Those Special Snowflakes


Are financial independence bloggers like Mr. 1500, Root Of Good, Jim Collins, Millennial Revolution, or Mr. Money Mustache special snowflakes?  Did they make millions with special investing abilities impossible for the average Joe down the street to replicate?

Or, did they have super-high income jobs before they were famous bloggers?

The beauty of the whole financial independence movement is that they’re NOT special snowflakes.  These are regular guys (and gals) who “made it” without any special abilities or superior investing skills.

They made their millions before they gained the massive internet popularity they enjoy today.

These days the most popular personal-finance bloggers have reached “Money Guru” status, and are pulling-in tons of money (in some cases much more) than they ever did working a 9 to 5 job.  While that’s impressive, I say just ignore it.

Look at who they were before they were famous, before the Business Insider features, before the book deals, and before the internet groupies.  They were just regular guys (and gals).  Many of them were engineers, pulling in nice salaries.  But nothing outlandish.

So what set these “not-so-special snowflakes” apart?  What trait did they all have in common that created wealth at unprecedented rates?

If I was to boil down the secret to a single word, it would be efficiency.

 

Efficiency Is The Secret

In my last post on Loser Industries, I wrote about how efficiency appeared to be the key that allowed certain industries to prosper and ultimately outperform the market.  That same principle holds true for individuals trying to create fiscal outperformance in their own finances.

If we look back to early posts by bloggers like Mr. 1500 or Mr. Money Mustache (before they got famous), they were all about maximizing financial efficiency.  This led to big savings rates, which built wealth far faster than early career investing returns.

I was able to achieve similar results because I saved efficiently … long before those bloggers wrote their first blog post.  I followed a similar path, and got a similar outcome (minus the internet fame of course).

What was I like back in the “old days” before I met Mrs. Tako and had a couple kids?

Long before I was ever a millionaire, I was a saving fool.  I spent over a decade living a frugal single lifestyle:

  • I drove very efficient cars, like a two-door civic and an old beater Subaru (models that old didn’t even have AWD).
  • Even though I owned a car, I walked to the bus stop and took the bus to work every day.  It was far cheaper than driving.
  • I rarely bought anything new.  If I couldn’t find something at a thrift-store or craigslist, I usually didn’t buy it.
  • I ate to maximize calorie count per dollar (if you can believe it).  A meal would consist of a terrible $1 TV dinner bought on sale.
  • I had low cost hobbies that were free or paid for themselves.
  • Other than road trips with friends, I never went on vacations.  No air travel.
  • I lived in old run-down apartments and had roommates.  While I didn’t always enjoy having roommates, it did save a lot of money.

Back in those days I had huge student loans and less than $20,000 in my bank account.  Starting out, I only made about $50k per year, but I still managed to save about $25k per year.

You would never call me a “special snowflake”.  I wasn’t wealthy by any stretch of the word, but I had a plan.

 

Still Just As Efficient

Today, (a couple million dollars later) I’m still the same frugal person I was back then.  I didn’t get all fancy and start spending like a madman when I broke $1m or even $2m.

While I definitely eat a lot better than I did in those early days, our focus is still on efficiency and being smart with our dollars.

I still drive old cars, and buy most of my stuff at thrift stores.

So how much more efficient are we than the average household?  Well, it’s hard to give exact numbers, but there are definitely clues…

Twice a year my power company sends out this neat efficiency notice that always makes me smile:

power efficiency
Compared to other households in a 1 mile radius around us, we spend 23% less energy. The difference is even larger in winter months.

It always makes me smile because I get to see how much more efficient we are than our neighbors.  Damn it feels good to be efficient.

While our power bill is only one small piece of our spending, you can easily go look at my monthly expense reports and divine that we’re still just as efficient in all other areas.

 

Early Retirees Are Efficient Asset Builders

What really sets the world’s truly wealthy people apart from everyone else?  Many people might guess “A big salary”, but it’s not actually a large salary that makes the difference — It’s assets that make you wealthy, not your income.

Incomes come and go.  For most people, income levels over our lifetimes look something like this:

median household income

Take a close look at that graph.  Income goes up, and then it comes back down again.  Yes, job income doesn’t climb continuously.  At some point you’ll reach ‘peak income’ in your 40’s and then it’s all downhill after that.  Age discrimination is alive and well folks.

For wealthy early-retirees however, income doesn’t matter — building assets is what matters!

Over the lifetime of an early retiree, net worth looks something like this:

early retiree networth
Net worth of a early retiree who saves 50% of post-tax income, retires at 45, earns 6% returns on investments, and uses the “3% rule” after age 45.

It just grows and grows.  Meanwhile, income is tiny compared to the growing mountain that is net worth.  Yet the early retiree in this scenario sees that same large income-hit after age 45 … only because he/she quits at “peak earnings” to retire early.

