Blog Spotlight - Early Retirement Extreme

I have wanted to "spotlight" a few early retirement blogs that I follow. One of the earliest ones I found was Jacob's ERE -- Early Retirement Extreme Blog. His own subtitle reads: Financial independence, frugality, self-sufficiency, ecology, capitalism, and voluntary simplicity.

One thing is clear - the word "extreme" is very apt. Jacob's mission seems to be to shake people up a little, sometimes by throwing out numbers and statements which at first glance seem preposterous ("You can get by on $6000 per year per person in the Bay Area" is a favorite claim of his.) But he then backs up his statements and claims by describing how he does it.

I was intrigued and impressed enough to interview him and below are his responses to my questions.

Ram: Tell us a little about your own retirement story. (Why does Early Retirement interest you? How do you plan to get to it?

Jacob: When I started my blog, one of the first things I did was to write a series of posts on how I went about it, starting with this one. It is really quite simple: Spend very little and save the rest. The trick then becomes how to live as well as possible while spending very little. In the beginning I was not that good at it as could be expected having been your typical middle class consumer. Today, it would be hard to tell from appearances that I only spend about $6000 a year (in the Bay area).

Lots of people seem to be unable to wrap their minds around a number like that. However, there are many people in the country that lives on that amount and even less; however, their problem is that they lack the skills, desire, or opportunities to earn much more than that. In general, however, everybody seems to spend all they earn and that is what prevents them from a life of leisure, and so the problem is that we have been conditioned to spend all that earn. I mean, most personal finance blogs out there tell you to save 15% of your income. Most people here would consider that pretty good, but 15% is so negligible that it would take a good three decades of work to become financially independent. Some think that 30% or 50% is a lot. It is, but only relative to the paltry 15%. In China, the average is 50%. If you want to retire in your 30s, you need save even more than that, closer to 75%. This means that if you can live on $6000 and you can earn a little more than $24,000, you can make it. Conversely, if one lacks the competence to live on anything less than, say, $30,000, one would need a six figure income and not that many earn that right out of school.

2. What are some of the things you plan to do while retired?

Jacob: Even while working I have several balls in their air. What do I do for relaxation? Well I work or rather I do things. I'm not sure I should call it working because "work" usually implies something you do because you have to. In fact, aside from a few jobs, I have never really felt like I was working insofar that I would still be doing what I did/do even if I didn't get paid. I think that's a great situation to be in. I think I have been lucky not having to have considered work "work" for most of my career.

Anyway, since I was 25 or so I used my spare time doing various forms of non-profit work setting up web pages and writing articles and books about the world's problems. In fact, the blog is one such project. I would like to dedicate more time to this. Currently, my main focus is on global warming, resource depletion, and overpopulation. This is essentially about humanity learning that it lives in a finite world and that it/we/our economy can not keep growing forever, lest we self-destruct.

Solving this problem will be to our generation what avoiding global nuclear war was to our parents and grandparents. Somehow they agreed that saving the planet from destruction was worth it. Now our generation has to do the same, so this is what I want to work on doing.

3. Do have any Early Retirement fears? That is, things that might disrupt your plan for enjoying early retirement?

Jacob: Other than running out of money one way or the other (hyperinflation, say), my biggest fear is the "What if"-monster, e.g. how my life could have turned out otherwise. For any human, there are probably only a handful a really important decisions to be made during a lifetime, which can be said to have a single cause. I'm not talking about eating unhealthy or healthy or working hard or being lazy. Those behaviors merely contribute to a trend. What I'm thinking about are decisions that are almost singular in time such as who to marry, whether to have children or move to another country. Those are defining moments and retirement is certainly a defining moment. Two things should be considered: What will happen if I retire and what will happen if I do not retire. Both are uncertain. In particular I wonder whether solving the three problems mentioned above can be more effectively done within the confines of regular employment.

4. What advice/suggestions do you have to those who want to retire (early)?

Jacob: My advise is to learn how to spend less and still live well. It is far easier to learn to spend 5 times less than it is to learn to earn 5 times more. Most consumers seem to think there's a direct correlation between how much one spends and how well one lives. It's an idea that is continuously reinforced by society, so it is hard to let go off. However, letting go of that and "daring to be different" is practically all that is required. Some "get" that right away, while others seem to be very stuck in their ways.

5. What is your blog about?

Jacob: Well, it could be described as the "The way of Jacob" :-D It is idiosyncratic, iconoclastic, and often contrarian as well. It's like Fight Club without the fight or The Matrix without the matrix or Idiocracy without the idiots. The funny thing is that for those who "get it", the posts actually make sense. The rest probably think I'm crazy :-)


Please be sure to check out Jacob's blog.