This article is an excerpt from the Shortform book guide to "Early Retirement Extreme" by Jacob Lund Fisker. Shortform has the world's best summaries and analyses of books you should be reading.
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Do you work more than you need to because you buy more than you need? Are you blindly following a narrative that just ain’t so?
The modern world lures us into giving away our freedom, argues early retiree Jacob Lund Fisker. The vast majority of adults are caught in a needless cycle of consumerism. Luckily, he says, it’s possible to free yourself from this system.
Read more to learn three reasons to break out of the unfulfilling cycle of consumerism.
The Cycle of Consumerism
Fisker believes that many people sell decades of their lives to employers so they can buy consumable goods and status symbols that don’t make them happy. He broke out of the cycle of consumerism by learning how to survive on just $7,000 a year, which allowed him to permanently retire at age 33. In Early Retirement Extreme, he teaches others how to do the same.
Fisker argues that the dominant cultural narrative of the modern age influences people to work far more than they need to survive. The average worker believes that the ideal life is to be as busy and productive as possible, earn as much money as they can, and then spend that money on consumer goods. For this reason, as their income increases, they increase their spending in lockstep rather than saving their money and buying back their time by retiring. They don’t question this narrative and end up living unfulfilling lives.
(Shortform note: Some take Fisker’s idea further, arguing that work isn’t just a dominant cultural ideal: It’s the primary religion of the modern age. While Fisker says that most people work to increase their income and buy more consumer goods, writer Derek Thompson points out that many people (particularly white-collar workers) now see the work itself as the prize and the way to fulfill their life purpose. To these workers, saving their income to retire early would be undesirable, as it would mean giving up their ultimate source of meaning in life.)
Is life as a habitual consumer really so unfulfilling? Fisker says it is, offering three reasons to break out of the cycle of consumerism:
Reason #1: Your purchases don’t make you happy.
Reason #2: Habitual spending keeps you dependent and vulnerable.
Reason #3: Paying off debt wastes precious time.
Let’s take a close look at each reason.
Reason #1: Your Purchases Don’t Make You Happy
Many people falsely assume that you can find happiness by spending money, asserts Fisker. Because the dominant cultural narrative defines “successful” people as those who earn and spend the most money, people who want to feel successful spend excessively on status symbols with little intrinsic value. For example, you may buy a large, lavish home not because you need that much space to live a good life, but because it signifies to others and yourself that you’re a “success.”
(Shortform note: Not only can you not find happiness by spending money, but research also shows that some purchases may make it harder for you to find happiness. Although many people purchase status symbols to impress others, one study found that displaying luxury items actually discourages others from getting to know you further as a potential friend. If status symbols don’t really improve personal relationships, it’s possible that people seek them primarily to prove status to themselves rather than to other people.)
Others seek fulfillment in the intrinsic pleasure of accumulating possessions. They enjoy building collections of items that are personally meaningful to them, like antique toys or designer handbags.
(Shortform note: How do you distinguish a fun collecting hobby from unhealthy “hoarding”? One rule of thumb: Collectors are typically proud to show off their collection to others, while hoarders hide their collections out of shame.)
Fisker argues that both of these spending habits position spending money as your life’s source of meaning, and consequently, they lock you into a cycle where you feel you always need to spend more to be happy. Spending money becomes a compulsion, something you feel you must do rather than something you want to do.
(Shortform note: Compulsive spending is a medically recognized disorder also known as oniomania. If you’re aware of your compulsive spending and want to stop, experts advise creating a “relapse prevention plan.” Identify the people, places, and situations that trigger you to make a purchase and avoid them to reduce the temptations in your life. For example, if a date recommends meeting at a local shopping mall, suggest a different location.)
Reason #2: Habitual Spending Keeps You Unskilled and Dependent
According to Fisker, people in consumer culture are unskilled because they’ve internalized the habit of solving their problems by spending money. They deprive themselves of the opportunity to grow through solving their own problems; consequently, they become dependent on the products they buy.
For example, if they don’t have enough warm clothes for the coming winter, most people will go out and buy some. They believe they need to do this, but in reality, there are many solutions that don’t involve such an expensive purchase: They could learn how to tailor hand-me-down clothes into scarves and layered jackets, learn how to trap heat in their houses more efficiently, or even move someplace warmer.
When you believe you need to buy a certain product or service to survive, Fisker argues that this limits your freedom by creating the illusion of a greater cost of living. You believe you need to work more to afford all your expenses, so you spend all your time working rather than pursuing more fulfilling activities.
|Counterpoint: Outsource Your Problems to Save Time|
Although Fisker laments the fact that people in modern culture solve most of their problems by spending money, some argue that this isn’t always a bad thing. Often, people spend money to deal with problems they’re fully capable of solving well, just to save time. In 168 Hours, Laura Vanderkam argues that more people should hire services to take care of common but time-consuming tasks, like laundry, cooking, and cleaning the house. Doing these simple tasks yourself isn’t necessarily central to your personal growth, as Fisker implies. Vanderkam notes that this allows you to spend your time in more valuable ways, like playing with your children.
