Post Retirement Needs & Wants are Hard to Envision in Debt Slavery

Chatting to some colleagues, it seems that many have a hard time envisioning living on less that they currently earn. D’oh, what’s so surprising about that you might say? Well, some of these guys are serious savers. Some of them have kids that are soon to transit from being dependents to adults in their own right, some are already empty nesters.

The point is that many are already living on less than they earn, or their outgoings are about to fall. That’s the only way you get to save 🙂

And yet, sometimes discussing how much we’d need after leaving work, their default level is roughly 2/3 of what they currently earn, and few people seem to be able to conceive of living on less.

Now I’m no Jacob of ERE, but here are some of the reasons I will pay less when I stop work than I have done for most of my working life:

No mortgage. For twenty years housing has cost me about the equivalent of five grand in 2010 real terms. No more. Say I spend £1k a year on maintenance. That’s £6k less I need to earn a year (4k difference plus tax and NI)

No need for two cars. With more time I can be flexible, or use taxis, car-sharing systems, hire them if I really must. Saving about £1.5k in all the parasitic costs of owning a car and keeping it on the road. That’s say £2k a year less I have to earn.

No commuting costs. It is easy to end up paying thousands of pounds in commuting costs, and this is not just the cash, but the loss of time every working day. Say another £2k off. This applies less to me because I often bike to work and live closer than most colleagues.

That’s around £10k less that I’d need to earn simply by stopping working. Not having to earn the money to spend on something that’s not fun is always better than having to earn it and buy it. Having one car in the household is a big step up from no car. The second one is only a step up when it covers times where one won’t do.

The mortgage is an anomaly in that is has nothing to do with stopping work. It’s more to do with sucking up 20 years of not spending more than I earn. The house is something I now have, it saves me the need to pay rent, it isn’t inherently work-related.

These are costs saved, but there are other costs that can reduce. With more time, I can do things that previously I’d have had to pay other people to do. On my first house, I replaced the guttering myself. On this one I paid someone to do it because I didn’t have the time, but I could have done it myself and saved money.

All these are steps that move me a little bit out of the money economy. Doing something for yourself is usually cheaper than buying it, because to buy it you have to earn the money and pay tax on it. If I buy £100 worth of spuds from Tesco I have to earn £130 gross to do that. If I grow £100 worth of food from £3 of seeds, I only have to earn £4. I don’t pay tax on value I add myself where I consume it myself – or barter it with others.

There’s a balance here, we don’t have to go all American pioneer and aim for self-sufficiency. As a debt-slave you have to be largely in the money economy. You haven’t got time to to otherwise. As a financially independent individual, you can choose to be less in the money economy – reducing the amount of your effort creamed off as tax.

The money economy can do things for you that you just can’t easily do yourself – I don’t want to keep my own cows and you can’t grow coffee in the UK. You can’t make a PC at home. But let’s face it, you can grow far better tasting veg than money can buy from Tesco, and there are many other things you can do yourself.  If you have the time.

Holidays, a temporary respite from wage-slavery?

Some of the other things colleagues felt were non-negotiable needs were holidays. Some had plans to see all sorts of things on Grand Tours. Obviously they need money for that. Something that has changed over the years is that people pack a lot of expectations into their two week holiday in the sun, almost as if that is a compensation for the grimness of debt slavery. This is almost an addict’s logic – work is awful so I need my break. Needing a break is a symptom, not a solution. Some nutcases even borrow money to buy their holidays, WTF? The summer holiday has almost become totemic – even though some folk even get back to work more stressed than when they were in the office.

Holidays don’t have to be expensive, particularly if you are flexible when you travel. The young usually keep the cost of their holidays down of necessity, and the old do too, both these groups can usually take more time over their travel and aren’t tied to school holidays. Flexibility, and being open to roughing it every so often are the key.

After experiencing Stansted airport in 2007 I came to the conclusion that flying is just not an enjoyable experience for me. The bit in the air is okay, it’s the rest of the package that sucks.  Airports makes me want to kill my fellow humans and yell into their screaming kid’s ears to STFU when they scream into mine. That’s before I have even got off the ground. You get ripped off for the journey to the airport, ripped off to park your car, ripped off to eat or drink anything, hassled by half-wits in security. Why do people pay to do this? Just because the ad says pay £5 to get to the beach doesn’t mean this pain is worth enduring. You get nickel-and-dimed 20 times over in surcharges for the necessities to actually get to use your £5 ticket.

