it’ll cost you $5500.The correct way to handle this (as Tesla does) is to make new batteries backwards-compatible whenever possible, and allow old cars to be upgraded with minimal mark-up on the battery. After all, an electric motor can run for over a million miles with zero maintenance. The rest of the car is rock-solid as well. Why not provide a path for these cars to have a healthy 30-year lifespan, getting a longer range every 10 years or so as the batteries need replacement? There’s still a chance for the company (or the aftermarket) to correct this problem, so I remain hopeful.
  • Some readers have expressed concern about the Leaf’s “driver side small overlap front crash” rating (it earns a low rating, while all other safety categories are good). I think it’s a statistically insignificant complaint, but Teslas are surely even safer. Plus, the reader correctly pointed out that if I’m going to nitpick about the phone app, I should also mention crash testing.

The shortcomings of Nissan stir up some real anger in me. But it’s probably because I like the basic car so much. Nissan’s electric car program could capture so many more loving customers, if it were just managed by a charismatic and highly technical leader, rather than a ridiculous pyramid of corporate paper pushers.

If you want a passionate, perfect car and you have unlimited money, there’s only one choice: A Tesla. The Model S right now for $80,000, or a Model 3 next year for $40k.

If you want a really good electric car and don’t want to wait for a Tesla model 3, the Chevrolet Bolt is a great car with 240 miles of range, much better software, similar rockstar acceleration and “only” $30k after the $7500 federal tax credit since they haven’t run out yet.

Chevrolet Bolt

But although it’s a better car than the Leaf, I would have a hard time justifying the extra $10,000 cost of the Bolt. The extra range makes no difference for the typical urban and suburban driving cycle. But it’s still no good for cross-country road trips because it will still only fast-charge at 50 kW, the same as a Leaf. If you can even find a fast charger out in rural Wyoming. Compare this to Teslas, which charge at 120 kW with chargers along every highway in many of the world’s rich countries.

But for non-millionaires, buying a $30,000 car is about as clever as shooting yourself in the wallet. It’s not even a remotely rational option, so flush it from your mind. The Nissan Leaf (and other electric mid-priced cars) are the best affordable option for driving, if you are still stuck in a life that requires a car.

So the Mustache family will probably be keeping the Leaf and continuing to work it hard for the coming year or more. I may add a trailer hitch and some other minor upgrades, but for the vast majority of our possible uses for a car, it’s a pretty amazing deal.

* About $530, just for registration, just for one year. They charge you extra for the first 3 years when you get a new car around here, compared to about $50 per year for my old van and previous car, a Scion xA. The hidden costs of Luxury Racing Wheelchair ownership are really big, and often overlooked.

** Although certain curmudgeons in this website’s forum don’t believe me, it’s hard to explain the shift that happens in your life when you truly don’t need a car to get around. Before the change, a car is a reassuring necessity – just as important to your life as as a bed and clothing.  After the change, you see a car for what it really is: an exorbitantly complex rolling living room. Thousands of pounds of glass and metal, with robotic arms to wipe the windows and a thousand components just for the portion to control the air temperature around you. A car is no more a reasonable form of personal transportation than a cruise ship is a vessel for weekend fishing expeditions on the lake. But, since Mr. Money Mustache represents only a very mild form of frugality, he still gets to use and review these fancy toys!


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Get Rich With: Conspicuous Consumption

MMM Note: The following is a lesson from our Canadian friend Mr. Frugal Toque, a long-time reader and contributor to this blog, and soon-to-be early retiree.

“This above all: to thine own self be true.”

– Commander Data, probably quoting some old English guy.

I can’t say for certain that we Mustachians need perfect honesty: I’d be lying to you. But if we’re to proceed with the utmost efficiency, we’re going to have to at least cut the crap out of our own lives when we look in the mirror and get down to business.

Do you drive a car? I do. Do you lie to yourself about how much the use of that car costs? I used to.

The Toque family makes an annual visit to Grandpa and Grandma Toque every summer, a family reunion of sorts to meet up with the entire Toque clan. Mrs. Toque and I would always record this journey, 600km in each direction, at a reasonable cost of about $100: billing the whole thing to ourselves as if it were simply the cost of gas.

We’ve made this journey for 18 years, every summer we’ve been married and the one before that, and sometimes more than once per year. To add to the issue, before we’d even met, I’d make that 1200 km round trip several times a year in a small sports car with at most one passenger, always billing it in my head as the price of gas.

I would lie to myself, basically. Even while train rides made themselves available, at something like $70 or so round trip, I’d take my own car because, “Hey, it’s the same price, right? Plus, I’ll have my car with me when I get there.”

Never mind that the Toque grandparents live within walking distance to everything and had extra space in their car for events farther away. No, I took my turbo-charged sports car on that long journey, never really accounting for the insurance, maintenance and depreciation it cost me.

Nowadays, having chosen the career Software Engineer over Professional Race Car Driver, I got rid of the sports beast and drive a tidy little Nissan Versa. It only burns through my cash at about 20 cents per km. Despite this savings, this past summer, we took the train on our annual sojourn.

First of all, I have to say, “Holy shit! Trains are awesome.”

If we book our train seats all at once, Mrs. Toque and I and get two comfy seats facing our two children. Then, like a particularly fast cloud, we get to drift lazily past all of the highways we’d normally find ourselves jammed up in. I calculate many tens of dollars of benefits associated with the absence of swearing at stupid drivers and worrying about getting ourselves in another highway collision requiring the procurement of a new car.

In my sports car days, my racing vehicle must have burned through at least 40 cents per km, some $500 per round trip, when a VIA train ride would have cost a tiny fraction of that for a single person. Nowadays, with four seats purchased for the entire Toque family, the cost of the equivalent train ride runs up to $360, exactly the cost of taking an average 30 cents/km car on the same trip.

But here’s the thing: the cost of the train ride is honest. Our consumption stares at us, right there when we hand our credit card information over and click “Proceed with Order”. It doesn’t hide away in the depreciation of our car, maintenance costs and insurance. We can’t lie to ourselves that our trip only costs the price of gas.

Yes, nowadays we drive a cheaper car.  But taking a car because it’s cheaper is still lying to ourselves. Believe it or not, many of the costs of driving a car are hidden away in road maintenance and pollution, line items we find really hard to quantify. I feel confident, mind you, that if we were to find a way to quantify the damage exhaust fumes do and the subsidies that go into highways versus railroads, we would discover that the train ride costs a lot less.

This is what I mean by saying that we can get richer through the use of Conspicuous Consumption. By putting your consumption out there where you can’t hide it, where you have complete honesty, you’ll find yourself getting richer. If, when I’d driven an Eagle Talon TSi, I’d been honest with myself, I’d have saved over a thousand dollars in wear and tear on my car every year.

Moving on, I’d like to give one more example.

A few years back, Mrs. Toque had lamented that many of the children’s Lego constructions had grown dusty. Since the mini Toques wanted to keep many of their toys in the fully assembled state for playing purposes, they would store their toys on dresser tops and inside bookshelves. Layers of dust had accumulated and become unsightly. Now, you might begin to wonder, how many Lego sets are we talking? Figure for a pair of boys, 9 and 11 years of age, receiving a Lego set for each birthday and Christmas since they turned 4 or so. Add in there Mr. Toque’s own building block stash from his own childhood, and we have a lot of the magical clicky-blocks hanging around.

Mrs. Toque wisely proposed the purchasing of a set of simple glass cabinets, which the children could easily operate to retrieve their toys, but would encourage them to “put things away”, and also keep dust from accumulating on them in an unsightly fashion.  As a side note, many of these cabinets can be found cheap, but slightly used, over the Internet.

What does this have to do with Conspicuous Consumption? Behold the image.

The image has enough detail you can recognize the 1980s Transformers.

This is going to hurt my Frugal cred, I know.

We’ve discovered a delightful side effect of these cabinets, and thus I’m writing to you about it.  Whenever the children show interest in acquiring new toys with their allowance, we take a moment and pause in front of the glass cabinets to look at all of the toys currently available.  Are you certain this new toy is significantly different from the toys you have here?  Isn’t such-and-such just a re-paint of so-and-so?  Is the new toy going to increase your happiness enough that it’s worth the allowance money you’ll use up?

Like many other money-related exercises, the goal is to build habits in our children that will serve them for life by preventing them from becoming Clown Consumers looking for happiness at the far end of their credit cards’ limits.

Yes, he made his own U-Wing.

Toque Junior (II)’s custom creations.

It’s not fool proof, mind you. Allowance still flows into toys, but even the younger of the two brothers, at nine years, shows a lot more conscientiousness  about it. He has since built a fleet of his own creations, rather than relying on the official designs, and he spends a bit of time disassembling the formal constructions in order to harvest pieces from them.

There you are: a Hot Tip from the man in the Cold North.  Make your consumption as conspicuous as possible and learn the very finest lessons from it.

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Mr. Money Mustache, UBER Driver

Unrelated Surprise: Did you know there is now an MMM Android App? It’s really good. Beautiful offline reading. Alerts you to new articles automatically, if you want. Thousands of users already. Free. Many more features (plus an Apple version) to come. It’s on the Google Play Store.


About two years ago, I switched from taking my personal car to the airport, to hailing Ubers and Lyfts. The math of it was pretty simple: Uber was cheaper than paying for my driving and parking*. And that was before the considerable joy and time savings of not having to park in the airport lot and cram in among the huddled masses in the shuttle buses. Nowadays I sit in the back and get some work done like an Executive, leaving the driving to someone else.

Once I arrive at my destination city, these ride sharing services have replaced at least 90% of instances where a car rental would be useful. Between walking, renting a bike, public transit and calling a Lyft, a car rental is only useful for destinations deep in the boondocks such as a ski resort or a distant beach cabin. Which is another great improvement, since renting a car at an airport has never been a fun experience.

But during all these Luxury Executive rides, I’d often get to talking with the driver. We would talk about life, family, money and business. I always inquired about their experience with rideshare driving, and the response was inevitably something like this:

UBER DRIVER: “Oh, it’s pretty good. On a good day I’ll make a hundred bucks, sometimes even two hundred if I really work it and stay up late.”

MMM: “Is that your profit after subtracting the cost of driving?”

UBER DRIVER: “No, that doesn’t include gas. But I’ll only use, like, not even a full tank – maybe thirty bucks”

“Hmm”, I would think to myself.

“If this driver is burning through $30 of gas, (twelve gallons), they’re probably covering over 250 miles. Whether they realize it or not, it’s costing them $125 in direct car costs before even accounting to the damage to their health or the risk of injury. Thus, the net profit might be as low as $50 for a big day on the road, or five bucks an hour.”

There’s no way Uber could be such a successful company if the pay rate were really this low. Is there?

But on the other hand, some of my Uber drives to the airport have included a Dodge Ram pickup truck (V-8 engine, fancy wheels, bought brand new on credit), a BMW X5 and even a Hummer H3 (with over 250,000 miles on the odometer). Maybe people really are that  uninformed about the cost of driving. As my friend Bill said when we talked about this:

“Imagine developing a company specifically to take advantage of people’s ignorance of how expensive it really is to drive their own car. What would this company look like? “

(the answer is of course that it would look like very much like Uber or any other ridesharing company)

To resolve this mystery (and as a way of getting some test miles on my new electric car), Mr. Money Mustache decided to go deep undercover in September 2016, and sign up as a driver for both Uber and Lyft services.

The Initiation

Using another driver’s referral code, I signed up on the Uber system and started to follow the instructions. I needed a background check, medical exam, car safety inspection and a few other daunting things. Luckily, Uber runs facilities called “Greenlight Centers” which put all this stuff in one place. The closest one to me was about 40 miles away in Denver, so I charged up my new Leaf and headed down.

