Early Retirement Extreme Forums

@Tyler9000: Interesting way to think about it. What differentiates your levels 5 and 6 is reliance on financial capital. Complete reliance at 5, and becoming less relevant at 6. There are two ways this occurs. First, a diversification of strategies where skill-based activities generate income and other value that reduces the reliance on investments. Second, application of systems theory (see Jacob’s level 7 focus) which has the effect of further reducing expenses because the systems are constructed to use inputs that are freely provided, and avoid those which aren’t.

If there is a missing step between 6 and 7, the 6a) is the skill-based diversification away from investment income and 6b) is the application of systems theory. Assuming linear progression, I think this sequence is more likely because the activities in 6a) become a foundation for the systems that are constructed in 6b). Also, while jobs and side hustles can also be undertaken at any level, at 6a) the motivation is reducing reliance on investments (use FI as a safety net) while at lower levels the purpose is to accumulate capital toward FI. Same action initiated by different mindset.

I very much agree with the thinking of the last several posts. I think it comes down to the difference between Financial Independence and Frugality. What is unique about "ERE" is that it presents Frugality in more theoretical terms, rather than as a specific solution formula or flow-chart process.

The link black-son-of-gray made to the predator-prey equations is also key. The best I could come up with was something like "optimization is too masculine." I'm not being even a bit woo-woo in my thinking, just limited in my vocabulary, when I suggest that the problem with rigid focus on SWR is that is does not adequately value or evaluate feminine energy. Human beings do not live in a closed, simple system, and as long as there is energy coming into a complex system, there will be growth and change and chaos.

According to one of the most popular conservative American feminist-back-lash books of the 1960s, one of the functions assigned to the masculine is sexual abstinence towards limiting family size in situations of inadequate resources. The feminine, or a person in their feminine energy, is inherently, or as in this example, literally pro-creative.

Okay, so the first column in the chart defines the given domain in its heading. We are considering the personal finances, skills and resource use of households consisting of around 2.1 people as our economic unit. We are also somewhat assuming that 2 of the people in the household are independent adults and the .1 is a non-productive dependent, like Jacob's ugly-cute dog. What I am trying to get at here is that thinking of yourself as an independent adult who is responsible for yourself and your contractual obligations, and only yourself and your contractual obligations, now and into the future, is a very modern masculine way to view your ultimate domain. In spite of our noted superficial financial functioning differences, IlliniDave and I actually have quite a few things in common. We are the same age, from the same region, close to the same background, close to the same level and usefulness of education, we are both divorced parents with a couple children in their 20s. Due to our similar region/background/age, we are both a bit old-fashioned and sexist relative to the average member of this forum. So, he chooses to include his adult children who are female and his grandchildren who are infants in his financial domain moving forward, and I do not choose to include my DS28 and my highly career-motivated DD25 in my financial domain moving forward. However, I am already devising my super-frugal-Grandma plan which will allow me to compete for the affection of my theoretical grandchild against the likelihood of a very affluent Boomer Grandma on the other side of the aisle or tree. I do not wish to have to resort to calling upon the funds of a theoretical male in the role of Grandma's Boyfriend, but...

Anyways, I hope that the specificity of my example offered, does not detract from the larger point I was attempting to make which is that the boundaries of our defined domains of influence, or responsibility and authority, in which calculations such as net worth are made, are entirely artificial, and the word "independent" is meaningless outside of context which can only be defined as abstraction.

Instead of trying to operate at the highest level of insight, it seems the goal is to be able to assess one's situation, recognize the paradigm, and apply the appropriate focus. People who skipped to level 5 wanting an easy answer for early retirement might be better served by adopting a level 2/3 mindset to accumulate capital and learn investing skills. Level 7 systems thinkers will create a lot of waste without the ecological insights gained by practicing frugality at levels 4/5. Ultimately, I don't think level 8 is about independence from the money economy; that seems more like a survivalist aspiration. Instead, level 8 is reached when the lifestyle no longer requires external input in the form of performing undesirable work, or needing money that does not flow freely to the person. Having perfected the systems, there is now very little left to do. This enables the day-to-day focus of level 1, but without financial stress and needing to grind it out at a job. Perhaps teaching and helping others then becomes a focus.

