"striking it rich is merely a well-marketed fantasy"

[jacob]

@Spartan_Warrior -

Figuratively, there should NOT be a "vast and obvious" difference between breathing and cooking your own meals.

If you're wealthy _in kind_, you do what you want without worrying about your income, comparative advantage, and importantly, whether you run out of money by spending it. You may worry about losing money but that will not be due to spending it. It will be due to a failure to protect it. Wealthy people care much less about ROI and much more about drawdown than do the middle class.

Certainly, there are differences _in degree_ in what we do vis-a-vis flying helicopters and buying congressmen vs trying to perfect cold leavened bread and repairing motorcycles. However, that's not a difference in kind, just a matter of scale. The issue is how tasks are approached. Not what the tasks are.

The wealthy's focus remains that money comes from assets; that there will be enough assets; that one does not need to worry about income and expenses (I don't worry because I know I can not naturally spend much more than I already do); that assets must be protected; that building, buying, and selling assets is how wealth is created.

Now, you're pursuing FI ... but---and I think we've talked about this before and never reached an agreement---still focus very much on consumption, sacrifice, and earning. Conversely, I barely track my consumption. I don't consider any of activities sacrifice, and I don't care what I earn---I'm not working for money, I'm working for value.

You're seeing this through middle class lenses. Earning money through a a salary until you have enough to convert those "savings" (the wealthy don't think of their assets as "savings") to diligently invest and provide you with another "income" which can be spent to maximize utility. You set your spending on a scale with a cut-off of activities labelled "this much sacrifice but not more".

This is a middle class perspective. It is also an Early Retirement perspective (as abundantly found on E-R.org). Consider how that perspective would change if your had 50 years of living expenses saved? 100 years? It's the idea of "never running out" that defines the wealth-mindset. Whereas the idea of "matching income to expenses given work activity" defines the latter.

Sure, you can retire extremely early with the latter mindset and in that case, I would say extreme early retirement has little to do with the wealth mindset. However, ERE (as I see it) is more about structuring one's life to generate value...

[Spartan_Warrior]

Jacob, it's true I might be thinking of things differently being as my position is far earlier on the path to FI than yours or others. At this point, if I were to adopt much of the mindset you attribute to the wealthy--like not worrying about income--it would get me closer to bankruptcy than wealth. That's just a fact of the numbers. I do imagine that it's easier to ignore or forget about the numbers once you reach FI.

Regardless, I've already agreed that the mindset of ERE in terms of how it uses money is most similar to (but, as stated, probably not identical to) that of the wealthy. I disagree that that's sufficient to make most ERErs as a whole part of the wealthy class, or even having that much in common on a day to day basis (I don't think you were arguing otherwise, just clarifying my point). I also disagree that the difference in power between buying congressmen and buying used motorcycle parts on Craigslist is merely one in scale. It is, technically, but it's such that it's essentially a whole other beast--like TNT versus nukes. Again I reference the difference between "freedom" and "control". It is a powerful difference.

I also disagree with some (not all) of the way you've characterized my mindset, and I fear this is in danger of becoming a No True Scotsmen argument at this point. I don't want to go down that road by defending myself and my "ERE cred" too thoroughly.

However, I will say that the term "sacrifice" (or "not sacrifice") gets thrown around pretty frequently and ought to be defined. That may be one part of your assessment I agree with--I do see some of my actions in pursuit of FI as sacrifices. For instance, cooking 99% of the time. I understand the value of cooking, I enjoy doing it occasionally, but it gets old. Sometimes I would rather order a pizza out of sheer laziness, and I hold off on that pizza because of the expense.

That is sacrifice. Is it an Earth-shattering sacrifice? Of course not. Do I even have to think about it most of the time? Not really. Is it better for me that I don't get that pizza? Yeah, definitely. Is it a choice made in the name of "structuring one's life to generate value"? Absolutely--because if I just ordered a pizza every time I felt like it, I'd be that much further from FI (and that much fatter). And that is not a life of much value to me.

Is this so different from your own calculus when deciding whether to buy a new book? (A decision I think you admitted having difficulty with in your journal.) Aren't you ultimately asking yourself whether the book gives you more value than the money you would spend on it? That's the same thing I do when I decide not to "sacrifice" on the pizza. I don't see the grave difference in mindset here. Or is there one?

