Damn it Feels Good to be a Gangsta

Where are you and where are you going?
classical_Liberal
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Joined: Sun Mar 20, 2016 6:05 am

Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

That's sounds like a really fun set up. It'll be interesting to see how you so living apart from your GF. I know the issue has been weighing on you for awhile. I hope you figure out a way to get the best of both worlds.

mooretrees
Posts: 458
Joined: Sun Jan 27, 2019 1:21 pm

Re: Damn it Feels Good to be a Gangsta

Post by mooretrees »

Hope the move has gone well. I want to push you to write a long promised post about taxes you've threatened to do in the past. As someone really wanting semi-ERE I hope to hear some interesting ideas. I've read and reread your journal as I move towards (hopefully) part time work in the near future.

Also, no updates on the juicy details in the polyamory thread. I love reading that thread! Nudge, nudge.....

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Taxes, Health Insurance and Social Security in a Semi-ERE Framework


I wrote this as one post but it is fucking long so I broke it into 3 parts that I'm going to post at the same time. @mooretrees thanks for the nudge to finally write this, I hope it's not too basic to help you!

What follows is a tips and tricks level method that I developed to pay zero federal income taxes and get very cheap or free health insurance through the Affordable Care Act. I also discuss Social Security and it's potential benefits for those interested in semi-ERE. The exact method described will only be applicable for citizens of the United States, but I believe several countries offer similar opportunities. I am not a tax professional and I developed this strategy by reading several blog posts and double checking the information on the IRS website. If anyone reading this is a tax professional please PM me or comment with anything you think would be a useful addition or any mistakes I've made.

For all sections, portions describing the actual methods are in bold, so you don't have to read the rest if you just want the tricks.

Part I: Taxes

This method uses retirement accounts heavily. While this may present a problem for a young person hoping to retire in 5-7 years it is less of a problem for a semi-EREer who will work for many additional years. There are several methods for prematurely removing funds from retirement accounts. MadFIentist outlines several of them here. It's also possible to borrow up to $50,000 from your own retirement account to buy property. Details here.

For the extremely low income earner there are also tax credits available. Earning 1-2 Jacobs puts one close to or below the federal poverty level. I realize this is ethically uncomfortable for some people, but there are several tax credits and assistance programs for people with this income. I have not extensively researched these programs/ credits, but if your income is this low, they are worth looking into.
The first topic I'll cover in this post is taxes. I was pleasantly surprised to learn that the tax code is extremely biased towards the semi-EREer. The government wants you to earn some money, just not that much. 

Let's start with no retirement account "tricks." The 2019 standard deduction and progressive tax bracket system are biased towards lower income earners. For my examples I'll be using a single person and the numbers for the 2019 tax year. The calculations for a married couple should be available from the links provided. In most cases the numbers can simply be doubled for a married couple, but this is not always true.

The standard deduction for 2019 is $12,200. This is the amount an individual can earn tax free. The simplest method to pay no taxes is simply to earn only $12,200, an amount that can be earned at minimum wage working less than 40 hours per week. Note that at 1 JAFI ($8,631) of expenditures, this still implies an ~29% savings rate.

A quick example: Assume an aspiring EREer can earn between $51,675 and $155,025 depending on how much they work. If they earn $51,675 they pay [12200*0+9700*0.1+(51675-12200-9700)*0.12] $4,543. If they earn $155,025 (3x as much) they pay [12200*0+9700*0.1+(39475-9700)*0.12+(84200-39475)*0.22+(155025-84200)*0.24] $31,380.50. It will take the low income earner 3x as long to earn the same amount, but they will pay $17,751.50 less taxes on the same amount of income earned.

The following is a method that I use to pay zero federal income taxes. This method heavily utilizes retirement accounts. I'm going to describe how the method works for W2 as well as 1099 employees (will also work for sole proprietors). There are several methods for the self-employed, but I will describe the one I use, which I *believe* allows for maximum earnings without being taxed. Income which is placed in a 401k, traditional IRA and HSA*** is not taxed. A W2 employee can contribute $19,000 in a 401k, $6,000 in an IRA and $3,500 to an HSA for a combined total of $28,500 of tax free savings (sourcesource). If you spend at or below the standard deduction of $12,200, you will pay no taxes on up to $40,700 of income. 

