Mr. Money Mustache’s Simple Secret to Retiring Early in Your 30s

21:13I'm like, here we go. Yeah. And that's like always the best$2.90 I ever spend. And I'm like passing hundreds of cars. And I'm like, I can't believe you guys won't even spend three bucks to skip this incredible five mile long traffic jam. Little things like that, you might not do if you're like, you know, on the bleeding edge of poverty, but you've got to relax as your financial situation improves. It seems like there's an efficiency element here that is maximizing your life in a general sense. And to do that, that was have as high a savings rate as reasonably possible while we're amassing wealth.

21:47And then it's within reasonable high constraints. How do I optimize for something else that is not just more wealth at this point? It's happiness or convenience or time spent doing the things you enjoy with the people you love. That's so true. But I also wouldn't even say like there's a line like accumulation versus retirement spending. Like you want to have a good time for your whole life. You might still be taking the toll lanes even while you're still saving for early retirement. Of course, like if you can afford it and your savings rate is still reasonable, just don't go overboard cheaping out on yourself.

22:19And that's why I always try to focus on things that are a win-win rather than a win-lose. like taking two flights instead of one to save money is a win-lose right you win some money you lose a bunch of time and your trip is less fun whereas living closer to work so that you can walk to work or bike to work is a win-win because your days are better and you're spending a lot less on your car and commuting expenses and you're healthier so there's usually so many win-wins that you can do if you're at a beginner stage that you don't even have to get into the weeds of like sacrificing stuff you like in order to save money.

22:55Not too much anyway. And I think that's really important nuance for folks who are less familiar with all of the, I think I've read every single article of yours, by the way, over the years, except for this, the sweet spot one. I don't know how I missed this one in those deep dives. There's folks who think, it's just about being frugal. No, there's much more to it than that. But with that caveat, could you explain why controlling spending is the more important variable compared to income generation, in your view? That is because what we've seen is that throughout our incredibly wealthy country, people seem to be able to manage to like blow any amount of money, like no matter how high your income goes, people can blow it all and still end up in debt.

23:36And that's why we hear about the movie stars and the NFL players and everyone else who's had multimillion dollar payouts that still end up bankrupt shortly afterwards, even though like just one year of their income is more than enough to raise a family in upper middle class forever, you know, if they just invested that money. So it's, I mentioned that stuff because I want people to understand that having at least some concept of your spending is important. And also, if we're just thinking about the math of early retirement, the spending has more powerful effect because it accelerates your path to early retirement by making your savings rate higher, right?

24:10Lower spending. And presumably, you've learned the skills of how to have a happy life on this lower spending level so that after retirement, you've locked in lower spending. So any amount that you've saved also goes further. So that's why I consider it a double effect because it lowers the amount you need to save. And then it lowers the amount you need to spend for the rest of your life to be happy. So a smaller amount of investments gets you further. And very few people talk about lowering spending, at least before this whole fire movement started, because there's just such an implicit bias in the United States that more spending is always better, no matter what.

24:48It's like, you always want more. I also think that there's not really a profitable way to communicate the value of spending lessons from a mainstream media perspective, right? Like there's not like, like a product you can sell. It's just like, don't spend money. So like, like here, there's a billion ways to do that. You can, there's like tools out there, like Monarch money, for example, that are great or mint.com or Excel spreadsheets. But I think that that's another challenge is you can sell a course for five grand to help somebody make money. And if it helps them do that, maybe somebody gets value out of that, but there's nowhere to do that.

25:19And your view was, this is just common sense. I just want to share it with the world. And I think that was very refreshing and very powerful. And that's why it appeared so unique at the time. Maybe, yeah. Because you could argue that in a commercial magazine or newspaper, they're depending on all these advertisers who are selling stuff. In a wealth magazine, most of the ads are for luxury products like Mercedes and Rolex and all this stuff. Those advertisers are going to be a little pissed if the main message of the magazine is don't buy Mercedes and Rolex products because it wrecks your chance of an early retirement.

