*Early Retirement Extreme*

by on March 31, 2012 at 7:05 am in Books, Economics, Food and Drink | Permalink

That is the title of an erratic but interesting book by Jacob Lund Fisker, and the subtitle is A philosophical and practical guide to financial independence.  Think of it as a study in “least cost living,” his web site is here.

Here is his post on a middle class lifestyle on 7k a year, health insurance included, sans young children, don’t skip the section on the lentils.  How does it compare to how people lived fifty years ago?  To how I lived thirty-two years ago as an undergraduate?

“Not buy very much” seems to be his main strategy.

I transplant these scenarios to a foreign setting.  Let’s say you had 10k a year, net, to live in either India or Mexico.  How high would your standard of living be?  What kind of health insurance could you buy?  How would your level of happiness compare to working at a job you don’t like for 80k a year for twenty more years?

When it comes to modern society, I sometimes wonder, what is the true secession point with decent utility?  What kinds of options are your savings giving you?  Is there any chance you will take those options?

For the pointer I thank CR.

1 Jonathan March 31, 2012 at 7:14 am

Possibly of interest:
Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century [Paperback]

Mark Blyth argues that economic ideas are powerful political tools as used by domestic groups in order to effect change since whoever defines what the economy is, what is wrong with it, and what would improve it, has a profound political resource in their possession. Blyth analyzes the 1930s and 1970s, two periods of deep-seated institutional change that characterized the twentieth century. Viewing both periods of change as part of the same dynamic, Blyth argues that the 1930s labor reacted against the exigencies of the market and demanded state action to mitigate the market’s effects by “embedding liberalism” and the 1970s, those who benefited least from such “embedding” institutions, namely business, reacted against these constraints and sought to overturn that institutional order. In Great Transformations, Blyth demonstrates the critical role economic ideas played in making institutional change possible and he rethinks the relationship between uncertainty, ideas, and interests on how, and under what conditions, institutional change takes place. Mark Blyth is an assistant professor of political science at the Johns Hopkins University specializing in comparative political economy. He has taught at Columbia University, and at the University of Birmingham, UK. Blyth is a member of the editorial board of the Review of International Political Economy.

2 Ed March 31, 2012 at 7:33 am

Re: Extreme Early Retirement

The site certainly proves there are lots of ways to live, and live well, outside of the “mainstream” of a 9 to 5 job, commuting, and credit card debt.

At the same time, it seems that what motivates many of the folks over at extreme early retirement is a desire for isolation or to withdraw from society. There’s a lot of talk about small towns to live in, but little talk about “early retirement” in, say, New York City.

3 IVV March 31, 2012 at 9:24 pm

And small towns are not society? Must New York City be the standard to judge against?

4 MC April 1, 2012 at 5:07 am

Um…that’s because it’s impossible to live cheaply in NY, right?

That’s like saying, “what motivates them is a desire to avoid automotive technology. There’s lots of talk about riding a bicycle, but little talk about ‘early retirement’ while driving, say, a Lamorghini.”

5 Dan Weber April 1, 2012 at 9:54 am

Just reading quickly, he claims to live in the SF bay area. Not sure just how isolated he is.

6 dearieme March 31, 2012 at 7:51 am

‘the “mainstream” of a 9 to 5 job’: do those still exist?

7 JonF311 March 31, 2012 at 11:35 am

Yes, but they’ve turmed into 8 to 6 jobs.

8 Rahul March 31, 2012 at 7:56 am

10k a year in an Indian big city is an OK lifestyle; nothing fancy at all. Lots of Indians live well below that but it’ll still seem a hard life to any but the very bottom of America.

The other problem is even if you had a million dollars a year in India you can’t buy your way out of the commons: air pollution, traffic, noise, etc. are great equalizers.

9 Andrew' March 31, 2012 at 7:59 am

I moved to semi-rural US and have been pretty surprised how “third world” it seems. It’s interesting though. I spent a year manually removing black widow spiders (it worked, went from killing ~3 per night to not seeing any in a couple years) but you still have to keep your lawn mowed. It seems the worst of both worlds, but then I haven’t personally experienced true poverty.

10 Pallavi Thakur April 1, 2012 at 1:19 am


I would say as of now Rs 50,000 per month (approximately A$1000) is enough for a single person middle class lifestyle in India. This assumes that initial fixed costs are taken care of – a nice furnished house and a car (thanks mum and dad!). I actually did some research on this some time back and spoke to friends still in India (IIM, ISB upper middle class types) – this incidentally was one of my plans on how to move back to India. I am in my late 20’s and the A$1,000 p/m would have come from investments I have made.

