That’s a good point, actually; one takeaway from the FIRE (Financially Independent, Retire Early) community is that your retirement date is basically a function of your current expenses; assuming a safe withdrawal rate of 4% you “just” need 25x expenses to retire forever.
But dropping your expenses to zero is fairly hard; in fact, dropping your expenses by any meaningful amount is hard since people have fairly sharp intuitions about where their money is going, and probably not wantonly spending it in the first place.
And moreover, the goal isn’t to extend your personal runway to infinity, but rather to improve the fuzzy metric of “living a happy, fiscally secure life”. Presumably, most of your expenses are reasonably rational purchases on that axis, and getting rid of them would make you less happy overall.
My thesis is that, for the same amount of annoying dealing-with-financial-institutions-effort, setting up an online brokerage account to put the majority of your money in index funds is like 10x to 100x return on effort for many, compared to saving $20 a month switching banks.
That’s a good point, actually; one takeaway from the FIRE (Financially Independent, Retire Early) community is that your retirement date is basically a function of your current expenses; assuming a safe withdrawal rate of 4% you “just” need 25x expenses to retire forever.
But dropping your expenses to zero is fairly hard; in fact, dropping your expenses by any meaningful amount is hard since people have fairly sharp intuitions about where their money is going, and probably not wantonly spending it in the first place.
And moreover, the goal isn’t to extend your personal runway to infinity, but rather to improve the fuzzy metric of “living a happy, fiscally secure life”. Presumably, most of your expenses are reasonably rational purchases on that axis, and getting rid of them would make you less happy overall.
My thesis is that, for the same amount of annoying dealing-with-financial-institutions-effort, setting up an online brokerage account to put the majority of your money in index funds is like 10x to 100x return on effort for many, compared to saving $20 a month switching banks.