25:55Mindy Jensen:Pete, let's look at your specific situation. What was your savings rate? At what age did you start your fire journey? How long did it take you to save up enough money that you felt like you could early retire? Hmm, deep, deep history. So I did try to write this down once because what happened to me is I retired early and then enjoyed six years of retirement before I even started writing my first blog article. So it was already kind of stuff I'd done just passively. I was always kind of like, I'm interested in money. And I would, I started reading investment books when I was a kid, just because I found the whole subject interesting.

26:31So when I started earning, like a professional salary, which was really just pretty average, it seemed like a ton of money to me, especially growing up in a family that wasn't super high income. So I just saved, I lived the life that I thought was very luxurious, which left a lot of money left over still because I was an engineer and I like to do things efficiently. And then after that money started building up and it's like tens of thousands and then hundreds of thousands, I'm like, well, what should you really do when you have too much money? There's got to be some good use for this. And I already knew about investment.

27:01And so as I just kind of put two and two together and realized, well, investments are a form of passive income. So as soon as your investments cover your lifestyle, then you can quit your job. So that realization was probably in my early 20s. And I'd already been saving up for a while. My fiance at the time and I were both like living this kind of lifestyle. At that point, we realized, okay, there's only going to be a few more years that we have to work before we are financially independent. And we also wanted to start a family. So we thought, it would be great to get all this done before the baby was born so that we could have the time to be full-time parents.

27:36And those are all the pieces that went together. It really, the whole career took me about 10 years, right? Because I started working around 20, finished working around 30, just before 31, actually. So you could just round it up to 31. I think, is that all the questions? What was your savings rate? Oh, the savings rate. Yeah. It varied depending on income, right? So initially I started off making And at the time, like$44 ,000 was my first salary. And that was Canadian dollars too. So my savings rate was lower. And I bought a car as well on my first year after graduation. So it was probably like 10 % the first year.

28:08But it quickly went up. And towards the end, it was more like 60 plus percent because our salaries were up in the$100 ,000 range times two, you know, two workers. We were spending what we thought was a lot. It was like 40 plus thousand, which would be 80 ,000 in today's dollars. But that still left a lot to save. It kind of happens like this. whoop. And at the end, as your salary goes up, your spending level is probably going down because you've already built out your household. You got all the furniture you need. You got your car, have a paid off car. You've optimized all this stuff. You already got your bikes as a young adult.

28:40You know, all the things you need to buy when you become an adult. So I find the spending kind of goes down, which makes it easy to save. And then of course, every time there's a life change, like having children, your spending is going to go back up, but then it goes back down again as you get through each stage. So 60%, maybe even as high as 65 or more, that combined with like I did a bunch of home renovations. So we kind of like did some forced equity in our first house and then rented it out in order to buy the second house. That all kind of like in big messy way added up to financial independence after about 10 years of work.

29:12Mindy Jensen:You said you bought a car after college. We used to ask guests what their biggest financial mistake was. And that was hands down. The number one answer was, oh, I bought this brand new car after college. Scott, you also bought a brand new car after college. Was it a brand new car, Pete? Was it like a big, I can't imagine you ever in one of those$50 ,000 pickups, which are$70 ,000 now, by the way. Well, I've never been a pickup deck guy, but I liked sports cars. So I bought a sport e car for for Canada anyway, and it was only like two or three years old. I remember it was a 1994 Ford Probe GT. So it's kind of like this little sporty two-door thing that was a clone mechanical clone to the Mazda MX-5 Miata which is also a cool car not Miata MX-6 it was fun it was like more than I would have spent if I was Misty Monday Mustache at the time but really what it did is it basically just consumed most of my first year of savings and it was worth it right like that's an example of a splurge that was worth it so like it delayed you know it cost$15 ,000 at the time so maybe like 30 of today's dollars, a thousand.

30:15But I had so much fun with it. And my friends thought it was cool. And, you know, it's a good date car and everything. So I wouldn't take that decision back. It was worth it delaying my retirement by a very small amount.

