Life Traps Analysis from WSP

[Fish]

@trailblazer - Thanks for the detailed response! Yeah I suppose expectations should be along the lines of "this is some random guy's 'minimum viable product'" as opposed to the ERE book which cannibalized some of Jacob's best ideas and writing from the blog. I've decided that I'm willing to part with the $10 to support the WSP blog (not that they need it, but as a token that I found their ideas of value), though they won't get it until I'm ready to read another 160 pages of their writing.

I have the personal impression that too many people in the fire space focus too much on expenses.
The return on investment would be significantly greater if they tried to earn more.
[...]
So I guess what I'm trying to say is that what I like about WSP is the renewed focus on the "let's kick some ass" part of life

Agreed. Sometimes I find myself really going out of my way to be frugal, e.g. to avoid driving someplace, eating out, buying something new, etc. Now a certain amount of this is invigorating and makes life interesting, but there are certainly situations where I know the frugal solution is not really appropriate/efficient but I still pursue it anyway out of habit or on principle. No need to always do things the hard way. If I can save some energy by taking the easy way out and redirect it to *value generation* then that seems like an intelligent solution to me.

[7Wannabe5]

they say that their system is for humans basically right out of college, and the only jobs worth working are Wall Street, Sales, and Silicon Valley. FIRE by 35-40. so it would presumably not apply to a 53 year old human female.

Right, but is this based on assumption that extreme maximization of income is only possible for young males? I determined that the only way I can keep my expenses below 25% of my income from part-time substitute teaching and dregs of my former rare book business is to allow myself to be passed off like a new baby at a family reunion from the household of one 90%+er old (over 50 years) man to another OR attempt to live in an ill-equipped 1990s conversion van. Thus, I am currently engaged in a multi-certificate Data Science course of study while spending the summer camped out with a former frat brother of my BF who is leaving for the Middle East in two weeks. Theoretically, I will help him with his gardening in exchange for free rent. He is the director of IT for a large company, and my DD27 is now the most junior headhunter for an esteemed high tech recruiting agency, so maybe it will work out that I will end up with a new career. Anyways, it will be good exercise for my flabby brain. The yacht guy also invited me to go sailing with him, so that is my Number 2 back-up plan, and staying with my aging, insane, affluently-pensioned mother would be #4.

[prognastat]

I think the main reason that most FIRE blogs focus on frugality over income growing, because the former is achievable to almost everyone in any situation. The latter isn't necessarily achievable and without the former you could end up making more, yet still spending it all.

Of course focusing on both at the same time is the optimal option if increasing your income is a viable option for you.

However, it simply isn't possible for the majority of people to make the 200k+ a year that seems to be a must for the WSP lifestyle. Outside the US it is probably even harder for most to achieve such an income.

Of course it also depends on your location, earning 100k in rural Mississippi is probably worth as much or more than making 200k in New York or Silicon Valley and their amounts seem heavily based on living in either of the latter two.

[Fish]

I think the main reason that most FIRE blogs focus on frugality over income growing, because the former is achievable to almost everyone in any situation.

For most people, achieving a 50% savings rate through frugality is a more plausible prospect than doubling income. Yes, there will be some that will think sacrifice and living out of an RV is the only way to do it, because they're only capable of copying someone else's lifestyle solution. But it is an actionable template even if they choose not to do it.

The path to doubling income is not copyable. How does someone go from being an average performer to the top dog at work? How to start a side income? The path is person-specific. Without any imagination or creativity the only solution is to get a 2nd job or to drive an uber on evenings and weekends. So I suspect that many don't try because it requires a higher level of skill than copying, and success isn't guaranteed.

However, it simply isn't possible for the majority of people to make the 200k+ a year that seems to be a must for the WSP lifestyle.

