Tag: Finance

Book Notes – Early Retirement Extreme – Jacob Lund Fisker

Book Notes – Early Retirement Extreme – Jacob Lund Fisker


  • Reading a textbook about physics won’t turn a person into a physicist. This only happens when the concepts are constantly applied and one starts “thinking like a physicist.”
  • Looking busy is important because in this culture business is a virtue.
  • Society has made it very easy to spend money. Shopping centers line every street. Many creative means of spending money have been devised. Instead of spending 30 seconds opening a can of tomatoes with a traditional can opener, it’s now possible to spend 30 minutes working to pay for an electric can opener that can open the can in the same amount of time.
  • Is spending the most productive years of your life chained to the job market to collect a lot of rarely used stuff that gathers dust in the closet or takes up space in junkyards a wise choice?
  • Some problems are self-created; one must learn to avoid these. A common solution to problems is to go and buy some product. Too weak to open a lid? Go buy a tool rather than exercise to become stronger. Want to barbecue, but don’t have a grill? Go buy one instead of making a fire pit.
  • Running a marathon is technically easy, but few have the persistence to actually go through with it, and even fewer are already in such a physical condition so as to do it without preparation. Mental blocks are similar. It’s much easier to say that something can’t work than it is to find a way to make it work.
  • There are always excuses. “I don’t want it enough;” “It’d be nice, but I can’t do it,” “Yes, that is interesting and may be fine for you , but I could never…”
  • Why do we still work eight hours a day, 50 weeks a year, when we’re twice as productive as we were 50 years ago?
  • Why do we have children, then send them away for most of the day shortly after they’re born?
  • Being financially independent you can take risks with your time to focus on projects which don’t require an immediate payout to justify your effort.
  • The core of this book: What you want to do with your life given that you don’t have the time to do everything? Do you want to spend most of your life paying off the interest of a 30-year mortgage and working so you can fill increasingly bigger houses with increasingly more stuff while being stuck in your daily commute in increasingly nicer cars? Or are you prepared to give up the stuff so that you can do whatever you want, whenever, and wherever, within reason? What will your legacy be–what you owned or who you were.
  • Runners and other athletes sometimes get the comment that they’re already fit, so they don’t need to exercise. Yet their diligent exercising is exactly what causes their fitness.
  • Change is seen as a personal failure: admitting that an alternative is better is perceived as a personal failure.
  • We have come to a point where spending money is one of the few recognizable signs of success. For instance, spending half an hour in a traffic jam getting from A to B in an expensive car is considered more successful than spending half an hour in a traffic jam getting from A to B in a cheap car. I’m not sure why that is. Even more puzzling, both of these is considered more successful than spending 25 minutes getting from A to B on a train or spending 20 minutes on a bicycle getting from A to B while passing cars in a traffic jam.
  • It’s considered more successful to sit on a couch in your home, if there is an additional unused couch in an additional unused room, compared to a house with no unused couches or no unused rooms.
  • Consumers do not solve their problems. Consumers are used to buying or arguing their way out of problems.
  • Your collection of 20 different cleaning products could all be replaced with vinegar and baking soda. Chop garlic with a knife instead of using one of the many different designs of garlic press.
  • Most career people’s lives are dominated by schedules and procedures. They get up at the same time every day. They take the same route to work and sit at the same desk and do the same things day-in and day-out for many years. At the end of the day, they go back along the same route. They have various chores and activities scheduled until they go to bed at the same time. Maybe they occasionally go to a restaurant, the movies, or a sports event. Weekends are like evenings–structured around chores that didn’t get done during the week, like laundry, cleaning, and sleeping. Vacations are arranged in the same manner–if not taken between job transitions, vacations are spent a few days here and there as people spend one day traveling and then frantically go around and try to see everything they want to see before they head back exhausted. The reward for running on this treadmill occurs not through the satisfaction of doing a good job, but from the semimonthly paycheck.
  • The work system is designed so that most people have been specialized to as far down the production chain as possible. Specialization makes people replaceable either directly through advances in technology or through competition between many others with similar skills. Specialists are like cogs in the system and they tend to have very simple interfaces with it.
  • Pay attention to the number of books on the bookshelves, the tools for the hobby projects, the work in progress spread out on the desk. There are none. What empty lives these people must live.
  • Watch out when buying an expensive shirt, because you will find it needs an expensive suit to match.
  • No matter how much someone earns, expenses tend to match income. This is called lifestyle inflation.
  • On the homefront the growing use of time-saving technology doesn’t result in time saved either. Rather, it results in more being done.
  • Retiring at 50 is still considered early, despite the modern possibility of retiring decades earlier.
  • Reduce waste and live on a quarter of what a normal person spends:
    • Own only what you use.
    • Maintain what you buy.
  • Those with greater control over their income can choose to work less at higher efficiencies and save the money for intermittent periods without income. That way you can start a business without the risk of losing income.
  • Find something meaningful to do (instead of work).
  • A loosely coupled system is less likely to fail. Loosely coupled systems have slack. They’re flexible and resilient. This means that they function within a range of parameters rather than at just a single value.
  • The salary man: (Wage slaves) are free to change their job, but they’re not free to quit their job. Wage slaves are free to choose other products as long as they can afford it, but they’re not capable of creating alternatives to buying products, because they’re too busy working.
  • The business man: makes a living of creating products to solve consumers problems.
  • The renaissance man:
    • Is competent in a wild range of fields instead of a single vocation.
    • Develops all sides of himself to reach his full potential.
    • Uses generalized skills (borrowing, engineering, creativity physical strength) to solve his problems instead of buying a solution.