30:27Mindy Jensen:Interesting. Okay. That was not the answer that I was expecting. Yeah. And then I bought a$10 ,000 motorcycle right when I moved to the US because I'm like, what am I making so much money? It was brand new Honda, like sporty bike. And that was like another$11 ,000, which is like 20 ,000 of today's dollars. That was maybe a bit of a worse decision. I probably wouldn't repeat that. But you know, like I still recovered from it. I sold it for like$5 ,000 a few years later with hardly any miles on it because I didn't really need a motorcycle. But it's still fun. You know, I don't don't super regret it or anything.

30:58Then you bought a 50 to 75 year retirement following that those didn't impact things too much. You can afford to be very inefficient and still do pretty well. Like the key is being slightly less ridiculous than average. So like I did some ridiculous stuff, but not as much as my co-workers who would buy like a$50 ,000 BMW and like a pickup truck with six wheels and like drive one each, you know, alternate driving them to work from a really, really far away like horse property. So like that kind of stuff is such bigger numbers that it really that's what kind of sabotages your retirement is when you're you're doing multiple years of salary, just getting burned up on on all these little purchases and big purchases.

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33:15Mindy Jensen:Thanks for sticking with us. I've got a couple of tangential questions here. One is, and I'm going to lodge a complaint here. I know you said we can't take complaints, but this is a common one that we get, is where are all the stories of the people who fire, but only ever make$50 ,000 a year the whole way through adjusted for inflation? And these folks are rare in this space. But, you know, you mentioned you started with a$44 ,000 salary and ended at$150 ,000,$200 ,000. We've had so much trouble finding this person, right? Like we've heard from the community over and over again, we want to hear from this person and we just can't find them out there at a high level.

33:52My hypothesis is something to do with the fact that if you're going to pursue FIRE, you're going to get very good with money over a long period of time. And that is going to naturally translate to boosts to the income over a decade or 15 year grind that typically it takes most people to achieve this goal. But have you found examples of that$50 ,000 earner the whole way through? And do you think it's reasonable to expect people to be able to get there with the income that low? Yeah. So it's kind of rare. And it's possible that because our platforms are filtering for a certain type of person, you know, like people who seek out finance podcasts and websites and they're like readers, they might tend to just be higher income people.

34:30But I did remember a couple like so one person I'm still in touch with, his name is Joe. And he and his wife at the time, they were teachers in like the public school system in Las Vegas, which I think is notorious for having fairly low salaries for public school teachers. and Joe became the main guy who encouraged me to start a forum on my blog. So like this thing called forum.mrmoneymustache.com. He was like the lead moderator. So I heard lots about him. He's a really, really smart guy. Both he and his partner are geniuses. So on top of being teachers, they also just started like save, save, save.

35:05They lived really frugally and then they would buy a rental house and then manage it really well and then leverage that to buy another rental house. and they were really good at managing the tenants. And eventually they built up a pretty big real estate income portfolio that was bigger than their teacher salaries. So they're like, great, we're done. They ended up like that wealth level kept going up and up and up. And even after quitting the teaching jobs, they ended up in an upper income situation just because they were so good at all these other things. So it's a little bit like your story because they started out with lower incomes, probably like 35 ,000 each and they had children, but they work their way up from that situation.

35:43And, you know, that's one of the things about the United States is there is a lot of upward mobility. And if people are smart and work a lot, it's pretty hard to stay in a lower income unless you're really dedicated to just staying exactly in this thing that you're passionate about. Or if you're spreading your energy around, you know, like to do other things like raising a family, you're obviously going to be less devoted to your career. So anyway, the point is, the math still works, you just have to spend less money. But the people are rare, because America has a lot of money in it. And that's why I moved here, right?

36:15That's why I moved from Canada to the US in my 20s is because I wanted the same upward mobility. And my salary doubled as soon as I crossed the border. That happens a lot in this country. And that's great. The other place that I think people get stuck on a lot is with kids, and planning for those expenses. And that did not seem to impact you. And it seems to have no impact on a portion of the fire community. And it's just an enormous roadblock that's insurmountable for another portion of that. And have you observed that dichotomy as well with folks? And how would you respond to that? Kids are interesting in the form of expenses because they can cost as much or as little as you want, right?

