ERE vs sacrifice / The Wheaton scale of ERE.

Simple living, extreme early retirement, being wealthy, ...
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Post by jacob » Thu Apr 18, 2013 12:46 am

Here's something that's been bothering me for a while. Perhaps I shouldn't be bothered because it seems like there's a natural progression... just one of those things. I still think it's helpful to ponder this issue.
Let's step back and consider the ERE forum participants ...
I think we can split them into two groups.

1) Those who have been living this way for years. (minority)

2) Those who are just starting. (majority)
My suggestion is that group (2) should study group (1) carefully to figure out the differences between their own thinking and the thinking of those who've made it because it's quite likely that some day they'll think the same way. The main question is the process from 2->1. Are you going to make your own mistakes or will you learn from other people's mistakes. I think studying those who are already in the place where you are going is as very valuable strategy.
It is primarily a matter of perspective. Your general knowledge determines how you see things. Here's an important observation:
People in group one rarely emphasize their money. They just take money for granted. The don't talk about whether their "lifestyle" is upper clas, middleclass, MMM-style, or ERE-style realizing that lifestyle has nothing to do with how much you spend but with what you do. Since I don't live in isolation, I get to see lifestyles from all classes, and what I see is that there's no visible difference between a couple spending $10000/year and a couple spending $100000/year. In particular, if you didn't know you couldn't tell.
Any differences in the connection between spending and lifestyle is simply in YOUR head. This is the proverbial: "Does the person driving the new BMW actually make a lot of money or did he buy it on credit?".

You don't know, right! There's a similar one, which I think many miss, namely "Does the person living on $10000/year live a poor life or is he just that much better at getting value for money?" "Does the person spending $100k/year live twice as good as the person spending $50k?" You don't know, right? In particular, do you think that a person who spends twice as much you do has it twice as good as you? If no, why do you think that a person who spends half as much only has it half as good?
The ends (looks, apparent features, amount of stuff, kinds of stuff) are the same. But the means (buying, couponing, sales, trading, building) are very very different. If you talk about the ERE lifestyle, it's tilted towards trading and building with a few sales thrown in. Conversely, the consumer lifestyle is tilted towards buying and couponing. And whatever passes for mainstream frugality is somewhere in the middle of that spectrum.
Another difference is that those who are starting (group 2) see money as a scarce resource: Must make enough. Must make sure that the money is safe. Those who've been at it for a while (group 1) sees money as something that just comes to them serendipitously. They live in a way where they're paid to live: "Hey, I'm superinterested in programming, so let me do that for fun for a year. Then I get involved in development project and then suddenly someone wants to pay me $2000. Sure, I spend a couple of months on that, for fun." If such things are going on constantly, they become expected, and you stop worrying about one-source incomes. Instead it becomes a multisource income model. It's like how most of us don't talk about oxygen or tap water. We just presume it's there. Yet the beginner perspective is still focused on money-as-scarce-resource so they're focused on replacing the scarce resource from their job with a scarce resource from investments.
I occasionally get emails from people who've been doing this for 20-30 years. They never talk about their money, nor do they use terms like "FI", "SWR", and "sacrifice". They talk about what they do. The opportunities that fall into their lap. The sporadic income: Then I started a business for two years. Then I sold a house and bought another one.
I often think about this. I think "lifestyle" is an extremely limited way to look at life. It's very present focused and has no context. Consider how my detractors said I was "going back to work" as if I was going to go back forever. Whereas if you begin to consider ERE as a _life history_ instead, then things get more interesting. In fact, when those with 20-30 years of ERE experience write me, the email is not about their "life style". It's about their life-history: Then I did this for a few years. And then I moved there. And then I did this. And Now I'm ...
Of course these are just words, that is, information. What I'm really saying is that there's a difference in "wisdom" (defined as knowledge AND perspective) between the two group. It's hard to teach wisdom with words. It may indeed be impossible to teach. It's something one has to teach oneself through experience.
This also makes it hard to convince other people what that "different perspective" actually is, because it's no easy to see.
Therefore we often turn to metaphors. Lets use martial arts.
The world as it is now is that everybody goes to school and learns just one technique, say the the left hook. Over twenty years of training, they become very good at the left hook. Success is measured in terms of how good your left hook is. Whether you win or lose is determined by the strength of that left hook. This is YOUR PERSPECTIVE.
Now enter a group, call them ERE fighters. They say they don't actually use the left hook very often. Some say they don't actually fight that much at all. Now from "YOUR PERSPECTIVE", they must therefore not be good fighters at all. They say they use a different style which makes little sense to you overall. In your mind, you'd maybe pick and choose a few of their techniques, perhaps a front kick, but you still evaluate success by the power of left hooks. However, you're open-minded and thus you begin to learn different techniques. You learn that the right arm can bunch too. (To a sword fighter it would quite the novel innovation