***In order to contribute to an HSA a high deductible healthcare plan is required. High deductible plans usually have the lowest premiums so they will work in conjunction with the healthcare premium reduction tactics described in part II

Contributing to an IRA will trigger the savers credit. If AGI* is kept under $19,500 and at least $2,000 is contributed to an IRA, the saver will receive a credit of $1,000. Assuming taxable income does not exceed AGI (impossible under relatively normal circumstances) then tax owed would be ($19,500-$12,200)*0.1-$1,000= -$370. Sadly the credit is not refundable, so the government won't actually pay that $370. This means a W2 employee can earn $48,000 without paying taxes. Since income in addition to $19,500 must be saved in a retirement account
you must either spend less than $19,500 a year to work or spend out of savings (which will convert "good" non-retirement account money to "bad" retirement account money). Note that any amount up to $19,500 not spent can be saved outside of retirement accounts or placed into a roth IRA** (which will not reduce taxable income, but can be withdrawn at retirement age without taxes on the income growth). 

*Important note for those who don't know, putting money into retirement accounts (except Roth accounts) reduces AGI.
**In order for the Roth IRA to make sense in place of a traditional IRA you need to earn at least $6,000 less than the income limits listed.

For a 1099 laborer, a greater contribution can be made to 401k accounts. The highest contribution level is a solo 401k (mine is with Vanguard). Other options are an SEP IRA or a simple IRA. You can contribute $19,000 plus 20% of gross earnings (up to $56,000 total) for a solo 401k. The calculation of how much it's possible to earn without paying taxes is tricky. Increases in gross income raise AGI, but they also raise the amount that can be contributed to the 401k as well as the tax deductable portion of SS (which both reduce AGI). If you have no idea what I'm talking about, that's fine. Based on my calculations you can earn $65,811 as a self-employed person and still not pay any income taxes. This calculation assumes you max out both a traditional IRA and an HSA. I would definitely double check that number if you are planning on using this as a guide for how much to earn without paying taxes.

The self-employed can access 401ks without needing an employer to offer them benefits and also have more of a variety of funds to choose from. The downside is paying more in self-employment tax (which replaces payroll tax for non-W2 employees).

The $19,500 AGI limit is important because it is a tax "cliff." If you go over that amount by a dollar accidently you will end up paying several hundred dollars more in taxes (I like to think of this as a game though, so, sometimes you fuck up and lose if you aren't careful. It's just a few hundred dollars that you would've paid anyway, it's not like you die). It's also important to remember that SS (1/2 of self-employment tax) is not deductible and must be included in your $19,500 spending budget. State taxes are only deductible if you itemize (You can use the method described to eliminate state taxes too, it's different from state to state though. I usually end up owning a few hundred dollars).

I want to make one thing clear about the AGI limit. Spending more than $19,500 will not cause your AGI to exceed $19,500. The issue you are trying to avoid is running out of money to fund your retirement accounts to reduce your income below $19,500. The government does allow you to contribute to retirement accounts in the previous year up until April 15th of the following year, so you can use income from the first part of the next year to reduce the previous years income (this just kicks the can though and eventually you'll need a year with super low spending to keep paying no taxes).

*QBI*: The tax reform that started in 2018 added the qualified business income deduction. 20% of business income is deductible from income. It's a bit difficult to find information on this deduction since it's still pretty new. If you stay below $19,500 AGI and use the method above, your federal income taxes will be $0 and you won't have to think about QBI. I *believe* QBI is reduced by retirement account contributions. As far as I can tell QBI will not increase the amount you can earn while paying $0 taxes, but I'd still like to include a section about how QBI will affect taxes for those who can't keep their AGI below $19,500, so PM me or comment if you've got info and would like to help me out.