IMO, strong people make "sacrifices" every day, in the pursuit of a life of value/the good/Eudaimonia. At a broader level, every single action and outcome "sacrifices" some other possible action and outcome (Determinism aside ). It probably deserves its own thread, if there isn't one already, but yeah. I think the term gets a bad rap around here. One man's sacrifice is another man's "structuring one's life to generate value".

(And for the record, my spreadsheet has always been labeled "assets", not "savings", although I find that linguistic distinction irrelevant. "Assets" is simply the more correct term to describe stores of value that aren't limited to cash savings...)

[jacob]

Is this so different from your own calculus when deciding whether to buy a new book? (A decision I think you admitted having difficulty with in your journal.) Aren't you ultimately asking yourself whether the book gives you more value than the money you would spend on it? That's the same thing I do when I decide not to "sacrifice" on the pizza. I don't see the grave difference in mindset here. Or is there one?

I'm asking myself whether the book is fundamentally worth it (price vs value) irrespective of how much money I have (I have a lot) or what else I could buy with the money (I have little desire to buy other things), so it's not a sacrificial trade-off. It's analogous to the difference between frugal and cheap. Frugal is value for money. Cheap is as little money as possible.

Just because the wealthy have a lot of money doesn't mean they are throwing them around freely (that being what happens when the middle class suddenly comes to money) because if they did that they would eventually find themselves without money. Rather they have a keen sense about "market rates", e.g. paying the landscaper or babysitter minimum wage even as they could easily pay much more.

Sacrifice (the way I understand the word) is giving one thing up for another. (The common understanding is giving it up, period.) Those who have more than enough money don't think in those terms. They can have both if they wanted ... so the decision is made along another dimension.

I don't see the big difference between "TNT" and "nukes", that is, the scale of the power. The difference here, between the wealthy and the middle class, would be that the wealthy have no compunction about using their powers. They somehow think that rules (legal, tradition, expectations, ...) don't apply to them. If they don't like the rules, they change them. This is how things get done, after all. The wealthy are to some degree sociopathic. Just like ERE when rejecting 9-5 'til 65.

[Seneca]

I came to ERE through the "rich people books", Benjamin Franklin to Snowball, Jacob mentioned above (both biographies and books they wrote). I read them looking for what it was they were doing/thinking differently than we were as wage slaves. Without those books, I don't think I'd have been nearly as receptive to the ERE concepts as I'm not naturally frugal, or pissed off with my job.

EX- One of the concepts I found applicable was Warren Buffett's skill and focus on capital allocation. That's the mindset I have tried to intentionally to cultivate for buying things like a book, car any other stuff. "Is it well allocated capital that will provide a return greater than the cost" instead of "are my future paychecks going to be big enough to buy this on payments"?

[sshawnn]

One man's sacrifice is another man's "structuring one's life to generate value".

I have some used motorcycle parts that I need to get listed on CL. I see more value(making a connection, finding the parts a home and not in the trash, raking in enough money for a pizza on Saturday night(hell no I'm on a diet)) in selling those than than devoting an equal amount of time to professional endeavors. I do not want to enter into the money is freedom/power, paradigm/argument again but to me, selling those parts is striking it rich.

[Spartan_Warrior]

@Jacob:

I'm curious now, how do you measure the fundamental value of a thing, if not in money or time? Now that I think about it, I do tend to mentally calculate the value of a thing in terms of how many hours at work it costs me to pay for it--a trick I learned from The Millionaire Next Door, which I guess is pretty much the Baby Boomer/upper middle class guide to early retirement.

I certainly agree in terms of "irrespective of what else I could buy with the money". In my pizza example, importantly, I am not considering what else I could buy with the money--the alternative is not consuming something else, but "buying" more freedom/financial independence by not spending at all.

It's the "irrespective of how much money I have" that rings false to me. I have no doubt it's true in your situation and probably some others', but for the "classic EREr" age 35 with <$500k and no intention of working in a high paying field again--basically, where I see myself in eight years--I don't think it rings true that you can make spending decisions without considering how much money you have. You, Jacob, "have a lot", but does the "classic EREr" with $500k? By conservative estimates of ROI, those assets would generate an income at or near so-called poverty level. (I know I'm speaking in terms of "income" and "ROI" again, but I'm still wrapping my head in circles to figure out how ERE is possible if your assets didn't generate income...)

