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Comment by rorrr | Hacker News Reader

Sorry, but this story is garbage.

Rent/mortgage, retirement completely ignored.

Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick.

On average people after 65 spend $2,920 per year on medical out of pocket expenses (Source: http://www.newretirement.com/Planning101/Rising_Medical_Cost...)

Then his food comes from his garden, which means he has to work on that, and he conveniently didn't calculate the opportunity costs, tools, irrigation, chemicals, seeds, etc.

What about transportation costs, electric/gas, phone, internet, household supplies, upgrade of your old computer, clothing, shoes.

Then if you want to have a car (and it sucks to live pretty much everywhere in the US without a car), what about car insurance, maintenance, new car every X years?

Yeah, it's fucking easy to live on $7K per year when you own a house with a garden, don't pay property taxes, use 1995 computer, and have no safety net in case of a serious sickness.

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Then his food comes from his garden

Not all of it. You obviously missed the link in that article to his FAQ answering every objection you raised: http://earlyretirementextreme.com/frequently-asked-questions ...a max of $1200/yr on food

which means he has to work on that

Right. His point is that you don't need income, not that you don't need to work.

and he conveniently didn't calculate the opportunity costs

Zero if you like gardening.

tools

For gardening? Amortized over the life of the tool? Visit some estate sales and you can get set up for gardening like a pro for probably $50.

irrigation

You mean like a rainwater barrel + some old rubber hosing? You can make one of those for probably $10 in parts.

chemicals

Not necessary.

seeds

These come from the plants themselves. As in, free.

What about transportation costs

If you don't commute and ride an old bicycle (know how many of these people give away? and can be fixed for <$20?) these can be surprisingly close to zero.

Anyway this is in the FAQ he linked to. $600/yr

electric/gas, phone

This is the first thing in the FAQ he linked to in that article: $3240 per year

internet

$240/yr he said

household supplies

Well, you found one thing he missed.

upgrade of your old computer, clothing, shoes

Did you miss where he said he has a 7-yr-old computer and keeps clothes for a long time (= very low amortized cost; probably $50/yr total for these things)

Then if you want to have a car

He covered this. $600/yr

don't pay property taxes,

Read the FAQ. He estimates a you could afford a $100k home on that budget. I've lived in one in an expensive state (RI), it was spacious.

no safety net in case of a serious sickness.

That's what savings are for. $3000 in savings and bam, you've covered your deductible.

TLDR: read the article and the FAQ.

I suppose my biggest objection is I hate his lifestyle. I like going out, I enjoy activities which are more often than not paid, I don't have a girlfriend who sits at home and cooks for me all the time. Just because one person is happy with a certain way of living doesn't mean everyone will be. I could do it like he does and simply be miserable.

You could just do something else then. I'm not saying "everybody copy me". There are paid versions of my activities, but I eventually found the versions there were free or almost free. This holds for almost everything unless you insist on a particular paid version. For instance, when it comes to going out. Lots of people like that, but why are they really going out? Probably not to sit in a particular restaurant and pay money. Maybe more about not having to cook and meeting friends? If so, this could be accomplished by taking turns inviting each other for dinner at home. If the cooking isn't great, that's something that can be learned. Just an example.

Whatever... the first X paragraphs (I stopped reading your drivel) are dedicated entirely to saying "everybody copy me".

In my experience, a lot of people do in fact enjoy going out to eat for the food, not merely the experience. You get a professional preparing excellent food, usually to a standard higher than you would easily manage at home (assuming you're going to good restaurants), and in a wider variety of cuisines than you can affordably stock up for, too.

Expansion on the previous point: I bounce around national cuisines quite a bit, because I'm a cook as a hobby, and whilst, say, a gumbo won't cost you mutch if you're regularly cooking Louisiana staples, cooking it ab initio from a cupboard that's normally cooking Italian-influenced meals will cost you a small fortune. A quick look at my Louisiana recipe book tells me I'd need to aquire cayenee, paprika, garlic salt, onion salt, white pepper, spiced sausage, Tabasco (specifically Tabasco) and a bunch of other stuff. Then you need to get in all the meat and veg, some of which may be difficult to aquire from local shops or require specialist outlets, which adds in travelling time and cost, and which you'll probably be paying for higher quality for - at least if you're serious about cooking and food - than you might for a common-or-garden meal. That makes your one gumbo cost almost as much as it would at a restaurant.

