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Mr. Money Mustache and Jim Collins: An Interview

….photo by: timmycrockery

Mr. Money Mustache is the Babe Ruth of the early retirement zealots on the blogosphere. His fiery style with a touch of badassity has inspired thousands around the world to get off of the financial treadmill and to achieve financial freedom at an early age. And if you are looking for someone as financially savvy as Mr. Boggle, start reading the blog of one of my favorite bloggers and a pal jlcollinsnh.

Together, Mr. Money Mustache and jlcollinsnh. are two great minds to seek financial wisdom from. As Father’s day is approaching fast, I asked this duo to provide their financial advice for young adults, including my daughters, who will soon have to start making financial choices in their lives. And they did not let me down.

Jim Collins even engaged his daughter in this conversation to make it bit interesting.

Me: You both have achieved financial independence at a relatively young age. If you have to advice young people who are about to begin working, what are three important financial habits that have had most impact on your financial well-being?

Jim: I actually have a post in the works on this very subject tentatively titled: “My plan for my daughter.” It will be in list form. But the three key elements are:

1. You are young and tough and know how to live like a student and with roommates. Keep doing it.
2. Spend the next ten years or so working your tail off. You are young and tough and this is the time to establish yourself in your field.
3. Save 50%+ of your income and pour this into VTSAX. Pay absolutely no attention to the market ups and downs, unless you want to celebrate the downs as the buying opportunities they are.
4. Do this and 10-15 years out you’ll look at your VTSAX stash and realize you’re Financial Independence. At that point sit back, sip a glass of fine wine and savor the delicious dilemma of deciding what to do next.
OK, that’s four. Buy three and get one free!


MMM: The same rules apply to everyone hoping to build some wealth: You need to spend less money than you bring in. For me, that meant working the equation on both sides – I deliberately sought out jobs that paid well, and always kept an eye on expenses.

To be successful at this, you can’t give up too easily at the first sign trouble. Many people say things like “I can’t ride a bike to work, because I live too far away”. And thus, they doom themselves to spending $100,000 every 10 years in commuting costs. When really, you are always free to optimize every bit of the equation. You can move to a new house, or a new job, city, state, province, or even country. The same trick applies with every area of expenditure, and even your earning potential. Everything can be optimized, and there is ALWAYS another, better way, as long as you don’t put up mental roadblocks for yourself.

For a young person, I would advise: find a way to save at least 50% of what you earn, and eventually 75%. Do as much optimization as it takes to get there. At that point, you can relax a bit, because you’re less than 10 years away from financial independence, when money will soon stop mattering. It will be much easier and less radical than it sounds, and the results in your later life will be spectacular.


1) always invest at least 50% of your income,
2) learn to live on minimal needs, 
3) avoid all debt

Me: I grew up in India when there was no credit card. One lesson I learned from my father early on was to delay gratification till I can earn money to pay for. Fast forward now — with easy credit and rapidly growing consumerism — what parents can do to teach their kids value of money?

Jim: Nothing teaches the value of money quite like work. My daughter is a waitress and she knows just how much effort it takes to earn those tips. Next she’ll be on her own and learn all about paying the rent out of her earnings.

As for credit, just like in India, in our family there is no credit card. Well, there is actually, but only in the sense that it is a convenient way of paying for things and not, you know, a source of credit. (laugh)
She has both heard me preach against debt and has seen we never use it.  Credit cards are a convenience to be paid on time, every time — not a form of financing.
It is simple really:

If you have to borrow money for it, you can’t afford it.
Never borrow money; and carrying a credit card balance is just about the worst/most expensive form of borrowing there is.

Someday you might borrow to buy a house, but don’t be in any hurry. Houses are not an “American Dream” or a way to “build equity.” They are a pain in the ass indulgence to be bought only when and if needed and even then only if easily afforded.


MMM: My own son is 7 years old. We’ve always set an example about not buying disposable things, the concept of a finite environment, and riding bikes instead of driving cars. But recently, I had a neat conversation with him where he started to appreciate the concept of investing.

He has amassed $32 in his little wallet at this point, and he is hesitant to blow it on new toys, because it took him a year to accumulate it. But I explained that if he invests that money at a 10% return, he’ll get $3.20 every year just for letting someone else borrow it. Plus, he’ll still have any additional money available that he earns.

He’s excited by this idea, so he is going to invest all $32 with “The bank of Mr. Money Mustache”. I will pay him 10% interest and give him an auto-updating spreadsheet to track his increasing wealth. To make it more realistic for him, I’ll pretend the money it is in Lending Club or the stock market. We’ll get to the concept of “risk” later.


Jessica: Don’t allow them to have a credit card at a young age. Whether the parents give their kids an allowance or the kid works, the parents should not give their kids more money in addition to what the kid is already making. That way if the kid wants something, they have to use their own money.


