Live On Half by…Embracing Your Inner Scrooge (McDuck)



Let Scrooge McDuck, maternal Uncle to Donald Duck, and Great Uncle to Huey, Dewey and Louie, guide your spending habits.  According to his Wikipedia entry Mr. McDuck was, in his first few appearances, characterized as a greedy miser.  But in later comics and animated shorts and the modern day he is more often portrayed as a charitable and thrifty hero, adventurer, explorer and philanthropist.  I also remember from the old comics is that he is occasionally given to excess….and stress….but it is the other qualities that we need to channel.

Living on half of your income (and investing the rest) is simply a way to achieve financial independence (FI) relatively quickly.  Most people are used to spending all of the money that comes their way.  To make it worse they carry balances on their credit cards, often borrowing money at 24.99% interest to buy $0.25 worth of coffee mixed with $0.10 worth of milk and sugar.  This kind of habit doesn’t disappear just because you started browsing a few blogs and thinking it sounds like a good idea to cut back.  You have to let your inner Scrooge McDuck guide your spending – embrace being a miser – at least for now.  Achieving FI means you can afford the luxuries that you want without needing to work.  But what you are likely to find is once you give up some of the luxuries you have been purchasing your whole life you no longer miss them and may be happier without them.  I know a lot of people feel this way about cable or satellite TV.

If you are single (or have a like minded partner) with no responsibilities to anyone but yourself and want to achieve FI as soon as possible then by all means live the life of a greedy miser.  Try to save 85% of your money. 85% is a big number – get ready for some BIG changes.  There is no need for a home in the traditional sense when you can take advantage of ALL of the benefits of that job of yours.  Is that climate controlled office building being under utilized during non-business hours?  You COULD… sleep under your desk, take sink baths, and keep all of your perishables in the break room refrigerator.  Security guard giving you a hard time?  You may be forced to spend $50 per month on a storage unit – just try to be discreet.  Soon you will be have enough money saved that you will not need to trade your time for it – you should still be thrifty – but the interest your investments earn will pay for the luxuries, adventures and philanthropy that you choose.

My inner miser is constantly getting beat up by my inner caring father.  Inner caring father thinks that his children will visit him more often when he is old if they have happy childhood memories that include vacations, toys, and recreation – the more the better.  When inner miser and caring father merge into a single identity they become thrifty dad – a lovable adventurer and explorer who is an expert at getting the best deal and choosing experiences that are high in quality and low in cost.  Saving 85% is not a compatible goal, but reaching or exceeding 50% definitely is for a lot of families.

How?  It takes a few big steps and a lot of little ones that will get you there.  Here is a little one that pertains to the cost of kids’ activities:

Recently my two oldest kids became interested in taking a martial arts class.  Remembering the few months that my oldest son took a Taekwondo when he was five years old I shuddered at the monthly hit the budget might take if we went back and signed the two boys up.  I visited the website of the place we had taken him and found out that this is what the cost would be.  Note that this is for a 1 hour class 2 times per week:

monthly fee child #1: $95 + $17.33 for testing (average)
monthly fee child #2: $90 + 17.33 for testing (average)
$/year (combined): $2428
$/hour of training: $11.67

When I was a senior high school I joined the local Judo club.  I have noticed that there are karate, taekwondo, and other martial arts schools in every other strip mall around town, but no Judo.  I researched a little bit and found the closest Judo club.  They meet at the local police station twice per week for an hour and a half of training, and sometimes have practices on Saturday.  I enrolled the two kids and this is what we are paying:

annual USJF membership each child: $50
monthly fee child #1: $30
monthly fee child #2: $15
$/year (combined): $640
$/hour of training (not counting extra Saturdays): $2.05

Note that this comparison does not include uniforms or tournament entry and travel fees. I am assuming the costs for these will be similar for both.

So in this example choosing wisely saves $1788 per year, and is a MUCH better deal on a per hour basis. If you earn $100k per year that savings is about 1.8% of your income. If you earn $50k it is about 3.6% per year. That is one more small step toward being able to save half.

Note: At almost every Judo class I have watched so far there are at least 3 blackbelts who are teaching each session. At the Taekwondo school there was only one.

Another Note: If it helps you stay focused on being thrifty you can emulate Mr. McDuck’s appearance. Pince-nez glasses are a good place to start – as long as you can find them free or cheap.  If you find a mirrored pair they can also be used to emulate Morpheus.


