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Renaissance Lifestyle/3 Strategies

Posted: Thu Nov 06, 2014 6:55 am
by 7Wannabe5
Page 191
Within the context of the Renaissance lifestyle (see A Renaissance Lifestyle) there are three financial strategies to pursue: Intermittent work (see Intermittent Work), financial independence (early retirement), or semi-retirement supported by a form of part-time work(see Financial Independence and Investing.)
Given that my goal is the Renaissance lifestyle but not complete Financial Independence, how can I judge whether I have created a resilient model for intermittent and/or part-time work? These are my personal categories for Renaissance Lifestyle which I created prior to reading ERE or joining this forum:
Category #1-Knowledge and Skill Attainment
Category #2-Spiritual and Social Practice
Category #3- Health and Fitness
Category #4-Beauty, Style and Charm
Category #5-Home, Hearth, Garden
Category #6-Travel and Novel Experience
Category #7-Financial Practice
Category #8-Trade and Entrepreneurial Activities
Category #9- Creative Projects
Category #10- Meta-planning and Organizational Projects
I am thinking that if I am successfully engaged in activities/projects/goals/practices in all of these categories (perhaps in rotation rather than simultaneously) and the intermittent and/or part-time work I am choosing to engage in is either in alignment with one of these categories or at the very least not counter-productive to any of them and I am at least saving some money (net worth line on graph going up) then I will have successfully achieved my version of the Renaissance lifestyle. Are there other metrics I am ignoring or more concrete ones that I might follow? IOW, maybe what I am looking for here is given that I am quite confident that I can keep my monthly living expense under $X and I can employ myself or be other-employed in intermittent and or part-time work(s) that is in alignment with one of these categories that pays $Y/hr. , what might be reasonable parameters for T (hours engaged in paid employment), P ($ passive income) and C1 (number of desired lifestyle categories with which chosen paid employment is in alignment) and C2 (number of currently possible sources of part-time/intermittent work which are in alignment with chosen lifestyle?) Or something like that?

For instance, I think a Renaissance lifestyle that was dependent on part-time and/or intermittent income would be more resilient if you had the skills and experience to be confident that there were 20 (C2) different creative projects you could work on this year, any of which would likely produce some income or if your source of part-time/intermittent employment was very much in alignment with several of your categories, for instance, a friend of mine runs a green lawn-mowing service which would be in alignment with my categories (3,5 and 8.)

Of course, I'm sure that the rule of "If you have to ask then you aren't there yet." very much applies here but I think it would be helpful to have some metrics to shoot towards, like the 4% equation for those who are seeking complete financial independence before they balance out their lifestyle.

Re: Renaissance Lifestyle/3 Strategies

Posted: Thu Nov 06, 2014 6:55 pm
by jacob
I think that the basic rule of demonstrated capability is the most important in both cases. [I worry about the increasing number of people who seem to uncritically/dogmatically believe in the 4% rule as some kind of financial guarantee.]

I don't think you can set up such hard rules because the actual strategy will depend on values and preferences as well as the reality of the specific situation. In other words, I can't come up with a quantifiable metric. I think it depends more on the type of incomes.

Your hard cash flow limit is obviously this

X<P+C2*Y*T

Then there's the question of risk. If C1 measures your potential (what you can do and remain happy) and C2 measures your actual, then your risk consideration is something like ...

High C1 + Low C2 => High unrealized potential
High C1 + High C1 => At the limit of capacity which is high (however compare to X!!)
Low C1 + Low C2 => At the limit of capacity which is low
There's no LowC1 and HighC2 because C1>C2 at all times.

Risk would be X*(C1-C2)/(YTC1) ... I think that equation kinda covers the qualitative behavior. Not sure how useful it is. Simple equations don't really capture this problem very well.

To add capital income, use (X-P)*(C1-C2)/(YTC1). Again, this is rapidly turning into an exercise of trying to make a very complex problem look like real science. Then again, don't economists do this all the time :-P

If you're doing one-off jobs, like a handyman type, I would prefer multiple skills. More than 10 covering everything from installing a sink, fixing an electric outlet, unclogging a toilet, tuckpointing a wall, ... Basically, your capital is then a combination of social and technical in that a lot of people know that you're the go-to person for any kind of home problem. That is, the Charles Long strategy. (I recommend his book for this strategy.)

If you're doing freelancing, I would prefer at least one, that is, two different and independent venues. E.g. one could be tax-prepping and the other could be photoshopping. This is a slightly macro-diversified form of income in that if one area fails the other will work. And you should be very diversified on the client base. I keep this number limited because it generally requires more proficiency to get paid a decent income here which means a greater concentration, but by all means, feel free to expand this into multiple areas as well. I'd be thoroughly impressed by someone who can freelance in 5+ fields at $15+/hour. Such a person would likely never have anything to worry about.

