Comments on: Stranger in a strange land

By: eu_us

eu_us — Tue, 20 Sep 2011 00:18:27 +0000

LOL Jacob, another amazing post.
Your post sounds very American, but I know your thinking is not anywhere close to that.
Speaking of credit cards,, I remember years ago I had a boyfriend (US born and raised) who, when I bought a computer cash (only $500 in circa ’97-98), asked me in a kind of upset manner: why you didn’t buy the PC with your credit card?” . I said: “but I had the cash, why would I want to pay interest on it.” His response was: “everybody uses credit cards.”.
Over the years living in the US,I realized that it’s very true .

By: 6 Month Blogaversery First Gen American First Gen American.com

6 Month Blogaversery First Gen American First Gen American.com — Fri, 14 Jan 2011 11:18:03 +0000

[...] Retirement Extreme’s Article about A Stranger in a Strange Land is a good article challenging the status quo of the 8-5 life in the rat [...]

By: Weekend Reading: The New Year Begins | Invest It Wisely

Weekend Reading: The New Year Begins | Invest It Wisely — Sun, 09 Jan 2011 18:04:37 +0000

[...] Stranger in a strange land (Early Retirement Extreme) [...]

By: Invest It Wisely

Invest It Wisely — Thu, 06 Jan 2011 19:22:54 +0000

What do you compound your interest on if you don’t buy shares?

By: Jeremy Day

Jeremy Day — Wed, 05 Jan 2011 21:48:27 +0000

@ Moneymonk – The problem is not so much sacrificing in our twenties as it is not knowing what to do in our twenties. Not many people are teaching others that there is a different way…

Next best thing…

Begin now…

Cheers,
Jeremy

By: krantcents

krantcents — Wed, 05 Jan 2011 20:36:53 +0000

The question is: What is the meaning of life? Since I am older, I will share that I have a very good life living within my means! It is all about choices.

By: deegee

deegee — Wed, 05 Jan 2011 16:57:40 +0000

Josh, I had to compare the cost of renting to buying when I bought my co-op apartment back in 1989. Back then, interest rates were high and it was just before the real estate market took a tumble in 1990-1991.

But after taking into account the tax deductibility of the property taxes and mortgage interest (both my own and the co-op’s), and discounting the principal payment in my own mortgage, the net amount versus the rent I had been paying was about the same. But I was building up equity even though the asset’s value was declining. The real estate market would not fully rebound until the late 1990s and now the apartment is worth more now than it was in 1989.

Once I paid off the mortgage in 1998, the remaining maintenance charges were about half of what I would be paying in rent, and more than half of those expenses remain tax-deductible, unlike rent. I have had no maintenance increase in the last 2 years, either, a tribute to the good work by the co-op board.

By: deegee

deegee — Wed, 05 Jan 2011 16:47:51 +0000

Fascinating post, Jacob.

My 20s and early 30s were my get-up-and-go days. I began to struggle in my mid-30s but still enjoyed my peak earnings years. But I hit a wall when I turned 38 and switched from full-time to part-time work at the same company. In my early 40s, my daily thought was “Why am I still working here?” At 45 I threw it all in and retired 2 years ago.

On the debt side, I made sure never to take on more than one of the “big 3″ types of debt at the same time – student loans, car loans, and home mortgage. I made sure to pay one off (student loan) before taking on another one (home mortgage), or avoid the loan (car, paid cash for it) altogether. And I always paid my credit cards in full although I did not charge much on them (often zero for months).

I always found it a bit exhilirating to pay off a big loan or pay cash for a car because I was avoiding debt. I always felt paying interest was a waste of money, even if it were necessary in the case of a mortgage. Similarly, I LOVE collecting interest and dividends on my investments. In 2010, I earned about $33,000 in monthly and quarterly dividends in my taxable accounts (and some more in my IRA), and another $17,000 in cap gain distributions.

I am now enjoying an easy everyday life for the years of sacrifice in my 20s and 30s. I look forward to many more of them.

By: Josh

Josh — Wed, 05 Jan 2011 16:34:23 +0000

@Landon, others

Buying a house is not the best investment you can ever make (the recent years should have already disproved this notion).

In my case, even if I paid for a house in cash, just property taxes + insurance + maintenance would add up pretty close to what I am paying in rent. Now if I took out a mortgage and added interest in there, it is not even close.

I plan to own someday too, but owning just for the sake of owning is not wise. It is almost always a better move (financially speaking) to rent and invest the difference.

