FIRE reaching Critical Mass

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SustainableHappiness
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Re: FIRE reaching Critical Mass

Post by SustainableHappiness » Sun Oct 07, 2018 10:36 pm

Ditto on the reason why FIRE won’t go mainstream is because breaking free of modeling your behaviour off of a role model is friggin’ hard. It took me 4 years of reading blogs and trying things out before realizing I’m not MMM, I’m not ERE, and more importantly, I don’t actually want MMM’s or a ERE (modeled by Jacob) life. But they are (were?) my damn role models and there is inherently some envy that goes along with that.

Assuming moving from Copying through Creating (to reference ERE learning steps) takes a number of years in a relatively stress-free environment where an individual (me in this case) is both willing and able to devote time and mental energy to it, is it a reasonable expectation that the Copying->Creating cycle will even happen for a 2 person household making $40k a year? Toss a kid in there and even with higher income, the deep learning would be difficult/impossible without significant amounts of time and effort.

It’s weird, but the way that makes sense to me to break into those minds and push anti-consumerism would be mind-numbing amounts of advertising, like moving from pull marketing tactics (a la blogs) to push marketing tactics (a la “Playing With FIRE” the movie) so people are more likely to follow the tactical aspects and fall into the strategic aspects. And that just sounds f’ed up. I mean, a billboard about the latest FIRE superstar...WTF?

BRUTE
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Re: FIRE reaching Critical Mass

Post by BRUTE » Sun Oct 07, 2018 11:49 pm

a sad truth about humanity is that even the most positive movements have relied mainly on brainwashing mindless followers.

Seppia
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Re: FIRE reaching Critical Mass

Post by Seppia » Mon Oct 08, 2018 3:10 am

Jin+Guice wrote:
Sun Oct 07, 2018 4:53 pm
I also wish there was a prominent FIRE blogger who made significantly under the median income, because this is the demographic who would benefit most from it's message.
I think it's semi-impossible for the above to happen.
It's hard to live on 7k, as it is hard (and requires luck, so twice as hard) to land a high paying job.
In general, people prefer "easy" to "hard", so it's a lot easier to sell a blog like the frugalwoods rather than ERE.
As jacob was mentioning, random guy/gal X with median salary prefers reading frugalwoods, tricking him/herself into believing that by not hiring a painter to paint their house, they will magically achieve FIRE in 10 years.

Never forget one of the most important truths of our modern age, courtesy of my high school professor: "people can't* do math"

*in this case I should maybe say "don't want to"

Lucky C
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Re: FIRE reaching Critical Mass

Post by Lucky C » Mon Oct 08, 2018 4:37 am

I see two extreme solutions if you want FIRE (or just significantly less waste) to be mainstream:
A) Get everybody to prefer Hard to Easy on a cultural level. This must be drilled into their heads at a young age.
B) Remove the ability for everybody to consume less by controlling supply or purchasing ability, so that they have no option but to be more efficient.

Of course this would be impossible in the Land of the Free as you would need to be a Communist dictator or similar, or at least take control every aspect of education. The best we might hope for is just being able to get people to move up one Wheaton level from their natural/cultural inclinations. This seems to be what FIRE is doing for high earners, but other levels of the population may need something totally different (e.g. lowest income earners going from getting hopelessly in debt to slowly paying off that debt).

Jean
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Re: FIRE reaching Critical Mass

Post by Jean » Mon Oct 08, 2018 5:23 am

Making it a religion. Or getting back to a religion that doesn't value more. Everyone was ERE before monotheism.

Jin+Guice
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Re: FIRE reaching Critical Mass

Post by Jin+Guice » Mon Oct 08, 2018 6:17 pm

I don't really find ERE that hard on the spending side. Getting down to 1 Jacob is hard because the dude is absolutely and completely minimizing every cost while still living a cursory "normal" middle-class existence. There are high diminishing returns that require a lot of effort to overcome shaving the last 3-5k off. I don't think living on 2 Jacob's is hard. I think it is easy. It's only hard if you're used to living on 3 or more Jacobs.

Finding a "high paying job" where the reference is everyone else's salary is hard by definition. I would argue that, in the current rich country environment, this is not required for ERE (or FIRE). The problem is the cultural norms. Consumerism is our religion and almost everyone currently alive has grown up in it. It's really hard to convince people that everything they've been taught is wrong and everyone around them is wrong. It's very easy for the current paradigm to take one thing from a fringe movement, turn it into a buzzword, and claim they're doing it. Look at what happened to environmentalism. Now that we're all woke af about global warming I see boutiques where everything is brand new blasting AC into the August street with signs advertising "sustainable clothes." WTF does that even mean?

prognastat
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Re: FIRE reaching Critical Mass

Post by prognastat » Mon Oct 08, 2018 6:23 pm

Well many have experience living around 2 Jacob's either during/right after college or after first moving out of their parents place on their own.

Most try to get out of this as quickly as possible though by earning and spending more rather than through improvements in efficiency of the spending that is already being done.