Business deductions: Anyone with income reported on Schedule C can take business deductions. Personally, I think this is a great reason to turn a hobby into a business. Earned a few thousand dollars too much? Maybe this is the year to buy that new gear and deduct it (not the most ERE solution though). Deductions for business expenses are also the only way to reduce self-employment tax. Make sure your business is actually operating as a business, otherwise the IRS may try to classify it as "hobby income," which will make it so you can't deduct expenses.


Also, remember that business deductions will reduce your gross earnings which will reduce the amount you can contribute to a solo 401k.
That wraps up all of the tax schemes I've come up with. Hopefully this was helpful to some people, I've seen all of this information discussed on this forum before, but never with this much detail. Regardless of method used, having low expenditures and low to moderate income will generally allow one to pay less overall taxes throughout their lifetime than having high income and high expenditures.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Part II: Health Insurance and the ACA

The Affordable Care Act tied the price of health insurance to income. If you receive health insurance through the ACA marketplace you are eligible to receive a healthcare subsidy if you earn under a certain income. Conveniently many of the tricks described above will also make you eligible for a larger subsidy. The following method is a method I have used to drastically reduce or eliminate entirely health insurance premium costs. Note that I am young, have no underlying conditions, am healthy and the only active healthcare service I use is STI testing. I can also cover the deductible for any year because of my ERE savings.

The affordable care act calculates income as Modified Adjusted Gross Income (MAGI). To calculate MAGI for the ACA, start with AGI and add tax-exempt foreign income, tax-exempt SS benefits, tax-exempt interest.

Federal subsidies are paid to those whose MAGI is within 400% of the federal poverty line (FPL). In 2019 for a single individual this was $12,490. The maximum amount that a household pays is capped at a certain percentage of income. The percentage of income a household is required to pay rises as their income rises.

The second cheapest silver plan is used as a benchmark for the subsidy. The difference between the premium of the second cheapest silver plan and the dollar amount of your household requirement (based on the income cap) is your subsidy. Note that it does not matter what plan you actually chose. The only portion of the equation which you have any control over is MAGI.

Here's an article with numerical examples that explains the process. I couldn't find the numbers for 2019 so I can't run an example, but if anyone knows a good resource which shows the income caps and second cheapest silver plans by state, I'll share the link and edit to run a numerical example. I found it difficult to understand how the subsidy is calculated without looking at the numerical example given in the article.

The subsidy is maximized at 133% of the FPL or $16,611.70 for 2019. In practice, getting your AGI below $19,500 will come close to maximizing the subsidy. 

Be careful, if your MAGI falls below 133% of the FPL in a state that accepted the medicaid expansion and (more critically) below 100% in a state that did not, you will not be eligible for marketplace insurance.


I can't guarantee that this will eliminate all premium costs, but I've never ended up paying more than $100/ month for health insurance and many years received free health insurance through this method. I am young and in good health with a high savings, so I always get the cheapest plan. Regardless of the healthcare plan you need to purchase, this method will significantly reduce premiums.

Note that in order to qualify for the marketplace you do need to have some income (though I believe you are eligible for medicaid if you don't have any income). As I said at the top, the federal government really likes you to have some earned income for the year.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Part III: Social Security and semi-ERE

The final thing I'd like to discuss is Social Security (SS). Old age retirement is a concern for many EREers. It's difficult to know how much is "enough" and what the investment landscape will look like 30 years from now. It's difficult to anticipate your wants and needs 30 years in the future.

No one knows if SS will exist in 30-40 years or what it will look like. There are certainly funding problems. In the mid-90s, both of my parents told me independently that SS would not exist when they retired. Now they are both collecting and somewhat dependent on SS.

I'm certainly not counting on SS to be around when I retire or to last through my entire retirement. However, ignoring it completely is unwise. One of the convenient things about working PT or intermittently throughout your working years is being a lot closer to collecting SS when one is making decisions about it. I still think it's worth knowing how SS payments operate currently, because any new system will likely incorporate pieces of the old.

To collect SS in the U.S. you need to work for 10 years. Years of work is determined by credits. Currently a working credit is earned when you earn $1,410 of earned income. Up to 4 credits can be earned per year and 40 credits total are needed.

