The ERE Wheaton Scale

[jacob]

0) First have some sympathy for the very limited space that the table provides Columns can be replaced with other columns if you think there are more useful ones, but it's not possible to fit more words in there. Furthermore, it's not helpful to scatter level 8 concepts all other the place (e.g. spending efficiency) because it takes a level 6 or 7 to even begin to appreciate what spending efficiency means instead of vehemently disagreeing with the fact that some may be more efficient than others. This also means that the table is meant to be used by others ... not so much as a metric for experts to gauge noobs. The hope is that people read it ... and then use it to conclude that there are people around them who seem crazy or moronic in either direction but that this perception is entirely relative. In particular, after understanding the concept of relativity, some empathy might obtain for different levels.

1) Yes, the plan is to add more blogs, books, ... so tell me where to put them. Due to limited space, they better be acronyms though One reason I like the spending column with actual numbers is that it seems to conform nicely with the other columns so far AS FAR AS BLOGGERS GO.

2) The map is not a race. The map is not meant as a test to pass for a certificate or an achievement award either. It's not like "First you must get under 30k spending to pass level 4". The spending level is meant to be representative for the blogs. We are of course really looking at spending efficiency like this: http://forum.earlyretirementextreme.com ... 322#p99322 ... but that concept is hard to convey in a table with 3-5 words per field. The point is to gauge what people spend on something that on the outside looks like a more or less normal lifestyle, e.g. not under a bridge, not in a mansion.

3) People are not meant to conform to a single level. However, I have noticed that in reality, fields at the same levels OFTEN go together. One might say I arranged them according to my anecdotal biases. But it's not like you find your savings rate or your spending and then go read off your level. That would be totally misunderstanding the point. A full time worker in the food service industry living paycheck to paycheck together with 4 other room mates and barely making ends meat isn't automatically level 5 because they only make 20k/year. They're clearly level 1. Similarly, a doctor with a 200k salary isn't automatically level 5 because they put away 100k. They could be level 1.

4) Levels more than two degrees off aren't meant to be theoretically "incomprehensible" as much as they simply aren't practically considered relevant to onself. Compare goals at level 4 and 6. Lots of heated discussions between "4% because internet" and "3% because history". Less heated between the latter and "4% because Trinity". Or compare levels 4 and 5. Both have 4% SWR but they have them for different reasons.

On the "travel channel", higher levels might be dreams but they are seen as impractical ("what sell my house and car and just move to some other country? I don't think I could") vs ("why would I go backpacking when it's more interesting to go and live among the locals for an extended period?")

5) I also considered putting in savings and networth but then quickly ran into the problem of comparing people who just started vs people who had been saving for a few years. E.g. it would be nice to have a column with FU Money, 10x years of savings, ... 25x, 100x, ... but mostly that just measures how long someone has been saving.

[jacob]

I haven't read much of other pf blogs for almost half a decade now (getting old here), but here's my initial placement. I'll place blog according to what they mainly write/blog about and not where the blogger necessarily are themselves.

To me Ramsey talks mostly about getting out of debt, establishing an emergency fund, and investing in mutual funds for retirement. That puts him as a solid 1 in my book. I generally recommend his books to people whose financial/debt situation is a total wreck.

I actually have no idea about Suze Orman. Level 1 or 2?

From my own delightful interactions with the Boglehead forum many years ago, I get a distinct level 3 vibe. Reducing expenses is still seen mostly as a sacrifice in the loss sense. The focus is (or was?) also of accumulating millions rather than aiming for a SWR at a lower expense level. This is also where I'd put early-retirement.org

I'd put TSD and Dollar Stretcher at level 4. The main focus is on saving money by finding smarter solutions. DIY hacking, etc.

I don't know where to put Suffolk, Monevator, jlcollinsh, GoCurry...

[Tyler9000]

Well, it is the ERE Wheaton Scale, so really, those of us who are sort of ERE-Boglehead hybrids don't map cleanly, and the pure archetype Boglehead is on a scale that is nearly orthogonal to ERE, and in some cases probably totally disjoint.

