Financial freedom is having options, not just having money to spend
I remember times when I didn’t have enough money to buy the stuff I wanted. Still plugged into the world of consumerism and advertising to some extent, the stuff I couldn’t afford bugged me.
What I discovered was not that it bothered me because I really needed the stuff and it would give me lasting improvement of quality of life. What bugged me was that I didn’t have the option of having it. I couldn’t afford it, and because I wasn’t brought up to buy consumer goods on credit I couldn’t have it.
It took a bad experience at work to show me that there was something a lot worse than not being able to afford consumer tat. It was not having options to walk away from bad situations.
Our American friends, with their delicious lack of irony, can get away with saying things that would just sound hokey and ridiculous from me. In this old newspaper clipping, which is a 1963 ad for a savings and loan company.
The Pleasure of Walking Tall (cringe)
It highlights the advantages of financial freedom -
A man without savings is always running. He must.… He must take the first job offered, or nearly so. He sits nervously on chairs because any small emergency throws him into the hands of others.
Two-and-a-half years ago I sat in an annual appraisement, when The Firm had had a general annus horribilis due to incentivising the salesforce to sell products without evaluating whether they were profitable first. And I listened as a little twerp of a line manager told me he was going to slaughter my appraisement because the project I had been on had been cancelled and my skills didn’t fit in his area. He did it because he needed to score a decent number of negative hits. I was in a weak position, had had some upheaval in my personal life, and had no options. I didn’t have savings, so I had to sit nervously on the chair. Nowadays I would read him the riot act and launch a grievance (you aren’t actually meant to drop someone down three grades without giving them some warning in the preceding quarter, so I could have nailed him for not giving me a heads up first).
He can take a level stare from the eyes of any man.…..friend, stranger or enemy. It shapes his personality and his character.
The ermine is a noble and proud creature, and chose to take action so that this would never happen again. That means independence of working for a living. Getting another job is not the answer. There’ll be another jumped up twat who has just had a child, has no savings, and is desperate to achieve his objectives at my expense so he can continue to afford to pay interest on the debt buying his nice middle-class lifestyle.
Having savings, and therefore options, makes it easier to resist the blandishments of consumerism. Now, I can walk into a store and look at the stuff they have, all gaudily pushed for the weak of will. I can look at it, and think to myself “yes, that would be nice. I can easily afford it. But I’ll pass, because I don’t have a need for this stuff, and I know the want leads only to fleeting satisfaction for a few days”. After a certain point, it is the people in your life that matter, and what you do with them, not what is in your life.
Somehow, having to option of buying the stuff, without particularly breaking a sweat, makes it easier to say no. You can ignore all the 10% off, SALE, everything must GO signs. I’m old enough to have seen it all before, and rich enough and ornery enough to be perfectly happy to pass up on the offer if it means I can take the time to consider the purchase at my leisure. If the damn thing costs 50% more, so what? I don’t buy consumer goods often enough and they are such a small part of my budget that I can afford the luxury of consideration. And many of these offers are cyclical.
I don’t understand the fuss made on Martin Lewis’s moneysavingexpert site about topcashback and quidco etc. Obviously if you are going to spend a shedload of cash on some consumer goods then for sure, try and spend less using these sites. However, the truly radical money saving tip is don’t buy the stuff in the first place, guys.
Ivan Illich, seemed prophetic in the 1970s when he wrote in Tools for Conviviality
Elite professional groups . . . have come to exert a ‘radical monopoly’ on such basic human activities as health, agriculture, home-building, and learning, leading to a ‘war on subsistence’ that robs peasant societies of their vital skills and know-how. The result of much economic development is very often not human flourishing but ‘modernized poverty,’ dependency, and an out-of-control system in which the humans become worn-down mechanical parts.” Illich proposed that we should “invert the present deep structure of tools” in order to “give people tools that guarantee their right to work with independent efficiency.”
Look at so many of the products people will buy for Christmas, they are a lock-in to a complex system of more payments. For example, an Xbox, a mobile phone, Sky TV, a gym subscription, a motor car, a twin-blade razor, contact lenses. So many ways to engineer extra costs into your life, and you tend to do that once you have sunk some costs into it. It was such a relief when I sold my Sky Plus PVR to a friend at work – it had suckered me into an extra £10 a month!
There are also deliberate attempts to change time-honoured ways of doing things into things that require continuous locked-in purchases of overpriced consumables. Take a Nespresso machine, for example. What a daft way to overpay for coffee. Any product that has a club on the website should ring out ripoff alert in big letters. With a bog-standard filter coffee machine I can get my coffee from anywhere, in any quantity I want. From Tesco to some hideously overpriced London coffee emporium selling me Java Blue Mountain air-freighted fresh that morning, no doubt.
I have the choice of how strong and how much I want, by varying the grind and the ratio of water to coffee. If I am lazy, I can use a coffee machine – this is in fact how an Ermine rouses himself, by loading a coffee machine in the evening, and using a wireless remote control to start this in the kitchen from the bedroom 
If I am not lazy I can use a filter cone, a French Press or a stove top espresso maker. With the exception of the filter cone, zero waste bar the bag of coffee beans, and even in the case of the cone, the waste is compostable paper.
With a Nespresso machine, my choice of coffees and choice of suppliers is narrowed massively, to the 16 of the Nespresso range and to one supplier. I’d waste an aluminium capsule each go, so wasteful that Nestle have to come up with a whole greenwash site to assuage the eco-consciences of their customers.
It’s absolutely and staggeringly bizarre. Nestle have designed a complex system to wastefully lock-in their customers by replacing a perfectly serviceable and simple range of historic methods of extracting coffee from ground coffee, purely so they could make more money. And people will willingly buy this. Illich would despair of us.
Savings. Yes, there’s a lot to be said for them. Most people save in order to buy something. That’s good, particularly is the alternative is to use credit. Though the most common reason for saving, it isn’t the only one.
I save to buy power and freedom – the freedom to walk tall in the 1963 ad. The ad looks really odd to 21st century eyes – modern ads for savings accounts emphasise saving up for something like a house, or the advantageous interest rate. I have never seen a modern ad advocating saving to buy yourself independence of thought and action. Wage slavery is too ingrained in our culture, and we have surrendered to Illich’s modernized poverty.
living intentionally simple living: early retirement frugality
by ermine
4 comments
frugality – akin to living like a celibate monk in a brothel
Todd at financialmentor.com summarised the challenge of what you have to do to become financially independent in 10 years. The thrust of his argument is you need to live on a lot less than you earn, and he described how that isn’t so easy
It takes the self-discipline of a celibate monk living in a brothel to survive on 20-30% of what most people earn in our current culture.
It’s why most people fail, with the exception of odd, extremely focused individual like Jacob (ERE) who finds this all a breeze.
I’m with Todd there. I achieve a greater savings rate than 70%, but then I cheat by having a paid-off house and cycling to work a lot of the time, which takes down two big fixed costs for most people.
Not paying a mortgage isn’t hard, what is hard was paying all the instalments and overpayments over the last 20 years to get to that stage. Reducing other costs was hard. It is particularly hard for the first one or two months of going cold turkey on consumerism.
It was difficult because I had to overcome the norms of a lifetime. For most of my working life I was okay with work, and indeed even now what I do is fine and has regular moments of being interesting. It is the management environment that gets me down. So I had got used to spending a little bit less than I earned, so I was both a consumer of boys toys and of fine wines and eating and drinking out.
