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There's another useful way to look at this mathematically and practically: survival time. If you cut costs to nearly zero, you can survive nearly infinitely. T

There's another useful way to look at this mathematically and practically: survival time. If you cut costs to nearly zero, you can survive nearly infinitely. There are plenty of small companies that serve a small market and last for decades by being careful about spending. That doesn't mean scrimping on coffee, but it means not paying $20k for a stylish sculpture for your office reception or $2M for a beach concert with the hip artist of the day. The exact same thing applies to personal finance. Often, working towards making a lot more money is the fastest way to get rich, rather than spending a lot of time eliminating small costs (e.g. cheaper coffee). However, for a typical person, eliminating big costs such as expensive luxury cars makes a big difference. If you want your money to last, you need to be frugal relative to the scale of your assets, revenue, and growth.

bradlys 6y ago
There’s another way to look at it too: a waste of time. If what you enjoy is lowering costs for the sake of it, living an extremely minimalists lifestyle, and focusing all your energy on finding ways to avoiding spending money then good for you. But for the rest of people? Probably a waste of time. And most individuals will never accrue the level of wealth necessary to live a FIRE life. After all, you can’t actually reduce your costs to anywhere close to $0 in the US. Healthcare, food, shelter, and more can cost a lot. God forbid you want to live a somewhat normal life and have children who grow up with some normality.
- pushrax 6y ago
  The post above is explicitly not advocating attempting to cut costs to $0, but to consider survival time when evaluating expenses. The extreme example is just useful for projecting an intuition of the relationship between spending and survival. Same as how "You can generate revenue to infinity, but you can only cut costs to zero." shows the edge cases to build the intuition.
treis 6y ago
>There's another useful way to look at this mathematically and practically: survival time. If you cut costs to nearly zero, you can survive nearly infinitely. Only if you don't enjoy doing things like eating food and living indoors.
- DiggyJohnson 6y ago
  You are needlessly missing the point. GP is referring to a tradeoff between cost and survival time, a continuum. Obviously businesses and individuals cannot really reduce costs all the way to 0.
  - treis 6y ago
    The point is that you need to count time spent by the founders as an expense. Roughly somewhere between 15-20k per month per founder. Even if you're surviving by eating ramen in your parents basement there's still an opportunity cost from not having a job. You have to account for it.
    - makeee 6y ago
      I’d argue that most people absolutely should not account for it. There’s enough to stress out about when trying to get your startup off the ground. The idea that your “spending” 2Ok a month due to opportunity cost is not helpful and probably likely to lead to burnout. On the other hand, saving a little money and knowing you’ve extended your runway an extra 3 months can be very helpful.
- deleted 6y ago
  [deleted]
malavwarke 6y ago
knowing where to spend and where to cut is very important

bradlys 6y ago

There’s another way to look at it too: a waste of time. If what you enjoy is lowering costs for the sake of it, living an extremely minimalists lifestyle, and focusing all your energy on finding ways to avoiding spending money then good for you. But for the rest of people? Probably a waste of time. And most individuals will never accrue the level of wealth necessary to live a FIRE life. After all, you can’t actually reduce your costs to anywhere close to $0 in the US. Healthcare, food, shelter, and more can cost a lot. God forbid you want to live a somewhat normal life and have children who grow up with some normality.

pushrax 6y ago
The post above is explicitly not advocating attempting to cut costs to $0, but to consider survival time when evaluating expenses. The extreme example is just useful for projecting an intuition of the relationship between spending and survival. Same as how "You can generate revenue to infinity, but you can only cut costs to zero." shows the edge cases to build the intuition.

treis 6y ago

>There's another useful way to look at this mathematically and practically: survival time. If you cut costs to nearly zero, you can survive nearly infinitely. Only if you don't enjoy doing things like eating food and living indoors.

DiggyJohnson 6y ago
You are needlessly missing the point. GP is referring to a tradeoff between cost and survival time, a continuum. Obviously businesses and individuals cannot really reduce costs all the way to 0.
- treis 6y ago
  The point is that you need to count time spent by the founders as an expense. Roughly somewhere between 15-20k per month per founder. Even if you're surviving by eating ramen in your parents basement there's still an opportunity cost from not having a job. You have to account for it.
  - makeee 6y ago
    I’d argue that most people absolutely should not account for it. There’s enough to stress out about when trying to get your startup off the ground. The idea that your “spending” 2Ok a month due to opportunity cost is not helpful and probably likely to lead to burnout. On the other hand, saving a little money and knowing you’ve extended your runway an extra 3 months can be very helpful.
deleted 6y ago
[deleted]

malavwarke 6y ago

knowing where to spend and where to cut is very important