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1. 

   staticwarp
   

   Novice
   Joined: Mar '12
   Posts: 6

   last week i discovered ERE. its been very enlightening and entertaining reading through the blog, wiki, and forums. i've gotten the gist of the ERE strategy, however, as jacob mentioned in several posts, the really useful stuff is left intentionally vague. i feel like i've understood most of what is presented here, and some of it isnt new to me as i've been living below my means in order to have more free time for a while now (it just never occurred to me that i could actually become FI doing this).

   now i feel like i want to dive in further, specifically into the fairly simple mathematics behind the ERE strategy, and learning about investment. from what i can tell, this requires reading a few books, namely jacob's book, and any books on investing that he or anyone else in the forums would recommend in order to understand enough about managing my own money so that i dont have to pay someone else to do it for me.

   jacob's book is pretty cheap, however, following the principles he has laid out, i'd like to see if i could either beg or borrow a copy from someone here who has one they would be willing to share, as its probably not at my library. the specifics regarding postage and stuff would be up to the lender, you can reply here or pm me if interested in loaning or giving away a copy of the ERE book. same goes for books on investment, if you would like to loan or freecycle any of them my way, thats more money towards my ERE :)

   otherwise, i would love some suggestions on other books and resources so that i can continue to formulate my plan for ERE. thanks ^_^

   Posted 1 year ago #
2. 

   DutchGirl
   

   Master
   Joined: Sep '11
   Posts: 480

   "Your money or your life" could be another book to read. I don't have hard-copies of either book (Jacob's or this one), so can't help you there, but others may have it. I think one thing to remember is that your strategy has to fit with who you are. Mr. Money Mustache (google his website) relies heavily on owning houses and being a landlord. It suits him, but may not suit you. So maybe some things are intentionally vague so that you can adapt the strategy to your life and your preferences.

   Posted 1 year ago #
3. 

   staticwarp
   

   Novice
   Joined: Mar '12
   Posts: 6

   i can certainly understand that. what i'm looking for is a way to make sense of the numbers presented on this site. how to figure out what it would take for me to retire or become FI, for example. then how to figure out how long that would take, etc. the examples on the blog are somewhat incomplete and hard to follow. jacob also devolves into investing jargon when discussing ERE, and i'd like some recommendations on what to study to understand that.

   Posted 1 year ago #
4. 

   dragoncar
   

   Expert
   Joined: Oct '10
   Posts: 1,287

   If it's not at your library, you should ask them to get it. They may not, but hey worth a shot right?

   The electronic version is only $10, so I'd say factoring in shipping it's worth just getting that. If you have a Kindle account, someone can lend you the ebook for free.

   Also, I just noticed that Amazon is allowing Prime members to read the book free! I don't know if that includes Student Prime, which you can get free for a year if you have a student email address.

   Finally, you can always ask about any equations here... people will be happy to explain.

   Posted 1 year ago #
5. 

   JohnnyH
   

   Expert
   Joined: Jul '10
   Posts: 1,363

   I have an extra hard copy of YMOYL... Wonder if it would be practical to set up a lending library of sorts here. Basically it's about $2 to ship a book mediamail anywhere in lower 48.

   Posted 1 year ago #
6. 

   staticwarp
   

   Novice
   Joined: Mar '12
   Posts: 6

   @johnnyh: a lending library would be awesome. i would certainly participate.

   @dragoncarmaster: i'm unable to find a reference post for the equations i'm talking about, but what i'm trying to figure out is: how much i need to ere/fi, which seems to involve an inflation rate and a swr. (i dont totally understand either of those, so some further reading is probably a good idea). in order to out how much i need before i can even start thinking about how much investment income i need, i would need to figure out how much principal i need to shoot for, so that i can start a plan and be able to see where i'm going with this... i think. i'm confusing myself a bit here.

   i'm interested in the type of ERE that jacob describes in which he has a large savings and a stock portfolio(?). i'm not interested in real estate or business. what books does he recommend reading to gain some insight into how that works?

   Posted 1 year ago #
7. 

   dragoncar
   

   Expert
   Joined: Oct '10
   Posts: 1,287

   The basic, super-simplified rule of thumb is that you want to save 25 times your annual expenses.

   As you say, this is based on many factors that I'm sure you will explore when you get more into it. But I still think it's a pretty good starting point. To be on the safer side, save more. To be more aggressive, save less.

   Investment styles vary greatly. You can try Googling "dividend investing" "index investing" (bogleheads.org) and "permanent portfolio" (gyroscopicinvesting.com/forums) for just a few examples.

