Mr Money Mustache vs Ramit Sethi

I read a lot of finance blogs and recently saw this article discussing a couple of different personalities in the FI/FIRE space and their different ways of looking at your finances and potentially FIRE.  There’s obviously more than one way to organise your money which is one reason why I find blind following of the Barefoot Investor approach to be somewhat annoying, well that and the fact that he is just plain wrong on a lot of stuff but that is potentially another post at some point.   With that aside, let’s have a look at the people mentioned and the article!

I don’t know if Ramit Sethi is really well known in Australia, I read his book I Will Teach You To Be Rich maybe 10 years ago and it’s kind of an equivalent of the Barefoot Investor but for the US (actually I got the UK edition because I was living there but whatever).  The book is about having the right systems in place, automating your finances, spending less than you earn etc.  However since then as the article says he has mostly moved on to creating other streams of income, living the good life by cutting out the stuff you don’t care about, as well as making more money from your day job.  

As an example I used parts of some of his techniques to get raises in my jobs which were pretty significant in both dollar and percentage terms and because of that was able to put aside a hell of a lot more money to help me on the road to FIRE.  I haven’t paid for any of his courses but his free stuff is pretty good in my experience so I’m assuming there is even more value in the paid courses.  He doesn’t necessarily advocate retiring early, it’s more about being financially independent and living a good life.

Mr Money Mustache (MMM) presumably needs no introduction to anyone in the FIRE community, he’s pretty much about saving as much as you can early on and then not having to do any work that you don’t want to after that.  To some extent an argument can be made that he’s not actually retired but I really don’t feel like getting into that and I’m not part of the Internet Retirement Police. The fact that he doesn’t have to work if he doesn’t want to is good enough for me.

So the two approaches essentially boil down to earning as much as possible, or spending as little as possible.  There are elements of the other approach in each of these as well, Ramit is about spending a lot on the stuff that’s important to you but spending as little as possible on the stuff that isn’t, and if I recall correctly MMM got quite a few raises during his time in full time work and has plenty of other side projects going on to earn more so he’s fine with increasing earnings. 

Obviously if you can combine both approaches then you earn a lot and spend very little and as a result invest a lot and you will get to FIRE a lot earlier than you would otherwise, but that’s not for everyone and not for me.  Looking at the different types of FIRE, the MMM approach is probably closest to Lean FIRE and the Ramit approach to Fat FIRE or as I prefer to call it, HI FIRE. 

My approach is a bit of a combination of the two.  I’m fine with spending a lot on stuff which is important to me, but if it’s not important then I’d either rather not do it if I don’t have to, or spend as little as possible if I do.  I could definitely spend less than I do on things like holidays and eating out occasionally, but that’s a tradeoff I’m not willing to make. 

Likewise when it comes to earning more, I’ve been reasonably aggressive in salary negotiations in the past and as a result of that have a pretty decent income from my day job.  I could certainly earn more if I decided to become an Uber driver or some such, but the priority for me once I’m done with my day job is spending time with my wife and kids.  So when it comes to both spending less and earning more I want to find the right balance with each of them. 

What approach do you take to FIRE?  Is it more important for you to not compromise your current standard of living, or are you prepared to make lots of sacrifices in order to retire early and never have to work again?  If you liked this post and would like to read more like it then please subscribe using the link on the right!