Fish
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Re: FIRE reaching Critical Mass

Post by Fish » Mon Oct 08, 2018 7:40 pm

jacob wrote:
Sun Oct 07, 2018 1:40 pm
PS: If @Fish is reading this and the data is there, it would be interesting to see a graph for singles instead of households.
The data isn’t really there but we can get an idea what it looks like by transforming the x-axis into single-earner income percentile. Not really accurate since it overestimates net income (singles typically pay more tax than joint filers for a given income), and the granularity is not there to adjust the typical spending curve for number of earners or size of household. The tricky part is correlating expenses to income but I don’t have [the time to comb] the microdata to construct that result. Would be really neat to have data to show percentiles of spending at every income level. That might partially redeem the higher spenders (like myself) that have to endure the constant fat-fire shaming that goes on here. ;)

Image

P.S. The data is extrapolated above 95th percentile so don’t read too much into that.

7Wannabe5
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Re: FIRE reaching Critical Mass

Post by 7Wannabe5 » Tue Oct 09, 2018 10:18 am

I think this discussion is a bit stuck on a false dichotomy between MMM and ERE. There are other models, and the best one for below median earners would likely be some variation on "Possum Living" combined with "Discards: Your Way to Wealth" and/or the much more readily obtained "The Art and Science of Dumpster Diving." Some articles in the "Tightwad Gazette" would also apply.


IOW, if you want to boot-strap yourself into some degree of FI or semi-retirement, and you are starting from below median (lower middle-class) income then you will have to resign yourself to adopting some under-class tactics in order to succeed over similar time-frame. For instance, you could pick up scrap metal in a stinky old super-polluting truck as your side-gig and you could trade food for housing and get the food from a no questions asked free pantry handout in a more affluent district and you could do video dances in second-hand stretchy pants in the hopes of collecting enough tokens from fans to turn in for cash payments and you could babysit all of your neighbor's kids while she works the night-shift and keep them quiet with some jacked-cable cartoons and boxes of week old donuts from the thrift bakery while you start reading your way through Jacob's suggested volumes on the topic of investing.

Jin+Guice
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Re: FIRE reaching Critical Mass

Post by Jin+Guice » Wed Oct 10, 2018 3:28 pm

I agree that MMM and ERE is a false dichotomy, even though I may be somewhat responsible for starting the fight over said false dichotomy. I do think it'd be possible to do the standard FIRE route on a very low income though. Even minimum wage =$7.25/hour*40*50=$14,500 or approximately 2 Jacob's. I believe one would pay almost no taxes at this level. Thus a 50% savings rate is achievable. There are likely to be other extenuating circumstances though in this situation such as a lack of skills, criminal record, debt, other mouths to feed, etc... My point is only that, even at a low income level FIRE is theoretically achievable. Jacob argues this in more detail in the post he linked to about getting wealthy on minimum wage.

My experience with FIRE and low wage is that most FIRE bloggers suggest that if you are making below the median wage you should attempt to raise your wage. This viewpoint will be completely vilified if FIRE does gain more public traction; however, I think it's a valid viewpoint taken at the minimum wage earning level. Raising your wage above minimum wage should not be that difficult, though I admit there are circumstances where this is untrue.

7w5s point is still valid. 50% is MMMs suggested savings rate and it still takes 17 years of working and that's with and assumed real investment return of 5% (according to his math). I think it'd be a lot more fun/ interesting to employ some underclass techniques to raise income/ lower spending. This would also make one more resilient.

hojo-e
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Re: FIRE reaching Critical Mass

Post by hojo-e » Wed Oct 10, 2018 4:16 pm

Pretty good NPR interview

Want To Retire In Your 30s? Millennials Say They've Got The Formula
http://www.wbur.org/hereandnow/2018/10/ ... t-rieckens

jacob
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Re: FIRE reaching Critical Mass

Post by jacob » Wed Oct 10, 2018 4:26 pm

I think the comment section (NPR) shows we're far from critical mass or much mass.

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Bankai
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Re: FIRE reaching Critical Mass

Post by Bankai » Wed Oct 10, 2018 4:28 pm

http://www.wbur.org/hereandnow/2018/10/ ... t-rieckens

And when I found out about index funds, these low-cost index funds, and how much money you could save by not having a financial adviser — you're essentially betting on the stock market, which in its history has always gone up.
mhm

Seppia
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Re: FIRE reaching Critical Mass

Post by Seppia » Wed Oct 10, 2018 4:46 pm

We (rightfully so) often mock the index fundamentalists, but I don't think there's a 20 year period where the world stock market has seen negative real Returns IIRC.
So while I would think prospects at today's valuations aren't great (for the USA market in particular), I would not bet against the market in the long run.

Obviously, "the long run" is not 2 years

Loner
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Re: FIRE reaching Critical Mass

Post by Loner » Wed Oct 10, 2018 5:04 pm

From the article: "to hear that someone was that happy living on $27,000 a year is what was so intriguing to me in the beginning". :lol:

From the comments: "There is a bit of choose your own adventure to it. [...] MMM lives in a beautiful home in Colorado, while that guy Jacob (spelling?) lives in a trailer, and pretty much only eats lentils for every meal", "They’ll all try to get on SSDi. Live in their parents homes."

