How the Man Behind Mr. Money Mustache Retired at 30, and You Can Too

— -- Mr. Money Mustache is the financial guru for the hipster generation and to most of us, he is living the dream.

Pete, who doesn’t use his last name in the media, retired at age 30, as in never having to work for money again. And he shares how he did it on his popular financial blog, MrMoneyMustache.com, where he encourages his readers to achieve “Financial Freedom Through Bad---ity.”

Before retiring early, both Pete and his wife worked in software engineering, each averaging about $67,000 annually over the years they worked.

"My coworkers were a little surprised, they said, ‘what do you mean retire? You are going to take a month off until you run out of money?’ And I said ‘no we are done, we have enough money for life,’” he said.

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Pete lives frugally, but don’t call him cheap. He insists that he and his family – he is married and has one son -- live the good life. He doesn’t clip coupons or buy in bulk. He shops at an organic grocery store and has home theater. His mortgage is paid off and the family is debt-free, living on only $25,000 a year.

“At the time of retirement, we had it split up with $600,000 of investments ... and then a house that was paid off that was worth about $200,000,” he said.

"We assume that happiness is based on how much money we have, how much stuff we have, but none of this is correlated," Pete continued. "Turns out it’s about whether you have warm relationships and friends and people you trust and who trust you."

While that may not seem like enough to retire on, Pete said it’s doable if people can learn to stop spending far beyond their means and committing to the “habit of not borrowing.” According to the U.S. Federal Reserve, total outstanding credit card debt in this country was $884.8 billion as of January 2015.

“Keeping expenses to a small fraction of your income, I thought that was normal, but apparently that is very rare,” he said. “I can always use my old quote that it’s an ‘exploding volcano of wastefulness,’ money and diapers and minivans flying out of the roof of the house but I don’t want to insult people because it’s not a moral thing, it’s a logical thing.”

Here are a few tips from Mr. Mustache himself on how to save money to prepare for early retirement.

1. Save Half of Your ‘Take Home’ Pay

Most people who get paid every two weeks are only putting a small amount into savings each time, if at all, Pete said. Instead aim to put 50 percent of every paycheck into savings.

2. Forget the Big, Fancy Car

“It’s not necessary to buy an SUV entirely on financed money, and actually that is a terrible idea financially and no one tells you that,” Pete said. “Autonomy is one of the biggest factors in happiness. Ironically by borrowing money to buy a nicer truck you have less autonomy because you are tied to a job and then you are less happy."

3. In Fact, Pete Says Don’t Borrow Money For a Car, Ever

“But 90 percent of people do it,” he said. “It leaves for a lot of dead financial bodies everywhere.”

Pete himself rides a bike as much as possible. Last year, his family said they only spent $71 on gas.

4. When You Have Money, Downsize

Don’t buy into the “moving on up” hype, Pete said. After retiring, He and his family moved from a 2,200 square-foot home to a 1,500 square-foot home.

5. Do Home Improvements Yourself When PossiblePete said he enjoys fixing things around his home in Boulder, Colorado, so for him it’s more of a hobby than a chore, but even then, he said it’s smart to remain frugal.

“[My] kitchen is from Ikea,” he said. “There is always this assumption that it costs $50,000 to fix up a kitchen and it’s just not true.”

6. 'Trim the Fat' from Your Day-to-Day

For example, Pete said to skip the $5 latte at the coffeehouse and buy whole beans to grind and brew at home.

“If you get fair trade beans from Costco, it’s about $0.30 per latte… until you are a multimillionaire you make your own coffee,” he said. “If you have a twice a day coffee habit, that is like $30,000 per decade that you are spending on coffee.”

Another suggestion from Pete is cancel the gym membership.

“Not everyone has space for it but you can get a multi-set of dumbbells that you can fit in a closet,” he said. He also is an avid bike rider.