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    My bank used to pay 6% interest, back when I opened my account. It now pays 0.25%. By their own calculator, I lose money to inflation by saving it :(

    Of course, there’s other things to do with “savings” - index funds and/or investment accounts, etc. but still, it isn’t quite as easily done as said.

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      Putting your money in an index fund is really quite easy, and their long-term average returns over the last 30 years have been ~5% after adjusting for inflation. As is mentioned several times in the footnotes.

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        “long-term average returns over the last 30 years”

        I think long-term requires looking back more than 30 years. It’s easy for one block of 30 years to perform very differently to another.

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          The last 30 years have included, among other things, the second largest recession in ‘modern times’. But I generally agree with your statement.

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      We already live in a post-scarcity world and arguments structured around retiring early admit it without actually admitting it. The future is here, it’s just not evenly distributed. Better to address the distribution problem than worry about retiring at 30.

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        Sounds like an argument for effective altruism / earning to give, a path I don’t see much talked about in the finance / FI communities. Definately a path that’s been on my mind lately. One account I’ve been reading on this is jefftk who contributed much of his income while working at a tech bigCo: https://www.jefftk.com/giving

        (personally just starting to think about this stuff - found myself reading both ‘winners take all’ and ‘doing good better’ recently (which have some contradictions between each other) and finding it a bit nuts how hard picking donation funds is - even coolearth as a carbon offsetting fund recommended by ‘doing good better’ a few years ago has been criticized https://forum.effectivealtruism.org/posts/RnmZ62kuuC8XzeTBq/why-we-have-over-rated-cool-earth )

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          One thing I forgot to mention is that the framing of the existing model feels off to me and I don’t think that pursuing money in an effort to better distribute it as an individual is a viable path because it still emphasizes the pursuit of money.

          I think somewhere along the way people forgot that money is only a proxy for “value” and in pursuit of the proxy metric we devalued all the things that were actually valuable. When optimizing a proxy it is easy to forget what the proxy was initially measuring/approximating.

          I call this the green paper token fallacy.

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            Yep, wasn’t trying to evangelize EA as the path, just an option that could make sense for some. For full disclosure I have not been effective altruist, am trying to sort out my worldview / goals / finances and it’s been on my mind more. Thinking aloud a sci-fi story ‘The guy who worked for money’ https://www.shareable.net/blog/the-guy-who-worked-for-money which compares money as a proxy versus a social credit score as proxy comes to mind.

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            So, I think that’s the pragmatist’s view. I understood @davidk01 ’s comment to be a much more philosophical, long view take.

            If I’m reading him right, he’s suggesting that the entire capitalist framework we live under is basically over, but various entities just haven’t caught up with that yet, and we should solve the larger problem of how to distribute wealth equitably rather than striving to enrich ourselves.

            I’d love for him to be right, but I suspect, at least in the near term, he’s not. And if he’s wrong, yes, earning to give is definitely the more virtuous path.

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              Yeah, agree it’s an optimistic long view to hope for (James Burke from ye olde Connections show had a nice lighthearted on post-scarcity https://www.bbc.co.uk/programmes/b09jvfc4 ). I’ll leave a similar comment I left on HN recently:

              I’ve been fascinated by this plot of ‘social thresholds achieved’ at the cost of ‘biophysical boundaries transgressed’ - https://goodlife.leeds.ac.uk . I find it a more level-headed analysis to frame arguments around what resource usage it takes to be a ‘happy’ country, rather than just aggregating various happiness metrics alone. “No country in the world currently meets the basic needs of its citizens at a globally sustainable level of resource use.” (summary article: https://theconversation.com/is-it-possible-for-everyone-to-live-a-good-life-within-our-planets-limits-91421 ) (via HN discussion on world happiness report: https://news.ycombinator.com/item?id=19615776 )

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                What’s interesting to me is that adjectives like “just” get thrown around much more than “happy” which says something about what people see as important.

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                  You mean when people optimize they choose fairness vs some other metric? Or do you mean something else?

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                    I mean that when people talk about enacting fairly major changes to society, I often hear them talk about the injustice of the currently lopsided capitalist system of wealth distribution, rather than the overall happiness of the average citizen.

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            That’s an incredibly altruistic attitude. Admirable.

            As for me, I’ve been slugging it out in the trenches now for 30 years. I’d be more than willing to put time and effort into solving the redistribution problem if I had any confidence at all that it would actually be effective.

            Humans are lazy and greedy. I have yet to learn of a vision for a post scarcity world that actually takes those very basic human traits into account.