The more plausible route (but still doesn't work for everyone) is: 1) earn 100K (83+ percentile), 2) marry a spouse who also earns 100K, 3) leverage economies of scale to live a really nice lifestyle on half your combined income. Not as awesome as being a 200K single playboy/girl (96+ percentile), but still significantly better than the median experience. Or speaking of median, another solution is to be two median persons working together (~50K * 2), and spend it all faking it in your 20s and 30s.

I get your point though. The pie isn't big enough, and the compensation structure isn't such that everyone can do it. But I guess it should be possible to increase income by a tier (about 50%: from 50K --> 75K, 100K --> 150K, etc.) provided that one isn't already working hard to maximize income. More likely people are already being Pareto-efficient with their effort and labor (Gervais-Losers) and simply don't care enough to make the attempt.

Edited to add: I don't think it's all about spending money. Access to people is also important, e.g. if you're 200K then you're likelier to know someone who owns a yacht or private jet and the kind of optionality that results from the access simply can't be bought at a lower income level.

[Seppia]

Statistically, I would make the "totally unsupported by any number but still I think I'm right" claim that it's easier to make more than the median than it is to save 50% of net income.

What the people on this board do savings wise probably puts us in the 0.1% (of top savers), so being in the top 20-30% earners is "easier".

The claim that "anybody could do this" (= it's simple) doesn't necessarily translate in "anybody DOES that" (= it's easy).

After expenses have been cut to a certain point, I feel it's MUCH easier to go out and make $1000 more per year than it is to save $1000 more per year (yes I know the two options don't result in the same savings rate but you get my point)

[Sclass]

I think the main reason that most FIRE blogs focus on frugality over income growing, because the former is achievable to almost everyone in any situation.

For most people, achieving a 50% savings rate through frugality is a more plausible prospect than doubling income. ....
The path to doubling income is not copyable. How does someone go from being an average performer to the top dog at work?

I liked the WSP article. You’re right, it is just easier to save a dollar than earn a dollar. And you make another good point, it is really hard to double your salary. Think of it from a business owner’s view. An employee is a man hour of labor and represents an expense. So how could you justify paying double for the same man hour? The owner has just doubled his expenses which is a dumb thing to do. So my view is for most people it is very difficult to double salary if you’re selling the same product- you, unless you totally boondoggle your boss. I’ve seen that one on occasion. And that never lasts because a smart owner will eventually trim the fat.

If you really do stand out at work guess what...your owner has already bought your hour so you are giving him extra service unless you’re willing to look for the next highest bidder. You’re boss will be happy like a farmer who discovers one of his cows produces two buckets of milk instead of one and you won’t get double feed. What’s the point of a two bucket cow when it requires double feed? You can kind of short circuit owner profiteering if you get paid on commission like a salesman. But seriously, as an owner, I just love a good cow and I cannot help but milk it and hope it scares the other cows into producing more milk.

Is saving a dollar the same as making a dollar after taxes? Maybe an accountant can advise. It doesn’t seem so considering one may be saving a dollar that isn’t part of the cash flow. That is, how can you save yourself rich if you don’t make a dollar in the first place?

My personal discovery was the quickest way to double your income was to build another income stream independent of your billable hour. Invest money, build a business, sell something manufactured. Personal labor isn’t terribly scalable.

I guess you can get a new degree but that isn’t really selling the same man hour again.

We’ve discussed the saving vs. earning trade off in the past here. Face it, it’s hard to get out there and make somebody give you their money.

[prognastat]

@Fish
The pie size is indeed what I was referencing in that it is simply not possible for a large percentage of people to even achieve such an income. Even if suddenly everyone was as capable as one another and as hard working it would simply drive down the value of those jobs through competition and maybe more people would make more, but fewer would actually reach the goal.

As for marrying to achieve it together, well that is one of their other life traps...

@Seppia
WSP isn't advocating for being in the top 20-30% earners though(even this can be tough though). They are solidly advocating you should be achieving about the top 3-5% household income by yourself. This is simply not possible for most people. Even if the other 95% of people not currently earning that much were suddenly as capable and willing of earning such an income then the earning potential for those jobs would be lower.