I guess it comes down to this: I would agree that the middle class makes spending decisions in terms of "how much money I have" and "what else I can spend it on". I further agree that the wealthy think about neither of these factors. I agree that ERErs don't think about "what else I can spend it on". But I don't know that I can agree that ERErs in general get to disregard "how much money they have". I certainly don't ever foresee there being a time where I don't consider how much money I have when making a purchase. Is that middle class thinking? Maybe. Is that kind of thinking necessary for someone trying to live on a poverty level income for 50 years? I personally think so, and that's kinda my point.

(Note that IMO having a naturally low inclination to spend doesn't obviate the fact that one's spending level is a major consideration in the effectiveness of the ERE strategy. It just makes that consideration that much easier.)

As far as the difference in power metaphor, I agree TNT and nukes aren't the best at illustrating my point. I'm trying to say that sticks of dynamite can be powerful tools. They can move entire mountainsides, allowing people to build roads to new lands ("freedom"). But nukes can do all that and more: hold entire countries hostage, coerce politicians, destroy environments, etc. ("control").

The whole point of the OP article is that the truly wealthy (top 0.5%) wield tremendous power inaccessible to 99.5% of the world. Buying politicians, changing the rules, etc.

Likewise, I don't see how it can be that "the wealthy have no compunction for using their powers", implying that the middle class does. The middle class doesn't have these powers to use! Only the wealthy get to change the rules, and only by virtue of their wealth. (<$1M ain't gonna cut it.)

"Choosing not to play" (freedom) is not the same as "changing the rules" (control).

[jacob]

Maybe a permaculture analogy will work to explain the possible dimensions of seeing things. Now in traditional agriculture, you measure things like yield, fertilizer, and pesticides and try to decide whether the extra yield is worth the sacrifice due to pesticide and the cost of fertilizer. It's a linear relation between input and output (I mean linear in the science sense, that is, y=ax, not in the sociological sense.) Whereas in permaculture, you try to arrange different plants together relative to each other as well as specifically according to location (sun, drainage, ...) taking advantage on nonlinear relations, where two particular plants next to each other might facility better growth of a third plant.

The better my setup, the less time and effort I need. If I've arranged my life to minimize friction and have things drop into my lap. Why would I be concerned about "life-energy"? If I have a kettle sitting on the boiler, why would I want to watch it to make it boil faster? It's not like I'm trying to heat my water with friction.

While I live at a poverty level income, I live far from a poverty level lifestyle.

When I measure the value of a thing, I consider whether I can somehow use it to "make the system" better. I consider several things. For example, when buying a book, I'm not as concerned with the purchasing price as I am with the recovery price---can I sell it again, easily? Or do I know someone I can give it away to? Will it take up space? Is it heavy? Should I read this book or another book?

Of course you could also see it as me being deeply concerned abut life-energy. However, I approach the problem at a strategic level rather than a tactical level. If I take care of the strategy, the tactics take care of themselves. Moneywise my strategies are such---my lifestyle is designed to---that I should always be able to make some money just be turning on a spigot somewhere. In general though, I'm not looking to make money as much as I'm looking to make "competence, health, and experiences" ... because all that mundane stuff, like food and shelter, is dirt cheap.

In the book I compare investing to hunting rather than farming and stress the importance of developing a hunters mindset. This analogy is also useful to explain the different frames of mind here. In farming, time translates into effort and effort translates into food. In hunting, planning, knowing, and preparing the land (making maps of trails, setting up blinds, ...), and otherwise waiting may translate into food.

In ERE we set up the easy life. I'll grant you that the wealthy may simply buy this kind of life and instead spend their energy setting up business structures or legal structures instead. What's common is the focus on designing structures. In contrast the middle class are focused on fitting into existing structures that others have decided for them.

I also agree that freedom from others is not the same as control over others. However, I think they are related.

[jacob]

WRT ROI, the key to the confusion might be that the wealthy only need a ROI of 1% or less after inflation because their SWR is very low. They are therefore fairly unconcerned about whether they're making 1.6%, 2.7%, 3.8%, or 6.9%. Since they need so little, it doesn't really matter much how it's invested. The easier the better, heck, treasury bonds is just fine. They're easy and they pay on time. OTOH, someone who needs 3-4% after inflation worries a lot more. What to do? Equity? Put options? Dividend growth? Buy and hope? Is the market overvalued or undervalued? If they don't pay attention, they could end up making 2.7% which would be problematic. To keep the analogy going I know a person who took a flier figuring he could make some easy shortcuts by leveraging a rental and getting 10%. He worries a lot!!