to use BOTH arms and use TWO swords!) You learn how to kick. You even learn how to block. As such your fighting style changes enormously and you start winning. An outsider who doesn't grasp this new style will look at your strength sheet. Left hook: Poor, it says. And haven't seen you fighting, he judge your chances poor. Looking at an even more advances fighter, it might say left hook--not used. Surely the sign of a losing fighter. But that turns out not to be the case. However, you'd have to KNOW that "left hook" is not a good metric for a multi-dimensional fighter to actually realize this. The ultimate step is having developed such a reputation and composure that you don't need to fight at all. That's the end-point of ERE.
Here's something else to ponder. Stoic in its modern form means living an austere form of life. However, in its original form it meant living in harmony with nature. A life without friction. The point of ERE is to reach this state. This is a life where you don't have to struggle for anything. Just by living the way you are, all your wants and needs are satisfied automatically.
In the name of "personal growth" I think, therefore, it's helpful to identify where one is on this scale of development. I'm definitely not quite there yet. However, I am quite removed from the initial perspective. And I think I have an idea of what the end-point feels like.


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Post by jacob » Thu Apr 18, 2013 1:07 am

The difficulty in matching spending to an individuals lifestyle also makes direct comparison difficult.
For example, here's what I care about

* intellectual and technical mastery

* solving "impossible" problems

* using very nice tools

And here's what I don't really care about

* a nice house

* toys

* travel
So my priorities are nearly diametrically opposite of what could be considered average preferences. Because people are prone to superficial comparisons---does it look the same---this is why I'm not a very good role model for ERE. If I had normal preferences, this is what I could do with ERE

* Buy this home for less in opportunity/maintenance/tax cost that our 1BD/1BA Chicago apartment rent.

* Buy toys instead of tools.

* Go live in the 3rd world for $300/month for 6 months at a time.

And other people have yet other preferences ...


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Post by Chad » Thu Apr 18, 2013 1:30 am

While your first post is probably the more difficult to grasp, The second post is probably where the real issues lie, as direct comparisons would seem straight forward, but are not.


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Post by Hottentot » Thu Apr 18, 2013 1:32 am

We are all human beings and some people (especially the young ones) will only learn from their own mistakes. Even if you tell them (or me) that something won't work, they may think they have a chance to do it better than you and win.

It's like the people who don't believe in the possibility of ERE. They say to you that it's impossible and you won't make it. If you try you will fail because of this and this and that. But you try anyway.


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Post by arrrrgon » Thu Apr 18, 2013 1:43 am

You left out the group of us that never cared about "keeping up with the joneses", but never realized there was another way :D
The hardest part for me was wrapping my mind around being able to save money on my current salary. I always felt like I would need a higher salary in order to save enough money. I always wished that I could just spend all of my time with my wife. Since finding the ideas on this site I've realized that this is actually a possibility for me if I just work at it.
Now back to waiting out the tornado warning in our basement :)


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Post by C40 » Thu Apr 18, 2013 2:04 am

Part of your first post made me think of something... For all the people that will say you (or they) couldn't be happy spending only a small amount of money - how often, when they meet a person that seems very happy - do they ask themselves "I wonder how much money this person spends?" or make any kind of connection between the persons' happiness and how much they spend?


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Post by Ego » Thu Apr 18, 2013 2:27 am

One of the hurdles I'm still working on is the desire to be what others consider normal. Not always. In fact, not all that often anymore. But it still happens.
It's frustrating that most frugality advice focuses on how to "have it all" for less. The implicit assumption is that I want to have it all, that having it all is the right thing to do. Not having it all is somehow failing. Never once am I encouraged to think for myself.
When we were in China we would go out for morning runs in the parks where people were doing their therapeutic walks. It never failed that as we were passing a fit old lady vigorously swinging her arms or an old man pounding on his thighs with clenched fits, they would see us coming, get a little frazzled and begin trotting along beside us. It was as if they didn't want to be left behind. Eventually they'd catch themselves and slow down to a walk again.
That's how I feel when I catch myself wanting to be normal. I know I don't want their stuff and their bar tab and their credit card payments.... I don't really want to be good at throwing left hooks because I don't like hitting people. I know it. But still, every once in a while I look around and realize I'm trying to jog along in their footsteps. I find myself practicing a left hook.
One of the reasons I enjoy coming here is because most of the conversations are like this one. They make me think. It's not about how I can do a better at appearing to be normal while cutting my own hair. It's about doing better at simply being who I am.