On the topic of food...it's interesting that Tabasco is specifically mentioned. I'm originally from Louisiana, and my family and I prefer Crystal hot sauce; we think it has more flavor.

I suspect that it's less a case of Tabasco being ideal, and more a compromise between "ideal" and "aquirable world-wide".

Having spent literally months trying to find the correct chilli sauce for authentic Pho recently, I'm sympathetic to that argument.

There are examples which cannot be done free as far as I know. For example, I love to go paintballing. To make it cost less, you can buy your own paint and own your own equipment. But it still costs money because I don't own a giant plot of land or have 100 friends with their own gear. Then I have to buy the paint itself on top of that. Can you find me a non-paid version that matches that experience?

I suspect most people go out to have fun. What is fun? Meeting people and creating experiences/memories. Sure, you could sit with your friends at someone's home every night but that gets boring honestly and turns into the same people and patterns.

Have you considered airsoft or reballing? I used to play airsoft, never played paintball. The land/playing area would usually be provided by someone one of the players knew, private forests, empty barns, junk lots, etc. We all had our own guns. We usually managed to scrape together 5-10 people for our games. Not sure about 100. That sounds rather ambitious for a game(?)

The general trick to owning expensive equipment is to find something with very little depreciation (usually top quality items) and buy used. This makes the carrying cost rather low. For example, my hand planes for woodworking are $300+ each, but I could sell them again for 90%+ of what I paid for them, so my effective cost is only thirty bucks. A brief search on the net reveals one can get 2000 paintballs for $30. Now I don't know if they're any good or not, but that sounds pretty cheap to me. How many shots for a game? 100? That's less than two bucks.

So I think you could do it pretty cheaply if you "invest" the money and do the organizing footwork.

Just to clarify the details of the paintballing example...

Land is a serious problem except once it's no problem at all. If you don't know anyone who has land that they'll let you use, how do you find someone? Everyone I've met that plays paintball cheaply just plays illegally on land that they do not own, which may or may not seem unethical to other people. In my opinion, access to legal land actually is a significant hurdle for many people.

Now, in practice, paint is the main cost. Perfectly good paint costs less than $0.05/ball (maybe $0.03 is a bit low-end), which is usually marked up 100% or more if you're playing on a paid field (this is their main revenue). The problem is, many players are accustomed to a play-style where they burn thousands of rounds ($50+) a day. If everyone agrees to use pump-action guns (cheaper!), you can have nearly the same experience at 1/20 the paint cost. If everyone around you is using semi-auto and burning paint, it's a lot harder to go pump (some people like the asymmetric challenge, but most do not).

Especially living in a city. You also need to travel there (it's almost certainly not accessible by public transport). Paint is the main cost, I do own my on equipment, and most places require field paint. Also, I love walk on paintball with 50-100 people in a giant game. You're going semi-auto and burning a lot of paint, that's part of the game play.

I agree. I like going out to eat at good restaurants, attending a concert, maybe watch a game at a stadium. These cost money. Ultimately, to a certain extent money allows you to do things that give you enjoyment. If you can afford it, then go for it. After all, we have only one life to live.

I believe he does account for rent/mortgage, by doing an RV. And his idea is that he has handled retirement--he's living in retirement now.

The catch is that he had six figures saved up beforehand (he lives off the investment income), which doubles as a rainy day fund in case of serious illness.

Then you have to calculate the amortization costs for the next RV (when this one dies), RV insurance, gas (which RVs needs a lot of), maintenance, sewage pumping costs, water costs.

I wouldn't call living in an RV a retirement most people envision.

Not arguing that it's a choice I'd make, just pointing out that he does include rent.

It'd be interesting to see his breakdown of the other expenses you mention, though.

It's a lot easier to live on $7000 with significant savings than it is to live on two or three times as much.

It disappoints me, but I have to agree with you (at least in part, I wouldn't call his story garbage).

I say it's disappointing because his blog really inspired me to make some changes and I agree with the overall thrust of what he's saying.

