What is your FIRE number? Your expected FIRE expenses?

[Fish]

I see ERE as something quite different from "extremely ER" both in terms of skill-set and attitude when it comes to earning and spending. I see ERE as multidimensional and E-ER as fairly one-dimensional.

To me, FI is just backstop safety-net. It's not something I depend on. At all.

Thanks Jacob, this clears up a lot for me. This recent post on the 4% rule also helped. I’ll introduce myself later but I wanted to share the insight that resulted from contemplating these words.

There’s a very important distinction to be made between ERE and “extremely ER.” E-ER is one-dimensionally focused on attaining ER through the practical application of FI math, that is, frugality and investing. Those pursuing E-ER are likely motivated by the desire to quit working and as such try to find the shortest path. Retirement is largely nonproductive and solely supported by investment income, as attempts at self-directed value generation will likely fail with a limited skillset. Such shortcuts result in quality of life being constrained to fit within the planned SWR.

By contrast, ERE is a more deliberate and thoughtful endeavor where needs and wants are satisfied in the most appropriate and efficient way possible, using the strategies in the book. Those pursuing ERE seek to maximize quality of life, which in turn is limited only by an individual’s skill level. The value generation and income resulting from the constant acquisition and application of new skills makes financial independence a natural consequence of this lifestyle, even if it is not a goal. Because investment income is just one of several income streams, it is also more resilient.

For those like me who picked up E-ER first because it aligned with our goals and was easier to understand, there may be a huge blind spot where we can’t see the difference between E-ER and ERE. The ERE people stand out as being much more skilled, but we E-ER people still see ourselves as one of them. But those who understand ERE will certainly know the difference. I think PF-bloggers like Jacob and MMM personify ERE while many of their followers only ever get to the E-ER level of comprehension and practice.

E-ER is freedom through investments, ERE is freedom through skill. Period. What they have in common is low expenses. For someone with an ERE mindset, the function of investment income is to provide enough confidence to start relying entirely on the skills that got him to FI. Whereas if the E-ER practitioner were to be separated from his investments, he would have no choice but to get a job. That’s the difference.

[Did]

is that if you're already deriving $50000 in passive income per year, you might not be inclined to engage in any kind of productive effort that pays less than that. I've already recognized some reluctance towards getting into/developing productivity that pays less than $20/hour ..

Jeeze for me the whole point of it is to not to need to have regard to cash once you've hit genuine FI. You're off the treadmill. I understand keeping an eye open for cash when enjoying yourself (you'd be a fool not to), or even picking enjoyable hobbies with a potential eye for commercialisation if you need to, but not being productive unless it pays a certain amount sounds like the Cave to me....

[jacob]

@Fish - Nailed it!

@Did - We're not talking about the same areas of the map. Suppose there are two activities: 1) Watching TV all day. It's mildly interesting. Pays nothing. 2) Moving furniture in a warehouse for a month. Boring work. Pays $10/hour. Free exercise. Meeting new people which could lead to something else.

If $10/hour makes a difference, then option 2 will be picked (even if it is more boring than netflix) but eventually this could and likely will lead to a more interesting life. If $10/hour makes no difference, more TV it is.

Of course, there's also option 3) find another and more interesting activity than either. However, one thing that became clear to me the first time around was that 95% of human activity consists of work. It's what most people do all day. It is also a question of scale. Even at FI, some activities are better done with access to people and capital than at home. I had this argument when I went into finance. Some people thought that blogging about stocks from my kitchen table should be sufficiently satisfying. But it just doesn't compare to what's available in terms of things to do and do them with at a financial company. Compare flight simulators to real jets. No matter how FI anyone gets, nobody, but the king of SA, can afford their own Boeing 747.

My point is, thus, that too high of an FI can lead to some stagnation. Of course one can deliberately choose not to, but I definitely feel the temptation to pick option 1 ... and by 1 I don't mean just TV, but generally things that are unproductive or don't lead anywhere.

[Dragline]

Don't forget option 4: "DO BOTH." I couldn't resist . . .

