FIRE:Is It Intelligence or Determination

[martyp]

For me, it was just dumb luck.
I was FI and didn't even realize it until I was laid off and really took a good look at my situation. Finding this board was a big help!

This was pretty much true for me too. One day I discovered that I was FI and it was also at a point in my career where it made sense to ER.

There really wasn't much of a plan. There was no time table or sophisticated investment strategy. My philosophy was to spend some and save some. I was pretty much LBYM all my life. I don't think this was a lesson from my parents or something absorbed from life. I think it mostly helped that I wasn't extravagant and none of my friends were either.

There was a certain amount of luck in my life circumstances that helped me to achieve ER

 

[brewer12345]

Interesting to hear the same echo of my own thoughts here on a particular issue: raise your hand if you plan for the worst possible outcome. This might be just my own mental issues playing out or it might be an industrial disease of someone who spent years dealing with junk credit, but I almost always spend far more time plumbing the downside than the upside. In most cases, I try to figure out a reasonable worst case scenario and how to hedge against it in the most cost effective way. Once I have done this, I am usually pretty risk tolerant of anything but the ugliest outcomes as long as there is substantial potential reward.

 

[Walt34]

Interesting to hear the same echo of my own thoughts here on a particular issue: raise your hand if you plan for the worst possible outcome.

Welcome Back, Kotter Arnold Horshack Raising Hand - YouTube

 

[growing_older]

I would argue it's the ability to delay gratification, and/or anticipate the future. You can be dumb and lazy and still have this foresight.

This most closely matches my experience. I was lucky to be born on third base and intelligent enough to sleepwalk through having decent jobs, but never hard working or driven enough to make the most of them. I don't like to be told what to do, even by managers I like, even doing work that is somewhat interesting. Those were the good jobs, most of them were much less enjoyable so I was motivated to save and buy my freedom from having to work. A lot of life intervened, so my original plan from my first job to save like crazy and retire in 5 years never happened, but being stubborn enough I have kept saving and look forward to FIRE soon.

 

[papadad111]

Nice letter Walt. Great to pass on that knowledge to someone who can and will benefit from it. Well done!

I believe it is combination of luck
- being born into the worlds largest economy regardless of economic standing gives a far better chance than being born into one of the worlds worst economies.

Determination and grit - no safety nets. No want to help you except yourself. No one to depend on but yourself. The will to succeed. The ability to see the vision years later. Seeing parents or family struggle in retirement is a hell of a wake up call on what NOT to do.

And probably most important is discipline - the ability to forego a jelly bean today for 2 jelly beans tomorrow

Interesting comments on the engineering / aspie types. Not sure I agree with that. There are a few more engineers in here but I attribute that to playing with computers more and being on inanimate message boards vs specifically being more retirement minded.

Anyway. No secret recipe. It's a combination that very few people have so kudos to a you fire types. Good good !! Carry on !

 

[purplesky]

For those of you who say it is luck, what is your advice to a 20 year old who doesn't want to work until they are 65 or older? Do you tell them it doesn't matter what you do, you just need a lucky break or two, or do you tell them to LBYM along with some relevant career and investing advice? Or do you look at their environment, and tell the urban youth to forget it, it'll never happen, and the kid from the upper middle class not to worry, he's got it made?

The whole luck issue comes into play for everyone.

Determination and intelligence are definitely at the top of the list to build wealth.

Luck is not having your job outsourced or downsized. Millions of Americans have experienced this and most never recover to their previous income levels.

In my city we have lost tens of thousands of great paying jobs in Education, Aerospace,defense,Automotive industry,technology,airlines,Financial industry,retail,etc. all in the disguise(excuse) of achieving shareholder value.

Many promised pensions lost or greatly reduced which puts many people in a bad spot.

Through my megacorp job I have witnessed this outsourcing firsthand over the last 3 decades and its just made me extremely aware of how lucky I am. I still have a solid pension(fingers crossed) and a pretty solid low cost 401k, and paid for health care and generous vacation time. So I feel very lucky even though I have worked VERY hard to get it.

I don t know why some people get defensive about being lucky because its just part of what life gives you.

And if some poor kid does find a path out of poverty than yes that in itself is part luck. Because most poor people get stuck in the cycle of poverty.

 

[scrabbler1]

At my former company, many of my longer-term coworkers had considerable company stock holdings, some of them higher than mine. We were all lucky to have been working for that company back in the 1990s when the ESOP was first set up and we acquired humdreds of shares at low prices and saw the stock price explode in the early 2000s.

But that did not mean all of us could just ER from this newly found wealth. Some, like me, did. Others didn't or couldn't for the usual reasons we have seen here before - they didn't LBYM, they didn't want to, they needed the health insurance, to name a few. Those that did ER were often childfree like me, had working spouses with health insurance, and/or were old enough to get grandfathered into phased-out retirement benefits such as HI or pension, and/or were old enough to begin collecting SS or from their 401k/ESOP.