Losing the gadget addiction was a harsh switch but easier to hold on to, compared with losing the eating and drinking out. In the end I didn’t want to be working longer to sustain that lifestyle of having the toys, once I had come to that conclusion I could execute the decision, job done. I still have the gadgets I bought up to April 2009, there’s no point in flogging stuff like that on Ebay for the time/return point of view and most of them still work, and surprisingly enough I’m happy with their slowly ageing functionality. Stuff, therefore, was not the problem, and indeed sitting on Stuff accumulated over nearly thirty years of working life means Stuff wants have mostly been addressed anyway.
Hardly watching TV and web-surfing with the power of ad-block plus on my side means I am exposed to far fewer ads than most people, and I adopt a30-day embargo to sterilise any residual power of advertising. If I had a desire for some consumer item, stick it on a list and park it. After thirty days if it still seems like a good idea, go for it. 30 days gives enough time to reflect, and eliminates 95% of my purchases – by then I’ve usually found a way round it or it simply didn’t matter that much to me anyway.
It’s where my world intersects with other people that contrasts and difficulty lie. This is where Todd’s comment rings true for me. Before April 2009 I lived in a way that wasn’t particularly different from how my colleagues and friends lived. The biggest obvious difference is probably being child-free, though even that isn’t hugely unusual in the people I know.
Now, there is a big difference. Most of the people I know from work spend a lot more than I do, and they get nice stuff for it. One guy I know has an audio system that’s worth more than my house. Many have more than one foreign holiday a year; I haven’t used my passport for the last three years.
You have to be more internally referenced than usual to live so differently from the people around you, just like the monk holding to his own values despite the whorehouse around him reflecting contrasting ways of living. ERE observed that early retirement tends to draw personality types INTJ. I would say it is the independence of thought that is the most valuable aspect of that personality type for executing the frugality needed to achieve early retirement, where all around me things urge me to spend! spend! spend!
Trying to spend less means I sometime pass on social opportunities. So there is a cost to living differently, and I choose to pay that cost in the interest of being able to stop working a lot earlier than most people I know. Compared to the quality of life I lose by not buying Stuff, the quality of life I lose by cost-cutting in experiences and socialising is more of a downside to going for early retirement.
Although I am probably personality type INTJ, I’m not as strongly that way as say Jacob, and by going for early retirement rather than extreme early retirement the frugality challenge isn’t such a big ask. Being older than the typical extreme early retirement planner helps too, as SG observed in this comment.
Half the trouble with extreme early retirement for most people is that the first two decades of your working life contain the biggest costs – getting somewhere to live and buying the stuff to set up a household, and just when you are clear of that, most people then have children. That sets you back again because they costs some extra money but more importantly restrict the household’s capacity to earn money.
If I had time and energy on my side I would go the route of the entrepreneur, I wouldn’t choose saving as a means to financial independence. Although taking a long hard look at spending and cutting waste is worthwhile, at the moment I have reduced spending on things that would enhance my life.
So unlike ERE, and Monevator, the attractions of the Spending whorehouse are real for me. It is just that the attractions of financial freedom are greater.
living intentionally reflections: early retirement meaningful work Minsmere volunteering
by ermine
1 comment
Early Retirement as opposed to Meaningful Work
I’ve rudely pinched much of the title from BripBlap’s Early Retirement or Meaningful Work? post. It makes for interesting reading, and his post contains many of the things people say about work – that good work does far more than pay the rent, it gives you a structure and meaning. Steve gives this concept its head in the last paragraph -
But I have realized that my real dream is not early retirement, as I often thought it was. I dreamed of days of leisure. I’ve had those days now, as I’ve been unemployed. I don’t want leisure. I want work with meaning. My real dream is finding meaningful work, and it should be everyone’s dream.
Hmm, well I have to take issue with the last few words. Obviously if meaningful work is Steve’s dream, who am I to gain-say that, have at it, but there’s no reason it has to be everyone’s dream. Perhaps I am unusual in this, but I hear the distant drum of the Calvinist work ethic here, and I don’t like it.
Now for sure the initial impetus for me shooting for early retirement is that I find work sucks, both in what my own job has become specifically and what work has become in the post Thatcher-Reagan era. I have no personal experience of working pre Thatcher, but I saw the background radiation of the post-war employer/employee contract that preceded it in three of the four companies I have worked for, and the quality of my job has gradually degraded as it becomes more management-by-numbers rather than leadership by common sense. Indeed what has particularly changed over the last three decades is that managerialism has taken over from leadership, grinding out innovation and inspiration across the board. However, that’s a rant for a different day.
Early retirement, for me, is all about power. It’s not about meaning. Financial independence, for me, is about being able to meet my needs and a modicum of wants from resources that are mine and under my control. I want nobody to have power over my time, and I want to be at nobody’s beck and call.
The modern world of work is about debt slavery – borrow money for college, for a house, and while you are in hock you are owned by your job. I have served nearly my entire time with that, and I am buying my freedom, to be and to live according to the light of my own lamps, to chart a course guided by my own compass. Of course I will accommodate people or goals that are special to me, but the Company isn’t special to me. I work so that I get money, and I use some of that money to buy my freedom from debt slavery.
Having now eliminated all debts, the debt slavery I am now buying myself out of is the slavery of future incurred debts. Once I have my running costs and some spare I am safe from that.
Too many people conflate early retirement with not working. For me early retirement is not having to work. It is the freedom to do something, but to be able to flip the bird if anybody requires me to do something that conflicts with my own aims and desires in life. Freedom doesn’t have to be exercised – I might choose to go along with it if there is a greater good, but there shouldn’t be a coercive hold ‘do this or else we can make you lose your home’.
People get more awkward and cantankerous as they get older, because they accumulate power, and have seen stupid things lead to crap too many times before.You lose the starry-eyed belief that it is different this time, because it very rarely is. Many things have transformed the work environment over the years, but human nature has remained the same.
I have seen enough management initiatives, and TQM, MBWA, investing in people, corporate social responsibility, employee engagement (funnily never employer engagement) and similar claptrap to last me a lifetime. It’s all rubbish. What Western corporations are in dire need of at this time is competent leadership by top brass that actually gives a damn about the company, its customers and the people that work for it, rather than simply maximizing the size of their own remuneration package. We have never discovered a way of linking pay to performance in a way that doesn’t produce pathological behaviour, particularly at the top. The recent financial crisis is merely the results of this pathology writ large, across many sectors. It is endemic in our large companies, and they can only continue to turn a profit by grinding out efficiency in the layers below senior management, increase in scale or reduce workforce costs by outsourcing etc.
And I’m tired of working in systems run by chancers, yes. But though retirement can mean not working, it doesn’t have to mean not working. I was at RSPB Minsmere recently – the welcome desk is staffed by volunteers, as is the shop and tea room. Looking at these people, I would say most were retired, and they include a fair proportion of early retirees, indeed some faces were younger than me.
I presume none of them had to be there, they chose to be there. They had early retirement and, by evidence of the fact that they were there, meaningful work. The two are not mutually exclusive. Indeed, I would say that if meaningful work is what you crave, there’s a lot to be said for early retirement – it opens up opportunities for meaningful work that you couldn’t otherwise afford to take, such as those RSPB positions.