Here’s the really interesting part:  Because this early retiree only spent 50% of post-tax income during his/her earning years, income that can be spent never actually declines.  Spendable income continues to grow even after early retirement and your standard of living never declines!

 

Final Thoughts

When it comes to building wealth, you don’t need to be a special snowflake.  Absolutely anybody can do it if they’re determined enough.  It all comes down to building assets efficiently with whatever income you happen to have.

High net worth individuals live off a very small percentage of their income and just continually stack-up those assets…over and over and over again.  For a lifetime.

While it is true that some famous personal-finance bloggers now derive very large incomes from their internet fame, don’t be dissuaded — the principle of efficiency is still what builds true wealth.

No amount of fame is going to change that.

40 thoughts on “Those Special Snowflakes

  • September 20, 2017 at 3:09 AM
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    Mr. Tako,
    Seriously, kudos to you on what you’ve accomplished. Ive read quite a few of your posts but I’d like to know how frugal Mrs. Tako is. One common denominator I see among PF bloggers who have reached the 7-figure mark is like-minded spouses. Without supportive spouses, FI is difficult to achieve early.

    Reply
    • September 21, 2017 at 8:27 AM
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      Mrs. Tako is pretty frugal. She’s frugal in a different way than me, so in a sense we compliment each other well.

      I’d say she’s an extremely supportive spouse, and she totally gets the point of frugality. Without her support there’s no chance I’d be where I am today. No question.

      Reply
  • September 20, 2017 at 3:09 AM
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    Mr Tako,

    the declining incomes after 55 are also influenced by people dropping out of the work force entirely because they have enough (or they are getting permanently ill.

    Otherwise great post. Your writing style gets better and better!
    Im also planning with a 3% witdrawal rate.
    Im FI but not yet retired.
    Hanging in there for 2-3 more years because a beach house is calling that I want to pay with cash.

    All the best!

    Reply
    • September 21, 2017 at 12:28 PM
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      Yep, I’m aware. There’s also the fact that individuals older than 50 see greater unemployment rates and require a lot longer to find a new job. I could write an entire post on all the possible reasons for it. When it’s the end of the day though? Don’t count on income rising.

      Reply
  • September 20, 2017 at 3:22 AM
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    Very, very well said!

    I’m also a big fan of Mr. Money Mustache but before him I read the Early Retirement Extreme blog run by Jacob Fisker. Jacob was FIREd with an annual budget of something like $7,000 per year. It seemed insane, but that’s when I realized that Efficiency was a key ingredient of FIREing.

    Obviously, being efficient AND having a large income just allows you to FIRE earlier, but people can definitely get there on modest incomes too.

    I didn’t FIRE until my early fifties, but I would have FIREd much sooner if I and Mrs. Freaky Frugal had been more efficient. Fortunately, we were already fairly frugal for our entire marriage. 🙂 It was just a matter of degree.

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    • September 21, 2017 at 8:24 AM
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      I’m pretty efficient, but living off $7k sounds hard.

      Also, did you know you used a lot of F’s in your comment? Seriously, you’re going to wear out the ‘F’ key on your keyboard! 😀

      Reply
  • September 20, 2017 at 3:40 AM
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    Great post, its easy to forget how much determination goes into aggressively saving over a decade or more. I concur, it takes efficiency and a rising income. You were definitely more frugal then me, but we ended up in a similar position. As long as you are happy with what you are doing, save as much as you can. I still have an expensive hobby or two, like golf. Its something that bring happiness so I will not abandon it.

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  • September 20, 2017 at 3:54 AM
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    Wonderful post. It is easy to look at some of these well known successful FIRE bloggers and think that I could never do that. Since finding out about FIRE I have realized that I know people who naturally apply a lot of the FIRE ideas to their lives without ever intentionally pursuing FIRE, or even being aware of it. Sometimes I think it is just kind of random who becomes famous.

    Reply
    • September 21, 2017 at 8:20 AM
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      Absolutely Beetsandlilacs! There’s actually a bunch of prevalent theories that suggest we have a lot less control over life than we think. Random chance controls more of our life outcomes than we think.

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  • September 20, 2017 at 3:59 AM
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    I really love efficiency. It can help us achieve more and do better within a short period of time. We can then allocate our resources to more activities and thus increase our productivity. We all have 24 hours a day, but we differ in what we do or can do in those 24 hours.

    Also, I think most of the bloggers you mentioned were software engineers . They made a lot but managed to maintain a frugal lifestyle.

    Reply
  • September 20, 2017 at 4:07 AM
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    Great post and observations! I’m shocked that you ate $1 TV dinners because your cooking looks amazing. Yes engineers are notorious for efficiency and maximizing what they are given (I dated two before haha!).