11 Andrew' March 31, 2012 at 7:57 am

What kind of health insurance in India or Mexico? Aren’t we getting pretty close to a rational avoidance of health insurance in some countries based on quality? Despite hysterical cries to the contrary we have it here based on cost.

12 TommyVee March 31, 2012 at 3:57 pm

Both India and Mexico have national health care (somehow they are not “too poor” to afford it, but the US is???) http://en.wikipedia.org/wiki/Universal_health_care

In both countries, expats are very likely to carry supplemental private insurance since the national health system is very basic. But people are not choosing to be “uninsured” in either country.

13 Pallavi Thakur March 31, 2012 at 9:56 pm

Tommy, even the poor try to avoid the Government hospitals if they can in India. Universal Health Care there doesn’t mean the same thing as it does in the West.

14 chuck martel March 31, 2012 at 11:17 pm

Mexicans seriously injured in traffic accidents near the US border are routinely helicoptered to American hospital emergency rooms. You’ll be OK if you get the flu or a bad cold in Mexico but treatment for trauma is traumatic.

15 Rahul April 1, 2012 at 12:30 am

Do the CBP-ICE minions station themselves at the hospital helipads to fingerprint the medivacs, I wonder…..

16 NAME REDACTED April 2, 2012 at 2:51 am

Actually, no, look at swine flu deaths in the US versus Mexico. Mexico did way worse.

17 asdf March 31, 2012 at 8:01 am

Hot men already do this. They are often marginally employed on and off and bang sluts for entertainment. Women are programmed to consume.

18 dead serious March 31, 2012 at 11:48 am

You again? Give it a rest. You watch too many movies.

19 Finch March 31, 2012 at 12:37 pm

I believe in the previous thread it was concluded that the poor, low-IQ, not-so violent or drug-involved as to see prison or injury, unable to keep a job much less a wife, low-status guy – is the new alpha who will out-breed us all. It makes you wonder what alpha means.

Maybe the explanation is that people with low mating market value tend to hook up with one-another, and for the same reasons that they are low mating market value they are also bad at effectively using birth control and keeping relationships together? Maybe there’s no alphaness going on at the low end at all?

20 Pallavi Thakur March 31, 2012 at 10:02 pm

As much as I hate to say this asdf isn’t entirely incorrect. If you are hot, confident, presentable (‘alpha’) but low income – you do get to bang attractive women. Some of these women may relatively be high income earners themselves. So yes Finch is correctly incredulous but asdf isn’t entirely incorrect. Women with a short term mating strategy discount socio economic status at a much greater rate than people would like to believe.

21 Finch March 31, 2012 at 11:03 pm

I’m not arguing against game’s efficacy. I’m arguing against large numbers of poor folk having figured it out or being naturals, despite no hint of it in other aspects of their life, when there’s a much more obvious explanation for what’s going on. I thought that was the dumb part of the previous thread.

22 Cliff March 31, 2012 at 11:10 pm


23 DW March 31, 2012 at 8:12 am

Status status status.

He’s high status for extracting so much from so little. Someone adopting 80% of his lifestyle would need 10x the money and have 1/10th the status!

24 jdm March 31, 2012 at 8:14 am

I just took a quick look at his blog. It seems that he has recently taken a (presumably well paid) job as a quant/trader in Chicago. He’s evidently not opposed to trying different things in life.

25 will April 1, 2012 at 5:25 am

hah, his retirement was funded by his ~$200,000 investment portfolio. He may have needed that job after ’08.

26 Bill March 31, 2012 at 8:24 am

I wonder how much he expects to earn from his book.

And, what he plans to do with the extra money.

27 Cliff March 31, 2012 at 11:11 pm

I believe he published it several years ago. Also he got bored and took a job.

28 tyui March 31, 2012 at 8:49 am

After teaching at a university in a small town for 30 years and saving & investing nearly 50% of my salary, I have been able to retire at 57 and move to the suburbs of a big city (where real estate costs three times what it did).

29 Jack March 31, 2012 at 9:45 am

I suspect peer pressure (for adults!) makes it much harder for people to do this. It’s not so hard to live frugally, but no one wants to look like a cheapskate. Call it the mother-in-law effect, or the brother-in-law effect, or keeping up with the Joneses, or all of it. We spend more than we need to because we want to keep up appearances.

30 Rahul March 31, 2012 at 10:00 am

While partly true I think habit, and indiscipline are more important culprits. Same as why diets or excercise is hard.

31 dearieme March 31, 2012 at 2:21 pm

Presumably you can avoid low status if you’ve got some suitable title: doctor, colonel…whatever. Or does only money matter in the US?