36:56Like as a parent, you get to choose short of like medical emergencies or whatever. But in general, the kids like most parents choose to spend more on their kids. And this goes up with each generation and richer people have always spent more on their kids than less wealthy people. So I think it's more about do what you can afford. And don't worry that it's going to wreck your kids lives if you live a frugal upbringing, right? Because I grew up, my parents spent almost none on us. You know, there's I have two sisters and a brother. So we're a big family. And we didn't have any spare money. So nobody did any expensive activities.

37:28We just like run around, play in the forest or go to school and then find something to do after school. There's no, we didn't do it like after school activities. And that was like, great. You know, I had an amazing childhood. It was super fun. All kinds of like wild, you know, creativity stuff, like making our own cars out of scrap parts and tree forts and everything else. And we didn't lack for anything, despite the fact that there was no money. And then we had to pay for our own educations too, our own college educations, because the Parents didn't have the money to just fund everybody like happens in the rich families.

37:59So I don't think there's any shame in that for parents who don't have a ton of money. And so that should make it easier for everybody to get through the child raising years without as much pressure as we apply to ourselves. And now, you know, in my life now, I know a lot of people who are in the child raising stage living in very wealthy communities. And sure enough, they spend a ton on their kids. You know, they might spend$40 ,000 per child per year on all the stuff between all the sports and private school tuition maybe, or just things that they buy their kids. And that's fine to you, but it's totally up to you.

38:32It's not really, it doesn't have to be expensive. We have just the one child who is a grownup now. And I like to joke that he cost less than nothing because it was so intense to raise him that his mom and I weren't able to go off and do the normal stuff we would have done, like go out for dinner or go on vacations because child demands so much. And you know, if the kid's crying all the time, you don't want to bring them on the plane and destroy everybody else's vacation. So you stay home and do stuff locally. So this actually saves money. It pays for his diapers. I have one more area of expense that I think trips people up when they think about this math of the shocking simple math early retirement.

39:07So we discussed income, we've discussed expenses as the major component. We discussed their investment returns. But I think that the expenses, there are some expenses that people don't consider when they get to retirement or that trip people up like childcare, which is a cost for, you know, the costs of raising a child in general that we just discussed. Those are costs for a period of time that then go away, presumably when children become adults, right? Or could get bigger if you decide you want to pay for an elite fancy private school, college education, for example. So there's things like that that trip people up.

39:41And then there's also insurance, which I think is the last major bucket that is a challenge for people because that's often covered in part or in full by an employer while one is working. So could you basically share your kind of high level overview of how you view insurance as a general concept and how you think about things in your personal life as a financially independent multimillionaire and how one should kind of wrap their head around that when they're approaching early retirement? Yeah. I mean, to focus on health insurance specifically, because that's the thing that most people worry about in this country, it's not as expensive as most people assume.

40:17That's the one thing. Like if you've gone through your life with employer health insurance coverage, a lot of people don't even know how much the employer is paying for it. And so they assume, oh, I can't leave my job because I need this insurance that you can't get any other way out. Well, guess what? Your employer is paying this money. So obviously it must be a finite amount that they can afford to cover. And you can buy that insurance for at least as cheap as your employer, as it turns out. Like when you look on the marketplace nowadays, what is it called? The Affordable Care Act has made insurance a bit easier and more transparent to buy.

40:48So it's in the hundreds of dollars per month, not in the thousands of dollars per month, you know, on a per person basis. So it's not as bad as what people assume. And part of the reason they get confused is because when you quit a job, you get this option to continue your health insurance through the program called COBRA. But the COBRA insurance is always like some ridiculous, like multiplied to infinity. It's not what your employer was paying, but they charge you more, maybe just because you're scared or they think you're desperate or whatever. That's not the real price of personal health insurance.