But the problem I have is figuring out how he accumulated his wealth. Of course, being a former physicist you'd think spelling that out in a simple spreadsheet would be a trivial problem for him. I haven't seen that though.

From what I have put together I think he got very lucky in the stock market, which quite honestly takes a bit of the wind out of his sails. Based on what he was earning, saving and investing, it seems that only outsized rates of return could explain his nest egg.

Nonetheless, his overarching theme is spot on.

It's not that hard to accumulate $100K if you're in IT. Just working for $100-150K a year and investing $20-30K annually should do it very quickly.

Now accumulating $1M in a span of 5-10 years is much more challenging. I'm yet to solve that problem.

As does working for $40k a year and investing 30k annually which is what I did. There's no stock market magic required.

I think that's just impossible. On 40K you will pay

$580 medicare

$1,680 FICA

$3,410 federal

$1,824 state (NY), and maybe some local, depending on where you live.

If you can invest $30K after that, you're some motherfucking frugal genius.

Under the table ftw?

@rorr - Uhm, yes, your point? I did say I was living on 5-7k/year.

After those taxes and $30K invested you'd only have $2506.

Okay, that's nitpicking. Make that 26k invested then. Also, you can reduce the taxes by diverting into an IRA. Also, after the first year, you can begin to add investment income on top of your regular income. This investment income will increase by about $1000 each year.

With those numbers $4K isn't nitpicking it's 10% of your net.

But 2-3% of my assets. I wouldn't get too hung up on the details. I didn't earn 40k every year. Some years were less. And some were more (see FAQ). I didn't live in New York.

Everybody can run their own spreasheets for their personal income and tax situation presuming an expense level of 6k/year. Figure an investment return of 3%+inflation (so 6% or so total). See what you get.

For some reason I initially assumed $300,000 plus was your retirement target. I am now assuming $175,000 in savings is what you define as "financially independent" That makes sense given your $7,000 per year expenses. ($7,000 divided by 0.04).

1) Starting from zero (because where else would we start for this analysis?)

2) We save $26,000 per year (2,166.7 per month).

3) Assume 6% return.

4) It takes about 5 to 6 years to get to $175,000.

Makes sense, a retirement fund that covers 7,000 per year in living expenses (i.e. about $175,000), takes only about 5 years of saving $26,000 per year (and conservative investing).

Quick and easy math here: http://www.math.com/students/calculators/source/compound.htm

Of all the blogs, this one does a great job of explaining how they built up their wealth!

Where's the magic? Save 80% of your net for 5 years. At a 3% return you will match what you spend now. That's EASIER than a spreadheet.

The math does not work out for that.

Let's say you make $100,000 per year. Saving 80% would mean saving $80,000 per year, and living on $20,000 per year. After 5 years you would have saved $400,000. 3% of $400,000 is $12,000, which is only about half of what you need to equal what you'd lived on for the past 5 years. You'd need a 5% return in order to make $20,000 per year from $400,000.

And this doesn't even take taxes in to account. Good luck saving 80% of your net when taxes alone eat away more than 20% of your net. You're also going to wind up paying taxes on the 5% return, effectively requiring maybe a 6% return (or probably significantly more, considering how much you lost in income taxes in the first place).

Try something slightly higher, like 83%. Maybe 5.4 years. You did get pretty close there. You're in the ball park.

Tax laws differ by income. If you make less, taxes go down. The capital gains tax goes away. Dividends become qualified.

The amount people pay in taxes do vary, which is why this "approximately 80%" savings for "approximately 5 years" system is probably only going to work for people who don't pay much if anything in taxes (ie. people with a pretty low income).

Depending on your income, your tax rate, any unforeseen expenses, and your desired standard of living, you might need to work considerably longer.

He is a former physicist? Good god, the waste... He attended a public school for free. I wonder if he has factored in the price his government paid for only 10 years of physiking out of him...

Companies allegedly don't recoup the cost of hiring you for at least a year. Public schools are offered because it is seen as a worthwhile investment in the future, and graduates help pay for the next generation's schooling. In other words, there was a lot of good-faith investment in him. He essentially took the money and ran.

I mean, I'm not saying he is scum or that he is contractually obligated to his country, but this is much less impressive when you realize part of what he did was offload much of the burden. It seems unlikely he'd have been able to amass the seed funding for the investments he lives on by age 33 without the tens of thousands invested in him by others.

