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

[IlliniDave]

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.

I'm curious about what you are alluding to here. Although I'm not certain exactly what qualifies one as a "high earner" in this context, for the sake of the discussion I'll assume I am one.

What sets me apart from median/non-high earners working for my employer is largely experience. With one exception we all have the same benefits, the exception being that I and my contemporaries are grandfathered into some retirement benefits that were discontinued for new employees ~ 20 years ago. I've already worked through the basic benefits wrt retirement: life and disability insurance, won't really need. 401k and HSA contributions by employer, won't really need. Medical (and dental) are items I'll have to pick up at higher costs than I have now (currently employer picks up 70% of what equates to an ACA Bronze plan). Most of the other changes I see as working in my favor (won't need a dedicated work wardrobe, won't have a daily commute, etc., basic things like that). I'm curious what I might be failing to consider.

By psuedo trial and error I've arrived at a spending level that corresponds to a standard of living I'm happy with: too much excursion in either direction and I get uncomfortable (local maxima I alluded to above). I would think irrespective of income anyone with a full time job has some time pressures that might be compensated for with money if its available, and I have them too although mine these days are small potatoes compared to what a young family would have to grapple with. At the same time, with each passing year I get a little less physically capable, meaning I'm in a zone where, assuming I do it soon, I'll be at a local minima of reliance on money at the beginning of ER. But it will be temporary.

I've "oversaved" and could probably weather spending 170%-200% of what I use as planning numbers, which are inflated from current spending, and I do and will probably continue to succumb to the occasional splurge--I have sort of a intuitive custom iDave faux-Wheaton scale that is largely decoupled from money (although implicitly there are associated financial constraints) so spending more isn't automatically "worse" than spending less. Subjective "best use of time" is the point of it. Some day I might try to express it in tabular form, but it's peculiar to me and something everyone should do for themselves. Sort of ties back to FBeyer's response upthread, with the wrinkle that I'd guess most of us hit an inflection point where scarcity of time (time being the ultimate capital arguably) looms larger than banking diverse forms of capital. As it has come to pass, I didn't get out of the rat race in advance of that inflection.

[mathiverse]

Thanks for all the answers everyone!

First off, sorry about the confusion, I'm not down to 3 - 4 Jacobs, I'm aiming for that over the next year. I'm still at the 8+ Jacob level and only recently started lowering my expenses from there.

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.

I'm not sure I can be much lower than 3 - 4 Jacobs without moving away from the Bay Area which has become clear after bostonimproper's answer. I drew up fishbone diagrams for a long commute, a short commute (walking or biking distance), living alone, and living with roommates (without my own room which seems the primary way to lower rent significantly below $1200 a month [a number easily doable with a private room in a shared place]). Given my personality, sharing a room is a large net negative and a long commute is a smaller net negative.

I tried the van thing temporarily and while I think I could do it better if I tried again, at this point, it's not for me.

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.

I agree with this. I'm planning on trying the no spend exercise mentioned in the Yields and Flows thread: viewtopic.php?f=3&t=10897 which I hope will give me insight into what expenses matter and also provide opportunities for me to improve my DIY/bodging/creative frugality skills since I won't be able to reach for my current hammer.

Is there any reason I shouldn't phrase that as "lowering expenses" though? The ultimate effect given my current level of expenses is that they will be lowered.

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.

Thanks for the link, Scott! I also get a lot out of my work benefits. My motivation to get to 1 - 2 Jacobs at this point is to most quickly and safely have the opportunity to leave my job and also as a benchmark that shows I have strong Renaissance skills.

@c_L What you are saying about the number not mattering in so far as one can be at that number or not at that number at varying Wheaton levels makes sense, but I'm still think it's useful for me to think like this: If I were to move from the Bay Area to a LCOL area and keep most of my system besides working, what level of expenses would I be at? If I think it's around 1 - 2 Jacobs, I'm probably okay to quit and move away at any moment and be FI and have time to get to being ERE eventually.

... 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.

Whoa, thanks! Is this the kind of thing you're talking about? I've been thinking that if I was more physically fit, spent more time outdoors, and got better sleep, then maybe my stress would be lowered enough that I could manage having a roommate again. Maybe if that part of my life were on track, then I wouldn't have to pay extra to limit my interactions with other people. Getting fit would be a free way to lower my stress and maybe I could move in with a roommate once that was established.