    Another common factor is many of them started off with 6 figure salaries. When you save and invest the snowflakes created that snowball and then it started getting bigger and rolling itself without the salary input.
    GYM recently posted…GYM September 2017 Net Worth Update: $626,000 (-0.4%)

    Reply
    • September 21, 2017 at 8:18 AM
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      Yep, I ate those $1 TV dinners (hides head in shame). It wasn’t until I met Mrs. Tako that I learned about good food. I’ve come a long ways since those days!

      I used to eat only to consume calories. Now, I see food as a way to enjoy life! 😀

      Reply
  • September 20, 2017 at 4:48 AM
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    Very true! I don’t think there’s anything special or extraordinary about people pursuing FIRE. If anything, I think their anti-debt and pro-wealth mindset is what’s extraordinary; not their incomes or life circumstances.

    Reply
    • September 22, 2017 at 9:39 AM
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      Well said Mrs. PP, just what I was thinking! Breaking free from our consumerist culture to look at what the “average” person does and buys and say “nope, not for me I’ve got other plans” is the extraordinary path. #Respect for anyone on the FIRE journey!

      Reply
  • September 20, 2017 at 5:38 AM
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    Your famous in my eyes! And you are killing it as an early retiree….so Kudos my friend Kudos.

    I started reading these sites back in 2012 and since then have kicked myself in the butt for all of the spending I did when I was younger. I was far from efficient, not a crazy spender, but definitely not efficient. Alcohol and nights out were likely my biggest money pits.

    Oh well, what can you do. Now I am 37 and making strides forward. I hope by 40 my net worth has ballooned and by 45 is getting me set up for FI….if my blog is still running I will keep the world updated.

    Reply
    • September 21, 2017 at 8:15 AM
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      Me? Famous? Haha! 😀 Mr. 1500 gets more page views in a single day than I get in an *entire month*.

      But thanks for the kind words!

      Reply
  • September 20, 2017 at 5:46 AM
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    I always considered high savings rates to be normal and common sense. Which is why the fame of these frugal savings accumulators took me by surprise.

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    • September 21, 2017 at 8:12 AM
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      Apparently savings rates that high are extremely abnormal. I believe the US average is about 5%

      Reply
  • September 20, 2017 at 6:58 AM
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    Ha, you used me and “famous” in the same line! While I’m thankful for any and all of my success, I’m still very much an amateur. I really do appreciate you mentioned me with such fine company, so thank you for that!

    “These are regular guys (and gals) who “made it” without any special abilities or superior investing skills.”

    Yep. And in my case, I started from the back of the herd. Life wasn’t so hot growing up. My father had issues with alcohol. It was not pleasant. I also had $60,000 in college debt less than 20 years ago.

    Bottom line: Anyone can do this.

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    • September 21, 2017 at 7:59 AM
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      Absolutely! Thanks for visiting Mr. 1500! Touched by greatness!

      Reply
  • September 20, 2017 at 7:16 AM
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    I too have been frugal from the start. I don’t like to see waste and certainly don’t want to add to it. I prefer residing in small places so I can live large in other aspects of my life like travel. That being said, even when I travel I do it on the cheap (sure, it helps to get discounted and free flights!). Priorities are as important as efficiency. Knowing what you really want out of life and being able to achieve that by optimizing your time and your income. It totally irks me when people peek in to this community and run in horror saying “I could never do that” or compare themselves to those you spoke about as they are in their journey today. Everyone’s story starts at the beginning (see 1500 Days above) – you can’t compare yourself to their end. Thanks for pointing this out!!
    Miss Mazuma recently posted…The Do’s & Dont’s of Walking the Camino de Santiago

    Reply
  • September 20, 2017 at 7:43 AM
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    thanks for the shout out my man.

    I’ll have to point folks to this post when they say “yeah but there’s no way I could do that! I only make $100k/yr and it’s expensive where I live!”. We never earned more than $70-71k as individuals and still hit FIRE in our 30’s though!
    Justin recently posted…August 2017 Financial Update

    Reply
    • September 21, 2017 at 8:09 AM
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      Great point Justin! For most of my career I made significantly less than $100k/yr and I live in a very expensive area.

      That didn’t stop me either!

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  • September 20, 2017 at 10:36 AM
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    This is great. We make good incomes but were not filthy wealthy. And we’re making good progress.

    It’s really about figuring it out and adjusting your values.

    Well said.

    Reply
  • September 20, 2017 at 11:16 AM
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    Excellent article ! This is why I read FIRE blogs. It keeps me efficient and saving money. Thanks

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  • September 20, 2017 at 11:38 AM
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    I’m thrift store obsessed. On Saturday I spent $102 at the thrift store for my new closet and I thought to myself…how did I spend $100!! Then I looked over the 30 items I got and changed my mind. This stuff has got to be worth around $500 really!