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Post by Seneca » Thu Apr 18, 2013 2:54 am

So, what is the Wheaton Scale of ERE?
I think you make a difficult analogy here, Jacob.
Some people really do want to consume more than others to be happy based on what they care about, as you allude to.
The Wheaton Scale is a bit more straightforward I think. Level of consumption has to be determined through self-actualization, study, trial and error and skills building. Wheaton, as defined by him, has a sort of absolute quality to it.
I have tried both and find the difference between consuming $10,000 or $100,000 is pretty significant.
If you don't think about optimizing your spending it might not be, but if you do, there are big differences.


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Post by My_Brain_Gets_Itchy » Thu Apr 18, 2013 3:13 am

TL;DR- To succeed at FI/ERE one must master oneself.
@jacob:
First and foremost, you have achieved mastery in financial independence and early retirement in a unique and masterful way. That is why we are all here.
Whether you accept title of role model/mentor or not, you have apprentices.
In fact, whether you like it or not, you have spawned hundreds perhaps thousands of apprentices. Pretty much everyone here at some point or another, due to the fact they read your book, are your apprentices.
You also created an amazing forum and blog for people who are extremely like minded. INTJ's and engineering types in particular.
I admire your path greatly. It's extremely unique and specialized and catered to exactly who you are and how you see this world. I like the fact that you say that you are not 'normal', and admit to this. I like the fact that you can sustain yourself on such a small amount, and in no way do I see you as a miser or a scrooge. That's what makes it so impressive. I don't see myself as 'normal' either (lol hence the Chris Farley avatar). Frankly, if you were 'normal', I don't think your draw would be quite as powerful. At least for me it wouldn't. (See Eccentrics by Weeks.)
However..
My observation or lesson learned via Mastery (Robert Greene),is that once the apprentice has 'learned' from the master, they must make their pursuit their own.
If they try to 'copy' their master, they will fail. This may seem or appear like a rejection of their master, but really it is more a synthesis of the teachings to ones own personal being. As you recall, every single apprentice in mastery eventually 'rejects' their mentor, in order to make their own mastery.
FI/ERE more than anything is a process of becoming a master of yourself.
If you focus just on the numbers or try and copy someone else you will 'fail'.
In the process of ERE, one must truly look at themselves in the mirror and get to know oneself better.
Sure there is a high probably one can make their own mistakes, but that is where the learning occurs.
I see FI as the greatest mastery skill one can develop for oneself. And you have more than proven that you have mastered that. I have followed a significant amount of your teachings and inspiration.
however, for me (and possibly others), I see solo travel as the second greatest mastery skill one can develop for oneself. You do not. You have an extremely different opinion of travel and what it means, but thats fine, I totally see that its not your thing, and that is totally ok. I chose to synthesize the importance of mastery (a distinctly jacob/ere teaching) into a skill that I value more, solo travel (an extremely personal thing) and that suits me better.
For me, nothing can make you more antifragile, resilient, develop your self sufficiency, challenge yourself than to solo travel. Plopping yourself into a totally foreign culture totally outside your comfort zone, with your only possesions you have on your back, and then be challenged to go about your daily business. From communicating, navigating, eating, etc. Taleb in Antifragile even alludes to this. IMHO, if there was ever a SHTF scenario, my bet would be the one who developed solo travel skills would be better off than the 'tool user'.
For me, learning to use some tools doesn't compare to this type of challenge. The resiliency and problem solving you develop for yourself via solo travel is incredible. But that's me. I'm different. I value this more, this is where I see challenge, this is where I want to pursue one area of my mastery, and one area of my ERE. Hence my FI and ERE plan become catered toward that.
Neither path is better, neither path is normal, but at some point, each path must be ones own.


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Post by m741 » Thu Apr 18, 2013 3:41 am

I don't think there's just two groups of people, but rather a spectrum of people. I've observed a lot of longtime forum participants who have achieved FI and still actively discuss their finances. For instance, BraveNewLife and Akratic seem like 'group 1' but still actively talk about their finances, FI, etc. I don't want to speak for them but based on what I've read, they seem to view money as both a resource and something which comes serendipitously.
I've reached FI and I still think about it a lot, mention it in posts, etc. I've been involved in ERE for 2-3 years. Maybe I've just learned nothing in that time.
Maybe there's something else, though. I think that as soon as I found I had enough, I began to think about money differently. It's like there's a switch - "Ok, I've got enough, I can take a deep breath. What do I want to do now?" Once that pressure has lifted you're free to indulge in riskier interests. It means you can think like 'group 1'. If you were 'group 1' and lost all your money, I think you'd start to think like 'group 2' again. Not all the way, but partly.
In other words, it feels to me that FI is a sort of gateway, and once you've passed through it your perspective will shift a bit, and it's difficult to revert. Part of that is mental, but part of it is having those resources behind you. It's easier to float from job to job or hobby to hobby, knowing you have sufficient savings. Here's a quote from the Aviator:

Mrs. Hepburn: We don't care about money here.

