9 ms·

Sorry, but this story is garbage. Rent/mortgage, retirement completely ignored. Plus he has the shittiest $82 health insurance plan he could find, and he does

by rorrr 15y ago

Sorry, but this story is garbage. Rent/mortgage, retirement completely ignored. Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. On average people after 65 spend $2,920 per year on medical out of pocket expenses (Source: http://www.newretirement.com/Planning101/Rising_Medical_Costs.aspx http://www.newretirement.com/Planning101/Rising_Medical_Cost...) Then his food comes from his garden, which means he has to work on that, and he conveniently didn't calculate the opportunity costs, tools, irrigation, chemicals, seeds, etc. What about transportation costs, electric/gas, phone, internet, household supplies, upgrade of your old computer, clothing, shoes. Then if you want to have a car (and it sucks to live pretty much everywhere in the US without a car), what about car insurance, maintenance, new car every X years? Yeah, it's fucking easy to live on $7K per year when you own a house with a garden, don't pay property taxes, use 1995 computer, and have no safety net in case of a serious sickness.

scarmig 15y ago
I believe he does account for rent/mortgage, by doing an RV. And his idea is that he has handled retirement--he's living in retirement now. The catch is that he had six figures saved up beforehand (he lives off the investment income), which doubles as a rainy day fund in case of serious illness.
- rorrr 15y ago
  Then you have to calculate the amortization costs for the next RV (when this one dies), RV insurance, gas (which RVs needs a lot of), maintenance, sewage pumping costs, water costs. I wouldn't call living in an RV a retirement most people envision.
  - scarmig 15y ago
    Not arguing that it's a choice I'd make, just pointing out that he does include rent. It'd be interesting to see his breakdown of the other expenses you mention, though.
  - deleted 15y ago
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- deleted 15y ago
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- sixothree 15y ago
  It's a lot easier to live on $7000 with significant savings than it is to live on two or three times as much.
tryitnow 15y ago
It disappoints me, but I have to agree with you (at least in part, I wouldn't call his story garbage). I say it's disappointing because his blog really inspired me to make some changes and I agree with the overall thrust of what he's saying. But the problem I have is figuring out how he accumulated his wealth. Of course, being a former physicist you'd think spelling that out in a simple spreadsheet would be a trivial problem for him. I haven't seen that though. From what I have put together I think he got very lucky in the stock market, which quite honestly takes a bit of the wind out of his sails. Based on what he was earning, saving and investing, it seems that only outsized rates of return could explain his nest egg. Nonetheless, his overarching theme is spot on.
- rorrr 15y ago
  It's not that hard to accumulate $100K if you're in IT. Just working for $100-150K a year and investing $20-30K annually should do it very quickly. Now accumulating $1M in a span of 5-10 years is much more challenging. I'm yet to solve that problem.
  - erejacob 15y ago
    As does working for $40k a year and investing 30k annually which is what I did. There's no stock market magic required.
    - rorrr 15y ago
      I think that's just impossible. On 40K you will pay $580 medicare $1,680 FICA $3,410 federal $1,824 state (NY), and maybe some local, depending on where you live. If you can invest $30K after that, you're some motherfucking frugal genius.
      - sliverstorm 15y ago
        Under the table ftw?
    - erejacob 15y ago
dgallagher 15y ago
Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. A bigger issue with the cheap health plans is they tend to have a very high deductible, usually in the $2000 - $3000 range (his is $3500! http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comments-on-health-care.html http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comme...). If you end up in the E.R. once for anything, like a fever, you have to pay that entire deductible. For some, a single blood test will trigger it too. Granted you typically only have to pay it once per year max (meaning you won't pay it for subsequent E.R. visits in the current coverage period), but it's a heavy penalty none-the-less.
- rick888 15y ago
  Yes, but you won't go bankrupt like so many people claim you will without health insurance. Why don't more people get this $80 plan?
  - rorrr 15y ago
    Because you will go bankrupt if something serious happens while on this plan. Go see the details of his coverage, I bet it only covers basic things, and 50% of hospitalization drugs, and some crazy deductible. So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year.
    - rick888 15y ago
      "So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year." I already looked. $3000 deductible, no lifetime limits, and it covers major surgery, doctor visits are $40. If you want prescription coverage, there are plans less than $200 (in the $190 range) that cover 80% of prescriptions. Cable costs this much. I'm not saying this guy should pay for this, but many people that claim they will go bankrupt can easily get a plan like this and not.
colanderman 15y ago
