leanFIRE and fatFIRE definitions

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jennypenny
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Re: leanFIRE and fatFIRE definitions

Post by jennypenny » Mon Dec 10, 2018 2:21 pm

I've always considered leanFIRE people to be the ones who start from zero and add just enough to be secure and satisfied, while the fatFIRE people start out bloated (money/possessions) and trim just enough to attain FI. That doesn't really answer jacob's question though, since it's about the difference in mindset, not spending level. OTOH, using mindset as the measure removes fixed amounts from the definition.

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Re: leanFIRE and fatFIRE definitions

Post by TopHatFox » Mon Dec 10, 2018 4:29 pm

Is there really that much difference for one person after they have 500K? I get it if you have a family or feel like living in the shit-hole that is LA or NYC, but 15-20K/yr is a lot...

$600/mo for rent and utilities = 7K
$400/mo for HI, Dental, Umbrella = 5K
$200/mo for food = 3K
$100/mo for transit = 1.2K
$15/mo for smart phone = .2K

16.4K, with 3.6K for fun. I have no idea about insurance, but $400/mo for one person seems conservative. This could be cut more, but whatever. And this isn't taking into account that you'll probably be doing some sort of part-time work because you're bored out of your mind. Even if it's just making hiking videos or writing short books.

I guess I don't get the point of FatFire unless if you have a partner that isn't bringing any assets to the table (but even then, if you have your own small place, I guess you just have to feed and entertain her)? Or dependents (valid, they do add lots of new expenses)? Or an ego issue (MMM has multiple millions, I should have multiple millions)? Or a penchant for helping the world (for all the philanthropist types)? Or...possibly cancer. Dammit cancer.

The Old Man
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Re: leanFIRE and fatFIRE definitions

Post by The Old Man » Mon Dec 10, 2018 6:17 pm

TopHatFox wrote:
Mon Dec 10, 2018 4:29 pm
I guess I don't get the point of FatFire ...
Fatfire is for people that live LARGE and want to live LARGE (or even LARGER) in retirement.

Perhaps a more pertinent questions is, "What is the purpose of LeanFIRE?"
According to Reddit, the LeanFIRE subreddit was setup to accommodate people that don't have a high income but still aspire to FIRE. They were intimidated by all the FatFIRE types masquerading as real FIRE.

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Re: leanFIRE and fatFIRE definitions

Post by prognastat » Mon Dec 10, 2018 6:21 pm

Hmm I guess I have a very different conception of what LeanFIRE is than the actual subreddit holds.

In my opinion it's more lifestyle/spending both during and most of all after accumulation. In my conception of LeanFIRE you can make 500k a year and LeanFIRE by working only a year or so and still be LeanFIRE.

Of course there will be a lot of overlap in LeanFIRE and lower income due to necessity as when you make a very low income it's going to be much harder if not impossible to do FatFIRE or even regular FIRE.

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Re: leanFIRE and fatFIRE definitions

Post by Scott 2 » Mon Dec 10, 2018 7:43 pm

Is there really that much difference for one person after they have 500K?
Outside of general consumer habits, the primary leanFIRE risk is in the US healthcare system. It is possible to develop a chronic illness that results in maxing your insurance deductible every year. You could depend upon a medicine that retails at $5k+ a month, but is not covered by Medicaid. That means you need to generate enough income to get coverage on the exchanges, provided they persist and remain subsidized. Tough to do with only 500k in assets over 30+ years. In this scenario, you also count on the law requiring health insurers to cover pre-existing conditions. If that falls apart, your last hope before spending every dollar, is that a drug company will take pity on you with free medicine via an assistance program.

Someone with 2 million? If it comes down to it, they can control other costs and afford US healthcare. They also have a safety net for long term care, should their infirm period stretch out, before death.

Is it worth spending more "good" years accumulating wealth, in hopes of the "bad" ones being less bad? IMO that is a personal choice. But it is the best reason I've seen why someone might pursue fatFIRE.

Of course, ignoring the desire to leave a legacy to heirs or charity.

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Re: leanFIRE and fatFIRE definitions

Post by 2Birds1Stone » Mon Dec 10, 2018 9:31 pm

TopHatFox wrote:
Mon Dec 10, 2018 4:29 pm
Is there really that much difference for one person after they have 500K? I get it if you have a family or feel like living in the shit-hole that is LA or NYC, but 15-20K/yr is a lot...

