These days, I'm making investments of a different sort, and all have the same goal in mind: I'm trying to set things up now, so that our cost of living is reduced in the future, or at the very least, so that we don't starve or have to choose between medication and food as old folks. It's kind of a different approach to retirement, I realize, but part of the equation I'm using is the fact that this world is changing very rapidly and by all accounts, for the worse, so I want to be ready for that as well, as much as possible. In a sense, I'm planning for living my life in the future the way that Jacob Lund Fisker is living his life now; rather on the lean side. Very simply put, Mr. Fisker has been able to retire in his early thirties by living on one quarter of his income, saving and investing the other three quarters, and then living on the income generated from those assets. And we're talking about saving net income here: your entire pay, less any taxes you have to pay. He does not advocate putting money into a 401(k) plan because it rather defeats the purpose, which is to have enough money to retire now, not later, which is what conventional retirement plans are for. I kind of wish that he'd written Early Retirement Extreme thirty years ago, but that would have been a hell of a feat for him, considering that he would have been five or six at the time. It's just that it would have made such a huge difference to me. So much so, that I'm considering a copy as a gift to my eighteen-year old nephew.
One thing this book is not is an investment how-to. It's more or less a strategy for financial independence how-to. I really liked this book, and hope to try to put his theories into practice. But because his methods are pretty extreme, it would be a very hard thing for me to do at fifty-one years of age because I'm so ingrained in my ways. That doesn't mean I can't change; it just means that it's going to be much, much harder. Plus, it's a little late for me to retire early. I'll be lucky if I get to retire, period. Still, I think this book has a lot of value, and it will be of more service to a reader the younger that reader is. At this late stage of my life, the most that I'll probably be able to gain from it is a very good road map for simplifying my life, and maybe reducing some expenses. And in all honesty, some of the things he recommends I've been doing for awhile now anyway.
However, for younger people, it should be required reading. It would be impossible for me to try to encapsulate his ideas here; after all, it took him an entire book (albeit a small one) to present them. And at one point in the book he wades into higher math and presents formulas that quite frankly, left me in the weeds, which is part of the reason I want Steve to read this book as well. But Fisker also presents some tenets that even a knucklehead like me can understand: freedom is achieved by creating a large gap between production (or revenue) and consumption (expenses) and this can be done by one of two ways: earning more or spending less; it is far easier to reduce your expenses by three quarters than to increase your income by a factor of four. I also like the idea of including the cost of storage in the equation for deriving a total cost for your stuff, i.e., the extra cost of a second bedroom to your mortgage for a guest room that hardly ever sees guests. In this regard, it reminds me of my husband's uncle whose apartment doesn't have a second bedroom; if he has guests, he puts them up in a hotel for a night or so, which, when you consider it, is a LOT less money expended than the percentage of mortgage payment that a guest room represents. Something I never considered before. I should probably mention that his uncle is a millionaire, so perhaps this idea has more merit in practice than it does in theory, which is something else to consider.
His methods are extreme, however, and that's why I think that they are best learned at a young age; it's far easier then to adopt a non-consumerist lifestyle, and you have much more time to accumulate savings that will eventually be turned into assets that generate income on which you can live, easily, because you have a non-consumerist lifestyle. And by extreme, I mean extreme. His non-consumerist philosophies would have one be able to fit their entire possessions into a suitcase, or two, at the most. He doesn't just tell you to do that, though. He presents a strategy for thinking about it and achieving it, which is why this book would useful for anyone who really, truly wants to simplify their lives. I'm not saying that this book wouldn't be useful for just young people, because there is probably something here for everyone. I just think that it would be much easier for young people to adopt the ideas presented, and they would reap greater benefit by doing this early in life. I'm a middle-aged woman attached to her stuff. Still, I could sure make do with getting rid of a lot of that stuff. It occurs to me that when Steve and I first started dating, he was living that way. He had next to nothing in his house, save the minimum that he needed, and he was socking a lot of money away. Then he met me and we married, and I undid all that. He still doesn't have much stuff in this house; most of what's in it is there because I put it there. I did this.
The entire name of the book is Early Retirement Extreme: A philosophical and practical guide to financial independence. I think it is just that; a guide, and a good one. I wish I'd had it, and the presence of mind to pay attention to it, years ago. Buying my own home had always been my goal as a young adult; now I see that it should have been buying my own freedom from having to work for a living.
But do yourself a favor: borrow it from the library first.