    • Fixes what is broken himself.
  • To develop into a renaissance man, start self-development activities as hobbies. Start creating your own solutions.
  • Humans with an internal locus of control–the belief that they’re in control and that they’re the masters of their own destiny–possess agency. Agency resists and reduces stress.
  • We have an economic model that is based on pulling resources out of the ground and mostly turning them into unnecessary products, getting people to buy the products by convincing them that they need them, then getting them to throw the products away because they’re obsolete.
  • We are aware of large-scale problems, but most of us believe that we can’t do anything about them. Instead, we believe in a mythical They who will find a solution.
  • When a new field is invented, it’s not the salary men, the businessmen, or the working men who dominate it; it’s the inventors–the Renaissance men.
  • You can be a jack-of-all trades by choosing which areas to master and which to do not.
  • We call people primitive, but they can build their own shelters, find their own food, create their own clothes. But we know about the ficticious lives of TV-characters.
  • Take care of your body: After all, where else are you going to live?
  • Physiological goals:
    • Optimal physical and mental health.
    • Know how the body works.
    • Know which foods promote health and which don’t.
    • Don’t overeat.
    • Be able to perform physically while hungry, exhausted or tired.
    • Know basic first aid.
  • Intellectual goals:
    • Prioritize relevance of information.
    • Have an interest in learning new things.
    • Have general knowledge.
    • Be able to do quick research in multiple areas.
    • Be able to remain independent and critical of models and new ideas.
  • Economic goals:
    • Understand the difference between value (psychological) and price (market).
    • Learn the effect of choices and their opportunity cost.
    • Know how to save.
    • Know how to invest.
    • Make a budget, do your own taxes.
  • Emotional goals:
    • Make your own choices instead of out of fear or because they feel good.
    • Don’t be gullible or subject to manipulation, magical thinking.
    • Be patient and resistant to stress and realize you can’t influence external events.
    • Be empathetic and understand that situations are complex.
  • Social goals:
    • Know people in all different social circles.
    • Learn how to barter, sell, borrow and give things away.
  • Technical goals:
    • Have the knowledge to judge professionals in their service.
    • Understand limits and benefits of technlogy.
    • Select optimal tools and know how to use them.
    • Know how to repair your stuff.
  • Ecological goals:
    • Recognize the foods that are in season.
    • Know how to grow your own food.
    • Don’t waste energy or resources.
  • Tenure and experience are not the same thing.
  • People remember most of what they do, some of what they say, but little of what they see or hear.
  • The main mistake when dealing with an overwhelming amount of data and stuff is to reduce it, rather than relating to it on a more abstract level.
  • Expertise:
    • Copy and compare: define an objective.
    • Compile and compute: set a plan.
    • Skills and coordination will unleash creativity.
  • It’s important to understand that doing the right thing (good strategy) is much more important than doing things right (good tactics).
  • Consumers have become convinced that experts are needed for anything but the simplest task.
  • Self-sufficiency:
    • Mend your clothes.
    • Cook from scratch.
    • Use public transportation, bicycle or walk.
    • Grow your own food.
    • Make your own household agents.
    • Maintain your car. Start with washing it, then changing fluids, then repairing the engine.
  • Consider that almost any work becomes drudgery if you have to do it all day every day.
  • A good strategy solves multiple problems at the same time!
  • There is no such thing as needs and wants: there is no demarcation when a need becomes a want.
  • Happiness does not stem from being surrounded by possessions, being happy because of being surrounded by them is the result of an addictive habit.
  • Buy tools that last a lifetime.
  • When buying parts, tools, as well as new things, always try to get three different prices across markets (new and used) and time (do prices tend to go up or down? are they seasonal?
  • Anything done more than once is worth doing yourself.
  • Measure prosperity by less activity, not more. Do fewer useless things.
  • Focus on developing skills rather than on passive entertainment.
  • The price of stuff is higher than the sticker price, they:
    • Take up space.
    • Require maintenance.
    • Are hard to get rid of.
  • Used something in the last few months? Keep it. Otherwise, dispose of it (sell, give it away).
  • For grocery shopping and other regular purchases, use a maximum price ceiling which is the lowest price you have ever seen. Only buy at that point.
  • Buying a set of, say, screwdrivers to “save” money is rarely worthwhile. You will end up breaking the ones you use constantly and with a collection of ones you never use.
  • Start with cheap tools to see which ones you actually need and use.
  • Learn to be easy to get along with. Be considerate. I’m sure this is a learned skill.
  • Work from home when you can to:
    • Save transportation time and cost.
    • Work flexible hours.
    • Be inaccessable while doing concentrated work.
  • Feeling warm or cold has a lot to do with adaptation. Unfortunately, it’s now normal to live in heated and air-conditioned bubbles which allow for no adaptation at all, except perhaps to the price of those services.
  • Many adults act as if moving is not particularly enjoyable. Given the choice, they’d rather not move around. To them, moving is uncomfortable, exhausting, and even painful.
  • The diet quantity determines how big the body will be and the diet quality determines how healthy it’ll be. The exercise quantity and quality determines its function, form, and health.
  • Running doesn’t get you in shape. Look at the experienced runner: spindly arms and legs, scrawny upper body.
  • The reason that people get weak is not age; it’s a history of disuse.
  • Being hungry is nothing particularly worrisome unless it becomes a permanent condition.
  • If a brand needs advertising, it is probably because it is either difficult to tell the difference between it and another brand or because you would not otherwise want to buy the product in the first place.
  • Clean immediately after using something. It is often easier.
  • A salary is paid when productivity is hard to measure because the effort can’t be directly associated with a specific revenue-generating product or service.
  • This means that productivity has little bearing on how much a person actually gets paid, salary being determined by contract negotiation skills and historical accidents, such as being hired the year before new hires are given a substantially higher starting salary.
  • If investment income matches your expenses, you are financially independent.

