Highlights from the Money Boss Academy at World Domination Summit 2016

Last week, with the help of my pal Pete (a.k.a. Mr. Money Mustache), I put on a three-hour Money Boss workshop for 260 enthusiastic attendees of the World Domination Summit here in Portland. We presented our financial philosophy, answered questions, and even talked about how the Money Boss world view differs from Mustachianism. (Pete and I agree on many things — but not on everything.)

The Money Boss Academy at WDS 2016

We began by stating a shared belief: You don't want to be rich — you want to be happy.

Each of us does our best to create a life that brings joy and well-being. Money is simply a tool to accomplish this objective. The trouble is, most people aren't clear on what does bring them happiness. They've never taken the time to figure it out. As a result, they seek solace in material possessions. But consumerism actually blocks happiness.

Pete argued that you can achieve greater well-being by pursuing stoicism, voluntary hardship, and baddassity.

I stressed the importance of purpose. What do you want out of life? What's your grand goal in living? This can be as philosophical or as pragmatic as you wish. It's up to you. But without an overall aim, you have nothing to guide you. You don't have anything to help you evaluate decisions — financial or otherwise.

This morning, a friend sent me a quote: “When you don't know how much you need, the answer is always more.”

In the second part of the workshop, we moved from philosophy to practical application. I explained how business profit and personal saving rate describe the same concept. A business needs to earn a profit in order to survive; the same is true at home. If we want to achieve the things that are important to us, we need to earn a profit — and a bigger profit is better.

Pete shared the shockingly simple math behind early retirement. “A millionaire is made ten bucks at a time,” he said. “If you start respecting your tens at age twenty, then you'll be retired by thirty.”

I spent some time analyzing the average American budget:

  • According to the Consumer Expenditure Survey, the typical U.S. household spends 64% of its budget on Needs (such as housing, transportation, food, clothing, and insurance), 8% of its budget on Saving (including debt reduction), and 28% on Wants.
  • Compare this with the Balanced Money Formula proposed by Elizabeth Warren and Amelia Tyagi in their book All Your Worth. The authors say that in order to enjoy life, not fill pinched, and fund your future, your after-tax money should be spent like this: 50% on Needs, 20% on Saving, and 30% on Wants.
  • I argued that the Balanced Money Formula might be a good starting point, but it doesn't go far enough. I think it makes more sense for people to save half. I want folks to set aside 50% of their after-tax income. To that end, I came up with the Money Boss Budget: 30% on Needs, 20% on Wants, and 50% on Saving.

Pete thinks people should save even more. His wants people to save nearly two-thirds of their income!

The Money Boss Academy at WDS 2016

We talked a bit about how it's possible to be financially independent at different levels of spending. His family spends about $24,000 in a normal year. I spend about $36,000. We have a mutual friend who spends $120,000 per year. All three of us are financially independent, meaning that our savings could support us for the rest of our lives.

Pete argued that although our friend might be able to support that level of spending, that doesn't mean he should spend that much. “I prize efficiency,” he said, “and that sort of spending isn't efficient.” Pete also has a not-so-secret environmental agenda that drives his message. He wants people to spend less because it's easier on the Earth. While I think that's a laudable goal, I adhere to the mantra: Do what works for you. Pete's spending is aligned with his purpose, and that's great. That doesn't mean our friend shares the same values and mission, though.

During the workshop, we tried to present a few case studies and examples in order to demonstrate how to make real-world changes. In one instance, Pete analyzed my own behavior to show how an average person can reduce his dependency on cars.

As we were prepping for the workshop, he learned that Kim and I currently drive to the gym instead of riding our bikes. He whipped out his computer to crunch the numbers.

“Google Maps says it takes you sixteen minutes to drive to the gym. Does that sound right?” he asked.

“Actually,” I said, “sometimes it takes longer. If traffic is heavy, then it probably takes twenty minutes. Maybe more.”

Pete frowned. I could tell he wanted to scold me but was holding back. Instead, he looked at a map for the bike commute. “You know it only takes one minute longer to bike the route, right? It's almost nonsensical for you to drive.”

“But, we have a reason!” I protested.

“Of course you do,” he said.

“On Wednesdays, we have to take the dog to obedience training in northwest Portland immediately after the class, so we have to drive.”

“That's Wednesdays,” he said. “And I'm not sure you have to drive even then.”

“And on other days we drive because we don't want to leave the dog home alone with the kittens. She'd eat them. So we take her with us. I get up early to take the dog for a walk, then Kim picks us up in the car.”