This thought came as a result of pondering why these forums contain so much money discussion despite exposure to the systems thinking concepts through the ERE book/blog. It's not due to any failure to comprehend how these concepts can be applied to life. Rather, it happens that because of circumstance, the highest value activities are at "lower" paradigms and one just needs to work through the levels. Accumulation still takes years when applying ERE principles! Knowing the paradigms and resources appropriate to those paradigms allows for more productive action. This is the motivation for defining the PF Wheaton levels.

@Fish: I am likely the poster-child for somebody who skipped right ahead to Level 5, so I might be exhibiting some level of non-self-aware rationalization, but I don't know how it is even possible to do what you are suggesting in terms of taking your mind-set back several levels, like a kid doing make-up work over summer vacation. For instance, my current BF who has a very high income and has recently been seriously lowering his expenses and increasing his rate of investment post-divorce (level 3-4?), recently made the comment "You know, you could get a real job." to me, and my response was "Why?" and he said something along the lines of "You are depriving society of your brains.", and I replied "One of my long-term plans with my permaculture project might be to attempt to breed a cold-hardy plant source of caffeine for the benefit of all society. I highly doubt society would derive greater benefit from the results of the suffering I would experience if confined within the walls of an Insurance Institution for 40 hours/week."

Actually, maybe I should consider how or if it is possible a chart like this could help him. He describes his career as "rock-star", and he still has an 11 year old currently in the custody of his extremely hovering (expense-generating) mother, and he exhibits negative interest in the possibility of inhabiting my camper, and positive interest in the possibility (extremely negligible) of installing me in some yet-to-be-purchased suburban abode.

OTOH, I do believe that sometimes starting the same task or achieving the same skill set from the beginner's level with fresh-eyes can lead to better overall practice or enlightenment. So, shall ponder your suggestion.

Semi-related humorous note would be that I stayed with my third sister, who is very much mired in level 1 with her husband and 3 teenage kids, when I attended the ERE meet-up in Chicago, and when I attempted rather futilely to explain ERE and Jacob to her, she finally said "Oh, gotcha! He is like Dave Ramsey."

@the general confusion/disagreement in this thread (which I incidentally find rather interesting) -

I'd like to note that I see three distinct perceptions of my little table in this thread, but before doing that I'd also like to note that the goal of the table is what GandK wrote above and this has a lot to do with the https://en.wikipedia.org/wiki/Curse_of_knowledge also recently mentioned which often happens when one forgets---in all the excitement---that having university professors teach grade school math is mostly a really really bad idea.

One way of seeing the table is similar to crossfit skill levels. The purpose of the crossfit table is for the individual person to see in which events they are strong or where they are weak and use that knowledge to decide where to level up. All these crossfit skills are more or less independent. One can be level 4 in the 400m run and level 2 in the bench press. From all these tests, one could even generate a weighted crossfit index-level.

This is not at all what I have in mind with my table! If anyone desires to quantify their personal awesomeness, a table wouldn't be the best approach. I'm thinking something more like a purity test. (Maybe coming to a thread near you soon, ha!)

Another way of seeing the table similar to the karate belt graduation system (which is a 20th century invention) or alternatively the modern western degree system (also 20th century) that distinguishes students according to which kind of classes they've passed. The purpose of this system is two-fold. First it gives students something to strive for. Second, it gives us some way of ranking students with a simple number.

This is half-way compatible with my table but it's still not what I had in mind. For example, if you tell me that someone is an 8th grader, I can use that information to get a reasonably good idea of their absolute math prowess, i.e. they can solve linear equations with confidence and because 8th graders are more or less a commodity I simultaneously get a good idea about their litt. skill (they can read a 200 page book and write a 3 page essay about it). Sure, some outlier might be a fecking poet and write Nobel prize novels already or somebody's parent might be a math professor, but overall the class levels work reasonably well. Obviously, outliers will fall through the cracks here.

And yet another way is seeing the table similar to traditional sword fighting. Traditionally (pre-20th century), people didn't wear belts and so you'd have to gauge the skill of the opponent based on a bunch of indicators. Their stance, how they moved, subtle clues about how they held their sword. You'd have to crossreference this with your personal experience of other people putting them into groups of similar skilled people. With a beginner you'd need to know that they could be doing stuff that's too dangerous to both themself (because they didn't know) and you so you'd have to account for that. With an expert, you'd see them doing things that didn't make sense or broke the rules as you understood them, also you'd tend to lose a lot more. Sometimes this realization would be a self-fulfilling prophecy.