You can pay more to avoid the excesses of the so-called ‘low cost airlines’ but then you find yourself at the whim of striking air traffic controllers/baggage handlers/cabin crew. There are just so many single points of failure in the way of a good experience of air travel. Hopefully increasing fuel prices will drive up the cost of air travel and reduce numbers – I’d much rather fly every third year and have a good experience than twice a year with a rotten experience. About £200 return to Europe air tickets would get numbers down, and hopefully price some of the chavs out of the air too.

I don’t see what the attraction is in paying for this experience, so I haven’t set foot in an airport since then, other than for the occasional work trip. Once my time is my own, I will travel again, but slowly and overland, not in tubular cattle trucks.

So much for holidays. They’re a luxury, not a right, and you don’t get a right to them just because you have a crap job. Modern holidays seem to be almost the anathema of simple living, too. But they’re obviously really really important in some talismanic sense for an awful lot of people, so whoever’s doing the advertising spin must be doing something right.

Power and Heating are the exception

Of course, not everything reduces when you stop working. Heating and power are two obvious areas that will increase. I have hedged some of that with a wood stove and a chain saw and some contacts. Energy costs are a big hazard – my heat and power bill is £800 a year. It is low by UK standards because I have invested in some conservation but mostly because I have aggressively attacked electricity consumption using an Efergy power monitoring system and an appliance meter. That showed me, for instance, that scrapping my fridge-freezer and buying a new one would reach payback in one year, and that where possible I should use my 60W laptop rather than my 210W desktop PC. It is pretty obvious that energy costs are going to go up. You don’t have to be a peak oiler to see that.

The UK has become a net oil importer in recent yearsBritain has become a net importer of oil in recent years, and the aspiring middle classes of China and India are going to be bidding on the same world energy market as we are. Increasing demand running into a fixed supply usually means a price hike. Observe the effect on the price I have paid per kWh of electricity (the dips in Aug 06 and April 08 are artifacts due to the power company screwing up reading my meter, I have smoothed the curve with a 4-point moving average)

Variation in the price I pay per kWh of electricity

Test Your Retirement Budget While Still Working

It seems obvious to me – test out the retirement budget for a couple of years before you plan to retire, particularly if you aim to do it early. Obviously you still do have the inherent work-related costs like commuting, you can reduce the cost of lunch and coffee by taking a packed lunch, or simply qualify that in the budget too. A fantastic side-effect is that you will probably save more money which you might as well put towards retiring early – in my case some of my savings are going towards paying my way in the years before drawing my pension. If you hate having less money more than you hate working, well, the answer is obvious – work longer, at least you will know why!

I don’t find this, and indeed I am saddened by how little extra quality of life I bought with what was a pretty wanton spending on trinkets and gewgaws. There are some things I bought which I still enjoy and treasure – my Canon SLR lenses for both long bird shots and wide-aperture macro shots. I’ve even sold some pictures. I’ll be pushing up daisies before I get to the break-even point, but it’s fun.  My Hi-Fi – one of the key components bought with six month’s salary saved from my very first job, and most of it over 15 years old.

What runs through the Stuff I treasure and use is that it usually was decent quality, it lasts years, and it has low running costs, and often has been serving me well for years.  It often has multiple uses. I also bought a lot of ephemeral junk too, suckered by consumerism, though at least I didn’t get into debt to buy it.

What I found is that Ivan Illich was right when he said

I believe that a desirable future depends on our deliberately choosing a life of action over a life of consumption, on our engendering a lifestyle which will enable us to be spontaneous, independent, yet related to each other, rather than maintaining a lifestyle which only allows to make and unmake, produce and consume – a style of life which is merely a way station on the road to the depletion and pollution of the environment. The future depends more upon our choice of institutions which support a life of action than on our developing new ideologies and technologies. (1973, Tools for Conviviality)

Illich spotted that it is usually our relations with others, not what we have, that lends colour to life – conviviality, who matters more than what, once a certain level of needs is met. He was thinking of it more in the design of society rather than the individual case, indeed it is surprising how much of that early 197os thinking has some resonance to now.