The shortest day and the longest night, a time for reflection on the year
Most people do this on the 31 December, but I’m with the Pagan tradition here 
Today, on the 21st December (for most years but not all) the day is at its shortest, and the night is longest. There was also a lunar eclipse on offer today to make it even more special, but cloud cover meant I didn’t get to see it. As the wheel of the year slows to a standstill, it is a good day for reflection on what has been, and for what is to come.
Finances wise I’m doing okay – my low-cost ISA provider tells me that I’m 15.92% up on the year. I don’t know if they count the dividend income in that since that is still sculling around as cash, but I’d happy with it, indeed I am dead chuffed.
And no, I’m not brilliant, or a future Warren Buffett, a fair share of that has to do with a certain degree of luck in timing. Anybody starting this year and with some of my hopes and fears would do okay. It’s also got to do with determination is saving; Quicken tells me than I saved about half of my gross income this year, which isn’t bad taking into account that Her Majesty’s Government steals about 25% of it to sponsor profligate bankers – well along with running schools and all that actually useful stuff too I’ve also bought into some non-financial assets which probably count for half of the residual what I am left, indeed that part of my wealth-preservation strategy to try and hedge the forthcoming financial shitstorms is done. I’ve been able to live on about 10-15% of my gross income, but on the other hand I didn’t have a holiday this year as you probably did
I can focus on the financial from now, accepting the hazard that I could be totally wiped out in financial assets when the money dies because we are carrying on in a way that I can only see leads to what happened to the Weimar Republic. But I’m not wise enough to know for sure, so I choose to ride this dangerous horse in the awareness of its possible bad character.
I owe this man a beer or two, both for some seriously good tips, and yes, I’m happy to eat the consequences of my own bad choices but there really haven’t been any duff ‘uns to date and there are three elements that Monevator introduced me to which are responsible for about half of the current health of my ISA, the rest is my own hopes and fears.
To you, my dear readers and commenters a decent tip of the hat too, for insights, different points of view, different approaches and occasionally pointing out I am talking complete bollocks. Your help is much appreciated
Some things remain the same or continue to get worse – the slip-sliding decay of the company I work for from a once inspirational place to work into an outsourcing jobbing shop continues apace. I have at least found a niche in work culminating in 2012, which should take me to a good place to retire
The financial crisis continues to metastasize, hollowing out the shell of the Western World though leaving the apparent shell intact. It turns out the Goldilocks economy was nothing of the sort, and tragically this is being paid for by all sorts of people taken down as collateral damage. Looking at many people under 30, the big difference in their pattern of working compared to mine at 30 is less long-term or full-time employment, lots of short-term contracts for a year or two.
There is a general atmosphere of fear and loathing about employment prospects in much of the working population, as people begin to realise that the modern corporation does not really need that many people working for it to turn a profit, and it will subject those that it does employ in a roiling torrent of fads and inititatives, while busily outsourcing and subcontracting as much as it can to get away from any responsibility owed to customers, employees and shareholders alike, as short-term bonuses destroy strategic direction and company building at Board level.
Maybe there’s a good side in there. Perhaps it is Schumpeter’s creative destruction at work, though we should remember that his view of this as a positive force builds upon the priciples outlined in the negative view of Karl Marx’s schöpferische Zerstörung describing the way in which capitalist economic development arises out of the destruction of some prior economic order. That prior economic order, holding from the end of the Second World War to the implementation of the Thatcher/Reagan doctrine gave us decent pensions, banks that were stable in Europe, jobs that you could build a life upon and mortgages that were harder to get but possible to pay off, and some other good stuff.
Let’s hope the replacement can enable a lot of the population to lead stable, rewarding lives where they can bring up their families or pursue other dreams, aims and goals in some semblance of financial security. The last government hid some of the rotting core by pumping up the benefits system and employed an awful lot of people in the machinery of government, but the train wreck of the financial crisis scuppered that.
What lies ahead? Well, falling living standards for the majority of Brits, as they face:
- Skyrocketing inflation due to the Bank of England printing money and not giving a fig about the nominal inflation targets.
- Increasing energy costs, due to greater worldwide demand and/or possible peak oil
- Increased interest rates, hammering the personal finances of those who have overmortgaged, with falling house prices trapping them in negative equity
- Wages not keeping up with inflation
- Having to pay down high levels of consumer debt accumulated during the boom times
- Credit crunch mark 2, possibly precipitated by the PIIGS destroying the Euro. There is no bailer-out of last resort now – sovereign governments in the West are bankrupt, so their guns have no ammunition left.
On the upside, if you happen to be debt-free and have money, you may do well in the stock market, or perhaps somewhere else – after all those companies seem to be able to make money without employing people, or if they do employ them then they employ them in low-wage countries. I expect power in the West to shift dramatically from labour to capital, for success there you want to have capital, you want to not have debts and you want to get you income from capital rather than working for a living. I am by not means rich enough to do well at that, though I am richer than 90% of Brits. That doesn’t make me as rich as you’d think – the wealth distribution is massively skewed at the top
Hower, I will try and reduce my costs, particularly energy costs, I will not acquire debts unless I am building up savings to pay down the debt at the same time as I incur it, and I am aiming to retire and get my income from capital rather than from working. I am trying to reduce my exposure to the downside and fan the feeble flames of what exposure I have to the upside. However, I am not an island, so though I am less exposed to some of the incoming economic headwinds I still expect to take a hit in living standards. If I can make it working for another two years then though my material living standard may fall, getting my own time back will be a massive increase in living standard, for time is something that is priceless – they’re not making any more of it!
living intentionally simple living: fuel cost katy perry log burner louboutin specialisation
by ermine
7 comments
On living differently
Often it’s easier to see something reflected through other people’s eyes than it is to see it in oneself. A couple of PF posts that resonated with some of what I am doing.
Both of them were by Philip Brewer, whose review of Jacob’s book Early Retirement Extreme brought out this key nugget:
Don’t specialize.
Instead, develop the skills to do many ordinary things yourself. It doesn’t take nearly as much effort to develop and maintain a basic level of competence as it does to become good enough at something that you can do it professionally.
Now I’m a great fan of ERE, but I hadn’t spotted that in reading his blog, intellectually at least. And I’m far too tight to buy the book, since my library doesn’t carry US PF books. Practically, I was already following the lower specialisation path.
I am an serviceable carpenter, but not a cabinet-maker, and entirely self-taught to boot, apart from what I observed from my Dad many decades ago. That’s enough to save a few hundred pounds on making cold frames, though they’re hardly good enough to sell. And yes, I know every half-competent allotment holder does something similar, though I venture that even my substandard handiwork is better than about half of what’s out there However, my requirements were on a much larger scale.
That leads to one of the key things about living simpler, or differently, or extreme early retirement. It was reduce external dependencies, or put another way, increase self reliance.
The modern world is one where there is a high degree of specialisation and inter-dependency. It gains richness and variety in doing that. For instance, making Christian Louboutin high-heeled shoes is a seriously specialised job and you probably need a marketplace of hundreds of millions to be able to get enough demand, far more than the catchment area for a village cobbler.
You need market scale for niche products like Christian Louboutin shoes, worn by Katy Perry
Now it’s clear that Louboutins are in a different league from the functional products of a village cobbler, but all that specialisation does have its downside too. It sets us in a rat-race by definition, because all this dependency means that you have to persuade others to do things for you. Most of us aren’t beautiful enough or persuasive enough to do that without money, so we have to suck it up to The Man to get the money. Robert Heinlein wouldn’t have approved – specialisation is for insects.