Fun fact: One third of scientists (on a global basis) do not live in the country they were born in. (See http://www.fasebj.org/content/18/9/936.full) This comes from a lack of opportunities. For example, there are no groups working on what I was trained for in myCountry other than the one I was in. I would essentially have to replace my supervisor by competing with the other students he graduated with only one winner. This is what happens when each professor trains 10 people to replace him and proceed to determine the winner by whoever can work the hardest. This is not good faith investment. That's a callous winner-takes-all system with a built in oversupply to lower prices---like those competitions where you get webdesigners to work for free to make a logo. I don't feel any moral obligation to participate in that Ponzi scheme. Ever noticed how people hawking university degrees aren't exactly upfront about placement ratios and things like that and how students usually have to learn about what's really going after they're already committed?

Since the salary for an academic scientist is rather low, I could have made the money MUCH faster as a long haul trucker. At $17.5/hr a framing carpenter apprentice is paid substantially better than a grad student. At $37/hour a journeyman level carpenter (after 4 years as an apprentice) would make nearly twice as much as a postdoc. A watchmaker (2 year education) makes 40k. Yes, skilled tradesmen make that much. I never knew.

Had I known back then what I know now, I would never ever have gotten the degrees I did. It was and is one of the most inefficient means of making money I can imagine. Other than being a sign spinner or a dancing pizza (which still pays more than being a research assistant with a MSc, no kidding). I would have way more resentment towards the system if it wasn't for the fact that I enjoyed my work at the time. This enjoyment probably saved me from wasting my money on stuff to compensate for my lack of happiness working.

> He is a former physicist? Good god, the waste...

Not sure what you're getting at. I got my BS in Physics. Then even went to grad school for a while. There is no such thing as "getting a job in physics". There are no "physics jobs" that I could find. It's basically either go into high school teaching, or else get your PhD and try for an associate professor job while learning how to apply for grants.

My education in Physics was basically a bust. Entertainment. Fun to learn that stuff. Then I owed a lot of money. That's it. Had to actually learn something else in order to pay off the loans and make a living.

I wouldn't call it a waste. Now we have someone with a scientific brain thinking and writing about more efficient ways of living, with less pollution and better use of resources. I bet many physicists are doing things that are much less important for our future.

> He is a former physicist? Good god, the waste... He attended a public school for free. I wonder if he has factored in the price his government paid for only 10 years of physiking out of him...

So let me get this straight. The government builds "free" schools. The government then forces people - under threat of violence - to attend these schools. Therefore people owe the government a lifetime of work.

I'm appalled that anyone could hold such a view.

I am impressed at just how much you have managed to warp what I said. Please point to the part where governments threaten you with violence if you don't attend college.

Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick.

A bigger issue with the cheap health plans is they tend to have a very high deductible, usually in the $2000 - $3000 range (his is $3500! http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comme...). If you end up in the E.R. once for anything, like a fever, you have to pay that entire deductible. For some, a single blood test will trigger it too.

Granted you typically only have to pay it once per year max (meaning you won't pay it for subsequent E.R. visits in the current coverage period), but it's a heavy penalty none-the-less.

Yes, but you won't go bankrupt like so many people claim you will without health insurance. Why don't more people get this $80 plan?

Because you will go bankrupt if something serious happens while on this plan. Go see the details of his coverage, I bet it only covers basic things, and 50% of hospitalization drugs, and some crazy deductible. So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year.

"So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year."

I already looked. $3000 deductible, no lifetime limits, and it covers major surgery, doctor visits are $40. If you want prescription coverage, there are plans less than $200 (in the $190 range) that cover 80% of prescriptions.

Cable costs this much. I'm not saying this guy should pay for this, but many people that claim they will go bankrupt can easily get a plan like this and not.

Well, the "no lifetime limits" is thanks to the legislative healthcare reforms that were driven by a need to reduce the number of medical bankruptcies, so obviously that's a good step towards making healthcare more affordable to people who previously would have been driven into bankruptcy.

But a $3000 yearly deductible is still likely to be utterly unaffordable to a significant portion of the uninsured, and it would be surprising if they weren't subject to copays as well.