This is what I had in mind with my table. It also applies to chess and forum debates. The table is an overview of how people typically behave. It does not account for outliers. It does not presume to say that there are only exactly 8 different student-commodities in the world. The table is a guide! It's not a ranking system or an achievement system. A sword-fight is very much like a conversation and it can very easily go bad: You fail to account for a noob doing something mutually destructive that a more trained person would never do (the more advanced contester failing to account for DK-effect). You receive instruction from someone higher up but you don't speak their language and so it goes right over you head. So in order to have a good conversation, you need to understand where the other person is coming from and "speak" accordingly. Similarly, in order to teach, you also need to know where your student is coming from. And indeed to learn, you need to know where your teacher is coming from.

@Fish - Your posts in this thread sofar suggest you completely grok what I'm trying to say here. The table really describes learning-levels as they're described academically in the various Dreyfus papers as well as amateurishly overviewed in the ERE book in sec4.3 (Gauging Mastery). People move from the no-context concrete tips to collections of facts, then on to to methods, and then to synthesis of methods, and finally to being free of methods because it's all ingrained. One no longer thinks about it.

I do not know whether this is a natural or necessary progression or whether it's simply a widely adopted (see above, i.e., most martial arts and intellectual education systems) in the various 20th century systems that all of us accept blindly as being the only place for people to see when it comes to teaching, being perhaps chained in Plato's cave?

Certainly, most (all??) teaching methods I've seen almost never start at 5 or 7 or even 3 (except, maybe New Math which IMHO is a low point in pedagogy). It's absolutely possible to jump laterally from one field to another in terms of levels. In fact, the strength of the ERE philosophy DEPENDS on being able to carry one's ability to abstract to different fields. But I don't know how it's possible/practical to skip levels without having some foundation somewhere.

I absolutely agree that trying to go to 5+ immediately is likely to lead to ... I don't even know ... if there's zero experiental knowledge to base it on. That's style over substance. How can anyone optimize if they don't know how to optimize. That's like being religious without being spiritual, no?

I think martial arts is the ideal metaphor. Just like Dreyfus, we start with technique. Wax-on, wax-off. Then we put techniques together in kata or moves. Then we do a little sparring with our combos. And finally, we realize that "technique" was just a learning tool. As far as I know there's no "4 hour Black Belt" system in existence.

PS: There is a Zen saying: "Before Enlightenment chop wood carry water, after Enlightenment, chop wood carry water." You probably knew that already.

Well, you did call it a 'scale' which kind of implies numbers, points, grading, and such.

It seems to me that people could start out at a 5, even if they had no previous concept of FI/ERE, if they already had most of the pieces/skills in place and were only missing the vision of how they could weave them all together to achieve something much bigger than the individual parts.

If some have skills but no vision and others have vision but no skills, which would rank higher faster once they 'discovered' ERE? (honest question) I guess skills/habits might translate into 'raw talent' if you were looking at it from a scouting perspective.

If people have vision but yet no "skills" (in the sense of previous steps), they'd be able to learn the skills a lot faster. However, in my experience people with higher visions mostly have some skills at lower levels already; it's just that they're in some other field. Raw talent also helps for speed in terms of learning (like IQ). However, I still think people need to progress through the levels because each level builds on lower levels. This may just be because I'm not aware of any short-cuts. If I knew how, I'd be taking everybody straight to black belt.---Why waste time sending kids through K-12 when we can just take them straight to the PhD exam?

Vision != weaving.

The point of the Wheaton scale, which is really a scale of "visions", is that each level has their own vision of which skills matter and what they are.---That the vision of +2 levels is crazy and the vision of -2 levels is stupid.---That anyone will generally see visions removed from themselves as either crazy or stupid.

Paul Wheaton suggests only presenting information that is 1 level ABOVE the student's level. The martial arts system agrees.

The Wheaton scale is a formalization about leaving Plato's Cave. If you're still in chains you might listen to people who just broke their own chains. However, anyone who's already been out of the cave and come back to tell you about shadows would be deemed crazy. Even a mime would be in doubt.

For the Plato's Cave analogy of my table:

1-2) chained and seeing shadows
3-4) standing behind the slaves, seeing shadows and seeing chains
5-6) leaving, seeing chains, not understanding why slaves aren't breaking chains
7-8) outside, seeing people leaving

Of course there are different exits to the cave. But it's the journey that matters and I don't think the journey can be skipped.