Early in one’s working life the focus usually is on Stuff, because you start with nothing. RetiredSyd seems to make a similar observation that you get more bang for your buck on Stuff when you’re younger. What’s notable about some of those early purchases is that they can be in service for a lifetime – my pots and pans, my hifi, for instance. One big piece of Stuff is the house. Common wisdom has it that you should always stretch yourself when buying a house, on the principle that your leveraged asset is not marked to market and house prices always go up in the long run. I would differ – I live in a house which is cheaper than many of my colleagues on comparable earnings, but I also bought my house outright earlier in life than they will, even after some setbacks. Once you own your house, early retirement becomes much more attractive. In normal times, you could just as well get an investment portfolio that underwrites your rent, but there is an atavistic urge that makes owning the physical entity so much more reassuring than glowing figures on the screen, for me anyway.

So it is that there comes to a curious paradox – towards the end of your working life, hopefully when you are at the peak of your earning power, you can find you have less need for money, and stuff it into savings. You can get trapped on the hamster wheel like some of my colleagues, or you can rationally look at your wants and needs, qualify them, and perhaps get a better quality of life. There’s more to life than work.

Time to Ditch Bottled Water?

I was in a meeting a couple of days ago, one of the guys was drinking some sort of what the Americans call soda – miscellaneous synthetic flavoured sugared water. The other was drinking a plastic bottle of water titled “boring still water”. He was obviously living intentionally, at least as to what he was drinking – zero calories and good for him.

I linked to the Story of Stuff in yesterdays post on the budget, and on that site there’s The Story of Bottled Water (above), which really is quite remarkable.

Now I don’t really rate plain water as a beverage. I always like it to have gone through a coffee machine first, though if the sun is over the yardarm I’m also perfectly okay if it has been introduced to fermented grape juice or barley first 🙂

If I have to take plain water sans caffeine or alcohol, at the very least I prefer it sparkling, to give it some interest, and some tang, presumably from the slight acidity of the dissolved CO2. This must be some European thing, as I had the devil’s own job finding sparkling mineral water in the US, though I was tickled to find vast quantities of filtered tap water on sale there. Filtering tap water and selling it is not something we used to do in Europe – there’s always some sort of story about the source on the bottle here. This even applies to still water, and even on the cheap stuff from Aldi that I drink, which is about 25p for 2 litres.

I was first introduced to sparkling mineral water in Germany as a kid, to Hessen Quelle which came in re-usable glass bottles. I recall this from the early 1970s, so I’m not quite sure the European story stacks up with this film in that the start of demand manufacturing in the late 1970s and Orson Welles, he of the “there is a spring, and its name is Perrier” in 1977. The story of Perrier seems to indicate that mineral water was promoted in Europe before the First World War.

However, it’s difficult to get away from some of the issues in the Story of Bottled Water. Apparently you can get round the usual problems of tap water, the smell and taste of chlorine, by chilling it in the fridge. You can filter it to improve taste and remove some contaminants, however having once seen such a filter go green with algae I’m not so keen on that now. And Anglian tap water isn’t so bad taste-wise, if the chlorine goes.

The issues with mineral water are

  • cost
  • transporting water (though I usually drink British water at least)
  • making plastic bottles or making and transporting heavy glass bottles

I prefer the taste of water from glass bottles but in an attempt to reduce costs I have sifted to 2l plastic ones. These aren’t so ideal for sparkling water as by the time you reach the end most of the fizz has gone, and sparkling mineral water that has gone flat has a curious and not particularly pleasant taint.

The trouble is my penchant for sparkling water. You can carbonate tap water with a Sodastream, but swapping one environment-hostile process (transporting water and making plastic bottles) for another, the Sodastream  cylinder exchange process is a pretty outrageous scam, presumably where Sodastream make their money. I try and avoid anything with a subscription or running cost, and I can’t even make the business case for a Sodastream compared to Aldi. Heck, Aldi even throw in the water for free, while Sodastream want to charge me for a gas that’s meant to be ending the world.

Sodastream’s cylinders are £9 for 60 litres (ie 60 liters treated water). 30 2-litre Aldi bottles will run me £7.50, so Sodastream runs 20% more, plus the £60 capital cost. Not only that, but I would be supporting a company that has deliberately designed their cartridges so they are harder to refill from a large pub CO2 cylinder which would be a lot cheaper, though it can be done. I am chuffed that the Germans felt the same way, and when SodaStream tried to abuse the legal process to stop competitors refilling their cartridges the German Anti-Cartel Office stepped in and told SodaStream (known as SodaClub in Germany)  to cease and desist their restrictive trade pracitices.

