This is not me being misleading in how I present data. I’m presenting what happens by default in both options, not one optimized and one non-optimized option. What you discovered here is that, the plan to save money in the outback is robust and succeeds by default, while the plan to save money in the US is fragile and fails by default.
The longer explanation:
The Australian outback option isn’t optimized. It’s an off-the-shelf option that is heavily subsidized and in a bizarrely awesome economic climate… something I don’t think many people here knew existed.
I think it’s fair to compare a typical US job to a typical outback job because this is what you get when you don’t put much effort into optimizing your budget in both cases.
The difference is that the outback is already incredible without you having to do anything.
It’s actually pretty unfair to compare an outback working budget to the best-case US scenario where you spend tons of time in the US managing your money well to get the cheapest rent, best car prices, lowest food costs, and execute convoluted tax dodging strategies that most people couldn’t figure out. It’s a very tricky plan that requires lots of things to all go right, lots of time, lots of effort, lots of will-power, lots of knowledge, and lots of discipline.
On the other hand, my option only requires you to get whatever job you want in a remote area of Australia and get all your costs of living heavily subsidized and all your major cost centers nearly erased with no willpower, no planning, and no discipline required.
What you uncovered is not my “misleading” people, but the difference in robustness between the two plans. The Australian outback plan lets you save money by default with almost nowhere to go wrong while the plan that lets you save money in the US is a life-engulfing minefield of time-consuming bargin-hunting, self-denial, and tax evasion.
What you discovered here is that, the plan to save money in the outback is robust and succeeds by default, while the plan to save money in the US is fragile and fails by default.
But as you noted above, there is a lot of resistance by default to exercising the Australia option. So the Australia plan fails by default too.
Once you’ve opened the door to considering those rare Americans who might decide to uproot and move to unfamiliar lands across the globe, you might also consider those rare Americans who can manage their money and don’t consistently make irrational decisions. In the context of here, I wouldn’t doubt they’re the same people.
But as you noted above, there is a lot of resistance by default to exercising the Australia option.
Every plan has the problem that if you don’t execute it, it fails. In this respect, the two are exactly equal. (And in degree, they may not be too far apart—given all one would have to do to carry out the American plan.)
Imagine a hypothetical world. Every night, when you fall asleep, you experience the same horrible nightmare. As you sleep, you’re approached by different sets of con-men and con-women who do whatever they can to rob you and steal everything you have. This happens every single night. The twist is, the money you’re carrying on your semi-conscious, disoriented dream-projected self is actually your real money from your real bank account in your real waking life! Different people carry different amounts on them but most have somewhere between 1⁄300 to 1⁄400 of their yearly income on them.
To cope with these nightly robberies, most people in nightmare-land ignore their situation. With the small part of their mind that allows them to acknowledge what’s happening, they mostly hope that one day they can earn enough money to stop the constant robberies from taking everything they have… not realizing that because they’re ignoring the problem completely, the money is actually a fraction of their income and the solution of earning more money will never help them.
But the more adept people in this world learn advanced lucid nightmaring techniques. They spend large chunks of their day preparing themselves for their nightmares so they’ll remember how not to get robbed. It takes constant vigilance and is incredibly stressful, but it works more and more often over time. These people are still robbed occasionally, but mostly get by with only partial robberies instead of losing everything like their peers.
But one day after a couple dozen years, you’re offered a chance to leave nightmare land and live in “dreamland” where there are no nightmares. The only catch is that in dreamland, people earn 50% lower nominal salaries.
Hmm… if you think you’re especially good at navigating nightmares, perhaps you could continue using your nightmaring skills rather than leave?
But why would you? Dreamland sounds so much better. Having these nightmares sucks even when you don’t get robbed every night. In dreamland, you can just avoid the problem entirely and win by default without wasting all your time preparing for and experiencing nightmares. The nightmares feel less and less bad over the years as you get used to them, but they’re still awful—you’ve just forgot.
I don’t think I need to explain this analogy.