The lessons from this book are controversial. The title of the book isn’t Early Retirement EXTREME without a reason. Though sometimes repetitive, it does teach a lot of very applicable principles if you wish to earn more, save more and acquire valuable skills in order to live a simpler life.  If you liked these notes, you can support my blog by purchasing the full book on either:
Bol.com: Early Retirement Extreme on Bol.com
Amazon: Early Retirement Extreme on Amazon
Check out this book on Goodreads. I rated it 4 out of 5.
Spend more money to save more

Spend more money to save more

I read Ramit Sethi’s I Will Teach You To Be Rich a couple of weeks ago, and one of his advices has been resonating with me:

“Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”

Initially, this seems to be just solid financial advice. By spending only on the things you enjoy and cutting costs everywhere else, money goes towards the areas in life that provide the highest value for money. Subsequently, this will steer life away from the areas that aren’t providing value at all. Like most of Ramit’s advice, though financially minded, it is applicable to a lot more of life’s areas.

For example:

  • Friendship: spend most of your time with the friends closest to you, while avoiding toxic relationships with people who tend to drain more energy than they ultimately end up providing.
  • Fitness: do the exercises that provide you with the most benefit, like compound movements (squats, deadlifts, bench press, rows), while avoiding exhausting yourself doing just isolation work.
  • Nutrition: especially when trying to lose weight, ‘spend’ your minimally available calories on foods that you enjoy and keep you full, while declining on mindlessly eating the dense foods that do not provide the same satisfaction.
  • Time: since time is a non-renewable resource, use it wisely by only dedicating it to activities that provide value to your life. So read a book instead of aimlessly wandering around Reddit or Facebook.

By applying this advice to your entire life, you will guarantee that all of life’s resources are used optimally. That means being completely honest with yourself and sometimes making the most difficult decisions ruthlessly, in order to decrease every distraction to make the most valuable investment of all resources.

Consequently, by guiltlessly spending more on the most enjoyable area’s of life, it will in fact become a lot easier to avoid the value draining activities, therefore:

  • Increasing your savings while getting more for your money.
  • Losing more weight by actually eating the foods you enjoy.
  • Inceasing free time by doing more of the activities that provide value.

So start consciously making decisions with this advice in mind, in order to transform your life step by step.

If you liked this article, you can support my blog by purchasing the full book on either:
Bol.com: I Will Teach You To Be Rich on Bol.com
Amazon: I Will Teach You To Be Rich on Amazon