32 will April 1, 2012 at 5:28 am

You highly underestimate peer pressure. Even the smart and well educated feel terrible about not being able to buy the same thing as their friends.

33 MRFan April 1, 2012 at 4:17 pm

Also, even if one thinks that they are averse to the more obvious type of peer pressure –worrying about what other people think — living frugally can impact joint activities with friends. Those friends who are highly invested in the rat race to the tune of 100+ work hours/week/couple generally must spend more money on activities simply because they don’t have time to prepare for lower cost alternatives. Even the simplest outing can be a huge compromise on cost/preparation/expectation.

34 FYI March 31, 2012 at 10:01 am

Between that extreme and the “9-5 80k life” there are many options in between. I know single men who work in simple jobs (ex. telemarketing), make around 35-40k year and live a pretty comfortable life. Stress levels are much lower than more competitive jobs, benefits are usually ok…

The point is that they eventually get tired of that and go to more competitive jobs anyway. I think it is silly to imagine that our society was tricked into behaving the way we do. We like the extra money, the larger house, our wife and kids. Sure is easy to get carried away but still, if we really wanted to simplify things we would.

35 Ritwik March 31, 2012 at 12:05 pm

Sure, no one tricks anyone into anything, but groups/organizations/societies can often find themselves in very inefficient equilibria for a long time. Consider work hours in South Korea, for example. People ‘work hard’ because other people work hard. This doesn’t make them more productive (at the margin) or better paid than their peers/ contemporaries in other rich-ish economies.

Or, consider the availability of wedding venues, as a more trivial example. You need to book them in advance is the US/UK because other people are doing the same. There is no ‘shortage’ of wedding venues (adjusted for income etc.) , compared to say, India. Where people will book wedding venues only 2 months in advance.

36 FYI March 31, 2012 at 2:35 pm

I have a hard time believing in both examples. It might seem to *you* that the extra work put by people in South Korea is not worth it… but that is probably not the case for them! Regarding wedding venues, it might seem to you that reserving a place in advance makes no sense. But for the people who do, that extra time probably allows them to organize parties that would be otherwise impossible due to restrictions we have in labor force, for instance, that probably don’t exist in India.

37 Neal March 31, 2012 at 10:23 am

I would like to see someone do the same frugal lifestyle, but with young children. Consider the case of married graduate students, each earning $15k. This is a lower-middle-class income in a college town; living expenses are maybe $7-10k, leaving a good $5-8k for savings and leisure each year.

When you start having children, you immediately go from middle class to pinching pennies. Daycare for a young child runs $8-10k/yr BY ITSELF; it’s almost cheaper for one spouse to stay home until kindergarten!

38 TommyVee March 31, 2012 at 2:59 pm

We lived the frugal life-style when our kids were young, and we are financially independent now that they are grown. We could retire now, in our 50s, if we wanted to, but we have fulfilling work (I do contract energy efficiency software development that I enjoy).
Biggest single frugality for us was using mostly bike, foot, transit transport when our kids were young (we now have 1 old car for 4 drivers and it is parked a lot). Cars are the single biggest discretionary expense for most people in US, depreciating 2 new cars often costs ~15K/yr but is “normal” for middle-income people. We invested the money we did not spend on cars and gas in rental properties. Right now we own 6, so managing and maintaining them is a part time job, but they would support professional management if we wanted.
The greatest thing about reducing car dependence is the health benefits, and sense of freedom, not living so many hours of your life trapped in a little metal box.. When I see car drivers in traffic jams, honking at each other, swerving around, and even road-raging I am so thankful I don’t have to live that way.

39 The Anti-Gnostic March 31, 2012 at 4:32 pm

it’s almost cheaper for one spouse to stay home until kindergarten!

Yeah. Whoever heard of such a crazy idea. It violates every maxim of Friedman and Friedan.

40 MC April 1, 2012 at 5:10 am

That’s a slander on Friedman.

41 Andy April 2, 2012 at 5:20 am

Well if you are retired as per the blog, then you obviously don’t need day care. The other costs for children are fairly minor.

42 Erik March 31, 2012 at 10:23 am

Anecdotally I believe it is more common for Europeans to retire to a cheaper, warmer foreign countries than Americans. Having lived in England I know it’s relatively common for them to retire to Spain, Greece, or Thailand, to name a few options. I suspect they are more comfortable with living outside of their familiar government and society than Americans are, and with the NHS they know in a pinch they can fly back to the UK for any major medical needs, if needed.

I believe you could live a comfortable, upper-middle class lifestyle in Thailand for $30K to $40K a year. Yes, there would be a lot of challenges with local language, issues with the “commons”, ensuring you pay the right local taxes, etc. But you can also afford cooks and other servants at that level of income. Wealth is relative, and it comes down to trade-offs.