Howard Hughes: That's because you have it.


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Post by George the original one » Thu Apr 18, 2013 3:42 am

> A life without friction.
Ding, ding, ding!
I have a coworker that shares duties/title with me. I'm the calm one (most of the time) and the coworker is likely to turn a molehill into a mountain. Coworker is always creating friction rather than trying to smooth the path.
The flip side of the coin is that he'll pursue an issue until there's a resolution. And edge of that flipside (coins have three sides you know!) is that more time is wasted trying to reach a resolution for something that few people care about.
I think a similar triangle exists in the ERE universe, but I'll leave it as an exercise for the reader to figure out where they are.


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Post by George the original one » Thu Apr 18, 2013 3:45 am

The money aspect is quantifiable. The skills aspect less so. And the reasons for going ERE are downright fuzzy because motivations are fuzzy to begin with.


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Post by spoonman » Thu Apr 18, 2013 3:47 am

I have pretty much resigned myself to the fact that I will never truly understand something until I experience it. I try to keep notes on the things that people that have reached FI claim is difficult or surprising, but I just know that there are things I simply won't be ready for.


My_Brain_Gets_Itchy
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Post by My_Brain_Gets_Itchy » Thu Apr 18, 2013 4:04 am

I'm not sure if this book made the rounds of recommendation on this forum, but here is the link to Eccentrics.
I thought it was an amazing book:

http://www.amazon.com/Eccentrics-Study- ... 1568361564
It really empowered me to actually really chase within that which makes me unique.
Anyone who was anything in this world (Einstien, Newton, etc), was not normal.


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Post by Seneca » Thu Apr 18, 2013 4:06 am

@ MBGI- "Anyone who was anything in this world, was not normal."
That argument would, by definition, mean that most people weren't anything.
I don't agree.


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Post by My_Brain_Gets_Itchy » Thu Apr 18, 2013 4:08 am

Hm yes yes, very poor wording.
let me rephrase?
Throughout history, those who made the most impact to society were not normal?


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Post by Seneca » Thu Apr 18, 2013 4:18 am

Very much so. :-)


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Post by jacob » Thu Apr 18, 2013 5:15 am

@Seneca - I think ERE is multidimensional (whereas it's typically presented as a fairly one-dimensional thing .. like withdrawal rate) and it would be hard to put on one scale without a metric. But generally, I would count the number of ways the individual knows that will provide goods. Most know only one: Earn money at one job and spend it. In light of this thread, the initial impulse is to replace the job income with investment income and replace some of the spending with not-spending. This is not very "ERE", read "emergent renaissance ecology" not "extreme early retirement".
I consider myself pretty high up the scale (just to give a point of reference). I currently earn money in 4 different very uncorrelated ways. I know enough to add 2 more if I need to. I can get goods by buying, trading, or making. I can also repair broken stuff, I can prolong the useful life of goods, and I know how to get some things for free. This gives me a lot of combinations that allow me to pick up economic inefficiencies that are not available at "lower levels". In other words, I can stretch $1000 much much further than a consumer can stretch $10000. Given equal skills, there is of course a big difference between 10k and 100k... but given unequal skill, those amounts might obtain the same end result.
@m741 - The switch is exactly it. In addition, once FI no longer is the only source and you have two sources available whatever they may be. There's another switch. An alternative to FI is simply to develop the ability to work in 10 different fields and have the contacts to get income tomorrow. Such a person would never worry about money but just pick whichever of the 10 he felt like doing.
@MBGI - Maybe I misunderstand you choice of words, but I see FI as a very minor accomplishment compared to the ability to live well on sub 10k. FI was just something that happened incidentally from learning self-reliance, etc. Actually, I did not even realize that FI was possible until I had spent 3+ years learning how to be more efficient with my money. Initially, the idea with the money was to buy a house and be mortgage free.
A lot of my travel (10+ countries) has been professional/conference. This is generally of the "Please be at some obscure address (university, hotel, conference center, remote location) in random country at a given time. Figure out how to get there. You arrange it." This would involve flying/taking the train to the country. Maybe taking a local train. Followed by a tram, bus, or a cab at the other end. Then walking up to motel/hotel to get a room. Then figuring out where/how to eat. What I learned from that is that as long as you have money, you can keep moving. Doing this is maybe initially scary but actually pretty easy. I've also relocated to another country twice for work. Same story except with some local help to arrange housing. But in all these cases, existing money could solve all problems and income was also solved where applicable. I don't think what I've done in terms of traveling [with money] is particularly impressive.
Now, resourcefulness on the other hand would be to travel without money (or with little starting money) and relying on the skill to make it on the fly and arrange where to go next while traveling. You show up in country X. You have enough money to make it for one month but then you'd have to scramble and figure out how to get food, how to get to the next place, etc. Some people are good at that. One way to do it would be to rely on volunteer opportunities. Another way is to have a widely desirable skill (diesel mechanic) and sell it locally. [I don't think remote blogging counts in the same way :) ]. Maybe you know what to buy in one country and sell in the next... maybe enough to pay for the transport ticket. The question is: Do you have to engage or do you have a purse to draw on at all times. In the latter case, travel is easy. In the former case, it requires much more.
(This was part of why I wanted to ride a bike across the US. Not being able to pay for transport and having to find bike compatible places to sleep would make it more challenging.)
Someone who can travel and simply make money as they go along without having to think of money-making as something they need to do in order to travel but rather something that just comes naturally as part of the activities they like to do (bartend, fix engines, export stuff, ...). That I would consider ERE too ... even if there's no FI.
It really comes down to whether you're living in accordance with the world as well as yourself. Without friction.