When I arrived, I found an interesting scene that nicely personifies our new sharing economy. It was a mashup of an Apple Store and the DMV. Modern design and furniture, good music and glossy tablets everywhere, combined with an ocean of slightly desperate and bored looking people waiting to start their new driving careers. And Mr. Money Mustache, trying to blend in.

It was a funny feeling, spending those three precious hours of my Tuesday morning, waiting in queues and filling out forms. I was keen to learn about the driver experience and how things work in the New Economy. But I also felt a bit of the nervous “I’m applying for a new job” energy of the other applicants, and like a bit of a fraud for being here when I had absolutely no interest in truly having a job.

There was a trendy little cafe in the corner of the room, so I strolled over and picked up a Clif bar and a coffee. Due to my naive privilege as a former tech worker, I expected it all to be free – after all, don’t all offices offer free coffee and snacks, along with a keg of local beer and another tap for Kombucha? But a man popped out from around the corner and rung me up for $3.85. On top of that, it was a bland coffee in a small cup. This was an interesting reminder that working in a lower-training job is a different world than the one you and I probably both inhabit, here at the top of the economy.

When the process was finally done, my 25-year-old Uber concierge looked up from his iPad and issued me a genuinely warm congratulations and we shook hands.

“So that’s it?”, I asked

“Yeah! That’s it! You could go out and get in your car start making some money RIGHT NOW!”


“Nah”, I thought to myself. “Eighty miles of driving plus three hours in an office building is more than enough wasted indoor time for me for the next little while.” 

The spoiled retiree in me loves hard work, but only the right kind of hard work. The sedentary locked-indoors variety of work always falls to the bottom of the list. As you can tell by the low frequency of these blog posts.

My First Ride

Eventually, I was ready to give it a whirl. I cleaned up my car, stuck the Uber decal on the windshield, put on some nice clothes, mounted my phone on a sturdy dashboard clamp, and fired up the app. Within minutes, I had my first ring.

RIDE REQUESTED! John, 5 minutes away.

The ring was deafeningly loud, because (as I later learned after half an hour of looking unsuccessfully for a way to change it) the Uber app overrides your ring volume setting and sets it to !!MAXIMUM!!  I was so startled that I could hardly slide the “accept” button, but I eventually got safely on the road. I recognized the address as Longmont’s “Pumphouse” brew pub, right downtown.

I headed down the hill and scoped the area, and eventually found John. As he hopped in the car I slid the “start trip” button and his destination was revealed as the local Marijuana shop, just 1.9 miles away.

John and I exchanged pleasant conversation and he was impressed by the quick silence of the electric car. I dropped him off at Native Roots and then parked nearby, expecting another fare to pop up just as quickly.

Ride 1: 5 minutes waiting, 5 minutes driving, 1.2 miles unpaid, 1.9 miles paid. Net fare to me: $3.37

But the second fare wasn’t quite as quick. Fifteen minutes later, the Uber app rang again. It was John, now properly restocked and thrilled that I was still there in the weed shop parking lot. We headed back to the Pumphouse.

Ride 2: 15 minutes waiting, 5 minutes driving, 1.9 miles paid. Net fare to me: $3.37 … plus TIP $5.00!

Hey this wasn’t so bad: that five dollar tip really brought up the average. I was thirty minutes into my career and up about 12 bucks, minus five miles of car costs.

After another five minutes of idle time, the app rang again. This time it was a suburban address listed as 12 minutes (which turned out to be almost four miles) away. I decided to take the ride anyway, in the spirit of experimentation.

I got to the house, but nobody was there. After a minute, I used the Uber app to send the customer a text message. “Oh sorry!”, he said, “My phone GPS isn’t working well because we’re inside so it probably shows us in the wrong place! We’re just on the next street.”

I drove around a bit more and eventually found the young couple, and the app revealed a nice surprise: they were headed all the way to Boulder, which was over 12 miles from this part of Longmont. Surely now I would start earning the big bucks.

After 24 minutes of smooth, expert driving and pleasant conversation, I dropped them off at a restaurant. But I was surprised to see that the total wasn’t that impressive:

Ride 3: 10 minutes waiting, 4 miles unpaid, 12.4 miles paid. Net fare to me: $13.96. No Tip.

Driving in the Happening City

Now I was in Boulder, which has a much bigger scene than Longmont. Everybody is rich, every night is a big night, the University of Colorado is right downtown and it’s all action – there are no real suburbs. Due to high rider demand, the city operates in a perpetual “Surge Mode” which means Uber Fares are 20-30% more lucrative, and there is virtually no wait time for fares. And now, I was right downtown. So the app shrieked its notification tone immediately.

The customer was only a mile away, but due to the incredible slowness of trying to drive a 14-foot-long, 3300 pound Racing Wheelchair in a dense city it took me a lot of slow gliding in traffic and waiting at long traffic lights to get there. It was a couple of younger guys, heading back downtown.

We slogged through the dense traffic yet again at roughly one third of bicycling speed, and I earned my five dollar fare.

The app rang again, and I saw from the map it was yet another non-downtown person, probably looking for another ride downtown.

I decided not to play this game anymore, contributing to car traffic in a city that needs fewer cars. So I let this ride request go to another driver and set my destination to Longmont, hoping to find a customer heading that way so I could get paid for the ride home. There were none.

So I flew the Leaf back along the highway to home, and stopped at the grocery store to pick up some fresh food and a free battery charge for the car.

Total stats for the day:

4 Rides
1:51 hours
18.6 miles unpaid
17.2 miles paid
$32 including tips
~$18 of car costs
roughly $7 per hour net

Ongoing observations

After joining Uber as a driver, it was easy to add on a Lyft license: you can submit scans or photos of the same examination info to both companies. So over the course of 2017, I fired up both Uber and Lyft apps many more times to do some more driving and collect some more observations. I tried night driving, special events, and quite a few different parts of the metro area. I had a lot of fun, but made very little money.

  • One time, I was summoned by a 13-year-old girl coming out of the middle school, effectively turning me into Mr. Schoolbus Dad. After finding her in the school lineup, she directed me to the elementary school, where we picked up her little brother. I dropped them both off safely at home in a rusty suburban area nearby. (note – readers have since informed me that this shouldn’t have even been allowed, as you must be over 18 to summon an Uber. She must have been using her mom’s account, and I was apparently breaking the rules by not knowing them,
  • Another ride was from a college student, deep in the Colorado U campus. It took me forever to navigate the throngs of after school foot and vehicle traffic and find this young lad in the crowd. During the ensuing 3MPH transit of Boulder, I couldn’t help but remark, “Wow! I apologize for how slow this trip is going. I’m usually on my bike when I cross Boulder, which is a lot faster.”
    Our final destination was a strip mall, and he directed me meticulously through the entire parking lot so he could be let off within 20 feet of the front door of the restaurant. End fare for about 35 minutes of work, even with surge pricing, was another six bucks. My resolve to avoid driving cars in Boulder was reinforced.
  • My favorite times to be a driver were Friday nights. It was fun to feel the energy of people going out on the town, and find out what was going on.  I could see Uber driving to be a good escape for single people looking to meet new friends (or romances), because I almost always got along well with the customers, often exchanging business cards or email addresses with people when we found something in common.
    On longer rides with people over 30, the topic almost invariably led to life, business, and money, which led to Mustachianism, which led to me admitting my secret identity. Thus, some of my past Uber customers may even be reading this article today(?)
  • But in the end, it was hard to stay motivated to keep doing this experiment. There is just usually something better to do than driving around in a car, and I wasn’t willing to sacrifice too much of my life to gather more data. And with the financial gain of rideshare driving being negligble, I am surprised that there are so many people who do it.

How to Make the Most of a Low-Profit Situation

Still, as with everything in life, I did my best to optimize Uber driving for both fun and money. From my experience as well as reading online forums, the best way you can do it is:

  • Use the referral and bonus system heavily. Actual driving doesn’t pay well, but I have seen bonuses pop up on my app offering between $100-$500 to refer other drivers. There are also “weekly guarantee” offers that come up occasionally, offering more pay in exchange for meeting a certain threshold.
  • Use the lowest cost and most fuel-efficient car you can find. Uber requires you to have a fairly new (under 10 years) car, so get something on the older side of that spectrum, but with low miles. A 2009 Prius, for example, uses less than half the fuel of most cars of similar size.
  • Focus your driving around on “Surge Pricing”. By watching the app throughout the days and months, you will learn when your area enters periods of higher demand. Special events like Halloween, late weekend nights or major league sports events are popular times.
  • Try to find trips involving highways. Since you get paid mostly by the mile, you earn almost ten times more money at 60 MPH than you make in on a long trip through central city where you might average only 6 MPH. (There is an “hourly” component to your wage as well, but it is incredibly low, somewhere in the single digits per hour.)
  • Experiment with the “set destination” feature to filter for rides going your way. Taking fares with you on your commute to work or to an airport.
  • Make the most of your downtime: there will still be lots of waiting between fares. If you bring a book, podcast, laptop or make business-related calls that help you learn a trade that pays more than driving, you can get yourself into a more lucrative trade.

Suggestions for Uber and Lyft

During the course of this experiment, I happened to receive emails from relatively senior people at both Uber and Lyft for unrelated reasons. So I took the opportunity to make some suggestions to make things friendlier for drivers:

  • Report the total driving time and miles for each ride and each shift, clearly specifying paid and unpaid miles and hours.
  • Provide an drivers an estimate of the car costs incurred, and estimated hourly earnings after these costs
  • Allow drivers to specify the types of rides they are willing to accept. For example, “only ring me for riders within 1 mile”, or “I would like to be paid for for both pickup mileage and rider mileage.”
  • Provide drivers with the details of where the person is going, or at least how long of a ride it is. Right now, Uber has all this incredibly useful information at the time of booking, but deliberately withholds it from the driver.
  • And here’s the best one:
    Instead of setting a reasonably high price per mile (around $1 in my area) and an almost-zero-dollars-per-hour rate for the driver’s time, let’s do the opposite:
    – 50 cents per mile, which just covers the cost of the car
    – plus 33 cents per minute (driver’s net after Uber fees), which is about $20.00 per hour.
    This has many benefits. It reduces any temptation for drivers to rush or break the speed limit. It makes urban trips (where nobody should be using car anyway) more expensive. It makes more necessary highway trips cheaper. And it guarantees that if a driver has a customer in their car, they are not losing money.

I was surprised that both companies immediately dismissed all of these suggestions, with a round of vague excuses. This was a disappointment to the Economic Libertarian in me, because it seems obvious that  an open market between buyer and seller is the key to more efficiency.

In fact, early in my driving career I learned how much the unpaid driving was hurting my profitability so I stopped accepting distant fares. The app quickly sent me this note:


Yeah, right. How about you just stop ringing me with fares that are ridiculously far away, or give me the opportunity to GET PAID FOR THE DRIVING, instead?

When these companies deliberately tilt the field, they are being sneaky, which causes them to lose public trust, which causes the public to vote in a bunch of sclerotic regulation to protect the drivers and the public. If you, as a company, just avoid being a dick to people in the first place and treat them with complete openness and good old-fashioned honesty, they are more likely to let you run free.

Since I started this experiment a year ago, Uber has fallen into a world of trouble and bad publicity. Their internal culture of sexual harassment was blown wide open, along with the misdeeds of the wild and temperamental former CEO. From specific programs to evade government regulation to annoying treatment of drivers, Uber triggered a widespread backlash which became the #deleteuber campaign. Saying “Uber” is now a bit like uttering the words “ConAgra” or “Philip Morris” or “Exxon”.

Meanwhile, from the very beginning I noticed a friendlier tone in the way Lyft operates – see this 2016 interview with Lyft more laid-back founder John Zimmer.

In the End..