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              every adjective that exists for humans is a trait that humans have. otherwise the words wouldn’t exist. humans are also industrious, smart, caring, compassionate, and creative.

              you don’t think social democratic and socialist proposals account for greed and sloth?

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                you don’t think social democratic and socialist proposals account for greed and sloth?

                I don’t, but then the set of democratic socialist proposals I’ve been exposed to in detail is fairly small. I’d love to see you cite a concrete counter-example. I’m always open to having my mind changed in the face of compelling evidence!

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                  take the green new deal for example. does that proposal fail to account for human greed or laziness? did FDR’s new deal?

                  perhaps the difference is that these proposals view greed and laziness as things to be overcome, while you view them as hard limits which cannot be overcome?

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                    The green new deal is a perfect example. I have yet to be able to put my finger on precisely what the green new deal IS except “Yay renewable energy! Yay income equality! Yay good health care, affordable housing, and clean air for all!”

                    I love the enthusiasm and I am 100% behind the ideals, but I don’t see a plan for implementation here.

                    If you can give me a cite that lays out a concrete plan, I’d love to see it.

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                      it doesn’t sound like your misgivings have to do with greed or laziness, so i sense that we’re going off on a slight tangent. but i love discussing the GND anyway.

                      are you aware of the green new deal FAQ? this should get you beyond “Yay renewable energy! Yay income equality! Yay good health care, affordable housing, and clean air for all!” it includes concrete proposals such as a government jobs program to put people to work developing alternative energy infrastructure. is this too abstract? or maybe you take issue with the current lack of detail?

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                        The FAQ did in fact help. It lays out the idea that this will be a huge investment in infrastructure. It’s still way shorter on details than I’d like, but at LEAST it addresses “How will we pay for this?” rather than crowing about our glorious worker’s paradise future with no clear plan to get there.

                        I’ll keep my eye on this and hope to see it evolve further. This is indeed something I could get behind.

                        A thing I wonder about though is, the ‘guaranteed jobs for all!’ clause. The new deal did this through efforts like the WPA, which were disbanded when the great depression ended. How will this address the fact that joblessness is going to be an increasing problem with greater automation?

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                          i think a government jobs program is a way to address loss of jobs due to automation. green new deal jobs wouldn’t go away unless we decide they should. maybe we should be asking “will the green new deal harness the bounty provided by greater automation.” i certainly hope so, as that’s one of the things that could make the 10 year time frame feasible.

                          i don’t think it’s a comprehensive solution though; something like UBI or general sharing of goods regardless of one’s ability to make a wage may be necessary in the long term.

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                This is true but part of it I think is believing the people part will work out because plenty of people come to the realization about post-scarcity and money. I guess the effort is diffuse and not as organized as it could be. I try to remind myself and others that at the end of the day we really have everything we need and want and that money is made up.

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                We most assuredly do not live in a post scarcity world. What we live in is a world where we, and our parents, have been spending the inheritance of our grand children to produce baubles no one needs [0]. It is an easy mistake to make when one lives in the richest city in the richest state, in the richest country in the world.

                The past is littered with promises of an boundless future, today’s millenarian cults are no different. Be they the Easter Islands destroying their trees and falling into centuries of cannibalism, or South African tribes slaughtering their cattle expecting the ancestors would give them better herds.

                That we replaced God with the microchip and heaven with post scarcity is not much of an improvement.

                What the future looks like is Cuba, in the best of circumstances. [1]

                [0] https://www.bbc.com/news/magazine-33133712

                [1] Unless we nationalize the economy in the hopes of figuring out hot fusion before climate change makes industrial society impossible between 2050-2100.

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                  Be they the Easter Islands destroying their trees and falling into centuries of cannibalism

                  Not to dispute your main point but I feel the need to stand up for my Polynesian whānau. The “destroying their trees and falling into centuries of cannibalism” story (popularised by Jared Diamond) has been debunked [0][1][2]. They’ve been many more studies and articles about it since.

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                    So are you the one that grew up in post-communist Armenia or me? Check your assumptions at the door when engaging in online forums. The world is a big place with a lot of people who did not grow up in a boundless world and still concluded that we have plenty to go around.

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                      1). Identity politics has nothing to do with the ecological footprint of industrial society.

                      2). Ad ad hominem attacks are content free.

                      3). Лесно е да говориш за предположения когато мислиш че всичи други са Американци.

