Too Good to be True



Good Morning,

Last weekend, MarketWatch published an article about how a family went from not saving at all to becoming extreme savers. The article has some critical points:

1. It highlights the FIRE (Financially Independent and Retire Early) movement that centers around being a frugal saver to retire early. This concept has gained popularity from the blogger Mr. Money Mustache

2. Emphasis on creating a more frugal lifestyle is possible

3. Reinforces that lifestyle should be tied to lincome

4. Housing, transportation, and food were their biggest expenses

I thought this article was a great way to introduce how context is relevant within financial blogging and advice. Off the bat I recognized a couple things:

1. Their take-home income was 142k after taxes which would be in the range of 203k before taxes (federal, state, and local) which is well above the median two family income in the US

2. The flexibility for one person to work from home allows them to be able to save on that transportation cost

3. Ability to move from a higher standard of living to lower

4. No mention of children

While the article was great, these data points which I highlight to point out how distorted their view is. I do acknowledge that transportation cost can be minimized, not everyone has the luxury of working from home or can work remotely which changes the expense side. The killer for me is that children were not mentioned in this article which increases the cost of living based on their needs.

Despite my bashing, I do like these articles because you can find some life hacks but most are unrealistic because once you factor in the context you realize that this is the exception versus the average. This is the fallacy behind most financial bloggers since the context is never given to provide a full view. Within finance, context matters most with the message/information given and provided.

https://www.marketwatch.com/story/this-couple-went-from-saving-almost-nothing-to-70-of-their-income-heres-what-really-works-2019-01-15

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