I’m not supporting capitalist pigs like that. I’m all for genuine business, but restrictive trade practices where companies actively stand in the way of customers looking for cheaper solutions should never be supported.  And I am not sure that I can face futzing about with adapters and CO2 cylinders.

The issue here isn’t cost, I would only get through a couple of these 2l bottle as week in summer, and I’m not going to break into a sweat to save 50p a week or £26 a year. However, I don’t really want to be a gratuitous hazard to the environment without at least thinking about it if there’s an alternative that isn’t more expensive. According to the NY Times, about a quarter of all bottled water crosses national boundaries on the way from source to drinker. Living intentionally means at least considering the issue.

At work we have two types of drinking water dispensers – one sort is a filter and chiller on the tap water, the other is one with spring water in big plastic bottles fitting onto a chiller unit – these are placed where plumbing access is difficult. I find the water from both of these preferable to drinking it at tap temperature. I have a perfectly serviceable chiller at home called my fridge, so I will try the usual recommended solution of keeping tap water in a glass jug in the fridge. Hopefully the taste improvement of not coming from a plastic bottle will outweigh the absence of carbonation, otherwise I will go back to Aldi.

Oh and the guy in the meeting? He was being quite rational – after all, he was in unfamiliar surroundings. He was buying the convenience of the bottle, rather than the water as such 🙂

What’s up with this Calvinist Work Is Good For You Thing?

There seems to be a lot of Protestant work ethic out there in the PF blogosphere. We have Frugal Zeitgeist wondering Does a Minimalist Lifestyle Breed Laziness while Financial Samurai is concerned about The Dark Side of Early Retirement and observing Being Overly Content Can Be Detrimental To Your Career.

What’s up with that? We seem to definitely be in the ‘no pain no gain‘ zone. Work is there to pay the rent, not there to give meaning to life. Saying it is necessary and good for the soul seems downright Calvinist to me.

When I started work, true, it did give me some meaning, because it was a continuation of the arc that I had been preparing for, as I accepted society’s view of what a good lifestyle would look like. That path runs along these lines

  1. get born
  2. go to school
  3. go to university
  4. get job
  5. get married
  6. have kids
  7. retire
  8. die

All very 1950s, and I wasn’t even born then, but this expectation ran on through the 1970s.

At the same time, however, I was working and living life, and there was the process of what Carl Jung termed individuation going on in me. According to Jung, it is

the process by which individual beings are formed and differentiated [from other human beings]; in particular, it is the development of the psychological individual as a being distinct from the general, collective psychology.

Psychological Types, Coll. Works V6

Max Weber's seminal book on the work ethic and capitalism

Work is good for the soul is probably the force that drives Western capitalism according to Max Weber’s The Protestant Ethic and the Spirit of Capitalism. I’d go along with him in that the notion that work is good for you is part of western collective psychology, indeed I had to get to middle age before I found it possible to conceive that this was not a natural part of the way life is. That takes some doing, for instance this lady waited till retirement itself to challenge it, she has seen the light now 🙂

Compare my failure to challenge the status quo with Weber’s agricultural labourers on page 59:

since the interest of the employer in a speeding- up of harvesting increases with the increase of the results and the intensity of the work, the attempt has again and again been made, by increasing the piece-rates of the workmen, thereby giving them an opportunity to earn what is for them a very high wage, to interest them in increasing their own efficiency. But a peculiar difficulty has been met with surprising frequency: raising the piece-rates has often had the result that not more but less has been accomplished in the same time, because the worker reacted to the increase not by increasing but by decreasing the amount of his work.

Compared with those guys I have 150 years of educational advances, two college degrees, the hindsight of the Enlightenment. They spotted something I didn’t – enough is enough, the aim of life is to have a good time and probably a few beers with their mates. They could recognise what enough looked like, where I had to see more than four decades before I could even recognise the concept.

Of course, I’m selling the Protestant work ethic short. It was part of putting men on the moon, it drove people to cure smallpox and all sorts of good stuff that the West has achieved. It’s problem is it knows no bounds, so it also gives us the BP oil spill, climate change, bad advertising, junk food. It adds energy, but little critical direction, apart from the search for more.

It may even be possible that work is good for some people at some times, but it isn’t necessarily good for everybody, all the time. Yes, we should not become freeloaders on society, to that extent we should do enough work to pay our way. Cutting costs and retiring early doesn’t mean living on benefits for me, unless they are ones everybody in Britain enjoys like using the NHS. I’ve paid my taxes and my NI stamps for more than 30 years.