Once you qualify for SS, future payment level is determined from past earnings. To determine the monthly payment amount the 35 highest income years (indexed for inflation) will be added together and divided by the numbers of months in 35 years (420). The result of this calculation is called the Average Indexed Monthly Earnings (AIME). 

Payment amount is calculated from AIME and "bend points." The bend points are also indexed so they change every year. For 2019 the bend points are $926 and $5,583 (these are monthly amounts). You'll receive 90% of the benefit below $926 (max of $833.40), 32% of the amount below $5,583 (max of $1786.56) and 15% for any amount over $5,583.

The other factor affecting payment amount is retirement age. Depending on what year you were born, you will be assigned a full retirement age (FRA). Benefits can be collected starting at age 62 (which will be prior to your FRA). Benefits are reduced by 5/9 of 1% for every month they are collected prior to FRA for 36 months and by 5/12 of 1% for any additional months. Waiting to collect benefits will increase the payment amount through age 70 (which will be after your FRA). Monthly payments will be increased by 2/3 of 1% for every additional month you wait after your FRA. To be clear, you will never be paid for the months you don't collect benefits, but the reduction (increase) in monthly payment is permanent.


So..... who cares? For me, at age 33, there are 3 takeaways: 

First, unless you have an ethical reason for not wanting to collect SS, it's probably a good idea to make sure you have 40 SS credits. For someone who started extreme ERE at the very beginning of their working career and retired as quickly as possible, this would necessitate a few more years of working extremely part time. 

The second is that SS is biased towards low-income earners. This is great news for low to moderate income earners with low expenses. If you make $11,112 (in 2019 dollars) per year, you will receive $10,000.80 per year after retirement. Under current rules, someone with $10,000/ year in expenditures who plans to save 35x expenses can also receive 100% of their expenditures from the federal government after retirement.

If you remain in the workforce in some capacity you will have a better idea when to collect SS benefits. Saved too much? Retire earlier and take more benefits. Enjoyed too much time off in your late 40s and think you might be a little short? Wait a few years and take a late retirement.

In general, I think the concept of "enough" really helps with this last part. I've been trying to help my mother figure out when to retire, but she has no concept of enough or of the lifestyle tradeoffs between working and not working. Just having an understanding of these two things makes the decision much clearer.

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

Good wrap-up. I make use of most of these strategies myself. One additional note would be that there doesn’t seem to be much or any penalty for optimistically estimating your income for the year over Medicaid level, and dropping below Medicaid level potentially adds all sorts of complications.

I have even considered the possibility of applying for SNAP benefits just so I could use double credits at local farmers markets, but I would have to document payment of rent to my BF in order to qualify as separate household. OTOH, I did not have this problem when I was residing with my wealthy “ex” while my kids were still in college collecting financial aid. For that federal purpose, as well as income tax calculation, I was head of my own household. It’s just at the state administered level that live-in arrangements are considered.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

Great posts! You saved me from writing out a medical insurance post I've been dreading

I'll second what @7WB5 stated. Playing the MAGI game with ACA, it's better to be slightly over income than under. Once below your state's threshold (see J+G posts) you are in Medicaid-land. Although it's great insurance, the rules vary greatly from state to state and many require repayment upon death. DO NOT GO into the medicaid rabbit hole until you know all of your state's rules beforehand. They will even do things like put liens on your house, ect.

______________

Another option for healthcare are Health Shares. There are several reasons these may appeal to an semi ERE'er and several reasons people may not like them.

If you don't want to play the MAGI game, year after year, healthshares are great. You pay out of pocket for the premium and get to choose your risk exposure. No government, no insurance companies. Your premiums go directly to pay for other people who have hospital bills.

They pay out based on "incidents", and do not offer much coverage for preexisting or chronic diseases. This is how the premiums are kept low! A semi EREer who is more afraid of an accident, or sudden onset of cancer will have good coverage here. Someone who has lifestlye disease such as Diabetes 2 or heart failure and requires chronic medical management will fair poorly in a healthshare. Younger people who avoid lifestyle diseases should consider this option.