41:17And then on top of that, I have, there's other alternatives. Like I use a direct primary care physician subscription, which is like, in my opinion, much higher quality healthcare, but it's only a hundred and something dollars a month. So, which is basically like a doctor subscription. And then I have a separate thing that I don't really need. That's just like a catastrophic healthcare program, you know, where if I have more than a$5 ,000 expense, they'll reimburse the rest of it in any given year. But the wealthier you get, the more this doesn't even matter because you can self-insure. Like if you think about, you know, Warren Buffett, he doesn't need a health insurance company to come in and pay his bills.

41:55If he has medical bills, he may or may not have health insurance, but he doesn't need it. So the higher your wealth gets, the less insurance matters. And like, that's one of the reasons I don't keep insurance on my house, my primary house. And that's just because it's not a very expensive building and I could afford to rebuild it if it burned down. And I would, as a house builder. Recreationally, I would make it cooler than it is right now. So that would actually be kind of fun, but don't come burn down my house. It's not an invitation. So like, whereas if I was just starting out in my twenties and I had a huge mortgage on this house, I absolutely couldn't afford to replace my house out of cash.

42:29And also the mortgage company insists on you carrying insurance. So insurance isn't a big factor, you know, like it's, it's more like helping you sleep at night, but it shouldn't be a giant part of your spending. First, great point on the mortgage component, right? I'm now starting to have a couple of properties without mortgages, and you can boost the deductible very high on. So I would not feel comfortable replacing some of my properties ground up. So I carry insurance, but I'm fine with a 20 or$30 ,000 deductible, which sends a very clear message to the insurer. Hey, I'm only going to be calling you have to place burns to the ground because I'm not Mr.

43:04Money Mustache and will not find it fun to rebuild the property of my own in this particular case. So that makes it much cheaper, much, much cheaper, like thousands of dollars a year in premiums cheaper. And then I also am a little surprised at the difference in rates for families on the private marketplace. Even if you have a high income, they're significantly cheaper. But a big component of that is you just take it for granted, I think, Pete, that you're going to use a high deductible plan, which I think almost everybody who pursues FIRE should be doing in that sense. Because if you have millions of dollars, you can self-insure up to$20 ,000 or$30 ,000 in a given year.

43:44And that will make a huge difference in you or your family's overall premiums that you pay for health insurance. And then last, I'll also say that as you think about this in the self-employment world or begin amassing significant assets, there's a whole bunch of alternative solutions that are coming up, like the direct primary care, which you mentioned, which I also have for both of my kiddos. And it's fairly cheap. It's like 130 bucks a month, I think, for both kids, an infant and a two and a half year old. And it's great. The doctor responds anytime, day or night. I never have to go to urgent care.

44:16In the case of a serious emergency, we of course have to go to the emergency room. But otherwise, we're able to get all these prescriptions filled and all those types of things and set appointments pretty quickly. It's a much better way of doing medical care than I've I've ever experienced. And there's no copay. So you have like a little thing where you need a prescription, let's say for strep throat, you just text them. They're like, oh yeah. Or maybe a video call in the worst case you go in. And then they're like, here's your prescription. And then the whole thing's done. There's no bill for that.

44:42Whereas even with the health insurance, you typically go to the Kaiser office and you're waiting and everybody else is sick around you. And then you feel like you're in this third world situation. And then you get a bill for like$200 until you reach your out of pay max, whatever deductible thing. So the whole thing feels terrible in the old system and great with direct primary care. And it's like cable TV package price, right? Like I'd way rather have that than cable TV. And that pairs really nicely as well with these health share plans. I haven't made that leap yet, but I know many, many people in the early retirement community are making that leap.

45:13Yeah. And I have an article on that too, just to plug it a little bit. I wrote this article called two years without health insurance and what I do now. And then that's how I landed on this idea of using the health share program, which is by, you know, the researcher on that was our co-owner of headquarters, whose name is Bill. He got us all, or at least me interested in this program called Sedera, which is one of the health sharing companies. He convinced me to sign up. I've been a happy subscriber ever since. And it just helps like not have to think about what if something happened, even though I've never really had a health cost since I moved to the US, it's still just nice to know that you have the coverage in case.