With good internet connections becoming more common around the world, I believe people from developing countries moving to “emerging” countries will become an increasing trend. Why should I pay high taxes in the US when I can live abroad in an emerging country and work remotely for my same company, or retire much earlier than I could if I stayed at home?

For men especially, the main thing that keeps them in their more expensive, developed country is their wife and kids.

43 Sbard March 31, 2012 at 11:14 am

If Americans want to move somewhere warmer and cheaper for retirement, they usually go to Arizona, Florida, or Nevada, though some will retire to places like Panama or Costa Rica.

44 Urso April 2, 2012 at 5:28 pm

He’s not retired; his full-time job is figuring out ways not to spend money.

45 Ed March 31, 2012 at 11:00 am

One caveat. As someone noted above, Fisker recently took a job as quant trader. He had a high paying, high status job before, left or lost that, then lived for awhile on his wife’s income from her high paying, high status job. They seem to be DINKs. The book and the website seems to be repackaging miscellaneous from various cultural fringes in the US (both left and right), some are valid so if you are encountering them for the first time through the book then maybe he’s done a service.

American middle class families with children have absurdly high imposed costs (housing, health insurance, college), the housing coming from some combination of rent, mortgage payments, and property taxes. That means both parents have to take high salaried jobs and there is little left once the imposed costs are taken care off. Obviously just not having kids takes out a lot of these costs, something that Fisker was at pains to minimize on his blog. But its really the trinity of housing, college, and health care that contributes most of the costs (and taxes, but if you have a low income and rent you can avoid most of them), so the key is finding some way around them. The lentils are a distraction.

Plus if you are working long hours at a high salaried job, there are a number of additional hidden or not hidden costs that bleed your salary. Obviously commuting to and from the job, but you may need to change your wardrobe, at least five meals a week are outside the house, there are a surprising large number of bargains you can get if you are willing or able to obtain them during weekly business hours and you pay a premium otherwise, and so on. Plus the stress will induce spending. The costs of travel become cheaper per day if you go on an extended trip for several weeks as opposed to flying somewhere for a long weekend.

Also, the welfare trap is real in the U.S. Welfare programs are generally means tested but can be quite generous depending on where you live. So you will get low income people using public housing and public healthcare (though the schools are still an issue) effectively getting a higher standard of living than middle class people in the same area struggling to pay for both. The system extracts money from the middle class and redistributes it upward (in the form of bailouts and subsidies) and downward (in the form of welfare). If you tax something, you get less of it, and if you subsidize something, you get more of it. If the middle class person can’t get into the top income brackets it may make sense to drop into poverty.

These various extraction seem less intense in other countries. This is anecdotal, but my wife often comments that we can live on her small artisanal jewelry business in her country (Brazil) but forget that happening here. She also also comments how much cheaper consumer goods are in the U.S. than in her country, and even eating out seems to be cheaper up here now. I think she is right on both counts.

46 JonF311 March 31, 2012 at 11:38 am

Re: are a surprising large number of bargains you can get if you are willing or able to obtain them during weekly business hours and you pay a premium otherwise

Huh? Sales generally run the entire week, coupons are often valid for a month or more, and things like garage sales, flea markets and swap meets are almost always held on the weeklend.

47 Ed April 1, 2012 at 6:59 pm

The disconnect here is that my disposable income is not likely to go to additional stuff -I already have as much as I can fit into my small apartment, so I spend to replace. Maybe I already am living the lifestyle in this respect. So I’m aware that sales aren’t organized to run only when most people are at work but that is not when I was talking about.

There is alot of stuff I do consume -rail and bus transportation, meals and alcohol at restaurants or bars, and so on, that are often cheaper if you hit the places at off peak times. Plus for many services in my neighborhood, there were a limited number of options because for some reason the hours were often also 9 to 5ish (8 to 6 didn’t help because of the commute, and yes, I live in a strange neighborhood). Not working 9 to 5 meant I could shop around.

Generally, you are more able to take time to find and examine options and find cheaper versions of what you want if you are not committed to spending half your waking hours, and always at the same time, in an office or on the commute.

