Monday, February 12, 2018

Haters Gonna Say It's Fake

Haters Gonna Say It's Fake
Sometimes I wonder how the Financial Independence, Retire Early movement (what the cool kids call FIRE) has spread as far as it has. The details for reaching financial independence sound so ridiculous, that typing them out makes me feel like a scam artist.

People saving fifty, sixty, or seventy percent of their incomes? Retiring in their mid-thirties or late twenties? Living on twenty or thirty grand, total, a year, without having to eat plain rice for dinner each night?

That sounds like a hustle, friend.

The fact that the blueprint for FIRE was born on, and is shared through, the internet doesn't help things. We're skeptical of some of the things we read online because a lot of the things we read here aren't true. There are a lot of hustles on the internet. Maybe these early retirement bloggers are financially catfishing us. (Though things like Choose FI, Camp Mustache, and Jim Collins' Chautauquas are giving us the opportunity to see these supposedly retired folks in real life, press a finger against their foreheads, and validate their existence.)

The rub is that the people jetting off halfway around the world, or even just packing up the car for a weekend camping trip, are already convinced that financial independence and early retirement are for real. There's no need to preach to the choir, especially when they're already packed into the minister's bus on the way to the revival.

But what about the unconverted? Why should they believe?

A peek at the comments section from any early retiree profile shows that a lot of people aren't convinced by the sermon.

I wish I could say that I, too, showed a healthy degree of skepticism the first time I read Mr. Money Mustache's blog back in 2011. But I, with the fervor of the newly converted, read, and believed, everything the man wrote. I, too, would turn away from the false idol of materialism, become an investor instead of a mere consumer, and finally, truly be free.

Looking back, I'm a little surprised that I bought in so fully, or so quickly.

Maybe this financial independence stuff really is the truth. That might explain why it resonated with me.

But history has shown that I'm a bit of an easy convert. After hearing about communism for the first time in high school, I thought, "Man, this is definitely where society is headed...where can I pass out literature so I can help bring about the revolution?" A few months later, a cute girl in jean shorts convinced me to come to "this really cool retreat in the woods" where she and all her friends would be all weekend and, wouldn't you know it, that Sunday I came home born again. Oddly, I didn't particularly care what Marx thought about religion anymore.

Thankfully, not everyone jumps in with both feet. A lot of people show a healthy skepticism towards people who claim on blogs that they made millions in a few short years, and they didn't have to do anything remarkable either, and wouldn't you like to try, too? Part of me wants more of us to be more skeptical of ridiculous things we read on the internet.

But then there's the pesky fact that, after I worked on this financial independence thing for a few years, it turns out that it actually worked just like the blogger said it would. We got lucky and increased our income a lot, got frugal and reduced our expenses a lot, and invested the simplest way we could. With a little luck we could reach financial independence this year.

Of course, no one reading this really knows that for sure. For all they know, I'm lying about the whole thing. And the rational side of me thinks, "You know what? They probably should be skeptical."

I write in a medium that deserves some suspicion. It's just a blog, written by a guy who won't share his own name or many details about his life. Maybe people should not make life-altering financial decisions based on the advice of an anonymous bro on the internet.

I'm kind of at a loss as to where I'd go from there though, because I actually know the plan works, because I am working it. I know that something like financial independence is possible for a lot of Americans, especially if you have an above-average income. And I'd like other people to know that it's at least possible, even if it's not something they want to pursue.

But who am I fooling? This is the internet. You can show a bit of yourself here, the part you think is interesting, or cool, or just something that you want to share...but not everyone is going to pick up what you're putting down.

It's the internet, friend, and you're talking about getting rich and retiring a few decades early, without making any huge sacrifices.

Haters gonna say it's fake.



*Photo is from rasdourian at Flickr Creative Commons.