It doesn’t have to be that way. Much of the battle here is to reduce consumption. The obvious implication is a reduced standard of living, well it stands to reason, duh. And yet funnily enough, yes, one’s standard of living does fall, but in no way does it drop in proportion to the difference in the cost of the excess consumption. The aim is to consume smarter at the same time – buy much less, but buy better. We’re talking scaling down and trimming the excesses, not living in communes or doing a 1970s Felicity Kendal. I choose my excesses rather that simply following the herd to go for excess in all things as instructed by those nice advertising people.
Buy secondhand rather than new – much of advertising is aimed at the “you need it now” brigade. There’s very little that you need now – you need the air for your next breath now, but some consumer item will probably be cheaper and better next year. If you can wait for the item to come on ebay at the right price, you’ll get far more bang for your buck. Obviously, if fashion, or things like the latest iPhone matter to you, then this won’t be a recipe for a happy life. I don’t get to see a movie until a few years after its out and it is on terrestrial (non-pay) TV. It doesn’t really matter to me – if it did, I could pay, but I choose not to. I spent some of this afternoon shifting about 20 rounds of wood from where a tree-surgeon had cut down a pine tree. Why? because I’d like to do the same for my gas bill as I did to my electricity bill.
The Rational Optimist
If I buy my cold frames from a store, I have to pay 20% VAT on the product, plus 20% tax (I have driven my income below the 40% tax rate using AVC contributions, otherwise I would be paying 70% tax on purchases) plus 11% National Insurance on PAYE on earning the money to buy this. Thus I have to earn twice as much as the product costs. So for everything you see in a store, double the price to account for the tax you pay on the money to buy it.
That is why doing something for yourself often pays well – your hourly rate is double what it is when you earn money to buy the same thing, for the simple reason you aren’t taxed working for yourself. That’s where the basic level of competence works – I am sure I take longer to construct something out of wood than a craftsman, but as long as I am having a good time doing it then typically it costs less than half as much to do it in raw materials than it would be to buy. Plus I know how to service it. When I installed my Freesat dish out of scrounged bits it took me longer than an aerial installer would take, because he does it every day and has the workflow perfected. But it was a lot cheaper; though it should be noted I had the specialised knowledge from work.
As a society we have learned incompetence in doing things for ourselves – this Popular Mechanics from the 1930s shows how much has changed – I wouldn’t know how to go about half of this, and I am reasonably practical.
Some of the skills have been made redundant by increasing reliability and performance. I don’t need to know how to change piston rings, for instance – my car is coming up for 110,000 miles and still gets away with the annual service and MOT, something that was unheard of 20, 30 years ago. That is good. But some of the craft projects showed just how much people did for themselves, compared to now.
Some things that are obviously going to eat up money in future are energy costs, simply because we have only so much fossil fuel energy available and the demand is going up due to the increasing number of people wanting to live a Western lifestyle. I’ve already seen that – I have forced my electricity consumption down by more than half over the last six years but the total price I pay is still the same. Anticipating the same effect with gas, I aim to use this piece of equipment
multifuel log burner
to reduce my heating costs. It is a seriously low-tech piece of gear, a cast-iron box with a pipe out the back, into which you stuff wood and set fire to it. Compared to the gas central heating it’s a right PITA to use. But you can’t argue with the price of fuel – basically the cost of petrol for the chainsaw, though eventually we will be using biomass willow growing on a local authority allotment they couldn’t rent out because it regularly gets flooded with runoff from a road. You wouldn’t want to eat veg from there, but the willow likes water. If you keep your eyes open though, there is plenty of wood to be had for the asking as long as you are prepared for the grunt on carting it off and sawing it/axeing it up.
Now it’s obvious to me that fuel is going to go up in future. And in the general theme of becoming less dependent, not wanting to be taxed at 50% on needs and preferring to spend my money on stuff I really can’t do for myself, I want to get out of the money economy as much as possible for this necessity. That means some capital expenditure (log burner, chainsaw, chainsaw PPE) in return for reducing my long-term financial risks of being fleeced for power. My gas and electricity bills are about £800 together. I had to earn £1600 to be able to pay that. Some of that should be going to my retirement savings, not equally split between EDF and George Osborne’s war chest, thanks all the same.
The second post that tickled me was Change Your Life with Storytelling. I haven’t actually got to grips with this one yet, and this post highlighted that maybe I ought to. The narrative of what I am doing in life has an awful lot of what I am trying to get rid of, and arguably it doesn’t have enough of what I am trying to get more of. If I put my mind to it, it is still hard to picture where I want to be, and that may well incapacitate my ability to make that happen, because I can’t picture it. I feel I am in a mapless territory, and perhaps that needs to be addressed before I can unleash the power of saving to create and image a different, better, life.
Of course that may all be a load of metaphysical bollocks – such is the human condition that it is hard to separate the variables at times
economy living intentionally personal finance simple living: early retirement escape plan
by ermine
6 comments
My Escape Plan
Like anyone aiming to quit paid employment, my escape plan has a large financial component to it. However, reading Dreamer’s inspiring story of how she has made her plan real, reminded me that there is also a non-financial part of it too. People do not live by bread alone, and I have consolidated a lot of the intangible parts without considering them as an escape plan.
You have to take a view on what the future holds to execute an escape plan. The reason is that leaving paid employment means an enormous loss is power and direction – relying on capital rather than income means my trajectory is largely determined by what I have when leaving. There is little chance to make mid-flight corrections.
My vision of the economic future
I have a quandary here, because my view of the future is at significant variance with a lot of people, including some people whose view I respect. I am not sure I am right. The general view, which is that the turmoil of recent years has been a temporary aberration of the sort that occasionally afflicts capitalism and normal service will be resumed shortly, is at variance with my feeling that the myth of our time, continuous growth, is about to fail us.
Worse still, I have insufficient information to get a feel of when I expect the increasing world middle class population’s demand to exceed the limiting effects of peak oil.
I may retire, grow old, see a few more economic cycles and hopefully die peacefully in my bed before world demand overwhelms peak oil. We may solve nuclear fusion before then, though energy security is not the only hazard humanity faces. Something else might turn up – one of the bewitching aspects of the continuous growth myth of our time is that just when things seemed lost, so far something has turned up, like the mid-20th century energy-fuelled Green Revolution in agriculture.
In that case, investing to set myself on as best a path to deal with peak oil is a serious opportunity cost. I need a stake in business as usual too, so I choose to play both ends – invest effort and skills in the post-peak ready scenario and at the same time I hedge this by investing assuming that Britain is booming again – or at least not taking on too much water.
If you want results fast, use great force with extreme prejudice
Yoda, he of the sticking out ears in the original geek-fest Star Wars was a plug-ugly sucker, but he had a point when he berated somebody “do or do not. Do not try” If you want to retire early, you aren’t going to be living an Ozzie and Harriet lifestyle. You’re just not going to get there clipping coupons and skipping lattes at Starbuck’s.