In general, I really want companies like Uber and Lyft (and Tesla, AirBnb, Google, Amazon and many of the other tech companies that have been stirring things up so much lately) to succeed, because the benefits to all of us greatly outweigh the inconvenience of the disruption.

For example, some people worry about what will happen to driving jobs as self-driving vehicles gradually take over. But I’m excited about the ways this can make our lives safer, quieter, and less expensive as we give up on owning personal cars, ride bikes much more, and use automated cars as a service whenever the bike is impractical. Technology provides a lumpy ride, but it also provides change which is an essential ingredient in every human life to avoid getting into a rut. So, share on.

Further Reading: How Big Oil Will Diean interesting walk through the changes today’s technologies have already set in place – leading us very quickly to a place where nobody in 2010 would have even guessed.


this sentence surely made you ask, “but what about the BUS, Mustache?!?” – good question. Of course I’d always choose biking, then public transit as the first two options, but the airport is 45 miles away (well over 2 hours by bike) and the bus requires a transfer in Denver, which makes it even slower than biking. Also, both Uber and Lyft have referral programs which give you credit for referring friends – I still have a few credits in my Uber account.

If you want to try Uber or Lyft, sign by randomly choosing one of these codes from friends, and you’ll get $5-10 off of your first ride (and give a small surprise to some of the members of the MMM-HQ coworking space!)

Uber #1 Uber #2 Uber #3 Uber #4 Uber #5

Lyft #1 Lyft #2 Lyft #3

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When Your Shitty Health Insurance Doubles in Price

Well, despite Mr. Money Mustache’s outrageous optimism, I think we all saw this coming. I opened up my premium renewal email from Kaiser and saw this:

Figure 1: My new insane medical insurance premiums for the minimum available “Bronze” program, with a $6500 deductible.

My family’s monthly health insurance premium, which had already more than doubled in the last few years to $674 per month, was going up a further 44% for the coming year. For no good reason, other than perhaps the the current government’s attempts to kill off the Affordable Care Act. (By cutting various parts of the structure, the insurance market becomes less stable and predictable, and thus more expensive).

Now, before we go any further, I have to note that this is a situation that only affects high income earners. If we were really retired on a $30,000 passive income as we were for some of the decade before this blog started making significant money, our family’s monthly cost would be more like $128, due to tax credits and the Children’s Health Plus plan.:

Figure 2: Net insurance cost for a $30k per year family of three.

But in my email, I just saw the thousand bucks. And if you know how I feel about rules, unnecessary costs, and insurance in general, you can probably guess what my initial gut reaction was:

“Fuck. FUCK THAT! This is absolute bullshit. Fuck you, I quit, I’m not paying it.”

But, since I’m not sixteen years old anymore, I was eventually able to get past this first stage of the analysis and think about an actual course of action.

After all, all the power and freedom in the world is of no use at all, if you choose to wallow in your anger rather than taking steps to create the life you want. So I thought about why I was so angry. It boiled down to this:

The premiums are not an accurate representation of my risk.

The value of medical insurance is pretty easy to estimate: the National Institute of Health calculates that the average person consumes about $449,000* in health care spending over an 80-year lifetime, or $5600 per year.  This is less than my plan’s deductible alone, which eliminates the value of insurance right off the bat. My plan really only covers catastrophically expensive events, which means it is unlikely that I will ever use it.

Plus, most medical spending is loaded towards the last decades of life, where the Medicare program already picks up the bulk of the costs. And, we are healthier than average – aside from one baby delivery about twelve years ago, none of us have ever actually benefited from health insurance in over nineteen years in the country.

When you add up these factors, it is obvious that the insurance is a bad deal. When presented with overpriced insurance, I always just choose not to buy it, which is also called “self-insuring”. But whenever I talk about self-insuring for medical expenses, everyone asks the same question:

“But what if you do get hit by a falling piano and have to spend months in the Intensive Care Unit?”

The answer is that I guess I’d receive some large medical bills!

I’m not denying that an expensive treatment absolutely can never happen to me. I’m just putting an estimate and a limit on how much I am willing to pay for insurance on it.

Remember, health insurance is not really health insurance. It’s just “large medical bill insurance” – a shaky precaution against having to pay for expensive procedures, so you can keep your investments instead of using them to pay the bills, perhaps eventually becoming poor enough that you are covered by public health insurance (Medicaid). A better name for it might be wealth insurance.

We have been trained to think that going without medical bill insurance is very risky. But that’s just because the subject appears frequently in the news. If it weren’t such a hot topic these days, the average person without a chronic illness would rarely think about it.

After all, by comparison, what precautions have you taken against being hit by a meteorite? There could be one streaking towards you right now. It could kill you, or your children, or it could leave you with a lifetime of chronic care costs. Are you telling me you don’t have separate meteor insurance? Why not?

In 2013 a 60-foot chunk of rock came from space and hit Russia with the force of 30 Hiroshimas. The human race escaped with just 1500 injuries, but only because the rock came in at a shallow angle and landed in a very remote area.

If space rocks are too far-fetched, how about motor vehicles? If you choose to drive a car, you are willingly throwing yourself into a far riskier situation than simply self-insuring for medical bills. Even more dangerous, statistically: being inactive and/overweight, a boat in which over 66% of us sail every day.

The point is that while huge, uncovered medical bills are inconvenient, they are rare. Therefore, my willingness to pay for insurance against them must have a limit. I’d definitely pay $50 per month for it, but should I be willing to pay $1000?

What about $2000? $4000? $12,000 or $1 million per month? I think that everyone would hit their “Fuck That” point somewhere in there.

And remember, this problem of expensive medical procedures is unique to the US. You can take your dollars almost anywhere else in the world and pay out-of-pocket to get the same (or better) quality care for a fraction of the cost. At some point, a rational person has to be willing to stop overpaying for this inefficient system.

After doing the math, I decided that my limit is definitely less than $1000, which means I should at least consider other options. So I looked into some of them:

  • Full Self Insurance
  • 2.9 Months per year of Self Insurance (to avoid IRS penalty)
  • Medical Tourism
  • joining a “Healthshare Ministry” like Libertyshare
  • expat insurance like Cigna
  • Artificial poverty (reducing my income to a level where we’d qualify for subsidies)

Self Insuring is the easiest choice: you just don’t renew your insurance and start banking that sweet surplus right away.  There is a tax penalty for that: $695 per adult, $347 per child, or 2.5 percent of your adjusted gross income – whichever is greater. Thus, a family with $100,000 of income would pay a $2500 fee. With my new premium at $11,500 per year, the penalty would still be cheaper all the way up to $461,000 in income. Plus, there are a surprising number of qualifying exemptions, including a death in the family within the last three years, a category which unfortunately includes me.

A 90 Day Insurance Vacation is the lightweight version of self-insurance. The penalty only applies if you were uninsured for three months or more. So if you start your insurance during the enrolment period but then cancel it on, say, October 2nd, you cut your premiums by about 25% in exchange for the reduced risk protection. Just be sure to postpone your Wingsuit Jumping vacation until at least the new year.

Medical Tourism is an important thing that every US resident should be aware of. After all, we live in the country with the most overpriced medical procedures in the world – why should we insist on doing 100% of our shopping here? This would be like insisting you buy only US-produced goods and services: no electronics, no shoes, no Amazon and no blueberries in winter. We should all read a book or two on the subject to understand just how easy it is, to free ourselves from the US-centric assumption that doctors are shockingly expensive.

There’s a lightweight version of medical tourism too: simply comparing insurance pricing from one state and city to another.  From a quick search I see that Colorado is one of the more expensive states for health insurance, with New York being the worst, and the best three being California, Utah and New Mexico. As with everything, it’s good to shop around when choosing where to live, and regularly challenge yourself by asking, “Is this where I’d settle down if starting from scratch?”

Health Sharing Ministries  like Liberty HealthShare looked like the most promising loophole. Due to the strong influence of organized religion in the US, if you can join one of these, you are exempt from the tax penalty. The downside is the same as the upside: these ministries are exempt from ACA rules, which means they can drop you for having a pre-existing condition. And they also want you to affirm their value system, which can range from agreeable stuff like “taking care of your health” to excluding coverage for things that violate religious taboos like abortion or attempted suicide.

Expat Insurance sounded promising when I first heard about it from some fellow Canadian early retirees who write the blog Millennial Revolution. Companies like Cigna will cover you for worldwide medical costs for a fraction of what we pay here in the US. But the hitch is it only applies if you are truly on the road and don’t actually reside here. So it’s not an option for now. But in the long run when I retire to an oceanfront compound (or commune?) in Costa Rica, yes.

Reduced Income is the last and least feasible option on the list for me right now, but it’s genuine and not even artificial in the case of the typical early retiree.

Suppose you are retired with, say, a mortgage-free home and $800,000 in index funds, and living on a plentiful $30,000 per year. Your income tax return will show only about $18,000 in dividends, some of them even tax-exempt. On top of that, you’ll sell just a few shares and pay taxes only on the capital gains. This taxable income in the mid-20s will keep you in a very low tax and health insurance bracket.

 So What Path Did the Mustache Family Take?

I brought all this stuff up to Mrs. MM – the other, less morally-outraged, leader of our household.  Our conversation brought up a few things:

  • Although a $12k insurance bill is insane, we would not even notice a $12,000 difference in income taxes if the brackets were to change. We currently have a high income, but this has not caused us to increase our family spending at all. This is because of the magic of living below your means: once you have enough money, the surplus is just that: a big, fat, awesome bonus. Since I want this enormous surplus to go back to society over my lifetime, why should I be upset about some of it paying for other peoples’ health insurance right now?
  • But, I countered, this doesn’t apply to everyone. The typical MMM reader earns enough money to be hit by these higher premiums, and many are raising families and running small businesses, thus purchasing health insurance on the open market. At the same time, they are trying to save as much money as possible to reach financial independence while they are still young enough to enjoy it. Burning $12,000 per year on mostly-useless insurance can wipe out 25% or more of the amount you could otherwise save for retirement.
  • Given this, the Healthshare ministry was one of the better compromises. However, she felt that pretending to agree with a religion (especially if it’s one that actively oppose some things we value like same-sex couple equality and women’s reproductive rights) wasn’t worth it for us.
  • In my own hypothetical pre-retirement situation (a self-employed couple making $200,000)  I would probably go for full self-insurance, simply paying the tax penalty whenever necessary and using medical tourism for any expensive procedures.
  • But also remember that if you’re a high-income business owner, your business can pay for your health insurance with pre-tax money. This cuts your net cost after taxes by 30-40%, making it a subsidized program after all.

So in the end, we’re just letting the policy auto-renew for now, using that last bullet point as a consolation prize.  And these premiums will probably remain outrageous, unless we fix the underlying problem in the US: it’s not the insurance, it’s how much money we waste on medical care. If the Medical system could grow a Money Mustache**, I am certain we could cut our costs down by at least 75%, just as the average consumer can cut their costs by a similar portion just by learning to life a joyful and efficient life.


Further Research:

After this article came out, a reader told me about the site “Health Care Bluebook“, which allows consumers to look up typical costs of various medical procedures. Many are less expensive than I had assumed.


* I adjusted the NIH paper’s 2000 numbers to 2017 dollars.