I just find it weird that I’m over here in dreamland shouting back to people in nightmare-land that dreamland is so great but people in nightmare-land are shouting back “Screw you! I’ve already developed excellent nightmare-having skills. How dare you accuse me of not being good enough at navigating my nightmares. You think I’m not smart enough to handle subjecting myself to an unending series of them!”
“Huh? What? No! But dreamland is predictably good and it allows you to succeed constantly without having to keep your guard up and have nightmares all the time.”
“Whatever… Fxxx you dreamland hippie! I’m only robbed of 1⁄250 of my income most nights. You can’t even do math right! Dreamland would probably only be 2.5x better for me than nightmare-land… not 4x like you thought. Looks like I’ve exposed you for the liar you are! You won’t trick me into improving my life!”
“But why not at least consider trying it since you know it’s still better?”
“Dreamland? It’s impossible. Look, I pretended to consider it for 10 minutes already while I sat around making up clever reasons to reject it. Isn’t that enough? Only hard working nightmare navigators like me would even be capable of leaving nightmare-land… which I will prove to you by telling you how I won’t leave! Ha! QED, Booyah!”
Don’t burn out, Louie. This is Less Wrong, of course there’s going to be some pretty intense criticism. It’s only worth getting angry if you think you’re right but your posts/comments are negative on net.
It seems to me more like folks are pointing out that things aren’t all that nightmarish in actuality, and your analysis to show otherwise is flawed. If you would rather make fun than improve your analysis, there are other places on the Internet where that sort of thing is more welcome.
I might even agree with your conclusion, but would point out serious issues with quality of your arguments regardless. Off-the-shelf property, for example, is a good argument for taking it (if no downsides are present for your case) instead of trying to devise a more complicated or less apparent-at-the-moment plan, but not for the absence of alternative off-the-shelf solutions. Instrumental vs. epistemic rationality.
“the plan that lets you save money in the US is a life-engulfing minefield of time-consuming bargin-hunting, self-denial, and tax evasion.”
I work as a software developer in the US, have never made a ‘budget’ for myself or tried to analyze my finaces before now, I pay taxes normally, eat out often, and have no trouble saving lots of money. I’m going to substitute my expenses and pretend I only make 100k and see how much I’d still be able to save (living in Seattle).
Rent: 16.8k instead of 23.2k
Utilities: 2k instead of 7k (how can you spend 7k on utilities if you’re a single person in an apartment?)
Misc house expenses: 0.5k instead of 6.8k (what are these misc expenses that other people supposedly spend so much on?)
Food: The estimate of 13.3k is reasonable for food, although it’s easy to spend a lot less without hardship.
Transportation: 4.6k instead of 16.5k (who spends 16.5k per year on transportation? Just don’t buy a new BMW every 5 years and you should be set. I bought my car for $9k, 5 years ago).
Apparently it’s pretty easy live well in a large US city and save 33.9k per year without really paying attention to your finances. If you’re a good software developer you should be able to make a lot more than 100k and therefore save much more per year.
I spent $5800 on utilities last year… it happens when you live in an area that simultaneously gets below freezing point (and thus you need to spend on heating) and also gets above comfortable living point (and thus you need to spend on fans or air-con). I’m pretty reasonably frugal on both… I don’t set the aircon super low, I don’t set the heating on high… but utilities are pricey. I also count “internet” as a utility. When I lived in a warmer climate I spent $2800
“Misc house expenses” include things like fixing a broken toilet… or other general repairs. If you’re renting you may not have to pay that. Or maybe you do if your landlord is dodgy.
I spent around $8K on “transport”—which includes car payments (I bought a new but small hatchback 3 years ago = $22k), fuel, insurance, repairs, servicing and parking costs. I can well imagine that a family with more than one person (and thus more than one car) easily pays twice as much as me.
It requires you make a correct decision once a year or so about renewing the lease. The reason people have little discretionary income is that they habitually commit themselves to spending plans such as five years of a car payment—but that spending plan itself is a choice.