I agree from an emotional stand point I would rather own, but when we are talking strictly financials, renting almost always comes out ahead.

By: Windfeld

Windfeld — Wed, 05 Jan 2011 09:56:28 +0000

The question is: “What is the question?”

http://www.youtube.com/watch?v=xwQw6_X9hPk&feature=related

By: Seeking Shares for income in 2011 – this was easier in 2010 « Simple Living in Suffolk

Thu, 30 Dec 2010 15:38:02 +0000

[...] also good to take inspiration from people who have managed to escape the rat race, even if it means living very unconventionally. [...]

By: Landon

Landon — Mon, 08 Nov 2010 20:43:21 +0000

I love this site and I really liked this post… however, I don’t understand the anti-mortgage attitude in the post and the comments section. Buying a house is one of the best investments you can every make. The point is to PAY OFF the mortgage. It is a long term investment. Paying rent gives you a -100% return on your money and the rent prices will keep rising. I understand the risks of buying too much house than you can afford, but if you buy a house acceptable to your income, it is much better than paying rent. If you are able to accumulate 3-4 rental properties, *voila* there is your early retirement right there…

By: Melissa

Melissa — Tue, 14 Sep 2010 13:21:35 +0000

@Dharma Folk
I wouldn’t go so far as to say that alternative lifestyles are unproductive. Who put up the $ for your mortgage, to produce the car you have to pay for over 5 years, or the plasma tv on your credit card?

By: Dharma is free? « Dharma Folk

Dharma is free? « Dharma Folk — Sun, 23 May 2010 21:42:47 +0000

[...] are exceptions to the rule for unproductive members of society: alternative lifestyles such as early retirement extreme and van dwelling; authors who become popular enough to live off the royalties of their writings, [...]

By: Tim

Tim — Fri, 09 Apr 2010 02:40:35 +0000

Thanks for this very reflective post. The idea of saving early in life cannot be over-emphasized. Not only will it give one a headstart in saving for retirement, it shall also polish the habit of saving early on with one’s life.

By: rowan

rowan — Thu, 25 Feb 2010 18:12:05 +0000

This post is hands-down one of the best I have read. I’ve been reading your site non-stop since I stumbled across it yesterday. It is great to know that someone is leading the way towards a happier, healthier lifestyle and planet and tearing apart the myths that so enslave first-world countries.
I only wish I would have had my epiphany earlier in life and started saving money from part-time work in high-school. I’ve crunched the numbers and I could have earned enough money to pay my in-state tuition if only I would have saved 25% of my income from ages 16-18. To further reduce my expenses, I could have lived with my parents and banked close to 72k in earnings from my research position thereby nearly attaining your recommended 100k savings at the tender age of 22.
Teach all the young to save early and often and to “only spend dividends”. (repeat daily after the pledge of allegiance)
Currently I am 30 and have about 50k in savings (lost sight of myself for a while…) but I plan to retire at the age of 35 with about 250k in the bank.
Thanks again.

By: Jacob

Jacob — Wed, 22 Jul 2009 16:26:55 +0000

@PC – http://earlyretirementextreme.com/2009/01/day-14-investing-for-early-retiremen.html

By: PC

PC — Wed, 22 Jul 2009 16:20:54 +0000

Jacob,

Re-reading this I’m naturally wondering how you invest and hence compound the first retirement fund. Is there a strategy you explicitly put into a post that I missed?

By: Jacob

Jacob — Tue, 21 Jul 2009 16:22:59 +0000

@polly – I’m in my 30s I doubt that everybody will do like I do, at least not for several generations. If they did, at lot of those 100k efforts that are currently being spent on converting resources into waste would hopefully go towards improving the quality of life instead. If I may be US centric to demonstrate a point. Consider that many of the best and the brightest go into law or finance which are professions which one can say with some objectivity that they do not produce as much value as say an engineer, a school teacher, or the garbage collector. If today’s students changed their focus from seeking jobs that provides a high income to jobs that provide a high volume, we would see a big change in 20 years. On this blog I show you how you do not need a high income to live well.

By: polly

polly — Tue, 21 Jul 2009 13:03:19 +0000

This is a very interesting and stimulating site, I was not so clear-sighted in my 20s.
I’d be interested in your answer to the following – if everyone did what you did, it’s likely the jobs that would yield you 100K in 10 years would not exist, as the demand for what we produce in the jobs would not be there in most cases.
What then?

Polly