48 TommyVee March 31, 2012 at 3:10 pm

Having raised children all the way through college on a frugal lifestyle, I think the “produce-consume” “treadmill trap” is largely a self-fulfilling prophecy. People tell themselves it is impossible to spend less, so they do not.
If you live frugally for a while, then you can accumulate savings, which in turn lets you use a cheaper high-deductible health insurance plan, with an HSA for backup, saving more money. Moving somewhere with good public education takes pre-collegeeducation expenses off the books.
We helped one of our kids with expenses at a state university, very good price/performance. Our other child got a full merit scholarship. We still by everything we can used, both for financial and environmental reasons, and craigslist/internet has just made used/shared work better.
Whether you tell yourself that frugal living is possible or impossible, in each case you will be correct. Financial independence means living and working where, when, and how you want to. Marketing driven forced consumption will eat up any level of income if you let it, but for some of us material consumption does not bring happiness, but freedom does.

49 TommyVee March 31, 2012 at 3:13 pm

One other frugal living technique we still use is to rent rooms in our house to students or researchers on a temporary basis. Helps with housing costs and we meet interesting people.
I can’t believe how many people get foreclosed on a house that could generate revenue per bedroom. Some of our past room-renters from decades ago are still good friends.

50 Floccina March 31, 2012 at 9:48 pm

American middle class families with children have absurdly high imposed costs (housing, health insurance, college), the housing coming from some combination of rent, mortgage payments, and property taxes

Healthy children cost next to nothing to insure, housing in much of the country can be gotten cheap and parents do need to spend anything for their children’s college.

51 Winston March 31, 2012 at 11:04 am

Living on 10k/year sucks. I’ve done it. In general, I find that the more I make the happier I am. Sorry, dude you can keep your lentils and home made laundry soap.

52 Andrew' March 31, 2012 at 1:19 pm

He barely scratches the surface with lentils. It’s basically minimalist protein. You can also “hide” lentils in things. Not only is it a way to eat less meat, but it’s a way to always get enough protein when meat is inconvenient. There are other ways that are an IMPROVEMENT over just meat. And meat has become an expediency at times in my household. Sometimes vegetable sources are superior. We use meat when we don’t have time and I’m especially realizing now when we don’t have the knowledge. Meat becomes insurance against various deficiencies, tasty insurance for sure.

53 Winston March 31, 2012 at 2:04 pm

Honestly, I have nothing against lentils in particular or legumes in general. It’s poverty that I despise. I’ve lived in the kind of crappy conditions that he advocates and being poor or living like you’re poor gets old. So I’m going to eat gourmet food, live in a comfortable house, take fun vacations and drink top shelf liquor. It’s not like I’m going to need the money when I’m mouldering in the grave.

54 TommyVee March 31, 2012 at 3:18 pm

Drinking good liquor might cost a few hundred dollars a year, while owning a car costs about $8700 per year (http://www.usatoday.com/money/autos/2011-04-04-costs-of-driving-rise.htm). Getting rid of an extra family car for one year could finance top-shelf liquor for decades.

So financial independence for me means riding my bike, walking and taking the bus while purchasing a wide range of single-malt Scotch and artisanal tequila, wine, etc. Running from point A to point B can also work up a good thirst.

Yard sales show how little happiness most purchases bring, people see brand-new stuff they have never used, just to make room for new stuff they purchased next. The sad thing is that this produce-consume treadmill is destroying the natural systems upon which we all depend.

55 Floccina March 31, 2012 at 10:03 pm

I buy 3 or 4 year old cars, never get collision insurance and I keep them for 7 to 10 years. I think I spend about $3,000/year on a car including gasoline and repairs.

56 Andy April 2, 2012 at 5:22 am

A few hundred dollars/yr seems optimistic. Maybe more like $1-2k to get a reasonable amount of good stuff.

57 Winston March 31, 2012 at 7:11 pm


You’re right about the cost of driving a lot. One of most cost-effective things I did to live better was to move within biking range of my work. I bike there about twice per week and on the days I drive my short commute is something like $15 cheaper than my previous 22 mile/direction commute. In fact the cost savings on the commute pays for the closer-in house in the better neighborhood. BTW, the ownership costs on my car are approximately $3000 due to my short commute and the fact that I live somewhere where everything I need is convenient.

58 MD March 31, 2012 at 1:23 pm

Yeah, I’d rather work until I’m 70 but get to go out to eat at nice restaurants and drink high quality alcohol and someday have kids. I’m glad he’s happy, but his lifestyle is definitely not for me.

59 LibertarianinChina March 31, 2012 at 11:23 am

I am Australian, 35, living in Hanoi, Vietnam on <$20,000 a year. I rent a very nice, three bedroom house in a downmarket but safe neighbourhood for $470 a month. I have a blazing fast internet connection, meet plenty of interesting people, and travel around the region, mostly by motorcycle.
I used to buy books, and now I download. My reading would be very heavily restricted without bit torrent – there are no public libraries here.
Many of the people I went to college with are lawyers in Sydney or Canberra, pulling down excellent salaries and hanging out with other high status folks. Very, very few of them are as happy as I am.