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.

I'm interested in hearing what situations you were in here. My work provides a lot of benefits, so I will probably be in a similar situation once I quit, in that I'll have to figure out how I'm going to cover for new resource deficits that are no longer being filled by my company.

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.

This also drives a lot of my eating out expenses. I feel awkward and out of place going to restaurant and not getting anything. This has been getting better due to exposure to saying no to friends and family and also due to changing up where I meet with people.

@all
My intention in asking about other journals was more about seeing how other people failed. I feel as though I have a decent intellectual understanding of many things related to ERE, but ultimately when I try to put things into practice I still fail due to my personal failings (or now as I learn more about systems maybe due to the negative effects of work. eg Stress due to work leads to me overeating or buying stuff on Amazon that I don't need which leads to higher expenses which stresses me out, etc. And managing stress to maintain solid performance at work is the main reason I prefer to live alone.)

My plan is to rearrange my current design to have fewer negative aspects (eg getting fit, eating healthy, cooking, working less), aligning the remaining negatives with my strengths (at this time, I'm referring to using my excess cash flow to pay for an expensive housing situation only) to compensate, start learning skills with low ROI in the money dimension, but high ROI in the Renaissance ideal dimension, and make a 2 - 3 year exit plan that feels safe enough for me to move to an area where there are overall fewer negatives I need to compensate for while also quitting my job.

edit: typos

[classical_Liberal]

I'm curious about what you are alluding to here. Although I'm not certain exactly what qualifies one as a "high earner" in this context, for the sake of the discussion I'll assume I am one.

Lets just use the top 10% in household or personal income, I'll leave it to the individual to decide which better describes their circumstance. https://en.wikipedia.org/wiki/Affluence ... ted_States

What I'm alluding to are hidden benefits these types of jobs provide. These can range from free food at work and hotel points/airline miles accrued for work travel to the less quantifiable social status perks people might get in the world for their titles and work. High income jobs also tend to allow for the potential from more autonomy if the situation is played correctly.

@mathiverse
I'm going to respond in your journal.

[IlliniDave]

Lets just use the top 10% in household or personal income, I'll leave it to the individual to decide which better describes their circumstance. https://en.wikipedia.org/wiki/Affluence ... ted_States

What I'm alluding to are hidden benefits these types of jobs provide. These can range from free food at work and hotel points/airline miles accrued for work travel to the less quantifiable social status perks people might get in the world for their titles and work. High income jobs also tend to allow for the potential from more autonomy if the situation is played correctly.

@mathiverse
I'm going to respond in your journal.

Thanks. If it's 10%, I'm in. In my stodgy situation, I don't get perks of that nature. I could probably maneuver so as to travel a lot more (been 11 years since I went on a business trip), but airline miles don't make up for what I consider the negatives of business travel for myself. So not much for me to watch out for as far as having to make up for the absence of perks.

One thing I do get from work is regular immersion in the majority extrovert world. Although I'm an introvert, I'm not a recluse, so I'll probably have to go out of my way to manufacture social interaction, at least in small doses.

[Lemur]

Not sure if I count as a high earner ($93k base salary) but I found that mentally I tried harder to save when I made less at $55k (start of my journal). My expenses crept up mainly in regards to spoiling my son, but also increased "experiences" spending such as going out to events, traveling, etc. I blame my spouse for some of that lol but its on me too. I was at a 40% savings rate in the beginning of my journal simply by design and now I'm at 40% mainly due to being content with the absolute dollar savings (over $2500 a month). Also as my net worth as increased, I recognize more and more that interest/growth will take me further then savings effort. A nice problem to have really.

[FBeyer]

...
Is there any reason I shouldn't phrase that as "lowering expenses" though? The ultimate effect given my current level of expenses is that they will be lowered.
...

Yes, there is a crucial reason that will start to impact you seriously about 5 years from now, depending on the mindset you adopt today.

If you want to train your brain to continually look for things to remove from your life, then by all means think in terms of 'lowering expenses'. In a few short years, the daily myelination of synapses will teach your brain to be on the constant lookout for things that COULD be lower, or things to cut from your life. You'll be looking at the world through a lens of negativity and reductionism.