Early in my career I did get meaning from work, because I had not begun the process of individuation and establishing what my own values were.  As I got older, I realised that I was a debt slave, but in a velvet lined rut. I needed to work to be able to pay the mortgage.

Once I jumped to this, I realised that I didn’t like having other people having such control over my life, and looked at how to pay down this debt. I worked that out without PF blogs and suchlike, because there was no Internet at the time I started. It’s not that hard to work out that you have to spend less than you earn, and it was pretty obvious that if you don’t want other people controlling your life then don’t owe them any money 🙂

Even after paying down the mortgage I didn’t jump to the slavery part, until my declining but erstwhile good employer began to bring in nutty demeaning performance management BS, at the same time as the project I was working on was cancelled. The manager I worked for tried to use this to squeeze me out after having said he’d back me to retrain earlier on, before the credit crunch. It was at this point that I realised working for someone else, particularly in an office, is bad for you. D’oh…. So along the same lines as ‘if thy mortgage offends thee, pay the damned thing down or don’t take it out in the first place’, I realised that my office job was beginning to offend me.

Enter the PF blogosphere. I had failed to think independently and PF blogs made me realise that with grit and determination you can save enough to retire early, particularly if you spin off alternative income sources. I can only do the preparatory work  and learning with alternative income while I am still working as I’m bloody well not going to pay 42% tax on any alternative income streams, sod that for a game of tin soldiers.

I managed to get one final, and pretty high-profile project in an unusual area for which I happen to have the right skills, which is due to complete in 2012.  I have screwed down my outgoings to less than what I would retire on, and save well over half my earnings to the end of retiring early.

So I don’t get the Calvinist angle one bit. Work is not good for you per se. If you’re the sort that needs work to give you meaning, as I was to stage 4 of the list above, then yes, it is good for you. One you have individuated, you can make your own decisions. Work may be good for you, it may not. I’m with Max Weber, when he says

the care for external goods should only lie on the shoulders of the ‘saint like a light cloak, which can be thrown aside at any moment.’ But fate decreed that the cloak should become an iron cage.

Work isn’t good for me. What’s wrong with enough? Meaning in life can also come from who you are and who you relate to, not just what you do and what you own. To paraphrase the words of a song

I don’t need no stinkin’ iron cage…

Calvinist work ethic be damned. Freedom for self-determination is my birthright, and I’m going to claim it in the second half of life and continue the Jungian path to individuation. Know thyself…

A ropey copy of The Protestant Ethic and the Spirit of Capitalism can be read free on Go for the PDF, the text version is rough as guts

Page 2 of the Foreword lends credence to my viewpoint that for modern Westerners this work ethic is an atavistic echo of a religious nature. Like any element of the psyche that is part of an unconscious archetype, challenging the concept that work is an inherent good is met with fierce resistance and rejection. We had it right as part of the 1970s ideal of greater leisure, but urged onwards by those who could not brook the repudiation of such an archetype, we are unable to say enough is enough. We are still paralysed by monetary systems that require a long-term increase in GDP, despite the consequent environmental despoliation that is becoming increasingly clear.

The central idea to which Weber appeals in confirmation of his theory is expressed in the characteristic phrase “a calling.” For Luther, as for most mediaeval theologians, it had normally meant the state of life in which the individual had been set by Heaven, and against which it was impious to rebel. To the Calvinist, Weber argues, the calling is not a condition in which the individual is born, but a strenuous and exacting enterprise to be chosen by himself, and to be pursued with a sense of religious responsibility. Baptized in the bracing, if icy, waters of Calvinist theology, the life of business, once regarded as perilous to the soul

summe periculosa est emptionis et venditionis negotiatio

acquires a new sanctity. Labour is not merely an economic means : it is a spiritual end. Covetousness, if a danger to the soul, is a less formidable menace than sloth.

It’s Midsummer, June 21st, the Oak King is at his Zenith

It’s the longest day and the shortest night today. Something I’ve noticed from busting lots of consumerist junk from life is that I become more aware of the changing wheel of the year. Now is the time when the Oak King has vanquished the Holly King and reigns supreme, but in his ascendance lie the seeds of his own decline, just as for the Holly King the darkest time comes before the dawn.