I realised in 2008 that working in an office is not the way I want to spend the rest of my life. Some events before then had made me re-evaluate things, but being targeted by some punk at work to make up his numbers showed me that the world of work had changed somewhat since I started. I wanted results, and I wanted them in years, not decades. Months would have been even better
Extraordinary results demand extraordinary efforts. That means cold turkey on consumerism, it means less is more all round. You need a lot of capital to retire early, in the order of about 20x your outgoings. None of the ways I can think of doing this don’t involve a serious hit on lifestyle compared with most others. The secret is to spend less than you earn, big-time. It means saving well over half my take-home pay, and a fair amount of my pre-tax pay too.
Young people may want to consider working in some unpleasant environment abroad for a year or so; these are usually financially rewarding to compensate for their unpleasantness or cultural dislocation. There are plenty of people that made their fortunes in the oil service industry, or working in the Middle East, where as long as you can avoid trouble and stay off the hooch then you can be made in a year or two. In the past, the military offered opportunities to break the mould, like this report of working 19 months on the Cold War Distant Early Warning Line.
The common thread on all of these is that if you want to build up the cash to do something different to most of your fellow men then you have to live in a different way to them.
The same applies to me. With two-thirds of a working life behind me, I have built up some capital, by living differently to many of my colleagues – my house is a semi where most of them live in detached houses, and I paid off my mortgage over the years rather than extract the equity to buy more house or go on holidays. But it’s not terribly different from the typical middle-class lifestyle. So if I want to retire early, then I have to hit the financial goal hard. Jacob from ERE tells us that it is possible to achieve early retirement in five years. With similar determination, therefore, in theory it would be possible for me to achieve it in less than two years; I already have 2/3 of the amount saved up in the conventional way plus a paid-off house.
Non-conventional investment – the tin hat portfolio
So my escape plan has two parts. The tin-hat portfolio finds a good meeting with DGF’s life-long dream of becoming a commercial grower using sustainable, low-carbon permaculture. I don’t understand it at all, I was born in a city, I am not into the digging and planting and harvesting side of things.
However, I can invest some skill and energy in the construction of things that every grower needs, like cold frames, buildings, energy control systems and temperature control. As well as the satisfaction of creating something tangible at the end, a reward absent from too many modern jobs, it improves the efficiency of the land use and effort.
As well as this some capital assets like polytunnels and the like which extend the growing season or make exotics possible give me a return on capital, which is the hardest part of turning savings into income these days. Businesses can turn capital into income. From a tin hat POV this particular enterprise hedges some kinds of hit to the food supply and rocketing food prices. I would find life as a vegetarian lacking the finer gastronomic things in life, but it would keep the wolf from the door. It also takes us out of the money economy for some our own consumption. Obviously in normal conditions it puts us more into the money economy from the produce sales, which is the right way to be in the money economy – a producer, not consumer
This unconventional part of my portfolio therefore also does something for me, even if I am wrong, Peak Oil is a chimera and things carry on as usual. It will also be interesting, practical and fun at times.
The general problem with saving money, turning it into a non-financial capital asset such as a business or property, and trying to live off the return on the capital is that many capital assets come in large illiquid lumps. These have to be sold to realise any gains. Take, for example, a house – it may have gone up to £100,000 but to realise that you have to sell it to someone; even if it’s a buy-to-let property there are serious transaction costs. If you just happen to need £20,000 then you have a problem, you now have to find a smaller property to preserve the £80,000.
This is why most people use financial assets to do this job, but under certain scenarios those financial assets get written off to virtually zero. I do not feel that the probablility of those scenarios is vanishingly small over the next 30 years.
I used to know a very old person in Germany who had lost their life savings in financial crises – twice. When you hear the tone of voice of someone who has known that, you get a different kind of knowledge from reading about it in a book. You understand that the thin line that holds the edifice we call finance has its limits, and under certain kinds of societal stress it may fail under the load.This is usually more of a problem for people who have capital in financial assets than those living on earnings.
This collective memory underpinned the peculiar German abhorrence of inflation and the preparedness of the Deutsche Bundesbank to pay almost any price to keep inflation of the Deutsche Mark low in the 1960′s and 70s when other European countries let it rip – all the way to 26% in the case of the UK.
In the West we have been fortunate to have lived through a benign financial environment since the Second World War where this hasn’t happened recently. However, it has happened elsewhere in the world over that time – Argentina, Zimbabwe, the USSR, the Asian financial crisis in the 1990s.
The conventional portfolio
The second part of my portfolio is more conventional. It consists of a mix of ETFs, ETCs and investment trusts. I struggled with the latter, as these are actively managed and I have endless repetitions of the passive investing mantra to get over.
FWIW I’m unconvinced that continual pound-cost averaging works. Circumstances and luck have made me a pound-cost-averaging buyer when the market has been low and a forced seller when the market was higher than average. However, until I had a need for an income I found the index fund approach the easiest to have success with.
However, investment trusts have a good track record of paying dividends, and these are useful enough for a spread of ITs to give me the income I want to top up my pension, with the advantage that if I do it in an ISA it is not treated as income so I don’t get taxed on top, though dividends are taxed at source in the bizarre tax structure of the UK.
They seem to have the advantage of the income being stable over the long term. I don’t want to fret about investments and keep on churning them to release an income, so I will shift slowly from ETFs. High-yield ETFs such as IUKD that I was using are skewed in composition by the need to chase yield, which is a side effect I hadn’t thought about and didn’t want.
The largest part of my conventional portfolio is my final salary pension. It performs the position that bonds do in a self-select pension, a reasonably stable investment. However, since it is from a private employer, rather than government-backed public sector, and there is a deficit, I don’t consider it risk-free. Therefore I will draw it early – which will reduce the annual income from the pension since they will be paying it for more than the 20 years they expect me to live after 60. That means that I get some of it out before any risks/threats to its financial stability, and it is why I need to adopt ERE’s approach to saving enough capital to top it up.
Since pensions are considered income and taxed, drawing early means I get much more of it before paying income tax, which is all to the good in my view. My top-up income is derived from ISAs, which are not currently taxed, so I aim to pay minimal tax. I have paid an awful lot of income tax in my 30-year working life, and I’ve had enough for a while. I have done my part for society. If I get a State pension at 68 that will be nice, but I’m not counting on it, by then I expect the UK economy to be so hammered they’ll turn round and means test it or scrap it as unaffordable.
So I have a decent amount of diversity in my investment structure, in terms of the nature the investments and the spread. I can lose one of the three elements without going broke, though if the pension goes bust I may have to run down capital elsewhere.
The main problem with my escape plan is that the escape is two years off. I will have been at it for three and a half years by the time it comes to fruition. Saving 70% of one’s income is difficult to live with – I have the downside of a job with a toxic management structure without using the upside of the money. The halfway point is a nasty part of any difficult project – it is easy to lose hope, since the distant shoreline is not in view and yet much of the losses have been committed without return.Like Dreamer did, I continually re-evaluate if I can shorten the gap, but the maths do not change when revisited.
Finance is only part of a good escape plan. I am not a minimalist, and a big part of quality of life is who you are with and where you are as well as what you have. I have made good progress on these areas over my working life. In that I am different from many ER bloggers, who are sometimes discontented with their situation in life as well as finances. Much of that is simply being older. Getting these aspects of life right takes a lot of time; my 20s and 30s had much angst in them too I suspect some of that angst is part of the human condition.
living intentionally simple living: air rage dreams early retirement Ivan Illich retirement budget rising energy costs
by ermine
7 comments
Post Retirement Needs & Wants are Hard to Envision in Debt Slavery
Chatting to some colleagues, it seems that many have a hard time envisioning living on less that they currently earn. D’oh, what’s so surprising about that you might say? Well, some of these guys are serious savers. Some of them have kids that are soon to transit from being dependents to adults in their own right, some are already empty nesters.