PS: Just to add to the confusion. It was quite common in shinkendo to be told: "You know the way I taught you this skill previously? Well, that isn't exactly the best way to understand it but I had to because it was the best way to teach it. So now that you know the skill, please forget how I initially taught it and let me teach you a better way to understand it."

jacob wrote:But it's the journey that matters and I don't think the journey can be skipped.

I'm stuck on this part. On one hand, I can see where a person is fragile if they haven't learned all of the lessons to be learned on the journey. On the other hand, toiling too long on the journey* can leave a person stuck in a middle-class, scarcity mindset that will keep them from attaining full ERE enlightenment.

* I've always wondered if speed was part of the magic of ERE, not only contributing to the level of satisfaction but also the likelihood of success.

-----

I guess I'm assuming that a person's goal is full ERE enlightenment. If I drop that assumption, it makes more sense. Most people will probably journey to the level that suits them and best matches their innate skill set.

Yes, I'd drop THAT assumption [of everybody's goal being full-8+] already. (As part of my "don't discuss [controversial stuff] after age NN routine.")

People (any individual) will go as far as they want to go.

I can empathize! For example, I grok that "abs are made in the kitchen", but I'd rather keep eating hotdogs on football Saturday (Go Irish!) as well as other junk food; and so I settle for semi-abs... so that's my choice. Others will choose not to kick it up another notch on the ERE table of this thread for other reasons due to their particular enjoyment of metaphorical hotdogs slash dislike to daily workout routines.

Certainly, this leaves people in a fragile state. But that's nature.

In particular, I realize that it's quite possible that many won't be able to kick it up high enough even if they want to. IOW, it just be possible that humans in the aggregate would be able to take it quite high but that many humans aren't inherently able to move up that far by themselves. IOW, most humans are followers, not leaders, nor independents.

Here's what I have in mind, not as an ERE-specific Wheaton Scale, but one for financial independence based on how much you give to or take from others.

-3: Dependent on taking from many others who are unwilling to give in order to survive. Thieves with no other jobs or contributions to society.

-2: Wholly dependent on others who are willing* to give. Children, elderly, disabled. *or at least willing to pay taxes which support welfare programs

-1: Partially dependent on others who are willing to give, partially provides for oneself through work. A spouse making $X/year in a family spending >$2X/year, a high schooler with a summer job.

0: Able to independently pay for one's own basic needs for survival through work, but only minimal "wants" and not able to save anything. Living paycheck to paycheck.

1: Able to pay for all needs and some wants through work, but not all wants. Can save up for a want, but will always have more items to add to their wish list.

2: Able to pay for all needs and all wants through full-time work. Accumulating savings for nothing in particular. Might avoid buying a want just so that it can be put on a wish list for someone else to purchase as a gift.

3: Able to pay for all needs and all wants through part-time work, but couldn't cover all needs without some level of work income. There is some passive/investment income involved, or the person is frugal enough that they don't have any need to work 40+ hours/week, or both.

4: Provides all needs without work, but not all wants. Likely a significant amount of savings generating investment income, or perhaps passive business income, or living off the land. Still works to pay for wants.

5: Provides all needs and wants (for oneself) without work. The standard "financial independence" definition for one person. Would keep working to provide for other family members.

6: Provides the needs and wants for all dependents (spouse, children, aging parents) without work. A completely financially independent family.

7: Provides the needs and wants for all dependents without work, and in place of work dedicates time to provide for the needs of others outside the immediate family. A financially independent family that spends a significant amount of time volunteering, growing food to give it away, etc.

8: Financially independent and converts others up the scale toward being financially independent and then helping others, etc. Net result is helping provide for far more people than they would at level 7.

9: Dedicates life, or at least a large part of it, to helping as many humans as possible. People who have made millions or billions of dollars and create charities or products that are capable of changing the world for good. (I'm not saying people like Bill Gates are the epitome of financial independence, but I would say someone like him belongs at this level because of the enormous number of people he is trying to help).

10: Provides for any humans in the world who are in need. A utopian world leader, or god/mythological figure.

