Tag: t_ERE_MMM

G5 real essentials 2fend off hardship #Khmer

Posted on by tiger40490

See also: livelihood[def2] x-class #S.Liu describes a higher standard of livelihood, closer to the standard of my peers.

Trigger 1: The Mr Money Mustache’s blogposts like the reason he is NOT selling the website highlight the wrong priorities of many high-income individuals… reminds me of My inferiority against the Managing directors, the rat race, the race to top schools and branded colleges…

Trigger 2: As described in burn rate: 80%@median family income: wbank^BT #Khmer, the Khmer villagers lead truly happy lives without high education or healthcare. So that begs the question — just what are “important” (essential and beyond) to these villagers and their happiness?

Q: what are the top 5 “provisions” important to an individual’s livelihood, that constitute my level of bare-bones ffree? The MMM’s ffree is presumably similar, but not MY criteria.
— priority: healthcare
— priority: adequate education for the young — at least 9 years. Ideally provided free for the poor
— priority: retirement — cash flow to last 25Y, to prevent the retiree falling into hardship
Note low inflation is a pre-requisite.
— priority: basic housing — in safe, sustainable environment, free of hazards. Housing is the most elastic item in this list
— All these priorities are taken care of in the case of MMM, ERE author and other early retirees. Are there other financial needs?

recreation? Free recreations require resourcefulness and imagination. You can cycle (most sustainable) to nearby places or take public transport.

In https://www.getrichslowly.org/early-retirement-extreme/ ERE author Jacob said “We consider spending money a failure to solve our problems by smarter means.”

— PAP government .. I think SG government has the right priorities in terms of the most important livelihood provisions for the citizens.
CPF is related to most of the priorities below
— “African Americans must want to be successful” .. In this Jared Kushner comment “success” is undefined but has many overlaps with the priorities in this blogpost.
— life chances .. Most of these priorities below are related to “life-chances”, which is the missing ingredient in most impoverished communities, including inner cities and the Khmer village.

[21]to sis:G3specific goals@invest`more

Posted on by tiger40490

See also best Spends@100k windfall but I want to maintain two distinct blogposts.

Hi my dear sister,

Re your “vague” question of what exactly I want to achieve with my investment effort, I have a longer answer now, hopefully not so vague 😉

Indeed I still spend several weeks each quarter on investment research/review/decisions. I adjust my views (more often than my portfolio) rather actively.

In [[irrational exuberance]]  Shiller imagined holders of stocks growing into paper millionaires. One of them out there will feel the itch to cash out and improve current living standard. If I were one of them , how do I want to “live more like a millionaire“?

Even though I feel almost “job done” (i.e. I can retire to a thrifty retirement), there’s still some cash flow anxiety beneath the surface.

1) First goal I want to achieve with my investment is relief from that anxiety. Comparatively, I’m on a very comfortable cash flow “high ground”, so my anxiety is less than other people’s.

I will say there’s a risk that we could fall sick, suffer an investment loss or take other strategic missteps. Investment incomes (hopefully diversified and without a 10-year wait) provide the cushion I need.

I can see the ERE author doesn’t have this goal in https://www.getrichslowly.org/early-retirement-extreme/

See precarious pillar/levee/shield #MLP

1b) a related (vague) goal .. reduce my dependency on the WSC harbor as the base_camp for my family livelihood. Best achieved with higher NNIA.

2) The Second (specific) goal I want to achieve with my investment is relief from long commutes, which is a common pain in NY/NJ area. Most people seem to put up with long commutes but I hate it. With more investment income, I can afford to live closer to office, or take lower-paying jobs closer to home.

This goal is so close to heart that it popped out  as soon as I wrote down your question.  After a while, I found a more important, less realistic goal about work stress (work-life balance). I would want to find an easy job (less lucrative) with plenty of free time, where I am free to put in 50% of effort to do a good enough job, without risk of PIP.  I said “unrealistic” because my current level of wealth is insufficient to support it. At a more realistic level, I do feel less pressure to earn more, since 2019 in my chats with GregR. See also my blogpost on all_the_way despite low pay

3) another specific goal .. to support my stay-home wife, so that she can nurture the kids till high school. Many well-off families have a stay-home mother.