    For the most part I still live in a single’s lifestyle (despite the fact that I’m married with dog…) I just brought those $1 TV dinners a few days ago and sent the video of me eating to Ms. Frugal Asian Finance hahah. They’re pretty tasty in a pinch…:)

    They’re not snowflakes – they’re eccentrically wired.

    Reply
    • September 21, 2017 at 8:04 AM
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      Haha…OK I don’t feel so bad eating those $1 TV dinners now! 🙂

      Reply
  • September 20, 2017 at 12:04 PM
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    Your post title pulled me in – I was wondering “what the heck is Mr. Tako got on his mind?” Very nice article and well put. It’s so true that the average guy can get to where he/she needs to by just rethinking things and living life more efficiently.

    As you said, you don’t have to be rich or famous to reach FI. The hard part is that most people don’t seem to care enough to make the change until they’re pushing the traditional retirement date.

    — Jim
    Jim @ Route To Retire recently posted…Property Management Companies – Why I’m Firing Mine

    Reply
    • September 21, 2017 at 8:02 AM
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      Thanks Jim! Real change is hard to make happen. The chains of habit are heavy.

      Reply
  • September 20, 2017 at 12:47 PM
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    Great post, you certainly don’t need to be special, a little bit of efficiency goes a long way that’s for sure. I have the efficiency report, wish BC Hydro has something similar so we can compare with houses nearby that’s similar size.

    Reply
    • September 20, 2017 at 12:54 PM
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      I was wrong, I went on BC Hydro website and found I can compare electricity usage to similar homes nearby. Not sure how realistic the data is, since they don’t clear define what “similar” homes mean… Looks like our consumption is less than half the similar homes nearby (some as much as 70% less).

      Reply
      • September 21, 2017 at 8:01 AM
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        Wow, awesome job!

        I’ve noticed we tend to outperform in months when gas and electricity usages is highest. It’s probably the same for you.

        Reply
  • September 21, 2017 at 11:07 AM
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    Nice post. Wish I have the same kind of writing skills. I am trying to be more efficient with time and money. I started the FI things late. so we may not be retiring very early. Yet, we are having a more meaningful life now.
    Using my travel time to read books. Yes, free from library. Then cook most of the meals at home. We don’t eat out normally.

    Reply
  • September 22, 2017 at 9:14 AM
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    Efficiency is great if you can do it. I’m pretty sure it takes a special snowflake to do that when young, though. When you’re young, it’s easy to spend money and enjoy life first. I think it takes something in your youth to make you save more. My parents struggled financially when we immigrated to the US so that influenced me to save. Spending money just comes more naturally to young people.
    The good thing is that anyone can change and become more efficient. You just have to put your mind to it, right?

    Reply
  • September 22, 2017 at 10:42 AM
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    Love this post! (When I read the phrase “famous blogger” and me in the same sentence I laughed so hard I fell down :P)

    I definitely agree that efficiency is very helpful when it comes to becoming FI. That being said, efficiency isn’t what drives most people (for engineers it’s our aphrodisiac). So everyone needs to find out what drives them and use that. But you make a very good point that it’s not magic or a windfall that got the FIRE people to where they/we are today. It’s a systematic, mathematical strategy. Unlike starting a business, publishing a best seller, becoming a famous actor, etc, this one doesn’t require as much luck, networking, or marketing skills. You simply use math and progress tracking to get to the goal.

    Reply
  • September 22, 2017 at 3:41 PM
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    We’re fortunate that you Mr. Tako and the rest of the PF blogging gang efficiently optimized your savings, and have now turned your attention to spreading the word and educating the rest of us that weren’t taught or haven’t quite figured it out ourselves. Kudos!

    Reply
  • October 7, 2017 at 2:29 PM
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    I would like to know how others pay for healthcare when they hit FIRE. My wife and I are in our mid-forties, no debt, three kids in their teens and a portfolio of $1.5 MM.

    We are fortunate to get pensions. At age 50 I’ll get one and my wife will at 55.

    I looked into the ACA and on BCBS web-site and the average premium was about $1,500.00 per month and we’re talking a high-deductible plan. Nothing special.

    I’d love to quit my job but I wasn’t prepared to spend $18,000 per year on healthcare, with annual increases going forward I’m certain.

    We want to retire! but how does one get affordable heathcare??? What’s affordable you ask? $300 to $500 per month.

    I have the option of working till 55 for paid for medical but I don’t want to work another 8 years.

    any insight as to what others pay and carriers they use would be appreciated.

    Reply

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