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

+1

it looks like every individual has their own n-dimensional scale, and some of them overlap in some of the dimensions. for example, almost all humans interested in ERE will have some kind of financial dimension on there, otherwise they wouldn't be on this forum.

thinking about it more, brute thinks a definition of ERE should be considered. from the wiki:

Early Retirement Extreme (ERE) is a movement of individuals integrating ideas from anti-consumerism, DIY, the Renaissance man ideal, home economics, individualism, environmentalism, and rentier capitalism toward the goal of achieving financial independence extremely rapidly.

shortened:

Early Retirement Extreme (ERE) is a movement of individuals integrating ideas from various domains toward the goal of achieving financial independence extremely rapidly.

for brute, this defines ERE, and separates it from other FI approaches. instead of defining FI as a financial problem only, and trying to solve it exclusively with financial means, ERE utilizes any strategy or tool from any domain that could help.

this is why it's so hard to define progress or levels in any particular domain - every individual doing ERE likely has different domains they're picking from, and therefore exists in different dimensions.

if the goal of ERE is to reach FI, and FI is defined as "not having to work and be comfortable", that is really the only scale that all ERErs have in common. but there is an infinite number of ladders humans can use to climb this scale, and while individual ladders can be graded, the collection of ladders a human uses may be unique.

things that can be judged could be, to what degree does an individual's strategy fulfill his needs/comforts (% FI), and maybe how diversified is it. for example, a human with a 75% savings rate and 80% to his FI goal, even from a single job, is "more ERE" than another human with 5 independent gigs, but who barely scrapes by from doing them (all other things being equal). on the other hand, if two humans are already FIRE, but one is 100% invested in micro cap developing world stocks, whereas the other has 20% investment income, 20% social capital, 20% in gardening/cooking skills, 20% in a trade that's also a hobby (engine repair, carpentry), and 20% in.. whatever, that person might be judged a more resilient EREer.

in addition, fixed levels aren't necessarily useful. if a human FIREs on level 10 salaryman, but is a level 2 in everything else, is that level 10 a useful comparison for anyone else? brute thinks not, unless they're on the same ladder at level 8-9.

also brute thinks humans can go negative in probably all domains. brute thinks about humans starting out their first job with 100k in student loans, or parents to support (negative social capital), or so unhealthy they're below average (think obese and almost immobile). probably true for all or most domains. it can be very helpful to these humans to learn how to dig themselves out of that hole. brute thinks Dave Ramsey is almost exclusively focused on people with negative financial positioning. the 0 could be a human with a net worth of zero.

the columns in jacob's picture are the dimensions in this model. the difference being that they're all optional, and they can go into the negative, and they're not as set in stone as steps 1-10.

for this reason, and if the goal is to help people and "collect them where they stand", vs. "where they should be standing", brute thinks that a map is a better analogy than a matrix/grid/scale. from a mental models standpoint, a map doesn't judge humans on where they are, nor where they want to go. it's clear that anyone looking at a map can have a different goal, and is at a different position. and while most humans imagine a 2-dimensional map, one could draw lots of lines through one point that serve as the "dimensions".

another analogy brute likes are building blocks. every EREer probably wants to build something different, and even if 2 want the exact same lifestyle, they can build it using different blocks, coming from the many different domains.

in contrast, a fixed matrix with fixed levels implies that these are the exact domains that must be utilized for ERE, and that it's clearly better to be higher in every level - the goal being 10 in each of the few fixed domains.

this is the antithesis to the flexibility and systems approach model of ERE, and unlikely to produce helpful advice.

brute still thinks it's useful to have advice for humans that utilize category X at stage Y, and thinks that recommending stage Y+1 or categories X-1 and X+1 are great. but he would frame it more as suggestions, and less like a grading system.

there are already plenty of pages for individual domains in the wiki. these could contain an overview of different stages, but it wouldn't have to be exactly 10 levels. they could still roughly be sorted by how much they escalate. they would not need to have numbers.

if jacob encounters a human that just opened a brokerage account, he could say this: "oh wow that's cool, jacob also has a brokerage account. after opening it, he really enjoyed reading Bogleheads and A Random Walk Down Wall Street to help him get his head around it". no need for numbers.

in this case, the ERE wiki could just have a list of different stages under "investing", of which "opening brokerage account and buying random shit" and "index funds" are probably the first 2 steps.

