Early Retirement Extreme – Jacob Lund Fisker

Early Retirement Extreme - Jacob Lund Fisker


In real life, the prisoners of Plato’s Cave are those who are prisoners or slaves to their wages and their culture.  A wage slave is a wage earner who is entirely dependent on their wages.  While the wage slave is free to leave the current job, he is not free to leave the job market altogether and he can likely not imagine the possibility of doing so.  He is still entirely focused on the wall.

The wall shows other people not as who they are, but as what they own.  There goes a man in his new sports car, what is not seen is that the car is bought on credit and the man is stressed because he is having trouble making the payments.

Wage slaves have jobs where they can go and spend their most productive hours writing high powered memos so they can be more productive, while other people spend their time ignoring memos so they can be more productive too… … This endless working and playing is called “making a living”, yet people are so busy “making a living” that they have no time for living.  A wage slave is a person who is not only economically bound by mortgages, loans, and other obligations, but is also mentally bound by an inability to perceive that there are other options available. Like the prisoners in Plato’s cave.  Their chains are not physicals; the chains are mental, which in some sense makes them worse because it turns the prisoners into their own prison wardens.

Is spending the most productive years of your life chained to the job market to collect a lot of rarely used stuff that gathers dust in the closet or takes up space in junkyards a wise choice?  Were you really born just to die, leaving a large pile of discarded consumer goods? I realize that not wanting a house full of things makes me look weird and even “unpatriotic”.  After all, more is better and who does not want to be better?   But perhaps conformity is not the only way to live.  In fact, by taking the other end of the bargain, saving as much as other people are spending on wants, it is possible to retire and lice on invested savings after just 5 years of full time work.  Rather than increasing the amount of work to acquire more stuff, reducing this superficial need reduces the amount of necessary work.  It is possible to reduce the amount of work all the way down to zero: financial independence.  Indeed, playing the shadow game for five years provides a permanent way out of the cave!  Alternatively it is also possible to return to the cave for a few months every year to earn money for the next adventure out of the cave.

The resulting freedom could be used on personal projects such as reading books, visiting places, entertaining, exploring, cooking, learning, and experiencing.  It can also be used to start businesses, engage in a second career, etc without worrying about having to support oneself.

We have come to a point where spending money is one of the few recognizable signs of success.  For instance, spending half an hour in a traffic jam getting from A to B in an expensive car is considered more successful than spending half an hour in a traffic jam getting from A to B in a cheap car.  I am not sure why that is.  Even more puzzling, both of these are considered more successful than spending 25 minutes getting from A to B on a train, or spending 20 minutes on a bicycle from A to B while passing cars.

Similarly, it is considered more successful to sit on a couch in your home, if there is an additional unused couch in an additional unused room, compared to a house with no unused couches and no unused rooms. In the real estate market, a house with a greater potential for unused rooms generally commands a higher price than a house with fewer but constantly used rooms.  Perhaps there is personal fulfillment to be had in cleaning and maintaining a larger home? Or perhaps the fulfilment comes from paying someone else to do it?

Recently much attention has been paid to great kitchens and great kitchen appliances, while less attention is paid to great cooking and great cooks (except those on TV).  Why boil eggs in a pot when there are 350 varieties of electric egg boilers available?  A common misconception is that money is better or more successfully spent on granite countertops and restaurant strength food processor and burners than on cooking classes and practice.  Who has the time anyway?

This behaviour is pervasive.  People with more money than time buy $3.000 road racing bicycles with ultra light carbon frames to shave 2 pounds of the bike, regardless of the fact that they themselves are probably 10 pounds overweight, and only take a slow ride once a week.  Compare this to the amateur enthusiast with more time than money, who rides every day and thus has the power to ride his much less expensive bike much faster.  Who enjoys more?

For recreation, many believe that saving for a year to drop a large sum on a hectic one-week vacation in an exotic locale is more recreational than staying closer to home and taking a month off to relax.  A hectic tourist experience is considered very successful.

