Journals that go from high spending to 1 - 2 Jacob level spending

[mathiverse]

I’m in the process of lowering my expenses and was interested in folks who started at the 8+ Jacobs level of spending and went down to 1 - 2 Jacobs of spending. I want to read about their mindset shifts and challenges.

Also are there any high earners with journals? (Like I saw bostonimproper’s and cmonkey’s journals.)

In particular I wonder what sorts of thoughts get them past the trap of staying at 3 - 4 Jacobs given they could still retire within five years at that level of spending.

[FBeyer]

You shouldn't be in the process of lowering your expenses.
You should be in the process of finding out what your life is about, and designing accordingly.

In other words: Say no to EVERYTHING! Absolutely everything, even ERE, and start adding back on the vital parts of your existence.
In time you'll find that the complete lack of friction sets you free to make better choices.

Learn what to keep, not what to throw away.

You'll liberate much more than your finances!

[Scott 2]

I'm in software as well. My journal starts after I'd reached minimum expenses, so it's mostly me fighting to keep them down, then rationalizing the ride back up:

viewtopic.php?f=9&t=9323

IMO there has to be a bigger driver than money to sustain 1-2x Jacobs, especially if you are high earning. A strong belief in conservation of resources, intense interest in a low cost hobby, an overwhelming fear there will never be enough, or something like that. I don't have it.

On the other hand, efficient systems can get you to 3-4 Jacobs, while freeing both time and energy. That can be very complementary to the high earners life. Getting work to carry costs can help too - benefits, company meals, networking events, internet/phone reimbursement, education, stacking personal travel on top of corporate trips, etc. It'd be disingenuous to do that and claim to live on 2 jacobs, but it's a very effective financial tool in the high earner's box.

[ertyu]

don't forget intense hatred for your job. intense hatred for your job would do it, too.

[bostonimproper]

I've never been 1-2 Jacobs in spending. I think doing so would require something akin to what FBeyer has mentioned (throw everything away and build back up). The problem is, if you're mostly satisfied with your life as it is, it's much harder to go through that exercise, especially if you have other anchors to your current lifestyle. I'm thinking mostly of people like family, friends, partners, etc.

[jacob]

I suggest reading the entire thread on yields and flows viewtopic.php?t=10897#p197262 ... and following all the links into their respective rabbit holes. Perhaps crossreference to the journals of the participants.

At 3-4 jacobs, one is commonly "stuck" at the "Optimization" Wheaton level not seeing what the point is with "all that philosophy stuff". IOW, at 3-4 jacobs, one has reached peak-intelligence when it comes to paying to solve one's problems with money; but does not perceive the next step which is incorporating alternatives to spending. A high income is a barrier to transitioning from that framework: "Why bother when I easily earn enough to just pay ..."

The great arguments/debate here is between "comparative advantage" vs "renaissance/generalist", so in order to proceed, one has to see the value in the renaissance philosophy.

On top of my head, I think maybe look at classical_Liberal's shift between pre- and post-retirement in his journal.

[Loner]

I spend below two Jacobs. I never really spent above that though, so my case may be irrelevant to you, but I’ll tell just in case.

Like Scott says, I think to sustain such low spending, you indeed need more than just a desire to retire early. Anyways, you seem to think the same since you are interested in reading about mindset shifts and challenges rather than tips and tricks. In my case, it’s a mix of temperament and personal philosophy.

First, I have a high desire for freedom. I like being able to do what I want, when I want, and not being encumbered by stuff and lifestyle creep is an important component of that.

Second, I find beauty in efficiency. I find elegance in bicycles, in minimalist art, and in simple lifestyles because they are efficient. I’m naturally frugal, and just like Jacob remarked many times, I just cannot imagine spending 35K+ a year. I just would have no clue how to (nor would I get why) spend that much money. I don’t think I’m as driven as others here by environmental considerations, but it does pain me to see vast areas deforested and dumps filled with crap, so I try to reduce waste to a minimum.

Third, I’m very intrinsically motivated, and quite curious. So the Renaissance Man ideal just fits my temperament naturally. I like to DIY and learn about just about everything. This year, I changed a tab and a strut on my car. I could have paid for it, but why? It was fun to try to do it myself (and succeed!). I’m also self-employed and work in two very different domains, which suits my curiosity even if is not ideal for maximising income. I think I’m also naturally somewhat more impervious to peer-pressure than the average, so keeping up with the Joneses was never even something I needed to overcome. I think that knowing yourself and your own desires will help if you want to reduce spending.

