Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-21-2011, 05:29 PM   #41
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Quote:
Originally Posted by GeoffC View Post
(I AM a member of Bogleheads forum--

(everyone) Hello Geoff

If you were to have a solution to your question; what would it look like?

Are you looking for a mathematical formula to help reach a goal?

Are you looking for a measurement tool that takes into account different parameters to evaluate where you are in reaching a goal?

Are you looking for a list of do's and don't's?

Did the people at Bogleheads forum determine the angel question? If so, what is the answer?
__________________

__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-21-2011, 05:55 PM   #42
Recycles dryer sheets
 
Join Date: May 2010
Posts: 131
Quote:
Originally Posted by GeoffC View Post
I just checked out your blog. My guess is that you are are the far fringes of the FIRE socioeconomic choices. All well and good--someone has to be the extreme and its interesting to see how you do it. Most people who want to be FIRE do not want to live on $5000-$7000 per year (I think) and limit themseves to $300/month on housing. Perhaps I am wrong
Indeed. I think you are right. However, I also think that part of the reason you're right is simply that the average savings rate of this country is approximately 0%. "Extreme" is simply a question of being several sigma away from the average with the average being quite low. To wit, in China saving 50% of your income is normal(!)

This is actually why I started my own forum. My readers were prodding me because they didn't feel they fit in here given that their typical savings rates are 50-90%. It becomes a "difference in kind" rather than a "difference in degree". Note, that some are on both forums, me including.

My guess is that most people on this forum are in the 30-40% savings rate range.

So to reiterate: What's typical depends on who you ask ...

A large group of people who will never retire or retire on SS only: Savings rate <10%
A big group who may retire at 60-70: Savings rate 10-20%
A decent group who will retire at 40-55: Savings rate 30-50%
A small group who will retire before 40 Savings rate >75%
__________________

__________________
FI@30, ERE@33.
jacob is offline   Reply With Quote
Old 01-21-2011, 06:31 PM   #43
Thinks s/he gets paid by the post
GregLee's Avatar
 
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Quote:
Originally Posted by GeoffC View Post
If there are no generalities, so be it.
There are no appropriate generalities, because LBYM is, as dex said above, a tactical rather than a strategical consideration. To the question "How far beneath your means?", the only sensible answer is "As far as necessary to achieve your goal." Because we don't practice frugality for its own sake, but only to get enough saved to FIRE.
__________________
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 01-21-2011, 06:38 PM   #44
Recycles dryer sheets
 
Join Date: May 2010
Posts: 131
Quote:
Originally Posted by GregLee View Post
To the question "How far beneath your means?", the only sensible answer is "As far as necessary to achieve your goal." Because we don't practice frugality for its own sake, but only to get enough saved to FIRE.
This is where I disagree or, more accurately, see it differently.

I actually do practice frugality for its own sake to reduce environmental impact and be more sustainable as well as to become more self-sufficient and economically resilient.

This also means that frugality is not a sacrifice to me, rather it's a way of life. FIRE then becomes a nice side-effect.
__________________
FI@30, ERE@33.
jacob is offline   Reply With Quote
Old 01-21-2011, 06:52 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Quote:
Originally Posted by jacob View Post
This is where I disagree or, more accurately, see it differently.

I actually do practice frugality for its own sake to reduce environmental impact and be more sustainable as well as to become more self-sufficient and economically resilient.

This also means that frugality is not a sacrifice to me, rather it's a way of life. FIRE then becomes a nice side-effect.
You do not see it differently. You have more goals. You have retirement + environmental as the goal.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Okay--now I'm learning something
Old 01-21-2011, 06:58 PM   #46
Dryer sheet wannabe
 
Join Date: Dec 2010
Location: Boulder
Posts: 12
Okay--now I'm learning something

Okay...this is pretty cool. So we have two different world views. On one hand we have the 'save enough to meet your goal.' On the other hand, we have 'frugality is its own reward. FIRE is a consequence, but not THE goal.' Hmm. Interesting. I can definitely see both sides and how they manifest themselves. The way that is expressed in The Millionaire Next Door, which is somewhat more similar to Jacob's outlook in some ways--FIRE as a natural consequence of choices / actions rather than a goal.

To Dex: you ask what my goal is in looking at this? Really more of a philopsophical goal, I suppose. No, I don't think that there is a magic formula, but I bet there are some guidelines that would apply to most of the people who manage to achieve FI. It would be cool to identify those, as possible.

Perhaps the ideal is to reach a place where one actually has the ability to choose between Jacob's extreme or some other path. Most American's are not even close to the place that they could make Jacob's choice even if they wanted to...

Thanks for the thoughts--more welcome if people find this interesting.
__________________
GeoffC is offline   Reply With Quote
Old 01-21-2011, 07:20 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Quote:
Originally Posted by GeoffC View Post
To Dex: you ask what my goal is in looking at this? Really more of a philopsophical goal, I suppose. No, I don't think that there is a magic formula, but I bet there are some guidelines that would apply to most of the people who manage to achieve FI. It would be cool to identify those, as possible.
You have gone from metric/measurement to philosophical/guidelines.

