What is your FIRE number? Your expected FIRE expenses?

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7Wannabe5
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by 7Wannabe5 »

brute is pretty deterministic about these things. he's yet to meet a successful salaryman that became a successful handyman, or the other way around. most humans stay the way they've always bin in the grand scheme of things. brute himself completely and utterly failed at making this transition. it's just not for him.
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I think BRUTE is likely overly deterministic in his definition of handyman or workingman (as Jacob defined quadrant in book.) Since BRUTE is a minimalist tech-roamer free-market anarchist who values efficiency, the only (as far as I know) things BRUTE routinely takes responsibility for maintaining are Zone 000 (his mind), Zone 00 (his body) and his slim Zone 0 (home) consisting of his portable belongings including technology tools. So, how could BRUTE possibly make money on the margin, selling anything by the hour/product, and thereby earn some workingman status?

Off the top of my head:

1) BRUTE could walk into a public park, set up a sign that says "Tabata Interval Workshop" next to a can for donations and proceed to demonstrate his method for maintaining his body in the social realm.

2) Since roaming is part of BRUTE's routine, and transportation is one of the major costs included in the price of any good, BRUTE could transport any goods readily available where he currently lives which are not readily available at his next location.

3) BRUTE needs meat. I assume BRUTE currently spends money to purchase his meat. BRUTE could quickly scout for 5 outlets likely to provide him with high quality meat in his current location, then he could quickly assess what any of those establishments were currently lacking that could quickly be fixed with his technology skill/tool set. For instance, perhaps one very fine meat outlet does not even have an internet presence that would alert other paleo-roamers of its existence. Then BRUTE could offer to barter his skills for meat. (I actually worked for meat myself a number of years ago, because my third sister needed a babysitter for her son, and my brother-in-law ran a gourmet butcher shop.)

4) BRUTE could steal and develop my concept for an umbrella that is also a metal detector and use the detector end of it to find coins and jewelry whenever he gets too bored with reading comic books, and then he could quickly convert it into an umbrella whenever he saw a charming young woman on the sidewalk during a sudden downpour, and then he could lure her back to his rude den with something from his pocket full of shiny metal prizes.

See how easy! I already have BRUTE exercised, transported, fed, entertained and even possibly f*cked with no need to tap his current supply of $$$ and no essential change in his current lifestyle.

BRUTE
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by BRUTE »

7Wannabe5 is like 50% of the reason brute loves this forum :D

brute has done 2), if not with any routine. electronics sold in countries with high import taxes, sometimes up to 100% profit. somewhat limited, because brute can explain 2 laptops in his carry on to customs, but not 5.

could, could, could. brute is under the impression that potential is mostly an illusion, at least to him.

brute hasn't been formally diagnosed with autism/assburgers, but he's anti social as fuck. brute could post that Tabata sign, or talk to that butcher, but honestly, he never will. in this regard it feels very deterministic. if one is born/raised/groomed/whatever to be very social, those things are likely not just not stressful, but even fun.

as an example, the getting laid: even though brute could likely get laid a lot more if he was trying, it's actually so stressful for brute to be around demanding humans that the cost outweighs the benefit most of the time. in other words, the marginal utility of human contact is extremely low for brute. thus he pays a premium to be alone as much as he can. this somewhat traps him in the salaryman role vs. the working man, who needs a certain amount of sociability to gain new business.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by jacob »

@ThisDinosaur - No, the ERE blog/book wasn't really designed to answer that question. If anything, it was an intellectual exploration of what the actual questions in the field of personal finance and lifestyle design were in the first place. Remember, it was written at a time (in the twenty-zeroes) when financial independence generally meant/required having a million dollars and early retirement was something only a few high income people achieved in their mid-forties at the very earliest. It was a time when the way to grow networth was through compound interest and regular monthly contributions over a couple of decades of career work speeding it up with recreational coupon clipping, solid budgeting, and a perverse interest in knowing a thousand ways to save a dollar here and a dollar there. It was before FIRE blogging was even a thing.

90%+ of the blog was written between 2007 and early 2010. Same for the book. Compared to this list or compare to the dozens of FIRE blogs that exist today. http://rockstarfinance.com/best-early-retirement-blogs/ ERE effectively began and finished up before every other blog on this list even existed.