I've been following the thread, and the idea that FIRE will go "mainstream" any time soon sounds rather ludicrous. Here in Canada, close to half of the population lives pay-to-pay. Most articles on FIRE are of the here-is-an-interesting-curiosity variety. For people to adopt high-level frugality and ERE-like philosophy of life, we'll need a war or some other catastrophe. People rarely change their habits unless they are shocked into it.

Even the current "wave" of media attention shows that little is changing. People talking about fire in the media are not suggesting a new framework, but merely a slight variation on the current consumerist mindset. Most of them talk about how their ultimate goal is to travel and live more experiences, but they are still seeing travel and experiences through the consumerist approach, not from a producer perspective. People's mindset went from materialism to experientialism. At least with materialism you were left with something after spending your cash.

Hopefully I'm wrong.

prognastat
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Re: FIRE reaching Critical Mass

Post by prognastat » Wed Oct 10, 2018 5:08 pm

@jacob

Whenever there's an interview/article and you can see people react I feel the same way. It's good that the message is getting out and a small percentage of readers will actually look into it and make improvements, but I suspect the percentage is very low.

cmonkey
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Re: FIRE reaching Critical Mass

Post by cmonkey » Wed Oct 10, 2018 5:10 pm

Loner wrote:
Wed Oct 10, 2018 5:04 pm
while that guy Jacob (spelling?) lives in a trailer, and pretty much only eats lentils for every meal
:D :lol: :D Geeze it just never goes away.

Give it a few more yield bumps and we'll reach critical mass peak.

daylen
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Re: FIRE reaching Critical Mass

Post by daylen » Wed Oct 10, 2018 5:20 pm

@Seppia We have the same number of posts!

The problem with being optimistic about the future of the economy is that the last 200 years or so have been boom times. In the larger historical context, it is clear that these years were unique, and now we have entered (*) into a period of decline. At some point in the next 15-50 years (**) the price of oil will rise and restrict usage to large corporations and governments (then no one). Therefore it is not clear to me that index funds will be up in 30 years.

(*) Else, we will enter a period of decline soon; depends on the measure.
(**) This is a broad guess, so narrow it if you can.

Seppia
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Re: FIRE reaching Critical Mass

Post by Seppia » Wed Oct 10, 2018 5:34 pm

@daylen

Mmmmmh
I find some people have too short horizons, and some people too long horizons.
I don't really care (investing wise) what will happen in the next 200 years. I'll be dead.
I also think it's too long of a timeframe to make any sort of reasonable guess. Oil was supposedly becoming the most precious resource sometime around 2008, then sometimes around 2015 it was supposedly useless and about to disappear.
Perceptions are cyclical

Capitalist societies might disappear in the next 30 years: if they do I'll have bigger issues than figuring out the value of my Royal Dutch Shell stock.

So I'll keep investing assuming the future will be somewhat similar to the longish term past, while trying to acquire skills that would hopefully increase my chances of survival in case of nuclear holocausts/similar (I do make some great pasta)

jacob
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Re: FIRE reaching Critical Mass

Post by jacob » Wed Oct 10, 2018 5:46 pm

@Seppia - There's been plenty of 20+ year periods or even longer when real returns have been negative. If this was not the case, the 4%/25x rule would not have a 5% failure rate over 30 years since you would practically be guaranteed to be able to eat the capital.

http://www.multpl.com/inflation-adjusted-s-p-500 ...

Recall that S&P500 is a total return index and so includes reinvested dividends, so one can't presume to live on those.

Russell2000 (that's getting pretty close to being the entire market) is also a total return index.
While I haven't verified it, I bet it looks much the same.

The most recent long period of negative real returns was between 2001 and 2013 or so. This is the point when people start saying words like "but rebalancing?!". And yes, then you're good if you're actually trading some mean-reversion scheme ... sorry, I mean rebalancing.

However, a lot of the "thanks to the invention of Bogle .. low-fee index funds"-people are 100% in equity because of "in the long run".
Lets hope they'll all have side-gigs and never need to withdraw when during future trading range periods.

If you handpick dates and ignore fluctuations, real returns can be zero for multiple decades. For example, start with the crisis in 1893 ... and you can go forward to 1948 to find your early investments having gone nowhere. If you had retired on 100% equity in 1893, you would have needed an SWR << 2% because that lasted over 50 years! There's also 1929 to 1983. That's also over 50 years. One might image that actual faith in the strategy is not as strong as the professed one for at least some of the acolytes. 2009 showed as much.

If you look at nominal returns, it's a different story. Everything looks better inflated. People will likely pick either real or nominal returns depending on whether they want to present the bright side or the dark side of the argument.

When it comes to personal experiences, today's 60 year olds (traditional retires) started investing around 1980... and today's 30 years olds (newfangled FIRE community) started around 2010. So in terms of the anecdotes we have, things look pretty awesome. When those two meet, we have a recipe for lots of confirmation bias. And lots of bestselling cookbooks.

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