All debt comes with a contractual obligation of repayment, which is usually structured to last 30 years to minimize individual monthly payments, but definitely not to minimize the total number of payments which is maximized by increasing the maturity of the loan as much as possible.  If the maturity is extended in perpetuity, the interest payments become similar to rent (this is rent for loaned money you will have to return anyways).  If the only means of repayment is a job, this means that working must also last 30 years.  This way a single decision just after leaving school turns out into a lifelong commitment that is very hard to escape, given that the borrowed money has been spent into increasing consumption rather than into increasing production.

Salary men have options, but they do not create options. This linearization makes them predictable and subject to indirect control.  This control is exerted by providing a choice within a narrow range.  “You can choose between the following three models of cookie-cutter homes.  You should not modify them or your resale value will be impaired”, “You can chose  between the following two political candidates, you should not vote for others or your vote will be wasted”, “ You can chose between the following 25 heavily advertised breakfast cereals, but don’t think of starting your day with anything but breakfast cereal”, “ Chose the size and type of your TV and the number of channels, but don’t consider not watching TV, or you might miss out”. This gives the illusion of freedom while retaining control.  Wage slavers can choose to change their job, but they are not free to quit their job.

Few people pay cash anymore and “financial success” depends on being good at managing debt.

While the lack of a steady pay check might seem risky, it is actually safer as the working man has been conditioned to the situation of having to find new jobs he actually thinks of them as clients rather than employers, and thus considers it normal. A salary man is rarely without a job, but when he is, it is a high stress event, almost like a death in the family.

Many people spend more time maintaining their homes or their car than the time they spend maintaining their health.  Too many forget that they live in their body first and in their home second.  After all, where else are you going to live? Hence, taking care of the body should be the priority before taking care of the rest of the world.

Financial skills are important.  In particular, they become increasingly important for anyone who accumulates more and more assets.  It’s strange how specialists gladly spend a great deal of time perfecting their skills to pursue a five percent raise, while at the same time there is a fatalistic tendency to accept whatever investment strategies are currently fashionable on Wall Street when it comes to generating passive income.

Focusing on utility rather than consumer products or instructions is a key tactic.  Success is then redefined from accumulating and consuming the maximum number of products or the most expensive products to deriving the maximum utility.

You must be willing to change your frame of mind and conquer old habits.  In particular you must be willing to do things that 95% of the population won’t be able to understand and 99% won’t be willing to do.   Freedom is attained by creating a large gap between production ( revenue ) and consumption ( expenses ). This can be done in two ways: earning more or spending less. Nothing new there.

Giving up wants can be as though or easy as going on a diet, giving up smoking, or changing other habits dependent on strength of character.  However, doing without is often thought of as a sacrifice, especially when strongly attached to material comforts.  It is quickly realized ( about a month ) that happiness does not stem from being surrounded by possessions, but that being surrounded by them is the result of an addictive habit.  Thus, it can be tremendously liberating to not “need” something to be happy.

Notice how possessions tend to increase and expand to cover all possible closet and storage space.  Sooner or later the house will feel cramped with clutter.  This happens when storage becomes inefficient and more and more effort has to be put into playing Tetris with your stuff.  At this point consumers start talking about the “need” for more bedrooms.  These bedrooms are costly.  Not only are bigger houses more expensive; they also come with higher property taxes.  Its traditional to heat the entire house to 19 C, in other words, money is paid and gas is burned to make the possessions as comfortable temperature wise as the inhabitants.  Interestingly, storage costs are related to volume and not the price of what you are storing, transportation ( and often environmental ) costs are typically related to weight. As consequence, I consider not only the price, but also the volume and mass when I buy something.  The costs manifest mainly as real estate costs, that is, paying to put your stuff somewhere, and if you put it in your main residence and subscribe to central heating, the cost of keeping it at a comfortable temperature.  Stuff is also hard to transport, so having a large amount of stuff makes it difficult to move ant therefore it acts as an anchor on your mobility.

I don’t own anything tangible that would be heartbreaking to lose or which has substantial replacement costs.  The sum total of my possessions, including my residence, would cost less than 10% of my net worth.

Price might be higher if it leads to a lower ownership costs.  Ex 30 dollars shoes that last a year, VS 100 dollar shoes that lasts 5 years, VS 50 dollar used shoes that lasts 3 years.  Annual cost= ( your costs – used costs ) / Years in service. ( to lower the annual cost the item might be sold at the end, that is why we have “used costs” in the equation ).