[cmonkey]

@Fish, That's a great explanation of the difference between ERE and E-ER. Well done.

I think almost all people might start in the E-ER stage, but never get to the ERE phase which is alright. I can totally see the difference and I think its something that takes time to get too and maybe you never fully realize it simply due to all the potential.

I'd like to think I am moving toward ERE slowly with my public transit lifestyle, selling seeds that funds my homesteading activity and also building DIY skills that could lead to potential work/hobby later on.

[rube]

E-ER is freedom through investments, ERE is freedom through skill.

So I have a serious question @Fish @Jacob:
My normal salaried job provide me with income and savings. This is the main source of income (of the last 6 years). With help of these savings I bought assets (e.g. a rental).

With my non-salaried skills I gave the place an upgrade and did everything from the first visit till securing a tenant myself. Because I used certain skills here I increased the yield on the investment.

I could also use those (and other skills) to get paid directly/differently. I use to have my own business, while not really succesfull financially, I could live from it on a kind of Jacob level. I am quite sure I could do so again.
But at this moment I choose for the salaried job (combined with applying others skills here and there to increase yield and generate other small income streams).

Is this considered E-ER or a (possible) combination of E-RE and ERE or simply ERE?

[Did]

@jacob I fear I may have stagnated a bit with perhaps too low an income! Ha, but I needed a rest from people, and normal work. We can of course overthink these things. I plan on just doing what I like taking any cash that I can pluck without too much effort along the way. Plenty of adventure, topping things up when we need to.

One thing I've discussed with my wife is that whenever we do find cash flows increasing for whatever reason we must ensure it is spent in such a way that ongoing costs are lower or incomes higher when we stop the work. At least that's how I justified my brewery investment!

(As it turns out, a website I started on beer almost 20 years ago generated enough cash that week to pay for things - very unusual, but welcome).

[JL13]

I like the direction this conversation is going.

@rube, I'm not sure if I can answer your question, but it got me thinking. I guess E-ER is a focus on increasing efficiency in order to generate savings to invest to create passive income. I think ER-E's focus is to decrease intermediation in order to increase efficiency and skills in order to create optionality. E-ER seeks to reduce waste and increase savings, while ER-E seeks to eliminate (external) interdependence. E-ER would find the cheapest producer, seller, and transporter for product X (seeking efficiency on the financial dimension), while ER-E would try to cut out the seller and shipper entirely and possibly produce it themselves for fun(seeking personal independence).

You essentially insourced the property management and maintenance, so on that front I would guess that's more ER-E, since you cut out the middlemen. But then again, all you really did was accept a job (property management). Maybe ER-E requires more overlap/congruent goals? What else is gained by management of your own rental properties? Does the experience allow you to access more real estate opportunities (increasing optionality)?

[Ego]

My point is, thus, that too high of an FI can lead to some stagnation. Of course one can deliberately choose not to, but I definitely feel the temptation to pick option 1 ... and by 1 I don't mean just TV, but generally things that are unproductive or don't lead anywhere.

+1 Each of us has our own goldilocks amount. FU money but not so much that you are tempted to say FU to everyone and anything challenging.

[cmonkey]

Jeeze for me the whole point of it is to not to need to have regard to cash once you've hit genuine FI. You're off the treadmill. I understand keeping an eye open for cash when enjoying yourself (you'd be a fool not to), or even picking enjoyable hobbies with a potential eye for commercialisation if you need to, but not being productive unless it pays a certain amount sounds like the Cave to me....

+1. I don't really understand the obsession with being productive/personal growth that many people have these days. Purposely doing things that would be considered unproductive by most has almost turned into a form of social rebellion for me. Not going as far as watching TV all day (I think this harms more than anything), but hanging in a hammock all day would be a good example. I almost feel like I couldn't do it at this point due to this push to feel like I'm "doing something" to fulfill my personal growth.