60 sc April 1, 2012 at 6:03 am

Yes but your Lawyer friends in Sydney could sell their houses and move to Vietnam or Brazil or Canada, you could probably retire almost anywhere on earth for the same price as retiring in Oz. If you work and build up wealth in Vietnam you might be wealthy IF you live in a low cost city forever but it constrains your options, for instance you probably couldn’t retire in Sydney if you were so inclined. I think this is what Tyler means when he asks “What kinds of options are your savings giving you? Is there any chance you will take those options?”

On the hand you must be able to get cheap and tasty Bun Cha anytime you like…. I am envious, very very envious.

61 Tony March 31, 2012 at 11:29 am

Hm, well, I guess I’m sort of in his league. My partner and I both had six figure salaries, and moved to rural northern CA where we now have a household with three adults and a basic budget of $40k a year total. My number one goal is to never live in a city again. It turned out, somewhat to my surprise, that it was easy to get part time data analysis work done via the Internet, which affords some extra budgetary luxuries. It also helps to have paid off the house and have retirement savings and access to group health insurance. We order the really good lentils, from the Palouse, which go very well with grass fed rib steaks, LOL.

62 Rich Berger March 31, 2012 at 11:48 am

I read the book and followed his web site for about six months or so before he unretired and took a job. He was “extreme” by his own admission but had a lot of interesting ideas. It did not surprise me that he returned to work since he was too young and intelligent to be retired. In his place I would recommend Mr. Money Mustache.

63 Michael Crosby March 31, 2012 at 5:18 pm

I second that Rich.

When I first started reading ERE, I thought the author was too extreme and just way out there. But the more I read, the more I found I liked what he had to say.

I’ve incorporated some of his ideas, and my life is better for it. And MMM is a good blog too, that I think will only get better.

64 Lord March 31, 2012 at 11:56 am

Your options are quite restricted at low income levels, where, how, and the rest. My property taxes alone are over half that but I like where I live. While money is enjoyable, earning it often is not, and while few would take this option by choice, many will accept it by necessity. Some will say it is never a necessity, but placed between unpleasant living and unpleasant work, the former is often preferable, especially when money no longer buys what you need or want.

65 Max March 31, 2012 at 12:18 pm

If someone is willing to live on this much money without feeling deprived can we really consider a spending level above that to be poverty?

66 MD March 31, 2012 at 1:29 pm

I grew up living that guy’s lifestyle. When your parents makes a ton of money, but you live like monks, you are eccentric. When your parents make minimum wage, so you live like monks, you are poor. Now I make as much money as I can, and spend it how I please.

67 gregor March 31, 2012 at 12:38 pm

I grew up in India in the sixties. My father made about $60 per month working at a factory in mid-level position but we had very good middle class life. Some of the factory provided resources that we had – a very good gathering place for all sorts of sports and indoor and outdoor games, a very good school, a library – all within five minutes of walking distance – were quite remarkable in the sense that when our kids grew up here in USA we had to haul them around in a car and they could not just walk to places by themselves. Our life was somewhat unusual in that only when I visited the state capital at the age of 10 did I realize that so many people in India lived without 24/7 access to running water and electricity and sanitation services.

I don’t know how the things are in India these days, as a majority of my eight siblings are now US citizens, and even the kids of the ones who stayed behind are all (except one ) living in the US.

68 Dan S March 31, 2012 at 12:40 pm

The main issue as I see it is that while it’s possible to comfortably live at these low income levels and thus retire with a pretty small nest egg to support you, doing anything fun (travelling, bungie jumping, etc etc.) would be too expensive. So you either work and then travel when you get the chance, or you “retire” but don’t get to travel.

Anybody overcome these hurdles?

69 Boris H March 31, 2012 at 1:27 pm


The site is less extreme and less thought provoking, but he does seem to do a lot of (reasonably local) travel. He has achieved the same thing Jacob has, plus a big house / kid / two car lifestyle that is less socially marginal. Basically he worked for 10 years instead of 5 to get there. The income was high-ish (he is a software engineer), but probably not that high compared to many MR readers.

70 TommyVee March 31, 2012 at 3:27 pm

For us international travel is an important part of frugal living. Since we have high-deductible medical insurance, we get all our medical/dental work done in Costa Rica. US certified hospitals provide US quality medical care at ~30% of US costs, so savings on a few appointments can pay for air fare.

