My Expenses Compared with MMM

Some of you might have heard of Mr. Money Mustache (MMM), who retired at the age of 30 in the US and is quite popular in the F.I.R.E world. I have always wanted to compare my expenses with him and see if I can be as good as him with my expenses. I always believe that there are some similarities when I compare myself with him (like workouts, DIY, minimalism etc). My expenses should also be similar then? You know that I have this habit of looking back at my expenses in the past year and write a post on it in the beginning of the new year. This year, MMM also posted his expenses on his blog, so it was easy for me to compare my expenses with his. So am I better at managing my expenses compared to him? Lets find out. The results may surprise you!

First lets look at MMM's expenses. I consolidated all his expenses into the following buckets.

Mr. Money Mustache	In USD	In INR
House expenses	1,735	1,21,450
Food and cash expenses	5,728	4,00,960
Utilities and services	2,480	1,73,600
Health and fitness	0	0
Kid expenses	0	0
Vehicle expenses	965	67,550
Travel expenses	3,702	2,59,140
Miscellaneous	2,161	1,51,270
Projects	4,699	3,28,930
Total	21,470	15,02,900

Since his expenses are in USD, I converted them to INR by multiplying by 70 which was the average exchange rate for 2019. It seems like he spends around Rs. 15 lakhs a year. If I compare with my expenses which were Rs. 6 lakhs in 2019, I feel like I have done well. Wait, not so fast. I have to compensate for the cost of living difference shouldn't I?

From my past experience, I arrived at a scaling factor of 20. It is just empirical and I don't have a formula to compare expenses between Longmont, Colorado, USA with Bangalore, KA, India. What I saw was that if some one was earning about $100K, the equivalent pay they could receive would be about 20 x 100K = which is about Rs. 20 lakhs in India. Food that cost around $10 will be about Rs. 700 here. Rent of $1000 will be about Rs. 20K and so on. Of course this is a very crude way of calculating for cost of living differences. Some are quite expensive in India for the equivalent value, like petrol (or gas as they say in the US), electronics, fast food, electricity etc. Likewise some things in India are cheaper like services (electrician, maid etc). On average, I would like to think that a scaling factor of 20 works fine.

After scaling the numbers, this is what I got for MMM.

Mr. Money Mustache	In USD	Cost of living
House expenses	1,735	34,700
Food and cash expenses	5,728	1,14,560
Utilities and services	2,480	49,600
Health and fitness	0	0
Kid expenses	0	0
Vehicle expenses	965	19,300
Travel expenses	3,702	74,040
Miscellaneous	2,161	43,220
Projects	4,699	93,980
Total	21,470	4,29,400

Now you will see that MMM was somehow able to manage all his expenses in Rs. 4.29 lakhs in equivalent cost of living. He beat me! But how? To understand that I had to compare each bucket item with mine.

Mr. Money Mustache	Cost of living	Mine	Difference
House expenses	34,700	13,000	21,700
Food and cash expenses	1,14,560	2,62,754	-1,48,194
Utilities and services	49,600	74,831	-25,231
Health and fitness	0	13,205	-13,205
Kid expenses	0	32,634	-32,634
Vehicle expenses	19,300	25,567	-6,267
Travel expenses	74,040	80,422	-6,382
Miscellaneous	43,220	31,565	11,655
Projects	93,980	70,000	23,980
Total	4,29,400	6,03,978	-1,74,578

One thing you will notice between my expenses and MMM's is the fact that he did not mention what his kid expenses are because he is now divorced and the expenses are shared between him and his wife. Next thing is he did not have any health and fitness expenses. I know he works out at home like me, but may be he did not have expenses buying equipment (he already had weights and barbells). So if I exclude those expenses, the difference is still Rs. 1.3 lakhs.

The biggest difference seems to be in Food and cash expenses which is understandable since I am a family of 5 where as his family is 2. So spending twice as much seems reasonable. Otherwise we have pretty similar expenses. I was surprised how close I was in terms of expenses with him. Of course he is much better than me in every aspect, but I feel proud to be comparable with the legend!

Here is one final change after accounting for number of people in our house and adding same expenses as mine for the things that he did not mention.

Mr. Money Mustache	Cost of living	Mine	Difference
House expenses	34,700	13,000	34,700
Food and cash expenses	2,29,120	2,62,754	-33,634
Utilities and services	49,600	74,831	-25,231
Health and fitness	0	13,205	-13,205
Kid expenses	32,634	32,634	0
Vehicle expenses	19,300	25,567	-6,267
Travel expenses	74,040	80,422	-6,382
Miscellaneous	43,220	31,565	11,655
Projects	93,980	70,000	23,980
Total	5,76,594	6,03,978	-27,384