Read his post about HSA and how it plays into his retirement. Most high deductible plans have full coverage ( 100% ) when the deductible is reached.

Worst case scenario it costs him $4000 ($3000 of which is pre tax) a year. Thats ~300/month. Best case he doesn't visit the doctor once and it cost him $1000 and he puts $3000 into his rainy day / retirement account.

You need to have $3000 available day one of each year to do this, but it makes a lot more economic sense.

I'm not talking about him, I'm talking about why these $85/month plans aren't the blanket answer to the question of solving medical bankruptcies among the uninsured.

Because most people get denied. $85 is only for healthy and relatively young, no pre-existing conditions.

Not surprised. This is insurance. You don't get car insurance after you've gotten in a wreck, and you should expect to pay more for it if you're more likely to get in a wreck (e.g. lots of speeding tickets, etc).

If you have a car wreck, your insurance usually punishes you only if it is your fault (which makes sense).

Your sickness, most of the time, isn't your fault.

That's not quite accurate. Depending on how one measures somewhere between 40% and 70% of health care costs are used to treat lifestyle diseases (too much stress, too much food, not enough exercise) like high blood pressure, heart disease, diabetes, tobacco, alcohol, avoidable accidents, etc. Those problems are not genetic. They're behavioral.

Of course one can suffer these things without having the risk factors. I presume the experts who calculated those numbers corrected for that.

So in about half the cases (half the cost to be precise), sickness really is your fault.

One of the reasons high deductible plans have such low premiums despite not screwing people over with small print is that they attract a more healthy segment of the population, because a high deductible creates some incentive to avoid those [preventable] diseases.

As it is, people are only hit on their regular expensive plans if they smoke. Imagine if they were also hit with higher premiums if they were overweight (BMI>25, 2/3s of Americans are overweight), drank too much, smoked too much, didn't engage in regular physical activity, etc. Then the premiums for those who have a lifestyle which wasn't likely to cause chronic diseases would only pay half of what they're currently paying. Those who engage in risky lifestyles would see their premiums increase by 50%.

And I have enough savings to pull this off for decades should it come to that.

Granted if one gets so sick so as to max out the deductible every year consistently, one's life expectancy is probably not that long

If one stays healthy, unused money in the HSA becomes the equivalent of an IRA and can be used for nonhealth-related expenses after a certain age (I forget whether it's 59.5 or slightly higher).

I actually opted out of my employee plan when I was working in order to get in on this for the tax deduction. (My employer wasn't offering HSA eligible plans.)

What you describe sounds reasonable to me. Is there coinsurance on this plan? High deductibles don't bother me. But coinsurance, where you have to pay 20% or 30% of costs, scares me. If you get seriously ill or are hit by a bus or something, the cost to you could be huge, way more than the typical deductible.

0% coinsurance on mine. Go to www.ehealthinsurance.com and see what pops up (that's what I've used ... they may not include your state very well, but for CA, it finds 20 HSA eligible plans for me, 12 of which don't have coinsurance.)

A lot of people do get that plan.

And a lot of people get denied that plan.

Some people get married and start families. There's no way this plan costs $80 for anyone other than an under-40 single healthy nonsmoker. Add kids and a pregnant wife and see where it goes.

Maybe move to a country with more decent healthcare?

That might change his whole budget, no?

I've never seen a $3000 blood test. A family member got an exceptionally rare blood test this summer though; I'll try and look through his paperwork, but I'd be shocked to hear even that test cost so much.

It is actually really difficult to find out how much stuff costs at a hospital. That is one of my main complaints about the healthcare system. It is wasteful because the hospital environment makes you forget that things cost money, and that some tests have a very low probability of doing anything other than costing you money (not saying that was the case with your family member, just in general).

Hospitals really mess with people's cost-benefit analysis, which isn't normally too good to begin with. I was with someone in the hospital a few months ago, and we got the strangest looks when we tried to find out how much a test would cost. Ultimately we decided not to do the test, which was a long shot to find anything for a problem that wasn't very serious, and save a bunch of money. I wish there were some way to inject some more rationality into healthcare to get around the mindset of always doing everything possible, no matter the costs and possible benefits of treatments or tests.

