# The Principle of Constant Optimization

## By Mr. Money Mustache

## Wed, 15 May 2013 16:08:38 +0000

A few years ago, I was helping a friend with some kitchen renovations. He’s a smart guy with a good career, and he likes to work hard on the weekends. He had done most of the carpentry himself, completely transforming a very small house to make it work better for his growing family and greatly improving the home’s value as well. But as we talked about life over the background task of installing backsplash tiles, he mentioned that he wished they could afford to build an addition someday to get a third bedroom, or possibly move to a bigger place.

This was interesting to me, since I know this couple well, and they are pulling in two very solid salaries while living in a modest house that cost under $200,000 back when they bought it. With similar incomes, Mrs. MM and I lived in and renovated a larger house, and still had enough left over to accumulate a retirement-sized investment pool over nine years – about the same length of time we’ve been friends with these people.

Using my secret identity as Mr. Money Mustache, I naturally began to look for clues as to how this might have happened. I noticed a Honda CR-V and a (financed) Honda Pilot in the driveway. Those are great vehicles if you run a rafting company and need to pull people and trailers up the forest access roads to get to the best rapids, but they are not suitable for commuting to work, and yet that was their primary purpose. Their jobs were in two different cities, and neither of them has ever worked in the city we live in – despite the fact that both job types are available here as well. The recycling bin was piled high with fast food containers, which my friend picks up when returning from late shifts at work, and empty Gatorade bottles. The modern wall-mounted TV displayed the razor-sharp images and broad channel selection that are telltale signs of a premium cable subscriber.

So while I had solved the mystery of where their money was going (to the endless stream of seemingly tiny budgetary leaks that are part of a middle class life), I still hadn’t figured out why these otherwise-intelligent people were continuing to burn money even while they obviously had higher priorities in their lives than Gatorade. I asked a few more questions:

“Say, that Honda Pilot is a pretty posh machine – what made you decide on that one?”

“Well, we’ve always liked Hondas, and when we had the second baby we just figured we’d like a bit more space”.

“That’s cool. Hey, you often mentioned you don’t like your morning commute – have you ever considered looking into getting a similar position here in Longmont?”

“Yeah, I’ve thought of that, and it would be great. It’s just that, you know, I’m in a groove and I like my coworkers at the company in Boulder. I just haven’t really looked around at the opportunities here. Plus it’s only really a 25 minute drive if you hit it at the right time.”

This conversation went on for a few more cycles, and it became evident that the main reason for most of these ‘stash-draining behaviors was not conscious choices that my friends made in search of a better life, but just things that had been locked in at one stage or another earlier in their lives, which never ended up being changed. They were a form of habits.

As I mentally put myself into their shoes, driving to and from work and buying Gatorade for myself, I started feeling uncomfortable. I felt the inefficiency and the daily drain, but I was not able to fix it. And this brought me to a realization of something I have always done, that is not widely practiced. But it is so important, I think it could be considered one of the Principles of Mustachianism:

Practice Constant Optimization in all areas of your life.

When I was younger, I was faced with the typical young person’s perpetual shortage of cash. I had wants and needs, but with zero net worth and minimal income I obviously could not meet them all. The solution for me was to try to meet them, in order of priority, at minimal expense.

But the thing is, your wants and needs change over time, along with the rest of your life situation your income level, and the world around you. Your original way of meeting needs will soon become inefficient, and if you stick with it after it is obsolete, you are wasting your own time and money.

For example, way back when I graduated and got my first engineering job, I needed a place to live. Knowing that driving cars costs money and time, I naturally wanted a place close to work. But I also wanted to share a house with three friends, so we could pool our rent money to afford a really nice house even while paying less than we would each pay for separate small apartments.

The problem was that certain members of the group were party boys who wanted to live within stumbling distance of downtown. I preferred to live near work (which was 20 miles West of downtown), figuring you go to work far more often than you go to the pubs. We settled and got a place in the middle. It was reasonable, as I could bike occasionally and carpool the rest of the time. But the next year when the lease expired, the party boys had matured slightly and were willing to live closer to work. So I took the initiative and found us a nicer house with a shorter commute. Optimization had been performed. One year later, we moved even closer. And so on.

As the years have gone on, I have always felt the nag of any monthly expenses, seeking to reduce or eliminate them. Borrowing money for anything other than a house was obviously out, since that would trigger a monthly interest expense – an easy thing to optimize away. But much more than that came under the microscope and continued on to the chopping block. I compared insurance rates at every policy renewal date. Looked for new ways to eat that would result in better nutrition and lower cost. Ditched my sports car as soon I realized I no longer used it regularly, with my fancy motorcycle following the same path. Both were fun to own at the time, but when the desire for them faded, they were optimized away.

Even now, we always keep a creative eye out for ways to streamline our lives. The mobile phones were switched to prepaid plans. Mrs. MM recently cancelled her monthly Crossfit membership and started paying only for individual visits, supplemented by inviting friends to come join her for workouts in our home gym, saving $60 per month. We’re keeping our eyes open for a smaller house, since we bought the current house when planning to have two kids, then subsequently decided that one is plenty.

When you practice constant optimization, nothing should be considered sacred, and all of your old assumptions should be challenged on a regular basis. Are there other people out there doing things in a smarter way than you are? Great! You can easily follow their lead. Have your needs or tastes changed as you got older, or new innovations come up since you last bought something? Ideal – another chance to optimize.

Constant optimization may sound tiring when you list two decades of steps out like I did above, but in reality it is incredibly simple and easy. You just have to keep your mind open, asking yourself occasionally, “Is there anything I could change for the better?”. Often, the answer is no, and you can go on in the old pattern. But sometimes your open mind will find things to improve, and you will be far richer for it.

Getting started with a new habit like this can be as simple as saying, “I like to experience new things.” Then back it up by doing it. Take a different route to work as often as you can, until you’ve tried and compared them all. Subscribe to automated updates on the housing and job markets in your areas, just so you always have a mental map of what is out there. Make a list of your ten biggest monthly expenses and tape it to your fridge, just so you know they are all there, constantly using up your money, so they had darned well be worth the resources they are consuming. If they are worth the expense, continue to enjoy them. If they are not, optimize them away. Look at your daily routine from an outsider’s perspective, and figure out if you are really getting the most value from each one of your hours.

An unexpected benefit of all this self-imposed change is that it helps protect you from forming bad habits, which are hard to change once you get them. In fact, change itself becomes the habit, which is a good one to carry with you through your life. The willingness to experience change brings opportunity, wealth, learning, and happiness for most of us who embrace it.