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One bummer about this type of lifestyle optimization is the way that it is fragile to surprises you have no control over, like bad market timing or medical surp

One bummer about this type of lifestyle optimization is the way that it is fragile to surprises you have no control over, like bad market timing or medical surprises. The odds of each surprise are small, but the odds of no impactful surprises are also small. The risk, besides missing opportunities to explore life or have an impact on others, is sub-optimizing for financial independence. As an example, optimizing for income (even if increased expenses leave you with the less savings) can leave more options to respond to surprises than making sacrifices to permit a cheaper lifestyle.

shoo 9y ago
> as an example, optimizing for income (even if increased expenses leave you with the less savings) can leave more options to respond to surprises than making sacrifices to permit a cheaper lifestyle. Can you give some concrete examples of how this might work? I read your comment as suggesting to optimise for higher absolute revenue but lower absolute profit, which I find confusing - since it seems less useful than just optimising for profit - so maybe I'm not understanding what you are saying, or not fully understanding the consequences.
- evrydayhustling 9y ago
  Sure! Let's compare taking your first job at a high salary in a high cost of living area, versus a lower salary in a cheap place. The latter might net you more after-tax "profit" in the early years, but several factors can upset that balance over time: - Exponential raises (x% per year) cause the higher pay to more rapidly outpace the baseline costs of living, even if higher. - Many unexpected expenses, like a medical disaster or market losses, can offset taxes on higher income, leaving room to more rapidly recover if you have a higher income. - Once you've established a higher salary point, it is generally easier to retain it, even if you take steps to mitigate your costs like moving farther outside the city. These are just some examples. Overall, having a higher income opens up more possibilities for investments that alter the cost dynamics of the system, versus putting up with the cost dynamics that are available to lower income folks. For the same reasons the get rich richer, limiting yourself to the options of the poor can reduce your opportunities. Edit: I should note that this doesn't take into account cases where you find special opportunities in a low cost area! I know folks who were able to reinvest surplus income from early jobs in local businesses, effectively acting higher up the capital food chain earlier in their lives, because they stayed in cheap places. However, this is a more active strategy that didn't seem to be the same spirit of the "save more from your income so you can retire early" OP.
DrAwdeOccarim 9y ago
I agree, but also I've recently learned about all the different types of insurance one can buy. This means you could reasonably well hedge against these issues that affect one who isn't earning a salary.

shoo 9y ago

> as an example, optimizing for income (even if increased expenses leave you with the less savings) can leave more options to respond to surprises than making sacrifices to permit a cheaper lifestyle. Can you give some concrete examples of how this might work? I read your comment as suggesting to optimise for higher absolute revenue but lower absolute profit, which I find confusing - since it seems less useful than just optimising for profit - so maybe I'm not understanding what you are saying, or not fully understanding the consequences.

evrydayhustling 9y ago
Sure! Let's compare taking your first job at a high salary in a high cost of living area, versus a lower salary in a cheap place. The latter might net you more after-tax "profit" in the early years, but several factors can upset that balance over time: - Exponential raises (x% per year) cause the higher pay to more rapidly outpace the baseline costs of living, even if higher. - Many unexpected expenses, like a medical disaster or market losses, can offset taxes on higher income, leaving room to more rapidly recover if you have a higher income. - Once you've established a higher salary point, it is generally easier to retain it, even if you take steps to mitigate your costs like moving farther outside the city. These are just some examples. Overall, having a higher income opens up more possibilities for investments that alter the cost dynamics of the system, versus putting up with the cost dynamics that are available to lower income folks. For the same reasons the get rich richer, limiting yourself to the options of the poor can reduce your opportunities. Edit: I should note that this doesn't take into account cases where you find special opportunities in a low cost area! I know folks who were able to reinvest surplus income from early jobs in local businesses, effectively acting higher up the capital food chain earlier in their lives, because they stayed in cheap places. However, this is a more active strategy that didn't seem to be the same spirit of the "save more from your income so you can retire early" OP.

DrAwdeOccarim 9y ago

I agree, but also I've recently learned about all the different types of insurance one can buy. This means you could reasonably well hedge against these issues that affect one who isn't earning a salary.