$600/mo for rent and utilities = 7K $550
$400/mo for HI, Dental, Umbrella = 5K $120
$200/mo for food = 3K $250 (grcoery + eating out + Alcohol)
$100/mo for transit = 1.2K ($250 gas/insurance/depreciation)
$15/mo for smart phone = .2K ($Free thanks to work)

16.4K, with 3.6K for fun. I have no idea about insurance, but $400/mo for one person seems conservative. This could be cut more, but whatever. And this isn't taking into account that you'll probably be doing some sort of part-time work because you're bored out of your mind. Even if it's just making hiking videos or writing short books.
You could even hit those #'s living in HCOL area with a roommate or SO. My own costs are very similar over the past 5 years.(adding in bold for comparison.)

$500k will be a great spot to pull the plug. The question is, will I want to live on $18k/yr in my 40's, 50's, and beyond......probably not.

Some people have expensive hobbies they would like to pursue in retirement, others want to spend on others (as you pointed out). Healthcare alone could eat most of that budget, as already pointed out.

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Re: leanFIRE and fatFIRE definitions

Post by Jin+Guice » Mon Dec 10, 2018 10:22 pm

Is frugality not part of FIRE? I mean, MMMs blog is all about frugality. I guess you can retire early if you make an asston of money and then spend 40k a year, but is that really very interesting? I always thought 40-50k a year was fatFIRE.

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Re: leanFIRE and fatFIRE definitions

Post by Redo » Mon Dec 10, 2018 10:43 pm

MMM people think being frugal = buying a 50k car instead of a 100k car
For Canada, I would say 500k CAD is a good lean FIRE goal, since our poverty level is 16-20k, and we have less healthcare costs compared to the US.

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Re: leanFIRE and fatFIRE definitions

Post by BRUTE » Tue Dec 11, 2018 12:33 am

2Birds1Stone wrote:
Mon Dec 10, 2018 9:31 pm
$600/mo rent and utilities

..

You could even hit those #'s living in HCOL area with a roommate or SO.
errr no. $600 is a modest parking spot in the HCOL areas. the cheapest brute has ever rented in his metro area was $1,000, and that was half a decade ago for a bunk bed in a garage. most humans here live with roommates or SOs, and they still easily pay 3x what's being suggested.

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Re: leanFIRE and fatFIRE definitions

Post by FBeyer » Tue Dec 11, 2018 3:49 am

Redo wrote:
Mon Dec 10, 2018 10:43 pm
MMM people think being frugal = buying a 50k car instead of a 100k car
For Canada, I would say 500k CAD is a good lean FIRE goal, since our poverty level is 16-20k, and we have less healthcare costs compared to the US.
Poverty levels are a sensitive thing.
A couple of years ago the Rockwool foundation made a report saying that the minimum spending level that a family of 2, with one child, could subsist on was: 204.000 local wooden monies per year. We've had years where we spent 130.000 per year, putting us at 63% of that minimum line. This, however, is only doable because we haven't been forced to live at that poverty line for all our lives.

Much as I take ill-placed pride in living that far below 'poverty expenditures', I don't like to use poverty as any kind of measuring stick when it comes to FI. It's simply not an apt, nor a respectful, comparison for those who are truly stuck there. We can live like we do because we've used our great income and education to get ourselves there. The compound activation barrier (education, network, income, grit, motivation) you have to cross to move into true low-levels of expenditures is high, really high. Few of the tools necessary to cross that barrier are available to the poor.

I don't know exactly why we need a definition of leanFIRE, but if we absolutely, positively, must make one, please base it on median income rather than poverty levels. I'd really hate if the ERE corner of the FIRE movement was known as those analytical, emotionally void, assholes who ridicule the poor when we flaunt our expenditures.

Also: Stop shitting on MMM and his followers. Be better than that people. Please.

Redo
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Re: leanFIRE and fatFIRE definitions

Post by Redo » Tue Dec 11, 2018 6:24 am

No one is ripping on people who are in poverty. It's just a measure, if it offends you substitute poverty level with minimum expenses.
MMM is great, his followers and people on the FI subreddit, not so much. But you're right, it was a cheap shot.