You may have an excellent point about the costs/benefits of your perception of working in the US. I don’t think you have much of a point about actually working in the US, and that’s what all these comments are getting at. Even at much lower salaries, it isn’t that hard to save a lot of money if you care to. (I’ll throw in my own data point: my last serious job before law school gave me about 50k a year in disposable income, working 20 hours a week.)
While I’m at it, “time consuming bargain hunting, self-denial, and tax evasion” are all rather prominent parts of your own plan. You’re moving across the globe to find cheap living. You’re living in the middle of nowhere, with undoubtedly limited access to goods and services. And you’re evading paying US taxes (or maybe you actually have to pay them on your return; I don’t know). Plus, you’re working in a job that has no real benefit for your future career, away from friends and family. I laud the suggestion for people to do something different and potentially lucrative, but methinks you’re weighing options on less-than-accurate scales here.
the plan to save money in the US is fragile and fails by default.
Strongly disagree. Or, at least, it doesn’t seem to apply to the people you’re marketing this plan to. I won’t go through my expenses, but let’s just say that I’m saving money on a grad student’s salary, and don’t project my annual expenses doing anything more than doubling for the foreseeable future. Except for taxes, pretty much any salary increases for me will go straight to wealth accumulation.
In real terms? Once. I’m not going to speculate on inflation. There are, of course, plausible scenarios in which my expenses increase much further, but they have a pretty low probability at present.
Opaque potential for devising a plan might look worse in comparison to a specific worked-out plan. But unless you seriously think for enough time about that potential direction for developing new plans, and don’t come up with any simple plans, you can’t declare your own plan’s superiority over the other potential plans. And the argument for this difficulty must reference such effort and rationality of its conduct, ideally should describe the reasoning process that comes to a failure in every considered class of options.
You can perhaps point out a particular plan’s superiority over the painful process of trying to come up with an alternative plan, so that if the plan is clearly an improvement over status quo you should just take it and skip the thinking-about-alternatives part. This is a good reason, if you don’t expect to be able to come up with a sufficiently better alternative plan whose superiority compensates for the effort spent of devising it, but then again your argument should refer to this fact, and not just to status quo.
In short, your post is useful, since it gives a constructive lower bound on how good you can do, but your argumentation for it being the thing to do is lacking.
Short explanation:
This is not me being misleading in how I present data. I’m presenting what happens by default in both options, not one optimized and one non-optimized option. What you discovered here is that, the plan to save money in the outback is robust and succeeds by default, while the plan to save money in the US is fragile and fails by default.
The longer explanation:
The Australian outback option isn’t optimized. It’s an off-the-shelf option that is heavily subsidized and in a bizarrely awesome economic climate… something I don’t think many people here knew existed.
I think it’s fair to compare a typical US job to a typical outback job because this is what you get when you don’t put much effort into optimizing your budget in both cases.
The difference is that the outback is already incredible without you having to do anything.
It’s actually pretty unfair to compare an outback working budget to the best-case US scenario where you spend tons of time in the US managing your money well to get the cheapest rent, best car prices, lowest food costs, and execute convoluted tax dodging strategies that most people couldn’t figure out. It’s a very tricky plan that requires lots of things to all go right, lots of time, lots of effort, lots of will-power, lots of knowledge, and lots of discipline.
On the other hand, my option only requires you to get whatever job you want in a remote area of Australia and get all your costs of living heavily subsidized and all your major cost centers nearly erased with no willpower, no planning, and no discipline required.
What you uncovered is not my “misleading” people, but the difference in robustness between the two plans. The Australian outback plan lets you save money by default with almost nowhere to go wrong while the plan that lets you save money in the US is a life-engulfing minefield of time-consuming bargin-hunting, self-denial, and tax evasion.
But as you noted above, there is a lot of resistance by default to exercising the Australia option. So the Australia plan fails by default too.
Once you’ve opened the door to considering those rare Americans who might decide to uproot and move to unfamiliar lands across the globe, you might also consider those rare Americans who can manage their money and don’t consistently make irrational decisions. In the context of here, I wouldn’t doubt they’re the same people.
Every plan has the problem that if you don’t execute it, it fails. In this respect, the two are exactly equal. (And in degree, they may not be too far apart—given all one would have to do to carry out the American plan.)
