My thoughts on FI
I started this thread to engage this community on their thoughts on what LBYM means so see if there was a common base of thinking and/or whether there might be some metrics that provide common ground. Dex asked me to provide more of my ideas / thinking, so here goes.
I think that the best term that I have encountered to describe my philosophy is Financial Integrity (coined by Joe Dominguez). I think that the goal is find a healthy way to relate to the role of money in your life. There are many ways to do this. Personally, my goal is not so much about retiring early as feeling that I get to do work that I really value and enjoy and that I am well compensated for that effort. It is also very important to me to be able to vary the level and intensity of work, depending on what else is going on in my life. My ideal situation is one in which my expenditures, my choice work, and my long-term plans all go together.
On the consumption front, I am with a number of the posters who look at how an expenditure costs them some future choice. An expensive car in your working years can easily cost you a year or more of future paid-for living. I can calculate these things explicitly and after a while it just become second nature.
I am philosophically against taking on any kind of consumer debt with the exception of a mortgage, once you are established in life. College debt makes sense when necessary. For people just out of school, car loans and such can be necessary. Also, there are always contingencies, emergencies, etc. As my wife and I say, there are two sides to the compunding curve and you want to be on right one (e.g. compounding debt or compounding net worth). I believe that we need stronger laws against usury.
There is a point of diminishing return to consumption--any and all consumption--and it is important to think about where that curve turns over for you. I like the way YMOYL motivates this idea.
I am highly quantitative and, as I said earlier, I use Monte Carlo software to see how my consumption choices impact my future choices and options and this really trains one's thinking. Most people cannot articulate their point of "enough", nor do they have a solid understanding of how much money it will take to retire.
I believe that learning about investing and finances is as important and learning about good nutrition. There are certain things everyone needs to know. While I like YMOYL, I find their approach to investing worryingly simplistic.
So, LBYM in my life requires some number crunching and I was figuring that some people people do it this way, but that there were probably other common themes.
