A man who retired comfortably at age 30 explains how much money he had to save

'It really boils down to spending. Most people spend a lot more than they can afford while thinking they can afford it

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After a mere 10 years of working as software engineers, Peter Adeney (better known as “Mr. Money Mustache”) and his wife Simi had enough money to retire comfortably and debt-free.

That was in 2005, right before Mr. Money Mustache's 31st birthday.

“This was achieved not through luck or amazing skill,” he emphasized to Farnoosh Torabi on episode 38 of “So Money,” her personal finance podcast. “But simply by living a lifestyle about 50% less expensive than most of our peers and investing the surplus in very boring, conservative Vanguard index funds and a rental house or two.”

Mr. Money Mustache clearly figured something out — and he shares tips and strategies on his personal blog — but just how much sacrifice did it take to set himself up for such an early retirement? How much of his and his wife's combined $134,000 salary was going to savings?

“I saved about two-thirds of our take home pay,” he told Torabi.

While this seems remarkably high, he claims it's more than possible, and advises others to put 50% of each paycheck into savings.

“It really boils down to spending. Most people spend a lot more than they can afford while thinking they can afford it,” he explained.

One area of overspending tends to be cars.

“A lot of people in my income bracket or age range have a couple of brand new cars and they have them financed,” he said on the podcast. “It doesn't even occur to them that you could buy a car with money that you actually have, and they do this over decades ... Stuff like that can blow a couple of hundred thousand dollars over the course of just 30 or 40 years. If you optimize all the areas of your life so you're not wasting quite as much, you can cut your spending down by half or even 75%.”

While people think you have to “live in potato sack clothing” or “mash up leaves from the gutter to make your own toilet paper” to save this much, it's not like that at all, he told Torabi: “The average middle class family, and especially higher than middle income — they just blow through so much without even realizing it.”

Today, Mr. and Mrs. Money Mustache and their son live comfortably on about $25,000 a year in Longmont, Colorado — and it's doable, he assures.

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