I also think most people on this forum who are smart enough to achieve FI through extreme savings/investment are also smart enough to spot an opportunity when it comes along, or otherwise reject it simply because it's not what you want to do even if it would be an area of personal growth. There's no shame in coasting on what you have already achieved.

[IlliniDave]

I also think most people on this forum who are smart enough to achieve FI through extreme savings/investment are also smart enough to spot an opportunity when it comes along, or otherwise reject it simply because it's not what you want to do even if it would be an area of personal growth. There's no shame in coasting on what you have already achieved.

+1. A main goal of mine is to make getting out and trying to scrape up money optional (aside from the fact that maintaining an investment portfolio is a money-making activity). I don't know if I'll ever do much as a retiree that would meet the conventional definitions of personal growth or productivity either. Of course, I'm neither ERE- nor EER-bound. I've worked my way to a point where piling up money is easy and I have no problem taking the most efficient path, which is to FI predicated on a superabundance of assets.

[jacob]

@rube - The simplest way to differentiate ERE and E-RE is that the difference exists on a scale from 0% to 100%. Maybe I could build some questionaire that would "score" people from 1 to 100 but of course it's not that simple.

The greater difference lies in diversification. How many different ways do you have to create/get/acquire/buy/procure what you need to live? It's better to have a bunch of skills that just to have one skill ... or even more risky to become FI by winning the lottery.

Of course, as we say in finance, diversification is just "poor man's risk control", so the big step is to transition to the web-of-goal, where skills are deliberately connected together so as to mutually support each other's strengths and compensate for each other's weaknesses in terms of skills and other life aspects. This is what I call the web-of-goals (see ERE book chapter 5 or parts of the wiki ... Podcast #30 on ValiantGrowth also talked about it ).

All of these are more of a difference in kind or class than a difference in degree---although you can have differences of degree inside each of them.

So there are three different kind of ways to approach life.

E-ER where all income was made by mastering one high income job and learning how to get a cheap cell phone plan; where to get the best credit card; and which car lasts the longest, amongst other life-hack choices is level 1. (This group is pretty much the only one where I worry about blind application of the 4% rule.) I think anyone at this level can be recognized by being hyper-focused on "the number!"

FIRE, where one has made income in a bunch of different ways and made enough money to ultimately reach FI. Add a bunch of activities that further lower the cost-of-living as well. Should FI fail, there would be a bunch of ways to go and earn more money. There would also be a bunch of ways to go and not-spend money. This is level 2.

ERE is the full web of goals approach. Also see, viewtopic.php?p=74349#p74349 This is level 3.

I think much like personality tests, etc. everybody has a bit from all levels but they vary in strength.

@cmonkey - Back in 2011, I remember having long and boring debates with the ER people from early-retirement.org about how me doing any kind of paid work would break all the rules of early retirement: That whole "you're not supposed to get paid again ever" beach-towel argument. I think many who are capable of achieving E-FIRE have a hard time letting go of the exuberance that led them there. I also understand how flanneurism(SP?) is a counter-reaction to this. In any case, continued value-generation does provide for some floor than money can't provide. Not just security, but also connections, meaning, interesting activities, etc.

[Scott 2]

The more money I have, the less an absolute FI number makes sense.

Going back to day one now, I'd probably never worry about net worth or safe withdrawal rates. Skill based control of expenses, coupled with doing things that make me feel valued as a person, would be my focus. It'd mean a significantly different path than I took over the last fifteen years.

Once my current job plays out, that's my plan. It's likely I'll never delve into my savings. Doing "nothing" gets really boring. It feels good to help people with stuff. Sometimes they give you money for that...

[Eureka]

Going back to day one now, I'd probably never worry about net worth or safe withdrawal rates. Skill based control of expenses, coupled with doing things that make me feel valued as a person, would be my focus.

Thanks for sharing. This will be my inspiration.

[cmonkey]

Yes flaneurism.... I suspect my being drawn to that is the outcome of working in a fast moving rigid work place where it's taken for granted that you are always "on". My natural reaction is to counter it by wanting to be lazy.

