By Michael J. Wiener

Special to the Financial Independence Hub

When I first picked up Jacob Lund Fisker’s book Early Retirement Extreme, I expected it to be similar to other early retirement books I’ve read, but it isn’t.  This is a thoughtful philosophy book that lives up to its subtitle A philosophical and practical guide to financial independence.  If I had read it decades ago, I likely would have retired even sooner.

The book begins with the claim that modern life is like the movie The Matrix.  We can’t see the crazy way we live our lives as wage slaves.  We give up our most productive hours to a job that leaves us with too little energy to do much other than waste money on stuff we don’t have the time to enjoy.  If your instinct is to disagree, consider reading the book; Fisker makes an excellent case.

“Ignore most of the personal finance books out there.  They only explain how to play the game by the rules.  Instead, use the rules to play a different game” outside the Matrix.

It’s easy to pick out parts of the book that are extreme enough to seem crazy:  “it’s possible to live on a third or even a quarter of the median [U.S.] income,” central heating is “an uneconomical product,” “to adapt to cold, try switching to cold showers,” and “you can make clothes hangers out of cardboard boxes.”  However, it isn’t necessary to agree with Fisker on all points.  If you accept only part of his philosophy, you could end up with a more fulfilling life and fewer years on the job.

Philosophy

Here are examples of points the book makes on the way to building a philosophy for a different way of living.

“If you have debt, you’re not a free person.”

Our measures of success make little sense: “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.”  “Similarly, it’s 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 or no unused rooms.”

To have work-life balance, “one solution is to moderate one’s career ambitions.”  It’s best to realize “at an early point that going all the way [to the top of a career path] not only depends on skills, but also requires 100% dedication, reading time, and possibly some ethical compromises.”  I was fortunate to figure out early in my career that I wasn’t interested in management and the dedication of time it requires, even though that would have been a path to higher pay.

“People don’t seem to realize that the quest to bring more possessions in through the front door is a chronic disease, and that the shortage of space is a symptom rather than the underlying problem.”

“The kind of retirement most people are familiar with and dream about … revolves around spending money.”  This applies to my lifelong dreams of financial independence.  Now that I’ve achieved it, I’m unlikely to stop spending money faster than Fisker advocates.

People “spend their most productive hours and years in a job which they don’t really care about, after which they go home exhausted to deal with spouse, kids, dinner, bills, trying to keep up with the neighbors, and languishing in front of the TV because they have little energy left.”

We should “reverse the outsourcing of ordinary life skills and gradually insource skills” such as meal preparation and mending clothes.

“Happiness does not stem from being surrounded by possessions.”  “Being surrounded by them is the result of an addictive habit.”  If you analyze how often you use all your possessions, “Don’t be surprised if you use fewer than three percent of your possessions daily and 90%+ of all possessions less than annually.”  However, the author isn’t an extreme declutterer; he just seeks to own the things that serve him best.

Many houses have “restaurant-sized kitchens which seem proportional in size to the time the owners spend away from them, eating out.”  “Either buying or renting a home that is priced at several times your annual income is a huge financial mistake.”

More Specific Advice

“The best way to think about cost is not the sticker price,” but rather the annual cost.  If an item lasts 10 years, the annual cost is one-tenth of the sticker price.  Or even better, if you can buy something used and later sell it, your annual cost could be extremely low or even negative.

“Including home value in one’s net worth is an academic exercise, as this part of net worth is irrelevant to financial independence.”  This makes sense to a point, but I think it becomes less true in old age.  If you plan to use a reverse mortgage or sell a home before moving to a retirement home, the value of your home matters to your financial independence.

“I’d consider it normal to … be able to run five miles, walk 25 miles, or bike 50 miles.”  People would do well to drive less and exercise more.  I work hard to stay in decent shape, and I’ve maintained decent fitness standards.  However, when you’re young, injuries are rare, and you can often just work around them to run, walk, or bike.  As I’ve aged, the number of days I can’t do these things well due to one injury or another has been climbing, and I can’t control the timing of when I won’t be able to travel distances without motorized transportation. Continue Reading…