45:48You know, the article around shockingly simple math, really presumes a stock market, you know, pretty linear return, because that's how you have to have to model these things. And that's, I think, led there's been a lot of confusion in the early retirement space about how to factor in other types of assets like real estate. And I'll throw in crypto, for example. How do you think about those in the concept of an early retirement portfolio? Let's start with real estate, maybe your framework on that because it's probably a little easier than something like a crypto investment. Yeah, that's for sure.

46:20So real estate is supposed to be pretty passive income source if you're doing it well, but it still has numbers that you can attach to it. Like you'll have an amount of money that's tied up, you know, the capital, the amount you own of a property, and then you're going to have its net cash flow after all your expenses. And that's the part that you get to use towards your early retirement. So at the very most simple level, if someone's retiring off rental properties, You could just say like if the cash flow that's free and clear from these properties is enough to pay for all your bills, then you're retired.

46:51And then that's kind of nice because you know that your rental properties are probably going to go up with inflation automatically over the years. It's going to be lumpy, but it'll still go up. Sometimes you get lucky and like in the Denver market, it'll go up much faster than inflation and your rents will rise faster than inflation. So you'll get a positive surprise. But if you're just modeling it, I would suggest to take the conservative route, which is you figure out the cash flow only. And then remember that if you have mortgages on these rental properties, those are going to get paid off eventually as well.

47:21So every time you have a rental property that has a principal plus interest portion in its loan statement, that principal is savings. Like you're actually saving every month. A lot of people miss this detail. So a thousand dollar mortgage payment might have like two hundred and seventy one dollars going to principal. The other$800 is interest going straight to the bank. And then they put that whole thing as a cost. And it's not a cost. They're actually saving. And then the interest is a cost. And eventually that goes away. And then you're going to get like, that property is going to be free and clear.

47:50And suddenly you're going to get a huge cash flow bump. So I would consider that as like additional saving that you're doing. You can do like a cash out refi if you need to get access to that money. I think the big picture is that real estate should be outperforming the stock market. If you're doing a good job at it. if you have the right properties because it's a job, right? Like if it's not outperforming the stock market, then you shouldn't have real estate because why not just have this totally passive investment? So I always encourage people, like including people I've been coaching recently to look at each of their rental properties.

48:22Don't keep it just because you have it. Make sure it is a valid rental property. Like make sure you don't have like a million dollar house that's only giving you$2 ,000 of rent because you get way more in passive stock market income if you just sold that and bought the index funds. But in general, I don't know. Is that how you, would you agree with that? Is mostly basing it on cashflow, but remembering that the cashflow is gonna gradually increase? I struggle with it because I think that that's the most conservative way to think about it, right? Is this is an inflation adjusted stream of income.

48:52You know, if you buy a$500 ,000 house that generates$30 ,000 a year in net operating income, that should be a reasonable baseline target for a paid off rental property. Hopefully some folks can do better than that. that should just produce that amount of income, give or take, perpetually. And the advantage to that is that it's a much higher cash flow stream, potentially, if you're in a higher income tax bracket, more tax advantaged, the way you could harvest that money from a more traditional stock bond portfolio. But then there will also be work and some lumpiness to those cash flows, of course, and you can't sell it off in chunks the same way you can from a stock bond portfolio.

49:26And then the leverage component should amplify those returns, yes, in the accumulation phase. So I completely agree. I think it's challenging for folks to wrap that around in their heads, especially when they're in between those two states, the high leverage, high return phase, and the paid off cash flowing phase when it will underperform the stock market over a long period of time, but also produce that very predictable cash flow stream. It helps if you just do a net worth calculation where you add up the value of all the rental properties and then subtract the mortgages, any debt that you have on them.

