It is “Black Friday” weekend and I’m recovering from a cold early on a cold and moonlit Sunday morning. I’m thinking of all the things we have been buying. I’m asking myself if what we bought adds to our happiness.
I’m asking that question because yesterday, I searched for and watched a video that is shown above. That video is about a man I know of as Mr. Money Moustache, author of a blog by the same name. He is a man who figured out that by saving 64% of his income for ten years, he could retire. And he did. By his 31st birthday.
What he presents in that video can transform our economy and our politics. What he proposes is a lifestyle change to be sure. It is a change in our philosophy of money. He talks about paying off all debts, which he did. He talks about making sacrifices. Give up the Starbucks, eating out, buying things on credit and buying things we neither need nor want. He is, in a sense, a minimalist.
I’ve done something similar myself, but I’m not retired…yet. I’ve paid off all of my consumer debts. I don’t eat out much. I don’t vacation much. I don’t do Starbucks. All of that really adds up. And I’ve read some of his articles and have seen the benefits of a frugal life. He’s not talking about being a pauper, either. He’s talking about being our own bank.
And he’s right about rich people being smart with their money. Rich people need us to eat out, to borrow money for appliances, to do Starbucks. Mr. Money Mustache, also shows us something else in those videos:
He shows us a chart of savings rates for the developed countries of the world. I could’t get you the exact same chart he used, but I did find the chart above from the Organization of Economic Development (OECD). That chart is based on 2015 data, but what’s really interesting about that chart is this: Most of the countries with a greater savings rate that the United States are more “socialist” compared to us. In other words, most of those countries that have a higher savings rate than the United States also have a far more generous welfare state than the United States.
There is something else: China is far and away, the country with the highest savings rate in the world. They are still a communist country, but I’m not even sure if that has meaning anymore. I’m not even sure what to make of such a high savings rate, other than that they are growing their economy faster than people know what to do with it.
As I said earlier, wealthy people depend upon the rest of us to spend our money. That’s how they make their money. They produce goods and services we want to use and we pay for them. If you’re not happy with the top 1% and how they use their money, the best way to deal with them is to save money.
When you save your money, you become your own bank. No longer do you need to borrow to live. No longer do you need to borrow to thrive. In my family, we eschew unsecured debts. We save our money to go on vacation. We save our money for the things we want, or we figure out a way to earn more money. We don’t do Starbucks, and maybe once or twice a month, we eat at our favorite Indian restaurant. We prefer to eat at home.
Saving money, even on a small scale has allowed me to pay off all of my unsecured debts and reduce or eliminate the need for consumer credit. Paying off debts increases purchasing power and gives new meaning to the phrase, “disposable income”. Paying off all my debts allowed me to buy a home. Avoiding debts allowed me to trade up my first home for a better home. We don’t live paycheck to paycheck, but we’re not independently wealthy, either.
I’ve been there. Counting all the change in the jar for my next meal. Trying to find ways to earn money in a pinch. I know what it’s like to be poor. But I also know what it’s like to have some money. Not a lot, but enough to get along and have a decent place to live, and take a vacation once a year. I’ve seen a pretty fair continuum.
But until recently, I’ve never really put it all together for politics. Most of the struggle we’re seeing is over a sort of ideology that says, “I follow a book that says I’m my brother’s keeper. But not really. Not if you’re going to make me pay taxes and then give that money to someone else. Let me make that choice myself.” Maybe there is some truth to that. But mostly what I see is hypocrisy hidden behind a set of rules designed to distribute income upward.
Those same people who don’t think the government should be involved in that “I am my brother’s keeper” decision making process, have no problem with businesses who attain monopolies and treat their customers and suppliers, and employees poorly. Sears, Amazon and WalMart, are you reading this? I submit that if big business treated their employees, suppliers and customers fairly, that we might not need a generous safety net. The poverty in America speaks to this.
In my opinion, the best way to deal with a business that is not willing to be fair is to withhold patronage, to go somewhere else. But we’re surrounded by huge multinational monopolies who have made a living off of being unfair, and using government protection for cover. Big business has friends in high places, and will always keep someone there through a revolving door.
Maybe all that will change, it’s hard to say. But there is something we can do, something concrete. We can save our money. When we save our money, we develop a skill called, “discretion”, or “discernment”. We can think through our purchase before we buy. When we save our money, instead of being in a panic about a $400 car repair, we can choose when, where and how repairs will be made.
When we save our money, we are also conserving energy. Every animal conserves energy. They forage or hunt, but they also need time to rest. They sleep or they hide in a place where they can just rest. They collect nuts for the winter. Humans did that with food when they invented agriculture. Humans do that with money, too.
When we save our money, that is, when we make a choice to bag our lunch, to eat at home and fix our own meals, we are withholding money from very large firms. When we buy a used car, we are saving the depreciation costs of driving a new car off the lot. When we buy a new TV with cash, we are saving 29% interest (I kid you not) on a consumer loan or revolving credit. When we pay for a vacation with cash, it is far more satisfying than to know that when we get home, we will have a few years of monthly payments to make at interest.
There are many, many ways to save money, and Mr. Money Mustache enumerates many of them, and will provide inspiration for more. One other thing that I liked about MMM, is that he’s not selling books, or videos or some program that you have to buy for $499. It’s all there, on his website. He doesn’t need to sell you anything because he already has money. You can watch that video for free. Besides, he already has a business building houses and helping people.
What would happen to politics if even a sizable minority of Americans, say, just 30%, figured out a way to save 64% of their income? MMM also says that work is better when you don’t need the money. It’s better because then you can choose what you want to do and when you want to do it. What would happen with the economy if 30% of the people in it could decide what work would be done here, in the United States? What would happen if all Americans could do that?
I really don’t know. But I sure would like to find out.