if jacob encounters a human that just bought a house, he can say "jacob owns a house too, does derp (the human's name) plan on living in it or renting it out? jacob also heard that people rent out their spare rooms on AirBnB to make extra income, like a hotel. also, there's so many cool home projects derb can do like remodeling the kitchen. it'll increase the home's value, too!"

in this case, there could be transfer from one category to other close ones: real estate, renting it out, home improvement skills. the top of the wiki page of "real estate" could simply have links to similar/synergistic categories.


this would probably be somewhat crowdsourced. if jacob tried to model everything about ERE himself.. strike that. because jacob tried modeling everything about ERE himself, his grid level system is essentially grading people on how jacob they are. ERE is too flexible and specific for that. but there's a pretty diverse set of humans on this forum, so brute thinks that a somewhat crowd sourced "manual" on how to subtly push other humans towards their level + 1 in any ERE related area could be pretty useful.

BRUTE wrote:

Early Retirement Extreme (ERE) is a movement of individuals integrating ideas from various domains toward the goal of achieving financial independence extremely rapidly.

for brute, this defines ERE, and separates it from other FI approaches. instead of defining FI as a financial problem only, and trying to solve it exclusively with financial means, ERE utilizes any strategy or tool from any domain that could help.

this is why it's so hard to define progress or levels in any particular domain - every individual doing ERE likely has different domains they're picking from, and therefore exists in different dimensions.

This is good. To me ERE seems to be a progression from 21st century conventions back towards homesteading. In a sense in the extreme it's like homesteading with a big bank account and possibly residual income from conventional life.

You stated the difficulty of trying to set forth a scale. To have one universally applicable scale you have to have an ultimate destination folks progress towards. Most of the paradigms that seek to balance finance and lifestyle hit a point where each individual ultimately has to take their own happy path. So it's a lot like a tree (in appearance rather than function). Down at the very lowest levels (roots) you have all sorts of inefficient, misguided starting points that as some basic understandings and skills emerge converge into a trunk of sorts that ascends until some critical mass/velocity is achieved where each person then launches/branches into their own optimal space. The trunk is certainly conducive to a scale but the myriad of on ramps and later off ramps make the summary job a challenge.

Seeing what jacob wrote since I last checked in, it seems like simply re-titling the table to something like "Wheaton Levels for Selected Financial Dimensions as Relevant to ERE" might get the intent across better.

I tend to see ERE and other similar expressions as engines that focus things into the trunk and accelerate them through the trunk, like a philosophical propulsion engine.

jennypenny wrote:toiling too long on the journey* can leave a person stuck in a middle-class, scarcity mindset that will keep them from attaining full ERE enlightenment.

* I've always wondered if speed was part of the magic of ERE, not only contributing to the level of satisfaction but also the likelihood of success.

I sort of feel the opposite....that toiling too quickly can leave a person unable to fully appreciate the entire philosophy behind ERE. In my own life, from time to time*, I really wish I could just skip to the part where my SWR goes sub 3%. I imagine what I'd do each day, not having the commitment of work. I also then start thinking that I'm not quite ready for that entry point yet and that I 'need' to experience the next 3-4 years for it to be of full value.

IOW, I might be a level 7 in the savings rate path, a level 8 in the vacation path, but I might only be a 3-5 in the 'focus' path and the only way to move forward on that one is 'time in game'. Kind of like how something is only worth as much effort as you put into it.


*or more like every morning during my daily standup

IlliniDave wrote:I tend to see ERE and other similar expressions as engines that focus things into the trunk and accelerate them through the trunk, like a philosophical propulsion engine.

that sounds a lot like the way brute thinks about ERE.

all humans have to spend their lives doing some stuff, any stuff. the trick with ERE is doing things that have certain synergies, exemplified in the web of goals.

in a way ERE/the reversal from 21st century back to homesteading thinking means a reversal of past separation of concerns.

used to be a human got food after hunting/working, while getting a good workout. it also was the meaning of life, because without it, life would end by starvation.

nowadays humans have to work out to recover from their work, then drive to buy food, and buy their meaning of life too. everything's been put into its own little container.

ERE is the skill of selecting synergetic activities. live close to work so walking/biking there is possible, giving a workout. combining cooking as a hobby/social activity with healthy food. and so on.