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Bankai
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Re: leanFIRE and fatFIRE definitions

Post by Bankai » Tue Dec 11, 2018 8:06 am

I don't really follow MMM blog anymore (I read the whole of it 3-4y ago), but isn't his spending pretty much the same level as jacob's, i.e. 7-8k per person? They both own their homes outright so with imputed rent they both are probably around 12-14k per person or so? I can't see how he can be considered anything but leanfire.

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Re: leanFIRE and fatFIRE definitions

Post by jacob » Tue Dec 11, 2018 8:09 am

The Wheaton scale effect is strong. According to observation 1 most people will find folks
  • One or two levels up pretty cool
  • Three levels up a bit nutty
  • Four or five levels up downright crazy
  • Six levels up should probably be institutionalized
Conversely, by observation 2 most people will find folks
  • One level back are ignorant
  • Two levels back are assholes
  • Any further back and they shout be shot on sight for the betterment of society as a whole
This surely explains the felt animosity. People typically follow leaders, etc. who are one or two levels up from themselves. When they've attained the same level they move on and follow the next one up. There is therefore a difference between the blogger and their readers.

If the leader is seen as okay(*) (same level as the proverbial you) then the readers are by construction ignorant.
If the leader is seen as ignorant then their readers will look like assholes.
If the leader is seen as an asshole, then their followers should be shot for the betterment of society...

(*) Righteous? :? :P

If the levels are FatFIRE, FIRE, LeanFIRE, and perhaps ERE then people who would otherwise FatFIRE would be inspired by folks talking about FIRE, ditto FIRE to LeanFIRE ... However, from the perspective of LeanFIRE, the FatFIRE followers of FIRE would be seen as ignorant assholes, etc.

I'm pointing this out because I felt this ugly instinct in myself until I figured out what's going on. The reason I asked the question is that I'm losing track of where the levels are these days. A couple of years ago, we made this
Image

However, I think the "typical household spending" needs to be revised. It's now clear to me that it was built within a bubble of LeanFIRE.

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Re: leanFIRE and fatFIRE definitions

Post by jacob » Tue Dec 11, 2018 8:24 am

Bankai wrote:
Tue Dec 11, 2018 8:06 am
I don't really follow MMM blog anymore (I read the whole of it 3-4y ago), but isn't his spending pretty much the same level as jacob's, i.e. 7-8k per person?
No! :mrgreen:

There are some "apples and oranges" issues. I did a comparison of the ERE and MMM HQ budgets a while back presuming that we both paid the same housing costs for a 1bd/1ba apartment which was priced at $6500/year in the link.
jacob wrote: To compare budgets, I would need to rip everything out of my budget that is currently spent on housing in order to bring me into the same position as someone whose rent is already paid. Those rent prices would typically also include free heat, waste, and water, but you would probably pay for gas and electric. If I do that to my/our budget, we spend $9000/year on everything else (food, car, clothes, dog, meds, internet, stuff).

...

All I could find was MMM's 2016 budget http://www.mrmoneymustache.com/2017/05/ ... -spending/ ... Like my current situation he has a fully owned house and therefore does not pay rent or mortgage which is consequently not included it the budget! I'll rip all the housing costs out and put some frugal gas and electric back in as well to get the MMM HQ spending ex housing "as if they were living in the 1bd/1ba apartment above". I get about $5000 in house-related costs. (MMM spends 60% less on RE tax than we do.) I'll also subtract the broken arm ($3807) and use the 2015 number for health insurance ... which gives MMM a running budget of $17500/year, roughly twice that of ERE.
Put it another way, if ERE moved to CO (and borrowed a child) or MMM moved to IL (and shipped the child to college), the spending levels would not be the same. We can probably make a closer comparison, if I subtract out our dog and MMM subtracts out child related costs. Or we can just compare budgets line by line and get ratios that way---then take the median ratio.

PS: MMM's budget is similar to that of many of the forumites here thus illustrating the point I made in the post above.

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Re: leanFIRE and fatFIRE definitions

Post by TopHatFox » Tue Dec 11, 2018 8:26 am

2Birds1Stone wrote:
Mon Dec 10, 2018 9:31 pm
You could even hit those #'s living in HCOL area with a roommate or SO. My own costs are very similar over the past 5 years.(adding in bold for comparison.)