Traveling in semi-ERE? Healthshares will not ever force you to pay more for out of network care, there is no network. You are encouraged to "shop around" if that is a possibility. They will even pay out foreign health bills, although outside the US it's pretty hard to rack up huge medical bills. This also means no "balance billing", which is a HUGE risk you take when dealing with ACA plans. Even in-network hospitals can balance bill for services, depending on how they contract their services.

Most health shares are religious based. This may be a huge turnoff for some anti-religious folks. As a result they will often have caveats that they will not pay for things against the healthshares religious viewpoints. Abortions, health problems directly related to drug or alcohol abuse, etc are not going to be covered.

If someone opts for a healthshare, and later develops chronic illness, or some other issues, it is possible to change to an ACA policy at anytime under current law as long as you have a "qualifying event". This basically means you can always get ACA coverage as backup if you can manufacture one of those events, which should be pretty easy for an adaptable semi-EREer.

_______

A few other things regarding social security. I used to have an aversion to considering this in my "old age" retirement planning. The problem is that the benefit is so huge (as J+G points out), that it can literally fund an entire retirement for anyone near the 1-2 JAFI threshold.

Given that, it's important to consider that SS is currently, legitimately, projected to be able to fund about 3/4ths of its current payout through the remainder of the century. So even with no changes, 75% can still fund an entire old age retirement for people at ERE spending levels. Like J+G's anecdote of his parents, MOST traditional retirees are extremely dependant on this income. Which means if it disappears literally half or more of all seniors end up living on the street. I do not see our society (US) letting that happen. My current belief here is that if SS disappears we will have more to be concerned about than SS, because the events leading up to it's complete failure will likely mean the end of Western civilization as we know it. I say all of this because it's important to analyze risk factors.

If one eventually accepts that, at least some of SS will be there. It opens up so many options in planning for the second stage of ERE. Including the ability to choose when to take the benefit (per J+G's post). It can be used as a sequence of return risk adjustment, used to offset US medical costs as we age, etc. When factored into historical simulations the addition of even 50% of my SS raises my SWR by a full percentage point.

Anyway, thanks again J+G for such a great informative series of posts!.

mooretrees
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Re: Damn it Feels Good to be a Gangsta

Post by mooretrees »

Thanks for writing there G+J! I'm doing some of this stuff, but hope to do more when I drop to part time. Really glad to have this as a resource to check back into. Thanks!

2Birds1Stone
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Re: Damn it Feels Good to be a Gangsta

Post by 2Birds1Stone »

Good stuff man. One thing to add re: the Medicaid cliff for income.

One can always inflate income in a given year by doing a Roth conversion or realizing some capital gainz (so long as either is an option based on your investment vehicles).

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

You can also take fewer marginally allowable deductions to inflate micro-business income. Just be careful not to delude yourself with complicated bookkeeping. Also, when you get to the point where you're spending 50 hours on paperwork to avoid $200 in taxes, you may want to chill on this tactic.

plantingtheseed
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Re: Damn it Feels Good to be a Gangsta

Post by plantingtheseed »

When I'm 65 - (SEE: 35m12s - 40m30s)
https://www.pbs.org/video/dptv-document ... m-65-full/
Last edited by plantingtheseed on Thu Feb 18, 2021 9:40 am, edited 1 time in total.

Laura Ingalls
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Re: Damn it Feels Good to be a Gangsta

Post by Laura Ingalls »

I really should write the married straight people with kids ERE semi-retirement equivalent to your post. The dance of FAFSA, EITC, and ACA/Medicaid. Also the pros and cons of no income state vs an expansion state with a regressive tax code unkind to long term capital gains.

My only real advice is that in most expansion states offer dental as part of Medicaid. No subsidies exist for dental anywhere else in ACA. I have lots of gratitude to my local dentist that is chill and skilled and takes a Medicaid ;)

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

@Laura Ingalls: I think that would be great and help a lot of people here. If you're interested in posting it here you could do a "guest post."