Much of the standard advice wrt FIRE today was first presented on ERE: That savings rate was the variable that mattered. That one should focus on the big three, namely, housing, transport, and food when it came to expenses instead dozens or hundreds of small ones like cellphone bills, ziploc bags, and DIY detergent. And to a large degree that FI is possible at any level of expenses. While the last one is really an YMOYL idea, ERE was the first to make a specific/heavy point of it on the internet. (Also, consider that the "1 jacob" budget is below the inflation-adjusted Joe Dominguez budget ($6k in 1998 money) ... this is likely due to the systems-theory difference.)

Now everybody takes those ideas for granted to such a degree that most people have no idea where they first came from. There's even an App to illustrate how savings-rate relates to years in the work force. No need to do the math in detail (like I did in the book) or hack an approximation with a spreadsheet which is how other bloggers used to do confirm my graphs (save from a few fellow nerds who actually replicated my derivations in detail).

Many readers back then (2007-2010) told me they came and stuck with ERE because the ideas were new and interesting and that they had learned all they needed on other blogs about how to budget, open IRAs, negotiate fees away, and that long lists tips and tricks weren't that inspiring anymore. Basically, it was an advanced crowd who had all the basics down. I wrote the blog with that audience in mind and I wrote the book for those core readers never expecting it to take off like it subsequently did.

Essentially, the book was way-waaaayyy ahead of its time (and it still is). Also, the blog was written for "the advanced reader" because back in 2010, those few were the only ones really interested in FIRE. By advanced reader, I mean those who had already learned everything there was to learn about how to make a budget, how to make a savings plan, and how to perform 500 different frugal tips and tricks, ... People who were already post-scarcity but wondered if that was all there was to personal finance.

So THAT's the audience that the blog/book was originally designed for.

Now, FIRE has subsequently become pretty common in the personal finance space. You can even win a blogging award in it without having to compete in "best new entrepreneur blog", "best retirement/geriatric care blog", or some equally ridiculously inappropriate category. I largely credit MMM for popularizing FIRE. I'm only vaguely familiar with nerd-lore, but maybe in terms of analogies in the pf-space, I'm Wozniak and he's Jobs. Okay, maybe I'm pushing too far/close to computational godliness, but I don't think I'd be offending much of any people who's been around for the past 10 years if I say that ERE was the dominant FIRE blog in the first generation (where the focus was on technical innovation), and MMM has been the dominant FIRE blog in the second generation (where the focus has been on design and user-friendliness). When I wrote my final blog post (save for a handful of later diary updates) in 2011, MMM had about 500 RSS subscribers (how one kept track in those days). I had about 5000. I suggested my readers move on to MMM and bumped him to 2000 over night. After that he really--really kicked ass and figured out how to sell it and his current readership is much much higher than mine ever was (I figure more than 10x of my peak). I never really cared that deeply about selling it. I did try for a while but quickly realized that my clown-tolerance is relatively small as these things go.

I think MMM does a superb job at getting people out of the scarcity mindset. (Maybe because he's within a couple of Wheaton levels of the white belt practitioners, see much lamented table in other thread ;-) ) As does a few other bloggers when they talk about a mindset of abundance (a meme that's started happening over the past few years). I never really cared about writing about this stuff because I was already much past post-scarcity as was my readers when I was still writing. Now, we have the ERE forums which can be of some help for beginners, but for historical reasons you'll find very little of that stuff developed on the blog or in the book. This is where Wheaton levels become important. MMM is close enough for those who figured out the basics to hook up. The gap to the ERE book/blog is still too large.

Interestingly what has happened since 2010ish given the present growth in popularity of the subject is that ERE gets to deal with questions/comments like either being told that applied systems-theory is absurd or useless; and if not, that I should use my "intelligence" to figure out a way to communicate all the thousands of hours of experiental knowledge within a short paragraph so the average reader can become an expert in three easy steps; while Pete gets to deal with people who want to know about "the Mustachian way to find a good housekeeper" or which is the "Most Mustachian Tesla Model"?

Phew! That got much longer than the few lines I initially wanted to spend on it, but I figured that some historical perspective would be in order. What you see on the ERE blog is essentially grad school research notes on what at the time was an entirely new field. What you see in the ERE book is the resulting dissertation.

Whereas what you see in FIRE blogging today are "entrepreneurial" popularizations (but vastly better than what I ever did) of a few of the core ideas presented in that dissertation.