9) A distant goal I want to achieve with my investment is extra reserve to support optional big ticket items such as college. I don’t need an even bigger home, but my wife has persuaded me to consider a bigger home. Vacations are unnecessary to my simple life, but my wife would appreciate them.

Fundamentally, by age 40 I had completed all my big-ticket goals — 1) home ownership 2) retirement 3) medical contingency reserve 4) an optional, reasonable amount set aside to help pay college (discussed shortly)

When I look around at my age group, where is the Biggest difference in cash flow pressure, the difference between high ground vs low ground? Luxury branded education. As I said, most of my peers (Chinese professionals in finance or technology) set a target to save more than a million dollars for top school-district housing and top colleges. These are luxury items, not suitable for lower-middle class like me, with only a single income and two kids. To them I say NoThanks.

Now, Many of them consider the school-district home purchase (USD 700k+) an investment, but the monthly cost is heavy, including mortgage, pTax and maintenance, adding up to 4k to 6k every month. When I first considered this burden, this monthly commitment, I had to literally take a deep breath.

Why do I keep talking and thinking about my peers making their decisions? Because they represent a huge peer pressure on me and my wife. The “NoThanks” is easy to say once or twice, but consistency requires mellowness. I have to work hard to keep saying NoThanks. Paradoxically, this NoThanks is a major underlying motivation behind my investment effort.

Overall, I’m comfortable in terms of cash-flow, but in terms of income, we are really lower-middle class . No shame no regret.

— In Sep 2021 AshS asked me a similar question “Your growing net asset is just a number on a screen that you check every year. Why is that number important to you?”

  • I named nonwork income, esp. after retirement. I allocate most of my spare money into income-generators
  • I said that at the moment I wasn’t worried about having too much money to spend in later life. I think it reflects an underlying insecurity in livelihood[3], perhaps not about (anticipated) job loss but about non-financial disasters that financial resource would be needed just to reduce the impact. 100% complete protection is usually unattainable.
  • .. How about legacy for my offspring? I told AshS “not my plan” but any leftovers I can surely leave to them.

[3] Even the best managed companies and countries , with the widest moat, have the same insecurity.

— compare to younger peers like Kun.h
My friend K.Hu’s 2020 email is quite in-depth. Similar to my first goal, I can see that he still works hard for long-term family livelihood. ( I guess AshS is more carefree, due to the bachelor’s life. )

Compared to them, I’m older and more mellow, less ambitious in terms of Brbr, FOLB/exclub, career growth… Instead, wellness, lifestyle adjustment, healthcare, choice of home country, retirement planning …. are more important as I grow older. Therefore, livelihood is a slightly smaller driver.

FOLB/exclub/kiasu … At my age, I have less to prove, less to aim for in terms of moving higher…

Cashflow is a factor (sometimes a major factor) in each “dimension” above. However, cashflow should not dominate every dimension.

[19] Health-is-wealth: wrong priorities #leisure w1r4

Posted on by tiger40490

Fuller^exclub discussed two definitions of wealth. Now, Based on “Health-is-wealth”, I would regard wellness as a 3rd but qualitative indication of community wealth, at the community level or perhaps national level.

Some neglected elements of wellness:

  • Psychological well-being,
  • longer sleep
  • dental health, straight teeth
  • skin health, scalp health… not vanity !
  • posture esp. after middle-age
  • clear skin
  • endurance,
  • decline in flexibility, range of motion
  • decline in eyesight and hearing
  • decline in muscle strength
  • decline in speed of movement

— wealthy nation as measured by health-is-wealth
Remember the Khmer villagers? I think they may have good enough diet and a level of physical activity that’s better than the richer peoples, but presumably insufficient healthcare including prevention, detection, early intervention, long-term management of many health conditions.

