A group of younger workers, devotees of the FIRE movement, are seeking ways to duck mistakes made by prior generations
They’re also watching the generation entering retirement struggle with many of the same problems. About 10,000 people turn 65 every day and many are unprepared for the years ahead. Older Americans have high average debt. Their 401(k)-type retirement funds will bring in a median income of under $8,000 a year for a 65-year-old couple.
The younger generation’s radical solution—dubbed Financial Independence, Retire Early—has spawned an ecosystem of podcasts, blogs, books, conferences and informal discussion groups. One online forum dedicated to the concept, known to its followers by the acronym “FIRE,” has more than 450,000 subscribers.
FIRE adherents are often millennials and younger members of Generation X who have college degrees, above-average incomes and the discipline to adopt a strict do-it-yourself approach to retirement. Some say they are saving as much as three-quarters of their income, or five times the 15% savings rate conventional financial advisers often recommend, and growing their own food. Others are taking more modest measures such as living in smaller houses and driving older cars.
.. The downside of FIRE is its inherent paradox: For those seeking financial security, early retirement can be risky. Since many early retirees rely solely on income from stocks, bonds or real estate for living expenses, sudden market downturns can pose a threat to their plans. At the same time, these people have to forecast their cost of living for decades. This means prolonged periods of high inflation can wreck their forecasts and budgets.
.. The self-reliance and thrift embodied by FIRE have roots in American history. Elements of the philosophy can be found in Ben Franklin’s 1758 classic “The Way to Wealth,” Ralph Waldo Emerson’s 1841 essay “Self-Reliance” and Henry David Thoreau’s “Walden,” an 1854 book about living simply in a cabin he built near Concord, Mass.
Many FIRE boosters cite a more recent work: the 1992 book “Your Money or Your Life” by Vicki Robin and Joe Dominguez. This paean to financial independence and anti-consumerism, a business best seller in the ‘90s, found a new audience after the 2008 financial crisis.
.. FIRE enthusiasts gather around the country to discuss ways to save more, spend less, and manage investments. A recent meet-up in Manhattan attracted close to 30 people to an office conference room. The attendees—mostly men in their 20s and 30s, several with backgrounds in engineering—discussed taxes, index funds and real-estate investing over beer and potato chips.
.. It took a Category 5 catastrophe for Sylvia Hall to start thinking of changing her approach to her finances. When Hurricane Katrina struck the Gulf Coast in 2005, Ms. Hall, then a New Orleans resident, temporarily lost a home and a paycheck as the first payments were due on $101,600 in law-school debt.
How and Why to Buy a Car for Cash: Interview with James Kinson from the Cash Car Convert Podcast
.. I had the opportunity to connect with James Kinson, host of the Cash Car Convert podcast.
James has a fun story to share and some great lessons to teach. He’s a long-time car guy who got the debt-free religion and changed his car-buying habits. To his delight, he’s wound up a good deal richer than ever before!
He’s got some great lessons to share and in this show we discuss:
- The impact a cash car can have on your wealth
- Leasing vs. buying
- Whether the advice to buy a good used car still applies in the modern day of higher repair bills.
‘I’m a Dead Man Walking’
Mark Sanford has nothing left to lose. And he’s here to haunt Donald Trump.
The president, Sanford says, “has fanned the flames of intolerance.” He has repeatedly misled the public, most recently about the national murder rate and the media’s coverage of terrorist attacks. He showed a lack of humility by using the National Prayer Breakfast to ridicule Arnold Schwarzenegger’s ratings on “The Celebrity Apprentice.” Most worrisome, Sanford says, Trump is unprepared for the presidency.
.. he is simultaneously something of a crusader for his causes of debt, deficits, spending and government transparency. “The thing you have to understand about Mark is that he’s both quirky and professorial about his beliefs—a lot like how Ron Paul was,
.. To understand Sanford’s irreverence toward the 45th president, his friends say, you have to understand two things about him. One is his disdain for expensive clothing. “He didn’t wear a suit to his inauguration as governor
.. His father, a prominent heart surgeon, “taught his kids that everyone is the same no matter where they’re from or what they wear, and Mark took it to heart,”
.. “I believe in a war of ideas … and I tell the staff all the time: Look, we’re in the business of crafting and refining our arguments that are hopefully based on the truth,” he adds. “Truth matters. Not hyperbole, not wild suggestion, but actual truth.”
.. he is already viewed as a leader of the GOP resistance
.. “historically there’s incredible deference to the presidency from the party in power.” He understands the reluctance of rank-and-file Republicans to criticize a president who “has a proven record of taking people down.” But, he says, there must be a muscular check on Trump from somewhere inside the GOP.
.. He is the unlikeliest enforcer of honesty in politics. He knows it.
.. When he refused to accept Obama’s stimulus money in March—a position he was eventually forced to abandon—Sanford became a household name on the right.