36 comments:

  1. I CAN see where there are skeptics out there. It does require a damn-near perfect formula to achieve it...at and early age. It's like making a good wine. I find myself caught in the middle, defending why the haters hate (it must be freaking nice to make nearly 200k a year) and the ones who are doing it (look, just because you may not be able to do it yourself doesn't mean that these people didn't work hard or really did do it). You know what the rub really is though for me? Most of these people are making tons (sometimes more than their full time job paid) from their blogs talking about retirement. lol

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    1. Hey Tonya,

      The wine analogy is sharp. You need just the right environment, conditions, and of course, to start early.

      And yes, the big honking income is too-often glossed over.

      A big blog income does certainly muddy the waters of financial independence somewhat or, perhaps, just gives more ammo for those who really do think it's fake. How could they be sure your plan would work without that ongoing income stream.

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  2. I don't think its fake, I just think its somewhat unachievable if you don't start early in life or without resources to get you going.
    MMM is practically an idol, and I admire his can do, willing to do anything spirit. But you have to bear in mind, he was a software engineer, as was his wife, and its a little easier to save 50% of your income when you're knocking down over 200k as a couple, than if you're bringing in 60-70k as a couple.
    As for other sites that advocate real estate as the path to financial freedom, I think for the average joe who can barely swing their own mortgage its hard to fathom taking on another, hope for a great tenant who won't trash the place, and then hope for little turnover when you have to cover the mortgage payment without a tenant there.
    When you look at the sites where people are really putting themselves out there (Root of Good, The Frugalwoods, Millenial Revolution) showing their lifestyle in early retirement/financial freedom, their cause is a little weakened when you realize some of them are knocking down 10-15k in advertising (Try Personal Capital! ITS FREE!) I don't begrudge them for it, and Root of Good is probably the most honest when he shows how much he brings in from the advertising- but let's be honest here- its easier to make a 40k yearly budget when 15k is coming in the door from your website teaching people how to live in financial freedom.
    As I read through this I realize I'm coming off as negative, but I like to think I'm the other side of things. I enjoy your blogroll as it brings up various viewpoints, but what's really interesting: the sites that stopped doing financial freedom: Man vs Debt, IHeartBudgets, Unplanned Finance, along with the other debris or personal finance sites. What happened to them? Did they not acheieve their goals? The last post of IHeartBudgets was a working single mother case study, which IHeartBudgets really couldn't help. Are there cases in which people are in so deep they can't get out? I would argue that there are.
    I think more sites should show their actual financials, and what they invest in. A little more backstory: Did they come from nothing, did they pay off student loans, did they work their butt off with rental properties, and did they have any horror stories with investing or rentals in addition to the good stuff?
    For most people, we should stress the basics. Save as much as you can. Spend less than you earn. Passive stock investing.
    Thanks for all you do on this site, I enjoy it immensely.

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    1. Thanks so much for that comment, Rick! I agree with so much of it.

      For what it's worth, I can try to address as much as I can from my own perspective:

      -Our investments are pretty simple. We use Bernstein's Simpleton's portfolio, sometimes called the No Brainer portfolio: https://portfoliocharts.com/portfolio/no-brainer-portfolio/

      -We do have one rental house, which doesn't really bring in a ton of income after accounting for vacancy, repairs, etc.

      -I did recently add AdSense to the site and we average about $14 a month in income. Woot!

      -In the past, we have inserted links for some cash, but I think that is all behind us now.

      -We've turned down affiliate income in favor of saying what we really think of sites like Personal Capital. In fact, our post on that company in particular put us in a tough spot: either leave up our thoughts on their advisory services (which we noticed no one was writing about) or make $100 for every high net worth referral. We chose the former because we thought it would be important for at least one honest appraisal of those services to be out there. But if you make that sort of commentary, the SEC apparently doesn't allow you to have an affiliate relationship. Sigh...we missed out on some money there.


      I'll have to check out those other blogs you mentioned, though I do like Unplanned Finance. It would be awesome to see what bloggers' lives look like after FIRE is no longer the goal.

      I'll do my best to share more personal information, while we still try to keep our anonymity.