Then his food comes from his garden Not all of it. You obviously missed the link in that article to his FAQ answering every objection you raised: http://earlyretirementextreme.com/frequently-asked-questions http://earlyretirementextreme.com/frequently-asked-questions ...a max of $1200/yr on food which means he has to work on that Right. His point is that you don't need income, not that you don't need to work. and he conveniently didn't calculate the opportunity costs Zero if you like gardening. tools For gardening? Amortized over the life of the tool? Visit some estate sales and you can get set up for gardening like a pro for probably $50. irrigation You mean like a rainwater barrel + some old rubber hosing? You can make one of those for probably $10 in parts. chemicals Not necessary. seeds These come from the plants themselves. As in, free. What about transportation costs If you don't commute and ride an old bicycle (know how many of these people give away? and can be fixed for <$20?) these can be surprisingly close to zero. Anyway this is in the FAQ he linked to. $600/yr electric/gas, phone This is the first thing in the FAQ he linked to in that article: $3240 per year internet $240/yr he said household supplies Well, you found one thing he missed. upgrade of your old computer, clothing, shoes Did you miss where he said he has a 7-yr-old computer and keeps clothes for a long time (= very low amortized cost; probably $50/yr total for these things) Then if you want to have a car He covered this. $600/yr don't pay property taxes, Read the FAQ. He estimates a you could afford a $100k home on that budget. I've lived in one in an expensive state (RI), it was spacious. no safety net in case of a serious sickness. That's what savings are for. $3000 in savings and bam, you've covered your deductible. TLDR: read the article and the FAQ.
- ohashi 15y ago
  I suppose my biggest objection is I hate his lifestyle. I like going out, I enjoy activities which are more often than not paid, I don't have a girlfriend who sits at home and cooks for me all the time. Just because one person is happy with a certain way of living doesn't mean everyone will be. I could do it like he does and simply be miserable.
  - erejacob 15y ago
    You could just do something else then. I'm not saying "everybody copy me". There are paid versions of my activities, but I eventually found the versions there were free or almost free. This holds for almost everything unless you insist on a particular paid version. For instance, when it comes to going out. Lots of people like that, but why are they really going out? Probably not to sit in a particular restaurant and pay money. Maybe more about not having to cook and meeting friends? If so, this could be accomplished by taking turns inviting each other for dinner at home. If the cooking isn't great, that's something that can be learned. Just an example.
gregatragenet 15y ago
Hi rorrr, You are clearly on the treadmill. Yeah if you want to buy a new car every X years, and get a mortgage for an overpriced house you are not going to be able to live this lifestyle. You will probably have the lifestyle most enjoy. Maxed out credit cards, no savings, that big oh-shit moment in your mid-fifty's when you realize you've nothing saved for retirement... Not to burst your bubble, but his health plan is pretty good. I have a very similar one. It's shocked me too that you can get a good plan if you are willing to take a very high deductible.. And ironically if I took my deductible each year I didn't need it and burned it (or gave it to charity) I'd almost break even on my low-deductible 'old plan'. When I left employment the Cobra for my plan (2 people) was 980/month. I now have a HSA-style plan that's $170/mo. It has a ~5K-per-person deductible (x2 for two people). 100% coverage after the deductible is met. I'd about break even each year if we both simultaneously came down with cancer. But since we're healthy I get to pocket the 10K or so I save each year. Most cities you can get by without a car. I prefer it, actually, it is a lot less stress than driving and a lot healthier. But, yeah, if you are like the folks who got a 'great deal' on a house in Stockton in 2007 and are now commuting from there to Santa Clara, I guess bikes are out of the question. It's all about live-near-where-you-work (or vice versa). The author states he's got a $100K in savings - That's a lot more safety net than your average American. Do you have that kind of safety net?
- potatolicious 15y ago
  > "Yeah if you want to buy a new car every X years, and get a mortgage for an overpriced house you are not going to be able to live this lifestyle. You will probably have the lifestyle most enjoy. Maxed out credit cards, no savings, that big oh-shit moment in your mid-fifty's when you realize you've nothing saved for retirement..." It's amazing how much introspection you have on the life of a total stranger without him even revealing the least bit about his lifestyle or finances! Seriously, I'm all for being frugal and responsible, but you're just projecting at this point, and it really does come off as an ad hominem.
  - erejacob 15y ago
    Welcome to my life.
sixothree 15y ago
$270/month for my half of the rent+utilities $50/month for my half of the car $50/month for my half of the dog My wife spends a similar amount per year. HE doesn't live on $7000, THEY live on >$14000. Those are two completely different scenarios. I'm also willing to bet his wife is taking up a lot more slack than he admits or realizes.
- erejacob 15y ago
  And I lived on less than $7000 per year when I was single. Yes, one scenario has two persons and the other has one but economically it's the same. This is covered elsewhere in this thread. BTW, I'll take that bet. We have a joint account, so it's pretty clear where the money is going.