** Ideas for making US healthcare less expensive – please critique and add your own in the comments!

  • Eliminate the 75% of healthcare spending we currently waste on self-imposed lifestyle diseases: eliminate subsidized urban car infrastructure in favor of muscle-powered transportation. Treat soda and products with added sugar in the same way we currently treat liquor. Treat health and fitness (rather than medical treatment) like a human right, instead of a vanity accessory just for rich mountain-dwellers and celebrities.
  • Make health care purchasing look more like Wal-Mart and Amazon, and less like the DMV. Every standard procedure needs to be listed on a menu with a price, and those need to be on the front door so they are subject to competition. By huge national or even international companies and co-ops.
  • Drastically increase the supply of doctors, and make the job more enjoyable: Cut mandatory work hours for residents from 80 to 40 per week. Modernize the medical school curriculum to eliminate pointless memorization, reflect current technology and reduce the cost of the degree.  Open the borders to qualified doctors from other countries. Allow telemedicine – let doctors in other countries certify easily for US diagnostics and prescriptions.
  • Elevate nurses to do all the stuff they already do, but in their own clinics without working for a doctor and paying the money up the chains.
  • Start using search engines and artificial intelligence for diagnosis, rather than flawed and expensive humans.
  • Open state and national boundaries for insurance and hospital services with only the required regulations for safety as we do with other imports.
  • Eliminate the right for anybody to sue for medical malpractice, or indeed for pretty much anybody to sue anybody else for anything. Let’s make our professional reputation and our actions public and then just suck it up like adults, reinvesting the enormous proceeds currently wasted on litigation.
  • Figure out if we can make single-payer health insurance work for us as it already does for most countries. There are many benefits, but the biggest is probably just eliminating all the mental energy we each waste on thinking about this mundane topic. As an analogy, imagine if every citizen had to hire their own police force for personal security – just think of how much energy and fear would be wasted on this topic, which we barely have to think about right now. As it turns out, it works the same way with health insurance.





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Introducing The MMM World Headquarters Building

I’ve been using this picture of a similar space at “Shift” coworking in Los Angeles for inspiration in designing my main room because the size and window/door layout are similar.

Almost exactly six years ago, I wrote a simple post about a pawn shop opening up in my town. It was during the very early days of this blog, and I figured it was an easy way to take some shots at that financially predatory industry. Also, the shop was called Mister Money, which had an ironic similarity to my own name, Mr. Money Mustache.

So anyway, in that post I joked that I was going to buy the building next door, and if anyone walked into my shop trying to borrow money, I’d PUNCH THEM IN THE FACE and tell them to embrace frugality and sensible living, rather than high-interest borrowing, as the solution to their financial problems. For some reason, this idea of the “Face Punch” really stuck with the early readers, and became a bit of a brand for MMM.

As sheer coincidence would have it, in early March 2017 a cryptic ad appeared in the local Craigslist.

Commercial building for sale, $230000

There was an address, but no pictures and no other information.

I recognized the address as being right next door to my pawn shop rival.  And we recognized the price as being about half of what a small single-family house or commercial building goes for around here these days. Mrs. Money Mustache was the one who first found the ad, so she called the number.

To make a long story short, the building was a severely run-down joint, but with extremely good potential. A dozen species of insects and animals called its rotting exterior woodwork their home and three dumpsters worth of demolition, debris and dead trees clogged the property*.

But at the core was a 2400 square foot brick and concrete structure, plus a detached 2-car garage, on an immense 7500 square foot lot, directly across the street from a recently-built $23 million building which happens to host one of the town’s best pubs.

The reason it was so cheap, aside from decades of neglect, is that it was owned by a charming man in his 70s who now lives hundreds of miles away. Once a prominent owner of significant chunks of Longmont, he was unloading this last forgotten scrap of real estate just to get it out of his hair. Perhaps he was unfamiliar with the recent boom in our property prices here, and he was definitely unfamiliar with modern property marketing techniques (he had relied on a friend to even get the ad onto Craigslist). The building had been in constant use by a series of retail tenants, but nobody had had much of an incentive to fix the place up.

I called him later that night with an all-cash offer, and after an hour of telling me amazing stories of his life, he accepted it.  A few weeks later, we closed on the property and then I spent the next few months in a full-bore restoration process – a multi-person vortex of flying sparks, brick, sawdust, beer, diesel, sweat, blood, and beer.

Figure 1: Replacing the Infinitely Shitty “doors” to the back yard and future patio, with a reasonably fancy unit I rescued from another builder via Craigslist. I also added some foam insulation and some repurposed siding – leftover materials and design ideas from last year’s backyard studio project. Just one of about 100 similar-scale improvements this building needed.

So Why Did We Buy a Building?

This somewhat wild scheme is the culmination of a few different values:

  • We wanted to get more involved with the local community, by owning a little piece of the Main Street and helping to make it a more joyful place. There’s nothing wrong with selling stuff and making money, but I’m also interested in teaching classes, hosting events and parties, and donating the space for use for non-profit events which are designed to help people. (See the bottom of this article to learn about the first one)
  • Mrs. MM and a good friend of hers both have booming Etsy shops that are ready to break out into the real world. They enjoy working together so much, that they decided owning a building together was the next logical step. So both women, and both of us husbands, teamed up together and split the building equally.
  • From a financial perspective, it would be hard to go wrong because we got the place for such a low price. The land alone is worth more than the $225k purchase price, and if the town continues its current downtown boom, this could increase drastically again over the next ten years. Since the structure includes 2-3 separately rentable spaces, the property could easily bring in $3000-$4000 per month of income (after renovations) if we chose to rent it out in the future. And there were no banks or borrowing involved, so the stress and closing costs were low, and flexibility is high.

But all those points are just the “pretend responsible adult” justifications. In real life, we bought this thing because it seems like a fun adventure.

As this blog has grown so unexpectedly over the years it has presented all sorts of opportunities. As prestigious as they sound, they really all boil down to either spending more time on airplanes, or more time or sitting at the computer, and always less time being here for my son. I don’t really need more fake lifestyle guru nonsense in my life – I want more great stuff going on right here in our own community.

So, as the headline suggests, I’m outfitting half of this building to become the MMM World Headquarters.

What Happens at MMM WHQ?


We found lots of cool ancient brick under the other coverings. Here’s a scene from when I was trying out the new drywall hoist to install the kitchen ceiling.

I’ve decided that my side of the building will become a coworking and hangout space for Longmont-area Mustachian Entrepreneurs. It will be membership-based, with only 50 memberships made available at a price of $50 per month. And for the price of membership, locals get:

  • 24/7 keycard access to a big, open room downtown (about 700 square feet) with couches, tables, benches, stylish design, etc. Plus an adjoining small kitchen area for our food.
  • access to 49 other accomplished entrepreneurial local friends, who can all be part of an active Slack Group.
  • WiFi over Gigabit fiber internet access
  • Free or cheap coffee and fitness-friendly snacks
  • Tool sharing library
  • A big outdoor patio courtyard area out back with grill, chairs, speakers, patio lanterns, etc.
  • Outdoor gym with barbells, squat rack, and bodyweight things like pull-up bars, etc.
  • Garage workshop with welding and metalworking equipment
  • Beer brewing setup with permanent kegerator – members with skill in craft brewing can rotate through to produce guest batches. Ideally, this will provide free beer at all times.
  • Bike fixing station, parts inventory and swapping, helping each other improve skills
  • Talks and classes – from members, and from visitors.
  • Group Advocacy for improving the town.
  • The chance to work together on this new building – learning through doing as we build new features. (I’ve already got all the equipment for a 3.6 kW solar energy system ready to install onto the garage roof when we’re ready)
  • And any other perks and cool ideas we can think of with our collective mind power.

Although $50 per month sounds awfully cheap for all of this, it should actually work out great – paying the taxes and utilities and easily pumping out a monthly surplus to use for continued improvements, tools, supplies, etc. I reserve the right to make a profit off of the place eventually, but obviously this is not my main motivation – otherwise I’d charge a more “normal” coworking membership rate or just stay home and crank out blog articles.

If you’re interested in joining, read this rough agreement then send me an email through the contact form with “Coworking” in the title. If you end up as a member, I will put you onto a shared Google Doc list and the slack group so we can all start talking. (Please include some biographical background to help me determine that you’re a real, friendly person!)

The primary members will generally live within biking distance since I don’t want anyone to sign up for a mandatory car commute. But if you want to become a patron or long distance member – contributing to the cause and working remotely with the core members (perhaps just to gain access to such a cool group, stop in whenever you are in the area and see your money put to use for interesting hactivism here in Longmont), send me a email with “Patron” – we could probably still keep a close-knit group with up to 10 such members.

Important: Although the building now hosts frequent meetups and other events, please do not just show up at random time unannounced as part of your cross-country roadtrip. Instead, just attend an event if the timing happens to align.

 I feel strange adding this note, but travelers have been stopping by almost every day and as much as I love Mustachians, giving tours to unexpected visitors make it difficult to get work done – which is the kind of the point of a coworking space during the day.

Also, the Northern entrance is “Mud and Madder”, the future handcrafted shop owned by Mrs. MM and a friend which is not part of my HQ.

Are you Ready?

Our First Guests

The space is almost ready and the first philanthropic event is already booked: I’m hosting my friend Alan Donegan’s UK-based Pop-Up Business School for their inaugural US event in early September and it’s for everyone – not just members!

You can sign up here:

This is a nine-day class on Mustachian-style entrepreneurship: how to start a business with minimal initial investment and a quick path to cashflow.

Members of the Longmont community** and the coworking space will get first dibs at the tickets, which are are actually worth about $500 each but offered for free due to a unique business model.


Pop-up business school is intended to help anyone – well-established or just scraping by – start a business. Because this is such a powerful way to improve lives and communities, as Pop-Up Business School’s repuation has grown, Alan and company have been able to attract outside funding. City councils, philanthropic foundations, and companies.

So I tried the same thing here for the US debut – inviting a few unusually cool companies that are run by people that understand our mission around here. Almost all of them said yes and chipped in a substantial chunk of money, directly to Pop-up business school. So in thanks I’d like to mention them here:

Betterment Investing – simple, efficient investing platform with behavioral-finance (aka making it fun and easy) at its core. My Betterment Article.

Bluehost Web Hosting – the original and still favorite recommendation for how to get a beautiful website up and running quickly. My related aricle – How to Start a Blog.

Treehouse Learning – a classy and fun way to learn stuff – specializing in software development and other skills – with a meaningful social mission of cutting the cost of higher education.

See you There!

This has been a big and really rewarding project so far. Although it was a big commitment and going out on a limb, the resulting months of hard work and connecting with so many nice people has been exactly what I want out of life – and what I wish for you in your life too.

Here’s hoping that this current project of mine, and your own big efforts in the coming year, continue to crank out lots of opportunities for fun and learning.


*on the positive side, there were a number of functional mannequins and assorted body parts for them in the garage, which I have obviously saved for future fun.

** Out-of-towners looking for frugal accommodation might want to check out the RV campground at Boulder County Fairgrounds, tent camping at Union Reservoir, or even just find a spot for a tent in the nearby National Forest foothills, given the beautiful time of year.




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Great News: There’s Another Recession Coming

If you’ve been keeping an eye on the US economy in recent years, you might notice that things are looking pretty darned rosy. Unemployment is at its lowest level in 40 years, wages are rising, and house prices have not only recovered from their fiery crash of 2009 – they have had several years of record breaking prices in most regions, just like the stock market.

A current snapshot of how expensive the stock market is – not in sticker price, but in the more instructive price-to-earnings (P/E10) ratio. In all of US history, it has only exceeded this expensiveness once – for the late-1990s bubble. Not something that should make you sell your index funds, but probably a clue about an upcoming bubble-based recession. Image source is the very useful site

In short, today’s situation is very similar to what Mr. Money Mustache, despite no magical forecasting skill, forecast back in 2013, in an article called “How to Prosper in an Economic Boom“. In that post, I suggested that we were in for some very good years, which made it a good time for getting ahead – make hay while the sun shines!