In this case the exceptionally rare blood test was actually the crux of solving a major, chronic condition. That wasn't obvious until after the fact though.

While I do understand your arguments about rationality, I'd also point out that the prices cited by hospitals have very little relationship to reality and costs. Quite a few tests become far more rational when looking at cost rather than price.

(Not intended as an argument for any particular structure of healthcare, just an observation.)

His plan must be subsidized by the state - I have a very similar plan (with an even higher deductible) for myself and my family and it costs $950 a month.

I haven't seen any indications anywhere that California provides funds to my insurance company. However, plans do cost different amounts in different states.

You are healthy and don't have any dependents. I don't think you could take care of the general population on $1100 per person per year, even if you cover the low cost stuff. My rough calculations show we spend about $7500 person/year right now. Obviously we have lots of cost issues and such, but even with efficiency savings, someone has to be making the difference up.

Hi rorrr, You are clearly on the treadmill. Yeah if you want to buy a new car every X years, and get a mortgage for an overpriced house you are not going to be able to live this lifestyle. You will probably have the lifestyle most enjoy. Maxed out credit cards, no savings, that big oh-shit moment in your mid-fifty's when you realize you've nothing saved for retirement...

Not to burst your bubble, but his health plan is pretty good. I have a very similar one. It's shocked me too that you can get a good plan if you are willing to take a very high deductible..

And ironically if I took my deductible each year I didn't need it and burned it (or gave it to charity) I'd almost break even on my low-deductible 'old plan'. When I left employment the Cobra for my plan (2 people) was 980/month. I now have a HSA-style plan that's $170/mo. It has a ~5K-per-person deductible (x2 for two people). 100% coverage after the deductible is met. I'd about break even each year if we both simultaneously came down with cancer. But since we're healthy I get to pocket the 10K or so I save each year.

Most cities you can get by without a car. I prefer it, actually, it is a lot less stress than driving and a lot healthier. But, yeah, if you are like the folks who got a 'great deal' on a house in Stockton in 2007 and are now commuting from there to Santa Clara, I guess bikes are out of the question. It's all about live-near-where-you-work (or vice versa).

The author states he's got a $100K in savings - That's a lot more safety net than your average American. Do you have that kind of safety net?

> "Yeah if you want to buy a new car every X years, and get a mortgage for an overpriced house you are not going to be able to live this lifestyle. You will probably have the lifestyle most enjoy. Maxed out credit cards, no savings, that big oh-shit moment in your mid-fifty's when you realize you've nothing saved for retirement..."

It's amazing how much introspection you have on the life of a total stranger without him even revealing the least bit about his lifestyle or finances!

Seriously, I'm all for being frugal and responsible, but you're just projecting at this point, and it really does come off as an ad hominem.

Welcome to my life.

I actually make quite a lot of money compared to the average US income, more than $100K/year. I do save an invest (max out IRA for me and my wife), and I do spend a lot, though I'm frugal compared to most of my friends. $100K in savings is not something amazing from my point of view.

I did however a realistic calculation of what will happen if I need, let's say, a week in an ICU and a month of hospitalization (you go skiing, you fall and hit a tree, you break your spine). I will be bankrupt. Even with my expensive insurance plan hospitalization can easily cost $10K/day, and most of the drugs you will be on, are only covered 80%. That's if you don't need some exotic drugs at $5K/shot.

I realize it's a gamble, but the stats do say that 50% of bankruptcies are due to medical expenses, and 68% of them had health insurance.

Sources:

http://www.pnhp.org/bankruptcy/state_by_state.pdf

http://www.pnhp.org/bankruptcy/Bankruptcy%20Fact%20Sheet%20-...

$270/month for my half of the rent+utilities $50/month for my half of the car $50/month for my half of the dog My wife spends a similar amount per year.

HE doesn't live on $7000, THEY live on >$14000. Those are two completely different scenarios. I'm also willing to bet his wife is taking up a lot more slack than he admits or realizes.

And I lived on less than $7000 per year when I was single. Yes, one scenario has two persons and the other has one but economically it's the same. This is covered elsewhere in this thread.

BTW, I'll take that bet. We have a joint account, so it's pretty clear where the money is going.

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