   Posted 1 year ago #
8. 

   staticwarp
   

   Novice
   Joined: Mar '12
   Posts: 6

   interesting. is 25 times annual expenses the amount of principal to shoot for to ensure a consistent SWR? i'll take a look at those websites you recommended as well. also, you mentioned in an earlier post that i should ask the library to get the book. funny story, i actually tried using the "suggest a purchase" link on my library's website for another book a few weeks ago. it results in a feedback loop that continually returns "your search query did not return any results" even though the form you fill out to enter this loop is not a search form. i have a feeling a similar situation will occur if i call and speak to one of our library drones, but i shall try.

   Posted 1 year ago #
9. 

   jacob
   

   Expert
   Joined: Jul '10
   Posts: 3,298

   The reason that "some things have intentionally been left vague" is the same reason that MacGyver never lists all the ingredients or show exactly how he makes an improvised bomb. It forces one to acquire some knowledge of the process before engaging in it. (Lest some of the viewers head into the kitchen to prepare for 4th of July.)

   It's like some of the paragraphs in the Book of Five Rings (I paraphrase): "Stepping too far off the enemy's sword thrust will allow him to reverse and cut your leg. You must study this carefully." (And that's it ... he tells you what to look for but not more.)

   The math regarding investing in the book is nothing but the equations that describe a life-long annuity and how long it takes to save for it. It's pretty simple. However, if I put up a simple calculator, I fear that there's risk that someone might use the calculator without understanding its weaknesses. Hence the "you must study this carefully".

   Posted 1 year ago #
10. 

    staticwarp
    

    Novice
    Joined: Mar '12
    Posts: 6

    i understand why things were left vague. apparently i didnt make that clear. i am fully capable and prepared to put in the time to understand what is being suggested here.

    the purpose of my post was to ask for suggestions on where to begin and what to read, not to slag you off for being vague. apparently that is how it came off, and i'm sorry about that.

    for example, this sentence makes sense to you, and to other readers and forum members:

    "The math regarding investing in the book is nothing but the equations that describe a life-long annuity and how long it takes to save for it. It's pretty simple."

    but to me, it sounds like klingon. what i would really like is to be pointed in a direction that would allow me to understand what you mean by the above sentence. there is so much "advice" on investing out there that it is impossible for a layman to know where to begin, hence my question: where do i start? i'd like to study this carefully, but what is "this"? the title of my post is: "ERE resources". what resources (books, websites, people) should i consult in order to build an understanding of the principles behind the type of investing you describe on your blog? i already have the extreme frugality part down, and i'm working on living on less every day. but i dont know the first thing about the stock market and i'm hoping to get a recommendation on what to study to understand the investing concepts and the jargon described on ERE.

    thanks!

    Posted 1 year ago #
11. 

    JoeShmoe
    

    Apprentice
    Joined: Dec '11
    Posts: 77

    Hey staticwarp, I feel your pain. The market is seemingly very complicated.

    I am very passionate about dividend investing. Check out dividendgrowthinvestor.com and dividendmantra.com for 2 examples of how people stash as much of their cash into dividend stocks with a long history of rising distributions, in order to live off of the dividends in the future.

    I'm really into dividend growth investing but it is not everyone's cup of tea. Some people love real estate and some love bonds. Whatever gets you to your goal and allows you to sleep good at night.

    For instance today I am very happy because I received a lot of dividends in my cash account over the last couple of days and I also hope the market goes even lower so I can buy good companies for cheaper. So even though the market is down over one percent today, I couldn't be happier. That's an example of how I can sleep pretty easy tonight. Hope that helps.

    Posted 1 year ago #
12. 

    jennypenny
    

    Expert
    Joined: Jul '11
    Posts: 1,338

    "slag you off"--That was a new one for me.

    I think you'll have to learn about two things to understand ERE. The first is basic investing. I like the bogleheads wiki. You can start here http://www.bogleheads.org/wiki/Getting_Started

    You'll also have to learn about early retirement and how it differs from regular retirement investing. Dig through the blog posts and the ERE wiki. Akratic posted a chart here somewhere that showed net worth v. years to retirement. I can't find it but maybe someone else remembers where he posted it. MMM did a post on the basic math of ERE http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

    Don't rush. Keep your money under the mattress until you're ready. Investing in stocks now or 6 months from now probably won't make any difference.

    welcome :)

    Posted 1 year ago #
13. 