71 TommyVee March 31, 2012 at 3:36 pm

Also if you are financially independent, you are free to travel for longer periods, which drops the per-day cost of travel radically. You can rent an apartment/house instead of staying in expensive hotels and eating every meal at a restaurant. Better to cook most meals in your apartment, and save going out for more special culinary experiences.
Plus eating out all the time is unhealthy, restaurants always pack in the fat and calories, not so good for everyday, but fine as the exception instead of the rule.

72 tyui March 31, 2012 at 5:25 pm

Not if your ideas of fun are expensive. If they are, the frugal lifestyle plainly isn’t for you.

73 Andy April 2, 2012 at 5:25 am

1. Not everyone wants to travel.
2. You can travel to a nearby location. If you live in most parts of the US (e.g., CA) there is tons of great stuff to do within driving distance.
3. You can travel to inexpensive locations. e.g., India on a per day basis can be inexpensive (apart from the flight).

74 DK March 31, 2012 at 12:45 pm

My understanding is that a key in his early retirement success was a remarkable 9% annual return on investments. If so, his success is an exception rather than a rule – even if one is willing to live on lentils for year after year. (I don’t; I’d rather be a wage slave eating steaks).

75 TommyVee March 31, 2012 at 3:29 pm

Actually on his site he shows that investment return is not an important variable in time to financial independence. Income minus expenditures makes all the difference, since over his short 5 year time frame a few percent difference in return makes little impact.

76 Nylund March 31, 2012 at 12:50 pm

My wife and I actually sound quite a bit like him and his wife. We probably both spend about $7/year (household total: $15k), have an investment portfolio with a six-figure principle, and live pretty decent lives. Our basic “rules” and choices sound very much the same as well. Don’t buy more house or car than you actually need, cook good meals at home, don’t waste money on status items, etc. It really helps to be a good cook (both my wife and I are). There’s this perception that we must be at home living off lentils and ramen, but we can cook an amazing Coq au Vin for less than what two orders of burgers and fries would cost us at our local pub.

But yes, the MAIN thing that makes any of it work is the simple fact that we don’t have kids. But we do plan on having kids, which is precisely why we live like this and stash so much of our income into our investment portfolio.

77 RZ0 March 31, 2012 at 1:02 pm

Oddly, the cheapest policy for my family of four at the health insurance site he recommends is $958 a month. So much for early retirement!
And he’s wrong about dental insurance. Having it is cheaper than going to two checkups a year, since so many people have dental insurance but never use it.

78 TommyVee March 31, 2012 at 3:31 pm

With a 10K deductible, we pay $500 month to insure 4 people in Colorado, affordable insurance is easily if you have general good health and can handle a high deductible.
Then you just pay expenses out of pocket via an HSA.

79 mulp March 31, 2012 at 4:52 pm

With a $5000 deductible then 20% copay I was paying $10K for just one, and luckily was rated as standard risk when I got the policy which then increased 10% a year until Obamacare forced increased use of premiums for medical costs and it was reduced to $9000 a year. Over the objections of NH insurance regulators which seems to fear NH won’t have any insurers serving NH if the profits aren’t high enough – NH no longer has any NH insurers even though the rate of uninsured is the second lowest to Mass.

80 Floccina March 31, 2012 at 8:58 pm

I think that many of the problems with high healthcare costs are due to bad regulations at the state level. ND and UT seems to have much lower spending than most states.

81 Floccina March 31, 2012 at 8:54 pm

I live in Florida and I pay $430/month for a Blue cross health insurance policy for my wife, 2 sons and me. That is even though my wife had breast cancer. The bill for that was $60,000, I paid $10,000 and Blue cross paid the rest. She also had another illness that cost over $30,000 one year.

82 Floccina March 31, 2012 at 9:11 pm

I forgot to say that I am 55 years old.

83 Dan Weber April 1, 2012 at 10:24 am

Is that really true on the private market? I’d imagine that anyone who buys private dental insurance is going to use it.

84 Bill March 31, 2012 at 2:11 pm

I am so heartened to hear that you can live on so much less.

This will make it easier to tax the rich, since they will be able to live on less, and even retire earlier.

It might be hard, though, if you have three houses, and are building a fourth.

85 The Anti-Gnostic March 31, 2012 at 4:43 pm

We hardly need to tax anybody. If it’s possible to live OK on 7k/year then we are clearly making way too many transfer payments.

86 Bill March 31, 2012 at 10:40 pm

Transfer which way. If I am paying at a 30% rate and Mitt is paying at a 15% rate, while calling for more military spending, who and which class, is making the transfer?

87 Cliff March 31, 2012 at 11:21 pm

Don’t even start with that. I am sure you know the statistics about where the spending goes. But yes, fix the military spending, fix the special treatment for whatever Mitt Romney was doing, that’s fine.