@cmonkey:

maybe there's something to that old saying about the light only being visible in darkness brute doesn't really subscribe to that whole pain body/catholic suffering ethic thing, but he does admit that life can be pretty meaningless when there's nothing to overcome.

jacob wrote:For example, I grok that "abs are made in the kitchen", but I'd rather keep eating hotdogs on football Saturday (Go Irish!)

hold on, hold on... there are hot dogs made out of lentils?

Mental lentil dogs

IlliniDave wrote:This is good. To me ERE seems to be a progression from 21st century conventions back towards homesteading. In a sense in the extreme it's like homesteading with a big bank account and possibly residual income from conventional life.

Perhaps, but in the ERE community there has long been a homesteaders vs. nomads dichotomy. The early days of the ERE blog even seem to me to have been a bit closer to the nomadic side and have moved more towards homesteading as time went on.

BRUTE wrote:thinking about it more, brute thinks a definition of ERE should be considered. from the wiki:

Early Retirement Extreme (ERE) is a movement of individuals integrating ideas from various domains toward the goal of achieving financial independence extremely rapidly.

for brute, this defines ERE, and separates it from other FI approaches. instead of defining FI as a financial problem only, and trying to solve it exclusively with financial means, ERE utilizes any strategy or tool from any domain that could help.

So observe how this definition is also and already in the table under the correct level 7

creatively constructing redundant, stable, self-reinforcing systems of diverse elements where inflows and outflows are matched throughout the systems

I think the reason ERE stands out here from other personal finance sources is solely because ERE is still the main and practically only personal finance work whose focus was at this level. However, this focus level is common amongst permaculturists. In fact gardeners likely won't start referring themselves as permaculturists before their general focus is around stage 6 moving towards 7+. Because of this, I've had a much much easier time explaining ERE to permaculture people than I have to e.g. bogleheads who in gardening terms are more like monocrop farmers going for maximum production with fertilizers and machinery.

this is why it's so hard to define progress or levels in any particular domain - every individual doing ERE likely has different domains they're picking from, and therefore exists in different dimensions.

I think you're still thinking in terms of karate belts or standardized test rankings.

You're trying to figure out what level a given person is at based on a bunch of multiple choice tests. Hence all the talk about being level 2 this and level 10 that and the difficulty/impossibility of finding an appropriate weighing of these factors to find one single ERE-score.---Perhaps refined by doing even more testing of different columns. It seems like you want a standardized test/curriculum in which where the goal is to specify some clear goals with appropriate learning material that people can work on and then level up. You're essentially advocating an analogue to the educational system and what you're looking for is some GPA equivalent based on examining all the ERE-classes and you want one column for each possible class, e.g. investing, DIY, cooking, minimalism, nomadism, homesteading, ...

That's not my goal with my table.

What I want to know is how people think. I want to know how they came up with the answer; not what answer they came up with. It's been my experience that people who think in similar ways also tend to approach problems in similar ways and consequentially tend to come up with solutions that correspond to their approach. The MOST important column in my table is the Focus column. It's also been my experience that it's really hard to grasp and naturally think in ways that are both significantly higher and lower than one's own in the focus column. (Yeah, sure one can fake it, but only for so long and what's the point anyway?!) The [much] higher levels are difficult because one has never been there. The [much] lower ones are hard because one has either forgotten or find it hard to avoid using one's experience to go into higher levels (that's the curse of knowledge problem I've linked to a few times above).

BTW,

Read http://epubs.surrey.ac.uk/1198/1/fulltext.pdf ... and tell me what, if any, kind of standardized testing would be able to resolve what one's learning stage is at the meta-level (where one integrates all one's classes). I don't think it can be done.

The Focus column in my table, not coincidentally, is simply the Dreyfus learning levels expressed in personal finance-language.

http://www.bumc.bu.edu/facdev-medicine/ ... -level.pdf

This paper uses chess as an example.

I highly recommend reading this book: https://www.amazon.com/Amateurs-Mind-Tu ... 890085022/

This is a chess book about what goes inside the amateur's mind when they play the game and it's ranked by ELO levels. Players of different chess strengths have different thought processes which determine how they play. I think it's useful even for non-players just to recognize that what appears similar on the surface might be very different in people's heads. Indeed, I think many don't sufficiently appreciate the difference in thinking-levels and some aren't even aware they exist.

I think the same holds for what goes on inside people's mind when they think about personal finance. Players of different pf-strengths have different thought processes which determine how they play or see the game.