@everyone: Thanks for the responses! Thanks especially to everyone who added information.

plantingtheseed
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Re: Damn it Feels Good to be a Gangsta

Post by plantingtheseed »

Great journal! :D
Last edited by plantingtheseed on Thu Feb 18, 2021 9:41 am, edited 1 time in total.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

QuaranRetired: Accidental Early Retirement in the Time of Corona

I've been on unemployment since mid-March, which has created a natural personal experiment at being early retired. I'm not sure I like what I've found.

I don't want to sound insensitive to the massive amounts of death and suffering that are happening, but for me personally, the pandemic provided an interesting natural experiment by eliminating all work and social obligations. I was accidentally very well prepared for the pandemic... stacks of cashish, tons of personal projects, a semi-introverted personality type. I was even able to secure a second place to live in a small trailer on a friend's urban garden.

At first I was very productive, but as the pandemic has worn on, I've become more scattered and gotten less done. I reaffirmed my belief that having some structured work for others is important to my personal well being. I am not a great director or administrator of my own personal projects. Having some time constraints as well as accomplishing shared goals with others is very helpful to my own productivity.

I've realized that I am much less introverted than I thought. I only need one to two nights a week by myself. Most of the projects I work on are solo projects, but I only enjoy doing two to four hours of solitary mental (including musical) work a day, with one to two days a week off. I recently spent ten days in the Smoky Mountains with friends, reconfirming that spending a lot of time around people without the ability to get alone time is exhausting to me. However, the lack of social interaction due to quarantine has shown me that I need a lot of time socializing with friends to recharge as well. I also need to work on more collaborative projects, while still doing some solo work.

Having some time to be fully retired has given me time to introspect. I don't have the "freedom-to" question answered to a satisfactory level. I'm having difficulty developing a system that integrates structured work for others, personal projects, "maintenance" and social time into a system that works for me. YOU GUYS, A LOT OF TROUBLE. IT'S FUCKING HARD OUT HERE FOR A PIMP. Ideally these parts all fit together in a synergetic way, but I may need to develop them each on their own and give them their own space first.

fingeek
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Re: Damn it Feels Good to be a Gangsta

Post by fingeek »

I found exactly the same on my "test year off" (which I ended early at 9 months) - I need some external structure, as I don't have the discipline (yet) to create my own structure for long periods of time. Secondly, I need social interaction even though I thought I was fairly introvert.

For me, ultimately, I realised I didn't have an answer to "what am I retiring TO?"

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

Yup. BTDT. Once you eliminate external limiting factors, you are still stuck with internal limiting factors. OTOH, since I am now once again stuck with external limiting factors, the grass seems greener where you now are= where I was.

For young ENTP such as yourself, the internal limiting factor is most likely to be something like "attention/focus." For a middle-aged ENTP like me, the internal limiting factors were "attention/focus" and "vigor."

One thing to bear in mind is that ENTPs are most energized by new projects, so even though it seems counter-productive, granting yourself a very large space for new projects vs. committed projects might help. IOW, roughly analogous to Taleb's practice towards erudition which allows for picking up and tossing aside books in accordance with whim/druthers, but still totaling over 30 hours reading/study per week. Track "completion", but only as secondary metric.

It just occurred to me that this practice works for the same reason that the Coolidge Effect* works.

*New hen in the house increases rooster's level of attention towards old hens.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Slouching Towards Wheaton 6:

Due to the Coronavirus insights mentioned in my above post and a lot of time to think, I've had some new thoughts about crossing the moat from ERE Wheaton 5 to 6.

Moving from Wheaton 5 to 6 requires a shift in thinking. Getting to Wheaton 5 is about optimizing the money dimension. First expenses are examined and eliminated. Budgets are developed. A reduction in expenses is initially painful, but once it becomes a habit and the bank account starts growing, it becomes a fun game. Next expenses are optimized. Budgets are dropped and efficiency in spending becomes an obsession. All expenditures are tracked with the goal of maximum efficiency. Spending is minimized and savings are maximized. Life becomes a single variable optimization problem of increasing net worth as rapidly as possible.