You have been thinking about this for awhile so it would be helpful to others if you kicked off the discussion with your ideas. It would also help in focusing the discussion.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Old 01-21-2011, 07:43 PM   #48
Full time employment: Posting here.
 
Join Date: Dec 2010
Posts: 746
I never used a calculator to determine how much I needed to save / have available for retirement. Somehow I managed to rely on good old common sense.
__________________
East Texas is offline   Reply With Quote
Old 01-21-2011, 08:03 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,899
Quote:
Originally Posted by East Texas View Post
I never used a calculator to determine how much I needed to save / have available for retirement. Somehow I managed to rely on good old common sense.
I was lucky, too.
__________________
Yes, I have achieved work / life balance.
travelover is online now   Reply With Quote
Old 01-21-2011, 08:07 PM   #50
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by GeoffC View Post
Okay...this is pretty cool. So we have two different world views. On one hand we have the 'save enough to meet your goal.' On the other hand, we have 'frugality is its own reward. FIRE is a consequence, but not THE goal.' Hmm. Interesting. I can definitely see both sides and how they manifest themselves. The way that is expressed in The Millionaire Next Door, which is somewhat more similar to Jacob's outlook in some ways--FIRE as a natural consequence of choices / actions rather than a goal.

To Dex: you ask what my goal is in looking at this? Really more of a philopsophical goal, I suppose. No, I don't think that there is a magic formula, but I bet there are some guidelines that would apply to most of the people who manage to achieve FI. It would be cool to identify those, as possible.

Perhaps the ideal is to reach a place where one actually has the ability to choose between Jacob's extreme or some other path. Most American's are not even close to the place that they could make Jacob's choice even if they wanted to...

Thanks for the thoughts--more welcome if people find this interesting.
Did you buy that stuff on a street corner or did you make/grow it yourself? Do you prefer to smoke it, shoot it, snort it, suppositories, something else?
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-21-2011, 08:29 PM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
I just read The Wealthy Barber and followed the advice. Hey, I see that a sequel is in the works.....

After 21 years...The Wealthy Barber Returns - thestar.com

The four most expensive words in the English language? “While we’re at it ...”
__________________
Meadbh is offline   Reply With Quote
Old 01-21-2011, 08:59 PM   #52
Thinks s/he gets paid by the post
GregLee's Avatar
 
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Quote:
Originally Posted by Meadbh View Post
I just read The Wealthy Barber and followed the advice. Hey, I see that a sequel is in the works.....

After 21 years...The Wealthy Barber Returns - thestar.com

The four most expensive words in the English language? “While we’re at it ...”
I don't agree with this advice. The solution to excessive spending is not to cease to want anything that requires spending, but rather not to spend too much.
__________________
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 01-21-2011, 10:08 PM   #53
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,608
I have learned over the years what works well for me, and I have learned over the years that what works well for other people and they are not necessarily the same. The idea that you first set a goal of early retirement, then decide on a strategy to reach your goal, then devise the tactics to implement that strategy is logical and compelling, but it never worked for me. I had a vague idea that I wanted to retire early, I knew that would involve saving and investing in some way, so I worked out what I thought I could reasonably save from each paycheck. I measured how much I was saving, I monitored how much I was spending and how happy or unhappy I was with that level of spending. I spent more if I was too unhappy. I challenged myself to save more if was happy enough. Every once it a while I look at my pile and try to see if it will help me reach my goal.

Eventually my savings piled up and I needed to learn how to invest them. I made a few mistakes, read some books, made a few more mistakes, tried a few more ideas, some better than others, and finally settled on a mostly passive approach that I can ignore for long periods of time and still do well with. Once it a while I check to see if it looks like it is heading towards that goal.

This is kind of bottom up instead of top down, and I acknowledge it focuses first on tactics and not on goals. When I try to do it the other way around I quickly get frustrated and want to give up on the whole idea. So I go with what works for me. Once in a while I invent a metric like %saving of gross or %savings of net and see how I'm doing. Mostly comparing against my previous self, since it is hard to find these kinds of numbers for others. Maybe look at networth by age a little. It's hard to compare much of this. What about people with pensions (much higher than what I spend in a year), they make me so jealous. That's not helpful, so I go back to managing the tactics, since that's mostly what I can control.

Probably this means that I am missing some bigger picture idea, such as am I really maximizing my economic productivity in my chosen career, or should I be trying to get into something else. Too complicated.

On the other hand, this has also meant that when a catastrophe struck, like very bad investment losses, bad layoff or horrible divorce, my plan easily absorbed the changes and kept moving forward. I think if I was more focused on being at 95% of my goal and suddenly I was at 40% it would have been much more devastating, at least morale wise, and would have made it harder to keep trying.

