thoughts on early retirement

horses on beach

My family has been gone for a few days, visiting family in New York, while I stayed here to work. It’s been an interesting experience, being alone, because I haven’t had this much time to myself in quite a while. I’ve attempted to spend my time doing productive things, although today, many of the productive things have involved doing something where I can watch football while I do them. One of the activities today was baking bread from scratch. This was an interesting experience. I had watched Lara make a number of variations on bread – items such as pizza crusts, pastries, and assorted cakes and muffins. But I myself never actually attempted to make bread. It’s strange, because my son has been baking bread at his Waldorf preschool for years, and it doesn’t really seem like that difficult. Be that as it may, I have never actually attempted to make bread. So today I thought, why not?

So I baked some bread. Today, following instructions I found on the Internet, natch. It worked fairly well. I was able to make a decent loaf of bread, with a nice hint of garlic and onion, because I like that kind of bread… salty and flavorful, not hearty and/or sweet. You may wonder what the point of this is. I am not a big do-it-yourselfer. I generally think that when you spend a large amount of time trying to do something like this that you could expend a small amount of money on, you probably are not spending your time in an optimal way. But then again this weekend, my thoughts have been turned  toward the idea of minimalism, frugality, environmentalism, simplicity, and lifestyle design. Why, you may ask? Because of something I read on early retirement extreme this weekend.

I know I have mentioned early retirement extreme, a blog about retiring at an extremely young age, several times in the course of my own blogging “life.” It is, to the best of my knowledge, one of the best blogs about this lifestyle. It is not the only one of course, there are several others: brave new life and Mr. Money Mustache leap to mind (both are excellent and you should be reading them). All of these blogs, of course, have
Your Money or Your Life a book written back in the 80s although revised recently, as an inspiration. But early retirement extreme is probably the best-known of the current financial independence blogs. The author of the blog, Jacob, announced this weekend that he was leaving his early retirement to go into a new job as a quant trader. I won’t go into the details of what a quant trader is, although I have friends in that industry. Google it (or quant/quantitative analyst).

To me, any job in the financial services sector is the exact antithesis of an early retirement. The hours are long, the office politics are brutal, the pressure to perform is immense, the positive impact to society is (in my opinion) minimal at best and negative at worst. Your ability to pursue what you want will be limited by the firm’s immense demands on your time and expertise.  But be that as it may, it is an immensely challenging field and I understand why someone like Jacob, with a PhD in physics, would be entertained at the thought of engaging in the challenge of trying to conquer this field.

I myself am not engaged in an early retirement lifestyle. I have not made the choices which would enable me to retire at an extremely early age. Until the mid-90s, I was engaged in a career quite typical of most American corporate mid-level management. I chose in the mid-90s to  disengage from this lifestyle as much as I could (mentally) and became a contract consultant, which allowed me to design a much simpler lifestyle, which involved much less travel, much less involvement in corporate politics and less concern over the need to constantly deal with bosses and subordinates. But I do aspire to some of the ideals of the early retirement movement. I drive a 10-year-old car, which I am not fond of, but I intend to continue to drive. Why?  Simply because I don’t believe there’s any compelling need for me to buy a new car. I do not like to buy things. I have attempted to live in a “simple-ish” home. We attempt to eat simply, mostly vegetarian and organic and locally grown. I don’t have cable TV. I don’t play video games. We read a lot in my household. We have a garden that Bubelah takes good care of.  But after all of that back patting of myself, I realize that I have a long ways to go before I meet any of the ideals of an early retirement ideology.

So it is jarring to me to see that one of the proponents of the early retirement lifestyle has abruptly left this lifestyle after achieving it so efficiently. But I understand. I have spent most of my blogging life reading heavily about hedonic adaptation. I’ve written about it several times, although I have never made it a main focus of my blog. But be that as it may, hedonic adaptation is probably one of the key measures for understanding yourself . No matter how miserable you are – or how happy you are – your current state is what determines your happiness. If you are miserable today and things go a little bit better tomorrow, you will be happy. If you are happy today and things go a little bit wrong tomorrow, you will be miserable. This is just human nature. If you buy a toy today, hedonic adaptation teaches us that you will be less satisfied with it as each day goes by. This is fine. People are like this. I am like this.

