Early Retirement Extreme

Financial independence, frugality, self-sufficiency, ecology, capitalism, and voluntary simplicity

Retiring happy in the 21st century

Published in June 4th, 2008

Posted by Jacob in assets, consumerism, ecological footprint, financial security, inflation, planning

If you’re new here, you may want to subscribe to my RSS feed. Thanks for visiting!One must save to retire, because savings transfer purchasing power from the present to the future and in order to stop working one must have claims on future goods. That much is obvious (if not, read this post). Since [...]

Diversification

Published in March 21st, 2008

Posted by Jacob in financial security

9 Comments

Diversification is a method of avoiding non-systemic risk. Non-systemic risk is the kind of risk that involves uncertainty of individual components. Systemic risk is the kind of risk that involves uncertainty of all the components taken together. Indexing for investing is a typical example. Diversifying avoids the risk of individual stocks but it does not [...]

How I became financially independent in 5 years - Part IV - the investments

Published in February 10th, 2008

Posted by Jacob in compound interest, culture, economy, financial independence, financial security, investments, net worth, personal finance, saving

13 Comments

I posit that most people can attain financial independence in less than 10 years and in less than 5 if they are truly determined. I also submit that many people are not willing to make the necessary changes.
Read part I here
Read part II here
Read part III here
By cutting all expenses to the bare [...]

Time to be proactive about a possible recession

Published in February 9th, 2008

Posted by Jacob in economy, financial security

No Comments

Actually the time was several months ago, but since the recession has not been officially declared there is time to prepare. You can still make a difference in your life at this point by adopting a few of these measures.

Establish a cash position. During a recession cash is king. The reason is that credit is [...]

Ecological capitalism and consumer capitalism

Published in February 3rd, 2008

Posted by Jacob in culture, ecological footprint, economy, financial security

17 Comments

The Master said: “Ci, do you regard me as someone who learns much and commits it all to memory?”
Zi-gong replied: “Yes, are you not?”
The Master said: “No, I use one string to tie it all together.”
— from the Analects of Confusius
Have you ever noticed that what used to be referred to as citizens or [...]

How to be happy in the long run

Published in January 30th, 2008

Posted by Jacob in financial security, household, investments, job, motivation, personal finance, standard of living

18 Comments

The following is a list of the things I’ve learned during my first 30 years about how to live a good life.
Take it for what it’s worth.
1) Decide what your priorities are
Your main priorities are your health, food, shelter, and who/if you marry in that order.
Your other priorities are your children, your friends and your [...]

My emergency fund (transfer) in action

Published in January 28th, 2008

Posted by Jacob in budgeting, financial security

8 Comments

Today I went to my new dentist for the first time. I was pleasantly surprised since they did not seem to have a ton of fancy gadgets in their clinic. This generally means that they don’t have huge debts to pay off which should make customers pay less. Not me though, apparently a filling that [...]

Cash flow diagrams for the poor, the middle class, and the investor class

Published in January 26th, 2008

Posted by Jacob in assets, compound interest, debt, expenses, financial independence, financial security, investments, money, personal finance

16 Comments

Being poor or unable to get credit 100% of the expenses must be covered with wage income. Schematically the cash flow looks like this

Thus you put your time into your work which gives you a wage income that is used to pay for stuff that goes back to you.People with a credit score can go [...]

If I retire with a million dollars how well can I live?

Published in January 22nd, 2008

Posted by Jacob in assets, budgeting, cost of living, financial security, personal finance, standard of living

5 Comments

Financial planners universally use a rule of thumb that you can deduct about 4% of your retirement account annually without compromising your principal(*). With a retirement account of $1,000,000 you can therefore spend $40,000 a year.
As for how well you can live on $40,000 a year that is another question entirely.
If you live in New [...]

I don’t need an emergency fund, I have a credit card

Published in January 14th, 2008

Posted by Jacob in budgeting, compound interest, financial security

8 Comments

I don’t have a disaster fund or an emergency fund. For emergencies, I use a credit card. Why do I do that? The reason is that emergency funds must sit in a checking account to be liquid. While sitting there they earn less than a savings account (in general) typically only a few percent.
If I [...]

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