(A few key people in the [FIRE] blogging crowd have publicly (Trent Hamm, Go Curry Cracker, and MadFIentist) or privately (can't say, but even bigger) admitted that the ERE book has served or still serves as a key inspiration for personal strategy and/or blogging ideas to them. This is good, because that's what was part of my intention for writing it. It was never really intended to serve as a beginner's book. I'm glad but also surprised when it does work in that capacity but I'm not surprised when it doesn't. I did briefly attempt to write such a [101] book in 2011 but the effort faltered because I never really felt all that qualified at that point because of this problem.)

vezkor
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by vezkor »

I was surprised to see Pete bought a brand new electric car, last week. A little bit of me died, inside, but I'm sure his next post will explain why! ;)
MMM was great to get started with, definitely for levels 1-3... but for people aiming at 75%+ savings rate, you need to learn the principles behind ERE.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by jacob »

@ThisDinosaur - As for how-to ... maybe this way?

http://www.marketwatch.com/story/could- ... 2016-09-27

This is similar to how I started from noob in late 2000. I had already learned to live out of a suitcase since moving to Switzerland for grad school. For 1 year, I only bought food, train tickets (long distance relationship), and a couple of books. It was super hard back then in the beginning. I was thinking of all the things I missed; I focused on finding substitutes; it was work and it felt like a sacrifice. However, within some months, the scarcity mentality flipped. I began to focus on what I had rather than what I missed. Now, it's practically nothing to me. In the past year, I've bought a pair of pants, some router bits, and a couple of pliers. And I haven't missed a thing or ever wanted to go shopping. The things/or shopping entertainment experience I didn't get back then because I didn't know how to w/o buying them, I now live/solve problems by other means. I don't even think about not-shopping.

Not saying that this (or the link) is the only way, but crowbar-level "boot camp" may work.

PS: For more along these lines, search "buy nothing year" or "spending nothing year".

Dragline
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by Dragline »

More on Flanders here if you are interested: http://podcast.farnoosh.tv/2015/10/cait-flanders/

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Ego
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by Ego »

ThisDinosaur wrote:So, how does one eliminate the "Scarcity Mindset?"
This is a really great question!

I believe it is important to look at how mindsets get set. We humans naturally compare ourselves to others.

https://en.wikipedia.org/wiki/Social_comparison_theory

So, surround yourself with people who skew the average in the direction you want to move. One of the great things about this forum is the company we keep. There are lots of outliers here who do just that for me.

And I think this gets to the heart of stevos point...
steveo73 wrote: I think ERE has some flaws - namely too low spending and too low a targeted WR. I think the really low spending is not going to be realistic over time. At the same time I think you can get by with a higher WR rather than say 3%.
Cover your nut
http://forum.earlyretirementextreme.com ... php?t=3557

Operating on a small-nut existence is more anti-fragile than operating on a medium-nut / higher savings existence for a few reasons:

1) For many the difference in the health-effects of working full-time to save a small-nut vs. medium-nut is significant. That additional damage done in the accumulation phase to build a nest-egg that will cover a lifelong-medium-nut makes one more fragile in retirement.
2) Hedonic-adaptation makes it hard to go from medium to small-nut living. It is harder for medium-nuts to cope with catastrophe. Bigger they are, harder they fall.
3) The skills learned over a lifetime of small-nut living pay dividends in the event of catastrophe.

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Seppia
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by Seppia »

@jacob

Reading this post I came to think (again) the same that I thought while reading your book.
Your most impressive quality is the ability to synthesize complex things and de structure them in a collection of easily understandable thoughts.
To say it simply, you are able to eliminate all the noise and just distill the core.

I will be grateful to MMM because he's been the approachable badass who made me interested into the PF subject, but I can easily understand why many still are inspired by your book most of all.

Edit: sorry for the monster quote and thanks for editing it out
Last edited by Seppia on Thu Sep 29, 2016 12:10 am, edited 1 time in total.

steveo73
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by steveo73 »