$500k will be a great spot to pull the plug. The question is, will I want to live on $18k/yr in my 40's, 50's, and beyond......probably not.

Some people have expensive hobbies they would like to pursue in retirement, others want to spend on others (as you pointed out). Healthcare alone could eat most of that budget, as already pointed out.
I don't know, though. There are lots of relatively cheap and interesting hobbies too for a 15-20k/yr lifestyle.

Archery, hiking, climbing, camper van travel, reading/writing, podcasts/podcasting, documentaries/video making, gardening, bird watching, geocaching, marksmanship, swimming, fishing, camping, chess/board games, volunteering, motorcycle-riding, fossil hunting, bicycling, sailing (if you live on the boat), relationship building (aka meaningful-harem building lol), yoga, tai-chi, esoteric training like Wim Hof cold endurance, spelunking, mountaineering, tiny-house building, getting a cheap PhD. I don't know, there's a lot, and the major expensive ones usually encompass what you do everyday so you can't do the others (i.e. if you're sailing full-time, you can't exactly build a tiny house.

Agreed that the biggest risk is US healthcare screwing you out of hundreds of thousands of dollars after you get hurt while, say, fossil hunting. Either that or someone suing you via indirect liability. Hopefully the umbrella insurance is good for something, it would suck to have to raise 500K again.

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Re: leanFIRE and fatFIRE definitions

Post by Bankai » Tue Dec 11, 2018 12:53 pm

jacob wrote:
Tue Dec 11, 2018 8:24 am
"apples and oranges"
I don't quite see why any adjustments should be made at all instead of looking at cold, hard cash only?

After all, you both live in the same country & the rest is the result of your choices (i.e. you choose where you live and therefore your RE taxes are a result of that choice). If MMM is making more efficient choices wrt where he lives & economies of scale (by being a 3-person household) and you wrt almost everything else, but the end result is almost the same (spending per person), is this not the most important metric?

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Re: leanFIRE and fatFIRE definitions

Post by Laura Ingalls » Tue Dec 11, 2018 2:00 pm

@ banksia
It sounds like MMM is not a three person household anymore..

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Re: leanFIRE and fatFIRE definitions

Post by prognastat » Tue Dec 11, 2018 2:03 pm

@Laura

Oh wow, hadn't heard that as I haven't been keeping up with things in the MMM sphere that much lately. A shame that things didn't work out. It'll be interesting to see how it affects his blog. It doesn't seem to have lead to anything on the blog itself so far which is the only thing I still keep up to date on.

As for comparing the MMM and ERE, even without compensating for COL MMM does spend more from what I can tell. I'd say it seems MMM spends about 10k per adult per year. Also I'm pretty sure he lives in a more expensive home so imputed rent would be higher too.

Of course MMM shares spending for his whole family whereas Jacob provides his own expenses.
Last edited by prognastat on Tue Dec 11, 2018 2:17 pm, edited 2 times in total.

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Re: leanFIRE and fatFIRE definitions

Post by jacob » Tue Dec 11, 2018 2:12 pm

@Bankai -

The point can be argued (and it was in other threads).

If it's cold hard cash (cash flow) that matters then $27k/year requires $27k/4% = $675,000 in invested assets no matter how many persons are involved and $14k/year requires $350,000 or about half as much. I don't see why any adjustments should be made for choosing to add any number of children.

I know a family who is on their 5th child and I'd guesstimate they spend $60k/year. That would be ~$8k per person but their frugality/optimization/design level is by no means comparable to ERE or MMM, nor are they individually living in poverty. They're just a picture of normal middle class consumerism.

Key here is of course that different kinds of expenses scale both with the number of persons, the type of persons (children, adults, couples, ...), and location. Therefore adjustments have to be made if you want to compare not just the price you pay but also the value you get.

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Re: leanFIRE and fatFIRE definitions

Post by TopHatFox » Tue Dec 11, 2018 2:29 pm

@Laura, wait did someone die/divorce/get added. What's the scoop!? Oh the drama...

------

Damn, if even rich, educated, intentional people can't keep their relationships. Fuck.
Last edited by TopHatFox on Tue Dec 11, 2018 2:38 pm, edited 2 times in total.

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