Posted: Thu Apr 18, 2013 12:46 am
Here's something that's been bothering me for a while. Perhaps I shouldn't be bothered because it seems like there's a natural progression... just one of those things. I still think it's helpful to ponder this issue.
Let's step back and consider the ERE forum participants ...
I think we can split them into two groups.
1) Those who have been living this way for years. (minority)
2) Those who are just starting. (majority)
My suggestion is that group (2) should study group (1) carefully to figure out the differences between their own thinking and the thinking of those who've made it because it's quite likely that some day they'll think the same way. The main question is the process from 2->1. Are you going to make your own mistakes or will you learn from other people's mistakes. I think studying those who are already in the place where you are going is as very valuable strategy.
It is primarily a matter of perspective. Your general knowledge determines how you see things. Here's an important observation:
People in group one rarely emphasize their money. They just take money for granted. The don't talk about whether their "lifestyle" is upper clas, middleclass, MMM-style, or ERE-style realizing that lifestyle has nothing to do with how much you spend but with what you do. Since I don't live in isolation, I get to see lifestyles from all classes, and what I see is that there's no visible difference between a couple spending $10000/year and a couple spending $100000/year. In particular, if you didn't know you couldn't tell.
Any differences in the connection between spending and lifestyle is simply in YOUR head. This is the proverbial: "Does the person driving the new BMW actually make a lot of money or did he buy it on credit?".
You don't know, right! There's a similar one, which I think many miss, namely "Does the person living on $10000/year live a poor life or is he just that much better at getting value for money?" "Does the person spending $100k/year live twice as good as the person spending $50k?" You don't know, right? In particular, do you think that a person who spends twice as much you do has it twice as good as you? If no, why do you think that a person who spends half as much only has it half as good?
The ends (looks, apparent features, amount of stuff, kinds of stuff) are the same. But the means (buying, couponing, sales, trading, building) are very very different. If you talk about the ERE lifestyle, it's tilted towards trading and building with a few sales thrown in. Conversely, the consumer lifestyle is tilted towards buying and couponing. And whatever passes for mainstream frugality is somewhere in the middle of that spectrum.
Another difference is that those who are starting (group 2) see money as a scarce resource: Must make enough. Must make sure that the money is safe. Those who've been at it for a while (group 1) sees money as something that just comes to them serendipitously. They live in a way where they're paid to live: "Hey, I'm superinterested in programming, so let me do that for fun for a year. Then I get involved in development project and then suddenly someone wants to pay me $2000. Sure, I spend a couple of months on that, for fun." If such things are going on constantly, they become expected, and you stop worrying about one-source incomes. Instead it becomes a multisource income model. It's like how most of us don't talk about oxygen or tap water. We just presume it's there. Yet the beginner perspective is still focused on money-as-scarce-resource so they're focused on replacing the scarce resource from their job with a scarce resource from investments.
I occasionally get emails from people who've been doing this for 20-30 years. They never talk about their money, nor do they use terms like "FI", "SWR", and "sacrifice". They talk about what they do. The opportunities that fall into their lap. The sporadic income: Then I started a business for two years. Then I sold a house and bought another one.
I often think about this. I think "lifestyle" is an extremely limited way to look at life. It's very present focused and has no context. Consider how my detractors said I was "going back to work" as if I was going to go back forever. Whereas if you begin to consider ERE as a _life history_ instead, then things get more interesting. In fact, when those with 20-30 years of ERE experience write me, the email is not about their "life style". It's about their life-history: Then I did this for a few years. And then I moved there. And then I did this. And Now I'm ...
Of course these are just words, that is, information. What I'm really saying is that there's a difference in "wisdom" (defined as knowledge AND perspective) between the two group. It's hard to teach wisdom with words. It may indeed be impossible to teach. It's something one has to teach oneself through experience.
This also makes it hard to convince other people what that "different perspective" actually is, because it's no easy to see.
Therefore we often turn to metaphors. Lets use martial arts.
The world as it is now is that everybody goes to school and learns just one technique, say the the left hook. Over twenty years of training, they become very good at the left hook. Success is measured in terms of how good your left hook is. Whether you win or lose is determined by the strength of that left hook. This is YOUR PERSPECTIVE.
Now enter a group, call them ERE fighters. They say they don't actually use the left hook very often. Some say they don't actually fight that much at all. Now from "YOUR PERSPECTIVE", they must therefore not be good fighters at all. They say they use a different style which makes little sense to you overall. In your mind, you'd maybe pick and choose a few of their techniques, perhaps a front kick, but you still evaluate success by the power of left hooks. However, you're open-minded and thus you begin to learn different techniques. You learn that the right arm can bunch too. (To a sword fighter it would quite the novel innovation
to use BOTH arms and use TWO swords!) You learn how to kick. You even learn how to block. As such your fighting style changes enormously and you start winning. An outsider who doesn't grasp this new style will look at your strength sheet. Left hook: Poor, it says. And haven't seen you fighting, he judge your chances poor. Looking at an even more advances fighter, it might say left hook--not used. Surely the sign of a losing fighter. But that turns out not to be the case. However, you'd have to KNOW that "left hook" is not a good metric for a multi-dimensional fighter to actually realize this. The ultimate step is having developed such a reputation and composure that you don't need to fight at all. That's the end-point of ERE.
Here's something else to ponder. Stoic in its modern form means living an austere form of life. However, in its original form it meant living in harmony with nature. A life without friction. The point of ERE is to reach this state. This is a life where you don't have to struggle for anything. Just by living the way you are, all your wants and needs are satisfied automatically.
