John Greaney, forgotten pioneer of the FIRE movement

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Fish
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John Greaney, forgotten pioneer of the FIRE movement

Post by Fish »

This post is the result of my own research into the origins of the FIRE movement. I am writing it because the EarlyRetirementDude’s historical record of FIRE has a glaring gap in the 1996-2002 timeframe. Hopefully he will review the evidence and incorporate this new information into the history (and maybe credit me for the many hours of research that it took to uncover this?). Enjoy the read! -Fish

John Greaney is the best-kept secret in the history of early retirement. His retirement story is familiar. A former civil engineer, he retired at the age of 38 in 1994 by saving a huge chunk of his salary(Note 1) using “Millionaire Next Door” techniques, and growing it in the stock market. His post-retirement career was even more notable: he would go on to start the longest-running website on FIRE (still alive today after 20+ years) and its first significant internet community, which coined the acronym “FIRE”. All the evidence is in plain sight, but strangely, he is all but forgotten in the movement he helped bring about.

His website, Retire Early Home Page (REHP, retireearlyhomepage.com) looks like it belongs in a museum, with its Web 1.0 charms dating to its 1996 founding when it was hosted on Geocities. Just below the plain logo, an impossibility: his online magazine has published another regular update---in the year 2019, its 24th in existence. This place is no longer the center of the online FIRE universe as it once was, but Greaney doesn’t seem to mind.

Although he likes engineering, he doesn’t like working in engineering. He says that his motivation for early retirement was kindled just five minutes into a pointless three-hour business meeting at his first job. During his working career, Greaney resented his bosses’ demands for “face time,” the practice of showing up to the office for the sake of appearing productive. He maintained a policy of “3-for-1” time, where he goofed off at work for 3 hours for every 1 hour of uncompensated overtime he was required to work. While his colleagues were busy working evenings and weekends, Greaney would instead learn about investments and personal finance, laying the foundation for his early retirement.

The studies would continue even past retirement, leading him to start REHP as a means to share what he had learned with other early retirement hopefuls. The year he quit his job coincided with the publication of William Bengen’s pioneering work in safe withdrawal rates known as SAFEMAX. Greaney researched this subject and built a tool to allow his readers to backtest the viability of their portfolio for early retirement. This Excel spreadsheet would later be extended and improved upon by one of his readers, Bill Sholar (also known as “Dory36”) to become the well-known and indispensible FIREcalc program.

Needing a place for the growing REHP community to congregate, Greaney started the “Retire Early” discussion board at The Motley Fool’s website in May 1999. Posting as “intercst” (pronounced “inter-cost”), he acted as the discussion board’s leader and brought ideas and news items for the community to consider. The discussion board was popular, getting nearly 10,000 posts in its first year of operation and the rate continued to increase as more followers poured in from REHP and elsewhere. Some of the initial discussions are a product of the times (such as this news item asking the feasibility of a 8% inflation-adjusted withdrawal rate in 1999) while others are timeless, such as this thread questioning the meaning of being retired and other wondering what would happen if everyone pursued early retirement.

On January 19, 2001, a momentous occasion: the acronym “FIRE” was coined on the REHP discussion board. It caught on very quickly.

The Motley Fool started restricting discussion board access to paid members in 2002. While some members, including Greaney, were willing to pay for access, others were not which fractured the growing community. Early-retirement.org was started by Sholar in June 2002 as a free alternative to the paywalled TMF discussion boards. With this move, the FIRE community’s focal point very gradually migrated to early-retirement.org, where it remained until the explosion of early retirement blogs such as Early Retirement Extreme and Mr. Money Mustache. By the time the TMF paywall was rescinded in 2007, Greaney was out of the limelight and the REHP discussion board was a former shell of itself, having devolved into politics. But the FIRE movement, and the REHP, continue to live on.


Note 1: During his working career, Greaney saved 50% of his pre-tax income, which works out to a 70% after-tax savings rate since he was paying about 30% in taxes. He recognized early on that savings rate was the most important parameter for early retirement, publishing this result in an August 2000 retirement report entitled “Drive Your Financial Advisor's Porsche and Retire Before 40 -- The simple arithmetic of saving and investing.”

The Old Man
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by The Old Man »

https://www.newsweek.com/retiring-early ... ide-124127
Article about John Greaney from 2004.

Fish
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by Fish »

The reason I’m geeking over Greaney is 1) we finally know where FIRE (the term) came from, and 2) he conveniently bridges the FIRE chronology gap between the late 1980s-early 1990s FIRE gurus (Terhorst and YMOYL) and the early/mid-2000s where we have e-r.org, FIREcalc, and Nords. We can finally complete the narrative!

Before, all of those 2nd gen internet resources were appearing from nowhere and there was no continuity w/ the past except that YMOYL was cited as inspiration even though the state of the art for ER theory and tools (savings rate, SWR calculators, etc.) had advanced greatly since 1992. Based on my reading of the REHP boards 1999-2002, it also seemed there were more mentions of Terhorst than Robin-Dominguez, even with the out-of-print “Retire at 35” costing $100 on the secondary market.

plantingourpennies
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by plantingourpennies »

Very nice job Fish!
Fish wrote:
Sat Feb 02, 2019 11:02 am
On January 19, 2001, a momentous occasion: the acronym “FIRE” was coined on the REHP discussion board. It caught on very quickly.
Marking this on my calendar-from now on 1/19 shall be known as FIRE day.

EdithKeeler
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by EdithKeeler »

I'm pretty sure REHP is how I found my way over here to ERE.

