“Money is a solved problem”

[IlliniDave]

More on the inflow side always helps! In mine (I don't use simulation software, just the Open Office Excell knockoff) it (part time income) helps some, but in my case is sort of swamped by SS and my little retirement annuity. My plan pretty much requires at least one of those outside income sources to meet my goals (stay housed, fed, and warm; and have something to pass on) if I happen to live into my 80s.

[Fish]

@jennypenny - I made a poor word choice, especially given the analytical audience here. However, "solved" accurately describes the state of mind I am trying to cultivate. For those who were confused, Jacob's gun metaphor is a good way to understand it from my perspective. I just know that there will be some who will never be able to get over it, and will always imagine a prominent "mission accomplished" (or "solved") banner beside my avatar as I continue to journal from my current position 1/3 of the way on the road to FI...

I think the "insight" here is whether FI is considered the starting line or the finishing line or some other line. If you think of FI as the starting line for "real life" rather than the finishing line, then I surmise that one's attitude of scramble-level at <FI is more along the lines of someone who showed up late for a race AFTER the starting gun sounded.

You've mentioned before that reaching FI/RE is a starting point for real living and alternatively, the point at which one is qualified to learn what living is actually about. And although I only have perspective from one side of the "line," I expect you're correct about this (as usual!?).

The similarities I see between S_ and myself are: 1) spouses with little interest in extreme personal finance, 2) multiple children, 3) relatively high expenses for this forum (S_: 1.9 jacobs/capita, me: 2.4). We're loaded up with liabilities that prevent us from implementing a five-year FI/RE plan even with good incomes. We're also resolved to make this journey together with our life companions even though it would be faster to go it alone.

And in spite of this situation I continue to read these forums and think about PF at a frequency that is not commensurate with my willingness to actually implement the reforms needed to make a real difference. I could be FI today if I were willing to live like Jacob, or even MMM. I know it's possible, and I would be willing to do it even if early retirement were not involved. But DW and I have very different utility curves, and our spending is a compromise.

Sometimes I wish I could go back to Wheaton level 1 and forget that this even existed. Fully appreciate what I already have, instead of waiting with eager anticipation for what is yet to be. Work on the many non-financial things I know to be possible with my self-imposed constraints. But the weird thing is, I can't let it go; I don't want to forget. This is important to me too. So my "solution" is to stop thinking of FI as the destination. Those who are more hardcore in their motivation and implementation of ERE (or have the same liabilities but are closer to the finish line) don't need mental tricks to stay sane during the journey.

[suomalainen]

+1 to everything @fish said. FI can’t be the starting line for me any more. I had to let go of it (just like my dream of having a goomar on the side). But

the weird thing is, I can't let it go; I don't want to forget. This is important to me too. So my "solution" is to stop thinking of FI as the destination. Those who are more hardcore in their motivation and implementation of ERE (or have the same liabilities but are closer to the finish line) don't need mental tricks to stay sane during the journey.

+infinity

The mind trick is that I can fake “let go” of FI as the starting line by moving the starting line. So, yes, in a way, it’s just a cheat, a trick. The new “starting line” is that the firing solution has been programmed and the round fired, so fake-FI is reached at that point, which for me is about 50% of my FI number. Compounding, even assuming terribly low rates, will eventually get me there, so I can breathe a sigh of relief. “Pop the champagne gov’nah! I HAVE ARRIVED, MOTHERFUCKER!”

Note: To address those too caught up in the diction, you’re right, but think of it this way: the “problem” that is solved is not that the pile of desired money exists; it’s the cognitive dissonance of wanting something that can never be (on the same timeline). Comparing myself to you guys - be it young or old, but largely single or with companions of a similar bent...it just is really aggravating.

I choose sanity.

PS. @fish, if you’re ever in the northeast US, pm me and I’ll buy you a decidedly non-frugal beer.

[jacob]

I believe there is an inherent difference between active enterprise and passive investment that can't be calculated away.

This is another thing I've been saying but which usually falls on deaf ears: Namely that in practical terms, FIRE doesn't mean not working anymore but simply changing one's vocation to principal money-manager insofar income is not derived from a pension or an annuity. I guess one can convince oneself that one's investment strategy is a "solved problem" in the ballistics sense, but as you point out, there's a risk that the gun was pointed in the wrong direction, like how it was for the rolling LT bond portfolio.---People should check in at least every decade or so to see if their aim is still reasonable.