BRUTE wrote:it may be said that the sum of all these activities is the skill of living. it doesn't have to be intricate or secret knowledge. but does steveo73 think the median human would give up their car for a bicycle, start using Linux, or learning the (really extremely trivial) skill of making good coffee?
I agree that those things are the skill of living. It's amazing that so many people will never do this. I'm on the edge of pushing this stuff whilst typing into my fancy keyboard and using my fancy computer (ala MMM).
BRUTE wrote:maybe the word skill is a bit high-brow, just like when Jacob talks about humans being "intelligent enough for ERE". it's more of a propensity. some humans find it interesting and fun to engage in all this stuff, and it happens to make them resilient and frugal. others not so much.
It is a bit pretentious.
BRUTE wrote:brute completely agrees, but that's likely because steveo73 and brute are conditioned (or born) to be salary based. in modern western society, salary thinking is just the default. very few individuals successfully adopt any other way of thinking, especially those from a certain lower-middle upbringing (good grades, good college, good job).

it's likely that those humans who engage in true handyman (or whatever Jacob calls that quadrant in the ERE book) type business would find it equally difficult to get a "good paying job" and work it for 30 years straight. it might be personality, upbringing, skill set, interests that jive or clash with the structure of such a job..

brute is pretty deterministic about these things. he's yet to meet a successful salaryman that became a successful handyman, or the other way around. most humans stay the way they've always bin in the grand scheme of things. brute himself completely and utterly failed at making this transition. it's just not for him.
You may be right in the reasons for this but the point comes back to it not being as easy as stated to just go and earn more income from for instance knowing how to set-up my home computer so that it runs great. I like those skills that I've developed. I just don't believe that they are easily turned into income. They do save me money.
Last edited by steveo73 on Wed Sep 28, 2016 5:15 pm, edited 1 time in total.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by steveo73 »

Ego wrote:
steveo73 wrote: I think ERE has some flaws - namely too low spending and too low a targeted WR. I think the really low spending is not going to be realistic over time. At the same time I think you can get by with a higher WR rather than say 3%.
Cover your nut
http://forum.earlyretirementextreme.com ... php?t=3557

Operating on a small-nut existence is more anti-fragile than operating on a medium-nut / higher savings existence for a few reasons:

1) For many the difference in the health-effects of working full-time to save a small-nut vs. medium-nut is significant. That additional damage done in the accumulation phase to build a nest-egg that will cover a lifelong-medium-nut makes one more fragile in retirement.
2) Hedonic-adaptation makes it hard to go from medium to small-nut living. It is harder for medium-nuts to cope with catastrophe. Bigger they are, harder they fall.
3) The skills learned over a lifetime of small-nut living pay dividends in the event of catastrophe.
I don't really believe this. I'll give an anecdotal example. I have a friend who can live off nothing. I really don't think he would care if he had to live in a tent on the beach. He would just go surfing and live off as little as possible. He'd probably do that better than myself. At the same time he has no savings at all with 2 young kids (1 & 3 yo's) and a partner. He just spends money when it comes in.

I think it's much more likely to be anti-fragile if you can lower your spending and you have a decent amount of savings. I think the classic example is if you need a hip replacement. You can't spend less and that is going to hammer your budget. The person with medium savings can pull back and they may adapt fairly easily. The only point that is giving me pause to think here is your first point. I'm not sure if you can actually quantify your point and my feelings are that other factors are probably much more important such as diet and exercise. I don't believe though in working too long unless you enjoy it.

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Ego
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by Ego »

steveo73 wrote: I think it's much more likely to be anti-fragile if you can lower your spending and you have a decent amount of savings.
Oh, yes, we agree there. I thought we were discussing:

Low spending & moderate amount of savings to last....... vs .......Medium spending & high amount of savings to last
steveo73 wrote: I think the classic example is if you need a hip replacement. You can't spend less and that is going to hammer your budget. The person with medium savings can pull back and they may adapt fairly easily.
I was looking at it from the perspective that fish outlined here:
Fish wrote: A common reason for pursuing FIRE is the desire to quit working. Using the extreme early retirement (E-ER) approach, the job is the only source of income, and the measure of success is never having to work that job again post-FIRE. Result is a huge accumulation target (2-4% SWR) and heavy reliance on investments to meet post-FIRE expenses. The job is the vehicle to freedom but the boat is burned upon arrival.
Death by a million cuts. Jacob's extreme frugality allowed him to get out before the stress, lack of sleep and general crap of a high paying job caused him to deteriorate health-wise. Thankfully, that's what we did as well. Some few people (you?) find jobs that allow them to maintain outlier health while earning very high wages, but most high-wage jobs demand a level of commitment that leaves little time and energy for self-maintenance. Something's got to give in order to accumulate the nest egg and health (mental and physical) is the thing that usually gives.