I think there are countries with

  • better diet habits than average,
  • more active lifestyle than average,
  • more leisure time spent on workout, not wasted,
  • decent healthcare at affordable costs

These would be “wealthy nations” measured by health-is-wealth. (Some of these countries may be industrialized or underdeveloped. I won’t attempt to pick an example.)

I feel most communities are kinda lazy. If people don’t have to put up with lots of physical labor and simple unprocessed foods, then they would not. So it might be hard to find a culture, a society that meets my checklist above. Such a community would have to be intelligent, sophisticated to prioritize health over pleasure, comfort, luxury.

( There are plenty of individuals with the right priorities like that. I’m becoming one of them. See the other section.)

I feel Australia has a reputation for more leisure time and more active lifestyle.

Shorter work hours (France?) creates more job positions, reduces work stress (more slack resources), leaves more leisureTime which is a necessary-insufficient condition for healthier lifestyle.

— At the individual level:
Being closer to the Fuller wealth concept, this “definition” is not serious. You can’t measure and rank cities in terms of “amount of health”. You can’t accumulate health and pass it on to next generation or donate it. For self-use, health can’t be preserved or invested for growth. Nevertheless “health is wealth” is valuable reminder.

This pseudo “definition” (more than “ignores”) actively rejects FOMO, peer comparisons, ExClubs.

This definition singles out one neglected yardstick of “wealth” and places it on top of other yardsticks.

— parenting — As discussed with Damian B, parenting probably has a net negative effect on life expectancy at least for fathers, due to the impact on leisure time, stress…
However, the longest-living individuals tend to be grandmothers. I think child-bearing has health benefits.

[20]brbr: 80LMHI[def]: R.Teo #wbank^BT^FIRE #Khmer

Posted on by tiger40490

update:

In contrast to

  1. barebones ffree=realistic: BT^YLZ ^CPF #w1r6 — voluntary barebones ffree burn rate
  2. covid19$$handout reflect`Realistic burn rate — temporary, covid19-induced involuntary jobless burn rate

, this blogpost discusses a burn rate possibly even lower — 80LMHI [80% of the local medium household income]. See also

Background: A major pillar of my carefree bliss is the fierce /boycott/ to FOMO/kiasu, exclub, so-called 上一个台阶, benchmark with the MDs, chasing the “latency” endless goal,,,, I tell myself and myf kids that we don’t need even more money once we have enough nonwork income to support a certain burn rate. That is somewhere below Level5 of  6 levels@ffree #American perspective.

However, if you have not experienced deprivation, consider the comfortable and happy Khmer villagers we saw on our last day at Siem Reap, described below. Clearly, each person has a tolerance threshold. Question: What’s yours?

The answer to this question is fairly personal. This requires us to keep an eye on the bare essentials i.e. the essential things in our life, and resist lifestyle creep, and resist kiasu/FOMO/benchmarking.

My tentative answer to this question: I would reference 80% of the median family income among families of a comparable size regardless of ethnicity. (Singlular household data points are automatically filtered out.)

80% of median kinda define the “thrifty middleclass” lifestyle.

— Raymond’s 2013 comment sowed the seed for this answer. Raymond said “Now you have left high-salary WallSt and returned to Singapore. You should start living like the ordinary Singaporean family, unless you continue to draw the WallSt salary.”

If you earn the median family income, and  want to save 20% every month, then your burn rate must be 80% of the median income.
— The Khmer villagers:
Some cultures in SEA, Latin America, and some Buddhist cultures are more satisfied, less progressive than the East Asian and Western cultures. Some ethic groups may be lukewarm about the latency arms race

Unlike the Chinese, these cultures don’t mind FOMO or lagging behind on the curve. They don’t envy that much.