The right combination of luck and lifestyle decisions can lead to FIRE.

 

[2B]

The whole luck issue comes into play for everyone.

Determination and intelligence are definitely at the top of the list to build wealth.

Luck is not having your job outsourced or downsized. Millions of Americans have experienced this and most never recover to their previous income levels.

In my city we have lost tens of thousands of great paying jobs in Education, Aerospace,defense,Automotive industry,technology,airlines,Financial industry,retail,etc. all in the disguise(excuse) of achieving shareholder value.

Many promised pensions lost or greatly reduced which puts many people in a bad spot.

Through my megacorp job I have witnessed this outsourcing firsthand over the last 3 decades and its just made me extremely aware of how lucky I am. I still have a solid pension(fingers crossed) and a pretty solid low cost 401k, and paid for health care and generous vacation time. So I feel very lucky even though I have worked VERY hard to get it.

I don t know why some people get defensive about being lucky because its just part of what life gives you.

And if some poor kid does find a path out of poverty than yes that in itself is part luck. Because most poor people get stuck in the cycle of poverty.

You are obviously pretty down on things. I certainly agree that things could definitely be improved but all my suggestions would just have the moderators slapping me again for "political comments."

From your post, my father should have just given up when he lost his steel industry job in the 1950s and then again when Boeing laid him off in the 1960s. I should have stayed on food stamps when I was on them in the 1970s. There's no way I had any hope of finding a new job when the plant I worked at in 1982 shut down and laid 1,100 people off (including me). This should have been my plan when I lost another job during a buyout of my company in 2002. There's no way I could now possibly be making more than I ever did before and have more than enough money to retire.

Most people that have crap happen to them have a choice. You can pick yourself up, dust yourself off and move forward. Alternatively, you can wallow in your despair, complain how life isn't fair (it isn't) and wait for the blue bird of happiness to magically appear.

Opportunities are presented to everyone. When someone is prepared and willing to use these, the people that aren't call them "lucky." I've worked side-by-side with people that were as smart or smarter than me, made as much or more than me and had the same opportunities or better ones put in front of them. Some of these people are really well off and others are living paycheck to paycheck thinking they'll work forever.

 

[EastWest Gal]

LOL







Yes. How do people buy high/sell low, and do it again and again? I have seen so many housing bubble cycles, where people that I know keep buying and selling at the wrong time. I think people are afraid to be different. They think strength is in the number.

Simple. We live in the present. In a depressed market, people are afraid to spend, since they may lose they're job. In a roaring economy, confidence in spending is up (causing the roaring economy). So a lot of the economy is dictated by emotion. In 2008 and 2009, it was hard to picture 2013. By the same token, I'm not looking forward to the next big down cycle, but I really need to look at it as a buying opportunity.


Sent from my iPhone using Early Retirement Forum

 

[springnr]

The whole luck issue comes into play for everyone.

My folks grew up during the depression. LBYMs did finally pay off, took quite a few years.

Mother Nature's "layoff"

Dust storm in Cimarron County, Oklahoma, 1936. The 1930s Dust Bowl drought had four drought events with no time to recover in between: 1930-31, 1934, 1936 and 1939-40.

A dust storm approaches Stratford, Texas, in 1935

 

[2B]

Interesting to hear the same echo of my own thoughts here on a particular issue: raise your hand if you plan for the worst possible outcome. This might be just my own mental issues playing out or it might be an industrial disease of someone who spent years dealing with junk credit, but I almost always spend far more time plumbing the downside than the upside. In most cases, I try to figure out a reasonable worst case scenario and how to hedge against it in the most cost effective way. Once I have done this, I am usually pretty risk tolerant of anything but the ugliest outcomes as long as there is substantial potential reward.

I frequently get called a pessimist for planning for contingencies. I don't plan for the worst possible outcome but arrange things based on credible scenarios.

In investing, the worst possible outcome is that the US collapses/loses a major war wiping out all stock and bond values. If I planned for that, I'd have chests of gold and silver buried in my back yard and all available space in my house filled with canned goods and MREs.

Instead of this, I have a conservative asset allocation and have levels of cost reductions already evaluated in case returns are poor.

 

[rodi]

It's not intelligence. I know some brilliant people who had salaries bigger than mine, who struggle to save for retirement.... or to manage their investments.

I think pb4uski nailed it the best on the first page of this thread - it's about LBYM - which is not related to luck or intelligence.