That's true. One could easily map attitudes towards spending and investing on two separate axes. A blog like MMM would rate very highly on the spending side but lower on the investing sophistication (I don't mean that as a slight, but merely an observation that the predominant advice is to simply buy a single index fund). A forum like BH would rate pretty high on the investing side but probably quite low on the frugality. Where they rank in the overall personal finance space would come down to which quadrant they lean towards.

The thing about ERE is that it's not simply about spending level or investing sophistication. While it seems to me that the typical ERE-er is pretty savvy in both, it tosses in a third orthogonal axis around independence from money systems altogether (that's where the systems thinking comes in). So in many ways it's off the financial chart, which is why many people even very good with money have a tough time relating.

But a 3-D matrix doesn't make for a nice linear reference. I like the concept, and also definitely think that referring people to resources in the appropriate zone (usually one level up from their own to avoid the illusion of mastery) is the best way to help people. I'm intuitively drawn to the behavioral measures, though, as if the goal is to help people self-evaluate I think the absolute numbers may trip a lot of people up and cause them to dismiss the exercise outright.

[Tyler9000]

@Jacob -- I agree with your Ramsey and Boglehead rankings. I'd put GoCurryCracker on the same level of MMM -- they have very similar approaches.

[BRUTE]

ok, brute's levels:

Paradigm: uuhh, 2, 3, 4 and 5, 7, a bit of 8? brute is unsure how these are mutually exclusive
Spending: 6 (household of 1)
SR: All over the place, currently Lvl1, in the past (and hopefully future) 5-6
Focus: 5
Goal: 5
Vacation: 7

judging the matrix, brute thinks that the paradigms aren't at all mutually exclusive, he's using most of them in different parts of his life.

it also seems that Vacation & Experiences is really just vacation, and seems too specific compared to some of the others, at least if it's the only concrete column.

maybe Vacation & Experiences should be split up. brute also missed cooking/fitness, topics that seem very highly represented on this forum, and could be described as experiences.

brute would like to see a Insourcing/Outsourcing column added, as well as Minimalism. for example, it seems that jacob is solving problems like chairs & beds by becoming a carpenter instead of throwing money at them. brute solves them by sitting on the floor and sleeping on a pad.

in brute's mind, in/outsourcing and minimalism are much more distinct parts of ERE than typical spending or retirement goal, which are common to other PF philosophies.

another thing that stood out to brute is, Levels have an inherent value system to humans, where higher is always better. jacob cannot expect humans to perceive all of them as equal, or not try to game the system. if this is the goal, fine. but if the goal is merely "humans who liked saving a lot of money on plane tickets might also be interested in [level + 1], brute would not present the whole roadmap at once, and also not call them levels with numbers.

[BRUTE]

another thought: one dimension that maybe doesn't even fit ERE well is Social Capital. brute knows quite a few humans (male and female) that have no significant assets to speak of, but live a lifestyle several levels above their "paygrade" by incurring and saving significant social capital. these humans live in fancy apartments in expensive cities and jet-set around the world, and dine out a lot, but basically only pay for the budget airline tickets.

maybe the only human on this forum who seems to make significant use of social capital is 7Wannabe5. maybe the average individual attracted by ERE is too autistic to make good use of it, like brute.

[oldbeyond]

As long as you don't get to carried away archetypes are a great way to make sense of the world, and I think the numbers chosen convey the types pretty well. Basically each column is an axis of increased efficiency, abundance, complexity, resilience and agency respectively. Since they're all related it's hard to envision someone being a level 1 in efficiency and a level 7 in resilience. A couple of levels apart is possible. Quite a few PP-adherents seem to be ~4 in efficiency but easily 6 in resilience. Some MMM:ers stumble upon an expat gig and manage a 75% savings rate etc. But that you're always going to get. Most people seem to stay within the paradigm.