I'm going to suggest something that I'm not sure our fearless leader or the other FIRE gods would agree with. If following the ERE Wheaton path to enlightenment, after spending some time at the optimization stage, it may be necessary to give up efficiency in spending in order to progress. This may result in lower savings or even *gasp* higher spending.

If the goal is to acquire freedom-from the obligation to do things that we don't want to and freedom-to do the things we do, then it's important to acknowledge that sometimes doing things costs money. Doing things takes time, time that isn't always spent remuneratively. Sometimes doing the thing you really want might compromise the perfect fortress of absolute fiscal safety.

Using the Wheaton table language, moving from Wheaton 5 to 6 requires moving from a mindset of optimization to a mindset of yields and flows. I'm not sure I grasp this completely, but how I understand it is, money is no longer viewed as the single most important resource, but simply a valuable resource that can be used to achieve desired ends. Food is necessary to live, but very few of us (even now) are keeping more than 6 months of food on hand and most of us operate at around a months worth of food. The food tap is turned on when we need it. Having too much food on hand is a burden because it requires storage and maintenance. We simply believe that the world will always provide us with food when we need it. This is even more true for water. Is it possible to treat money the same way? 

The beginning of this journey is about examining our relationship with money and the stuff/ experiences it can buy. To swallow the FI/ERE pill is to reject the basic cultural assumptions about money and economic success. This isn't an easy thing to do. In many ways, money is our culture's religion. I don't think the end of the journey for most people is hitting a specific net worth. The end is creating a way of being that integrates your value system and personal needs into how you live your life.

It's possible to reach Wheaton 5 well before hitting your "number." Once Wheaton 5 is achieved and integrated, I think it's important to reexamine goals. Once spending is optimized there aren't any major gains left from re-evaluating accounting methods or changing budget categories. Instead of viewing problems through a financial or economic lens, ask what would ideally be done with today (this week, this month, this year) and why that isn't happening. 

In the beginning servicing our addiction to stuff, our conflation of spending and happiness, our feelings of obligation to paid employment and our fiscal and personal debts are often why we don't own our days. Once the money relationship is reexamined, personal and fiscal debts are paid and we are sitting on multi-year-spending amounts of net worth and passive income streams, the fears start to become more abstract. What would you do if you could do anything you wanted? If money is a solved problem, what's holding you back? What's your dream job and your dream way of doing it? Would you do things drastically differently if you focused more on what you wanted and less on money as the only means to get there?

Jin+Guice
Posts: 787
Joined: Sat Jun 30, 2018 8:15 am

Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Sorry for the double post in one day y'all, I've been mentally sitting on these for awhile but somehow haven't had the time/ energy to write them. The writing juices are flowing today. I would really appreciate comments on both posts. Thanks y'all!


@fingeek: Freedom-to is a tough question. DAMN THE INTJs!!!!


@7w5: Wow, this is totally true for me. I constantly beat myself up for not finishing projects that I start and am more excited by new ones.

I think what you're really trying to say is that I need to abandon all projects to get more girlfriends. Then I need to get more additional girlfriends so that I pay xxxtra attention to the old girlfriends, so that I can finally complete the projects I started.

Jason

Re: Damn it Feels Good to be a Gangsta

Post by Jason »

Jin+Guice wrote:
Tue Aug 11, 2020 11:13 am
YOU GUYS, A LOT OF TROUBLE. IT'S FUCKING HARD OUT HERE FOR A PIMP.
I don't know if it's a true story but it's circulating in the intrawebs and truthful or not, it will surely be a part of the first wave of Covid based movies. A housewife in The Hamptons found 100K of cash hidden in her college freshman son's room. Her first thought, of course, was that it was drug money. It wasn't. Turns out he helped out an older lady with some errands and the errands quickly turned into going to the land down under. Referrals and recommendations came in and before you know it, this kid is smashing every surviving Mrs. Howell on the island. His mother demanded he return the money which turned into a twitter debate and is an endearing side story. My guess is he got some friends involved and was taking percentages off their sweaty backs. There is a world of lonely, isolated people, longing for companionship. Mask up, glove up and watch em pony up, cowboy.

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