.. He would have been nothing without her in that first congressional race—her and her family’s money and connections.”.. “one buddy turned to me and said, ‘Well, the good news here is that you won’t have to wait until your funeral to find out who your friends are.’” He adds, moments later, “Now I consider myself blessed to have a number of good friends that, frankly, I can count on one hand.”.. Sanford was itching to redeem his legacy, and a special election in his old district offered the friendliest possible opportunity to mount the unlikeliest of comebacks... Riding sky-high name identification among his former constituents—and benefiting from a fractured, 16-way Republican primary field.. At that point, Sanford made a decision: He would hoard as much campaign cash as possible and spend none unless absolutely necessary. The strategy has been successful.. the explanation for Sanford not spending money to defeat Horne is due equally to two defining traits: cheapness and confidence... Ted Fienning, a Harvard-educated entrepreneur—who, in addition to being young, wealthy and telegenic, flew fighter jets in the Marine Corps—will give Sanford the toughest test of his career in 2018... (“[I] learned long ago not to try and discourage someone from something they think they might want to do,” Sanford tells me via email, “so [I] simply wished him well.”).. he makes repeated references to “integrity” and “honor” while taking several direct shots at the incumbent’s personal struggles... “Mark at his core is a libertarian,” Felkel says, but “South Carolina is a state that can’t afford to be libertarian. … His district benefits greatly from the federal government.”.. What I have the itch on is trying to carve out a niche on impacting the government spending.”
Frugality Isn’t What It Used to Be
One of Westacott’s central preoccupations in the book is why, if so many smart people have championed frugality, it hasn’t become the global norm.
.. Spartan laws and culture, Westacott explains, were fine-tuned to make citizens courageous, disciplined, and uninterested in wealth. At those same tables, Westacott writes, “The rations were meager to keep the young men lean and supple and accustomed to functioning on an empty stomach.”
.. the bulk of how present-day Americans think about frugality—or really, how they think about anything—was established during two especially fertile philosophical periods, in Greece two and a half millennia ago and in Western Europe a few centuries ago.
.. Thinkers in the first of those two periods were preoccupied with material wealth, and whether securing it could bring happiness, as aristocrats of the era seemed to think it could. This is the time when Epicurus warned of having to brown-nose in order to make money, and a number of his contemporaries chimed in with other critiques that echo today’s skepticism of acquisitiveness. Plato, for his part, advocated for modesty in housing, clothing, and food, arguing that simplicity in those realms would encourage moral purity. This vision of the ideal life is one that has proved extremely durable. Plato’s position essentially set the precedent for every homespun lifestyle blogger with a garden, a kitchen table made of reclaimed wood, and a penchant for serving drinks in Mason jars.
.. Whereas the ancient Greek philosophers were for the most part skeptical of selfishness, the 18th-century theorists Adam Smith and David Hume spun it as a virtue. Smith contended that when men acted purely in their own interest, “an invisible hand” ensured that they would contribute to the greater good.
.. “What has always been condemned as private vices came to be reassessed … on the grounds that they confer public benefits,”
.. “It seems,” Westacott writes, “that our culture is still torn between accepting acquisitiveness as a necessary condition of economic growth and denouncing it as an undesirable character trait that bespeaks false values and encourages unethical conduct.
.. Baking one’s own bread, for instance, has become a potent symbol of wholesomeness and self-sufficiency, but, Westacott argues, it’s hardly an act of pure independence. Since most home bakers are not growing their own wheat, grinding their own flour, constructing their own ovens, and so on, they are aided by labor-saving technologies that are miraculous and yet commonplace. It’s perfectly valid to bake bread because it’s cheaper, fresher, and less connected to processed-food supply chains, he suggests, but don’t get carried away: Baking bread at home is the result of the remarkable interconnectedness of the modern economy.
.. generation after generation has yearned for a simpler version of life that they imagined to have come before them. Two and a half millennia ago, the Greek poet Hesiod wrote longingly of the era of the first humans, a “golden race of men” who were “free from toil and grief.” Seneca, writing 500 years later, pined for “the age before architects and builders,” before humans felt that their happiness depended on such luxuries as “hewing timbers square.”
.. Some who desire more radical social change might even argue that the advocates of frugal simplicity effectively encourage people to accept an unfair economic system
.. Some who desire more radical social change might even argue that the advocates of frugal simplicity effectively encourage people to accept an unfair economic system. … But this criticism is misguided. The teachers of frugal simplicity criticize avarice and consumerism on the grounds that working ever harder to make ever more money to buy ever more stuff is not the road to a satisfying life. … The alternative is to argue that working, getting, and spending are the essential ingredients of human happiness.
.. However, the actual argument is that public policies should ensure that the poor can afford their first house before the rich can afford their third or fourth.
.. Olen describes how personal-finance coaches and large banks popularized the idea that by cutting back on small daily luxuries—a latte at Starbucks being the quintessential example—anyone could retire a millionaire; all they had to do was invest the money they saved from not buying a coffee into the market (and, preferably, let the personal-finance coaches and the banks manage those funds). “Collectively,” Olen writes, “they fed into the American streak of can-do-ism, our Calvinist sense that money comes to those who have earned it and treated it with respect.”
Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s. The comparable figure in 1973: 50 percent.
.. The acts on Extreme Cheapskates are socially unacceptable, and besides, they are pointless economic rebellions, doing little to affect people’s financial security in any meaningful way. Mr. Money Mustache had saved up $250,000 by the time he’d been working for five years—no amount of cleaning plastic straws with T-shirt shreds would have gotten him there.
.. Westacott at one point dwells on how wealthy people spend money to acquire status. It used to be that a fancy car or a country-club membership sufficed. But as these became available to more and more people, the acquisition of physical things has mostly taken a backseat to the acquisition of exotic experiences. Now, Westacott writes, because “not working is in itself no longer a badge of honor,” what the economist Thorstein Veblen in 1899 called “conspicuous leisure” is being displaced by conspicuous recreation.