Author Topic: FIRE Decisionmaking Principles  (Read 1205 times)

LWYRUP

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FIRE Decisionmaking Principles
« on: January 04, 2020, 01:19:46 PM »
I had a personal breakthrough in thinking about FIRE principles today that I wrote out for myself and decided I'd share in case others found it helpful.  This is the mental framework I'd like to use to help me integrate my spending and my decisionmaking.

Everyone has a limited amount of these three items:
  • Resources (money, but also real or personal property)
  • Energy (time, generally, but accounting for the fact that some expenditures of time wear your down so you need to recover, while others build you up)
  • Entrepreneurial ability (creativity, logical reasoning, problem solving skills and ability -- discounting the time it takes to implement these plans)

Everyone faces a series of challenges in their life.  Some of these are serious problems (e.g., recovering from an illness) while others are self-directed goals (e.g., climbing a big mountain). 

The goal of FIRE philosophy is to learn how to solve each challenge with the least expenditure of resources and energy, mainly by relying on and increasing entrepreneurial ability.  Doing this allows one to conserve and grow these reserves of resources and energy in order to take on more complex challenges, more self-directed challenges rather than externally-imposed challenges (e.g., starting a business rather than completing a report directed by a boss) and more challenges that involve helping others (once the groundwork has been lain for a happy personal life).

With this framework, there's not necessarily one "mustachian" decision that all people must abide by.  It is a problem solving system that will necessarily result in different answers for different people with varying goals and stages of life, etc.  However, we can all learn from each other by seeing how other people with a high amount of "entrepreneurial ability" solved problems in their own life with extremely efficient uses of resources and energy. 

I've started to use this framework to analyze purchases and it is helping a lot.  Previously, I used to live with broken and worn out things a long time, then get frustrated and say "I'm a high earning professional with plenty of savings, I shouldn't need to deal with this" and go out and buy something.  Typically something fairly nice but not top of the line because I like nice things and I wanted it to last but didn't want to break the bank.  This process allowed me to save a lot more than my spendy friends but a lot less (relative to income) than, say, Mr. Money Mustache.  Then I would feel bad and think I should just toughen up and live with problems, but I don't think "deprivation until quitting job you hate" is really the answer. 

Instead, when a spending decision comes up I am now trying to purposefully step back and think, "what is the problem I am trying to solve here" and then determine the most efficient way to solve that actual problem.  Sometimes, I've realized the problem isn't really a problem that can be solved with resources but is a mental block (e.g., solution to "I'm stressed" is not "Starbucks" but "reduce stress.").  Other times, I've realized I can solve it by adapting existing personal property.  Or realized I can spend less than I thought because I've zeroed in on the specific problem (need new toaster oven to make toast and reheat food) and avoided the traps (look, a shiny $500 smart oven that can air fry and sync with your phone!) designed to convince me to spend money rather than solve my problem. 

I suppose the only constructive feedback of this site that I can offer based on this analysis is that I feel sometimes jobs are framed on here as those horrible things you suffer through until the glory of FIRE.  I sort of unconsciously used the decisionmaking strategy outlined above to move myself from a terrible, very high paying job situation to a great, reasonably high paying job situation over the course of about five years and I'm so glad I did.  I would advise others in similar situations NOT to suffer though a bad job situation just to FIRE, but to go to work immediately using FIRE principles to make their job situation better, even if the path then gets slightly longer, so that RE becomes just a nice option at the end of a more enjoyable FIRE path. 
« Last Edit: January 04, 2020, 01:22:25 PM by blinx7 »

Buffaloski Boris

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Re: FIRE Decisionmaking Principles
« Reply #1 on: January 04, 2020, 01:27:21 PM »
Very interesting and well written. Thanks for typing it out.

AnnaGrowsAMustache

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Re: FIRE Decisionmaking Principles
« Reply #2 on: January 04, 2020, 02:34:56 PM »
Nice post. All comes back to being clear on the 'why'.

John Galt incarnate!

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Re: FIRE Decisionmaking Principles
« Reply #3 on: January 04, 2020, 03:06:46 PM »

With this framework, there's not necessarily one "mustachian" decision that all people must abide by.  It is a problem solving system that will necessarily result in different answers for different people with varying goals and stages of life, etc.

'Tis true.

FIRE is largely the result of an individual's carefully weighed decisions that result in a chosen   constellation of trade-offs configured within a larger matrix of trade-offs.

Each individual's essence, why/what/who they are, at the most personal degree, as well as luck, are also determinative of  FIRE's attainment.
« Last Edit: January 04, 2020, 03:09:53 PM by John Galt incarnate! »

Bloop Bloop

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Re: FIRE Decisionmaking Principles
« Reply #4 on: January 04, 2020, 05:11:02 PM »
+1
Fantastic post, and I agree with the framework you set out.
Each of us is geared differently in how we spend our energy - both the raw energy required to accomplish any task in any day, and the mental discipline required to make "good decisions" continually.

So, one person might love cooking and hate stress at work. Another person might deal very well with a high-pressure work environment but hate cooking. They will have different utility functions and may make very different decisions, but both can be equally Mustachian as long as they think about their own time/energy/money/health costs.

RWTL

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Re: FIRE Decisionmaking Principles
« Reply #5 on: January 04, 2020, 05:30:57 PM »


Everyone has a limited amount of these three items:
  • Resources (money, but also real or personal property)
  • Energy (time, generally, but accounting for the fact that some expenditures of time wear your down so you need to recover, while others build you up)
  • Entrepreneurial ability (creativity, logical reasoning, problem solving skills and ability -- discounting the time it takes to implement these plans)

Everyone faces a series of challenges in their life.  Some of these are serious problems (e.g., recovering from an illness) while others are self-directed goals (e.g., climbing a big mountain). 

The goal of FIRE philosophy is to learn how to solve each challenge with the least expenditure of resources and energy, mainly by relying on and increasing entrepreneurial ability.  Doing this allows one to conserve and grow these reserves of resources and energy in order to take on more complex challenges, more self-directed challenges rather than externally-imposed challenges (e.g., starting a business rather than completing a report directed by a boss) and more challenges that involve helping others (once the groundwork has been lain for a happy personal life).

With this framework, there's not necessarily one "mustachian" decision that all people must abide by. 

Thanks for sharing this.  It's really well thought out and articulated.

In addition to this, I've decided that the goal is to extract the most value / enjoyment  using the most efficient means possible.  This may mean spending extravagently on some things while maintaining low expenses in other areas. 

You're absolutely right that it's essential to find enjoyment in your life prior to RE.