So what happens then? Post retirement the high-saver tries to make up for all that time they spent in their office chair, which is better than his/her peers who are still working, but worse than it could have been had they gotten out sooner with a lower standard of living.

Who is more likely to have done the things that allowed them to avoid a hip replacement in the first place?
Who is more likely to overdo it trying to make up for lost time and damage their hip?
Who is more likely to have the varied skills that allow them to find alternatives to hip replacement?
Who is more likely to be in worse shape pre-hip-replacement and suffer more post-replacement?
Who is more likely to have the most good years between retirement and hip replacement?

It all goes back to which yardstick we use to measure a good life. Security is one possibility. Anti-fragility another. Love? Joy? Happiness? Meaning? Each of us uses our own yardstick.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by steveo73 »

Ego wrote:Who is more likely to have done the things that allowed them to avoid a hip replacement in the first place?
I don't see this as being at all clear cut. I work out regularly but my shoulder for instance is toast. It hurts regularly. I also have a dogdy knee. You get injured over time from working out.
Ego wrote:Who is more likely to overdo it trying to make up for lost time and damage their hip?
I think that this is a subjective point but I think working out too much over time like what I do is probably more likely to cause issues in later life.

In stating that I think working out is important. You are less likely to have a whole bunch of other issues arise.
Ego wrote:It all goes back to which yardstick we use to measure a good life. Security is one possibility. Anti-fragility another. Love? Joy? Happiness? Meaning? Each of us uses our own yardstick.
This is a little bit different to the topic we are talking about but I agree the concepts discussed here are more about choosing your own path and being comfortable with that.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by Seppia »

Ego wrote:
So what happens then? Post retirement the high-saver tries to make up for all that time they spent in their office chair, which is better than his/her peers who are still working, but worse than it could have been had they gotten out sooner with a lower standard of living.

Who is more likely to have done the things that allowed them to avoid a hip replacement in the first place?
Who is more likely to overdo it trying to make up for lost time and damage their hip?
Who is more likely to have the varied skills that allow them to find alternatives to hip replacement?
Who is more likely to be in worse shape pre-hip-replacement and suffer more post-replacement?
Who is more likely to have the most good years between retirement and hip replacement?
.
I kind of agree here, but I think in some way you're dodging the question.
While it is clear that you're much less likely to suffer certain injuries if you pull the trigger early, some things can be unavoidable.
I don't know think about a bike crash.
I think what steveo is trying to say here is that with the lowest spending you have less buffer in case of a catastrophic event.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by steveo73 »

Seppia wrote:I think what steveo is trying to say here is that with the lowest spending you have less buffer in case of a catastrophic event.
Exactly. Shit happens. The more optimised you are the less ability you have to decrease spending.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by theanimal »

steveo73 wrote:
Seppia wrote:I think what steveo is trying to say here is that with the lowest spending you have less buffer in case of a catastrophic event.
Exactly. Shit happens. The more optimised you are the less ability you have to decrease spending.
Que? So spending more allows you a bigger buffer?

Nobody is advocating for zero savings. What people are advocating for is minimal spending with medium to high savings*.

*Which you can accumulate more of by having lower expenses.

I think what Ego is advocating is that you are arguing on the premise that the activities one participates in as a non-salary worker are prone to catastrophe, when the real damage and the highest risk comes from sitting at a desk all day. What's more dangerous, sitting at a desk for an additional 5 years to accumulate surplus money you'll likely never need or jumping out 5 years early and biking multiple times a week?

I really hope I never become the person that picks the former.

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Seppia
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by Seppia »

no, I don't think in any was it was suggested that "spending more is better"
The initial point was "I you spend as little as possible you're making yourself more resilient".

It's in part true (you need less income to support you, so basically any job could do, while a bigger spender cannot survive on McDonald's salary for example), but one also has to consider that if you plan your total savings accordingly (let's say the very basic "save 25-30 times annual expenses") then any unexpected expense becomes potentially catastrophic.

It's basic math.

Mr. A spends $5,000 per year
He has a total of $125,000 in productive assets

Mr. B spends $24,000 per year
He has $600,000 in productive assets

Is mr. A safer?
If everything goes right, maybe yes. He needs less to support his lifestyle and he could save a lot of money even by working at McDonald's.