Best of luck on your way.

[classical_Liberal]

The problem may be using 1-Jacob of spending as a goal post without other considerations. Remember this number isn't haphazard, it's the approximate amount of resource usage that a developed Westerner needs to reach in order to make it sustainable. I'm not going to put words in Jacobs mouth, but my understanding of what he was trying to accomplish: To show that anyone in the West can live a middle class lifestyle, similar to everyone else, on this amount of resource usage. I would guess this is probably part of the reason he designed his system the way it is.

Now, we need to remember, money flow isn't the only measurement of flows, and money is not the only resource that a higher Wheaton level person needs to understand. The average middle class Westerner also has a job. Remember, Jacob reached this level of financial resource use while working a full time job! This means, at the time of the accomplishment, he was not relying on burning through excess time capital to reach this level of spending. Nor was he purchasing time back through his excess finances. It was sustainable as a middle class worker who spent a great deal of time and energy at a Full-time job. This is important, because I have come to realize how much value time has as a resource. As a result, understanding it's flow is extremely important.

Anyway, my point is that, if we are going to use 1-Jacob of spending as a litmus test to our Wheaton level, then we must also account for an addition of 40+ hrs/week of time otherwise NOT occupied with activities related to reducing expenses. Now, it's possible we don't work AND don't use the time previously relegated to FT employment to further reduce spending. We may choose to use it for something else, only tangentially related. It's also possible Jacob may have been burning through some other form of capital, like life energy? that required recuperation after FI. Only he can answer that. Each person's Web will and should be different in this regard. Where is the FT work energy going? If it's somehow flowing into expense reduction, then, even if we are at 1-Jacob of baseline spending we are not yet at his Wheaton level. It's also possible to work this in reverse, if FT employment was being used as a time occupier, it may even create life energy due to its nature(we may not realize this until it's gone). In this case, it's possible someone may end up spending financial resources to occupy time and create life energy once it's gone. As I have come to learn, it's very important to consider all of this.

One last paragraph to coalesce my blatherings here. This idea of "baseline" spending is important, whereas before it didn't matter to me. But it's only important insofar a we use to compare to the 1-Jacob spending level. Since everyone's web is different, they may have more or less financial outflows depending on other flows, their design, and overall goals. Because many people here are outliers, in many varying ways, they may spend more than this to reach some type of "non normal" middle class end game. That's OK. But, I thinks it's almost impossible to make such a comparison once someone moves into systems thinking. There are too many variables to consider. All of this leads to the conclusion that, if we are still comparing our spending to 1-Jacob, then we probably aren't thinking the same way he does. Which is probably why it's so hard to answer the OP question.

In particular I wonder what sorts of thoughts get them past the trap of staying at 3 - 4 Jacobs given they could still retire within five years at that level of spending.

[7Wannabe5]

It's also possible Jacob may have been burning through some other form of capital, like life energy?

Academia does not pay very well, but there are valid reasons why people choose such a career when trading all their accumulated intellectual and cultural capital. Living the "graduate student lifestyle" while earning first or second rung professor/researcher's salary is much more palatable than, for instance, living the "underclass lifestyle" while earning first or second rung Manager at Denny's salary. IOW, the hours Jacob spent hitting the books at age 14 were an investment he reaped in better lifestyle accoutrements beyond base salary; just like the hours other forum members spent coding at age 14 were an investment from which they were able to directly extract higher salary.

IOW, having a job you like can give you positive energy towards lowering other expenses. Some other examples would be wanting to be a stay-at-home parent, self-employed, or employed in the arts. I would suggest that an individual starting from the position of already making median salary doing something they enjoy is in better place than high earner doing something they don't enjoy. So, whatever life energy was previously spent getting to place of enjoyable work providing median salary is the differential. Another way to look at it on a more rational economic basis is to consider everyone as being in the work-force/potentially working towards FI starting at around age 14. So, nobody really does it in 5 years, and activities such as spending hours studying for exam which might provide scholarship vs. partying in back of potato chip truck would be relevant investment choices.