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  3. Tonya and Rick pretty much covered my comments haha. And in your defense, aside from the religion thing, Marx and Jesus preached a lot of the same principles. Christianity just thinks we have to wait for divine intervention in the Millenia to achieve it. :p

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    1. Ha! I hadn't thought about it like that but yeah, maybe those guys had more in common than I thought.

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  4. It's good to be skeptical, but FIRE is a good thing. Anyone can try it for a few years and see that it improve their finance. They might not be able to retire in their 30s, but it will hasten timeline overall. Retiring in your 50s is still pretty darn good compare to everyone else.

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    1. I totally agree, Joe.

      I think the hurdle I trip on is whether we do a good enough job addressing the (healthy) skepticism from those who hear about FIRE and don't jump on board.

      In other words, are we marketing ourselves to the people who, currently, would most benefit?

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  5. It's not fake, but I have as yet to see an ER who doesn't have a side hustle. I don't want a side hustle. I just want to be done, and it seems more and more this is not possible.

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    1. That's an interesting point. So many FIRE bloggers (though not all) have some notable side income, often from their blogs themselves. I don't know if we qualify (does having a barely profitable rental in Indiana count?) but who knows what the future holds. In fact, the current plan involves me working part time but, ironically, not for the money: it's to keep my mind sharp.

      http://www.donebyforty.com/2017/04/boredom-cognitive-ability-and-mental.html

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  6. I think it's just a step further in the whole evolution of the PF world. Way back in my early days, it was about getting control of your money to cut out debt and live debt free. That idea is STILL not mainstream. Then we moved on to wealth building. And then to FIRE. It's a natural progression IMO. It's not doable for everyone, at least not in any cookie cutter way, but it's certainly not a BAD thing to try for even if you fail, right?

    I only worry about being sold a scam when they cannot possibly materially benefit the audience in any way, and only benefit the cult leader. I follow the money, in that sense. The pursuit of FIRE for us is much the same as the pursuit of living debt free. Maybe we won't do it exactly like everyone else, and maybe it won't be perfect but most anything we choose to do in search of that result isn't likely to harm us (speaking in general terms of course!) If it turns out that the personalities that led us here were wrong, would we really regret making the effort?

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    1. Hey Revanche!

      That's a cool way of framing the issue: that perhaps FIRE is something people get towards eventually, after first getting their finances under control, paying off debt, etc. That would explain some of the initial skepticism and why so many people think it's not attainable: the more immediate needs are the only thing that seems addressable at the moment.

      I certainly don't want to give the impression that I think FIRE is a scam: quite the opposite. The rub is that a lot of people think it might be a scam.

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    2. Yeah I think you're right that much skepticism is likely borne of it being too many steps ahead in their journey.

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    3. I'm going to think that over for a bit. Dave Ramsey's got an outsized impact (considering how average/sub optimal his advice on a lot of subjects is), perhaps because he has a good system that starts out small: baby steps that take you from debt to riches one small goal at a time.

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  7. Very interesting post. I'm chuckling at the idea that the whole retire early thing is an internet born phenomenon... perhaps it's a generational perspective. When I got into this world back in the early 1990s the phrase wasn't FIRE, it was Voluntary Simplicity - and there certainly wasn't an internet to spread the idea around. The emphasis was much less on investing and budgets, and much more on lifestyle - but the goal was the same. Back then, you really could put your money in T-bills and live off of the interest, so the common wisdom said "Stay the fuck out of the stock market!"

    Anyhow, an old friend from my music days died recently, and there was a big memorial service. For musicians, that means a big concert and party. I ran into people I hadn't seen in decades... literally. I kept walking past people and thinking... that person looks vaguely familiar - then I'd mentally peel back the gray hair and wrinkles and find someone I'd shared an office with for years!