My SWR is currently 1.7% but by moving out of the big city, I could bring it down to 0.6%---not by sacrificing but simply by avoiding spending 60% of my budget on rent. The transition to those levels, from 4% to 3% and then to even less, mirror the $$$$$$$-ppl I've talked to. When you don't feel you have enough, you're "hungry", like a boxer, thinking about how you can squeeze more money out. Once you're full and know there's always money (or value) to be made, you get lazy and protective. You take fewer and fewer risks even if it means less return.

[Felix]

From my perspective, reducing wages and removing the middle class to maximize short-term profit at the risk of structural collapse looks quite a lot more like industrial agriculture. For only wanting small yields, they sure do quite a lot of active gardening. The story of the wealthy capital side being wise guardians with an ecological mindset doesn't really match what I see. Ecological thinking seems like the polar opposite of the short-term profit maximization so prevalent in the business world.

[Spartan_Warrior]

First I want to say I'm grateful for this discussion. This forum is the only place I've ever encountered where I can have a disagreement with someone that results in a rational debate that leaves me feeling like I'm participating in one of Plato's dialogues.

Now, to get back to "sacrifice" for a minute. I don't think it can merely be "giving up something to gain something else"--that defines any transaction. (I suppose all sacrifices are a subset of transactions.) I think there has to be some element of hardship or temptation. You have to be giving up something you want. The question is, is it still a sacrifice (or a different kind of sacrifice) if you're giving up something you want for something you want even more? Or is that simply a transaction again? I only engage in this kind of sacrifice. To me, I do consider it a "sacrifice", but mostly in the broad sense of giving up other possible opportunities, not what I would consider a "negative sacrifice" (giving up something you want in exchange for something you don't want more--think unwilling human sacrifice, or maybe even the ignorant consumer who thinks that shiny new iPod will increase real happiness).

I think your book buying criterion can still fit into this paradigm. Instead of money, you consider sacrificing space on the bookshelf, time it might take to resell, time it takes to read. Those are all things you sacrifice by buying a new book. If you don't buy the book, you are sacrificing knowledge, new skills, etc. By the definition of "giving up something to gain something else", you are indeed making a sacrifice whether you choose to buy the book or not. You're either getting the book at the expense of the space/time, or the space/time at the expense of the book, etc. As long as you're ultimately choosing what you want more, I don't see this kind of sacrifice as a problem. I see it as an exercise of will power and/or free choice (to the extent that that's possible--this is thorny enough without bringing free will/determinism into it ).

I will happily concede that the less inclined you are to "want" things, the less sacrifice becomes necessary. Again, to me, a sacrifice means giving up something you want. If you legitimately don't want it at even the most basic level, it's not a sacrifice to give it up--more like a good trade. This is probably why many ERErs are "naturally" frugal minimalists--that mindset helps a great deal in achieving early FI. It means less "beneficial sacrifice" is required--that is, less will power. In other words, these choices come naturally and don't feel so sacrificial.

I also agree, just based on what I know of your average spending level (which is about 50% of mine), that you are more of a "natural" than I am. So yeah, I probably make more "sacrifices" than you--that is, giving up something I want for something I want more (pizza for more FI). Is that a difference between a wealthy mindset and a middle class mindset? I don't know. I believe it's true that the wealthy don't make many sacrifices, because they have the money to have both choices. (Why consider space on the bookshelf when buying a new book? Just buy a new bookshelf, and if that won't fit, a new house!) But I think not having to choose is different from simply not having desire for the item being sacrificed. Not wanting is a frugal/minimalist mindset, whereas not having to choose is a wealthy mindset. To me the difference seems significant.

While I live at a poverty level income, I live far from a poverty level lifestyle.

Agreed--but only because, as you say, you make many deliberate choices in your life and acquire deliberate skills to facilitate this possibility. Because you have naturally low material wants, this doesn't feel sacrificial, but you are in fact giving things up through your actions--e.g. all the well-to-do middle class neighbor friends you might have had if you kept up with the Joneses, etc. Since you don't want these things to begin with, it doesn't matter--you'd rather be FI.