Hero Worship – Clark Howard

This  is a test to see if a Youtube video will embed in my blog post.  The video is worth watching, this is consumer advocate Clark Howard (website here) talking about a powerful moment in his life that had a profound effect on his career and who he became.

Whenever I listen start to listen Clark’s radio show (podcasts available on the website) and hear the intro music and, “ to save more, spend less, and avoid getting ripped off.” I get a pleasant rush of endorphins, similar to the what we all experience when the clouds part and the music starts at the beginning of The Simpsons.  Nerdy?  Yes but isn’t that supposed to be cool now?  I guess that is a nerdy thing to ask.

Welcome to Live On Half

Quote…grab that cash with both hands and make a stash…

Welcome one and all to Live On Half, a website dedicated to disseminating information that will help you become financially independent.  I am sure some readers who stumble onto this blog are already financial independence (FI) junkies, and in a hurry to achieve FI.  Others are maybe just curious about what is involved and where to start.

For the purpose of my writing I define FI as being able to live the lifestyle that you want to without the need to work.  The desired lifestyle is an important component.  If the only goal was not needing a job the rest of your life you could go out and commit a felony right now, and your life of financial independence would begin as soon as the police arrive to arrest you.  If your desired lifestyle involves living in a 10,000 square foot house and an addiction to high fashion and high technology then your road to FI will be longer than most if you are earning a middle class income.

I think what drives most of us who are seeking FI is a desire to spend our time doing what we want to instead of ‘needing’ to spend it doing something we don’t want to.  Most of you (us) spend a lot of our time working for an hourly wage.  Regardless of whether or not you ‘love your job’, you probably would not show up tomorrow if you weren’t being paid.

I first heard idea of living on half of your income (and investing the rest) from consumer advocate Clark Howard (who has a really great radio show - podcasts available here).  The idea was you can save 10% to 15% of your income to retire comfortably at the traditional age of 60 or so.  But if you can save 50% of your income (and live on the other half) then you can retire ‘early’.

Do you want a shortcut?  Save even more.  This is certainly demonstrated by the Great Ones – FI gurus like Mr. Money Mustache and Jacob at Early Retirement Extreme.  The most powerful principle they teach is that the power of saving is greater than the power of earning.  It breaks down like this:

X is the amount of money you need to live on each year.

Y is the amount of money you need to have saved in order to be FI.

In order for Y to last forever you live only on the interest it earns.  A conservative assumption is that you can withdraw 4% forever and it will never shrink.  Thus Y equals 4% times X.  If you can hack the typical middle class life and spending patterns to make X smaller, then Y can be smaller and you can save for it much faster.

A young person starting a professional career can achieve FI very quickly.  Mr. Money Mustache retired around age 30, acquiring real estate and a few toys along the way.  Jacob achieved a more modest result after working for only 5 years.  It is truly inspiring to read their stories.  But many of us are not at the same starting point as they were.  Our life circumstances may include

  • bad debt, including credit card balances and automobile loans
  • better debt, including mortgages and student loans
  • other costs such as ongoing medical bills and feeding and caring for dependents.

With the exception of ongoing medical bills I have had to deal with all of the above.  I am currently 38 years old and still dealing with at least one from each category:

  • automobile loan
  • student loan and mortgage
  • my wife and I have 4 kids – and 3 cats – and a dog

You may ask yourself, “How serious is this joker about FI if he has an automobile loan?  Has he learned nothing?  He probably buys all of his groceries at Whole Foods too.”  It is a chosen luxury and I fully acknowledge that it makes my path to FI longer.  This demonstrates my point above – true FI allows you to not work but also live the lifestyle you want.

The student loan is what it is – the follies of youth – my wife and I were not as frugal as we should have been when were in college.

The mortgage is bigger than it needs to be.  But the (relatively) big house is another luxury we are willing to work for.  Six people sharing 2800 square feet is very comfortable but not what I would consider to be over the top consumerism.  We live in Idaho – real estate is cheap, natural gas is cheap, electricity is cheap, property taxes are low – it is a paradise for people who don’t like to spend money and enjoy playing outside.

We are learning to apply the principles we have learned to our situation, and achieve FI a helluva lot faster than most people.  I suspect there others out there in a similar situation (large family, etc.) who are after the same goal and I look forward to being able to interact with and learn from them through this website.


Hello world!

Live on half of the money you earn. Invest the rest. This is a simple formula for becoming financially independent in a short time.

Do you want to know a shortcut? Live on less than half. But that is a clunky name for a blog isn’t it?