A lovely day, blue sky and fluffy clouds and just the right temperature for the bike ride to work. My cycle journey wends through the outskirts of the town, runs by the side of farmland and onto heathland before returning to the town. All around birdlife is in full song, from the sparrows making out on the rooftops to the lovely sound of the blackbirds duelling it out across the streets. I took time to appreciate the birds that sang to grace my ride:

  1. blackbird
  2. house sparrow
  3. chiffchaff
  4. wren
  5. wood pigeon
  6. goldfinch
  7. magpie
  8. greenfinch
  9. chaffinch
  10. starling

I missed the yellowhammer that is on the farmland, he’s quiet today. It is a good midsummer, too good a day to be spent in the office but good nevertheless.

Midsummer Poppies
Oak Tree with Midsummer Poppies

Wake Up Call – Is Fear Standing In My Way

There’s a guy in the office whose worked for The Firm for 39 years, he’s been with it man and boy. Let’s call him X, he’s 59 now, working as a project manager, on a project which is basically doomed. The suppliers were screwed down so much on price that they lied about the functionality of the products, and as a result it has no chance of being launched on time. They’ll be lucky if it does anything at all even when it is launched.

X highlighted this, and as a result he’s been shifted to the bench. Don’t be the bringer of bad news, people don’t like it. Last week he wasn’t at work, and we found out why this week. He came in looking a shadow of his former self, apparently having suffered a TIA. Wikipedia doesn’t pull any punches – under treatment there is the stark phrase

TIA can be considered as the last warning.

Last year X discovered he had late diabetes, and generally the toll of working is showing on him. We’ve been getting onto him about it’s time he listened to his doctor and indeed his body, and simply pulled his ticket and left. He’s entitled to within a whisker of full pension, so money isn’t an issue.

The tragedy is, that his whole world-view is associated with going to work. He has interests outside, but he has no vision, no mental model of what his life would mean if he didn’t go to work.

He is holding, ready for the final approach, but has no map, no concept of where he is going to land. And so he fears leaving work, though he doesn’t need the money.

I thought of X as I read McKenna’s book. He needs to take a look at where he is, where he is going, and why the hell he is still working when warning sings are flashing Wrong Way, No Entry, Do Not Carry On. He doesn’t need the money, but something that beggars belief is that he is hung up on it. Yes, his pension is about half his salary. But he’s got no mortgage, he isn’t raising kids, what’s he need all that for. One thing is sure. He’s not taking it with him if the warning signals continue to get louder and one day they stop all of a sudden.

I thought of another guy who I used to work with, in his 50s. He hadn’t progressed as far as he would like, and could be bitter about it. He lived to go hiking with his wife, and was saving massively in AVCs and the like so he could leave early. He was physically very fit – you don’t get to do all that hiking without developing muscles like steel.

He never got there – in his mid 50s the clockwork stopped, and he died of a heart attack.

I would say mental health at The Firm is below average, partly because as an engineering facility it is male-dominated, and partly because its age profile is skewed towards the middle-aged. It can’t hold young-uns because it doesn’t attract many of them in the first place, and it is deskilling so they see a lack of future potential. This isn’t a great problem for HR, as it probably needs to thin out the ranks a little bit more.

Dmitry Orlov - Reinventing Collapse

Looking at it I would say that as people get over 50 they become vulnerable to the stress manifesting as physical ailments. Dmitry Orlov, in his book about the collapse of the Soviet Union said that the 45-60 age group was particularly sensitive to the stress of the loss of meaning and what they had worked for. They would look at what they expected and what they now had, and the fire within their minds would surrender and they’d top themselves.

That’s not unknown at work, though it’s always hushed up – I only heard about it through a guy that worked for me that was in the volunteer first aid service. I’ve never looked at a particular cracked paving slab in the same way after hearing how it got that way.

I thought of X when I read Early Retirement – Is Fear Standing In Your Way. Everything about him is trying to flag him down, his body is telling him that he is running out of road. And yet like a rabbit in headlights, because he cannot see a meaningful life without work, he is frozen in fear despite all the warning lights flashing red. What part of

TIA can be considered as the last warning.

does he not understand…

So often we stay with the tried and tested, either because we lack inspiration to do otherwise, or we fear the unknown. It is sometimes good to be reminded that it doesn’t have to be this way, and the inspirational RetiredSyd did that for me today, introducing me to Early Retirement – Is Fear Standing In Your Way and to Early Retirement Extreme’s The Voluntarily Dispossessed. A reminder of what is wrong about the status quo is neatly summarised in Never Forget.

Sometimes it’s good to come up for air.

Does Money Buy You Happiness?