From a review:

If your no good, you won't like it. If your too good, you won't like it. If you've been playing chess for at least two years and are struggling to get any better... you will find it absolutely amazing. Chess will begin to make sense. Silman focuses on one topic at a time... He then shows you a problem position. He shows these positions to some of his students of different strenghts and asks them to play against him but to think aloud as they play. He comments on what they are doing poorly and well. He teaches you how to think, not just how to play.

The other columns in my table are essentially the different stages of "thinking aloud". Sure, sometimes a beginner might say something that corresponds to a much higher level ... or sometimes an expert may say something stupid, but in general, most people will think in ways that correspond to their level and act accordingly.

The utility of my table is that it does no good for a noob chess player to go take lessons from Kasparov because Kasparov (unless he's a genius teacher) is unable to present the material in ways that a noob can understand.

The same holds for personal finance.

@Jacob: I think your table more or less captures the different Wheaton levels of personal finance. I found the PF blog-space categorizes people by stages by comparing income and net worth relative to expenses (typical example). While motivations might correlate well, people in similar financial situations will have completely different mindsets that correspond to financial knowledge.

This is an attempt at describing the mindsets using your scale. It may not be completely correct and is intended as a starting point for the forum’s collective understanding. At level 6 and above, I stole your descriptions because you described it a lot better than I could (or maybe I don’t get it?). I’m still not satisfied with level 8 because it just feels like a difference in degree from level 7, not in kind. Maybe it should be deleted.

Level 1 (Scarcity): Views money as a medium of exchange. Work for money and trade money for stuff. Understands income. Debt is like a cheat code because it enables the purchase of stuff that is otherwise unaffordable. No concept of investing.

Level 2 (Accumulate): Views money as a tactical resource. Money can be saved for a rainy day. Understands interest. High-interest consumer debt and payday loans are avoided. Values having a high credit score to reduce cost of borrowing. Thinks the stock market is like gambling.

Level 3 (Exponential growth): Views money as a strategic resource. Money can be accumulated towards larger goals like buying a house, or saving for retirement. Understands net worth. May intentionally take on low-interest debt (mortgage, car loan) and invest the difference expecting higher returns. Investment is usually understood at this level and above. Budgets are seen as a sacrifice in the loss sense.

Level 4 (Embracing efficiency): Views money as life energy. Money should be carefully spent. Understands expenses, and tries to minimize them. Aspires to being completely debt-free. Invests in paying down all debt including the mortgage. Budgets and frugality are embraced.

Level 5 (Optimization): Views money as a store of value. Money enables freedom. Measures net worth relative to expenses. Optimizes operating expenses. Invests for retirement. Frugality is fully internalized and budget is primarily used as a retirement planning tool.

Level 6 (Yields and flows): Views money as a unit of account. Money reliance is fragile. Understands capital and yield in non-financial contexts. Manages cash inflows and outflows and realizes savings becomes less relevant when these are in balance. Diversifies income sources, and sees the point in investing for income. Robustness, not frugality, is motivation for addressing needs without money.

Level 7 (Systems theory): Views money in a context other than currency. Sees everything as a set of interconnected systems and money is just one of many inputs and outputs. Practices true lifestyle design. Creatively constructs redundant, stable, and self-reinforcing systems of diverse elements where inflows and outflows are matched throughout the systems.

Level 8 (Chop wood, carry water): Views money as all of the above, or something else? Sees money as a force that distorts the natural interactions between people and the environment and seeks to transcend it. Systems are perfected by minimizing undesirable work and using resources as part of a complete and naturally flowing cycle. Focus is on making money irrelevant to the systems by eliminating waste and "closing the loops."

If we accept this vision of level 8, then the next logical progression is level 0 or 9 (the true chop wood, carry water level?) where money doesn’t exist as a concept because of ignorance (like a child whose needs are entirely provided for) or because the person has completely transcended it. Possible examples include living in a world of extreme abundance, a set of closed, self-sustaining systems of one’s creation, or operating in a mythical "gift economy" where everything is freely given and debt does not exist. It’s interesting to think about, but likely too many Wheaton levels removed from us to be practical. Unless you have a strong vision of it, I almost prefer deleting level 8 and sticking with levels 1-7 because it doesn’t imply as much of a linear progression or so much the value judgment that one is better than another.