If you think in terms of What Do I Need to Live A Fulfilled Life, then you'll be operating from the standpoint on needs, values, and dreams. You might be getting rid of the same things, you might be doing the same actions, but the impact these two different approaches have on your mental health will severely affect you in the future.

I guarantee it, 'cause I'm talking to people on a daily basis who view the world from a reductionist point of view.

The ultimate effect might be the same but consider a coarse example.

a) I want more sex
b) I want a better relationship

Both should yield more sex, but the myopic focus on the Key Performance Indicator will affect the way you solve challenges.
A better relationship will yield a LOT more than just more sex, because you are addressing the fundamental issue, not the measurable target itself.

When you know what the hell you want to spend your life on, and you act accordingly, you'll make your choices from a fundamental need's point of view. When you make choices based on money...

Well...


I trust you can connect the dots from here on.

[classical_Liberal]

The ultimate effect might be the same but consider a coarse example.

a) I want more sex
b) I want a better relationship

Both should yield more sex, but the myopic focus on the Key Performance Indicator will affect the way you solve challenges.
A better relationship will yield a LOT more than just more sex, because you are addressing the fundamental issue, not the measurable target itself.

This is an amazingly succinct example/explanation of my distaste for SMART goals and their ilk. I've tried to explain this before, but feel this is the best simple example I've read which directly expresses my views.

I would just like to add, "better relationship" is hard to measure vs "amount of sex". Since "better relationship" is more subjective, it's more difficult to determine what's working and what's not. This is where I believe Wheaton level 6 and above thinking has a huge advantage. Because flows from better relationship (including advantages of more sex) are noted. Hence is why the long step from Wheaton 5 to 6 is worth it, IMO

[7Wannabe5]

A better relationship will yield a LOT more than just more sex, because you are addressing the fundamental issue, not the measurable target itself.

True, but only if a better relationship is the fundamental issue. What came first in evolutionary order, what we mean by "good relationships" or "sex?" Although, the systems truism of "the whole is greater than the sum of the parts" would seem to apply here, the devil's advocate could easily offer up a few counter perspectives. For instance, "sexual frequency" might be better correlated with objective measure of averaged physical vigor and mental health (depression scale perhaps most relevant) of both partners than subjective rating of "How good is your relationship?"

Since, it could similarly be argued that as "better sex" is subsidiary to "better relationship(s)", "better relationship(s) would be subsidiary to "better life or life-style" , and "better mental health and physical vigor" would also be subsidiary to "better life or life-style." However, determining this sort of hierarchy is not systems level design. Systems level design is concerned with complex feedback loops, so a systems model would include effect of increased flow of sexual activity (frequency) on subjective rating of relationship, effect of stock or flow of other factors influencing subjective rating of relationship on flow of sexual activity, and also effects of level or flow of physical/mental health/vigor on these other two stocks and flows. The kicker being that it is NOT necessary intuitive how this model will run towards maximizing self-report of "Happy and Fulfilling Lifestyle." which will also, obviously, feedback into other stocks.

So, for instance, it might be the case that devoting 1 hour/day to Empathetic Listening will increase sexual frequency 2X but 15 minutes/day of Tabata Training will increase it by 2.5X., but the Tabata training -> sexual frequency combined with the Empathetic Listening -> sexual frequency will have less effect on self-report on "Happy and Fulfilling Lifestyle" than just the Tabata Training itself, even if Empathetic Listening influences Good Relationship(s) influences Happy and Fulfilling Lifestyle much more than Sexual Frequency influences Happy and Fulfilling Lifestyle. Etc. etc. etc. Or it could even be some much less explicable or "acceptable" small lever that will pop-out.

[classical_Liberal]

@7WB5
Your response just goes to further illustrate the point. If goal of "want better relationship" really means "want happier and more fulfilled life", then measuring relationship status only, means we have focused again on what is being measured, rather than the true overarching goal.