    At any rate, people kept asking me what I was doing for a living, and I found it hard to come up with an appropriate answer. My stock answer is to say I'm doing graphic design and photography, because that's what my websites are about... but honestly, they don't bring in much income anymore, and for all intense and purposes I'm retired. But how do you explain that? Especially when you're looking at someone 20 years older than you who is still toiling away trying to make ends meet. I tried in a few cases... saying that my years in the music world taught me the art of living on dirt, but people sorta looked at me like I was crazy.

    I guess the thing that I was struck with is how much people tend to define themselves by how they earn a living. I suppose that's not really surprising because that tends to occupy most waking hours for most people, but it made me feel a little bit sad. I think the music world tends to attract people who need a sense of personal validation anyhow - you know... people who need to be on stage because they need the message from the outside world that they're OK, so on some level I suppose it's not surprising.

    I'm rambling. I guess we're just a collection of odd ducks here, but I do often feel like I've discovered a crazy secret... that you can have complete freedom if you simply "don't play" when it comes to consumerism.

    Final thought. I went to the estate sale... mostly I went for a friend who lives several states away. She couldn't make it out for the memorial and wanted me to pick up something she could have as a memento of our friend who passed. Walking through her house really drove something home for me. My friend who died was a musician - a fairly successful one in a small, offbeat genre - but she lived on the hairy financial edge and spent much of her life working as a waitress on the side to make ends meet. But her house was PACKED with stuff. Ridiculous amounts of jewelry, and clothing, and shoes, and just stuff. As I was walking around watching droves of strangers paw through all of her treasured belongings, I just kept wondering how much money she'd thrown away on things she only wore once... or something she bought because it caught her eye, but then she took it home, shoved it in the back of a cabinet and never used it. I just kept thinking how much easier her life might have been if she'd owned 3 pairs of cowboy boots instead of 30... and so on.

    Oh well. I suppose if everyone lived like we do the entire economy would collapse, so perhaps it's a good thing that people don't believe it's possible. It does make me sad though...

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    1. That story about your friend's passing and the estate sale put things into perspective, ECL.

      And you're right! YMOYL was way pre-internet. I should have noted that but my angle kind of depended on the healthy skepticism we show towards web-based stories and I just kind of ran with it. ;)

      Now that we're so close to financial independence and, perhaps, early retirement, I think a lot about what my answer to 'what do you do' will be. I don't have anything close to a satisfactory answer yet but I suspect that more of my self worth is tied up in my career than I want to admit.

      Want to hear something really shitty? If Mrs. Done by Forty decides to work, just because she wants to, then the easy answer is that I'm a stay-at-home dad and we live off of her income. It's an easy cover for our 'true' financial situation, and one that no one will really question.

      But, at least right now, it's a hard plan for me to come to terms with.

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    2. I know exactly what you mean. Back when I was still working at the music school there was a rumor going around that I was a trust fund baby. I suppose people noticed that I didn't tend to worry about money like everyone else did, and that was the only explanation they could fathom. I always found it greatly amusing - having grown up in a family that was barely clinging to the bottom rungs of the middle class - but it did leave me with a bit of a pang... like people think I'm some sort of waste-oid just living off of my parents' wealth or something.

      Anyhow, I'm sure my evasive answers to the "what do you do" question solidified the idea that I was somehow born with a silver spoon, and that did give me a bit of an uneasy feeling. I almost found myself feeling guilty or something.

      But in the end it's nobody's business anyhow. And while there's certainly a part of me that wants "credit" for creating my crazy little version of success, ultimately, getting to live life on my own terms is its own reward.

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    3. I know you're right, ECL: that the best and only real answer I can have to this problem is to get comfortable with my financial reality, not to look to others for validation. Easier said than done, especially for an extrovert like me.

      I can imagine how lame it must have been to have people thinking you were a trust fund baby when the truth was basically the opposite. I don't know how I would have handled that. I'd probably have corrected them, which wouldn't have really helped.