IMO, it is this low level of wants (either naturally or through "training") that makes ERE possible without a feeling of sacrifice. On the other hand, there is no corresponding constraint on the wealthy. Again, the wealthy don't have to choose. They get to keep up with the Joneses (or the Rockefellers) AND be FI. Exactly this:

I'll grant you that the wealthy may simply buy this kind of life

I can get behind that whole paragraph, by the way. I agree that another similarity between the wealthy and ERErs is designing their own structures. However, the wealthy get to foist their structures on other people while ERErs can only design their own lives--again, the critically important difference between "control" and "freedom".

I also think freedom and control are related. I think they're both on the same spectrum of power, just like dynamite and nukes are both explosives and can both be measured in kilotons.

Finally, the discussion of SWR seems to further my point. I don't recall--what was your SWR when you first went ERE? That's what interests me because that's where I see myself and that's what I think of as "classic ERE". I think it's also more representative of the other members on this forum (which, no offense, is now at least equally important as your own writings in how I gauge what ERE "is"--it's become a school of thought to me more than one man's philosophy).

I don't think many of us expect to find a high-paying dream job that continues to significantly bolster our worth after FI the way I suspect yours has. I also think that person seeking 3-4% ROI is more like the "classic EREr" than the wealthy person who can go without worrying about ROI at all. Again, this is based on where I expect to be and what I've seen on the forums. I don't think many of us are banking on 1.7% SWRs. I know in my case that would probably require me to work another 15-20 years instead of 8-10, at which point the entire concept of "ERE" pretty much falls apart IMO.

Anyway, as interesting as this is, we may have to agree to disagree for now. I really need to focus on some other work.

[jacob]

@Felix - I wasn't saying they're growing good stuff or being responsible hunters. It's the[ir] approach to gardening/hunting that's different. It is in a sense wise from their perspective (consolidating power) which for sure is not compatible with middle/consumer class or democratic principles.

@Spartan_Warrior - My SWR when I retired from physics was about 4% but that was right at the market bottom in 2009. Since then capital gains have bolstered my net worth somewhat more (by a factor two) than wage income. I make somewhat less than what people here seem to think. I can't say exactly, but it's less than the average software engineer on this forum. Incidentally, making more money via capital income than via earned income is another factor that will subtly and slowly change one's mindset when it comes to money and income. Finally, a large part of my confidence comes from the observation that my overall trend in spending is still down. My incoming value streams get still more diversified. I can still cut spending easier than I can add to earning.

[Felix]

Yes, that makes sense in terms of describing the strategic approach. Thanks for clearing it up.

[Ego]

IMO, it is this low level of wants (either naturally or through "training") that makes ERE possible without a feeling of sacrifice. On the other hand, there is no corresponding constraint on the wealthy. Again, the wealthy don't have to choose. They get to keep up with the Joneses (or the Rockefellers) AND be FI.

You've outlined three options:

-Sacrifice
-Enjoy a low level of want
-Indulge and keep up with the Joneses.

The middle option is presented as a constraint where we are either naturally okay with low consumption or we train ourselves to endure the sacrifice. Is there another option?

If I discover that it is in my long-term good to refrain from doing X, could I not learn to stop seeing X as an option and no longer experience the feeling of sacrifice?

We went to a meeting a few weeks ago and pizza served for lunch. On the way home my wife remarked about how she looked at the pizza and felt as if she were looking at dog food. It would have been a sacrifice to eat it. She used to love pizza but now she no longer sees it as human food.

[Spartan_Warrior]

@Ego: Good point. When I said "training" in the quoted section I was actually thinking more along the lines of the change you describe. Not training yourself to endure the feeling of sacrifice (I would say that is still just the first level of "sacrifice") so much as training yourself to actually lower your level of want so as to stop experiencing sacrifice at all. I think this is a harder, slower process than just powering through the feeling of sacrifice with sheer will power. I admit I am still undergoing this process myself in some regards (though far from in all regards--I think I'm a lot closer to the "natural low level of want" than I am to the "sacrifice" side, though obviously not so much as Jacob or others here).