[jacob]

@cL - In terms of comparing oneself to me, it's also important to realize that while my spending has always remaining low (I simply did not increase it as my salary rose for the reason you mentioned), I started at Wheaton level 2 much like many others. (Luckily I hadn't picked up the bad habits associated with level 1 or ~50% of consumers.) This means that initially during my buy-nothing experiment and similar, it was all about sacrifice, that is, doing without.

The increase from level 2 to level 4 can be seen here:
http://earlyretirementextreme.com/how-i ... art-i.html
http://earlyretirementextreme.com/how-i ... rt-ii.html
http://earlyretirementextreme.com/how-i ... t-iii.html
http://earlyretirementextreme.com/how-i ... ments.html

By the time I started the ERE blog in 2007, I was at level 4. You can follow the development of thinking [styles] if you read the blog in chronological order. You can see that the groundwork for level 5 and 6 are laid fairly quickly. Note that I started writing the ERE book in the spring of 2008 and some of the better/more coherent ideas went into the book instead of the blog. Level 7 is laid out in detail the ERE book. And examples of level 7-8 can be read in the 10 year update: https://www.getrichslowly.org/early-retirement-extreme/

I realize that this is not what the OP is asking for which could be read more as "what do I do if I increased my spending by a factor 8 since college and gotten used to it for a while but since then have been working my way down again/up the Wheaton levels except I got stuck at factor 4". I do think the convenience of a massive cash inflow can be a [motivational] handicap(*)... but frankly I think [the sticking point] is more to the fact that there's a big moat to be crossed to progress from that spending/Wheaton level, specifically this post: viewtopic.php?p=197501#p197501

(*) It is less obvious that reducing expenses has more relative impact than increasing absolute income when absolute income is high.

[7Wannabe5]

I think even if you are a relatively messy, undisciplined person with a number of bad habits(like moi), you can feel compelled towards lower spending simply because your favorite hobbies are usually some variation on re-inventing the wheel. For instance, one of my idols is Carol Deppe because she successfully bred corn back to original Native American varieties. How cool is that! Also, one of the reasons I am dumping my BF is that he won't let me do independent Primitive Technology projects on his wooded acreage. In fact, even though sex is one of my favorite messy bad habits, and I find it pretty easy to derive practical support from relationships with men (allowing me to spend even less the Jacob on pure cash-flow "cheat" basis) , I am seriously considering a life of celibacy so that I can best avoid bossy men interfering with my re-inventing the wheel project-scape and/or happy-go-lucky scavenger lifestyle.

[IlliniDave]

You shouldn't be in the process of lowering your expenses.
You should be in the process of finding out what your life is about, and designing accordingly.

This is pretty well-put, and I'd agree wholeheartedly maybe with the tweak of saying, "...lowering your expenses for the sake of lowering your expenses."

I'll second what I take to FBeyer's point that starting with a vision for life and arranging things to fit harmoniously with that vision might yield superior results. I don't remember the origins of this image, but it's sort of like the artist seeing the sculpture in the stone prior to removing all of the stone that's not the sculpture. It skirts the pitfall of becoming too focused on preserving money such that you wind up living in self-imposed semi-wretchedness (I mean that subjectively in the sense that you end up making yourself feel miserable because you always feel compelled to avoid expense first and foremost).

Of course, I'm one of those jacob alluded to who hit sort of a local maxima in "quality of life" vs spending and ceased development there--so it's quite possible that my outlook is an exercise in self justification.

At the same time, over on bogleheads, I get lumped in with the pathological cheapskates who all agree must wallow in abject misery from practicing masochistic self-denial.

[classical_Liberal]

Living the "graduate student lifestyle" while earning first or second rung professor/researcher's salary is much more palatable than, for instance, living the "underclass lifestyle" while earning first or second rung Manager at Denny's salary.

This is a very good example of situational forms of capital that do not easily transfer into dollar amounts. Because it's more than the type of job, how much time spent there, and the fact he was probably very interested in what he was doing, at least initially. It was also the university "Grad Student" lifestyle probably did not have the standard social, lifestyle inflationary pressures other jobs may have had. Or the fact that doing interesting, somewhat self directed work created energy of other realms in life instead of sucked from them. Etc.