BlueNote
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by BlueNote »

Thanks for pointing out REHP. That site is very 90's Web 1.0 (in the right way), right down to the lack of an RSS feed. I found that site a few years ago and totally forgot the guys name and site URL and couldn't find it again when I went looking.

BTW he has a review of the ERE book on his site.

tjh
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by tjh »

I too remember reading that website, likely early 2000s. I am going to read through updates this morning.

Redbird
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by Redbird »

25th anniversary update posted on Oct 1, 2019:

https://www.retireearlyhomepage.com/25t ... rsary.html

Smashter
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by Smashter »

@redbird thanks for sharing that update. Really interesting. Seeing that he found his expenses to be much lower than expected and that the 4% rule was too conservative for him, this post is even more fuel for the semi-ERE fire that is sweeping the boards.

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Seppia
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by Seppia »

Thanks for sharing Fish, I had missed the original post.
As usual, your contributions to the forum are very precious, I wish you posted more!*

*thats meant to be a compliment, not a complaint :)

jacob
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by jacob »

Not hard to see why the 4% rule has appeared to overshoot in the past 25 years.

https://www.multpl.com/inflation-adjusted-s-p-500

But bets are made ex ante and the entire point of the 4%-rule was to be conservative for any timeline. In that regard, it was not too conservative because the past 25 years have had one of the best performance streaks ever. Also, noting (see Dalio about 4/5 on the way down) that this would not have happened w/o significant central bank interference. The past 25 years could certainly have gone a different way.

slowtraveler
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by slowtraveler »

It seems he opened his eyes and realized he was in the 80% if cohorts where 4% isn't enough. We're often too conservative in this group so this is a helpful contribution to seeing the more likely situation.

@Jacob
4% includes dividends, that chart excludes dividends so they seem an inappropriate comparison. Also, about half of the last 25 years have had flat inflation-adjusted returns.

The trinity study defined 4% as the 93 or 96%, forget which, success rate for 30 years with a final value of 0%. Change the success to a final value of 100% of initial, inflation-adjusted principle and it drops the success rate to around 80%. Still good but 3-3.5% becomes the new <95% success rate withdrawal rate. When final value is 0%, the swr cannot be extrapolated. At 100%, it can be and thus, 4% is not prudent for this forum as we're retiring with spans of typically more than 30 years. But if we're in the lucky 80%, let's enjoy it if there's any additional joy to be garnered from life.

steveo73
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by steveo73 »

slowtraveler wrote:
Tue Oct 15, 2019 9:31 pm
At 100%, it can be and thus, 4% is not prudent for this forum as we're retiring with spans of typically more than 30 years. But if we're in the lucky 80%, let's enjoy it if there's any additional joy to be garnered from life.
The problem with this conclusion from the data is that the assumptions aren't being looked at. It's about blindly withdrawing 4% (or whatever) year on year with no reference to the current situation that you are in. Personally I find that highly unlikely. I'm shooting for a 5% WR (and potentially a little more than this) and retirement at 50 and I reckon I'm significantly safer than a lot of people who will be getting to 3%. The difference is that I have buffer in my expenses and other buffers available to me such as inheritance, being able to downsize my house and social security.

You can't have a WR discussion without taking into account your specific plan. The 4% rule (or whatever) is just a guideline. It's not a set in stone figure that means everything is good. You need to come up with a plan that works for you.

I think financial advisers look at WR's of like 6% but they are looking at people retiring in their 60's. That doesn't mean that they are wrong. A lot of people that make it to their 60's may also live another 30 years.

nomadscientist
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by nomadscientist »

It's an interesting history, but not at all true that mustache-twirling capitalists kept ordinary people out of the markets until index funds came along. Read fiction up to the 1930s and it's clear there was a significant established class of "people of independent means," not all of whom were rich. They were a stable class of financially independent "normal people" that had existed back to the days of early settlement in North America and into the mists of time in England. This class lived on government bonds or bank deposits/bank-issued bonds back when such instruments paid a real return*. It was largely but not entirely wiped out by the inflation and punitive taxation between about 1930 and 1990. Then the inflation settles down and US tax regime becomes more favourable to investors (very favourable to low capital investors with $0.x - 2m), and what a surprise, people "discover" financial independence for the "first time"...

*direct individual investment in the stock market is more a response to decline in social technology making people not trust intermediaries than improved financial technology. As ERN demonstrates a pension fund is a technically far superior solution than self-investment but people self-invest because they (rationally) believe a pension fund is likely to steal all their money. I also entirely agree with jacob that the index fund strategy is inherently risky. Just because all these low-sophistication, low political capital investors have decided it is a flawless strategy. Historically, they always get soaked somehow and just because it hasn't happened to indexers yet doesn't mean it can't.

benrickert
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by benrickert »

@nomadscientist Any suggestions on good fiction up until 1930s describing non-rich people of independent means?

sky
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by sky »

Here is one story, The L200 Millionaire:

https://www.getrichslowly.org/200-pound-millionaire/

benrickert
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by benrickert »

@sky
That £200 millionaire story was awesome. According to BoE, $200 (his income) in 1932 is £11,175 ($13,829) today. £147 in 1932 is £8,213 ($10,165) today. Non boat expenditures of £100 in 1932 is £5588 (£6,915) today. Quite close to one Jacob.

Hristo Botev
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Re: John Greaney, forgotten pioneer of the FIRE movement

Post by Hristo Botev »

What a fun website. Probably says something about me and my age that I find the stripped-down website layout so much easier to read. And the writing is great: bolded headings; liberal use of numbering conventions; concise writing.

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