[oldbeyond]

another thought: one dimension that maybe doesn't even fit ERE well is Social Capital. brute knows quite a few humans (male and female) that have no significant assets to speak of, but live a lifestyle several levels above their "paygrade" by incurring and saving significant social capital. these humans live in fancy apartments in expensive cities and jet-set around the world, and dine out a lot, but basically only pay for the budget airline tickets.

maybe the only human on this forum who seems to make significant use of social capital is 7Wannabe5. maybe the average individual attracted by ERE is too autistic to make good use of it, like brute.

Isn't that basically 6-8 in focus and partial #N/A on the savings rate as the flows consist of real goods and future promises thereof instead of money? Same strategy, different particulars.

[oldbeyond]

I don't interpret the vacation part as indicative of the tremendous importance of vacationing in ERE, but rather as an indicator of "involvement and skill in production of consumed goods". 1 is doing the one thing you can afford to do. 2-3 merely requires more complex "shopping". 4 requires some organizing and information gathering, 5 synergistic integration with the "work"-part of life, 6(BTW it should be BLM, right?) self-sufficiency in a barren environment while still creating value per 5(I assume that the travel blogging yields something, financial or otherwise), 7 a strategic realignment of one's whole reality to better integrate with whatever good(s) a change of scenery would provide and 8, well, 道可道，非常道.

[jacob]

I updated the typos.

[Ego]

This is my biggest concern with the chart. It's still too linear and IMO doesn't adequately represent how to scale PF/FIRE/ERE to a person's situation. I like the idea of having a chart where a person can find their own "You Are Here" but the fixed numbers still bug me a little and on both sides of the equation. I wish there was a better way to represent non-financial capital succinctly and how it can be used to subsidize a lifestyle. For instance, in that travel column our vacations would look very extravagant, but DH's work-related travel generates a ton of points/miles that allow us to travel frequently for free. When he retires, we'll adjust and probably convert our van into a camper. In both cases, we're at the same spending level but we've used different resources to 'pay' for vacations. I dunno. Maybe I'm just being too picky.

YMOYL (New Roadmap Foundation) solved this by presenting it as a web rather than a chart. That way a person can be on different levels for focus, savings rate, vacation, investor savvy.....

http://www.financialintegrity.org/index ... Nine_Steps

[jennypenny]

I like that, but is it enough? I feel like it should be a horizontal web with a pyramid a la Maslow on top, with ever-tightening webs all the way up.

^^ which only confirms that I'm not a visual person and should really stop reading this thread and making stupid suggestions

[jacob]

@Ego - I don't really see that [roadmap] as a web or even a map. For example, why do even numbers not connect to odd numbers and vice versa? What exactly is at the center? There's no information inherent in the connections.

It seems more like an artsy mandala kind of way to present their 9-step program which IIRC corresponds to chapters in the YMOYL book. In particular, it's not like a person is ever at one particular step at that program. Read the book and do the exercises and you're at step 9 ... now you all you gotta do is wait for the crossover point.

The Wheaton levels are more a measure of skill and relative perception between one's own at N and the one's immediately beyond (N+1 and N+2) and behind (N-1 and N-2). It naturally includes https://en.wikipedia.org/wiki/Curse_of_knowledge as well.

Think of how Wheaton levels could be applied to athleticism as well. The difference between a competitive swimmer and a beginner is not specifically that the former is faster. Speed is just was it most readily seen. The bigger difference lies in how to good swimmer also feels the water differently, breathes differently, is stronger, more efficient, etc. Similar for cycling. I could do a similar one for martial arts. The perception of what aikido is differs rather a lot between a white belt and a black belt. It's not just that the latter knows quantitatively more techniques. He thinks about techniques differently too, probably don't even quite think about them as techniques.

[7Wannabe5]

BRUTE said: maybe the only human on this forum who seems to make significant use of social capital is 7Wannabe5. maybe the average individual attracted by ERE is too autistic to make good use of it, like brute.