Me: Lifestyle inflation is a common practice for those who believe and preach in making more to enjoy more. In today’s society, you both may be in minority. How do you persuade young generation that happiness has no nexus with lifestyle inflation?


Jim: Lifestyle inflation has never been much of a concern to me. Rather the purchase of anything is a simple matter of priorities. Would I rather buy a Mercedes or financial freedom?

For me, freedom is the most valuable thing money can buy, so that has always been my #1 priority. There is no “sacrifice” here. Just my personal choice.
Following on with my response to question #1, I’d say once you reach FI (defined as 25x your annual expenses/4% sustainable withdrawal rate) start living on that. Do this even if you keep working.


Now your options are wide open. If you decide to stop working and engage in non-paying activities you’ve got the freedom to choose that path. You also have the freedom to continue with your career or start a new one. If that’s your choice, I’d suggest now investing 100% of that income.


Your net worth will explode, as will the dollar value of the 4%. If you want to expand your lifestyle, now is the time and this is the way. If you wind up with 10 million and want to spend every penny of the 400k that throws off, I have no problem with it.


But Mr. MM made a very insightful comment in one of his recent posts: If you’ve had the discipline to achieve FI and can now afford these things, you may well discover you are no longer interested in them. Like me and the Porsche 911 I now know would be more trouble than it’s worth.
While you didn’t ask, I’d also suggest that as one reaches Financial Independence,  it is worth giving some of it away. Few things are a more pleasurable or satisfying use of money. And you don’t have to worry about it getting dented in the parking lot.


MMM: For this, I think you need to hail back to the old masters who figured this stuff out long before we were all born. Thoreau, Benjamin Franklin, even the Greek philosophers. It is a natural human weakness to think that buying stuff equals happiness. The illusion is widespread, because it is reinforced by the rest of society and by constant marketing.

But it is possible for a rational person to beat the system. First of all, people are excited to hear the news that they can spend less and still be happier. This frees them from the trap of spending a lifetime always feeling poorer than the next guy up the ladder. It’s the shortcut to getting rich, and everyone can do it. So people tend to listen.

So once you have planted the seed, you just need to lay out the case with enough logic and emotion to get people to see past the false curtain of consumerism. It’s not difficult, because you have the truth on your side. But it takes at least a few blog posts to accomplish this.

I can’t just ride up to a crowd of girls coming out of a boutique store with $2000 Gucci purses on my old mountain bike and say, “Hey Girls! Look at me! THIS is the way to live! Why don’t you return those purses, get yourself some bikes and let’s go hit the foothills!”. It’s a gradual process.

Jessica: I think this will come as the kid becomes more responsible with money. I also don’t think you can generalize a generation when it comes to happiness. Individual people find happiness different ways and I think that stems from their environment, not which generation they grew up in.

People from the 1920s associated happiness with money, people in my generation do it and people in the future will as well. If you are raised with surroundings where physical things carry more importance than personal connections, your attitude towards money will be different than someone raise with less attention to owning things.


Me: What you guys have achieved (financial freedom) at such a young age is remarkable. Most young people want to enjoy life to the fullest before they get married, so saving 60-70% — as soon as first check arrives – is considered bit stoic. What we can do as a collective society to change this financial pitfall?


Jim:This is a tough one for me. I never thought of what I was doing as stoic or deprivation. It was always simply a matter of the way I chose to spend my money: On building the financial freedom that was most important to me. It is all “spending”, the only difference being what is important to you.I never had much interest in stuff. My main desire has been investments and my indulgence has always been travel.  When young that is actually more fun on the cheap. After our luxury week in the fancy Prague hotel, my daughter and I had this very conversation. She greatly enjoyed it, as did we, for its novelty.But she left us to continue her travels in Portugal and Ireland. She was very much looking forward to the hostels and the vibe they provide. I did too at her age, and still do to some extent. But I confess as I’ve gotten older the little luxuries my FI can provide are most welcome.

As for changing society, I’ve never been one who saw much to gain in that. While I can applaud those who try, It has never seemed much fun or of much interest to me.As I say in my blog Manifesto, we have one obligation to society:
To be sure we and our children are never a burden. Beyond that is pure personal  choice.


That done, we should each live our lives by our own lights and standards. Perhaps that provides a useful example for others.


I confess, I have little interest in trying to persuade anybody (other than my daughter) to follow my path to FI. But for those who are interested, I’m delighted to share what I’ve done and, of those things, what has worked for me and what has kicked me in the ass.


MMM:As a society, we’re already doing what is necessary – we’ve invented the Internet, which is the first way we’ve ever had for ideas to circulate freely without regard for the power or money behind them. Over time, I believe this will allow the most valid ideas to float to the top, as they stick in the minds of more and more people, and are reinforced and spread through society.