According to Financial Samurai‘s thesis, if you say money doesn’t buy happiness then you’re either poor or super-rich, and since I don’t have a super-yacht I guess that leaves poor.

I guess Sam hasn’t heard of necessary and sufficient conditionality. In general not having enough money results in some form of misery. Micawber was right there.

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six pence, result misery.”

And having more money does buy you many of the things people say it doesn’t. It often buys health, since it enables you to eat right and avoid living in polluted places. And yet, as one gets older, money does lose some of its lustre. Part of that is simply that one’s net worth usually increases over time – for instance I own my house outright, so I don’t need to service a mortgage. I don’t need to push myself to earn the money to buy a house; I’ve done that.

And yet, as I consider retiring early, I am weighing this up, and for me greater happiness would be achieved in being able to stop doing certain things and get unwelcome influences out of my life – and these are nearly all to do with earning money. I want more of my time back – each day that passes is a day I won’t live again, and each of those spent in an office is in some ways a day wasted.

So on balance, for me, I’d have to disagree with Sam. Obviously for him this isn’t true, but I would say that money only buys me happiness up to a point, if I have to work for it. After that, the opportunities I have to pass up to get more money actually cost me happiness. Getting the balance right is what I want to nail these days.

we can generally have anything we want, we can’t have everything we want

Hat-tip to Get Rich Slowly for this piece of philosophy. There’s a deep truth in it – just like the lie has finally been given to the myth of ‘having it all’ that polluted womens’ magazines for so much of the 1990s. Life involves choices, and and what areas to focus one’s intent on is perhaps the most important choice of all.

It’s easy to want to have it all, and let’s face it, who doesn’t? But in a world of finite resources, and finite nervous energy, it is necessary to know our values and priorities.

In the case of that article, it was the case of a guy in his 20’s who was saving so much for his retirement that he wasn’t living life. He didn’t move out of his parents’ home, so he was missing out on one of the key rites of passage. It is far easier to become an independent adult in your 20s, not because you have lots of money – you don’t, you’re at the lowest point of your earning potential. It is because you are at your most adaptable, you aren’t weighed down by lifestyle expectations. You’ll put up with conditions that you’d find a hardship later on in life when you have experienced better.

I shared houses with students, and then with pals and workmates until I was 28. I could do that because I didn’t have expectations. I remember the first house I shared with four other guys which had a leaky washing machine. It was an upgrade for me because I didn’t have to go to the launderette. It was no bad thing that the kitchen floor got washed once a week as a byproduct of the leak. This was a house with five guys in it 🙂 15 years later when my own washing machine sprang a leak I was on the net to order a replacement within an hour – my expectations were totally different.

Eventually I looked and came to the conclusion that though I loved living in London I was making too many compromises to stay there. I wanted to be able to live on my own by the time I was 30 in a house I was buying. That meant I had to move out of London, and get a job with better pay and prospects. Staying in crummy shared houses was great in my 20s and reduced my costs, but I had to move on as I got older.

The 20s are a special time in life, however. This decade is the time when you are working out your place in society, many people look to finding that special someone to live with in this decade, you are building and consolidating the foundations of your career, and you may have to move area either for work, university or for that special someone.

In my view, one’s twenties aren’t the time to acquire illiquid assets like a mortgaged house or to stay at home with the parents saving like mad and deferring life, but each to their own, as long as they do intentionally rather than being sucked into the hype ‘you have to get on the housing ladder as early as you can‘. I couldn’t afford to buy a house until I was 29, but I still managed to pay the damn thing off in less than 20 years.

So the subject of that article deferring his development into an independent adult in favour of his 65-year old self is not necessarily A Good Thing. It depends on his values and priorities, as GRS said

we can generally have anything we want, we can’t have everything we want

I love it. There’s a world of difference between saving like a nutter for retirement in 45 years and saving like a nutter for retiring in five years!

The Importance of Setting Goals

Stephen Covey's 7 Habits of Highly Effective People
Every so often I’d come across a book like Stephen Covey’s The 7 Habits of Highly Effective People and they would go on about setting direction. I hated to-do lists, and here was someone advocating creating the mother of all to-do lists. So I’d skip on to the next chapter, move along, nothing interesting to see here.

It hit me, when I started looking at how I could retire early, that these self-help guys were right. I had a goal, though I hadn’t set it in a formal way. Now that I had a map, I could start to make things happen in a coherent way.

Continue reading “The Importance of Setting Goals”