Eh, I am just more forth-righteously dismal in my accounting than most of my peers. I'd be generating a lot more paper or nailing down a lot more equity in that realm if I wasn't such a round-heeled soft-touch, and/or I cared about generating more paper or nailing down more equity. If morality(not a problem for me), sentiment (bit of a problem for me), physical repulsion (bit of a problem for me) and legalities (not very much of a problem for me) are cast aside, any reasonably attractive female in our affluent culture can gross $250/hr., or maybe $125 hr. if you consider transportation/marketing time and overhead costs. Obviously, this is an activity that can be adjusted to be as part-time or seasonal as desired, so if your living expenses = 1 Jacob then your work-week to cover would be something less than 1 hour. Problem solved! If it weren't for my unfortunate lifelong weaknesses in relationship to "puppy dog eyes" and "shoulder-to-hip ratio" AKA "the man-candy", I'd be soaking in a tub full of Franklins just like my idol Kash Doll.

Another tougher-than-me operator whose social capital operations I have analyzed, was my ex-husband's seriously-practical country-woman grandmother. She survived 5 husbands. One would die on her, and she'd go live with her parents or one of her children for a year or so, and then she'd just find another husband. To give you some idea of her personality, her 4th husband once ventured to voice a complaint about always being served soup for his lunch, and he never got soup again. My ex-mother-in-law isn't quite as practical-minded as her mother, but she is still dating at the age of 79.

Anyways, because surreal things can happen when you try to apply general systems theory to the realm of social relationships, I was trying to encourage my current default boyfriend to date other women, but he said he didn't like dating the other women because it was "like a part-time job" because they were so demanding. So, pretty clear indication that I am pricing myself below current market. Also, I am getting waaaay too many restaurant meals in trade. I like it better when they give me useful stuff like bike trailers or help me dig. In a way, I am just being kind accepting stuff-that-costs-money because that is mostly what they have because they are old.

In conclusion, I agree with oldbeyond that my odd functioning in this realm is pretty well in alignment with my odd functioning in other realms. I don't even know where I belong on the ERE chart because I don't even know what my net-worth is because all I have is a giant pile of rare books and a giant pile of wood-chips turning into potatoes.

[Ego]

The Wheaton levels are more a measure of skill and relative perception between one's own at N and the one's immediately beyond (N+1 and N+2) and behind (N-1 and N-2). It naturally includes https://en.wikipedia.org/wiki/Curse_of_knowledge as well.

The inherent problem with Wheaton is that any one person could be at different levels for each metric. I might be at a 7 in savings rate but a 4 in household spending and a 2 in retirement goal. The blog/resource that could potentially help me move from a 4 to a 5 in household spending may cause serious distress because of my 2 retirement goal.

[GandK]

@Ego

I don't see granular precision as necessary for this exercise. It would be nice if there were a rating system for each life facet that intersects with money; nicer still if there were an "app for that" which could spit out your lowest or most problematic area (not necessarily the same thing) and then say, "based on your personality type and goals, go read X to improve your situation." I could use such a thing myself.

But. This appears instead (per the OP) to be a first draft of a solution to a problem common to all of us: how to help those who profess to want financial change, when neither they nor we know where to begin, and when they are likely to be reticent or even misleading about their true financial situation. I think it makes the most sense therefore to ballpark what those people are likely to need based on outward indicators... things we can see for ourselves rather than on specifics that those people would have to tell us.

[Tyler9000]

So after thinking about it, here's my own quick mental model of the financial scale that largely drives how I personally recommend different resources for different people. Normally I'd recommend the resources of the next level up only after feeling confident that they've mastered those at their current level. It may not totally follow the Wheaton convention, so incorporate or ignore as you see fit:

0. Hand to mouth (just getting by)
Resources: Skills, education, helping hand

1. Got into debt. Need out.
Resources: Dave Ramsey, YNAB
- Note that it's possible to skip this level, but most people learn it the hard way (student loans, etc.)