49:59So then you really understand how much assets you have working for you. And then you compare that to the cash flow and decide whether to keep them, first of all. And secondly, you can do a future forecast and say, well, what is it going to be like when these are all paid off, whenever that might be? And then that's going to be your terminal, your final cash flow, if you let them all have no mortgages. And that's what your long-term budget is going to be. Between those two, if you're smart enough with money to accumulate these properties, I'm sure you can do the analysis and determine what your retirement budget can be.

50:32I think the challenge is in that middle piece because there's a 30-year window where most people are in that middle section. And in that middle section, if the cash flow is tight, you can't really count on it the same way that you can on one that's paid off or that has a very large spread between the gross rent and the mortgage payments. And I think that we find a lot of people who invest in real estate have this, in practice, a problem translating that theory to how much can I actually spend from this portfolio right now? And the answer is almost always what you just said. Make a list of all your properties, determine which ones are winners, which ones are losers, sell the losers, and keep the winners.

51:09And that's very challenging in practice for a lot of folks for whatever reason. Okay, last question here. Let's talk about other assets that are a little harder, right? They don't generate cash flow. They're not stocks. like, and let's use Bitcoin. You and I share, I think, a similar viewpoint on Bitcoin. I had a video come out last year. It looks like it was pretty poorly timed called The Rational Investor's Case Against Bitcoin. The comments have not been kind from the Bitcoin community. They have strong opinions there. And then you have an even better titled article, which is more frank, Why Bitcoin is Stupid from seven or eight years ago.

51:46But how does one think about this asset that has gone up in value a tremendous amount over the years and incorporating it into one of these retirement portfolios. Yeah. Well, I would think people should sell it and buy real investment because Bitcoin is like a dice roll that has just been continuing to come up on sixes over and over and over again. And people are like, see, I'm a genius investor. And other people believe that it's going to keep happening. Like Bitcoin is entirely dependent on belief. Like there's no actual fundamentals. It doesn't generate any income. And that's why it's by definition, not just my opinion, but that's why by definition, it's a speculation rather than an investment.

52:25An investment is something that generates income over time, and it would be worth it owning it for your whole life if you were never allowed to sell it. And imagine if somebody said, well, Bitcoin is great, but the price doesn't actually matter because you're never allowed to sell it, and it will never give you dividends. Would people actually want to own Bitcoin in that situation? Well, no, of course not, because it's guaranteed by definition that it'll never give you anything. However, Bitcoin has value only because you're hopefully that someone else will buy it from you for more in the future.

52:54Or some people dream that it'll replace the US dollar or whatever, like either way, you're hoping you can buy stuff with the Bitcoin. So that's not an investment. And you can keep speculating on it. And that's fine. And if it goes up more, they're good for you. But I certainly wouldn't bet any percentage, any significant percentage of my future wealth on this very, you know, moment of human hype. I'd rather own something that generates ongoing income like a rental house or a business, which is what stocks are. So that's up to you.

53:22Mindy Jensen:Well, you don't invest in Japanese yen. You don't invest in euro. Why would you call it investing in Bitcoin? Yeah. Well, the reason people think it's investment is because it has been going up recently during its very short lifespan. And that's how bubbles work, right? People get excited. they get FOMO and then they make up they fill in the backstory of like why this is different you know why it's not a speculative bubble like oh well the federal reserve is is corrupt it's fiat money is all toilet paper like we need to have independent this and that and like and the reasons keep shifting because the story has to you know keep existing otherwise the whole thing doesn't have any value like it's dependent upon a story and a belief system and I just don't play those games, right?

54:06Like I've never been part of any religion or belief system or like worshiping leaders just because they're famous. So that's how I feel about Bitcoin too. And if other people want to have a different opinion, that's great. It's funny because the criticisms I get from my article, they're all based on people who didn't read it. Like a hundred percent, they're like, how do you feel now? Bitcoin's$117 ,000. Like, whereas right in the article, it says, this article is not about the price. It's just about the idea of speculating on anything based on future price improvements, like that's not an investment.