Living life to its fullest is a concept that can exist almost independently of how much money you spend – and when money is involved, there is great flexibility on how you do it. For example, a young person wants to create lifetime memories by taking a long road trip with three friends. Can the memories only be created by making this trip in a financed 2013 Cadillac Escalade? Or could equally good memories also be made in a 2004 Honda Accord? Easy decisions like this are often all it takes to make the difference between a 0% savings rate, and a 75% one.

If the idea of more thoughtful consumption is sound, which I believe it is, it will find its own audience. Eventually, this will change the way people raise their own children, the way they run their governments, and even the nature of business and the products that are offered and promoted. In the future, I fully expect wasteful over-consumption to be something that only social outcasts engage in, rather than the majority of people doing it while feeling it’s a normal way to live.


Jessica: I’m not sure I know what the “pitfall” is here. If it’s what do we need to do to change young people’s attitude about living life to the fullest before getting married, I don’t think that is something that should be changed. I agree with it. I think people should enjoy life as much as possible and as great as I’m sure marriage is, its important to do what ever it is you want to do as an individual before your solo life becomes a life with someone else.
If it’s to change this negative attitude towards saving money, then I think emphasis needs to be put on the fact that saving money isn’t suppose to strap you into one life path for the rest of your life.
The idea of saving the money is so one can have financial freedom to do all the stuff they want. Yeah, saving money can be a bit difficult and you probably can’t afford to buy a private island in your 20s, but you can still enjoy life.


Parting Thoughts: Blogging is a noble passion. I get to know and learn from the bloggers like Mr. Money Mustache and Jim Collins who are selflessly changing the way most people think about money. As a proud father of two young daughters, I feel that their financial future is brighter than ever!

A book worth reading after reading this interview…

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Comments (17)

Great interview and excellent tips! Keep up the good work!

Thank you, MC! I appreciate your support. And it was really a treat to have conversation with Mr. Money Mustache and jlcollinsnh.

[…] If you care to, check it out here. […]

Thanks Shilpan….

I’m honored you asked and it was fun working with you on this.

Although, I was a bit taken aback when you called me “someone as financially savvy as Mr. Bogle.” :)
That would be Jack Bogle? As in the founder of Vanguard and the inventor of index funds?

While I’m as prone to wallow in praise as the next guy, this is more than a bit over the top.

I just write about the things Mr. Bogle created. A candle in comparison to a wildfire. But I’m honored that anyone would see even a candle’s worth of the same flame in me as in him.

I like your candle and wildfire analogy, Jim! I think you are doing a great service to Vanguard by becoming an angel advocate of their index funds. And rightfully so because most professionals can’t beat Vanguard’s performance at much higher expense ratio.

Great interview of the two main PF bloggers that I follow. I particularly liked the lesson for kids (we have 7 year old twins). Just today we were talking about how the bank pays you to keep your money there (instead of spending it). I may need to to borrow the idea of the Bank of MMM and supplement their savings to sweeten the pot a bit (up from the 1% the bank is paying).

Indeed, the Bank of Mr. Money Mustache pays way more in interest than any other bank of this earth! Thanks for visiting.

I really like this interview. Especially having the perspective from his daughter. It just goes to show how kids learn if they are taught. Too many families don’t teach children enough about money, finances, and credit. When you do right by your kids for the most part it shows. I was speaking with a friend from another country and he always say we live so much on credit here in the US. Where he is if you want something you pay cash or you dont get it. You want a home you pay cash until its built but then you dont have the monthly mortgage payments to worry about.

That’s how it was when I grew up in India. But, during my recent visit, I noticed that people in India have started embracing consumerism.

Great article. I love these two pF Bloggers, and read their blogs religiously. I’m definitely putting some of their advice into action.

[…] financially independent peoplez are going to ride bikes! In case you didn’t get the memo, here it is. It’s a cool interview with MMM, jlcollinsnh AND his daughter. Good to know that our future […]

Excellent interview with Triple M. I especially like how he is setting up a spreadsheet for his child that will allow her to track the growth of her money and keep her interested in it. If there is a single idea that this guy has had that doesn’t smell of badassity I would like to know what it is.

I can’t agree with you more. Thanks for visiting.

Great interview!!.. I can’t imagine anybody spending $100,00.00 in commuting over 10 years. Unless people are buying super luxury cars and commuting over 50km one way every day…? I am sure some do, its hard to imagine though.

Commuting can be very expensive, especially if you are driving over 40 or 50 miles one way to and from work or business in a large pick up truck. Not to mention, time value in terms of life-energy that you lose as well..

Your daughters are very lucky that they get to learn about money from you (and now Jim, his daughter, and MMM as well).

Great interview, Shilpan. I really enjoyed it!

I really enjoyed this conversation with Jim and Mr. Money Mustache.. thanks for stopping by, my friend!