The idea is therefore to seriously consider whether your current living arrangements are optimally aligned with your liberty and pursuit of happiness.  Is your money best spent on an extra bedroom or five years of freedom?.

Children naturally try to emulate their parents, at least in the early years, and for the most part a child’s values are a direct reflection of his parent’s, either conformingly aligned or diametrically opposed.  Traditionally parents have played a large role in their children’s upbringing.  Through watching and emulating, children learn life skills such as respect for others, the virtue of doing chores or performing a day’s work for a day’s pay, balancing a check book or keeping track of money, how to judge value, how to get good deals, eat inexpensively, cook a meal and do dishes, bake bread, clean, de clutter, ride a bicycle, tend a garden, hang up a shelf, or fix a plugged drain.  However, as people have increased their expenses, households now require two incomes, and thus, as it so often goes in out rime, parents have outsourced their children’s upbringing, and possibly taking a lesson from their own situation as wage slaves, they now act as managers of their children’s lives and careers rather than as role models, signing them up for extracurricular activities that are so very important for their resume to get into their dream college.

If new loans are the only way to raise cash, because all existing income goes towards bills and cost of living, and new loans are not available because credit has been maxed out, then a sudden need for cash ( for instance to fix a leaky roof, or any other emergency ) is a serious problem.

As our productivity has gone up, we have increased the size of our homes and filled unused rooms with unused purchases, which just wait to be thrown out or given away.  We are surrounded by the inedible landscapes of lawns and asphalt.  We have moved away from work and the market so we can waste time driving there, and money on maintaining our multiple cars.  In our spare time we waste time watching TV, waste our bodies eating junk food, then waste money treating the results of those habits.  These behaviours make no one better off, except those who sell the enabling products, who, as mentioned above, are often ourselves.

Think of health as wealth, the wealth that matters the most, and being wealth, its usefulness lies in its ability to serve as an asset in our lives.  The healthier the life, the better the life.

There is an absolute standard of fitness. To be fit is to be able to drag or carry an unconscious adult out of a burning house on one, maybe two gulps of air.  To be fit is to be able to fight and defeat anyone who can outrun you and outrun anyone you can’t defeat.

The staples are: ammonia, baking soda, borax, chlorine, soap and vinegar.  Just remember to never combine chlorine and ammonia.

On a parallel note, the US used to be known for its auto companies.  Today, some of the biggest industrial companies are in the business of selling junk food and cholesterol lowering drugs.  Food for thought?

Voluntarily stepping out of the consumer cycle and saving enough to replace one’s job with investment income instead of working is not “normal”.  The great majority of people do neither, and those who do one almost never do the other.  Anyone not consuming as much as possible tends to do so out of external necessity and thus does not have savings to invest.  Anyone investing for income tends to have plenty of money and thus consumes at an average if not above average level.  There are a few doing both, most do neither.

On the other hand, it is possible to find other people pursuing frugality as well as people interested in investing.  If you prefer to avoid confrontation, keep allow profile with it comes to this area of your life.  Don’t mention that you also happen to manage a six figure portfolio to your “voluntary simplicity” friends and don’t mention that you only have one bedroom to your investment friends unless you are prepared for the resulting discussion.

The golden rule of volunteering is that the volunteer gets to do it his way.  If you want to eat better for less, volunteer to cook.  If you want to save money on cleaning supplies, start making them yourself.  This takes leadership abilities, but if not you, then who?

An investor is a person who lives from his assets.  For an investor, the start of financial independence includes a strong vision of one day creating a metaphorical forest and living harmoniously with the forest.  It starts by planting seeds.  These seeds grow into saplings and the mind starts connecting the vision to the upcoming reality of a mature forest.


P=401p  ( using a conservative rate of return of 3% ) This means that each $1 dollar a month not spent is equivalent to reducing the required fund size by $401.  For example, the cost of a $20 cell monthly payment might seem inexpensive to someone earning $15/hour, but with an asset based income, it actually represents $20 * 401 =$8020, which represents over 4 months of work at the given hourly rate.  P =(aprox) 12 ( because is a monthly exp ) *p / interest ( interest 0 – 1 )