FIRE movement & Financial Minimalism

[Fish Tank]

Consider a typical candidate for FIRE who happens to be frum. The couple has combined income of $100-250k / year and achieves a savings rate of 30-50%.

Is this serious?

Many young married men learn in yeshiva for the first year or two after marriage.

But even if they join the workforce on day 1, earning $100k-$250k is highly unlikely.

The average frum couple gets married at a "young" age and has no college degree, which means they can't jump right into a high paying job.

They also have no work experience = entry level job =  low salary.

Yes, everyone has the opportunity to be an entrepreneur and start a business. But for someone with no prior business experience, it's very unlikely that they'll hit $100k very quickly.
(By time they do, their expenses will have grown e.g. kids)

[farmbochur]

Is this serious?

...The average frum couple...

When did I imply FIRE is for average people?

[Euclid]

When did I imply FIRE is for average people?

In general, FIRE is aimed at the average upper middle class earners. What you described (a couple in their low 20s making $100-250k) is a description of someone who likely has family money and has no need for FIRE.

[ltttc]

Is this serious?

YES, although it isn't meant for everyone. I know ppl who save over 50% of their income (myself included). Was I always able to-absolutely not, will I be able to do so next year- I have no idea. (Btw, we started out as a typical kollel couple w/o rich parents or in-laws.)

Keep in mind, this isn't an all or nothing game. Start getting into the habit of saving, as much or as little as you can.
*Start Small - put aside pocket change at the end of the day, $10/week...
*Save your windfalls - stimulus $, tax refunds, gifts, rebates...
*Pay Yourself First - Make savings your first expense of the month
*Make savings automatic -Arrange for a portion of your paycheck to go directly to savings so you barely feel the pinch

And most importantly: START NOW. There are always good reasons not to save. Don't let that stop you from putting away at least something.

[Fish Tank]

YES, although it isn't meant for everyone. I know ppl who save over 50% of their income (myself included).

My questions wasn't if the savings part is serious. I was referring to the income part.

[Fish Tank]

When did I imply FIRE is for average people?

You implied that it's possible to have a "typical candidate for FIRE that happens to be frum".

My response was that's it's very difficult to be frum and be a candidate in the way that you described it (income of $100-250k between spouses)

[ltttc]

My questions wasn't if the savings part is serious. I was referring to the income part.

While almost everyone can save something, you can't quite save upward of 50% if you're a family mking 100k/yr., so it's kinda related.
OTOH, who says you need to accomplish this in year 1?

[ltttc]

Is this serious?

Many young married men learn in yeshiva for the first year or two after marriage.

But even if they join the workforce on day 1, earning $100k-$250k is highly unlikely.

That's what I was referring to. Who says it has to be on day 1?

[Fish Tank]

While almost everyone can save something, you can't quite save upward of 50% if you're a family mking 100k/yr., so it's kinda related.
OTOH, who says you need to accomplish this in year 1?

You misunderstood what I said.

I said EVEN if they go to work in year one.

[ltttc]

You misunderstood what I said.

I said EVEN if they go to work in year one.

oh, ok. But that would only make it easier actually.

[ushdadude]

Read millionaire next door. Savings rate has nothing to do with income. What tends to happen is people spend more as they make more and what seemed like a luxury turns into a necessity.
That being said, being frum does make saving harder

[ltttc]

What tends to happen is people spend more as they make more and what seemed like a luxury turns into a necessity.

Absolutely true! If you can avoid falling in that trap, you can be on your away to achieving FIRE.

[ExGingi]

https://twitter.com/ritholtz/status/1405865379231158277?s=21

[avromie7]

https://twitter.com/ritholtz/status/1405865379231158277?s=21

I don't see that as a problem with the movement, rather the reason he doesn't want to join.

[Lurker]

I don't see that as a problem with the movement, rather the reason he doesn't want to join.

I think his argument is that FIRE may not be the most efficient use of limited resources (mental bandwidth and will power) when trying to maximize your potential growth and earning ability. Possibly a similar argument to investing over saving, except with brain resources vs monetary resources.

[ushdadude]

I think his argument is that FIRE may not be the most efficient use of limited resources (mental bandwidth and will power) when trying to maximize your potential growth and earning ability. Possibly a similar argument to investing over saving, except with brain resources vs monetary resources.

it can be fairly automated.

[Lurker]

it can be fairly automated.

I don't know enough about it to comment on that. His contention is that whatever brain power is being used to maintain the FIRE life can be better utilized in other ways for better returns. I have no clue what calculations he made to come to that conclusion. I don't know how you quantify a person's available will power. It's possible that FIRE can make someone accustomed to certain standards, thereby increasing available will power (and mental bandwidth) for other things.

[ushdadude]

I don't know enough about it to comment on that. His contention is that whatever brain power is being used to maintain the FIRE life can be better utilized in other ways for better returns. I have no clue what calculations he made to come to that conclusion. I don't know how you quantify a person's available will power. It's possible that FIRE can make someone accustomed to certain standards, thereby increasing available will power (and mental bandwidth) for other things.

Good points.
Also, as the president of a wealth management firm, he may be incentivized to get people to think managing finances takes a lot of brain power and time.

[ExGingi]

Good points.
Also, as the president of a wealth management firm, he may be incentivized to get people to think managing finances takes a lot of brain power and time.

 

I guess you don't follow Ritholtz.

What he's saying is simple, use your brain and energy to generate more income/wealth rather than find ways to save every penny. There is a diminishing rate of return on the savings once you reach a certain level.

[avromie7]

I guess you don't follow Ritholtz.

What he's saying is simple, use your brain and energy to generate more income/wealth rather than find ways to save every penny. There is a diminishing rate of return on the savings once you reach a certain level.

OTOH, you can never outearn stupid spending habits, so if you don't have financial discipline you'll always have a deficit.