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> The most important thing to note is that cutting your spending rate is much more powerful than increasing your income. I believe that part isn't exactly righ

by Zababa 5y ago

> The most important thing to note is that cutting your spending rate is much more powerful than increasing your income. I believe that part isn't exactly right, because you can increase your income way more than you can reduce what it takes for you to live. If you're a software engineer making let's say 70k, you can find a job where you make 150k, 200k or even more. If you currently spend 50k every year, it's way more effective than trying to spend less. You also have to take into account that once you retire you can live somewhere where the cost of living is lower.

PragmaticPulp 5y ago
Agree. I think that advice panders to people who want advice they can act on today. You can choose to save $3 at your next grocery store visit right away and it won’t even hurt. However, telling people to work on earning more feels like an impossibly difficult ask for many. You’ll get instant pushback when you suggest it, so bloggers avoid it. FIRE blogging is more about pandering to what people want to hear. It is, after all, a big money blogging niche these days. Alienating the reader is to be avoided if you want to keep readership up, so career and earnings are to be approached delicately if at all in their writings.
- Zababa 5y ago
  That's a good point. I wonder why we consider that people telling people to spend less is okay, while telling people to earn more is not. Maybe because we consider that they have total control over what they spend, but not over what they earn? While this may be true, most people still could probably find a better job.
froindt 5y ago
Yes, doubling your income and maintaining your lifestyle would make a huge difference. In many cases such an extreme bump isn't reasonably available. I believe GP was more referring to the rough rule of thumb is to have 25x your annual expenses by the time you retire. +5k income versus -5k expenses, you're better off cutting your expenses. By cutting expenses, the target drops by 25xExpensesCut, and you're throwing an extra ExpensesCut towards savings, helping on both sides of the equation. Going from spending 95% of savings to 90% makes a huge difference on the timeline, but 50% to 45% is much more modest since the timeline for compounding growth is so much shorter. Using 70k income, 50k expenses, and a 5% return, this would take about 30 years. [0] 75k income, 50k expenses goes to 25.2 years [1] 70k income, 45k expenses goes to 24 years [2] 150k income, 50k expenses goes to 10.6 years [3] Another detail often forgotten about, salary is stated before taxes, spending is almost always after taxes. That further increases the power of decreasing expenses. [0] https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=50000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=70... [1] https://networthify.com/calculator/earlyretirement?income=75000&initialBalance=0&expenses=50000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=75... [2] https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=45000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=70... [3] https://networthify.com/calculator/earlyretirement?income=150000&initialBalance=0&expenses=50000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=15...*
- Zababa 5y ago
  All good points. The original article has a few things that are oversimplified I think, which is why I criticize it a bit. For example, if you go from a country in the EU to San Francisco, you're going to earn way more but spend way more too. But if you plan on going back to the EU when you retire, this won't matter much because your living expenses will drop. I don't know how hard is doubling your income in general, but I don't know if it's always harder than dividing by two your expenses. The thing is that by focusing on earning more, you will end up with more money, and at that point you can always cut back expenses. While if you focus on cutting back expenses, you will end up with less money.

by Zababa 5y ago

PragmaticPulp 5y ago

Agree. I think that advice panders to people who want advice they can act on today. You can choose to save $3 at your next grocery store visit right away and it won’t even hurt. However, telling people to work on earning more feels like an impossibly difficult ask for many. You’ll get instant pushback when you suggest it, so bloggers avoid it. FIRE blogging is more about pandering to what people want to hear. It is, after all, a big money blogging niche these days. Alienating the reader is to be avoided if you want to keep readership up, so career and earnings are to be approached delicately if at all in their writings.

Zababa 5y ago
That's a good point. I wonder why we consider that people telling people to spend less is okay, while telling people to earn more is not. Maybe because we consider that they have total control over what they spend, but not over what they earn? While this may be true, most people still could probably find a better job.

froindt 5y ago

Yes, doubling your income and maintaining your lifestyle would make a huge difference. In many cases such an extreme bump isn't reasonably available. I believe GP was more referring to the rough rule of thumb is to have 25x your annual expenses by the time you retire. +5k income versus -5k expenses, you're better off cutting your expenses. By cutting expenses, the target drops by 25xExpensesCut, and you're throwing an extra ExpensesCut towards savings, helping on both sides of the equation. Going from spending 95% of savings to 90% makes a huge difference on the timeline, but 50% to 45% is much more modest since the timeline for compounding growth is so much shorter. Using 70k income, 50k expenses, and a 5% return, this would take about 30 years. [0] 75k income, 50k expenses goes to 25.2 years [1] 70k income, 45k expenses goes to 24 years [2] 150k income, 50k expenses goes to 10.6 years [3] Another detail often forgotten about, salary is stated before taxes, spending is almost always after taxes. That further increases the power of decreasing expenses. [0] https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=50000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=70... [1] https://networthify.com/calculator/earlyretirement?income=75000&initialBalance=0&expenses=50000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=75... [2] https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=45000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=70... [3] https://networthify.com/calculator/earlyretirement?income=150000&initialBalance=0&expenses=50000&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=15...*

Zababa 5y ago
All good points. The original article has a few things that are oversimplified I think, which is why I criticize it a bit. For example, if you go from a country in the EU to San Francisco, you're going to earn way more but spend way more too. But if you plan on going back to the EU when you retire, this won't matter much because your living expenses will drop. I don't know how hard is doubling your income in general, but I don't know if it's always harder than dividing by two your expenses. The thing is that by focusing on earning more, you will end up with more money, and at that point you can always cut back expenses. While if you focus on cutting back expenses, you will end up with less money.