It’s a lot easier to fix your problems right now, with a stiff economic tailwind at your back, than it will be in just a couple of short years (or less?) when the high seas and lighting bolts and whirlpools are ripping at your pockets. Fair weather preparations include:

  • Rake in your big paycheck while it lasts and don’t blow it on temporary luxuries
  • Keep your living footprint efficient – in expensive cities this is a great time to rent, and not a great time to spring for the sprawling home of your dreams on a big mortgage.
  • Eliminate any last shreds of consumer and student loan debt
  • With the stock market at higher price-to-earnings ratio than usual, there is less harm in paying off your mortgage earlier, keeping six months of living expenses in cash or money market funds, and other non-stock investments like rental properties in low-cost cities (where reliable rent is over 1% of total property price per month).
  • Design your career and your self-employment side gigs so that they are resilient: multiple streams of income from different sources, and an easy answer for “What would I do if my job or industry ceased to exist?”

Of course, becoming less dependent on a steady job is always a good thing – it just happens to be much easier to build that independence if you’re surfing atop a giant economic wave like this one.

So, Here We Go:

With all those preparations in progress, I hope you’re ready, because there’s a recession on the way.

I can say this with confidence because there’s always a recession coming – we just never know exactly when. About the only thing I can guarantee is that we are about four years closer to the next recession than we were when I wrote that optimistic earlier article.

But it is very important to remind yourself of this, because when we get to this rosy point of the business cycle, things have been so good for so long that we  forget that crashes are even possible. If you’re a sagely 27 years old right now, you may have never experienced a recession in your adult life – all you have ever seen is the good times. You’re in for an interesting surprise.

However, on top of that folksy “It always happens” wisdom, there are a few other clues that suggest the time is approaching:

Household debt levels have risen back to their pre-crash peak, and with an even worse composition: more student loans, and a record level of auto loans, the most ridiculous and self-destructive piece of personal finance outside of mortgaging your shins to a loan shark to afford tonight’s cocaine.

Image from the very good Zero Hedge article linked above.

Consumer debt shouldn’t really exist at all – it’s simply a house of cards that allows impatient people to pull their consumption from the future, just a teeeeny bit forward into the present, in exchange for spectacularly bad costs, stress, and wrecking of lives. But because it exists and is profitable, a huge ($1.3 trillion in 2015) financial industry has sprung up to originate, multiply, and churn this debt.

Just like 2007, the financial industry is on top of the world again, with lots of easy money flying around into things like “subprime auto loans”. The Great Recession of that era was caused when the wild packaging and reselling of mortgage debt combined with a false sense of confidence that the party would go on forever.

The final piece of evidence comes from just how long the present party has gone on. If you look at the history of economic expansions – how long we have gone since the last recession – we are currently enjoying the third longest one in history:

When we put all Good Times since WW2 into a graph, you can see just how exceptionally long we have been riding high.

So we’ve had a good run. If we go on to tie the Clinton-era record, that still gives us a maximum of two years until the trouble hits. And if you happen to think that economic success correlates with the level of brainpower currently in the White House, then, hmm.. you can make some adjustments based on that as well.

“OK, But What Actually Causes Recessions? And What will Cause the Next One?”

In succinct terms, recessions are caused when a bunch of people lose confidence all at once.

Usually it starts with a mini-crisis: the prices of stocks and houses have been going up for so long that people forget the opposite can happen. A bunch of testosterone-fueled betting and speculation (often by overconfident and under-regulated junior hotshots on Wall Street) ensues. And in general, speculation is a dumb thing.

If you have ever heard of someone buying something, not because they actually want it or because it produces income, but just because they think it will be worth even more in the future, that’s speculation. When people buy apartments in Toronto and leave them vacant (or rent them out at a loss) in hopes of later selling them to an even Greater Fool, that’s speculation. Speculation leads to bubbles, and bubbles always pop, because there was no rational reason for the prices to get that high in the first place. They also happen frequently in the stock market.

When prices hit some random limit or wobble a bit, the bubble often pops. Everyone gets scared and rushes out to sell, so the prices drop rapidly. Suddenly, over-leveraged novices can’t repay their oversized bank loans and they start missing payments.

Banks get scared of losing all that money, so they tighten up lending, which causes businesses to scale back hiring and expansion, leading to layoffs, which cuts down on consumer spending, which cuts down business profits again, leading to even more layoffs, and the problem feeds upon itself.

Eventually, the prices of these valuable assets gets low enough that people with actual money like you and me perk up and start scooping them up at a discount. A pristine apartment building here, some shares of a few thousand established, profitable companies there via an index fund. This puts a floor under the dropping prices.

Meanwhile, the Federal Reserve Bank also steps in, lowering interest rates and flooding the system with cheap money to encourage people to start buying houses again and businesses to start expanding to soak up the pool of unemployed people. Everyone gets back to work, and the recession ends. Usually very quickly – most recessions last less than one year.

So, as long as you aren’t a Consumer Sucka, commuting to work in a bank-financed gas-powered racing sofa and/or borrowing money for furniture and appliances to outfit that last spare room in your suburban mansion, recessions are a great thing. Housing and profitable investments become cheaper, insanity and speculation is reset, and people actually start living more frugally again, getting back to the roots of what living a good life really means.

Most people who are wealthy today, achieved it by building and acquiring profitable investments in the past, when they were on sale.  A recession is just a big sale – on almost everything.

“So, Should I Be Worried?”

No, of course not! This is just money we’re talking about, and you should never be worried about money.

One of the joys of Mustachianism is that it makes you immune to the business cycle. You immediately stop living beyond your means, so you have stepped back from the cliff. Then you start to build a resilient mesh of skills, health, money, friendships, and peaceful personal badassity which further protect you from trouble.

After all:  who cares about the price of gasoline, or affording cholesterol pills, or how to make the next truck payment, when you’re a wiry and muscular Mustachian, riding your swift and sensible bike a few miles to work and banking almost all of your enormous paycheck every two weeks?

Then as you live this joyful existence for however many years it takes, the final stage of complete financial independence arrives automatically, and you are absolutely invincible.

Whether it comes in two weeks or four years, I hope all of us are prepared for next hill on this roller coaster – it’s a lot more fun when you know it’s coming.


In the comments: do you care for a wager on when the next “crisis” will hit and we’ll fall into recession again? What will be the thing that gets us this time?

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The Happy City and our $20 Trillion Opportunity

happycity-coverOne of the joys and frustrations of being an engineer who is also a hopeless dreamer, is that you can see the beauty of what the world could be, while also feeling the burden of every single thing that is in the way of achieving that beauty.

Envisioning this potential (and sometimes even having the opportunity to design some of it) is one of the greatest joys of being alive. But slamming up against the stubborn wall of society’s inertia, all day, every day, can lead to some displays of choice language.

If only we could grasp onto even a tiny fraction of the improvements that are hanging right in front of our faces, our society could bypass decades or centuries of pain, and billions of people could lead happier lives, starting this afternoon.

We can illustrate this problem perfectly with an example from right here in my home town. Take a look at this Google Maps satellite image of where Colorado Highway 287, (also known as Main Street) crosses over the St. Vrain Creek:


Colorado Highway 287 makes a lame leap across the creek.

It’s pretty boring, right? And that is exactly my point. It’s a boring, utilitarian bridge, in a blighted, shitty area of town dominated by parking lots, used car dealerships, traffic, and noise. When you drive along that part of 287, you don’t even notice you are crossing a bridge. It’s just part of the wide, flat road. And besides, you’re busy navigating the ugly, stressful terrain of dense traffic – passing through in a rush to get to somewhere nicer.

Now, I happen to bike right under this bridge quite often, because Longmont’s excellent St. Vrain Greenway path allows you whiz along through the whole town, bypassing all the trouble that the car drivers have to deal with above. Down on the bike path it’s just you, recharging your soul and your muscles, passing a few other cyclists and watching the crystal clear water as it flows over oval multicolored granite rocks, maybe a few ducks and geese building nests along the water’s edge.

In 2013, that Main Street bridge was partially destroyed, along with quite a few other things in town, by an enormous flood. So they decided to rebuild it. And I decided to follow along with the project, because hey, I’m an engineer.

What I learned is that building even the smallest, least noteworthy road bridge is a spectacular project. The engineering calculations alone cost hundreds of thousands of dollars. The machinery involved would fill a football field, and the quantity of soil, steel, and concrete you need to move around is difficult to even comprehend. They have been working on this one insignificant bridge for over three years now, and I’m still waiting for the bike path to re-open.

Here's a peek under the bridge. Although you rarely look at this stuff, you definitely pay for it. Just post and beam like this consumes between 500,000 and 1 million pounds of concrete.

Here’s a peek under the bridge. Although you rarely look at this stuff, you definitely pay for it. Just that one post-and-beam support consumes between 500,000 and 1 million pounds of concrete – releasing equivalent pollution to about 150,000 miles of driving. I would need a bigger tape measure to estimate the whole bridge, but it would be many, many times more than this. Even a small bridge is a huge thing.

The total cost was estimated at 5.6 million dollars, which puts it roughly on par with, say, this 10-bathroom waterfront megamansion compound currently for sale in Florida:




And if you want a bigger bridge, like the flyovers with cloverleafs that get built every time two highways happen to interconnect, you can spend 100 times more.

How many megamansions will this cost us?

How many megamansions will this cost us?

Do you see the problem here?

This is exactly the same stuff I talk about in personal finance, except applied on a bigger scale.

The average American gets the most expensive car he can afford, and drives it as much as he can – for virtually 100% of trips out of the house. And yet he has a net worth of nearly zero, and subpar physical health, for most of his life.

The average American city builds the largest roads and parking lots it can possibly fund, maximizing the amount of available space for vehicles, in a noble attempt to reduce traffic and serve its citizens. But the result is that cities become nothing but wide, well-engineered, fast, deadly expanses of concrete. These are terrifying places for walkers and cyclists, which builds still more demand for more cars and more roads.

Let’s be clear here: I’m a capitalist, lifelong student of economics, pro-growth techno-utopian, and basically the opposite of a luddite. Efficient transportation is a huge wealth-builder for society, so we will always need bridges and fast roads. But these valuable resources will always be very expensive, so it makes sense not to waste them.

A transport truck full of factory components or food brings great wealth to Longmont when it crosses that bridge over the creek. The problem is the 400 single-occupant personal cars and trucks cramming up the rest of that road, full of people who are only driving because they don’t realize there is a better way.

Since even the most mundane bridge costs as much as a Mega Mansion, we are effectively building millions of mega-mansions mostly to to facilitate our clunky personal transport machines that are about 95% inefficient. And the whole reason we “need” cars in the first place is because we spread everything out by making our roads so big! It’s a circular problem.

Collectively, we spend almost half of our tax dollars on paving over our living spaces, or dealing with the consequences of the lifestyle created by that pavement.

The solution in both cases is so obvious, and yet almost nobody ever talks about it. In fact, many of us are still working to perpetuate and accelerate this stupidity.

Right now, as you read this, millions of people are passionately shopping around for new, better cars, and hundreds of American cities are planning enormous expansions of their road systems – new bridges, wider lanes, bigger parking structures. Politicians whine about our “crumbling infrastructure” and vow to rebuild it with emergency packages of deficit spending. Because we obviously need to build even more of it, even faster.

To Want Something Better, You Must Understand  the Core of Our Problem

Space for cars, or for people? Two ways to use a chunk of city land. (image credit: the happy city book)

Space for cars, or for people? Two ways to use a chunk of city land. (image credit: happy city)

When you’re born into a system, you come to think of it as normal. This was even true for me, growing up in an industrialized area and lusting after nice cars and motorcycles as I passed through my teens, feeling the frustration of heavy traffic jams and the joy of the open road.

But the quest for optimization led me naturally to bicycle transportation and minimizing car commutes, which led me to the study of urban planning, and the forehead-slapping realization that we’re doing everything wrong.

What it didn’t tell me, is how we got to this bizarre place. I mean, here are all of these relatively smart, wealthy people in this incredibly rich country, but our behavior is demonstrably self-defeating. What led us to this point, and how do we fix it?