The point is that many are already living on less than they earn, or their outgoings are about to fall. That’s the only way you get to save
And yet, sometimes discussing how much we’d need after leaving work, their default level is roughly 2/3 of what they currently earn, and few people seem to be able to conceive of living on less.
Now I’m no Jacob of ERE, but here are some of the reasons I will pay less when I stop work than I have done for most of my working life:
No mortgage. For twenty years housing has cost me about the equivalent of five grand in 2010 real terms. No more. Say I spend £1k a year on maintenance. That’s £6k less I need to earn a year (4k difference plus tax and NI)
No need for two cars. With more time I can be flexible, or use taxis, car-sharing systems, hire them if I really must. Saving about £1.5k in all the parasitic costs of owning a car and keeping it on the road. That’s say £2k a year less I have to earn.
No commuting costs. It is easy to end up paying thousands of pounds in commuting costs, and this is not just the cash, but the loss of time every working day. Say another £2k off. This applies less to me because I often bike to work and live closer than most colleagues.
That’s around £10k less that I’d need to earn simply by stopping working. Not having to earn the money to spend on something that’s not fun is always better than having to earn it and buy it. Having one car in the household is a big step up from no car. The second one is only a step up when it covers times where one won’t do.
The mortgage is an anomaly in that is has nothing to do with stopping work. It’s more to do with sucking up 20 years of not spending more than I earn. The house is something I now have, it saves me the need to pay rent, it isn’t inherently work-related.
These are costs saved, but there are other costs that can reduce. With more time, I can do things that previously I’d have had to pay other people to do. On my first house, I replaced the guttering myself. On this one I paid someone to do it because I didn’t have the time, but I could have done it myself and saved money.
All these are steps that move me a little bit out of the money economy. Doing something for yourself is usually cheaper than buying it, because to buy it you have to earn the money and pay tax on it. If I buy £100 worth of spuds from Tesco I have to earn £130 gross to do that. If I grow £100 worth of food from £3 of seeds, I only have to earn £4. I don’t pay tax on value I add myself where I consume it myself – or barter it with others.
There’s a balance here, we don’t have to go all American pioneer and aim for self-sufficiency. As a debt-slave you have to be largely in the money economy. You haven’t got time to to otherwise. As a financially independent individual, you can choose to be less in the money economy – reducing the amount of your effort creamed off as tax.
The money economy can do things for you that you just can’t easily do yourself – I don’t want to keep my own cows and you can’t grow coffee in the UK. You can’t make a PC at home. But let’s face it, you can grow far better tasting veg than money can buy from Tesco, and there are many other things you can do yourself. If you have the time.
Holidays, a temporary respite from wage-slavery?
Some of the other things colleagues felt were non-negotiable needs were holidays. Some had plans to see all sorts of things on Grand Tours. Obviously they need money for that. Something that has changed over the years is that people pack a lot of expectations into their two week holiday in the sun, almost as if that is a compensation for the grimness of debt slavery. This is almost an addict’s logic – work is awful so I need my break. Needing a break is a symptom, not a solution. Some nutcases even borrow money to buy their holidays, WTF? The summer holiday has almost become totemic – even though some folk even get back to work more stressed than when they were in the office.
Holidays don’t have to be expensive, particularly if you are flexible when you travel. The young usually keep the cost of their holidays down of necessity, and the old do too, both these groups can usually take more time over their travel and aren’t tied to school holidays. Flexibility, and being open to roughing it every so often are the key.
After experiencing Stansted airport in 2007 I came to the conclusion that flying is just not an enjoyable experience for me. The bit in the air is okay, it’s the rest of the package that sucks. Airports makes me want to kill my fellow humans and yell into their screaming kid’s ears to STFU when they scream into mine. That’s before I have even got off the ground. You get ripped off for the journey to the airport, ripped off to park your car, ripped off to eat or drink anything, hassled by half-wits in security. Why do people pay to do this? Just because the ad says pay £5 to get to the beach doesn’t mean this pain is worth enduring. You get nickel-and-dimed 20 times over in surcharges for the necessities to actually get to use your £5 ticket.
You can pay more to avoid the excesses of the so-called ‘low cost airlines’ but then you find yourself at the whim of striking air traffic controllers/baggage handlers/cabin crew. There are just so many single points of failure in the way of a good experience of air travel. Hopefully increasing fuel prices will drive up the cost of air travel and reduce numbers – I’d much rather fly every third year and have a good experience than twice a year with a rotten experience. About £200 return to Europe air tickets would get numbers down, and hopefully price some of the chavs out of the air too.
I don’t see what the attraction is in paying for this experience, so I haven’t set foot in an airport since then, other than for the occasional work trip. Once my time is my own, I will travel again, but slowly and overland, not in tubular cattle trucks.
So much for holidays. They’re a luxury, not a right, and you don’t get a right to them just because you have a crap job. Modern holidays seem to be almost the anathema of simple living, too. But they’re obviously really really important in some talismanic sense for an awful lot of people, so whoever’s doing the advertising spin must be doing something right.
Power and Heating are the exception
Of course, not everything reduces when you stop working. Heating and power are two obvious areas that will increase. I have hedged some of that with a wood stove and a chain saw and some contacts. Energy costs are a big hazard – my heat and power bill is £800 a year. It is low by UK standards because I have invested in some conservation but mostly because I have aggressively attacked electricity consumption using an Efergy power monitoring system and an appliance meter. That showed me, for instance, that scrapping my fridge-freezer and buying a new one would reach payback in one year, and that where possible I should use my 60W laptop rather than my 210W desktop PC. It is pretty obvious that energy costs are going to go up. You don’t have to be a peak oiler to see that.
Britain has become a net importer of oil in recent years, and the aspiring middle classes of China and India are going to be bidding on the same world energy market as we are. Increasing demand running into a fixed supply usually means a price hike. Observe the effect on the price I have paid per kWh of electricity (the dips in Aug 06 and April 08 are artifacts due to the power company screwing up reading my meter, I have smoothed the curve with a 4-point moving average)
Test Your Retirement Budget While Still Working
It seems obvious to me - test out the retirement budget for a couple of years before you plan to retire, particularly if you aim to do it early. Obviously you still do have the inherent work-related costs like commuting, you can reduce the cost of lunch and coffee by taking a packed lunch, or simply qualify that in the budget too. A fantastic side-effect is that you will probably save more money which you might as well put towards retiring early – in my case some of my savings are going towards paying my way in the years before drawing my pension. If you hate having less money more than you hate working, well, the answer is obvious - work longer, at least you will know why!
I don’t find this, and indeed I am saddened by how little extra quality of life I bought with what was a pretty wanton spending on trinkets and gewgaws. There are some things I bought which I still enjoy and treasure – my Canon SLR lenses for both long bird shots and wide-aperture macro shots. I’ve even sold some pictures. I’ll be pushing up daisies before I get to the break-even point, but it’s fun. My Hi-Fi – one of the key components bought with six month’s salary saved from my very first job, and most of it over 15 years old.
What runs through the Stuff I treasure and use is that it usually was decent quality, it lasts years, and it has low running costs, and often has been serving me well for years. It often has multiple uses. I also bought a lot of ephemeral junk too, suckered by consumerism, though at least I didn’t get into debt to buy it.