But I have realized, after reading a lot of the comments on early retirement extreme.com about Jacob’s decision to leave the ERE lifestyle, that I do need to concentrate more fully on a singular goal, and that singular goal has to be finding a point at which financial independence allows me freedom of choice over my actions on a daily basis. This is critical. I enjoy many parts of my job. I had an extremely busy week this past week, but it was also very satisfying: I was able to set up a system for my client that exactly met their needs and made them quite happy. I had a great feeling of accomplishment from that. Now, but that in balance with this idea: I enjoyed making my client happy, but how can I weigh that against the fact that I was working late most evenings and was not able to spend much time with my children. Granted I spend more time with my children than I would if I was traveling heavily, but it was an uneven solution to the question “what is your ideal lifestyle design?” I’d like to make money, do interesting work and work with people I like….and have lots of spare time for my family (and, frankly, myself). And the only way this will happen is if I achieve financial independence.

Unless you are familiar with the early retirement general philosophy, much of this may pass over your head. But I think you get the idea. There was a guy who espoused retiring early and showed how to do it,  who then found that in retirement he needed to go back to work. It seems a little hypocritical when I first read it. But it’s not….  the idea is that you would like to put yourself in a position where you can do exactly what you want when you want to, even if that means you want to return to full-time work in a new field. I certainly can’t do that right now. I would submit that probably 99% of Americans cannot do this now. So if you have access to a blogger who has been able to do this, and he’s written a detailed guideline on how to achieve that same level of success, that’s a good guide map regardless of what he’s doing now. I’m going to pay more attention to my plans to retire early, personally. And when I say retire early, I don’t mean to quit working. I simply mean to be able to work when I want to, in a way I want to, with people I want to, with companies I want to and how I want to.

I think that’s sufficiently heavy for Monday. Get out there and do what you do with pride, and with a focus on doing it so well that someday you won’t HAVE to do it, you’ll WANT to do it because people love what you do so much that they will throw money at you. Nice daydream, huh?

Photo Attribution Some rights reserved by mikebaird

PS I composed this post with Dragon Naturally Speaking (which I reviewed before, here). It took about 5 minutes of editing, mostly for punctuation, but by and large it got my speech. The geek in me appreciates the lack of typing.

5 comments

  • I like that you used baking bread as an example regarding this statement:

    “I generally think that when you spend a large amount of time trying to do something like this that you could expend a small amount of money on, you probably are not spending your time in an optimal way.”

    Most people make this a very simple consideration: Return On Investment. The investment being a combination of money and time spent. But then they consider the return to be the same whether you buy a nice loaf of garlic and onion bread, or whether you make it. This is where I spent a decade misguided, and where I feel awakened now.

    Consider these other benefits:

    1. Flexibility – You might find that over time you enjoy a little more garlic and a little less onion. Or perhaps baking at a higher temp and with a little more flour leaves the consistency more appealing. Unless you have a local baker friend, you probably can’t do that by paying for the bread, you can just try different bakeries or brands.

    2. Education – You are learning a new skill, and it’s not just bread baking. You are learning to cook in general. For example you learn how ingredients mix, and how temperature matters. If you choose to immerse yourself in this, you could learn all kinds of things from experts online that effect other foods than bread.

    3. Mental Health – If this is an enjoyable experience, and you find it relaxing, it pays far more mental health dividends than going to work to earn the money to pay for the bread and the gas used to get there.

    4. Potential Bonding – You mentioned that your kid knows how to bake bread. Perfect! How about you bake a different bread each month with him and try different ingredients. He’s in pre-school, how about chocolate chip bread with sprinkles? Sounds like a simple routine that he’ll remember when he’s 30 years old and pondering his own parenting.

    5. Health – in your specific example, I just like to know what is in the food I eat. I have no idea what’s in the bread I buy at the grocery store (admittedly, I still buy it) – but I know what goes into our homemade bread that we make with chili. It’s all natural and tastes great.

    In some cases you may still decide that the ROI is too low to do it yourself. But many times, I’ve found, the DIY model is beneficial.

    I don’t mean to come across as pushy on this topic, but it’s a perspective that took a long time to crystallize for me, and something that has made me a far happier person – so I just thought I’d share.

    By the way, this is true in so many other areas. This weekend my furnace broke and I spent more money fixing it myself than if i’d just called someone. However, I learned how my furnace worked, that I have an electric ignitor rather than a pilot light, that there are all kinds of safety mechanisms to prevent filling my house with explosive gas, and that touching an ignitor with your fingers will contaminate it in a way that can reduce it’s life from 15 years to 15 hours. It’s knowledge that will allow me to fix other problems with a $10 part from Home Depot next time, rather than $200 from a HVAC specialist.