Recently, I had the joy of reading a book about exactly this subject, from an author who has put much more thought and work into fixing it than I have. To put it moderately, it blew my mind.

Happy City, by Charles Montgomery, pretends to be a book about how cities are laid out, but you very quickly realize that it’s much more – a brilliant and thoughtful book about Everything that Matters – human happiness in the past, present, and future, and just how incredibly powerful our immediate environment is, in dictating this most important thing.

As you read through the book, which I have now done twice over the past six months (something I never do), you realize that city design strongly influences everything about our lives – our health, wealth, social networks, longevity, satisfaction and our tendency towards trust or violence which in turn even dictates how we will vote*.

And yet, for over 50 years we have been designing our cities in almost the most stupid, expensive, ineffective way possible. For example, did you realize that the following stuff is studied and well-documented around the world:

  • Building in the modern North American way (wide roads, big parking lots, wide lawns and plenty of space for every car) is the most expensive way that any group of humans have ever lived. We consume more concrete, water, pipes, wire, sidewalks, sign posts, landscaping, and fuel for this privilege.
  • But we don’t get any value for these dollars: we spend more time and money getting around than ever before, which leaves us with a chronic shortage of time to enjoy any potential benefits of dispersed living.
  • People who live in suburbs are much less trusting of other people than people who live in walkable neighborhoods where housing is mixed with shops, services, and places to work. This is because they have far fewer relationships with people who live nearby. And yet the overwhelming message of happiness research is that relationships with other people have the biggest influence on our happiness.
  • if 10 percent more people thought they had someone to count on in life, it would have a greater effect on national life satisfaction than giving everyone a 50 percent raise.

So we are getting a poor value for our money.

But how can it be a poor value if this is what people chose for themselves? It’s the free market at work, right?


This is the city Houten, just South of Utrecht and Amsterdam in the Netherlands. You can't get around the city by car, because the roads don't connect in the middle. You'd have to drive out to the ring road to get across town. As a result, 66% of in-town trips are by bike. Also, a central train station whisks you to other cities if desired.

This is the city of Houten, just South of Utrecht and Amsterdam in the Netherlands. You can’t get around the city by car, because the roads don’t connect in the middle. A car would have to to drive out to the ring road, and then back in the other side. As a result, 66% of in-town trips are by bike or on foot. Also, a central train station whisks you to other cities if desired. One of my life goals is that we – quite literally you and me – build a city like this here in the USA.

The book goes on to explain the history of suburbia, which I had never quite learned before:

  • Originally, we had big dense cities, small towns, and agricultural areas. The small towns were where people tended to be happiest.
  • Cities expanded to meet the desires of the workers: being close to work, but also having clean air and privacy like their small town counterparts. Housing was built at the edges in “street car neighborhoods” If you have ever walked around residential San Francisco, this is the basic feel.
  • When cars joined the picture, a consortium of GM, Firestone, Phillips Oil, Shell Oil, and Standard Oil bought up street car companies and shut them down. They also lobbied the government heavily and formed “Motorist Associations” to advocate for the rights of drivers – making driving more convenient and thus boosting driving demand for their products.
  • Cars were originally thought of as dangerous intruders in the city. If a driver killed a pedestrian with his car, it was a crime.
    The motorist associations pushed to change this balance: they sought to convince people that the problem of safety involved making sure people did not get in the way of cars.
    They invented the crime of “Jaywalking”, which is crossing a street somewhere other than a controlled crossing area.
    They pushed in the current legal arrangement, where if you kill a person with your car, it’s probably just a traffic violation. In some cases, it won’t be your fault at all as long as you were obeying the rules of the road.
  • Motorist associations also continually push for car-friendly policies like highway expansion, fighting against traffic tickets and speed traps, and even write articles like “Elon’s Carbon Con“, completely misunderstanding (or deliberately misrepresenting?) the entire life purpose of one of my favorite humans.

That last bullet point strays into politics, because you get into a battle of freedom versus regulation. I personally feel that if in doubt, you should err on the side of freedom. And in this regard, the book brought up its most stunning point:

  • Our current city planning method is not the result of free market forces at all. It’s actually an incredibly strict book of regulations which separates functions – residential, commercial, and industrial. It also defines setbacks, lot sizes, intersections, and parking requirements. It is all standardized in a group of standard, downloadable regulations that most cities purchase from Municode, while the road design comes from the Federal Highway Association’s Manual on Uniform Traffic Control Devices (MUCTD).
  • This is a self-replicating zombie of a system: every new town simply downloads and implements the existing book of rules without thinking about it, because “This is how things work in America”
  • But that original book of rules was built from an almost comical chain of events. The oil companies and motorist associations. Special interests and racism, like a regulation in Modesto, CA which banned clothes washing facilites from the main street, which happened to be run by Chinese people. The desire of rich people to keep away poor people (which is easy to do legally if you just ban duplexes and apartment buildings, or specify a minimum lot size as many suburbs do.
  • Highway subsidies, like the way we build roads with public money, lower the perceived cost of building a dispersed city. Mortgage subsidies from the federal housing association that made it easier to buy new houses than to restore or rebuild existing more central buildings.

This sounds pretty grim, but I look at it with optimism: if we have built this relatively wealthy society even with the boat anchor of horrible living design hanging around our necks, imagine how much wealthier we will become if we shed that useless burden for the next stage of our journey?

In fact, some people are already working on the project. A group called Strong Towns, run by a fiscal conservative engineer named Chuck Marohn, teaches cities about the folly of car-based expansion. From his career as a city planner, he has learned that the honeymoon of developer dollars and easy borrowing quickly fades to become a hangover of massive maintenance costs and low tax revenue. A densely packed city puts a lot of people, business, and money close together. With a dispersed city you get lots of maintenance costs but very few businesses per square mile.

A movement called “New Urbanism” started up in 1993 to bring back some aspects of people-friendly design. There are now neighborhoods popping up with these better design principles in every major city. In Mableton, Georgia they are actually reclaiming big parking lots to build useful islands of denser development, as shown in the earlier picture.

But it has been a long battle, because in order to make a place that is pleasant for people, you literally need to change or disobey the existing suburban building codes.

Here in Longmont, there is a street called “100 Year Party Court” and another called “Tenacity”, named by some frustrated New Urban developers who were dumbfounded by how ridiculous the existing road regulations were: “Why are they forcing to waste space for THIS MUCH PARKING on the streetside – what are they expecting, some sort of 100-year-party?”

Thus, it is time to stop the madness and start rebuilding our ridiculous infrastructure in a smarter way.

The increase to our personal wealth may be larger than any other possible change we can make. We have about 9 million lane-miles of roads in the US, and over 5,000 notable bridges. It costs about $1 million per mile to make a single lane of road, which means we have at least $9 trillion of roads and $100 billion of bridges, before we even get into 500 million parking spaces, which cost about $4,000 each! 

By Mustachian standards, at least 90% – Ninety Percent – of this pavement is wasted. It’s just there to support the other sprawl, and because we have trained our citizens refuse to walk or ride a bike, even for short distances.

How To Fix It

The good news is that this can be fixed. The reason people keep perpetuating the pointless car model is that they are unaware there is any other option.

If you live in Orlando and want to go out for dinner, you see only a choice of driving, or a long, noisy walk alongside a six-lane road on a narrow grass shoulder. I was there last month and did the walk, noting that they had not even bothered with sidewalks. I could see how Orlandans would assume that cars are superior to walking, if this were their frame of reference.

Now that you know there is a better way, there are practical steps you can take as a citizen:

  • Stop supporting car sprawl with your money. If a potential house, job, or store is in an area that doesn’t support bikes or walking, simply don’t sign the contract.
    After all, would you buy a house in an area that was impossible to reach by road? Probably not, and in fact areas like this are generally called “Wilderness”  because so many people insist on roads.
    Reverse your priorities and insist on living somewhere designed for Humans. There are now thousands of places like this. It’s worth the small effort to find one.
  • If you’re starting or expanding your own company, do it in a walkable area. If the majority of your employees will have no choice but to drive to work, that’s a bad place to start a business.
  • Start voting against any road expansions in your region. Somewhat counter-intuitively, road expansions never alleviate traffic jams – they only make them worse.
    The only solution to traffic is to get people out of their cars. Luckily, this solution also costs less and builds the wealth of your local economy rather than draining it.  Road expansion is to a city like candy and cookies are to your body. It has also been described as “trying to cure obesity by loosening your belt”
  • Channel that money you would have spent on roads – 100% of it – into bike paths, road diets, parks, central city redevelopment and “upzoning”.
  • Fight the “Not in My Back Yard” tendencies of most people, who object to new buildings or higher-density living near where they live. What these people are probably afraid of is not the presence of more people, but the car traffic they would bring. So, support more density, but only if it discourages cars.
  • Push for the removal of minimum parking requirements for new construction. Every time somebody wants to create a new building or business, our traditional building code system forces them to waste a bunch of money and precious land on parking spaces, which sit empty most of the time.
    It makes much more sense to use that extra land for more businesses and housing, eliminating the vast distances that encourage people to drive in the first place. Car parking would be a niche market, built by private companies and charged out at market rates.
  • And of course, just start walking and biking wherever you can. In a dense city, and even in US-style suburban sprawl, a bike will get you there faster than a car most of the time. Sure, there are a few spots that are truly unsafe for bikes, but even right now, with today’s infrastructure, we could eliminate at least 75% of town and city traffic overnight.
    For example, here in Longmont, biking is safe and efficient to 100% of possible destinations, at least 350 days of the year. But bikes represent less than 0.5% of the traffic I see on the roads.
    Every time you drive within a town, you destroy a bit of the feeling of community. Every single time you walk, you build the community, and advertise the idea of walking to every person who sees you.

As I learned from this book, urban planning is far from just a geeky niche topic – it’s really the foundation of most of our wealth and personal happiness.

We can improve everything about our lives, if we all understand a bit about how to arrange our living spaces. So I’ll see you out there this afternoon, as we start making some arrangements.


* (people who have weak bonds with their immediate neighbors will trust them less – and will also disproportionately vote for things like nationalist, anti-trade, anti-immigration policies and be worried about terrorism – sound familiar?)

Here’s a cool passage on this subject from the book:

“Imagine that you dropped your wallet somewhere on your street. What are the chances you would get it back if a neighbor found it? A stranger? A police officer? Your answer to that simple question is a proxy for a whole list of metrics related to the quality of your relationship with family, friends, neighbors, and the society around you. In fact, ask enough people the wallet question, and you can predict the happiness of cities.”

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Betterment Cranks up Features and Costs – is it Still Worthwhile?


From my 2015 visit to check out Betterment’s operations in NYC (photo: museumhack)

Since 2014, I’ve been using the Betterment investing service for a growing portion of my own savings.  I funded an experimental account with $100,000, and have had a monthly auto-deposit adding in an additional $1000 per month since then. The results have been documented on a page I call The Betterment Experiment.

So far, the experience has been better than I had expected. The company’s behavior – both to me as a customer, and through their relationship with the public and the media has been solid and classy. And their already-good investment system has continued to advance. I joined for the automatic rebalancing of shares, but since then have been impressed by two more obscure features that are surprisingly effective:

  • The tax loss harvesting system, which has sliced several thousand dollars from my income tax bill so far. (Note – this feature is generally most useful only at higher income levels, and I got extra benefit from having other capital gains to offset)
  • Tax Coordinated Portfolio Allocation, which automatically shields more your of dividend-paying index funds in your IRA instead of your taxable account. I just enabled this last month and am enjoying watching the results.

For people actually saving for retirement, there’s also stuff like an impressive retirement guide system and customized advice, but these are less useful to me personally.  Because this blog’s readership includes many technical and DIY-everything people, I wanted the Betterment account to stand on its numbers alone, not just feelgood convenience features.