Here’s a more abstract analogy:
Imagine a hypothetical world. Every night, when you fall asleep, you experience the same horrible nightmare. As you sleep, you’re approached by different sets of con-men and con-women who do whatever they can to rob you and steal everything you have. This happens every single night. The twist is, the money you’re carrying on your semi-conscious, disoriented dream-projected self is actually your real money from your real bank account in your real waking life! Different people carry different amounts on them but most have somewhere between 1⁄300 to 1⁄400 of their yearly income on them.
To cope with these nightly robberies, most people in nightmare-land ignore their situation. With the small part of their mind that allows them to acknowledge what’s happening, they mostly hope that one day they can earn enough money to stop the constant robberies from taking everything they have… not realizing that because they’re ignoring the problem completely, the money is actually a fraction of their income and the solution of earning more money will never help them.
But the more adept people in this world learn advanced lucid nightmaring techniques. They spend large chunks of their day preparing themselves for their nightmares so they’ll remember how not to get robbed. It takes constant vigilance and is incredibly stressful, but it works more and more often over time. These people are still robbed occasionally, but mostly get by with only partial robberies instead of losing everything like their peers.
But one day after a couple dozen years, you’re offered a chance to leave nightmare land and live in “dreamland” where there are no nightmares. The only catch is that in dreamland, people earn 50% lower nominal salaries.
Hmm… if you think you’re especially good at navigating nightmares, perhaps you could continue using your nightmaring skills rather than leave?
But why would you? Dreamland sounds so much better. Having these nightmares sucks even when you don’t get robbed every night. In dreamland, you can just avoid the problem entirely and win by default without wasting all your time preparing for and experiencing nightmares. The nightmares feel less and less bad over the years as you get used to them, but they’re still awful—you’ve just forgot.
I don’t think I need to explain this analogy.
I just find it weird that I’m over here in dreamland shouting back to people in nightmare-land that dreamland is so great but people in nightmare-land are shouting back “Screw you! I’ve already developed excellent nightmare-having skills. How dare you accuse me of not being good enough at navigating my nightmares. You think I’m not smart enough to handle subjecting myself to an unending series of them!”
“Huh? What? No! But dreamland is predictably good and it allows you to succeed constantly without having to keep your guard up and have nightmares all the time.”
“Whatever… Fxxx you dreamland hippie! I’m only robbed of 1⁄250 of my income most nights. You can’t even do math right! Dreamland would probably only be 2.5x better for me than nightmare-land… not 4x like you thought. Looks like I’ve exposed you for the liar you are! You won’t trick me into improving my life!”
“But why not at least consider trying it since you know it’s still better?”
“Dreamland? It’s impossible. Look, I pretended to consider it for 10 minutes already while I sat around making up clever reasons to reject it. Isn’t that enough? Only hard working nightmare navigators like me would even be capable of leaving nightmare-land… which I will prove to you by telling you how I won’t leave! Ha! QED, Booyah!”
Don’t burn out, Louie. This is Less Wrong, of course there’s going to be some pretty intense criticism. It’s only worth getting angry if you think you’re right but your posts/comments are negative on net.
It seems to me more like folks are pointing out that things aren’t all that nightmarish in actuality, and your analysis to show otherwise is flawed. If you would rather make fun than improve your analysis, there are other places on the Internet where that sort of thing is more welcome.
I might even agree with your conclusion, but would point out serious issues with quality of your arguments regardless. Off-the-shelf property, for example, is a good argument for taking it (if no downsides are present for your case) instead of trying to devise a more complicated or less apparent-at-the-moment plan, but not for the absence of alternative off-the-shelf solutions. Instrumental vs. epistemic rationality.
“the plan that lets you save money in the US is a life-engulfing minefield of time-consuming bargin-hunting, self-denial, and tax evasion.”
I work as a software developer in the US, have never made a ‘budget’ for myself or tried to analyze my finaces before now, I pay taxes normally, eat out often, and have no trouble saving lots of money. I’m going to substitute my expenses and pretend I only make 100k and see how much I’d still be able to save (living in Seattle).