by rorrr 15y ago

scarmig 15y ago

I believe he does account for rent/mortgage, by doing an RV. And his idea is that he has handled retirement--he's living in retirement now. The catch is that he had six figures saved up beforehand (he lives off the investment income), which doubles as a rainy day fund in case of serious illness.

rorrr 15y ago
Then you have to calculate the amortization costs for the next RV (when this one dies), RV insurance, gas (which RVs needs a lot of), maintenance, sewage pumping costs, water costs. I wouldn't call living in an RV a retirement most people envision.
- scarmig 15y ago
  Not arguing that it's a choice I'd make, just pointing out that he does include rent. It'd be interesting to see his breakdown of the other expenses you mention, though.
- deleted 15y ago
  [deleted]
deleted 15y ago
[deleted]
sixothree 15y ago
It's a lot easier to live on $7000 with significant savings than it is to live on two or three times as much.

tryitnow 15y ago

It disappoints me, but I have to agree with you (at least in part, I wouldn't call his story garbage). I say it's disappointing because his blog really inspired me to make some changes and I agree with the overall thrust of what he's saying. But the problem I have is figuring out how he accumulated his wealth. Of course, being a former physicist you'd think spelling that out in a simple spreadsheet would be a trivial problem for him. I haven't seen that though. From what I have put together I think he got very lucky in the stock market, which quite honestly takes a bit of the wind out of his sails. Based on what he was earning, saving and investing, it seems that only outsized rates of return could explain his nest egg. Nonetheless, his overarching theme is spot on.

rorrr 15y ago
It's not that hard to accumulate $100K if you're in IT. Just working for $100-150K a year and investing $20-30K annually should do it very quickly. Now accumulating $1M in a span of 5-10 years is much more challenging. I'm yet to solve that problem.
- erejacob 15y ago
  As does working for $40k a year and investing 30k annually which is what I did. There's no stock market magic required.
  - rorrr 15y ago
    I think that's just impossible. On 40K you will pay $580 medicare $1,680 FICA $3,410 federal $1,824 state (NY), and maybe some local, depending on where you live. If you can invest $30K after that, you're some motherfucking frugal genius.
    - sliverstorm 15y ago
      Under the table ftw?
  - erejacob 15y ago

dgallagher 15y ago

Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. A bigger issue with the cheap health plans is they tend to have a very high deductible, usually in the $2000 - $3000 range (his is $3500! http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comments-on-health-care.html http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comme...). If you end up in the E.R. once for anything, like a fever, you have to pay that entire deductible. For some, a single blood test will trigger it too. Granted you typically only have to pay it once per year max (meaning you won't pay it for subsequent E.R. visits in the current coverage period), but it's a heavy penalty none-the-less.

rick888 15y ago
Yes, but you won't go bankrupt like so many people claim you will without health insurance. Why don't more people get this $80 plan?
- rorrr 15y ago
  Because you will go bankrupt if something serious happens while on this plan. Go see the details of his coverage, I bet it only covers basic things, and 50% of hospitalization drugs, and some crazy deductible. So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year.
  - rick888 15y ago
    "So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year." I already looked. $3000 deductible, no lifetime limits, and it covers major surgery, doctor visits are $40. If you want prescription coverage, there are plans less than $200 (in the $190 range) that cover 80% of prescriptions. Cable costs this much. I'm not saying this guy should pay for this, but many people that claim they will go bankrupt can easily get a plan like this and not.