Anyone can follow an easy set of guidelines guaranteed to lower their spending and it doesn't take high intelligence and drive to do so. Just having the drive is enough. Achieving a top income though you need both the capabilities and drive for.

@Sclass
Yeah the more you make the more a dollar spent is costing you as earning the same dollar costs more due to taxes. Another reason why saving a dollar is more effective than making an extra dollar in income(unless you are in a tax bracket where you are effectively not paying any taxes yet).

[7Wannabe5]

Based on my experience, either the accounting goes weird and/or it becomes exceedingly difficult to reduce expenses below approximately the level of 1 Jacob. When you substitute skills or barter resources at this level, it becomes difficult to determine if and where you are simply not declaring self-employment earnings.

Anyways, after reading the article on dating from WSP, I am feeling the urge to write a companion piece for females who might care to profit from obvious fall-out of adoption of such practices. It will take inspiration from theme of Trollope's "The Way We Live Now." and Taleb's advice regarding lease vs. buy of the 3 F's (anything you wish to fly, float or f*ck.) IOW, if irrational fear of purchase is combined with strong believe in money as preferred chip of trade, then profit quadrant would be overt marketing of lease terms at high price.

[2Birds1Stone]

WSP makes it pretty clear that their advice is not for the masses, and furthers this by explaining why Sales, Finance (revenue generation), SV (IPO exposure) are the only worthwhile endeavors for their readers.

The point Sclass makes is great, but that is why they state "If you are not the first handshake revenue generator, you're just playing musical chairs".

[enigmaT120]

My BF recently told me that he would find me somewhat more attractive if I made $80,000. Unfortunately, I must report that by just saying that he rendered himself somewhat less attractive to me.

...yet I don't remember reading yet about any of your lower net worth boyfriends?

[BRUTE]

they say that their system is for humans basically right out of college, and the only jobs worth working are Wall Street, Sales, and Silicon Valley. FIRE by 35-40. so it would presumably not apply to a 53 year old human female.

Right, but is this based on assumption that extreme maximization of income is only possible for young males?

young, yes. this is in the articles somewhere, but the argument is basically this: to get to the top earnings-wise, humans have to be in the top 1% or so of their craft. thus even if 7Wannabe5 starts learning a new skill now, and is an extremely quick learner, there will be humans who've been practicing that skill since they were 20 years old. thus, it's almost impossible to become the best at something that is very profitable without being young.

males, they don't say so explicitly, but the WSP blog is pretty obviously targeting human males.

[Jean]

The more you earn, the more you're working for wall street and the silicon valley, and the more you spend, the more people you have working for you. I don't wan't to work for anyone, and I don't wan't anyone to work for me. I really don't understand the point of what they advocate. For everyperson in the top %, there are nearly 99 person working hard mostly making the top % share bigger with little personal benefit.
Pursuing a career with the goal of being at the top is akin to trying to win the lottery, because you very likely don't know yourself enough to choose the right career early enough to get to the top. A lot of people work hard, but without luck, you can't make it to the top

[Randy]

Anyways, after reading the article on dating from WSP, I am feeling the urge to write a companion piece for females who might care to profit from obvious fall-out of adoption of such practice

Please do, I was wondering myself what such an article would look like. I wonder what the benefit is of targeting only the male audience? Probably just because they have greater numbers in the targeted careers on Wall Street/Silicon Valley? Part of the overall douche-bag persona?

Also, has anyone used the software they recommend, Personal Capital, and can comment on the differences between that and Mint?

[Seppia]

Wall Street, Silicon Valley and Sales (the three careers they advocate) are among the most gender skewed of all.
In Wall Street and Silicon Valley they are also VERY racially skewed.

So they basically write for their audience

[7Wannabe5]

...yet I don't remember reading yet about any of your lower net worth boyfriends?