So maybe it would be more like four options:

- Enjoy a low level of want naturally and no feeling of sacrifice
- Train yourself to enjoy a low level of want, with no feeling of sacrifice
- Maintain a high level of want and endure the feeling of sacrifice
- Indulge and keep up with the Joneses (High level of want and no sacrifice)

Note that the fourth option is IMO only available to the wealthy*, at least if FI is concerned (so middle class consumers aside). It is not likely to be an option for an EREr with a middle/upper middle class salary during working years.

*It could be argued that though this is an option, the wealthy don't take it--i.e., they don't indulge in frivolous spending but only in "making money from money". I don't believe that's true in every circumstance (if there are private helicopters, somebody's buying 'em and it ain't the spendthrift middle class!) but even if it were, the mere existence of the option is enough to differentiate the class IMO.

This goes back to what I see as one of the critical differences between ERErs and the wealthy: ERErs either have a low level of want (again, naturally or through training) or they experience sacrifice in the effort to reach/maintain FI--that is, they must necessarily be concerned with "how much money they have" at least on some level. The wealthy have the option of never experiencing sacrifice nor lowering their level of want. As I put in my previous post, they have the option of "not having to choose"--between pizza and the cost of that pizza, or between a new book and space on the shelf.


@Jacob: Fair enough. I'm willing to concede that my viewpoint is colored by my position on the spectrum of FI (accumulation rather than protection). Maybe, as you say, when my income from capital starts to match or exceed earned income, my mindset will change. Maybe you have to be on top of the mountain already to get the full view, so to speak. At this point though I feel quite certain I will never enjoy the avenues of power and control that the wealthy class holds (not that I care to), nor do I expect to trade in my ability to "not want" for the ability to "not have to choose between what I want" any time soon. (The fact that your locus of control is in terms of spending, rather than capital/earned income, is another way of clarifying this difference IMO.) Maybe one day I'll "think wealthy", but I can't imagine ever thinking to myself that I am wealthy.

[jacob]

This differentiation of different perspectives remind me of a conversation about food calories I had with a couple of overweight, well fat, guys at a fast food restaurant once.

"It's ironic with you being the skinny one that you know so much about calories when you're the last one who needs it."

To which I said: "But perhaps it's precisely because I know so much about it that I don't need to know it."

I've had almost identical exchanges when it comes to exercise: "Why do you exercise so much when you're fit enough not to need it?!"

(This analogy may fail if you think I am meticulously adding numbers every time I eat. I'm not. Rather, I can intuitively tell at a glance what a particularly serving is worth in terms of nutrition. Whether it's good for me or not. ERE is the same way.)

I bring this up, because I'm a bit perturbed by the "low level of want" classification. I think I have a rather high level of want. I'm a snob. I like quality. It's rather how I go about it. This suggests that there are more than 2x2 dimensions of (high want, low want) times (sacrifice, no sacrifice).

It's similar to how the ppl in the above example see exercise and food-knowledge as a sacrifice in order to attain a [superficial?] goal [of looking a certain way---note they didn't say, "you're so healthy"], whereas my primary goal is to be fit and healthy with the looks being a side-effect. Similarly, my primary goal is to be economically efficient. The low spending is a side-effect of that.

The bearing on this thread is that values are internally driven ("pizza is dog food") rather than externally imposed ("I sacrifice easy pizza for financial independence").

If you add just one dimension, it becomes more clear. You can add either skill (social, capital, technical, ...) or values (e.g. minimalism, enviro.)

For example, I do (did) a couple of things that would be rather expensive if I had to pay retail, like sailing. That's a four-five figure want right there. There is, however a one-time three-figure ERE solution.

Then you can have a fifth option:
high skill, high want, no feeling of sacrifice

In fact, when I started saving money (year one of ERE), I had zero skills, that is, I had consumer skills.---Which are kinda useless w/o money to spend. It took me about a year to figure out how to satisfy enough of my wants through other means than spending money to stop feeling like I was sacrificing. Since then I've just gotten better and better. Today, I look at much of the stuff that money can buy as "dog food"... because I can procure better stuff though other means for less money.

The invisible (to consumers) skill component is why ERE and poverty have nothing in common except the dollar number on the bottom line.

To bring back the fitness analogy. It would never occur to me to go on a diet or think in terms of "losing 10 pounds" or "getting in shape for the beach". I do not think in these terms. I may think in terms of how strong, how fast, ... but mostly I just stay active with sports I'm having fun with. I therefore do not see sport participation as sacrifice in order to lose 10 pounds.