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                        I asked myself that and deleted it, but you’d replied :)

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                    This is great:

                    Separating the means of earning money from the freedom you are pursuing enables pursuing goals in that under-served intersection of valuable but not profitable. Whether that’s supporting free software, producing art or home-schooling your children, trying to fit such activities into a profitable enterprise inevitably produces uncomfortable compromises which can be avoided by removing the need to earn money.

                    But the rest of the article suffers from the fatal flaw of ignoring liquidity. 5% is not realistic for liquid investments. You can get it from the stock market – over long periods, and by never selling because you need the money. But that requires much higher levels of savings, where you can live off passive cash flows without needing to touch the principal.

                    If you want to stop working in 10 years you shouldn’t be putting your money in the stock market, because you aren’t guaranteed that it’ll be a good time to sell 10 years from now. If you don’t put your money in the stock market, how do you get 5%? Seems hard to consistently beat inflation. (Especially with what yield curves have been doing lately.)

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                      Putting your money in a mostly-stocks index fund and selling 4-5% of the initial principal per year is a common recommendation from financial advisors, and Monte Carlo simulations for that strategy using historical data including the great depression show low chances of failure over 50 year periods. Both of those links are in the article.

                      These things surprised me, which is why I wrote about them.

                      Perhaps future markets will be dramatically different, but if the conditions of the last century or so keep up this seems like a reasonable strategy.

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                        Ack, sorry I skipped the appendices. Thanks for the pointers! I need to read up on them.

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                      What is the big selling point of this frugality?

                      You spent 5-10 years working in an environment where there’s a lot of people and a lot of things happen.

                      Then you have saved up enough to move to somewhere that your $25k will last you through a year - but what is the point of being retired, when you have nothing to and need to keep living frugally?

                      I’m genuinely curious as to why this would be appealing - I’m guessing I’m overlooking some aspect, can some of you help me to figure out what it is?

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                        I heard it described best as: retirement isn’t “not working”, it’s “not needing to work”. The appeal is freedom and security. You can do the things that you value most, instead of the things that value you most.

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                          Spent my 20s working in NYC and SF. Moved to Berlin, cut cost of living to something like $10-12k/yr. It is extremely liberating to not need to work. I spent the first couple years working something like 1-2 months per year, mostly just to convince myself that I could still get a job if I wanted, and the rest of the time doing serious leveling up of various skills, many engineering-related. In those 2 years of mostly not working, I dramatically increased my employability by gaining some fairly rare engineering skillsets that I had always been attracted to but never had the time to really master while holding down a full-time job.

                          Now I’m working full-time again, but only because I found a place that is totally aligned with the things I want to bring into the world anyway. I get to run around the world teaching people about Rust, spend time building my database, sled, and spend time doing distributed systems and database work with clients. Being able to easily say no to things that consume your time really increases the chances of you finding better opportunities. I never felt this freedom when I was doing the engineering rat race in the US.

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                            You can do the things that you value most, instead of the things that value you most.

                            As long as they fit within your budget of $XXk/yr. It’s one thing to be a 20-something living with roommates on $25k/yr but don’t bother getting married or having kids and expect to keep to that budget. Most of these “retire by 30” advocates are hopelessly naive on this point.

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                              But $25k/yr is the medium post-tax income in one of the richest countries in the world. Can half of working Americans not afford to get married or have kids?

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                                It depends on what you mean by “afford”. Consider the costs of childcare, the fact that the poverty line for a family of four is (slightly) over $25k/year[1], and that without an employer you’ll be responsible for your own medical bills/insurance (unless medicaid-eligible). Consider also that the per capita personal debt in the U.S. is $38k – i.e. 1.5x the median annual income.

                                [1] https://aspe.hhs.gov/2019-poverty-guidelines

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                                  If your partner is in the same situation then you’re looking at 50k / year. But, yeah, if only one parent works or if you’re a single parent then 25k might be difficult.

                                  At least you don’t need to pay for childcare though if you’re not away at work all the time.

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                                  Harsh reality for those who think we are a rich country. Averages lie.


                                  We are a nation of poor people with a rich 1%.

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                                You can do the things that you value most, instead of the things that value you most.

                                This is a wonderful phrasing. Did you come up with it?

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                                  Yes but it was before having coffee, so if you like it then it’s entirely accidental. :-p

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                                Frugality is relative - living on the US median income doesn’t require a huge amount of sacrifice. “Somewhere that your $25k will last you through a year” is the majority of places in the world. Half of the US (and 99% of the world) earns less, and doesn’t have the additional benefit of a big pile of cash for emergencies.

