Scott 2 wrote: ↑Sun Sep 19, 2021 9:58 am
I get the renaissance man ideal, but low spending is a byproduct, not the driver. Chasing 1 Jacob is an attempt to back into it. It's not the only path there. That lifestyle has time demands that also come at an opportunity cost. Broadly diversifying your sinks of human capital is expensive, relative to how society values them.
If your goal is to influence societal change in any direction, interdependence through specialization will have much more impact. You can already see that in the degree to which your work is compensated. The ability to make exceptional contribution gives you far greater leverage.
7Wannabe5 wrote: ↑Sun Sep 19, 2021 1:48 pm
Well, even if you engage in barter with another human being and no money exchanges hands, you are de facto leaving them with more cash in their pocket which they could spend on gas, twinkies, or bowling lessons. So, secondary effects pretty much rule out all human trade, with possible exception of trade with other humans who currently spend less than 1 jacob/year themselves. OTOH, the fact that this sort of accounting tends to fall apart the closer you actually get to 1 jacob does not recommend return to rule of "efficiency is all."
I guess it depends on what your end goal is and whether or not you care about scalability of your solution. Jacob's ERE as lifestyle design solution is eminently scalable, in that if everyone did it the world would actually benefit, as @7W5 points out. @Scott 2's advice is more aligned with the traditional FIRE/high income earner perspective so not as scalable. If we operate under the assumption that my end goal/path to self-actualization is to work towards a solution for The Situation (or at least not make The Situation worse), which solution makes more sense? Since my time and energy are finite, let's assume they occupy two ends of a dial.*
Let's say I dial things to the 1 JAFI expenses end. I lower my spending which reveals new insights into how the world functions, increase resiliency, increase skill etc etc. All of this takes a lot of time and energy, which in some cases will be much less well-compensated than working in my technical field on the free market or starting a business (just as an example). Spending much less than average also might limit my sphere of influence since I have a harder time relating to the dominant culture e.g. Wheaton Levels and MMM has had more influence in terms of reduced consumption by $$$ than Jacob (debatable since Jacob was a huge influence for MMM, but you get my point). In 2.5 years I leave full time work with a host of skills and a comfortable <3% SWR as long as I maintain 1x JAFI expenses. I can then use my time how I please working towards solutions to The Situation and enjoying my life. My portfolio allows me to generate income and live comfortably, but is limited in it's ability to provide control, access, and optionality in the way a larger portfolio would.
Then there is the other end of the dial. I recently read through the Wall St Playboy thread again just because I like getting some counter perspectives. Although I haven't read their book, my impression is that after discovering I am locked into ~$100k a year career field with clear salary ceiling, WSP would tell me to put in minimum effort at my job and instead focus all my energy on creating a lucrative business (actually quite feasible for me since I usually have 4-6 hours a day at my job that I'm not doing anything). Eventually the income from this business will push me past the ~$200k income mark, hopefully in time for me to quit my job in 2.5 years. WSP would recommend paying to outsource things in order to have more time to focus on business, but that only makes sense to the extent that my time and not something else are the limiting factor. In 2.5 years I leave full time work with some business skills and ability to support a more expensive lifestyle due to the cashflow machine of my business. My portfolio and ongoing income is much larger in absolute terms, which means that money can go a lot further in providing control, access, and optionality (which in turn widens the circle of possible implementable solutions to The Situation**). The downside is I have to have much greater influence on others than with the 1x JAFI lifestyle in order to justify the excess burn from my higher spending lifestyle.
I know there are some out there who are probably reading this and thinking "Just do both!" But again if we assume that things are a dial, at one point is the appropriate level to stop in one direction? Is it 2x JAFI spending and $10k a year in business income? Or 4x JAFI and $50k business income a year? I don't know and those numbers are arbitrary anyway. It depends where on the S curve you think specific spending and income fall.
* = Maybe not an entirely true assumption, but given that we see almost no one with 1x JAFI expenses making >$100k a year, there is something to it.
** = This operates under the assumption that one can throw money at The Situation to help solve it. This is essentially what Bill Gates and some other billionaires are attempting to do with limited success.