My main point here relevant to OP is that since we become what we measure, we should be careful what we measure and how we measure it. Focusing on the single factor of 1-jacob of spending, without also focusing on why more than 1-jacob of spending has been worked into a lifestyle may be the wrong way to approach change. This goes back to something I realized a while ago, and that is I must identify the limiting factors of my current construct or system. If someone like me has

A)Gone through the normal FIRE frugality tips and tricks list (wheaton 3)

B)Honestly looked at personal priorities and begun pareto optimizing spending in macro spending categories (wheaton 5). (EDit: See @Jacobs link wrt to moats at these points, but if @mathiverse is 3-4 jacobs of spending you are probably near here already)

But is still spending way too much money and does not understand why. Then they are probably trying to buy more of some form of limited resource in their system. There is a factor(s) in their system they haven't considered and it is costing them.

I really think the high income conundrum is that to earn a high income, there is almost always costs to other forms capital. Time, social, family relationships, general energy, mood, ect. Since we are not measuring these directly, all we see are the financial outflows going to make up for lack of capital in these other areas. Keeping up with Joneses behavior to keep up socially, paying for the "right school district" for kids in family, restaurants and personal shoppers for time, expensive low energy hobbies for energy, psychologists and antidepressants to improve mood. A person making 100K or 200K a year, who is relying on these spending activities to keep "equilibrium", simply can't just "turn it off" to 1-Jacob of spending AND expect to continue to earn high income in the same situation. The system would collapse. They intrinsically, but maybe not consciously, understand this, hence the ever maddening spending behaviors once they realize others are doing such a better job in the spending realm.

In these cases, the question should be, how do I get more time, social, family, energy, or whatever area(s) that's lacking without spending money? EDIT: The worst case here is that to maintain the high income, all other resources have been already depleted. Money no longer buys enough of what we need. At this point it's tough to even "get off the couch", so to speak, and make progress on lower Wheaton level activities.

[jacob]

I appreciate the concept of "situational/class expenses"(*). It's the upper-middle class analog of pay-to-play to rural America's equivalent of not "moving to the city" and pay-to-stay. In both cases, there's a strong investment of capital in private curriculum building classes or social network backup respectively to such a degree that it's inconceivable how one might leave Plato's cave.

(*) Like spending more than 1 jacob on baby-Mandarin or toddler-ballet lessons. (In case anyone is doubting. Yes, that's a real thing!)

It's a very strong lock-in and not necessarily just money only. See ERE book chapter 2. If I were to re-issue a second ERE book edition, I could definitely add a few sections covering those instances explaining it in terms of whatever kinds of capital (mostly social) that the underclass didn't have the money to buy and the upperclass were specifically trying to buy [with money].

I think iDave's concept of local minima/maxima is pertinent. One needs some other kind of capital to materially outweigh one's other capitals in order to escape one's sticking point. This is a general observation. Once you get really good at a skill, you tend to ignore the other ones. Local min or max indeed.

Add: That class-moat of "keeping up appearances" among other things (social relations) is similar to what is preventing me from going full-on Suelo or Mark Boyle.

[classical_Liberal]

@jacob
I think it's much more than just social. The high income earner paying 8K for toddler ballet dance classes isn't just doing it for social cred. There are other key life factors missing or in extreme scarcity to go down this road.

I think my edit about the worst case is pertinent for some people who struggle to get startel. Others will simply follow the herd, so never had a chance, you've pointed this out through your active ERE years. I doubt the later are reading here though.

[7Wannabe5]

This is a very good example of situational forms of capital that do not easily transfer into dollar amounts. Because it's more than the type of job, how much time spent there, and the fact he was probably very interested in what he was doing, at least initially. It was also the university "Grad Student" lifestyle probably did not have the standard social, lifestyle inflationary pressures other jobs may have had. Or the fact that doing interesting, somewhat self directed work created energy of other realms in life instead of sucked from them. Etc.

All that and more. I could have pointed to myself as well as Jacob, because I have repeatedly lived variations of the "grad school" lifestyle without even attending grad school. For instance, I moved back into married student housing with my ex and our two toddlers in order to save money to buy a house. It was only slightly more expensive to live there and pay for one graduate course for my husband than it would have been to live in low-income subsidized housing which would have obviously been a MUCH worse environment.