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  8. Clap. Clap. Clap. NICE! Man, you can write. I'm right there with you with respect to the "preaching to the choir" aspect of all these retreats. I honestly think it's an excuse to travel and party. If I wanted to learn about FI, I'd fucking read MMMs blog (and yours and others...) Nothing wrong with being social, but shit. There's so many of these retreats it's making my head spin.
    Someday we'll have to meet at one of these retreats and share stories of our teen-year conversions. - Signed, happily born again twice. :-)

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    1. Thanks so much for the kind words, Cubert. They help me keep going!

      I've never been to one of these retreats and have only met a couple bloggers 'in real life' (though came close to meeting a third, when Joe Saul Sehy and I just missed each other on vacation once). Let's definitely try to meet up at one of these things. Oh, and I'm going to be in Minneapolis for a few days for work in August. Maybe we can grab a beer at Surley.

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  9. It’s much easier to say it’s not possible to reach FI than to take a deeper look into things. I think the story needs to hit home more for an average person to believe in it. Soon enough I’m sure everyone will know someone who’s FI!

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    1. Hey there, Lady Dividend. That's true: it's easier to be dismissive than to make big changes, and we bloggers should do a better job of trying to make sure the message hits home. I feel a little hamstrung by my anonymity but that might just be an excuse.

      And yeah, maybe meeting more people IRL, and being open about our FI, could change things.

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  10. I remember reading about financial independence/early retirement in the early days and people were saving and being frugal trying to retire in the 40s and 50s. From there I found Jacob from ERE and it sounded intriguing but too extreme and then saw Mr. MM guest post and I was hooked.
    Definitely don't think it's fake. A lot of it is just math and math doesn't lie. However, it's not as simplistic as that shockingly simple math. Some retire before they have kids...how do you account for unknown expenses for the future. Also, most of the famous FIRE bloggers aren't actually drawing down that 4% since the blogging income covers some or more of their expenses. Nothing wrong with blogging income but it's tough to promote that 4% rule while not living it. Another issue is the high income of the early retirees in the 20s and 30s. At that age, it is not so much the compounding and stock market but your savings and contributions...which require a high income. The storyline seems too simplistic when it's, oh I got off the consumer hamster wheel and voila...I retired 2 years later.

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    1. I love everything in that comment, Andrew. I have a half-baked post in the works that hits on those points: that many (most) of us early retirement bloggers has a big ass income that isn't given much press in the blogs (big surprise), that many of us earn a side income schlepping credit cards, Personal Capital assets-under-management investment pitches (that, whoops, none of us actually use because we don't think they're a good product), etc etc.

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  11. Have to admit I am a natural skeptic, but FI has always made sense and seemed rational to me, because it's maths. Maths is logical, provable and has a very good history and pedigree. Numbers in themselves don't lie.

    Blogging is a different kettle of fish, and I'm having to tread very carefully here. To be honest I'm not sure if you call bloggers making most of their money selling services to newer bloggers a pyramid scheme or true capitalism? They are creating some sort of value that many people are willing to pay for, which should be a good thing yes?

    As for the retreats, I agree some of them seen like idol appreciation opportunities. And moreover, they are a lot more pricey than my usual sort of holiday.

    Ultimately people will believe what they want to believe, and history if anything shows us how much sway public opinion can have.

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    1. True, Ms ZiYou. The math is the math, and there's no arguing that.

      I suspect that the math isn't necessarily the problem when people first hear about FIRE though. That is, even if they see how saving more than half your income would lead to riches, that someone might doubt whether this is really happening, or happening without some outside help.

      I have mixed feelings on how we make money as bloggers, but generally I think they're a pretty moral bunch. Personally, I don't really love the selling of Personal Capital to readers if they don't like the Assets-Under-Management model (and the pitch for those services is what's generating that $100-per-call affiliate income). But I suppose there's nothing wrong with getting some money from BlueHost if someone else wants to start a blog.

      I've never been to any of these retreats and, yeah, they do seem pricey sometimes. As you said, it's probably a good way to meet bloggers that you admire.

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  12. I'm not a skeptic of the foundational principles, but as I've commented before, I'm a huge skeptic of young(er) folks preaching who haven't quite figured out yet what their child rearing plan is going to be.