On a historical note, I remember the index herd eventually fretting significantly during the 2008/2009 period. It wasn't just a 20-30% drop---something that the current crop of young FIRE people have never experienced---but down 60%+ for a while (it looks like a blip now, but being immersed in it, it felt like an eternity). There were emerging signs of doubt whether indexing was still a sustainable strategy and the usual arrogant racket of talking points about "how nobody can beat the market" and "just buy and hold because it always goes up in the long run" almost vanished... then came back with a vengeance after FINRA (or FASB, I forget, reminder: look it up eventually) allowed mark-to-model/magic in Mar/2009 causing an instant rebound. But yeah, half a year's worth of weekly pain was about what it took to rattle people's hands.

[7Wannabe5]

More on the inflow side always helps! In mine (I don't use simulation software, just the Open Office Excell knockoff) it (part time income) helps some, but in my case is sort of swamped by SS and my little retirement annuity. My plan pretty much requires at least one of those outside income sources to meet my goals (stay housed, fed, and warm; and have something to pass on) if I happen to live into my 80s.

Well, I have little clue whether the assumptions I made in my model are reasonable, but doesn't much matter because at my spending level I am being backstopped by the unlikelihood that minimal SS payments will be vanquished in an environment in which the U.S. equity market is still strong functioning. Otherwise, this will be me in 40 years.



Of course, some of my wants are being provided at the above $2M passive level of luxury, due to the fact that my marginal bride-price (original problem money was invented to solve) currently exceeds my personal spending level. However, this is a stupid boring easy solution, so I am more interested in the challenge of a systems theory level solution that involves some combination of potatoes as unit currency, crowd-funding, solar-robots, and dumpsters.

This is another thing I've been saying but which usually falls on deaf ears: Namely that in practical terms, FIRE doesn't mean not working anymore but simply changing one's vocation to principal money-manager insofar income is not derived from a pension or an annuity.

Right. I heard you say that. I saw where you wrote about publicly traded corporation buying back their own stock too. And, I read something about zero interest rate bonds being/representing a much bigger bubble than bitcoin.

[Fish]

FI can’t be the starting line for me any more. I had to let go of it (just like my dream of having a goomar on the side).

Well put Finn! I recently had a thought along a similar line, that for me FIRE is plan B. It's rather obvious given what else has been written. But this thought is firming up in my mind. Another way to think of this is FIRE is a solution in search of a problem. And if the "problem" is my mild annoyance at being tightly coupled to a full-time job that I actually enjoy (for now anyways), then it's an inappropriate solution at that.

There has been a perspective shift, that I am not accumulating for FI or early retirement, but rather padding our savings simply because there's no decent way to spend it(*). Because I expect to be working next year, and the year after that, ad infinitum (well hopefully not that long! ), this savings can be invested for the long run. Previously, under a personal constraint of "I need the option to FIRE whenever I feel like it," a greater emphasis was placed on capital preservation because the loss aversion was simply too great. The limits of our frugal-skill competence is right around 4% of current assets, and furthermore DW would consider it sacrifice to live at that level of consumption. So from the FIRE perspective, we didn't have enough assets but at the same time couldn't afford a loss to keep the option alive. It's good to be free of this.

(*) So we also spend it on others in the form of gifts to family and our community. But even that gets maxed out quickly. We've tried charity, and while the act of making the donation feels good, subsequently when the letters roll in asking for more, it just feels like we paid good money to get added to a junk mail list.

[BRUTE]

brute also likes to think about this on a spectrum. all humans will retire eventually.

plan Z is to retire by death.
plan Y is to retire at 65 or whenever SS kicks in.
...
plan A is to retire next year with a 95% savings rate.

it feels good to know that if everything works out, brute will have saved a bunch of money and enjoyed his work. and that if not everything works out, and brute has to quit working or just can't take it any more, he will have options.

if humans hate their job so much that not FIRE'ing isn't an option, that also seems painful. luckily, brute is currently enjoying his work, and probably will continue doing so for a few more years at least. humans in brute's industry (typing on computers) often retire relatively early (50-55 is pretty normal), and apparently there's also pretty severe ageism.

so it's definitely great to build options, even if they may not be exercised much earlier than a regular retiree.

[unemployable]

I do believe money, or at least ER, is a solved problem in this respect:

5% withdrawal rate is feasible if you can reduce expenses in a downturn and have a pool of non-crashed assets that can be lived off while waiting for stock markets to recover
4% withdrawal rate is fine, with emergency action unlikely, but good to have a plan for
3% is bulletproof
At or below 3%, you'll die with a lot of money, so either buy nicer things or decide what should happen with your stash once dead.

If you experience failure under these rules, it will probably be due to some sort of socio-econo-political upheaval that will make you glad you ER'd when you had the chance.