[workathome]

@Jacob - I think the specific examples are helpful. I don't think abstractly as well as you do. Stories like "How I Went Sail-Boating Like A Millionaire For $1,000" are fun.

[jacob]

@workathome -

How consumers buy boats:
Seeing an ad featuring a couple steering a 40' boat into the sunset wine-glass in hand, they walk onto a boat show and gets sold a big boat on a 12% loan. They start paying $300/month in slip fees. Rarely sail it upon learning that a two-person team on that size boat tends to be more suicidal than so; also it takes 1+ hours just to get ready to sail. Total cost of boat: Tens or even hundreds of thousands plus a few hundred per month and a few hundred to a couple of thousands every time something breaks.

How consumers sail on boats:
Wandering into West Marine, they get gadgetted out with fancy ocean gear: $500 for the jacket, $500 for the bibs, $300+ for an automatic pfd, $150 for the boots, and maybe some trendy sun glasses too. In order to charter a boat they then get a basic and advanced keelboat cert. for $1500 if they shop well. They are now ready to charter boats for $200-400 per day. But they rarely do so because it's hard to find 5 other people on a given Saturday willing to split the charter. Total cost of sailing: A one time fee of about $4000 plus a few hundred bucks for every day on the water.

How the wealthy buy boats:
Realizing that cash is earning nothing in their savings account and hearing about some boat that's severely underpriced, they buy it in cash. They then organize the boat as a business hiring out maintenance to a company and chartering it to consumer sailors (see above). Meanwhile they write-off depreciation from their 40% tax bracket and sail the boat on weekends. Occassionally they take out their business relations on the boat to impress them and strike deals.
Total cost of boat: Almost zero.

How ERE sail on boats:
Wandering onto eBay and keeping track of sales, the pfd was $150, the boots were $25, and the bibs were $50. The rest of the gear was reusable outdoor gear since sailing is just like camping+raining. Having plenty of time, they develop a reputation of dependability and soon find themselves crewing regularly because dependable crew is always in demand. Having never taken a course they nevertheless soon find themselves with more experience than most Sunday sailors. Total cost of sailing: A one time purchase of equipment.

Now, I submit that the first two have much more in common with each other than either of the last two and that the last two have much more in common with each other than either of the first two.

[Spartan_Warrior]

@Jacob: No time for my usual bloviating responses but suffice it to say: I do see what you're saying. But aren't you moving the goal post a little though? Either you want to own a sail boat (higher want) or you want a cheaper one-time experience sailing (lower want). Couldn't that very example could be seen as sacrificial--"I sacrifice owning a sailboat for financial independence, settling for merely riding in one"?

This is why I think the focus on the term "sacrifice" may be merely linguistic quibbling. Sacrifice has too negative a connotation for what I think is really happening--making decisions that maximize personal value, either short-term or long-term.

(P.S. Responding without reading your most recent post, FYI.)

[Spartan_Warrior]

@Jacob: Okay, have now read most recent post. My previous question stands re: moving the goal post. I won't debate whether the first two examples have more in common with each other than with the last two or vice versa (because I suspect, overall, you're right). I will say that the key difference between the EREr and the wealthy appears to be ownership--another form of "control". The middle class (like ERErs) would incur tremendous personal cost in return for ownership/control of the resource. The wealthy would essentially incur no cost. Again, "not having to choose".

[Ego]

Couldn't that very example could be seen as sacrificial--"I sacrifice owning a sailboat for financial independence, settling for merely riding in one"?

From my perspective the typical consumer wants to "buy" the sailing lifestyle rather than to actually go sailing, which is implicit in your question. That's why some might see not owning a boat as a sacrifice. Same goes for many purchases, especially, ahem, the granddaddy of them all. Lifestyle purchase vs. actually living (doing).

I owned a sailboat (a forty year old wooden one, at that!) and I can tell you there are a myriad of reasons why you wouldn't want to own one if you can figure out a way to sail or liveaboard without ownership. That logic disintegrates if the aim is to purchase a lifestyle.

ERE eliminates the need for showy lifestyle purchases. "Merely riding" in a sailboat is what I am after. All the rest is dog food that I don't want. Both the rich and ERE get to sail without the dog food. Consumers buy and consume the dog food.