Anything goes wrong?
Not sure about this.
An unexpected $15,000 expense would cut out 3 years expenses for A, not even one year for B.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by 7Wannabe5 »

brute hasn't been formally diagnosed with autism/assburgers, but he's anti social as fuck. brute could post that Tabata sign, or talk to that butcher, but honestly, he never will. in this regard it feels very deterministic. if one is born/raised/groomed/whatever to be very social, those things are likely not just not stressful, but even fun.
You have identified a likely very fertile area for personal growth. Congratulations! ;)
Mr. A spends $5,000 per year
He has a total of $125,000 in productive assets

Mr. B spends $24,000 per year
He has $600,000 in productive assets

Is mr. A safer?

Imagine that you meet two people hiking on a path that leads into the woods. Person A has a pack full of gear and a look of grim determination, and Person B just has a knife and a canteen and is whistling a merry tune. Is Person A safer?

Also, you have to be thoughtful when comparing two stocks that are inherently different. Money invested in the stock market will tend towards exponential increase over time with no further investment of life energy. Your stock of physical health will tend towards steady decline over time, even with high level of continued investment of life energy. So, if the purpose of your system is something like maintain SWR at 3% and physical health at level of "can bike 80 miles/day with reasonable ease" then you will obviously have to devote relatively more life energy to Stock Health than Stock Money into the future to fulfill your purpose.

Also, an event such as "hip replacement" is an expected symptom of fragility, not an unexpected change in environment. Something has the characteristic of being anti-fragile if it tends towards responding positively in the event of change. Resilience is the ability to readily bounce back to equilibrium when there is change in the environment. Robustness measures the ability to remain impervious to change in the environment. It's not an easy concept. For instance, I think that my investment in growing fruit trees on vacant lots in an economically depressed neighborhood which experiences a good deal of transition is anti-fragile because if the neighborhood gentrifies, I can sell my land at a profit, or build on my land and rent at a profit, and if real estate tanks again, I can keep harvesting my growing orchard and pick up more land at bargain prices. So, it seems to me that the more you are able to regard what you have to offer on the market(s), any which way it goes, as being like unto how I regard my land, the more anti-fragile you are. Something like that.

7Wannabe5
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Re: What is your FIRE number? Your expected FIRE expenses?

Post by 7Wannabe5 »

Another cup of coffee loaded.

Maybe what I am thinking is that in order to have an overall system that is anti-fragile you have to have the same element as a flow into your stocks in one market, and a flow out of your stocks in another market. IOW, if you are a buyer in the market in one of your sub-systems and a seller in the market in another one of your sub-systems then you will more likely be anti-fragile to changes in that market. So, if your "retirement" plan includes plans for self-employment, as well as plans for living off of investment income, then you will increase your anti-fragility, whereas increasing your level of savings only increases your robustness.

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Re: What is your FIRE number? Your expected FIRE expenses?

Post by IlliniDave »

theanimal wrote:
Que? So spending more allows you a bigger buffer?

Nobody is advocating for zero savings. What people are advocating for is minimal spending with medium to high savings*.
I think the better way to say it the more money you *can* spend, the more buffered you are. It's basically the ratio of assets to the no-kidding minimum survival expenses you have that qualifies degrees of conventional financial independence. Say a person has a hard floor of $12K/yr in expenses but assets that will support $30K/yr, and with all going well he decides to spend the $30K each year. Since in a pinch he can cut his lifestyle to $12K, that means he's got up $18K/yr he can throw at whatever vagaries the universe dumps on his plate without overtaxing his assets. If the same guy sized his assets for $12K/yr only, any upward perturbation puts him in the position of potentially drawing more heavily on his assets than they can sustain.

In general there is a cost to gaining the asset margin, and I don't think you can say that gaining the margin is objectively better or worse than a leaner approach since it all gets weighed/measured in a context where emotion/temperament, very individual considerations, are significant.

7Wannabe5
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Joined: Fri Oct 18, 2013 9:03 am

Re: What is your FIRE number? Your expected FIRE expenses?

Post by 7Wannabe5 »

Okay, here's another simple reason why Person A is better off than Person B. If you consider investment risk rather than could be expected spending event and surmise a possible scenario where the market falls by 50% and both A and B wish to recover their SWR, if both Person A and Person B are capable of going back to work and earning $20/hr on the employment market in order to recover same level SWR, then Person A will only have to go back to work for an additional 3125 hours, but Person B will have to go back to work for an additional 15,000 hours in order to feel equally secure and happy.

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