Pete shook his head. “That's just an excuse,” he said. “You can make this happen.” He then spent an hour creating a case study describing how Kim and I could reduce our car dependence. He also created the following slide so that we could explore this scenario during our workshop.

Transportation Case Study

Overall, the first-ever Money Boss workshop was a success. Pete and I enjoyed doing the presentation together, and attendees seemed to enjoy it. Feedback was overwhelmingly positive. Still, I know it wasn't perfect and I've already thought of ways to make future workshops even better.

After our session was over, we made our way to a local brewery where we got a chance to socialize with folks from the conference. Naturally, we biked. And I have proof! A workshop participant snapped this photo of me and Pete weaving our way through rush-hour traffic in downtown Portland. (I took the second photo on our ride back from the brewery.)

Biking through Downtown Portland  Kodak Moment

 

And since the talk, I've been biking like a madman. (Like a Mustachian!) But tomorrow morning? Well, Tahlequah has puppy classes. We'll be driving to the gym.

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Fervent Finance
Fervent Finance
3 years ago

Looks like it was a lot of fun. This reminds me I need to get more involved with meetups and the like with others in this community.

ESI Money
ESI Money
3 years ago

Do what works for you. If it’s driving, it’s driving.

I’m sure Pete spends money in ways you don’t.

And as my daughter says in jest, usually after she buys something I think is not a wise purchase: “Let me live my life.” 🙂

PinchThePennies
PinchThePennies
3 years ago

Hi J.D., Interesting post and pdf – thanks for that. I think it would be worth to link this post (http://moneyboss.com/do-what-works-for-you/) in the paragraph below the second pictures especially as you already have the phrase (Do what works for you) highlighted in bold letters anyway. As for the pdf: You mention investing a few times but there’s no follow up on it so I guess people may look at it and then still be unsure how to go about it. I think it would also be worth putting in links to Jim Collins’ Stock Series or his articles about the… Read more »

Paul
Paul
3 years ago

Hi J.D.,
Thanks for all the great info. Most importantly, thanks for the way you motivate me with your writing. You have a real gift.
On a side note, I was wondering how MMM can even stand being your friend. First you owned an RV and now you have a dog and a kitten!

ZJ Thorne
ZJ Thorne
3 years ago

The summit sounds like another success. I’m glad that the dog has not eaten the kitten yet, and that both are there to bring balance and joy to your life. Life is not just about saving money.

Thehappyphilosopher
Thehappyphilosopher
3 years ago

I’m surprised MMM didn’t suggest you get a bike trailer to put the puppy in…that would be maximum badassity.

😉

Tristan
Tristan
3 years ago

JD,

It’s so good to read blog posts written with your voice again.

The formulaic crap coming out of the personal finance blogosphere for the past couple years has been so unbearable that I hadn’t regularly read anything from that realm for the past couple years.

This site is the perfect answer to said crap. I’m enjoying the heck out of Money Boss, just like I used to enjoy the heck out of GRS when I first opened my Roth IRA years ago.

Kristen w
Kristen w
3 years ago

Where are your bike helmets?! 🙂

JM
JM
3 years ago
Reply to  J.D. Roth

I’m someone who always wears a helmet. They’ve saved me more than once – I completely shattered more than one. For the more competitive side, they are also great for protecting the skin on your head if (when?) you have a slide. That said I’d also very strongly fight against any sort of mandatory laws to enforce helmet laws. Each person needs to make their own choice and definitely around town there is some appeal to not worry about a helmet. Those sort of laws tend to reduce cycling numbers and there is safety in numbers. Drivers behave better for… Read more »

Kyle
Kyle
3 years ago

I very much enjoyed the talk, so thanks for posting it. I tend to agree with you that post FI, it’s really about finding a purpose. I’m at the stage of my life where I’ve technically achieved FI (after a 10 year journey) and I’m wondering this very question. Frankly, I think finding a higher purpose in life and thinking about legacy is the harder question than FI, which is a simple math and discipline problem.

Lake Livin'
Lake Livin'
3 years ago

Man, it would’ve been awesome to witness that session!

JM
JM
3 years ago

Damn, I’m quite jealous of Petes orange bike. The number of bikes we need is always N+1…

I do agree with you about driving. It isn’t always about the financial cost. There is a lot to be said for paying for convenience. Yes it is more than financial and you understand that. Some hardship is good for you but equally, so is getting shit done.

BT
BT
3 years ago

BIKE TRAILER THAT DOG!

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