  • “I generally think that when you spend a large amount of time trying to do something like this that you could expend a small amount of money on, you probably are not spending your time in an optimal way.”

    I completely agree. While I’m a huge fan of Early Retirement Extreme and Jacob’s writing, many people on that site just trade one crappy job for another. For instance, Brave New Life’s comment above about the furnace does not sound like financial independence to me. Trading in a traditional job that I’m not overly fond of for a job like fixing the furnace, which I’m not overly found of, would not be financial independence too me.

    Plus, there is a very real ROI here. How many freaking times am I going to have to fix my furnace? A handful at best, which makes the ROI on learning how to do it very low and below what I make an hour at my current traditional job, which isn’t any worse or better than fixing a furnace.

    Obviously, if BNWorld likes fixing his furnace, more power to him, but there is more to the formula than just not paying someone else to do it. Yes, there are some things you can do yourself and get a good ROI on that many people farm out, but I do think some of the extreme EREers take it past the point of ROI.

    “…the idea is that you would like to put yourself in a position where you can do exactly what you want when you want to, even if that means you want to return to full-time work in a new field. I certainly can’t do that right now. I would submit that probably 99% of Americans cannot do this now.”

    It’s a shame more Americans aren’t shooting for financial independence, as this would make many jobs much better. Financial independence or just being close to financial independence would put the power back in the workers hands.

  • I generally like Jacob’s stuff but have written (both him and on my site) that I didn’t “get it.” After some discussion back and forth we came to the conclusion that I am not interested in living bare bones (he was spending 12K a year…my property taxes alone are 6K and will be higher in a couple months when I move) just so I can decide to go fishing on a Tuesday morning without answering to a boss/clients.

    Notwithstanding, I think that eventual freedom (even if I have it a decade or so after he does) is the amazing part about the movement.

  • I think this quote is the key: “I’m going to pay more attention to my plans to retire early, personally. And when I say retire early, I don’t mean to quit working. I simply mean to be able to work when I want to, in a way I want to, with people I want to, with companies I want to and how I want to.”

    The simple fact is that we all need to generate income. “We all” referring to the vast majority of the world’s population. It is possible to pare things down to a minimal budget and possibly get by on your life’s savings, and minimal additional income. And while I can see how that idea is intriguing, it simply isn’t a match for most people. There are many great ideas which can be taken away from Jacob’s site, however, and I think many people can use some of his tips to learn to better focus how and where they spend their money.

    In the end, it’s not about following Early Retirement Extreme (after all, the word extreme implies it will only apply to a very small number of people who are willing to work very hard at achieving it). In the end, retirement is about finding a solution that works best for you.

  • OMG. I love it…this is no mere post; it’s a great post. Okay, probably because I ruminate on like this myself now and again.

    Welp, it seems to be Jacob set himself a goal and he reached that goal: financial independence allowing him to retire at a young age. In fact, he actually uses that term: “financial independence” as a de facto substitute for “retirement.” Having reached that goal, a guy with as much energy as Jacob has would just naturally crave another goal. Now, however, he’s in a position to take on any job he pleases, or to pass his time in any way he pleases. Whether the job is driving the tourist train at the zoo or applying quantitative analysis to the vagaries of the stock market, it’s now his choice, rather than a job he has to do to pay the bills. IMHO, that is a kind of retirement.

    I often think what I would be doing if I had taken retirement when I planned instead of being laid off into retirement. Probably it would be just about what I am doing: teaching in a community college. I’d like to be able to do some volunteer work for no pay — something more altruistic. But teaching is altruistic, so who am I to complain about getting a check for entertaining myself with students>.

    Semi-Demi-Exboyfriend retired in his early 40s with a scheme along the same lines as Jacob’s. Lives on 12 grand or less a year — pays for houses, cars, motorcycles in cash. Never lets a blade of grass grow under his feet: he’s 70, takes New Girlfriend dancing several nights a week, and still climbs mountains almost every day. He’s never gone back to f/t work (although he did underwrite his bumhood with the occasional TDY with the Air Force Reserve). And I’ll tell ya: that guy can make a MEAN loaf of bread! 😉