    Hoplite
    

    Master
    Joined: Dec '10
    Posts: 489

    @staticwarp,
    If you're truly starting at the very beginning, you could read "The Richest Man in Babylon" for basic saving/investing timeless principles (you may be beyond this point). After that, I think a good smorgasbord-type book would help you get a foundation, something like "Investing for Dummies", which is a decent primer with a conservative (i.e., don't lose money) bent:
    http://www.amazon.com/Investing-For-Dummies-Eric-Tyson/dp/047090545X

    I would also recommend The Only Investment Guide You'll Ever Need, by Andrew Tobias. http://www.andrewtobias.com/theonly.html
    This book is more about what NOT to invest in, or waste time learning.

    From the ERE wiki page, the following books are mentioned:
    The Intelligent Investor by Benjamin Graham Amazon
    The Intelligent Asset Allocator by William J Bernstein Amazon
    A History of Interest Rates by Sidney Homer and Richard Sylla [1]
    Failsafe Investing by Harry Browne (The Permanent Portfolio)

    You can learn more about the Permanent Portfolio at http://www.crawlingroad.com
    Of the above, I would start with the Graham book.

    Posted 1 year ago #
14. 

    jacob
    

    Expert
    Joined: Jul '10
    Posts: 3,298

    I just wanted to clarify the "intentional vagueness". It wasn't meant to leave things open-ended but to make sure that "the kids don't play with guns".

    To read:
    YMOYL (beginner)
    The ERE book (advanced)
    The entire blog (typically), don't forget the comments
    http://earlyretirementextreme.com/wiki/index.php?title=Main_Page
    http://earlyretirementextreme.com/wiki/index.php?title=Calculate_Your_Time_to_Retirement
    http://earlyretirementextreme.com/wiki/index.php?title=How_much_money_do_I_need_to_retire
    http://earlyretirementextreme.com/wiki/index.php?title=Investments
    http://earlyretirementextreme.com/startup-curriculum-for-finance-economics-investing.html
    http://earlyretirementextreme.com/further-reading-a-big-list-of-books.html

    Putting you on a path towards specific investment advice or even general advice is hard. Personally I think someone who lives off their investments should either have stupendous amounts of money (not the case for us) or at least be well-informed. I don't have enough faith to decide on a specific strategy and then run blind for the next 60 years. To give an example, the first edition of YMOYL recommended 30 year treasuries. This was a good suggestions for the first two decades. Now it's not and the newest edition recommends index funds. Now I think there's a high likelihood that this recommendation will change again within a decade or two. (Some of the early 1980s retirement books recommended money market funds!)
    See http://finance.yahoo.com/echarts?s=^N225+Interactive#symbol=^n225;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined; (and consider that any bond fund that went along with this is asset diversification likely paid 0% all along). This could wreck havoc if it happened here. Going international is not necessarily an adequate defense.

    On the other hand, I also realize that not everybody has the desire/talents to consider their investments. Like, I'll probably be in charge of DW's investments, but I honestely don't know what my contingency plan would be in case I get hit by a bus.

    What's really most important is that

    1) You choose an investment strategy that's compatible with YOU.
    2) This strategy is internally consistent by which I mean it could actually make money.

    Example: Buying random stocks that Cramer or Smartmoney recommends
    might be compatible with one's personality but it's not inherently internally consistent. Conversely, indexing IS internally consistent but might not be compatible with "you". (For instance, I know too much about how the market works to have supreme faith that "even experts can't beat the experts" and some of the other index dogma.)

    Posted 1 year ago #
15. 

    staticwarp
    

    Novice
    Joined: Mar '12
    Posts: 6

    thanks all, i think i've got a pretty good stack of material to get through now. its going to be a while before i have enough capital to invest, so i have plenty of time to learn about my options and how to manage the money as wisely as possible. i've given my budget some scrutiny and figured out that right now my girlfriend and i are living on about 75% of our total income, the remainder of which is unfortunately going towards minor debts as well as dental and medical procedures. those will be taken care of by years end however, at which point i'm going to shoot for living on 60% of our income while adding in an HDHP and HSA. this is still not exactly ideal, as 50% would put us right at about 14,900/year total living expenses, but with some creative thinking and changes in perspective i think its possible to go further below that. either way its going to be an improvement and it feels good to know that for the first time in my life i'm saving some money and on my way to taking better control over my time.

    thanks for the resource suggestions. wish me happy reading! (^_^)/

    Posted 1 year ago #

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