And if you're a full-timer you just need that one salaried job and an emergency fund.

Anything seems to be a combination of that. If you're semi-retired, capital income can substitute for some of this.

Otherwise, it's a bit like playing a chess game and trying to give a point value to each piece. While this is possible in chess thanks to the experience of millions of chess games, it's hard to do for real life problems.

Re: Renaissance Lifestyle/3 Strategies

Posted: Fri Nov 07, 2014 10:03 am
by 7Wannabe5
Jacob said: Risk would be X*(C1-C2)/(YTC1) ... I think that equation kinda covers the qualitative behavior. Not sure how useful it is. Simple equations don't really capture this problem very well.

Thank you! Very, very helpful. I never would have thought of relating my unrealized potential (like money left on the table) to risk in that manner. My sister has similar problem because she deals in rare books with me and is a musician and wants to teach yoga and is attending law school (for free on high LSAT score scholarship) so I told her this equation this morning and she understood it right away. You should put it in your next book.

So, if you surmise that C1 might be significantly greater than C2, one way to proceed would be analogous to testing happiness boundaries with lower spending, right? For instance, am I just as happy lowering the thermostat 5 degrees and wearing a sweater or chopping some wood for the fireplace? vs am I just as happy teaching yoga vs. paying for yoga lessons 5 hours/wk. vs. independently practicing for no expense? So, there would be an X1 and an X2 too and if X1=X2 then risk would equal zero or it would approach zero as C2 approaches C1 or maybe X2 can only approach X1 too if considered to be resources vs. cash-money?

Anyways, I like this equation because I think it is an antidote to the Green Eggs and Ham type thinking that keeps many of us stuck in our various ruts.

Re: Renaissance Lifestyle/3 Strategies

Posted: Fri Nov 07, 2014 7:59 pm
by jacob
Before you find it too helpful, I want to point out that I made that equation up in the span of 5 minutes. My observation was, however, to consider that

* Having a high unrealized potential is both valuable (because it's possible) but also risky (because you haven't actually demonstrated that capacity.
* Having a low unrealized potential means that there's not much further to go so if you've already strained your capacity, one hiccup can sink you. Whereas if you haven't it doesn't really matter.
* Having an ultimately high capacity is easier than having an ultimately low capacity which is much harder. This is because it's much easier to live the same lifestyle on $10000/person/year than it is at $5000/person/year.

It's hard to capture these observations in simple math equations.

Also, be careful when talking about risk. Theoretical people tend to think about risk as volatility, the probability of positive as well as negative outcomes, that is, the uncertainty of the prediction; whereas more practical people mainly care about the probability of loss. These two perspectives are radically different!

Re: Renaissance Lifestyle/3 Strategies

Posted: Fri Nov 07, 2014 9:21 pm
by 7Wannabe5
Jacob said: Also, be careful when talking about risk. Theoretical people tend to think about risk as voltaility, the probability of positive as well as negative outcomes, that is, the uncertainty of the prediction; whereas more practical people mainly care about the probability of loss. These two perspectives are radically different!
Gotcha. I would rather not know what is going to happen. How terrible it would be to be granted the set certainty of happiness!

Re: Renaissance Lifestyle/3 Strategies

Posted: Sat Nov 08, 2014 3:19 am
by Ego
Seems to me that part of becoming a renaissance person is learning to be free from the need to have definitive goal posts that are used in the same way that people tend to use the 4% rule. (ie. okay, now I can rest).

I understand the desire to measure. The theory, "If you can't measure it then you can't improve it" may be true with specific variables but is it true with renaissancianism in general?

Re: Renaissance Lifestyle/3 Strategies

Posted: Sat Nov 08, 2014 11:06 am
by 7Wannabe5
Ego said: Seems to me that part of becoming a renaissance person is learning to be free from the need to have definitive goal posts that are used in the same way that people tend to use the 4% rule. (ie. okay, now I can rest).
Very good point.
Ego said: I understand the desire to measure. The theory, "If you can't measure it then you can't improve it" may be true with specific variables but is it true with renaissancianism in general?
I think it must be measurable because it is so obvious when you observe the lack of it. The multi-millionaire slum-lord who is 100 lbs. overweight, the woman who spends 4 hours at the gym or salon every day and hasn't cracked a book since high-school, the triple PhD holder who hasn't had a date in 18 years would be out-of-balance examples, but also the dithering, puttering Jill-of-all-trades-but-master-of-none type-of-functioning where the variety/balance is present but the level of skill attained is too low to warrant Renaissance Person status (sigh.)