I'm sure once I'm done working I will find the right balance. I don't know that I will ever build any form of social capital though, even if it's the best you can build.

[Did]

Once my current job plays out, that's my plan. It's likely I'll never delve into my savings. Doing "nothing" gets really boring. It feels good to help people with stuff. Sometimes they give you money for that...

Depends on how skilled you are at enjoying yourself !

I'm still having wild adventures with my wife. I have no desire to be productive really. I want freedom, adventure and to experience all I can having dodged the traditional work nightmare before I got too old to do so.

Granted its only been three years. But its not old yet.

Yeah if life was dull with the partner, due to kids probably, I'd try and find some form of pleasure by helping out at the retirement village or whatnot, but thankfully I'm not in that position.

[BRUTE]

so EER is a highly leveraged but narrow path to success, whereas ERE is highly diversified but rarely as leveraged in any particular area?

[ThisDinosaur]

There is a stereotype of E-ER that is being criticized. The 27-ish year old minimalist with a religious faith in the 4% rule and the US TSM who plans to fill the gaps with 'side-hustles' and writing a travel blog. While this person may seem very naïve to readers of ERE, I think the two decades+ they have to run out of money is enough time to learn something else about investing and/or self sufficiency. Just because they are in the internet retirement police now, doesn't mean they wont progress along the Wheaton levels in time.

I second what Scott 2 said about changing focus over time. You can start, like I did, being motivated by having enough money to never have to worry about money. Then, you can learn that not needing money is a strong parallel way to accomplish the same thing. Life hacks can be like a starter drug for true independence. It's easy to fall into the Identity Trap of thinking that other peoples' FI motives are the same as your own, or that they will remain unchanged over a lifetime.

Even before I saw extensive criticism of the 4% rule, I was planning to save for a 2-3%SWR because I believe taxes tend to increase over time more often than decrease. Also, I am more of an ant than a grasshopper and would rather have saved too much than too little.

[cmonkey]

There is a stereotype of E-ER that is being criticized. The 27-ish year old minimalist with a religious faith in the 4% rule and the US TSM who plans to fill the gaps with 'side-hustles' and writing a travel blog. While this person may seem very naïve to readers of ERE, I think the two decades+ they have to run out of money is enough time to learn something else about investing and/or self sufficiency. Just because they are in the internet retirement police now, doesn't mean they wont progress along the Wheaton levels in time.

Well if this is who we are talking about, I certainly don't fit that description. I really don't know where I fall on the EER-ERE scale. Maybe some examples of ERE web-of-goals lifestyle hacks would be appropriate for learning? There is the standard 'live by work/walk everywhere' example, but this is the best I know of. Substitute public transit for walking if you do that.

Some web-of-goals hacks from my life include my seed shop (which funds my homesteading), learning how to use our public transit system and developing different but parallel passive income streams that could be substituted for each other. That's about all I can think of. Maybe I'm making this out to be more complex than I thought and these are good examples.

[IlliniDave]

There's an investing web site I occasionally participate on where I often find myself saying, "There is no one-size-fits-all best way of doing things." The main thing is to have Available Resources > Ongoing Needs for Contentedness. Whether you pile up enough money to forge a sledgehammer to achieve that or forgo money completely and homestead, or anything along the continuum between, it will potentially get the job done. Everyone needs to find what resonates with them and pursue it with whatever prudence they can muster.

Speaking simply for myself, I'm not real comfortable in the realm of 'side hustles' or starting micro-businesses or what not. Hats off to those who thrive in that environment, but my path to quality of life follows a different route. And to me what's important is living life in a way that makes me feel as fully alive as possible. I don't care what Wheaton level that is or how smart or dumb I am in the eyes of the erudite. I do care how I feel at the end of a day listening to the birds and insects sing while the sun sets. I want to feel *there*. (Low ambitions make the condition AR>ONC easier to meet ).

It's not hard to imagine that a stress that would make Person A miserable and possibly send them to an early grave would give Person B the 'edge' he needs to thrive.