In the name of "personal growth" I think, therefore, it's helpful to identify where one is on this scale of development. I'm definitely not quite there yet. However, I am quite removed from the initial perspective. And I think I have an idea of what the end-point feels like.
Let's step back and consider the ERE forum participants ...
I think we can split them into two groups.
1) Those who have been living this way for years. (minority)
2) Those who are just starting. (majority)
My suggestion is that group (2) should study group (1) carefully to figure out the differences between their own thinking and the thinking of those who've made it because it's quite likely that some day they'll think the same way. The main question is the process from 2->1. Are you going to make your own mistakes or will you learn from other people's mistakes. I think studying those who are already in the place where you are going is as very valuable strategy.
It is primarily a matter of perspective. Your general knowledge determines how you see things. Here's an important observation:
People in group one rarely emphasize their money. They just take money for granted. The don't talk about whether their "lifestyle" is upper clas, middleclass, MMM-style, or ERE-style realizing that lifestyle has nothing to do with how much you spend but with what you do. Since I don't live in isolation, I get to see lifestyles from all classes, and what I see is that there's no visible difference between a couple spending $10000/year and a couple spending $100000/year. In particular, if you didn't know you couldn't tell.
Any differences in the connection between spending and lifestyle is simply in YOUR head. This is the proverbial: "Does the person driving the new BMW actually make a lot of money or did he buy it on credit?".
You don't know, right! There's a similar one, which I think many miss, namely "Does the person living on $10000/year live a poor life or is he just that much better at getting value for money?" "Does the person spending $100k/year live twice as good as the person spending $50k?" You don't know, right? In particular, do you think that a person who spends twice as much you do has it twice as good as you? If no, why do you think that a person who spends half as much only has it half as good?
The ends (looks, apparent features, amount of stuff, kinds of stuff) are the same. But the means (buying, couponing, sales, trading, building) are very very different. If you talk about the ERE lifestyle, it's tilted towards trading and building with a few sales thrown in. Conversely, the consumer lifestyle is tilted towards buying and couponing. And whatever passes for mainstream frugality is somewhere in the middle of that spectrum.
Another difference is that those who are starting (group 2) see money as a scarce resource: Must make enough. Must make sure that the money is safe. Those who've been at it for a while (group 1) sees money as something that just comes to them serendipitously. They live in a way where they're paid to live: "Hey, I'm superinterested in programming, so let me do that for fun for a year. Then I get involved in development project and then suddenly someone wants to pay me $2000. Sure, I spend a couple of months on that, for fun." If such things are going on constantly, they become expected, and you stop worrying about one-source incomes. Instead it becomes a multisource income model. It's like how most of us don't talk about oxygen or tap water. We just presume it's there. Yet the beginner perspective is still focused on money-as-scarce-resource so they're focused on replacing the scarce resource from their job with a scarce resource from investments.
I occasionally get emails from people who've been doing this for 20-30 years. They never talk about their money, nor do they use terms like "FI", "SWR", and "sacrifice". They talk about what they do. The opportunities that fall into their lap. The sporadic income: Then I started a business for two years. Then I sold a house and bought another one.
I often think about this. I think "lifestyle" is an extremely limited way to look at life. It's very present focused and has no context. Consider how my detractors said I was "going back to work" as if I was going to go back forever. Whereas if you begin to consider ERE as a _life history_ instead, then things get more interesting. In fact, when those with 20-30 years of ERE experience write me, the email is not about their "life style". It's about their life-history: Then I did this for a few years. And then I moved there. And then I did this. And Now I'm ...
Of course these are just words, that is, information. What I'm really saying is that there's a difference in "wisdom" (defined as knowledge AND perspective) between the two group. It's hard to teach wisdom with words. It may indeed be impossible to teach. It's something one has to teach oneself through experience.
This also makes it hard to convince other people what that "different perspective" actually is, because it's no easy to see.
Therefore we often turn to metaphors. Lets use martial arts.
The world as it is now is that everybody goes to school and learns just one technique, say the the left hook. Over twenty years of training, they become very good at the left hook. Success is measured in terms of how good your left hook is. Whether you win or lose is determined by the strength of that left hook. This is YOUR PERSPECTIVE.
Now enter a group, call them ERE fighters. They say they don't actually use the left hook very often. Some say they don't actually fight that much at all. Now from "YOUR PERSPECTIVE", they must therefore not be good fighters at all. They say they use a different style which makes little sense to you overall. In your mind, you'd maybe pick and choose a few of their techniques, perhaps a front kick, but you still evaluate success by the power of left hooks. However, you're open-minded and thus you begin to learn different techniques. You learn that the right arm can bunch too. (To a sword fighter it would quite the novel innovation
to use BOTH arms and use TWO swords!) You learn how to kick. You even learn how to block. As such your fighting style changes enormously and you start winning. An outsider who doesn't grasp this new style will look at your strength sheet. Left hook: Poor, it says. And haven't seen you fighting, he judge your chances poor. Looking at an even more advances fighter, it might say left hook--not used. Surely the sign of a losing fighter. But that turns out not to be the case. However, you'd have to KNOW that "left hook" is not a good metric for a multi-dimensional fighter to actually realize this. The ultimate step is having developed such a reputation and composure that you don't need to fight at all. That's the end-point of ERE.
Here's something else to ponder. Stoic in its modern form means living an austere form of life. However, in its original form it meant living in harmony with nature. A life without friction. The point of ERE is to reach this state. This is a life where you don't have to struggle for anything. Just by living the way you are, all your wants and needs are satisfied automatically.
In the name of "personal growth" I think, therefore, it's helpful to identify where one is on this scale of development. I'm definitely not quite there yet. However, I am quite removed from the initial perspective. And I think I have an idea of what the end-point feels like.