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Post by george » Thu Apr 18, 2013 7:52 am

People in group two rarely emphasize their money.
Perhaps this should say group one?
Really enjoyed the post Jacob.
I don't think "society" gives a monkeys.... what we do. Its really our perception of our own importance that holds some people back.
When our time on earth is finished the question is did we make the most of this garden of Eden or did we live a life we believed we were supposed to. Doesn't mean we have to be selfish, helping others brings true contentment. Just means we have to be honest with ourselves about how we want to live and why we choose to live the way we do.


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Post by My_Brain_Gets_Itchy » Thu Apr 18, 2013 1:00 pm

Farming vs Foraging
good morning @jacob:
You didn't misunderstand my words at all. You have it correct. I see FI as the ultimate mastery skill one can have for oneself.
In my interpretation, I see no difference in developing FI skills and farming skills. Both entail the ability/skill to reproduce/regenerate a necessary resource, which in the case of FI, is money.
Maybe I am misunderstanding your interpretation, but in this analogy, what you describe as ERE sounds a lot like 'foraging'. IE the ability to 'find' money based on your wits and skill, rather than 'grow' it.
One can choose to focus on foraging skills instead of farming, but wouldn't farming skills be more practical?
Having the ability to 'forage' or live without money is very romantic and admirable. I am not trying to knock it at all. And yes, you develop a hell of a skill set.
But in what you described, wouldn't it then place Daniel Suelo and the homeless as the ultimate role models and mentors to follow? Their ability to live without money and forage off their wits and skills are unparalleled. If we look past the negative stereotypes and stigmas, they do indeed have a very unique skill set and ability to 'forage' and survive.
We can try and deny the existence and importance of money, but the sad reality is that money makes the world go round. It's not to say that the more money the better, I do not advocate that.
Developing FI is the foundation and door to open up every other skill we can imagine. If we choose to do so. It is the goose that lays the golden egg. But just don't let anyone kill your goose, or, make sure you let your golden eggs become golden gooses.
If I then choose to develop 'foraging' skills sure I can do that, if that is my persuasion.
Again, I have extremely high regard and respect that you have these self sufficient, 'foraging' skill set priorities. That's very admirable.
Time as a resource
What I am concerned most about is preserving and nurturing a very delicate resource I see even more important than money, and that is time.
It is our most precious yet difficult to grow/manage resource.
Foraging, in this scenario, in how I see it, gives me a deficiency/takes away from time resource.
FI/farming, for me produces time surplus.
For me, it's as simple as that. That is my motivation.
What I do with that time is a whole different conversation. ;)
Test of Antifragility
One of the ultimate test of our antifragilities imho, is the SHTF scenario. A collapse in economy and society.
Ultimate volatility.
In what is considered the the most realistic book on this subject matter 'Suriving the Economic collapse' (Fernando Feral Aquirre), which I think is considered the ERE book for the PREPPER/doomsdayers world, the author talks about the collapse in the Argentina econonmy.
His ultimate conclusion?
Those with the financial resources and power, faired the best.
EDIT: Speaking of Antifragile, a constant theme through Taleb's book is Financial indepedence as the ultimate antifragility 'skill'. IMHO, his FI is more about growing/farming than it is about foraging/finding. But maybe it is just my bias on how I read it.


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