I’ve had an atypical personal finance ‘journey’, so to speak. I never thought about personal finance for most of my life. My family had a harsh, almost unforgiving attitude towards debt, driven by Shakespeare’s maxim: “Neither a lender nor a debtor be.” I was taught from an early age to spend less than I earned, to be frugal when I could and always be prepared for the unexpected. So using these simple guidelines I made it into adulthood without debt, and with substantial savings that were carefully invested in diverse markets.
But I had no end goal. My plan was to simply work until I couldn’t work anymore, save a little bit more than I earned and never enter into debt for any reason. But when I first started to think about my responsibilities as a dad, when I learned Bubelah was pregnant, I decided I needed to read up on personal finance fundamentals. So I went to amazon, searched on “dad finance” and lo and behold, “Rich Dad, Poor Dad” came up.
I didn’t know anything about the ‘baggage’ that’s associated with Kiyosaki’s work. All I knew was that someone here had opened up my eyes to a new way to view the world. Life didn’t have to be about working until a government-mandated retirement age; you could have another plan, financial independence. Now I know that many of Kiyosaki’s real estate principles are ill-advised, to say the least, but you know what he did that many other authors didn’t do? He made me think. He presented an alternative to the mainstream. I’ve read a few dozen “get a side job” or “cut out the latte” type books, and they are all good advice… but they don’t really make you think. Rich Dad did.
So in that vein I’d recommend the book Early Retirement Extreme. I’ve enjoyed Jacob’s blog for years. You know why? Because, in a sea of advice about how to advance your career and manage your 401(k) and deal with your mortgage, he simply says: you can leave it all. You don’t have to live by society’s dictates: get a house, get a yard, push your way up the corporation, and utilize the stock market as laid out by your retirement plan’s administrator. He offers a very clear and very reasonable model for doing something DIFFERENT. This is not just practical – it’s also philosophical. Jacob begins the book by exploring Plato’s allegory of the cave. I hadn’t heard of this before I read this book, although I had read Plato. But there’s nothing wrong with that – in the sense that philosophy is ‘elite’ we probably need more elitism these days.
Jacob retired in his early 30s. He had saved drastic – almost draconian – amounts of his salary in his twenties and thirties by living an exceptionally minimalistic lifestyle, although he argues that he didn’t do anything truly exceptional – he simply avoided the temptations of consumerism and was attentive to the use of his resources. One of the things that struck me reading his book was that he lays out a vision for life that’s predicated on the idea that none of us really need any “things.” That’s an exaggeration: we need clothes, and some utensils, and shelter, and maybe a few semi-extras like computers and high-speed internet; but by and large most of the things we think of as ‘must haves’ are not. If you have a neighbor with a shovel, and you have a hammer, the two of you can share; you don’t both need a shovel and a hammer. We don’t need martini glasses and winter/summer tablecloths, or multiple sets of dress belts.
Maybe much of this is obvious to people who live a minimalistic lifestyle, and maybe much of this is insane to those who live the standard suburban lifestyle. I don’t think Jacob’s writing to convert anyone, to be honest. He seems to be trying to convince readers of his plan, but I don’t think you could come to this book treasuring your Lexus and enjoying your lattes and Netflix and occasional trips to TGI Friday’s and have the right mental mindset to absorb what he’s talking about. You have to be halfway there already. If you’re already thinking about an endgame – financial independence – then what he’s talking about will open up a lot of new ideas for you. The idea of extreme minimalism, of community sharing, of making maximum utility of the resources you have at your disposal will all seem quite simple and yet have a “why didn’t I think of that before” feeling.
I’m not sure this plan is for everyone. As someone who’s further down the suburban white picket fence/4 bedroom/2.3 kids model than I’d ever thought I’d be, I’d say that the transition from an air-conditioned, cable-supplied house like ours to an early retirement extreme existence would be exceptionally difficult. But the important thing about books like ERE is that they point out that difficult does not, by any means, imply impossible. You can minimize your expenses. You can make the goal of your life independence, not wage slavedom. You can do these things – others have and you can, too.
So while I can’t recommend ERE to everyone – it’s technical, it’s unforgiving and it’s hard – if you want to learn something new about personal finance and frugality and minimalism and environmentalism, you have to read this book. I haven’t read many personal finance books that have deeply affected my thinking about money and the role it plays in my life. One is Rich Dad, Poor Dad. Another is The Millionaire Next Door. And Early Retirement Extreme will sit alongside those books, too. Not so much because it’s a guideline, but because it’s a philosophical work that deserves to sit in the back of your mind all the time; every time you buy something you should have this formula ringing in the back your mind. You won’t read many books like this, to be honest, but that’s exactly the reason you should read this one. I’d imagine if you read this blog, you’re probably the type of person who would enjoy Early Retirement Extreme; so buy a copy through amazon or visit your local library and request a copy.