What I found is that Ivan Illich was right when he said
I believe that a desirable future depends on our deliberately choosing a life of action over a life of consumption, on our engendering a lifestyle which will enable us to be spontaneous, independent, yet related to each other, rather than maintaining a lifestyle which only allows to make and unmake, produce and consume – a style of life which is merely a way station on the road to the depletion and pollution of the environment. The future depends more upon our choice of institutions which support a life of action than on our developing new ideologies and technologies. (1973, Tools for Conviviality)
Illich spotted that it is usually our relations with others, not what we have, that lends colour to life – conviviality, who matters more than what, once a certain level of needs is met. He was thinking of it more in the design of society rather than the individual case, indeed it is surprising how much of that early 197os thinking has some resonance to now.
Early in one’s working life the focus usually is on Stuff, because you start with nothing. RetiredSyd seems to make a similar observation that you get more bang for your buck on Stuff when you’re younger. What’s notable about some of those early purchases is that they can be in service for a lifetime – my pots and pans, my hifi, for instance. One big piece of Stuff is the house. Common wisdom has it that you should always stretch yourself when buying a house, on the principle that your leveraged asset is not marked to market and house prices always go up in the long run. I would differ – I live in a house which is cheaper than many of my colleagues on comparable earnings, but I also bought my house outright earlier in life than they will, even after some setbacks. Once you own your house, early retirement becomes much more attractive. In normal times, you could just as well get an investment portfolio that underwrites your rent, but there is an atavistic urge that makes owning the physical entity so much more reassuring than glowing figures on the screen, for me anyway.
So it is that there comes to a curious paradox – towards the end of your working life, hopefully when you are at the peak of your earning power, you can find you have less need for money, and stuff it into savings. You can get trapped on the hamster wheel like some of my colleagues, or you can rationally look at your wants and needs, qualify them, and perhaps get a better quality of life. There’s more to life than work.
Time to Ditch Bottled Water?
I was in a meeting a couple of days ago, one of the guys was drinking some sort of what the Americans call soda – miscellaneous synthetic flavoured sugared water. The other was drinking a plastic bottle of water titled “boring still water”. He was obviously living intentionally, at least as to what he was drinking – zero calories and good for him.
I linked to the Story of Stuff in yesterdays post on the budget, and on that site there’s The Story of Bottled Water (above), which really is quite remarkable.
Now I don’t really rate plain water as a beverage. I always like it to have gone through a coffee machine first, though if the sun is over the yardarm I’m also perfectly okay if it has been introduced to fermented grape juice or barley first
If I have to take plain water sans caffeine or alcohol, at the very least I prefer it sparkling, to give it some interest, and some tang, presumably from the slight acidity of the dissolved CO2. This must be some European thing, as I had the devil’s own job finding sparkling mineral water in the US, though I was tickled to find vast quantities of filtered tap water on sale there. Filtering tap water and selling it is not something we used to do in Europe – there’s always some sort of story about the source on the bottle here. This even applies to still water, and even on the cheap stuff from Aldi that I drink, which is about 25p for 2 litres.
I was first introduced to sparkling mineral water in Germany as a kid, to Hessen Quelle which came in re-usable glass bottles. I recall this from the early 1970s, so I’m not quite sure the European story stacks up with this film in that the start of demand manufacturing in the late 1970s and Orson Welles, he of the “there is a spring, and its name is Perrier” in 1977. The story of Perrier seems to indicate that mineral water was promoted in Europe before the First World War.
However, it’s difficult to get away from some of the issues in the Story of Bottled Water. Apparently you can get round the usual problems of tap water, the smell and taste of chlorine, by chilling it in the fridge. You can filter it to improve taste and remove some contaminants, however having once seen such a filter go green with algae I’m not so keen on that now. And Anglian tap water isn’t so bad taste-wise, if the chlorine goes.
The issues with mineral water are
- cost
- transporting water (though I usually drink British water at least)
- making plastic bottles or making and transporting heavy glass bottles
I prefer the taste of water from glass bottles but in an attempt to reduce costs I have sifted to 2l plastic ones. These aren’t so ideal for sparkling water as by the time you reach the end most of the fizz has gone, and sparkling mineral water that has gone flat has a curious and not particularly pleasant taint.
The trouble is my penchant for sparkling water. You can carbonate tap water with a Sodastream, but swapping one environment-hostile process (transporting water and making plastic bottles) for another, the Sodastream cylinder exchange process is a pretty outrageous scam, presumably where Sodastream make their money. I try and avoid anything with a subscription or running cost, and I can’t even make the business case for a Sodastream compared to Aldi. Heck, Aldi even throw in the water for free, while Sodastream want to charge me for a gas that’s meant to be ending the world.
Sodastream’s cylinders are £9 for 60 litres (ie 60 liters treated water). 30 2-litre Aldi bottles will run me £7.50, so Sodastream runs 20% more, plus the £60 capital cost. Not only that, but I would be supporting a company that has deliberately designed their cartridges so they are harder to refill from a large pub CO2 cylinder which would be a lot cheaper, though it can be done. I am chuffed that the Germans felt the same way, and when SodaStream tried to abuse the legal process to stop competitors refilling their cartridges the German Anti-Cartel Office stepped in and told SodaStream (known as SodaClub in Germany) to cease and desist their restrictive trade pracitices.
I’m not supporting capitalist pigs like that. I’m all for genuine business, but restrictive trade practices where companies actively stand in the way of customers looking for cheaper solutions should never be supported. And I am not sure that I can face futzing about with adapters and CO2 cylinders.
The issue here isn’t cost, I would only get through a couple of these 2l bottle as week in summer, and I’m not going to break into a sweat to save 50p a week or £26 a year. However, I don’t really want to be a gratuitous hazard to the environment without at least thinking about it if there’s an alternative that isn’t more expensive. According to the NY Times, about a quarter of all bottled water crosses national boundaries on the way from source to drinker. Living intentionally means at least considering the issue.
At work we have two types of drinking water dispensers – one sort is a filter and chiller on the tap water, the other is one with spring water in big plastic bottles fitting onto a chiller unit – these are placed where plumbing access is difficult. I find the water from both of these preferable to drinking it at tap temperature. I have a perfectly serviceable chiller at home called my fridge, so I will try the usual recommended solution of keeping tap water in a glass jug in the fridge. Hopefully the taste improvement of not coming from a plastic bottle will outweigh the absence of carbonation, otherwise I will go back to Aldi.
Oh and the guy in the meeting? He was being quite rational – after all, he was in unfamiliar surroundings. He was buying the convenience of the bottle, rather than the water as such
living intentionally personal finance: Calvinism iron cage life Protestant work ethic work
by ermine
20 comments
What’s up with this Calvinist Work Is Good For You Thing?
There seems to be a lot of Protestant work ethic out there in the PF blogosphere. We have Frugal Zeitgeist wondering Does a Minimalist Lifestyle Breed Laziness while Financial Samurai is concerned about The Dark Side of Early Retirement and observing Being Overly Content Can Be Detrimental To Your Career.
What’s up with that? We seem to definitely be in the ‘no pain no gain‘ zone. Work is there to pay the rent, not there to give meaning to life. Saying it is necessary and good for the soul seems downright Calvinist to me.