My in-laws were born in the depression. FIL would have spent every penny that came into the house if he could. MIL didn't let him. He had a blue collar factory job, she went to work as a file clerk for the IRS when the youngest kid went to grade school. Neither had big salaries. They had 6 kids that they sent to private school (Catholic, so not super expensive, but still an outflow of cash.) They managed to pay off their house in 10 years. They paid cash for cars. MIL made sure they socked money away, despite 6 kids and low income. Even today - she lives on about $18k/year - which is covered by her pension and SS income. She has enough savings, and a paid off house - so if she needs to go into long term care (which is coming soon), she'll have the means to do so. She's not brilliant. She wasn't lucky being born into the depression, having her sisters and brother split up as children into fostercare because her mom was ill for 2 years, she never went to college - worked at a bank as a teller while attending high school at night. She *was* determined to have an emergency fund.

A former coworker took me to lunch last week. He was picking my brain about the 401k options, whether to roll our old 401k to the new 401k, and what to do with out pension lump sum options from the original (several acquisitions ago) company. This guy is MUCH smarter than me. He was my boss in the past, and made quite a bit more than me. But he never dug into weeds of the 401k plan options, or the pension options. He knew I had - so he asked my opinion (and good questions about why I'd reached my conclusions.) We talked about the retirement thing - and he conceded I'd "worked my plan" for a long time - brown bagging, paying down the mortgage, maxing the 401k... He recognized that my choices had paid off. FWIW - he wasn't born in the US - he was born in India. He has fairly significant asthma that would probably qualify him for disability if he chose to go that path. But - that "luck" didn't impact his not being able to retire early - his less aggressive savings had the impact.

 

[NW-Bound]

... he wasn't born in the US - he was born in India...

I have also seen first-generation US citizens from 3rd-world countries who are big spenders. You would think they know to practice the LBYM philosophy.

 

[Katiek]

For those of you who say it is luck, what is your advice to a 20 year old who doesn't want to work until they are 65 or older? Do you tell them it doesn't matter what you do, you just need a lucky break or two, or do you tell them to LBYM along with some relevant career and investing advice? Or do you look at their environment, and tell the urban youth to forget it, it'll never happen, and the kid from the upper middle class not to worry, he's got it made?

I'd tell them the best way to reach their goal is to LBYM and try to make saving a priority over needless spending. But I'd also tell them not to waste time comparing themselves to others who seem to have accomplished what they want in life. It doesn't mean that those people are necessarily smarter, harder working or "better" in some way. It may just mean those people were lucky to have good health, parents who emphasized saving etc. You can't control the "luck" factor, but you can do your best to create the most opportunities for yourself and to make the most of the opportunities you have.

 

[2B]

I have also seen first-generation US citizens from 3rd-world countries who are big spenders. You would think they know to practice the LBYM philosophy.

I was told by an Indian engineer that was retiring that many Indians and Pakistanis culturally want to show off their success with fancy cars and houses. He said he didn't buy into that and that was letting him retire.

 

[NW-Bound]

I think LBYM is an innate trait that some people have, and some don't. I have the impression that background or upbringing does not have much to do with it.

 

[RunningBum]

I don t know why some people get defensive about being lucky because its just part of what life gives you.

Probably because I know a whole lot of people who have had all the same "luck" and advantages that I had and aren't FI.

I also know a few people who have had some of the bad luck you listed and still overcame it to be FI.

And it's not just luck that I was never laid off, nor that I got into a dotcom company with good stock options. I saw signs on the wall that the first mega corp I worked for was heading for trouble, and my skills weren't that well suited to go elsewhere. I figured out what I was lacking and worked on getting more marketable skills, and a year or two later those skills got me a job at a smaller company that took off. Some luck involved there, but I made a good choice and worked hard to put myself in position for that luck.

And you didn't answer my question, would you advise young people that it's mostly luck, or that there are actually useful things they can do to put themselves in much better position to FI?

 

[David1961]

I know folks who make a ton of money and cannot save a dime. Many of these are considered "intelligent" people but their skills at money management are poor. In other areas of their lives, they have a lot of discipline, but when it comes to money, they don't.

 

[Major Tom]

I have also seen first-generation US citizens from 3rd-world countries who are big spenders. You would think they know to practice the LBYM philosophy.

I have seen it too. There are 2 factors that I think may be driving this. Firstly, it could simply be that once they arrive in a country where the option for liberal consumption exists, their basic psychological make-up takes over and determines whether they take advantage of this "opportunity" in a way that it couldn't in their home country, as their options for consumption were limited there.

Also, for some first-generation immigrants from poorer countries, conspicuous consumption is a way of showing they "have made it". I have been in a number of conversations with first-generation immigrants who have told me that many Americans don't appreciate what they have, are lazy, and don't work hard enough. I interpreted this as meaning that these Americans they speak of are fully acclimatized to living in a first-world country and don't necessarily equate the acquisition of nice, shiny consumer goods as being an indicator of success in the same way that some new immigrants do.

Note that I am painting with broad brush strokes. I hope no-one reads my comments as a slight against any group of people.