Being a systems thinking newby, I'll admit, the problem with this type of thinking is that it becomes so overwhelming that it's very easy to lose oneself in thought vs taking actual action. It's also frustrating as hell. Given our human failings it may make sense to narrow the field a bit and focus on certain things. However, I think it's possible to at least have a base understanding of overall goal/system and take some guesses how it may be impacted by actions in one node or one subsystem. I'm beginning to believe the two most fundamental things to consider are: How will my measurement of progress impact how i make progress? and how will progress in one area potentially impact others? Simply being aware of these while taking action allows for more mindful agency in ones life. For example, if I believe a better relationship flows to more and better sex, which would flow to more overall happiness and fulfillment, but it turns out it did not, that paints a different picture of the system than I had in my mind to begin with. Something's missing.

[jacob]

Maybe worthwhile to recall the Hegelian constructor. viewtopic.php?p=169390#p169390

At one's current level one is the goal. At the next level one has the goal. SMART goals do not work unless they're measured at the next level... but it's almost impossible to set up a measure for a metric that one is blind to. In less abstract terms, one can not solve a problem with the same kind of thinking that created it.

What kind of SMART goal would a chained slave in Plato's Cave set in order to break his chains? It's a trick question. There's literally nothing that can be measured in terms of shadows on the wall that would allow the perception of the chains.

[classical_Liberal]

but it's almost impossible to set up a measure for a metric that one is blind to. In less abstract terms, one can not solve a problem with the same kind of thinking that created it.

I wonder if adding real or hypothetical constraints to the solution space is an exercise that would break through this barrier. Each time you find a solution, place more constraints so that the solved problem needs to be reevaluated. Eventually you'd get to a point where you'd literally have to "go back to the drawing board" and start from scratch with a new thought process. The "no spend year", being an example of how this works.

[7Wannabe5]

Your response just goes to further illustrate the point. If goal of "want better relationship" really means "want happier and more fulfilled life", then measuring relationship status only, means we have focused again on what is being measured, rather than the true overarching goal.

True, but it isn't even necessarily true that "happy and fulfilled life" overarches "better relationships." It only applies in very individualistic society that highly values independent functioning where people read self-help and personal lifestyle design books (not that there's anything wrong with that ) When you model a system, you always have to create a boundary or boundaries for the model, while recognizing that in reality the boundaries are imaginary. In a lifestyle design model, you could, for instance, choose to create the boundary at the level of family or community or FITB and maximize "happiness" of all humans, or even all complex living systems (your Uncle Joe = 40 acres old growth forest), rather than maximizing your "happiness in the moment." "ERE" attempts to do this at the very modern divide of individualist/globalist, maximize/do-no-harm (with mutual positive feedback loop because spreading the word about how to maximize/do-no-harm results in less harm = help.) It would be interesting to compare/contrast this model with a model where, for example, goal was to maximize "happiness" of 20 closest companions with no regard for anybody else on planet and no particular preference towards self over the 20 others within the boundary of model. (This thought came to me while reading book on topic of keeping wealth in the family over 4 generations.)

OTOH, sometimes a rose is a rose and a pickle is a pickle. I've participated in enough couples therapy to know that it is possible that somebody will attempt, and even succeed for a time, in convincing you that you want "a better relationship" when you actually really do just very much want to get laid more than once every 6 weeks. IOW, I am very suspicious about any advice along the lines of "fill his/her love bucket and it is bound to overflow upon you eventually." It's kind of like thinking you can apply trickle-down free market capitalism theory/practice to a situation of total draconian monopoly. However, it very well may be the case that FBeyer meant to recommend a practice as inclusive of "radical honesty" as "empathetic listening", in which case I agree. For instance, I have frequently dated very recently divorced men and listened to them vent over expensive Thai food. Not all relationship therapists or dating experts would recommend that in such a situation I should look pointedly at my watch and say something like "I am wondering how long until you stop grousing about your ex and start kissing me?", but I believe that it would be best practice.

Similarly, money holds a lot of mythology, so it can mean many different things to different people. It can be a pickle or a rose or a FITB. For purposes of this forum it is defined as something like "freedom from need to sell work (time * vigor or life-energy)", but that doesn't mean that is all that it means, or holds in mythology, for any given member of this forum. Therefore, I agree that challenges to extreme constraint can be very helpful because they can bring these more hidden mythologies out into the open. Just like how forcing an issue like sexual frequency can bring out other problems or hidden covert contracts, expectations and disappointments in a relationship.

[FBeyer]

Being a systems thinking newby, I'll admit, the problem with this type of thinking is that it becomes so overwhelming that it's very easy to lose oneself in thought vs taking actual action...