Like spending more than 1 jacob on baby-Mandarin or toddler-ballet lessons.

lol- The funny thing is that practices like these often originate in much more frugal version in graduate student heavy environments, but then become ridiculously expensive when they move up/down the social chain to highly affluent realms. 40 years ago, the joke was that the wealthy suburban automobile executives flaunted by driving very expensive cars up very long driveways, but the Ann Arbor folk flaunted by driving 20 year old Subarus with collection of bumper stickers from Ivy League schools their kids attended. Nowadays there is a lot more bleed-over.

Artsy-Bohemian is another lifestyle that is much more bang-for-the-buck than the underclass spending level it entails, and it is similarly rendered much more expensive when copied. For instance, the difference between setting fashion and following fashion.

what is preventing me from going full-on Suelo or Mark Boyle.

Interesting. In my case it is mostly physical cowardice.

[Wads]

You shouldn't be in the process of lowering your expenses.
You should be in the process of finding out what your life is about, and designing accordingly.

In other words: Say no to EVERYTHING! Absolutely everything, even ERE, and start adding back on the vital parts of your existence.
In time you'll find that the complete lack of friction sets you free to make better choices.

Learn what to keep, not what to throw away.

You'll liberate much more than your finances!

Wow, this is great. Thanks!

[bostonimproper]

In terms of pay-to-play, if you're high salary in a HCOL or VHCOL area and down to 3-4 Jacobs, the thing you're probably spending the most on is comfort and personal energy in the form of housing and transportation options that get you your own bedroom with a <60 minute commute, not social capital in the form of baby Mandarin. You could argue you are probably spending on social capital by not living in a car, van, boat, or RV like Jacob did or by living in a safer neighborhood or by not doubling up rooms or by taking the job in the first place. But all that is still a few Wheaton levels away from multi-thousand dollar toddler ballet.

[classical_Liberal]

In terms of pay-to-play, if you're high salary in a HCOL or VHCOL area and down to 3-4 Jacobs, the thing you're probably spending the most on is comfort and personal energy...

Agree with this. I think a well-oiled, 100K+, high salary machine (ie functional and sustainable from a personal level) with a 20-25K annual cash burn rate looks very different than a 30-40K job with 7-12K spend rate well-oiled machine. Of course we can find exceptions to any rule, but in general these high income lifestyles have very different resource pressures than median. While the SR% may look similar, it's still very easy for the high salaried person to wonder what they are missing in absolutes. Also easy for the median income person to wonder what the hell high salary person is wasting money on (hence outlier anecdotes ). I believe a big part of what both parties are missing is that high income levels tend to have resource deficiency in areas the median does not. IOW, they are not seeing the system accurately because they are only measuring the nominal spend rate metric. To take it a bit further, I think poverty level (12K earn and 13K spend) levels have the "other" resource deficits of both high income and median, plus some others.

OTOH, I also think high earners have "other" resources not available to many at the median level, that are directly related to having these types of jobs. I think there may be some poor use of these "extras" which contributes to the high level of spending and/or some habit formation around these extras that yield unhealthy nonEREesque results. It's also very important for the aspiring FI ERE'er to understand what all of these things are, because many are very subtle and they will bite you in the a** if/when you quit your job. I have personal examples of these types of unexpected situations if anyone's interested. They were not easy to see, even as the impacts to cashflow are obvious.

[Scott 2]

OTOH, I also think high earners have "other" resources not available to many at the median level, that are directly related to having these types of jobs. I think there may be some poor use of these "extras" which contributes to the high level of spending and/or some habit formation around these extras that yield unhealthy nonEREesque results. It's also very important for the aspiring FI ERE'er to understand what all of these things are, because many are very subtle and they will bite you in the a** if/when you quit your job.

I account for this. Replacing it all would cost tens of thousands of dollars. My company values the benefits at around $60k, according to the annual summary. In FIRE I'll drop most of it. There's no chance of taking the cash instead, unfortunately.

Some of it is a trap, even in the moment. Vision insurance that locks you into high dollar optometrists is one of the best examples. Costco optometrist plus Zenni glasses is an order of magnitude cheaper, but not a common solution. The insurance is sold to optometrists as a marketing strategy!