It is not my fault that the 28 year old did not want to be my BF. Men who are old enough to consider me not too wrinkly to accompany them to social engagements generally do not choose to date any women unless they have adequate income.There are a few exceptions to this rule, but they would usually possess functioning in other realms, such as "play", that is superior to the average. Also, I do not drink or visit bars unless already accompanied by a male, except maybe once a year with my sisters.

young, yes. this is in the articles somewhere, but the argument is basically this: to get to the top earnings-wise, humans have to be in the top 1% or so of their craft. thus even if 7Wannabe5 starts learning a new skill now, and is an extremely quick learner, there will be humans who've been practicing that skill since they were 20 years old. thus, it's almost impossible to become the best at something that is very profitable without being young.

Yes, but there are the same number of years between 53 and 68 as there are between 23 and 38, and it is possible that I will experience an extreme burst of brain energy when my body finally runs out of estrogen and progesterone.

[classical_Liberal]

...

[jacob]

It would help to quantify the dollar-numbers that we've trying to double or cut in half when talking about whether something is easy or perhaps more accurately: simple. In the ERE book I remarked that focusing on 1/2x spending is easier than 2x income in the $4,000-$400,000 range. Those numbers did not have any detailed research behind them other than covering and rounding to the nearest two-orders of magnitude. Kinda like saying that human adults weigh in the range of 10-1,000kg.

It would also help to consider whether one's vocation allows such 2x-moves or whether there are salary glass-ceilings you can't work your way through.

For example, you can not 2x a grad-student stipend even if you work 100 hr weeks. Ditto the rest of the academic research ladder. You simply get what you get. There's no negotiation (except near the top levels that you will reach no time sooner than when you're 50+) and there's no skipping ahead. Ditto military careers or anything where salary-decisions are made several levels away from the position you're interviewing for. This ain't web-design or SQL hacking

Therefore in some vocations you have to switch vocation to unlock the 2x path.

Put it another way, the ability to work long hours is a required but not a sufficient condition for making good money.

[Fish]

One of the common refrains in WSP is that one cannot be both smart and hardworking... just one or the other. In the WSP plan, working 70+ hour weeks is not the endgame... it is all about developing skills that will transfer to "careers" (jobs which pay for performance) and starting businesses (passive income streams). So if you have those opportunities, absolutely go for them. In the meantime, hardworking is the default... but an exit strategy is needed. Until you have the skills to generate scalable income, work a lot and get paid to learn. There are many strategic benefits to the long hours: learn faster, more income, fewer opportunities to spend money on nonessentials due to lack of free time. Then when you are ready you cut back at work and redirect that effort to more productive endeavors.

Very few people have the drive to pull this off. It’s FI in a decade, but with 70 hour weeks for much of it. It recalls this quote from the site:

Going into medicine for money is like marrying a woman because she has large breasts.

If you truly want to do it then go for it!

Similarly, I think it would be nuts to follow the WSP plan for the money alone. There has to be something else, like a desire to be the very best that one can be.

[classical_Liberal]

...

[prognastat]

I've not been a huge fan of what I have read from WSP. There is a reason I hang out in ERE. However, I wholehearted disagree with the views expressed in this thread that it's more difficult to double earnings than halve spending. It's a Wheaton level issue, using a different scale. Following the advice of working 80+ hrs a week, almost any person (in the US at least) can earn a top 10% income. Obviously, they must have the ability to remain that dedicated as a prerequisite. Skill required to succeed at job develops quickly at those time commitment levels, even if the required skill is BS politics or selling consumer trinkets to the masses.

Personally, it is an ethical issue. Do I want to spend 80 hours a week doing something which contributes negatively to society/fellow humans? And a personal choice, do I want to spend 80+ hours a week doing any one thing? No and no. If I did, earning 200K is just as easy as only spending 12K. It's simply changes in behavior.

Even if people managed to double their income, for most households doubling there income would lead to about 100k a year or less. Nowhere close to 200k.

Also having the intellect and drive to perform 80+ hours a week in a high stress and paying occupation is something most people don't possess.