Buddhist monks might be a better reference, but I like my vivid first-hand observations. My Cambodia Chinese tour guide said rural Cambodians have a more satisfied life, perhaps surviving on subsistence farming, fishing. Not sure if they need education and healthcare, which are presumably non-essential luxuries beyond their reach.
— FIRE: I think the burn rate in this blogpost is still higher than the extremely low yet adequate burn rates featured in the ERE and MMM discussions.

Mr Money Mustache, Pete Adeney, with a $2k/M burn rate, wrote “Once you find out the true meaning of enough, buying yourself more than enough doesn’t really make you any happier,”…. “And here in the United States, even a lower middle class level of income is way more than enough to pay for a happy life  – as long as you spend it right.”

ERE author at about USD 700/M is more extreme in his burn rate and in his DIY enthusiasm.

I’m more like Pete i.e. MMM than Jacob of ERE.
— World Bank poverty line for the rich countries is USD 22/day or USD 660/M, similar to the ERE author. In Singapore, If we keep taps on our burn rate, then this level of bare-bones ffree is not unrealistic, largely thanks to Medishield.

At my level of abstinence and discipline, projected family burn rate is SGD 2k/M.
— SG official statistics: SGD 7k median household income from work (excluding employer CPF contribution or nonwork incomes) implies that after cpf deduction, 50% of the Singaporean households only have below SGD 6k/M to take home. Many (more than 33%) households have 4k take-home income only.

Even if my family income becomes median, my expenses are likely lower thanks to no-mtg, no-car, no-maid. In such a case, my savings and brbr would still be above median.

Beware: some low-income households have no kids. A subset of those are singular households such as me in 2004-2006. In contrast, the median “nuclear-family” income is higher.
— The Business Times FIRE article described a max-savings lifestyle, not too different from mine.
SGD 2500 family burn rate excl.housing/driving #BizTimes is another blogpost based on the same article. I feel this figure is close to my 2020 recorded burn rate if excluding insurance, enrichment, flight,,,
— SG vs U.S.
In Singapore, My minimum standard is basic-healthy, at SGD 2.5k/M for my family. This is likely to induce a sense of deprivation in my kids. If it does, then we can reduce some of the insurance coverage

In the NY/NJ, the basic-healthy burn rate might be USD 4k/M, including a company health insurance + a basic car. See my blogpost on U.S. peers’ burn rate

live close to work #MMM

Posted on by tiger40490

https://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/  is an excellent blogpost that resonated with me right away. It reinforced my plan to rent a home in Jersey City and work in JC or NY midtown or downtown. Despite the rising home price of JC, I can still rent.

— They brushed off the potential commute, saying “Oh, 40 minutes, that’s not too bad.”

Most people, even smart middle-class young professionals like the featured couple, actually think this way.

Yes, actually it IS too bad! — Pete lamented

— $0.17/mile minimum

MMM biked to work while keeping a car for occasional use. Why minimize usage? He wrote

If you buy the right car for $5,000, you might be able to squeeze 100,000 miles out of it with no major repairs. In this case the car depreciation is 5 cents per mile.

  • Gas, at $3.50 per 35 miles (assuming 35MPG), is 10 cents/mile
  • Tires, at $300 per 50,000 miles are 0.6 cents
  • Oil, at $25 per 5,000 miles is 0.5 cents
  • Miscellaneous things like wipers and occasional maintenance visits: $200 per 20,000 miles = 1 cent

So the ultimate cheap driving in a paid-off economy car still costs at least 17 cents per mile. In contrast, IRS estimate of total driving cost is $0.51 per mile.

ERE author #homesteading

Posted on by tiger40490

Partly based on ERE: The 10Y udpate

  • USD 7k/Y burn rate can support a meaningful lifestyle, but he needs a lot of skills, a lot of meaningful hobbies to keep engaged
  • favor free sight-seeing locations like walk/cycling in the natural
  • small home is easier to maintain
  • learn to live without car, even in the U.S.
  • learn to cook simple yet healthy. Fish is the best animal food — not cheap but easy to cook. Jack He singled out steaming; I like microwave

This author had a lot to say about “where to spend the time meaningfully after retirement” esp. if travel and grandchildren are out of the picture.