I calculated that the tax-related features were easily increasing my return by over 1% per year, which easily covered Betterment’s 0.15% annual management fee. I still see many criticisms* popping up around the internet, accusing me of being a “shill” for Betterment and that everyone should just  manually run a Three Fund Portfolio in Vanguard. But so far none of them have correctly accounted for these tax savings in their calculations – they underestimated TLH. It’s an easy oversight to make without holding a Betterment account yourself and watching the results.

As my positive feelings about the company grew, I continued to move more personal investments over to a second, private account at Betterment, including my old work IRA. As a result I now have about $500,000 with Betterment.

Logically, this was still only a partial commitment – the numbers worked out in favor of sending all my future investment dollars to Betterment, but I was still building trust in the company, so I decided to take it slowly. On top of that, my older investments (mostly with Vanguard), have gone way up in value since I made them in the early 2000s, so it would be tax-inefficient to sell them just to buy similar index funds through Betterment.

Then, They Dropped This Bomb

(Update: after writing this post, I had the opportunity to exchange several private emails with Betterment founder Jon Stein and other employees, and they were quite reassuring. He also posted a much better explanation of why they changed prices, here. So I have updated this section to reflect what I learned.)

On January 30th, I got a preliminary note from the company announcing that their fee structure was about to change. The original tiered price structure looked like this:

  • 0.35% on the accounts under $10,000 (with auto-deposit)
  • 0.25% on accounts $10,000 to $99,999
  • 0.15% on accounts over $100,000

They announced an upcoming change to a flat fee, with a cap

  • 0.25% on all accounts up to $2 million
  • Free management on the portion of your balance which exceeds $2 million

In other words, your fee is capped at $5,000 per year.

They also added personal consultation services called Betterment Plus and Betterment Premium for higher rates, and I have heard these are welcome services for many customers. But since I greatly prefer talking to computers rather than people when it comes to the subject of money,  we’re focusing on the robo-advisor service – now called Betterment Digital – here.

In practice, the two fee levels look like this. The first graph shows what happens on balances up to $1 million, while the second graph is just a zoomed out version showing up to $4 million. The new fee structure will cost significantly more for the wealthier readers of this blog – it only starts to save you money at around $3.3 million in investments.


People with under $100,000 in their account will notice no difference. Those of us in the $100k-$2 million band will see a 66% increase in fees (starting on June 1st), then things even back out by $3.3 million.

In my situation (a $500,000 balance), the annual management fees jump from $750 to $1250 per year, an increase of $500.

How do I feel About This?

These days, I try to avoid outrage and instead think about the big picture. The price change brought up some questions:

  1. Why is the company increasing fees? Are they correcting a past mistake, having realized it’s hard to make a profit on 0.15%? Are they being opportunistic? Are they plumping up the company in preparation for sale?
  2. Is the service still a good value at for me 0.25%?
  3. Is there a risk that this will happen again? Investing large chunks of your life savings requires a huge amount of trust. In my opinion, this sudden price change was a violation of my trust – it sets a precedent and I wondered if it could happen at any time. Sure, you can always pull your money out at any time, but this is a hassle with potential tax consequences. Good investors leave money in place for decades and don’t want to be forced to move it around.

Question #1 is a philosophical one. I am rooting for Betterment and I like the people who work there. In general, I try to do business exclusively with companies that pass this test. And this makes me less of a customer and more of a partner.  I want my business partners to make money off of their customers, including me, because that’s what will keep them in business. Being a customer should never be an adversarial relationship.

After talking to Jon, I learned that the price increase was a necessary thing to remain a growing and sustainable business. Doing the math, they manage $6 billion, and at 0.15% they would only collect $9 million in annual income. Far too little to go around in a firm with 100 employees. Sure, they are winning new customers quickly, but that is a very slim margin at this stage. Jon said he would prefer to drop prices as the company grows large enough to allow it, but first we have to get there. He also said their goal is to become an independent, public company.

Question #2 is just a math question, and the answer is Yes. It is overwhelmingly clear that my Betterment account delivers more than 0.25% net annual improvement over trying to manually approximate its performance with Vanguard ETFs. Their software is incredibly good, and just keeps getting better. The talent level of the people there is insane**. 

Question #3 was the real stumper for me. This price increase came out of nowhere, and nobody asked me for my opinion – as a customer or as a long-time promoter who has sent thousands of other customers to Betterment. When I got the short advance warning, I spent the day emailing with the marketing department and even the founder, trying to talk them out of it, because I feel that it was placing the trust of customers at an incredible risk. From my email to their team:

” the single biggest weakness that Betterment has (which it is gradually overcoming), is trust […]When you raise prices on existing customers (and even on future customers in the middle of the customer acquisition stage) this trust is partially or completely shattered.

Investing millions of dollars over a lifetime requires a much more stable policy that reassures people over a period of multiple decades. The good news is that the profits are still there – one wealthy person may have the investments of one hundred or even one thousand beginner investors. But Betterment is still a brand-new company working on acquiring its first foothold of trust for larger, more conservative investors. Is this worth it?”

This is a human behavioral finance problem straight out of a textbook. As humans, we are subject to the cognitive bias called “Loss Aversion” – we fear and perceive the loss of what we currently have much more than we fear and perceive missed opportunities for much larger amounts of gain.

For example, which of the following two options would you prefer?

  • an anonymous vandal does $1000 of damage to your car in the parking lot at work, or
  • you car-commute uneventfully to work for a few months – but unknowingly miss the opportunity to ride your bike, which would improve your financial picture by much more than $1000?
Complaints on my Twitter feed about Betterment price change - click for larger

Complaints on my Twitter feed about Betterment price change – click for larger

That second option should be much more scary to every office worker, but it’s not. And yet Betterment has walked itself right into the same trap – subjecting the wealthier portion of its 200,000+ customers to loss aversion.

(Related Reading: here’s an earlier article about one of my favorite books of all times, called Predictably Irrational – it  teaches you about more of your own flaws in a very entertaining way.)

I feel that a much better business move for Betterment would have been to spend less money on developing new features, in order to be able to leave the existing price structure in place.

But given the current path, I now think the biggest problem was the way they communicated the price change. It was mentioned in passing as part of a cheerful “Look what’s new at Betterment!” email to customers. It’s the communication style we have come to expect from Verizon or Comcast, but not from a place as genuine and authentic as Betterment.

You could see the pain in the passionate essays that customers immediately sent to my email inbox this week, and in the responses to something I put on Twitter. One guy even started a petition on in an attempt to communicate customer dissatisfaction.

The net result for me will probably be no change. I’ll leave the Betterment Experiment running, and continue to deposit the $1000 per month, because that’s exactly  what an experiment is for – I leave it running so we all get to watch the long-term results.

I still plan to transfer more into my private account over the next year, but I will make a point of reviewing the other robo-advisers and competing services from Wealthfront, Schwab, Vanguard, and WiseBanyan in order for this blog to be less Betterment-specific. My trust was shaken and then mostly reassured in this case, but I don’t want readers in this blog to follow in my footsteps without considering all the options independently.

An investment company making management fee increase is a very small deal in the grand scheme of things. But it is a big deal to me because I really try to keep my recommendations useful.

* To these critics I say “I respect your hardcore Vanguard chops but please try to separate Bogleheads ideology (which holds that anything not Vanguard is automatically Evil)  from the actual numbers. Beating the market is not a viable goal, but reducing account-holder mistakes and reducing taxes is much riper area to harvest. Betterment only has to accomplish this at an 0.25% annual rate to justify their fee. 

** Observe this white paper they published explaining the details of new Tax Coordinated portfolio.  They just operate on a higher technical plane than other companies.

Disclosure: Betterment’s real relationship to MMM – After I invested with them in 2014, I also joined their affiliate program as I do with any product I use and like (see my Affiliate policy). Then I got kicked out, because more recent SEC rules state that you cannot be an affiliate while also having a “testimonial” review.  I felt a review is useless if you can’t report on your own experience, so I decided to leave the program so I could leave my review up. No problem, of course – my goal is to never let affiliation affect my recommendations as there is plenty of money in life either way. Later, Betterment paid to have flat-rate advertising on this site, and that program may or may not continue  – this article might make me a less desirable advertising platform, and I didn’t check with anyone before publishing it.

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Inside Mrs. Money Mustache’s Top-Secret Five-Figure Etsy Shop

oil-mixFor the past two years or so I’ve been keeping a secret from you, and I think today it is finally time to spill the beans.

The secret is that my wife is no longer really retired, and in fact she started a business that is now big enough to fund our entire family’s lifestyle. Making this confession will subject both of us to the full fury of the Internet Retirement Police. But it’s worth it, because there are some valuable lessons in her experience that could be useful to other people hoping to take control of their own income.

I’m always fascinated and happy to see people making money through self-employment, (especially in fields that don’t require a university degree) because it presents a nice shortcut around most of the problems that the world of work presents to us. Prefer to set your own schedule? Go right ahead. Unhappy with work conditions? Change them. Want a raise? Company profits are under your control. Don’t like your boss? Just find a mirror and have a quick word with yourself.  Sure, there are loads of great jobs out there, but conventional employment is often only a small, boring slice of a life’s work experience.

The Etsy Shop


You’ve almost certainly heard of  Etsy, a highly popular online marketplace that specializes in handmade, small batch products – most often produced by a single person. Almost everything there is cute, unique, and custom, which makes it a hit in the gift-giving and personal pampering markets. And because the focus is on small entrepreneurial business and relatively natural products, even Mr. Money Mustache can get behind the general theme without too much grumbling about clueless consumers.

My wife was a fan and an occasional customer, but also became curious about just how difficult it would be to make some of the things that were for sale – often at relatively high prices. So she launched an investigation, which has led to two years of fun and learning, and is still growing.

Update: When I first posted this article, we asked people to please avoid trying to track down her Etsy shop, just to keep her experiment realistic. A small percentage of good-hearted but mischievous Mustachians disregarded this request and flooded her shop with orders anyway. Almost her entire current soap inventory (over $1000 worth) was quickly sold out. So if you do find her shop, you’ll only see a few remaining products for now. You’ll have to use your imagination to picture what it usually looks like – an array of 20 different fancy looking soaps and other products.

So to continue this tale, let’s launch into an interview with the lady herself.

An Interview With an Etsy Entrepreneur


Mr. Money Mustache: Hello there wife! Thanks so much for allowing me to do this interview with you – I know you’re normally not a fan of the public eye.

So to start things off, what is it exactly that tempted you to get into the business of being an Etsy seller in the first place?

Mrs. Money Mustache: Hello husband! It is strange and fun to be back on the blog, so thanks for doing this article.

Becoming an Etsy Seller was a gradual process, as it is with many folks, I suspect. I was sitting around being all retired and, frankly, I was bored sometimes. At the time, I didn’t have a real plan for all my free time.

One day, while standing with a group of parents at the after-school pickup, I became enamored with these lovely wrap bracelets with pretty beads all the moms seemed to be wearing. I hadn’t seen them before and became curious, so I started shopping online. I found out they cost a small fortune and, not really being a jewelry person, I quickly dismissed the purchase.

But, upon further review, I saw they were selling on Etsy and this prompted me to think I could make one myself. So, I dove down into a rabbit hole of watching videos and buying supplies and I was hooked. Learning and making really filled a void in my life, so I went a little crazy. I made a bunch of bracelets, gave them to friends, and at a certain point, I had spent more than I felt comfortable on the whole endeavor.

This is when I came back to Etsy and the idea of selling was born. I figured if I could sell enough of these bracelets I had learned to make, I could pay myself back for all the stuff I had bought to make them recreationally.

MMM: Wow, that’s interesting – selling as an atonement for consumer guilt? It sounds negative when you put it that way, but it seems to have become a big positive in your life. So anyway, what date was this?

Mrs. MM: This was in April of 2014. That’s when I started my first shop.

