The Weekend Listen

A pair of wireless headphones for podcast listening

I listen to a lot of podcasts while driving, working out, and doing chores around the house. In this weekly feature, I’ll tell you about one episode I particularly enjoyed that week.

Note: This week’s podcast episode contains explicit language that may be objectionable to some listeners. 

I’m a little behind on my podcast listening, and this week’s selection is about two weeks old.  I’m posting it anyway because it serves as a nice follow-up to Sunday’s post on financial management.  On the Tim Ferriss Show, the author of The Four Hour Workweek interviews top performers in a variety of fields about their habits, beliefs, experiences, lifestyles, and how they do what they do.  Tim recently talked to “Mr. Money Mustache,” Pete Adeney, about how he retired at 30 and lives comfortably (with a family of three) on $25-27K of passive income per year.  I was not familiar with Mr. Money Mustache before this podcast, but I’m intrigued by his advice and plan to check out his website (which apparently has a cult following).

A couple of noteworthy points from the interview:

1. You only need to save 25 times your annual expenses to live off passive income for the rest of your life.  If you can live off of $30,000 per year, you can retire once you’ve stashed away $750,000.  That’s a lot less than most financial experts recommend.

2.  If you limit your annual draw to about 4% of your total savings, you should be able to live on your savings forever, as the market usually outperforms a 4% annual return even in bad years.

3.  Adeney recommends that you not spend more than $10,000 on a car (preferably closer to $5,000) and that you drastically minimize how much you use your car.  He urges everyone to design a lifestyle that allows you to walk or bike nearly everywhere you need to go.  This can greatly decrease your spending and improve your quality of life.

4.  He doesn’t bother with active investing because it’s too time consuming.  Instead, he invests his money in indexed funds (he mentions Vanguard), where he can get a reliable return without spending his time researching investments and trying to beat the market.

5.  He focuses a lot on the non-renewable resource of time, which he says drives most of his decisions.  The more you save and the less you spend, the less you will have to work and the more time you’ll have to spend doing things you love.

This is a long interview, but it contains some good information.  Happy listening!

Are you listening to a podcast that I haven’t mentioned yet?  Let us know about it in the comments!

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