LBYM to me means comfortably living, somewhere below my means. I want to manage wisely to make the most of the means I do have, but I still want to live comfortably. Finding the right balance between what I want and all the things I could have is something everyone probably has to find for themselves. I do not think LBYM means living as far below your means as possible, nor that it should be competitive (unless you want it to be, I guess, I don't want to do that myself). I want to be comfortable now and retire early and comfortably then. I'm okay if it takes me a little longer than it might have, if I get to be comfortable enough along the way. All the metrics that work for me to manage this are mostly based on tactics, not so much on goals, except for total portfolio size in relation to expenses wanted from it.
__________________
growing_older is offline   Reply With Quote
Old 01-21-2011, 10:44 PM   #54
Recycles dryer sheets
 
Join Date: Jul 2010
Posts: 58
if a person has zero debt and $1 in their wallet they are living below their means

beyond that, everyone is going to be different. I could conceivably keep spending to $500 per month, but that is not a tradeoff I care to make. So I keep spending under $2 000 per month and everything else goes into savings and investments. Unfortunately, after taxes it isn't 20% (but that just means if someone nets $4 000 per month I see kids as one of the very few possible reasons why they couldn't be saving 50%)
__________________
TomG is offline   Reply With Quote
Old 01-21-2011, 11:05 PM   #55
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 2,405
Quote:
Originally Posted by GeoffC View Post
We can surely just declare that we all need to live below our means and we can use estimates from some of the better calculators to figure out how to get there, but it is valuable and interesting to see how people *really* do this. Obviously more saving is better, but I don't think that most of the people here are the kind of folks who budget their toothpaste consumption.
Personally I use Quicken and a hand-crafted Excel tracking spreadsheet. The latter has 10 worksheets, one of which is a 464 row by 52 column retirement calculator which uses about 45 different input values (inflation, return rate on cash, etc.) and calculates my financial independence to the nearest month.

This spreadsheet also enables me to:

1. Play "what if" scenarios pretty easily.
2. Decide on job/career related questions -- for example, I've pretty much decided not to go to law school because I know I'll be FI fast enough in my current job; if my FI date had been 10 years in the future I may have decided differently.
3. Have more confidence in my target FI date -- it has been holding fairly steady in the 45-47 year old range for the past few years.
4. Provide feedback on my behavior -- if I spend $2000 more on something, then that pushes out my FI date somewhat. Then I can judge if it was worth it to me to have spent that. Similarly I can decide if the additional deprivation of, say, eating oatmeal every day is worth it given that it accelerates my FI date by 2 weeks (or whatever).

I don't budget my toothpaste consumption but I have tracked my income, spending, assets and liabilities nearly daily and pretty much to the penny for probably a dozen years now.

Anyway, that's my answer to how I "really" do this.

2Cor521
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 01-21-2011, 11:12 PM   #56
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
The appropriate equation, spherical chickens notwithstanding, is:

O*M*G = W*T*F
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 01-22-2011, 12:23 AM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,896
I define LBYM simply as if one spends less than what's budgeted (eh...you do have a budget, right?) than you are practicing living below your means.

Of course, that's assuming you were honest when creating your budget
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is online now   Reply With Quote
Old 01-22-2011, 05:17 AM   #58
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
+1
Quote:
Originally Posted by Danmar View Post
Obviously different paths to the same place.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 01-22-2011, 05:21 AM   #59
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Hello SecondCor521 - Is there a place where we could compare Excel files / models please ? I am not a finance expert and my excel model seems to be very, very complex. Not sure if I got all my model assumptions right.

Quote:
Originally Posted by SecondCor521 View Post
Personally I use Quicken and a hand-crafted Excel tracking spreadsheet.
2Cor521
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 01-22-2011, 05:55 AM   #60
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Alright... break it up.... stop kickin' the poor guy and step back. Your in my way... I can't get to him to whack him with the nightstick!

Just jokin'

LBYM - is just what it states.... but the goals and outcome may be different. For some... they might achieve FI. Others (at the lower income levels)... it might just enable them to control spending and build an emergency fund (live well and survive certain crisis)


It is not a formula.... it is a vague description of spending level.
__________________

__________________
chinaco is offline   Reply With Quote
Reply

Tags
living below your means, ybym


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What ER means to me. e86s54 Life after FIRE 36 10-02-2010 08:05 AM
Why I Live Below my Means Culture FIRE and Money 80 03-23-2009 12:00 AM
Not sure what this means... SecondCor521 FIRE and Money 4 05-09-2008 12:39 PM
At, Below, or Above your means Sam FIRE and Money 27 03-30-2007 11:23 AM
Wonder What This Means? boont FIRE and Money 15 06-13-2006 10:45 PM

 

 
All times are GMT -6. The time now is 06:36 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.