— One of the G3 central ideas, possibly the #1 in Jacob’s philosophy was “the renaissance ideal of spending your life mastering a productive level of competence in a broad range of subjects. This arsenal of “renaissance skills” would then be combined into a mutually reinforcing web-of-goals, which made living more interesting and balanced — but also more cost- and resource-efficient and resilient in the face of the growing complexities and uncertainties of the 21st century.”

This is remotely similar to “develop all your potentials.” or self-actualization.

This ideal is simply unimportant to me. This fundamental difference is probably at the heart of my resistance to many tips from Jacob.

Actually a lot of the things Jacob spent his life on are really for fun rather than productive, such as sporting (including sailing), watch making, tool-making,, The modern economy depends on specialization, rather than everyone making his own tools.

Why doesn’t he learn to diagnose and treat all medical conditions, and even make medical instruments from raw material? That would be more practical, more productive.

Yes his and many FIRE blogs show justifications for acquiring a wide range of easy, practical (widely useful) skills, but there is a balance between versatility/resourcefulness/self-reliance vs specialization. Modern economy is built on the efficiency of specialization. I may learn tax preparation or car troubleshooting, but I won’t learn a lot of other skills.

— homesteading — is a full-page chapter in ERE: The 10Y udpate
Homesteading is one of the G3 foundations (“rite of passage” as Jacob put it) in the U.S. FIRE movement  but not necessarily in other countries. Singapore doesn’t need this skill — I will stick out my neck to say this.

DIY demands a certain level of interest and capabilities. Jacob said repeatedly that maintenance is not his favorite, not enjoyable, though his woodworking skills developed over several years. Jacob sees himself as an intellectual. So do I.

I am also uninterested in many DIY tasks, though I feel proud on my DIY achievements.

25Y worth @ living expenses #Fuller wealth

Posted on by tiger40490

Update: ffree analysis is dominated by black/white swans, not Fuller Wealth.. See ffree^carefree^cashflowH/L ground

https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/ and many other FIRE discussions mention that a portfolio of “25Y worth of burn rate rate” would basically last you forever.

ERE author said his 7k/Y burn rate will deplete his (800k) savings in 114 years , and his wife’s 7k/Y will last 62Y.  The two of them maintain separate personal assets. If I were to do the same, I can last somewhere between 62 and 114 years. I do have my wife and kids to support, so I’m about 33Y. However, if I ignore my net asset value and simply match my nonwork income to my burn rate, I could last a million years i.e. forever.

Anyway I like the simplicity in this 25Y estimate, a concrete illustration of Fuller wealth.

— minimum reserve size in SGD

  • assuming a basic validity in the 25Y calculation, as a widely held estimate. I won’t verify this calculation.
  • assuming reasonable liquidity of the portfolio, so you can withdraw on an annual basis
  • assuming healthcare cost is taken care of largely by Singapore government.
  • assuming kids education cost doesn’t skyrocket through the roof
  • assuming net housing cost is below $1k/month in the long term
  • assuming you have the option of selling your home in X years (perhaps when your kids grow up and move out), but in this discussion you decide to keep it for wealth preservation or other reasons.
  • assuming you don’t have NNIA like CPF-life

25Y = 300Mon. At SGD 4k/M, we need a SGD 1.2mil portfolio, without counting the home net equity value. This amount is very hard for most people. It’s not easy for me.

At SGD 3k/M, we need SGD 900k. More realistic.

At SGD 2500/M, we need SGD 750k. I think this burn rate is still realistic. See burn rate: 80%@median family income: wbank^BT #Khmer and the blogposts on BizTimes article

CPIx-inflation fear: discrediting high-saving (minimalist)lifestyle

Posted on by tiger40490

Since my 20’s, many people around me have drilled into me notions like “your $1000 /squirrel/ away will be worth $500 in 10Y (or 20Y), so saving 60% of your income every month is less advantageous than spending 90%”.