The world is choc-a-bloc full of randomness, and randomness will mess with almost any model.
Teaching System's Thinking (modeling) should go hand in hand with Design Thinking (a way of acting) IMO.

We can sit down and draw diagrams, and keep on adding complexity to our models, to try to account for all the things we can think of. But none of that will ever substitute for experience.
The best way to experience system's thinking is to build a system and experience it in action.

Most -stable- everyday systems fall into place in a matter of weeks. ie converge asymptotically towards constant output.[1]
So think of something, build it, do it, look at how fast the output converges.

There are always side effects that you didn't really think of to begin with (my gardening experiences with slugs and cats for instance...), but you'll only ever see those once the machine starts churning.

The time it takes to iterate and improve on everyday systems is so short it's crazy.
Once you grasp even the most basic idea of systems thinking, you can't help but see the world in that way; so there IS definite merit to understanding systems thinking, but getting off your ass and BUILDING something teaches you much faster than diagrams will.[2]

To paraphrase:
Academics, who are wont to read about systems thinking, don't have the natural inclinations to get off their asses and actually DO systems thinking, like, say, craftsmen would. The latter would probably not ever consider reading something to esoteric so the concept of systems thinking is stuck somewhere between the best of two different worlds[3]


[1] This is the snooty way to say: you knows what you's gonna gets out of its.
[2] Or in the case of 7w5 WRITING your way through what could have been a diagram...
[3] The two worlds being: seeking understanding and seeking results.

[7Wannabe5]

@FBeyer:

Quite true However, in my defense, I would note that my slacker eNTP pattern is more like Read, Read, Read, Read, Talk/Write, Talk/Write, Talk/Write, Talk/Write, ...DO!

For example, did I or did I not BUILD a lifestyle business, a polyamorous relationship structure and a permaculture project? Did I not learn from my failures? Am I not still entangled in their various rubbles? Perhaps, it may be the case that TIDY or KILL is the more missing link.

[classical_Liberal]

I think you folks helped identify a source of frustration for me. I grok the real world is different than models. Hence the need to measure results of actions, to see how they are impacting a system. I think my problem is boundaries. I get overwhelmed with all the potential interactions. This is, incidentally, a problem I've had with any decisions in my life in the past as well, which results in my general inability to commit to anything of substance.

[AnalyticalEngine]

This is a good discussion and perfectly encapsulates some of the pitfalls I've seen when pursuing this stuff. The systems thinking vs. hoarding money/cutting expenses distinction is extremely important because, in my experience, hoarding money/cutting expenses creates a scarcity mindset. Now, on the flip side, I also see people refer to "abundance mindset" as "I make $200k a year as an instagram infulencer and spend a boatload of money." This is also incorrect. The real goal is to engineer your life by engineering your routines to give you the most of what you want with the least waste. Spending money excessively is a form of waste, and it's possible to live an abundant life by spending very little. But the key really is to focus on how your routines complement each other/add to your lifestyle rather than focus on how to hoard money.

[Frita]

Spending money excessively is a form of waste, and it's possible to live an abundant life by spending very little.

For me, not wasting is one of my core values. My spouse made an excessively high income and was constantly telling me how we were 1%ers. (I always did and do find that embarrassing.) He spent to some degree (frugal in peers’ option and outrageous in mine) to blend and at home we were frugal like the college days. When he had enough with the nest egg set and walked away, that external spending stopped. Like Jacob, he does lean toward the best item with careful maintenance.

Sorry, no journal...The money part was easy compared to other factors. When one has a high income and doesn’t engage in massive lifestyle inflation, it seems pretty easy. Nothing like living in married student housing on a grad assistantship and full-time minimum wage job while attending full-time and being the wealthiest of our friend group!

[horsewoman]

Reading this thread made me remember an old Dilbert strip, for some reason :)

[classical_Liberal]

@horsewoman is pick'en on me!

Very good point!

[horsewoman]

@horsewoman is pick'en on me!

Very good point!

Haha, yes I suppose I am funny thing is, I had initially some more text written beneath the comic but deleted it before posting (was not sure if it was really relevant after all.) but one sentence literally was "c_l, I'm looking at you!"