Re: Renaissance Lifestyle/3 Strategies

Posted: Sat Nov 08, 2014 1:14 pm
by JamesR
Jacob, what are you talking about .. 4% is obviously the be-all and end-all of retirement! I worship at the throne of the 4%!

To be honest, I'm fully aware that 4% is going to a bit fall short on the safety margin side of things. But I focus on 4% or even 5% merely because I'm doing it like a cross-country hiker, focusing on the next step, and then one more after that, and so on.

Ah, looks like ego made this point as well.

I definitely think there's lots of ways around the 4%/3% measure of ERE, such as owning relatively passive sources of income and/or having the skills etc to do a semi-ERE thing. But I guess ultimately all roads lead to 4% & better.

Re: Renaissance Lifestyle/3 Strategies

Posted: Sat Nov 08, 2014 2:12 pm
by Ego
7Wannabe5 wrote: I think it must be measurable because it is so obvious when you observe the lack of it.
It is obvious that something is missing. Just what that something is, is often not really the skill (or the lack thereof) itself but the ability to use the skill in a useful way. For instance, yesterday I watched a half-dozen groups of busker musicians. The most popular were actually terrible musicians. I mean really terrible. But they injected such energy into the crowd that nobody really cared that a group of eight years olds with kazoos could have done better musically. There were a few tight groups that never missed a beat but were somber to the point of being angry.

Renaissance skills are often adjacent to what we would measure as quote/unquote skills. Sometimes they have nothing to do with the skill at all. The terrible musicians made lots of money with their joyful playing, but their Renaissance skill was their ability to have fun being terrible musicians. The money seemed incidental. I would have missed the point had I kept score by counting how much they had in their hat.

Re: Renaissance Lifestyle/3 Strategies

Posted: Sat Nov 08, 2014 4:06 pm
by 7Wannabe5
Ego said: Renaissance skills are often adjacent to what we would measure as quote/unquote skills. Sometimes they have nothing to do with the skill at all. The terrible musicians made lots of money with their joyful playing, but their Renaissance skill was their ability to have fun being terrible musicians. The money seemed incidental. I would have missed the point had I kept score by counting how much they had in their hat.

I agree with your point about some skills being much more valuable only in combination with other skills and I agree that you, from your perspective as a consumer/purchaser of the skill combination, would have been making a poor estimation by measuring the money in the hat BUT one of the individual joyful musicians could be able to make the measurement by considering in a more rational, self-aware manner the decision made to spend 4 hours that afternoon performing music for net proceeds of $2/hr @ happiness level 9 vs. planting potatoes $1/hr@HL 6 vs. putting in a half day shift at Taco Bell $10/hr@ HL 2 vs. managing stock portfolio $20/hr@HL 5 vs. visiting Grandma at the nursing home -$5/hr@ HL 7. I think one of the most frustrating things about the employment market is that there are so many things you can only choose to do for 40 hours a week. Of course, one of the most frustrating things about life is that there are only so many things you can choose to do before you die. So why would anybody want to do the same thing for 40 hours a week for 40 years?

Anyways, one reason why the equation Jacob suggested seems helpful to me is that I am somebody who is almost always inclined to choose the more happiness producing less $$ producing activity right at the margin of safe cash flow. I have that option because I am self-employed and I am self-employed because I want that option. However, the more skill combinations I possess that will allow me to achieve higher happiness levels and higher hourly wages IF I don't have to do them past the point of burn-out, the lower my risk of my income going below safe cash flow level or my happiness going below my personal optimum will be. Some simple examples would be I enjoy substitute teaching if I only do it twice a week, I enjoy putting books into inventory but only for about 4 hours a week, I enjoy donating plasma if I only do it twice a month, I enjoy doing bookkeeping for about an hour/wk, I enjoy cooking but not if I have to do it 6 or 7 nights a week, I enjoy home improvement projects around 4 hours/wk, I enjoy eating chocolate but not more than once a day, I enjoy hiking but not more than 12 hours/wk, I enjoy having sex but not more than 10 times a week, I enjoy reading but not more than 4 hours a day, I enjoy sleeping but not more than 8 hours/night etc. etc. I mean economics is a squishy science but I think less so for the self-aware individual than in the statistical aggregate.

Re: Renaissance Lifestyle/3 Strategies

Posted: Sat Aug 15, 2020 5:34 pm
by Stahlmann
gonna run calculations for myself in short future :lol:
Otherwise, it's a bit like playing a chess game and trying to give a point value to each piece. While this is possible in chess thanks to the experience of millions of chess games, it's hard to do for real life problems.
that's sad :lol:

edit:
interesting problem as more and more people gonna be affected as we enter gig economy.