When I started work, true, it did give me some meaning, because it was a continuation of the arc that I had been preparing for, as I accepted society’s view of what a good lifestyle would look like. That path runs along these lines
- get born
- go to school
- go to university
- get job
- get married
- have kids
- retire
- die
All very 1950s, and I wasn’t even born then, but this expectation ran on through the 1970s.
At the same time, however, I was working and living life, and there was the process of what Carl Jung termed individuation going on in me. According to Jung, it is
the process by which individual beings are formed and differentiated [from other human beings]; in particular, it is the development of the psychological individual as a being distinct from the general, collective psychology.
Psychological Types, Coll. Works V6
Max Weber's seminal book on the work ethic and capitalism
Work is good for the soul is probably the force that drives Western capitalism according to Max Weber’s The Protestant Ethic and the Spirit of Capitalism. I’d go along with him in that the notion that work is good for you is part of western collective psychology, indeed I had to get to middle age before I found it possible to conceive that this was not a natural part of the way life is. That takes some doing, for instance this lady waited till retirement itself to challenge it, she has seen the light now
Compare my failure to challenge the status quo with Weber’s agricultural labourers on page 59:
since the interest of the employer in a speeding- up of harvesting increases with the increase of the results and the intensity of the work, the attempt has again and again been made, by increasing the piece-rates of the workmen, thereby giving them an opportunity to earn what is for them a very high wage, to interest them in increasing their own efficiency. But a peculiar difficulty has been met with surprising frequency: raising the piece-rates has often had the result that not more but less has been accomplished in the same time, because the worker reacted to the increase not by increasing but by decreasing the amount of his work.
Compared with those guys I have 150 years of educational advances, two college degrees, the hindsight of the Enlightenment. They spotted something I didn’t – enough is enough, the aim of life is to have a good time and probably a few beers with their mates. They could recognise what enough looked like, where I had to see more than four decades before I could even recognise the concept.
Of course, I’m selling the Protestant work ethic short. It was part of putting men on the moon, it drove people to cure smallpox and all sorts of good stuff that the West has achieved. It’s problem is it knows no bounds, so it also gives us the BP oil spill, climate change, bad advertising, junk food. It adds energy, but little critical direction, apart from the search for more.
It may even be possible that work is good for some people at some times, but it isn’t necessarily good for everybody, all the time. Yes, we should not become freeloaders on society, to that extent we should do enough work to pay our way. Cutting costs and retiring early doesn’t mean living on benefits for me, unless they are ones everybody in Britain enjoys like using the NHS. I’ve paid my taxes and my NI stamps for more than 30 years.
Early in my career I did get meaning from work, because I had not begun the process of individuation and establishing what my own values were. As I got older, I realised that I was a debt slave, but in a velvet lined rut. I needed to work to be able to pay the mortgage.
Once I jumped to this, I realised that I didn’t like having other people having such control over my life, and looked at how to pay down this debt. I worked that out without PF blogs and suchlike, because there was no Internet at the time I started. It’s not that hard to work out that you have to spend less than you earn, and it was pretty obvious that if you don’t want other people controlling your life then don’t owe them any money
Even after paying down the mortgage I didn’t jump to the slavery part, until my declining but erstwhile good employer began to bring in nutty demeaning performance management BS, at the same time as the project I was working on was cancelled. The manager I worked for tried to use this to squeeze me out after having said he’d back me to retrain earlier on, before the credit crunch. It was at this point that I realised working for someone else, particularly in an office, is bad for you. D’oh…. So along the same lines as ‘if thy mortgage offends thee, pay the damned thing down or don’t take it out in the first place’, I realised that my office job was beginning to offend me.
Enter the PF blogosphere. I had failed to think independently and PF blogs made me realise that with grit and determination you can save enough to retire early, particularly if you spin off alternative income sources. I can only do the preparatory work and learning with alternative income while I am still working as I’m bloody well not going to pay 42% tax on any alternative income streams, sod that for a game of tin soldiers.
I managed to get one final, and pretty high-profile project in an unusual area for which I happen to have the right skills, which is due to complete in 2012. I have screwed down my outgoings to less than what I would retire on, and save well over half my earnings to the end of retiring early.
So I don’t get the Calvinist angle one bit. Work is not good for you per se. If you’re the sort that needs work to give you meaning, as I was to stage 4 of the list above, then yes, it is good for you. One you have individuated, you can make your own decisions. Work may be good for you, it may not. I’m with Max Weber, when he says
the care for external goods should only lie on the shoulders of the ‘saint like a light cloak, which can be thrown aside at any moment.’ But fate decreed that the cloak should become an iron cage.
Work isn’t good for me. What’s wrong with enough? Meaning in life can also come from who you are and who you relate to, not just what you do and what you own. To paraphrase the words of a song
I don’t need no stinkin’ iron cage…
Calvinist work ethic be damned. Freedom for self-determination is my birthright, and I’m going to claim it in the second half of life and continue the Jungian path to individuation. Know thyself…
A ropey copy of The Protestant Ethic and the Spirit of Capitalism can be read free on archive.org. Go for the PDF, the text version is rough as guts
Page 2 of the Foreword lends credence to my viewpoint that for modern Westerners this work ethic is an atavistic echo of a religious nature. Like any element of the psyche that is part of an unconscious archetype, challenging the concept that work is an inherent good is met with fierce resistance and rejection. We had it right as part of the 1970s ideal of greater leisure, but urged onwards by those who could not brook the repudiation of such an archetype, we are unable to say enough is enough. We are still paralysed by monetary systems that require a long-term increase in GDP, despite the consequent environmental despoliation that is becoming increasingly clear.
The central idea to which Weber appeals in confirmation of his theory is expressed in the characteristic phrase “a calling.” For Luther, as for most mediaeval theologians, it had normally meant the state of life in which the individual had been set by Heaven, and against which it was impious to rebel. To the Calvinist, Weber argues, the calling is not a condition in which the individual is born, but a strenuous and exacting enterprise to be chosen by himself, and to be pursued with a sense of religious responsibility. Baptized in the bracing, if icy, waters of Calvinist theology, the life of business, once regarded as perilous to the soul
summe periculosa est emptionis et venditionis negotiatio
acquires a new sanctity. Labour is not merely an economic means : it is a spiritual end. Covetousness, if a danger to the soul, is a less formidable menace than sloth.
It’s Midsummer, June 21st, the Oak King is at his Zenith
It’s the longest day and the shortest night today. Something I’ve noticed from busting lots of consumerist junk from life is that I become more aware of the changing wheel of the year. Now is the time when the Oak King has vanquished the Holly King and reigns supreme, but in his ascendance lie the seeds of his own decline, just as for the Holly King the darkest time comes before the dawn.
A lovely day, blue sky and fluffy clouds and just the right temperature for the bike ride to work. My cycle journey wends through the outskirts of the town, runs by the side of farmland and onto heathland before returning to the town. All around birdlife is in full song, from the sparrows making out on the rooftops to the lovely sound of the blackbirds duelling it out across the streets. I took time to appreciate the birds that sang to grace my ride:
- blackbird
- house sparrow
- chiffchaff
- wren
- wood pigeon
- goldfinch
- magpie
- greenfinch
- chaffinch
- starling
I missed the yellowhammer that is on the farmland, he’s quiet today. It is a good midsummer, too good a day to be spent in the office but good nevertheless.
Oak Tree with Midsummer Poppies