(The same people also say that “If you can invest profitably, then it’s a different story”, but we always stopped there because none of us has that skill.)

This is the mainstream view. Well, since my 20’s I have gradually increased my savings rate. I guess it was 2-3k when I was earning s$5k. Now it’s touching s$10k.

Q: Was I unwise and regretful maintaining high saving rate?
— A: On the contrary, I think I am insightful and incredulous, with a healthy dose of skepticism. Luck is a secondary factor.
— A: No. SG government squrrels away some amount in every term, to build up the past reserve. The purchasing power didn’t drop to below half over the years. In fact, I think it has grown.
— A: No. ERE author and MMM each saved up enough and retired early. Apparently, their savings didn’t lose value due to inflation.
MMM has a blog proclaiming — once you save up 30Y worth of living expenses you will be able to retire.
— A: No because I have managed to leverage my savings to invest profitably not in traditional stocks, mutual funds, insurance products but in overseas and local properties.
— A: No because I don’t know where I could have spent more. I can look at my peers’ burn rate breakdown
— A: most important, inflation rate in my personal experience has not been half as high as predicted (by those pundits). My best-effort analysis is 30Y SG inflation: personal xp.

Only a small portion of my personal “basket” has doubled in price over 30Y.

##[19] best Spends@100k windfall

Posted on by tiger40490

to Genn: G3 specific goals@investment effort #commute is an introspective. In line with that if I receive $1m windfall, I would use it to strengthen my shields and relieve my anxieties.

Q: what’s your best use of additional 100k, assuming you can’t invest it?

  • I didn’t choose a very small sum — not enough of an interesting question, and not engaging
  • I didn’t choose a very big sum — unrealistic and not engaging

Specific items I can spend on … are the best answers.

  • lower-paying (probably contract) job with more satisfaction. Respect is the #1 satisfaction.
  • .. In contrast, My answer to Genn is more about work-life balance (free time …)
  • commute — See my answer to Genn. Note For commute current income is more effective than a $100k windfall far out.
  • more frequent visits with grandparents, but business-class ticket would be un-affordable luxury.
  • vacations to nearby locations. There are plenty of world class yet low-cost destinations in SEA, China and India.
    • No Japan no Korea please — luxury and unnecessary. Our family life isn’t less complete if without them.
  • — smaller, “lifestyle” items that I could spend part of this 100k on
  • more yoga classes, and possibly other classes
  • more packaged, washed raw veg and fruits
  • more frequent buying of salads
  • — less specific items:
  • spend to create more spare time for kids, family and myself

For Mr Money Mustache, apparently such a windfall doesn’t mean anything, but I doubt it.

Some of These are among the G10 most important lifestyle changes after I achieve bare-bones ffree.

 

 

(practical)skill-learn`as recreation #ERE

Posted on by tiger40490

http://earlyretirementextreme.com/ere-book author says he enjoys learning practical skills such as bike building, and cooking, instead of overseas vacations and other expensive recreations.

Similarly hobbies:

  • computer system repair — can be fun
  • home decoration
  • home improvement
  • wood work
  • furniture improvement — I did a few times!
  • calligraphy

These recreations are much cheaper than some of the promoted and /popularized/ recreations like

  1. overseas vacations including flights, hotels and dining
  2. digital music, hi-fi, … — compare to guitar, singing
  3. photography — compare to drawing, painting
  4. golf — compared to jogging
  5. mountaineering

(My cost assumptions could be outdated and over-estimated) These activities usually require complex equipment and trained personnel, and they have commercial sponsors.  I don’t like their profit-motivation, but in reality, some of these activities can be life-enhancing for practitioners with special needs, such as the elderly or disabled.

There are significantly cheaper alternatives to these recreations (though this bpost is more about skill learning)