Re: Renaissance Lifestyle/3 Strategies

Posted: Sun Aug 16, 2020 1:51 pm
by classical_Liberal
@Stahlmann
Good thread revival. I think this was just before my time reading here, but I wouldn't have gotten it at the time anyway.

A real gig economy is a dream come true for the semi-EREer, or even anyone who fancies themself a polymath because the opportunities to try different things. The problem is, gig economy in reality tends to operate at either very low level skill or highly specific skill. So the only opportunities are very low paid, not valued entry level or highly paid expert. I definitely agree with @7WB5 that so many of the more intermediate opportunities require 40+ hours a week, and that sucks.
7Wannabe5 wrote:
Sat Nov 08, 2014 4:06 pm
could be able to make the measurement by considering in a more rational, self-aware manner the decision made to spend 4 hours that afternoon performing music for net proceeds of $2/hr @ happiness level 9 vs. planting potatoes $1/hr@HL 6 vs. putting in a half day shift at Taco Bell $10/hr@ HL 2 vs. managing stock portfolio $20/hr@HL 5 vs. visiting Grandma at the nursing home -$5/hr@ HL 7. I think one of the most frustrating things about the employment market is that there are so many things you can only choose to do for 40 hours a week.
I'm curious if, after many years of reflection, you still think this way? If so, how do you measure the HL?

Re: Renaissance Lifestyle/3 Strategies

Posted: Tue Sep 22, 2020 8:35 am
by xmj
7Wannabe5 wrote:
Thu Nov 06, 2014 6:55 am
I think the notion of trying to quantify everything here misleads from the ultimate purpose - which is, growing in each of the categories listed in the original post. In my opinion, most of that growth will come from a comparison with previous intervals, but in a qualitative manner:
- Am I fitter than yesterday?
- Does my garden look better than last year this time around?
- Have I discovered anything new this month?
- Have I successfully challenged some long-held, flawed assumptions?

Quantifying things is easy in the categories related to the marketplace -- financial practice & trade and entrepreneurial activities -- and I don't see how this is beneficial to aesthetics and personality development.

Re: Renaissance Lifestyle/3 Strategies

Posted: Thu Sep 24, 2020 7:29 am
by 7Wannabe5
classical_Liberal wrote:I'm curious if, after many years of reflection, you still think this way? If so, how do you measure the HL?
Unfortunately, my immediate response to this question was "I would, if I was currently more happy." Kind of like how you avoid the scale when you are stuck in a round rut of chub.
xmj wrote:Quantifying things is easy in the categories related to the marketplace -- financial practice & trade and entrepreneurial activities -- and I don't see how this is beneficial to aesthetics and personality development.
True, but that is why it is more important for those of us who respond well* to metrics to attempt to track them in realms where it is not as easy to do. Otherwise, we risk very narrow compulsion as "cure" for dispersed impulse.

*For instance, repeated trials and accumulated evidence offers proof that I do much better at maintaining my weight if/when I am in the practice of weighing myself every morning, but for some humans of other personality type this practice is less functional. Therefore, it may follow that I would do better at maintaining my Happiness Level if I did consistently attempt to track it. During the period when I was tracking it regularly, I did gain some useful insight into practices most well associated; such as exercise, time in nature, travel/novelty, social interactions, etc.

Re: Renaissance Lifestyle/3 Strategies

Posted: Thu Sep 24, 2020 3:30 pm
by classical_Liberal
xmj wrote:
Tue Sep 22, 2020 8:35 am
I think the notion of trying to quantify everything here misleads from the ultimate purpose - which is, growing in each of the categories listed in the original post. In my opinion, most of that growth will come from a comparison with previous intervals, but in a qualitative manner:
Good point. I wasted a good deal of time about a year ago trying to quantify non financial forms of capital into dollars. I mostly did this because I wanted to know how "rich" I was in terms other than financial. It was a total failure. Edit: It was a failure in measuring, although it was a helpful exercise in learning what other types of capital I do indeed possess. I just couldn't quantify them like currency.

The problem I see with qualitative measurements is the bar continually changes based on recency bias. This happens quantitatively too, but you can always go back and look at hard numbers from 2 or 5 years ago to see if actual progress has been made. So, I may be more happy today than I was yesterday, or last week. But what about last year? Has the type of happiness I experience changed in kind over the years? Has the bar for a "happy day" changed? It gets pretty muddy. One can always journal, I think that helps, but it still lacks the precision and accuracy of a quantitative measurement tool.

I'm not mentioning this because I have a solution. Just that there may not be a great solution to trying to measure things which are more abstract.