2. On steady ground, but in need of basic money management skills
Resources: Suzy Orman (have you thought about retirement?), Betterment, Mutual/Lifestrategy funds, Fail Safe Investing (sound basic principles over extreme detail)

3. More is better (focus on career, grow your investments, enjoy your money)
Resources: Bogleheads, career guides, savings discussions, financial advisers (when required)

4. More isn’t all it’s cut out to be (burnout phase)
Resources: YMOYL, Work Less Live More (things that talk about balance more than money), basic SWR introduction

5. Less is better (focus on what’s important)
Resources: MMM, advanced SWR research, blogs like Brave New Life (wish he was still posting), downsizing ideas
- BTW, I've found that a lot of people today (including a few popular ER blogs) skip from step 2 to 5 while carrying the disillusionment associated with 4. But in the process they only have level 2 money management skills for nonexistent assets and are looking for easy answers. I like to encourage people to try Bogleheads, PortfolioCharts, etc. to expand their financial horizons, and I also try to give good career advice to help them find a happy career path rather than the first possible exit. The accumulation associated with Level 3 is still a necessary step even if you're smarter about it than most.

6. It’s not really all about money to begin with
Resources: ERE, Taleb
- Lots of people take the fast track to step 5 and stop there. But they intuitively understand their money-centric plan is fragile, which is why they fret about 4 vs 3 vs 2% SWRs, market valuations, politics, and any other reason they can think of to justify working OMY. ERE is the best resource I've found to date to help people think about antifragile systems applied to life to give them the skills and confidence to escape that cycle.

7. Living completely independent of the financial system
Resources: Skills, helping hand
- Note that that the levels are cyclical, and level 7 could also be considered a conscientious version of Level 0. Thus Jacob's common observation that ERE often has more in common with the working poor than the middle class.

(BTW, I feel like there might also be a missing level between 6 and 7 but can't quite put my finger on it. Probably because that's as far as I've personally experienced and don't know any better! Something about the transition back off the grid, or prototyping that lifestyle -- any suggestions?)

[Scott 2]

Using absolute dollar values is brittle, both over time and location. Why not use percent of median income?

[Riggerjack]

This seems an oversimplification, to the point of being ineffective.

Trying to tie all of ERE into one axis is simply always going to be problematic, as EVERYBODY here has different priorities.

I would break it out as a financial 1-10 scale, similar to any of the previous suggestions. And a skill scale, A-?

This would allow for the skills being a direct substitute for money, to help people easily see that it's not just about a savings rate. That this can work at the income levels of illinidave, or that of 7w5.

So levels would be expressed as 4f or 7c, depending on personal priority.

As long as I'm on the subject, I think savings rates of savings/expenses would really hammer away at the frugality side of the equation. An increase of savings from 40% to 50% is significant. By the same token, that is a change of 66% to 100% as expressed savings over expense. Just my $.02.

[black_son_of_gray]

I'm looking at Jacob's latest version, and I'm starting to think that there are actually two parallel tracks/progressions embedded within levels 1-8. (ignore the vacation column for this post, emphasize 'focus' and 'paradigm')

The first track is levels 1-5. I'd call this "Financial Independence". In particular it frames things in equations - it figures out the relevant equations, it solves for x, it finds local minima and maxima. Optimization is the natural peak of this framing.

The second track is level 1, then 6-8. I'd call this "ERE". Here the framing is not equations, but reactions. This world is in constant flux. There are reagents and products, reaction rates spitting out products (yields), and dynamic equilibria. Finding, cultivating, and maintaining a stable equilibrium is the natural peak of this framing.

Naturally, the two tracks intertwine, just as ERE and FI have inextricable links. But the vibe is different, as is the endgame. For FI, any given strategy should result in an optimum (at least in theory, life makes things messy). But for ERE, there are many stable equilibria and they evolve in time. You need to find one that works for you, but there are many solutions that can get you there.