MMM: How long did it take to get your first sale? And how have your sales ramped up since then? What was your busiest month so far?

Mrs. MM:  It definitely took a while to get my first sale. About 2.5 months after first opening my shop. But, I was so busy making items and learning about Etsy that I didn’t really notice the time pass. I remember it was a holiday-specific item (a fourth of July bracelet) and that’s when I realized the importance of holidays in retail (duh!)

My sales increased really slowly over time. I did so much research by lurking around in the Etsy forums and finding out what makes other shops successful. I created a lot of different products (necklaces, bracelets, guitar picks, even crocheted dish cloths!) so I could test them out and see which were successful. A wise man once said: “Work is better when you don’t need the money.” and he was right. 🙂 I was able to do a lot more than a shop that can’t invest much due to money constraints.

My busiest time, by far, was the holiday season of 2015. In November and December of 2015 I was so busy that I couldn’t keep up and had to place my shop on vacation mode (Etsy has an option for that, which basically means: I’m not open for business at the moment.) During just those two months I sold about $10,000 of stuff. I was working constantly and it got in the way of family time and I realized I needed more balance.


Blending various fancy oils in the home workshop, with a stick blender.

MMM: I noticed that even after your first shop became fairly successful, you actually started a second Etsy shop. What was the cause of this? How has the experience been, compared to the first?

Mrs. MM: Yes! I decided to start a second Etsy shop in August 2016. As an Etsy Seller, I really wanted to support other Etsy sellers, so I started buying stuff from them quite a bit. I purchased almost all my shop supplies on Etsy and I also started buying small gifts.

One year, I bought some handmade soaps for family members at Christmas and tried one out myself. I fell in love with it and realized how much better my skin felt. Of course, as a crazy-researcher-type (which is what I realize I am, post retirement), I decided to try making my own soap. This led to a second love and once I felt confident in my products, I opened my second shop, which sells mostly natural bath and body products (soaps, scrubs, lotions, and oils).

This second shop is so much more fun than the first. For one thing, I am making products that I love using myself and really believe in. I also had so much experience at making my first shop successful that the second one was much easier. I had a few customers that shopped at my first shop that immediately bought from my second shop. So, that first sale came much faster.

I also really love the “soaping community”. All the soapers I’ve met through Instagram (which is a platform I used to hate and now love) are so generous with time and information and they make beautiful products too. It’s just a completely different (and more fulfilling) experience this time around.

MMM: How do you decide what to make and what to sell – and which products to discontinue?

Mrs. MM: In both shops, I try a lot of different things. I follow my own feelings of what I’d like to wear or use. I like to make new items and sometimes they do really well and sometimes they don’t. I also find that in the bath & body world, you get repeat customers much more easily. So, they will let me know what they want more of, which has led me to keep products that I wasn’t sure if I should continue and making new ones.

I also follow my values. For example, right now many of my bath and body products are all natural, but I’ve also tried using ingredients that aren’t considered natural. I like to experiment and decide for myself what I like. But, after dabbling in fragrance oils and other “not 100% natural” ingredients, I find myself veering back towards all-natural. I’m trying out a lot of different packaging and am finding that this is a challenge as well, as I want everything to be eco-friendly, but also reasonably priced.

So, I guess I discontinue items that aren’t doing well and that I’m not a huge fan of either. But, I will always make new things (because that’s the fun part), so I will always want to sell new items along with the ones that stay on and sell well.

MMM: What are the factors in your success – Is this something just anybody can do? If not, what skills or personal tendencies do you think would create a good Etsy shop owner?

To take nicer photos like this, she had to figure out lighting, background, and camera - For both Etsy and MMM pruposes, we upgraded to a Sony alpha6300 with separate Sigma prime F/1.4 lens.

To get nicer photos like this, she had to figure out lighting, background, and camera. For both Etsy and MMM purposes, we upgraded to a Sony alpha6300 with separate Sigma prime F/1.4 lens. I love the camera – takes amazing film-quality videos too.

Mrs. MM: My success (or, my definition of success anyway) is probably due to incessant research. I am always researching. I read a lot and look at a lot of other shops and try to figure stuff out. It’s a fun puzzle and I think it is the most interesting part of owning an Etsy shop for me. I would get bored if I wasn’t doing that. The business half of my degree is finally coming in handy!

To be successful on Etsy, you need to understand how SEO (search engine optimization) works. Etsy has their own search engine, so you just need to figure out how to make your listings show up near the top, which is easier said than done!

Once you know that, you need beautiful pictures so that people actually click on your listing. Again, this takes a lot of research and some photography skills. I look at every single picture in a search result and figure out what makes me click on an image. I also look at my listing in that list and see if it stands out.

For example: I recently realized that I was clicking more on photos of soap with packaging than “naked soap”, so I changed one of my listings so that the first photo had packaging – and it did result in more sales.

Doing what it takes to get the shot.

Doing what it takes to get the shot.

SEO and quality photos are the two biggest things. After that, you need to give excellent customer service and ship your packages out in time. It helps if your packages look cute upon arrival too. That leads to good reviews and word of mouth, which leads to more sales.

MMM: What has been the biggest unexpected positive, and negative, in your experience in dealing with customers?

Mrs. MM: The biggest positive has come from my second shop, as I have built up repeat customers in a relatively short amount of time. These are people that leave me incredible reviews, send me a message that brightens my day, post their purchases on Instagram, etc. I am very surprised by this, but it does bring me a lot of joy.

The negatives used to affect me a lot, but I’ve learned that they will always be there. There are people that leave one star reviews without contacting me first. People can be pretty brutal when reviewing a product. I don’t think they realize they are leaving a review to a single person (as opposed to a company). It’s one thing to say “Amazon sucks”, but when someone says “You suck”, that’s totally different. Sometimes they are folks that own a competing shop on Etsy (or have a friend that does), so you know the review isn’t even accurate or relevant, but it still sits there staring you in the face.

MMM: I hear you on that Mean Internet Strangers thing. Sometimes I stumble across multi-page discussions on Reddit or Bogleheads, among people I’ve never met, who are just making the most bizarre and pessimistic speculations about our personal lives, or my motivation for writing the blog, or whatever. There is no practical way to set everyone straight, so you really just have to develop a thicker skin instead.

Mrs. MM: I think it’s a bit easier in the smaller world of an Etsy shop. There are also a lot of difficult customers, but I always answer all their questions and do my best and some of them have actually made large purchases or become repeat customers. One of my best customers in my second shop was someone that was previously difficult.

MMM: What do you think the upper limit on profit would be in an etsy shop? Do any of your role models or competitors seem to be running pretty big operations?

Doing the Math

Doing the Math

Mrs. MM: The sky is the limit! There are many shops on Etsy that started off as one-person endeavors and now they own huge businesses with many employees. Most of them move on from Etsy and start their own web sites, which makes sense as they no longer need the Etsy platform to generate sales.

Etsy also has rules about manufacturing help and the handmade nature of items, so if you get big and want to start selling different things, it makes sense to move on.

That’s not the goal for me, although I might use a helper during the holidays sometimes. (MMM himself has been known to sit on the couch and cut out hundreds of cardboard squares for my packaging material)

My goal is to keep making and to keep learning… not to have a huge money-making operation. My word for 2017 is ‘balance’. 🙂

I should also add that on the lower end, it’s very easy to make nothing, or even lose money on an Etsy shop. There’s a lot of competition, so it is not easy to get established. Hard work and endless patience are essential to get through that painful first year.

MMM: Hmm, there were no numbers in your answer, but I guess we don’t really know how any of those huge Etsy sellers personally. But based on their photographs of daily production I’d estimate that the upper limit might be in the $200,000 range of annual profit for a single-person shop. $1000 per day in sales, minus about 33% in cost of materials and other overhead.

But as you say, shops can get much bigger than that – they just usually leave Etsy, hire some employees, and expand into a standalone operation.

So let’s talk about your situation instead – what’s the net hourly profit you would say you make at this stage, now that you are established?

Mrs. MM:  Hmmm… that’s tricky because I keep wanting to make new things, so I am spending more than I would be if I were purely profit-driven. My first shop is at a stage where my profits are very good compared to my revenue because I’ve lost a bit of interest in that shop and am not spending much on it. Hourly, I’m guessing around $30 per hour. However, as a result of me losing interest, it has slowed down quite a bit and it is actually “on vacation” on Etsy at the moment.

My second shop is still in the growing stages, so profits are not that great at the moment. I’m also finally at a place where my prices are set where I want them to be. My up front investment was quite big and soap takes 4-6 weeks to cure, so that shop is still up in the air, profit-wise. But, I’m guessing it will become more profitable on an hourly basis than my first shop once I ramp up my operations by making larger batches (less time spent and supplies cost less when bought in bulk).

So yeah, good question. I guess my answer is: “I’m not sure. I should probably calculate that.”


A freshly poured batch of soap. This hardens overnight, and you cut it into 16 bars. 4 weeks later, it is cured and ready to sell.

For example, to make a 5 pound batch of soap (a “loaf”) takes about $20 worth of materials if you are using high-end stuff like coconut and olive oils. This takes roughly 2 hours of labor by the time you make it, clean up, and later cut and package the soap. You end up with 16 bars, which sell on Etsy for $6 each. So, your profit is about $80, for roughly two hours of work. But that work is spread over a month, so you need make a bunch of batches to keep things in stock.

MMM: Where do you see this hobby taking you?

Mrs. MM:  Ultimately, I want to be able to use this hobby for community building. I imagine owning a store somewhere on Main Street that sells my products, but also empowers others to make. I see myself teaching others how to make their own things and how to start their own shops. I see myself making alongside others and having this ongoing conversation about our common problems and our successes. I imagine connecting with other makers in a community space. I see us all teaching kids that you can make instead of buy, create instead of consume. You can own your own business while also doing the things you enjoy.

MMM (update): During the casual yearlong process of working on this article, we ended up stumbling upon an interesting, underpriced old building on Main Street, and are now about to purchase it. It will make for some interesting stories (and parties too), so I’ll keep you posted on that.

Mrs. MM: The maker’s movement is huge and is having a big resurgence in our modern lives. I am the type of person that never considered myself “creative”. I still wouldn’t use that word to describe myself, but I am now a handmade maker. I make stuff with my hands and they are sometimes even useful things! You can do it too!

I would love to go back in time (or forward in time) and live in a world where everyone is a maker of things and we just make and trade with each other. The simplicity and the community of that framework really appeals to me and it gets at the root of what makes us human.

MMM: During these past two years, I have mentioned your growing Etsy hobby, but never told anyone how to find your shop. And even with this article, I still want to encourage readers not to go out and try to find her shop on Etsy. We both felt that doing so would be a form of “cheating”.  Can you explain this philosophy?

Mrs. MM: It was really important for me to create my own success, independently. Success isn’t as fulfilling if you cheat! I’m pretty sure that almost every single person who purchased from me didn’t know my secret identity and that feels good.

I’ve built all of this myself, from scratch. I’ve also learned that many people will pay big bucks to cheat the system (whether it is online selling, blogging, etc). I’ve found that the harder, longer road, is always better in the end.

MMM: That’s really cool. And it’s also more educational for you. As a relatively high achiever with skills in software and technology, and no financial pressure, it can be argued that you are already “cheating” compared to most Etsy sellers.

But if you do it right, financial independence is the good kind of cheating – you preserve the learning and effort, but cut off the stress and any temptation to create shortcuts.

And even without financial independence, entrepreneurship is a huge advantage to add to your collection of life experiences. I have a bunch more stories of entrepreneurial friends I’ve been wanting to share with you, so let’s do it in the months to come.


Somewhat Related Reading:

50 Jobs over $50,000 – Without a Degree
Interview with a CEO – Ridiculous Student Loans vs. the Future of Education

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