                                A framing I found useful but didn’t include in the article is: imagine you live the median lifestyle and you can now afford to retire. Do you want to work another 20-30 years to pay for additional luxuries? The answer might still be yes for many people, but I think its really valuable either way to explicitly consider the question.

                                Personally I found that a lot of my spending was on things I didn’t really care about much, so I was able to spend a lot less with a little forward planning. Perhaps a better way to convey the idea is ‘spending money efficiently’ - applying some attention to checking that you are getting a good conversion rate from time spent to happiness gained.

                                And, as soemone else touched on already, even if you want to work and have a more expensive lifestyle, its really valuable to know that you could survive being unemployed for a long time. Rather than having to work, you are choosing to work. If conditions change, eg your employer screws you around, you can safely vote with your feet.

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                                  I don’t necessarily agree with this framing, but it’s right there in the article:

                                  By separating the means of earning money from the freedom you are pursuing, it enables pursuing goals in that under-served intersection of valuable but not profitable. Whether that’s supporting free software, producing art or home-schooling your children,

                                  FWIW your comment didn’t come off as well-intentioned… it seems sarcastic. Something like “I wouldn’t want to be retired” or “Retired people have the problem of finding something to do” would have made the same point.

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                                    Appreciate the feedback on my comment - I’ll keep it in mind.

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                                    What is the big selling point of this frugality?

                                    In the context of this article, the author seems to be deliberately conflating (or at least comparing) startup funding and expenses with personal finances and retirement. The argument is that when you run a business, if you have your cash reserves in some interest-bearing investment and then keep your expenses low, you get more than what you saved in the end. Which is basically just another illustration of the magic of compound interest.

                                    The big selling point of early retirement, for me, is freedom. I don’t have the entrepreneur mindset or the required skills. I could learn them, and be okay at it if I really had to, but that’s not where my interests lie. I want to wake up in the morning and do the first thing that comes to mind, even if it’s not something that can (directly) make me money. I can’t do that right now while my life situation demands a steady paycheck.

                                    You spent 5-10 years working in an environment where there’s a lot of people and a lot of things happen.

                                    Then you have saved up enough to move to somewhere that your $25k will last you through a year - but what is the point of being retired, when you have nothing to and need to keep living frugally?

                                    The word “retired” in reference to early retirement is often both used wrong and misunderstood. A better phase would be “financially independent,” although that still carries some baggage as it was historically used to refer to the wealthy. Certainly, the wealthy are (or can be) financially independent but frugality enables the middle class to be financially independent without being wealthy.

                                    People with the goal of retiring early aren’t (usually) looking to pack it all up and live out the remainder of their lives aimlessly and without purpose. The goal is get to a place where work is optional and they have the ability to pick and choose what they take on and spend more time with the people they care about the most. Early retirees typically think of it as retiring to something rather than retiring from something.

                                    There are people who are genuinely happy with their jobs and are content to work full-time until age 65 or later. And that’s perfectly okay if that’s what they really want. It’s just that a lot us are starting to realize that with the right planning, this doesn’t have to be the only way through life, as our culture has taught us.

                                    Finally, be careful not to confuse frugality with deprivation. Frugality is simply being analytical and mindful about how you spend and manage your money. It’s learning that spending money on novelties and temporary experiences does not actually make you any happier in the long term, despite what western pop culture (which is driven largely by advertising and marketing) has ingrained in us.

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                                      the author seems to be deliberately conflating (or at least comparing) startup funding and expenses with personal finances and retirement.

                                      Not startup funding, but startups vs fire as strategies for having lots of autonomy. I know a lot of people for whom a big part of the appeal of the startup world is having lots of control over what they do and how they do it. But financial independence can do that too, and is more attainable than many people realize. The compromises are different - even more freedom at the expense of lower income.

                                      But otherwise I agree with everything you said.

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                                        I should use a thesaurus more before I comment, I think.

                                        If the idea is how to stretch your money to attain financial independence, then it does make a lot more sense to me. In my head, achieving that is different from retirement, although it would facilitate an early retirement.

                                        About frugality, that is a case of in my vocabulary it carries the meaning of scrimping and saving, rather than good management and thriftness.

                                        I guess I do understand…

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                                          I think a lot of people have the same association. If I started again I would explain it like: employment is a way to trade time for money, and you want to do it efficiently rather than just rolling with the default setting, and here are some surprising zones of efficiency that don’t seem to be well known.