# Maximizing Financial Utility and Frugality

The past few days have seen an increase of chatter concerning retirement and financial planning. One of us is even putting out a prospectus for a rational financial planning sequence. Some others have derided the concept of saving for retirement, as there is a probability of death before that time.

I am of the Extreme Early Retirement group. The idea is to save and invest 60-90% of your income, and you will have enough money to retire within a decade rather than four decades of the normal working career. This requires you to exercise your frugality muscle (such as cutting cable, biking to work, eating out less), but due to hedonistic adaptation, you will come out no less unhappy.

The [sequences](/lw/4su/the_science_of_happiness/) have already spoken on how spending money does not make us happier (after our basic needs are met). A Rational Financial plan should take this into account, even if a majority of people would not want to consider it.

I am just a beginner, so I linked the two big names in EEA, [Mr. Money Mustache](/mrmoneymustache.com) and [Early Retirement Extreme](/earlyretirementextreme.com). You can find their journeys towards financial independence [here](http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/) and [here](http://earlyretirementextreme.com/how-i-became-financially-independent-in-5-years-part-i.html).

ERE is an austerity heavyweight, while MMM lives a pretty luxurious lifestyle, but still spends much less than his former coworkers. He just spends on what is important to him, such as travelling with his family and eating organic food, and not on anything frivolous, such as cable or eating out. He lives very far from a deprived lifestyle which the average person would shy away from. It takes a paradigm shift and some grit, but the people of LessWrong are not the type to reject munchkin ideas because it takes a little bit of mental effort.

If I were to make a compilation of posts for a Rational Financial Planning sequence, it will go as such…

[How](http://earlyretirementextreme.com/how-little-do-you-need-to-retir.html)[Little](http://earlyretirementextreme.com/how-i-live-on-7000-per-year.html) [Money](http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/) [you](http://www.mrmoneymustache.com/2012/06/01/raising-a-family-on-under-2000-per-year/)[need](http://www.mrmoneymustache.com/2012/12/15/high-cost-of-living-its-a-state-of-mind/) [to](http://earlyretirementextreme.com/how-rich-do-you-really-need-to-be.htm) [Retire](http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/) [?](http://earlyretirementextreme.com/can-i-retire-young.html)  
[Basic](http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/) [Retirement](http://earlyretirementextreme.com/wiki/index.php?title=Calculate_Your_Time_to_Retirement) [Math](http://www.mrmoneymustache.com/2011/04/26/why-hardcore-saving-is-much-more-powerful-than-masterful-investing/)  
[Rationalist](http://www.mrmoneymustache.com/2011/07/14/living-better-than-your-neighbors-on-75-less/) [Spending](http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/)   
[Maximizing](http://www.mrmoneymustache.com/2011/06/21/frugality-as-a-muscle/) [Utilons](http://www.mrmoneymustache.com/2012/12/18/your-money-or-your-life/) [per](http://www.mrmoneymustache.com/2012/09/06/does-peak-happiness-really-come-at-75000year/) [Dollar](http://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/)  
[Utilons](http://earlyretirementextreme.com/day-5-find-a-free-hobb.html)  [Free](http://earlyretirementextreme.com/day-18-join-a-challeng.html) [Of](http://www.mrmoneymustache.com/2011/10/20/mmm-challenge-try-getting-your-groceries-with-a-bike-trailer/) [Charge](http://www.mrmoneymustache.com/2013/03/19/a-lifetime-of-riches-is-it-as-simple-as-a-few-habits/)  
[Investing](http://www.mrmoneymustache.com/2012/07/30/managed-payout-funds-automatic-grocery-buying-machines-for-the-early-retiree/) [Rationally](http://www.mrmoneymustache.com/2011/08/15/become-a-lazy-landlord-with-reits/) [Basics](http://earlyretirementextreme.com/day-14-investing-for-early-retiremen.html)

These are just the basics. Investment advice is scare, and the above does not talk about many fianacial aspects, such as insurance, children, career choice. The authors do speak about them on their blog’s, but I omitted them for brevity. Read and follow these posts however, and you will be better off than 90% of your peers, and well on the road to Extreme Early Retirement.

\[Edit\] This idea of cutting your expenses and maximizing your savings obviously do not apply only to early retirement. Other financial goals, such as saving for a house, building up capital for a business, or giving more money to charity all will be more quickly accomplished if you learn to cut excesses from your life. The driving idea is the cost to live is very small, you are not made any happier by spending money on the extras, and you should put this money where it matters to you the most.

Petruchio