    And in those cases I'm a skeptic mostly because I realize that I myself was an idiot about how to properly think through child rearing financial implications, until I actually had kids. Only then did I have a true sight and truthful conversation with myself and my spouse about financial priorities.

    And if one decides not to have kids at all, that's a very fine financial choice which I appreciate, but it puts you on a different FIRE track than the one that I occupy.

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    1. Hey Tin!

      Yeah, as we're about to have our first kid, I can already see how this can impact our FI plans pretty significantly even while trying to remain frugal. Doubling the number of health insurance plans alone is kind of a biggie.

      Harder to operate 'without a net' when there are little ones who depend on you, too.

      Sometimes I wonder if living outside the US for a while might address the healthcare issue. I need to dig into that a bit.

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  13. FIRE, retiring earlier than you thought, saving tons, spending less than you thought, whatever you want to call it, it is possible. Fact. I am living proof of that.

    But, you won't find me talking about it on my blog (of 8 years). I don't think that any of my followers would believe it and/or I don't want to open myself up to the judgement and micro analysis of my actions.

    Personal finance is so... personal.

    P.S. Kids don't have to cost a lot of money. I had a litter of them 8 years ago and except for moving some (already existing) money into their education fund, nothing in our daily lives have changed.

    Great post.

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    1. Hey there, Journeys of the Zoo. I think that's pretty cool that you're going a stealth FI route. I wonder if more people in my circle are doing the same.

      Any tips you have for keeping the cost of kids down in FI (especially health insurance) is much appreciated!

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  14. I'm in this space hoping to demonstrate that it doesn't take a five-figure blog income or a six-figure W-2 income to become FI. Although it's going to take what feels like forever to get there so I'll have to entertain/keep my audience for a LONG time in order to demonstrate to them (and myself!) that it's not actually fake haha.

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    1. Hey Erin,

      My blog similarly is not earning any real money so I feel you on that.

      And I think we need more people working towards FI without a huge W2 income, to show that people making average salaries can achieve the same goals. The tactics and timeline are different but the goal can still be reached.

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  15. The math is undeniable. There is just no magic to it at all. The only problem I had with FI (when I found it through MMM in July 2017) was the annoyance that I had failed utterly to see it myself. If you understand basic math, you can understand FI.

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    1. Yep! Totally agree: the math is the math. Mr. Money Mustache's post on the shockingly simple math was a game change for me back in 2011/2012.

      Still, even with the simple math, I think there's justifiable reason for skepticism because it's often hard for the average person to believe that an anonymous blogger really is living on 50% of his income, or doesn't immediately understand how it's possible to live on the $25k or so that MMM does. (In that blogger's case, it's possible because he's paid off his mortgage...so it's not really an apples to apples budget compared to 90%+ of the population.)

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  16. I think you are right it is hard to believe. Part of that is because of the definition that we have of retirement. I mean that Protestant work ethic is built into a lot of us. That we work and we work and work and it is part of our self worth. Even I have a bit of a hard time accepting that I could retire earlier than my colleagues (but it can be done based upon the numbers). My wife is even more skeptical, but I am working on her. I think it comes down to the idea of culture and limiting beliefs. They can't do it or don't have the discipline (and you need discipline to do this) then it won't work. I mean there is a reason why we have a weight loss industry, etc because if it was easy all might actually do it.

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    1. I think there's a lot of truth to that last point, Jason. The concepts aren't necessarily all that complicated for FI: earn more, spend less, invest the delta, and repeat for a few years or a decade.

      Of course, I think it's debatable how achievable the first step is for a lot of people, but that's a different discussion. But yeah, for people earning $20 or $30k, this sure must seem like a scam at first.

      And I like the observation that our hesitancy to believe in or embrace an early retirement might have something to do with the Protestant work ethic: the idea that we are somewhat defined by our work is in direct conflict from a conscious step away from that work.

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