colanderman 15y ago

Then his food comes from his garden Not all of it. You obviously missed the link in that article to his FAQ answering every objection you raised: http://earlyretirementextreme.com/frequently-asked-questions http://earlyretirementextreme.com/frequently-asked-questions ...a max of $1200/yr on food which means he has to work on that Right. His point is that you don't need income, not that you don't need to work. and he conveniently didn't calculate the opportunity costs Zero if you like gardening. tools For gardening? Amortized over the life of the tool? Visit some estate sales and you can get set up for gardening like a pro for probably $50. irrigation You mean like a rainwater barrel + some old rubber hosing? You can make one of those for probably $10 in parts. chemicals Not necessary. seeds These come from the plants themselves. As in, free. What about transportation costs If you don't commute and ride an old bicycle (know how many of these people give away? and can be fixed for <$20?) these can be surprisingly close to zero. Anyway this is in the FAQ he linked to. $600/yr electric/gas, phone This is the first thing in the FAQ he linked to in that article: $3240 per year internet $240/yr he said household supplies Well, you found one thing he missed. upgrade of your old computer, clothing, shoes Did you miss where he said he has a 7-yr-old computer and keeps clothes for a long time (= very low amortized cost; probably $50/yr total for these things) Then if you want to have a car He covered this. $600/yr don't pay property taxes, Read the FAQ. He estimates a you could afford a $100k home on that budget. I've lived in one in an expensive state (RI), it was spacious. no safety net in case of a serious sickness. That's what savings are for. $3000 in savings and bam, you've covered your deductible. TLDR: read the article and the FAQ.

ohashi 15y ago
I suppose my biggest objection is I hate his lifestyle. I like going out, I enjoy activities which are more often than not paid, I don't have a girlfriend who sits at home and cooks for me all the time. Just because one person is happy with a certain way of living doesn't mean everyone will be. I could do it like he does and simply be miserable.
- erejacob 15y ago
  You could just do something else then. I'm not saying "everybody copy me". There are paid versions of my activities, but I eventually found the versions there were free or almost free. This holds for almost everything unless you insist on a particular paid version. For instance, when it comes to going out. Lots of people like that, but why are they really going out? Probably not to sit in a particular restaurant and pay money. Maybe more about not having to cook and meeting friends? If so, this could be accomplished by taking turns inviting each other for dinner at home. If the cooking isn't great, that's something that can be learned. Just an example.

gregatragenet 15y ago

Hi rorrr, You are clearly on the treadmill. Yeah if you want to buy a new car every X years, and get a mortgage for an overpriced house you are not going to be able to live this lifestyle. You will probably have the lifestyle most enjoy. Maxed out credit cards, no savings, that big oh-shit moment in your mid-fifty's when you realize you've nothing saved for retirement... Not to burst your bubble, but his health plan is pretty good. I have a very similar one. It's shocked me too that you can get a good plan if you are willing to take a very high deductible.. And ironically if I took my deductible each year I didn't need it and burned it (or gave it to charity) I'd almost break even on my low-deductible 'old plan'. When I left employment the Cobra for my plan (2 people) was 980/month. I now have a HSA-style plan that's $170/mo. It has a ~5K-per-person deductible (x2 for two people). 100% coverage after the deductible is met. I'd about break even each year if we both simultaneously came down with cancer. But since we're healthy I get to pocket the 10K or so I save each year. Most cities you can get by without a car. I prefer it, actually, it is a lot less stress than driving and a lot healthier. But, yeah, if you are like the folks who got a 'great deal' on a house in Stockton in 2007 and are now commuting from there to Santa Clara, I guess bikes are out of the question. It's all about live-near-where-you-work (or vice versa). The author states he's got a $100K in savings - That's a lot more safety net than your average American. Do you have that kind of safety net?

potatolicious 15y ago
> "Yeah if you want to buy a new car every X years, and get a mortgage for an overpriced house you are not going to be able to live this lifestyle. You will probably have the lifestyle most enjoy. Maxed out credit cards, no savings, that big oh-shit moment in your mid-fifty's when you realize you've nothing saved for retirement..." It's amazing how much introspection you have on the life of a total stranger without him even revealing the least bit about his lifestyle or finances! Seriously, I'm all for being frugal and responsible, but you're just projecting at this point, and it really does come off as an ad hominem.
- erejacob 15y ago
  Welcome to my life.

sixothree 15y ago

$270/month for my half of the rent+utilities $50/month for my half of the car $50/month for my half of the dog My wife spends a similar amount per year. HE doesn't live on $7000, THEY live on >$14000. Those are two completely different scenarios. I'm also willing to bet his wife is taking up a lot more slack than he admits or realizes.

erejacob 15y ago
And I lived on less than $7000 per year when I was single. Yes, one scenario has two persons and the other has one but economically it's the same. This is covered elsewhere in this thread. BTW, I'll take that bet. We have a joint account, so it's pretty clear where the money is going.