88 will April 1, 2012 at 5:42 am

Come on, you’re too smart to believe all the rich pay that rate or to believe that raising taxes on a few people who direct investment will make a meaningful dent in the deficit.

Are you seriously suggesting that in general the poor and middle class transfer wealthy to the rich?

89 Jeff Holmes March 31, 2012 at 2:51 pm

I lived off 1,000 a month (paid in cash) for a year in Rwanda from 09-10. Quality of life was great. It was easy to live low cost both because the cost of living was lower (particularly food) but also because consumption opportunities are limited. Even if I had been making three times as much my lifestyle would not have been much different, save eating out more and taking more trips.

90 Andy April 3, 2012 at 1:50 am

I was easily living off $1,000/month in CA for several years.

91 Jamessir Bensonmum March 31, 2012 at 4:14 pm

The website featured in this thread reminds me of a lot of others. What I get from it is an alternative way of thinking about things. Some of the points I can respect. I also appreciate a lot of the comments.

It’s fun to check out websites like it as well as expat forums of Americans living abroad. Live vicariously through others that sort of thing. Right now for me, though, it’s just easier to make my living here in the US. If I could do this well or better abroad that would be great, but I can’t. Damn sure don’t want to end up broke in India or Mexico.

92 Nikki March 31, 2012 at 6:23 pm

Is choosing a job you enjoy such an exotic option that it doesn’t even deserve a mention?

93 Cliff March 31, 2012 at 11:23 pm

That’s a great option if it exists for you. For many people, it does not.

94 Floccina March 31, 2012 at 8:42 pm

Cheapskates Anonymous blog

95 Benny Lava March 31, 2012 at 11:07 pm

This retirement guy is like a post-modern Walden. Yes if you already have a house with a yard you can grow lots of vegetables in San Francisco. But buying a house with a yard in the Bay area today will require a lot more than 7k a year, so right away this is as superficial as squatting on Emerson’s property for 2 years. But he is really acerbic and chides people who like things like socks without holes (so decadent). Plus his wife cooks a lot and if you are married to a woman who hates cooking you are kinda screwed right there. Or if you have 2760 in commuting costs how can you pay rent and feed yourself on 4,000 bucks a year? The assumed upfront investment makes this not worth further investigation, though I appreciate an orthogonal view on diet. Maybe if he wrote a lentils blog I’d read it.

96 Cliff March 31, 2012 at 11:23 pm

Uh, he’s retired. There’s no commuting cost.

97 Benny Lava April 1, 2012 at 3:46 pm

Oh I see. I didn’t pick that up from skimming the link, my mistake. I guess if you bought a property in the Bay area 30 years ago you are still paying 1980s property taxes and probably amortized your debt so I guess the idea of living on 7k a year for certain people who planned well in the 80s isn’t so crazy.

98 Ron April 1, 2012 at 1:57 am

Ahh, yeah… I used to make 6 figures… was very bored sitting in meetings. Company sent me to multi-day training, paid meals, whatnot. So what? Eating alone in some fancy restaurant sucks. Feeling like you’ve got a big bullseye on your back every time you check into a hotel sucks. Feeling like you have no time to do anything you want to sucks. Knowing that what you do means nothing in the long term sucks.

Now… well, we raise chickens, have a big garden, homeschool, use a compost toilet and irrigate fruit trees with our greywater. Getting into permaculture. I wouldn’t trade it for anything. I do work part time, and bring in more than we need… but our actual expenses are around $10K per year, and that feels pretty extravagant at times. We’ve always lived far below our means, and always will.

If anyone thinks that a person can’t be happy and entertained, doing something challenging and rewarding for that kind of expenditure… in our culture where waste and opportunity abound… then they aren’t thinking outside the box. Might want to cut back on that media consumption, where every company is desperately trying to convince that life without [x] is meaningless.

99 Ron April 1, 2012 at 2:08 am

Full disclosure: We did save early on, and have no debt, and drive older cars… and I do [generally] like the challenge of fixing things we own. And we did build our own house, and so on. All of that makes the budget possible.

So I don’t mean to sound like anyone can do it. Most can’t. Or don’t think they can. Same difference, I guess.

100 Ricardo April 2, 2012 at 2:19 am

C’mon, Tyler. There’s a term for people who spend years of their lives trying to live a middle class lifestyle on $7,000+ per year: “graduate students.”

Many graduate students are miserable, though. Not sure how much of that can be attributed to one’s hopes and dreams being dashed in pursuit of a dissertation versus living without a car and eating kidney beans and lentils for dinner several nights a week.

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