54:37And no one reads that. If Bitcoin goes to$4 quadrillion, my article is exactly as valid as it was if Bitcoin had gone down to one cent, because it's not about the price of Bitcoin. It's about the meaning of speculating on things. It looks like the three of us will not be making our bloodlines, as one Bitcoiner put it to me with this speculation here. I completely agree.

55:00Mindy Jensen:Bloodline. You're missing out an investment that could make your bloodline. actual quote from, I presume, Bitcoin bro in response to some argument I made against it at one point. So is that talking about having a bunch, you know, building a dynasty and then you give money to your children so that they're they are rich in the future? I think if you just hold Bitcoin forever and never sell it, it just perpetually compounds in value going up ad infinitum. And then your heirs and descendants are rich until the end of No, the first generation makes it, the second generation preserves it and the third generation spends it.

55:34That's true. And that's the other funny part is like they're criticizing this approach that we have, even though I'm like, well, I've lived most of my life in financial abundance and been retired since I'm 30 and I'm almost 51 now. So like I can't be doing anything all that wrong. Like how much more do I want? How much better money situation do I want? So I don't need Bitcoin. Well, thank you so much for coming on here today, Pete. It's always just a privilege to chat with you. It's been great to see you a couple of times recently. Thank you so much. And yeah, I hope you continue enjoying your retirement here.

56:05And what's on the docket for the rest of the day? It's an even bigger privilege to be on BP Money. So thanks a lot for the invitation. And the rest of my day, it's just a dad day for me. So I'm going out for a hike with my son and I'm doing some construction for the rest of the day. And it's going to be awesome. Happy Tuesday. Happy Tuesday. I had to check.

56:24Mindy Jensen:I love that you had to check like your watches just Monday, Tuesday, Wednesday. It doesn't even have hours and minutes. It just does the day of the week. I've seen clocks like that. That would be a great wristwatch. Okay, Pete, before we go, where can people find you online? If you just look for Mr. Money Mustache, you'll find all the different versions of me. My favorite place is people reading the blog or joining the bootcamp. But I also have a mostly inactive Instagram account and Facebook and X slash Twitter, whatever. Awesome. Okay, Pete, thank you so much for your time today. And we will talk to you soon.

56:58All right, you too.

56:59Mindy Jensen:All right, that was Pete, Mr. Money Mustache. And Scott, I always have a great time talking to him. What did you think of his commentary? It is just always a privilege to chat with Pete. He really pioneered a lot of stuff in the world that we live in, in the fire community here. And he's only continued to expand those concepts, even as he has enjoyed a decades-long early retirement. during that time period. So it's just truly a privilege to chat with him and love the refinements and the evolutions, but the lack of deviation almost in its entirety from the core principles that he's stuck to his entire life.

57:37Mindy Jensen:Yeah, he is, you said he pioneered a few things. I think he pioneered a lot of things. He was one of the first financial bloggers talking about how you can reduce your spending to retire early and live the life that you want. He was certainly the person that we found first. And when we talk to people, it's almost always, oh, I found this one article from Mr. Money Mustache. It's funny because we were mentioning his first car purchase, which I didn't know before. That was kind of fun to hear about. His blog obviously influenced my first car purchase. And you would not believe the amount of time I agonized over whether I should buy a then brand new 2014 Toyota Corolla, or if I should buy a 2006 or 2007 seven or eight-year-old Toyota Corolla because of his blog and the wastefulness component of that.

58:28It seems like such a silly thing to agonize over 10, 15 years later. But that was where I was thinking. I never had the cool car. I sort of have one now with my Tesla here. But it was funny for me to hear that.

58:40Mindy Jensen:I was actually surprised that he had purchased a fairly new car right out of college. I thought for sure he would have been very frugal his whole life. So that was a fun little tidbit that I had never heard before. All right, Scott, this was a super long episode, so we should get out of here. Are you ready? Let's do it. That wraps up this episode of the BiggerPocketsMoney podcast. He is Scott Trench. I am Indy Jensen saying farewell, Gazelle.