 

[haha]

I agree with the majority here, it is mostly attitude. You can't be real far sub-normal intellectually, but if you avoid occupations where you just do not have the mental horsepower to compete, the rest boils down to attitude. And much of this is like many others have said, the most important thing is that you have resistance to social/consumer memes. There is a lot of truly horrible advice and assumptions floating around among people and the media.

Doesn't hurt to have a degree of arrogance, so you can just continue on your own way, as long as it seems to be working.

Ha

 

[Jay_Gatsby]

I know folks who make a ton of money and cannot save a dime. Many of these are considered "intelligent" people but their skills at money management are poor. In other areas of their lives, they have a lot of discipline, but when it comes to money, they don't.

There are likely many reasons for this.

1. They could be making up for certain insecurities (i.e., nerds wanting to show they are finally successful)
2. They could be spreading their financial wings after keeping them tight for 7+ years of post-high school education
3. They could be living the lives they were denied growing up (i.e., came from a poor background)
4. They could have spouses who are spendthrifts and they just can't say no.
5. They could be so dedicated to their careers/professions that everything else, including money, spouses, children, etc... take a back seat

I could go on and on, but the simple fact is that for most people it's very hard to LBYM. In theory, LBYM sounds easy, but in reality...well....just look around you.

 

[2B]

I agree with the majority here, it is mostly attitude. You can't be real far sub-normal intellectually, but if you avoid occupations where you just do not have the mental horsepower to compete, the rest boils down to attitude.

I'll disagree with the "lack of mental horsepower" keeping people out of lucrative occupations. Assuming "normal" intelligence, desire and willingness to apply oneself is much more important. I once dated a girl that had flunked out of UT Austin in her freshman year majoring in English. She was working as a file clerk in a bank and said she wished she could make the kind of money an engineer makes. I said why not be one? She had only had Algebra I (grade of C) in high school. I said I could teach her the basics of calculus in a week. She accepted and within a week she could do simple integration and differentiation. She enrolled in a local junior college for a year and a half. She disappeared off to college and got a mechanical engineering degree. Motivation trumps IQ.

 

[haha]

I'll disagree with the "lack of mental horsepower" keeping people out of lucrative occupations. Assuming "normal" intelligence, desire and willingness to apply oneself is much more important. I once dated a girl that had flunked out of UT Austin in her freshman year majoring in English. She was working as a file clerk in a bank and said you wish she could make the kind of money an engineer makes. I said why not be one? She had only had Algebra I (grade of C) in high school. I said I could teach her the basics of calculus in a week. She accepted and within a week she could do simple integration and differentiation. She enrolled in a local junior college for a year and a half. She disappeared off to college and got a mechanical engineering degree. Motivation trumps IQ.

Normal intelligence is an IQ of 100 by definition. I don't think this will work for an engineer, or many other intellectual occupations. You friend had greater than normal intelligence, but got off to a bad start in college. If you can have someone doing differentiation and integration in a couple of weeks, she is way beyond normal. Many of us have grown up in intelligent families, in upscale suburbs or city districts, gone to quality suburban or city magnet schools. What seems normal to us is way beyond normal; which after all means "the norm". This board is full of highly intelligent people. Look at the abstruse arguments found here!

Also, IQ too low for many occupations does not preclude considerable financial success or ER. Keep the nose to the grindstone, angle for a government pension, don't overplay your hand and keep grinding on.

Ha

 

[kgtest]

Lack of planning and budgeting, which doesn't really equate to intelligence.

Add to it consumerism. Eat, live and play well. A little planning goes a long ways.

The more I have been in investing its interesting to hear the ideas others in my circle of friends have about investing...they range greatly but I do notice most of there ideas are hampered by realistic debt or spending problems.

A good engineer friend of mine out on the West coast said to me "I quit tracking my budget when I realized I spent too much on booze."

 

[NW-Bound]

... You friend had greater than normal intelligence, but got off to a bad start in college. If you can have someone doing differentiation and integration in a couple of weeks, she is way beyond normal...

IQ is important, but without some formal education one cannot live up to his full potential. And it takes some discipline to go through school for that formal education.

Here's a real-life example. I knew a guy who worked as a programmer at megacorp. He was smart, but never finished college (ADHD?), and I was not sure how many years he had. Still, he was good at what he did. But having that chip on his shoulder, he proved his mental ability by joining the Mensa society and told us all about it.

He left for another job at another corp. I met him some years later, and he was still doing programming. I did not know how this subject came up, but in his new job he had to do some scientific computing, and he admitted to running into some problems because he was not familiar with floating-point computations. Now, I was not a CS type, but I knew about "machine epsilon", which a programmer like him should know.

A guy of his intelligence could read and learn all about that too, but I guess the problem was that without a formal education he did not know that he did not know. He had problems finding work the last I saw him, and I wonder if his lack of formal education could have something to do with that.