Fisker would likely argue that spending on services like this can create the illusion of a greater cost of living. In other words, if you get used to hiring someone to do your laundry and can no longer imagine living without it, you may work additional hours to maintain this service rather than spending your time in more fulfilling ways.
Vanderkam offers advice you could use to avoid this mistake: Track how you’re spending every hour of your time for a week and proactively build a weekly schedule around your highest priorities. This way, you can notice when you’re spending less time with your kids because you’re working to afford unnecessary expenses and intentionally look for ways to reduce your hours at work.
Reason #3: Paying Off Debt Wastes Precious Time
Debt is one of the most limiting constraints possible on your time and freedom, says Fisker. Going into debt means selling your future time and labor to buy something now. Additionally, you’ve committed to selling more of your time to pay interest on that loan. The deeper in debt you are, the more time you must waste working to pay interest and the less time you’ll have to live your life the way you want to. Despite this, it’s common practice in modern culture to live perpetually in debt.
Fisker argues that it’s almost always entirely unnecessary—and against your best interests—to take on debt of any kind. This means only purchasing something when you can afford it instead of racking up credit card debt. It also means forgoing auto loans, expensive mortgages, and student loan debt.
|Comparing Debt Culture Around the World|
Although Fisker doesn’t acknowledge this, the view of accumulated credit card debt as socially acceptable is largely unique to the United States (and a few other first-world countries). In most cultures around the world, debt of any kind carries a stigma, and the average citizen avoids it completely wherever possible—following Fisker’s advice by only making purchases if they’ve saved enough to afford them.
Why do so many cultures see debt as shameful? One possibility is that these societies have internalized Fisker’s logic. If it’s common wisdom that going into debt requires a compounding commitment of your future time to make interest payments, you may see taking on debt as a foolish decision subject to judgment from peers. Alternatively, debt may trigger a deeper form of shame—the feeling that you’ve taken money from someone else, yet failed to make this exchange “fair” through repayment. In other words, people may see debt as an inability to right a moral wrong.
This cultural shift can be jarring for immigrants to the United States, where credit card debt is not only less shameful but also sometimes socially encouraged. To attain a valuable credit score in the US, you must take on some debt and then reliably pay it off in full, typically with a credit card. American society penalizes you for staying completely debt-free, as people without a reliable credit history may be denied or charged more for housing, insurance, and personal loans.
The Goal: Buy an Early Retirement
Fisker explains that you’ve escaped the cycle of consumerism when you’re no longer buying things that won’t make you happy. Once you’ve done this, it’s possible to buy yourself an early retirement and work only as much as you want to.
People differ in how much they want to work. Many choose to pursue total financial freedom as quickly as possible, saving up enough money to never have to work again—a lifestyle that Fisker argues is more attainable than most people believe.
Alternatively, some people may not feel the need to immediately swear off work for the rest of their lives. In this case, Fisker notes that you can save enough so you can partially retire, only needing to work a few hours every week. Another option is to save enough to buy back your freedom in the short term—a mini-retirement, you might say. For example, if you save 87.5% of your income for a year and live off of the other 12.5%, you can quit your job and live off your savings for seven years.
|How Do Fisker’s Ideas Fit Into the Broader “Early Retirement” Community?|
Fisker’s recommendation to work only as much as you need to is the primary goal of the FIRE (Financial Independence, Retire Early) movement. The FIRE movement describes the many authors, bloggers, and other workers on the internet who have dedicated themselves to spreading the message that early retirement is more attainable than our culture makes it seem.
The movement’s intellectual roots lie in the 1992 book Your Money or Your Life, which, like Early Retirement Extreme, contends that it’s possible to escape our culture’s typical working schedule by building your life around your personal values. Fisker has stated on his blog that this is one of the two main books that shaped his financial philosophy, the other being Rich Dad Poor Dad.
In the online FIRE community, Fisker’s strategy of partial retirement is known as “Barista FIRE,” since it involves finding a part-time job of some kind, like “barista.” On the other hand, Fisker’s suggestion to take some time off work in a mini-retirement would technically be a sabbatical rather than a form of FIRE, since you intend to go back to work and retire at a later date. Such a mini-retirement would actually delay your FIRE, as you spend time using up your savings rather than contributing to them.
To survive off of such a low income and retire early, Fisker argues you must learn to do three things: minimize your expenses, diversify your skills, and invest your savings.
(Shortform note: Many FIRE enthusiasts focus mainly on investment advice and make it their goal to increase their passive income as much as possible. Fisker sets himself apart with his emphasis on minimizing expenses and diversifying skills—Fisker is more philosophically aligned with proponents of frugal, simple living like Joshua Fields Millburn and Ryan Nicodemus (Minimalism).)
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Here's what you'll find in our full Early Retirement Extreme summary:
- How the modern world lures us into giving away our freedom
- How you can permanently retire in your 30s
- Three tips for minimizing your cost of living