Rent: 16.8k instead of 23.2k Utilities: 2k instead of 7k (how can you spend 7k on utilities if you’re a single person in an apartment?) Misc house expenses: 0.5k instead of 6.8k (what are these misc expenses that other people supposedly spend so much on?) Food: The estimate of 13.3k is reasonable for food, although it’s easy to spend a lot less without hardship. Transportation: 4.6k instead of 16.5k (who spends 16.5k per year on transportation? Just don’t buy a new BMW every 5 years and you should be set. I bought my car for $9k, 5 years ago).
Apparently it’s pretty easy live well in a large US city and save 33.9k per year without really paying attention to your finances. If you’re a good software developer you should be able to make a lot more than 100k and therefore save much more per year.
I spent $5800 on utilities last year… it happens when you live in an area that simultaneously gets below freezing point (and thus you need to spend on heating) and also gets above comfortable living point (and thus you need to spend on fans or air-con). I’m pretty reasonably frugal on both… I don’t set the aircon super low, I don’t set the heating on high… but utilities are pricey. I also count “internet” as a utility. When I lived in a warmer climate I spent $2800
“Misc house expenses” include things like fixing a broken toilet… or other general repairs. If you’re renting you may not have to pay that. Or maybe you do if your landlord is dodgy.
I spent around $8K on “transport”—which includes car payments (I bought a new but small hatchback 3 years ago = $22k), fuel, insurance, repairs, servicing and parking costs. I can well imagine that a family with more than one person (and thus more than one car) easily pays twice as much as me.
Spending less than 37% on housing doesn’t require
It requires you make a correct decision once a year or so about renewing the lease. The reason people have little discretionary income is that they habitually commit themselves to spending plans such as five years of a car payment—but that spending plan itself is a choice.
You may have an excellent point about the costs/benefits of your perception of working in the US. I don’t think you have much of a point about actually working in the US, and that’s what all these comments are getting at. Even at much lower salaries, it isn’t that hard to save a lot of money if you care to. (I’ll throw in my own data point: my last serious job before law school gave me about 50k a year in disposable income, working 20 hours a week.)
While I’m at it, “time consuming bargain hunting, self-denial, and tax evasion” are all rather prominent parts of your own plan. You’re moving across the globe to find cheap living. You’re living in the middle of nowhere, with undoubtedly limited access to goods and services. And you’re evading paying US taxes (or maybe you actually have to pay them on your return; I don’t know). Plus, you’re working in a job that has no real benefit for your future career, away from friends and family. I laud the suggestion for people to do something different and potentially lucrative, but methinks you’re weighing options on less-than-accurate scales here.
Strongly disagree. Or, at least, it doesn’t seem to apply to the people you’re marketing this plan to. I won’t go through my expenses, but let’s just say that I’m saving money on a grad student’s salary, and don’t project my annual expenses doing anything more than doubling for the foreseeable future. Except for taxes, pretty much any salary increases for me will go straight to wealth accumulation.
...how frequently?
In real terms? Once. I’m not going to speculate on inflation. There are, of course, plausible scenarios in which my expenses increase much further, but they have a pretty low probability at present.
Opaque potential for devising a plan might look worse in comparison to a specific worked-out plan. But unless you seriously think for enough time about that potential direction for developing new plans, and don’t come up with any simple plans, you can’t declare your own plan’s superiority over the other potential plans. And the argument for this difficulty must reference such effort and rationality of its conduct, ideally should describe the reasoning process that comes to a failure in every considered class of options.
You can perhaps point out a particular plan’s superiority over the painful process of trying to come up with an alternative plan, so that if the plan is clearly an improvement over status quo you should just take it and skip the thinking-about-alternatives part. This is a good reason, if you don’t expect to be able to come up with a sufficiently better alternative plan whose superiority compensates for the effort spent of devising it, but then again your argument should refer to this fact, and not just to status quo.
In short, your post is useful, since it gives a constructive lower bound on how good you can do, but your argumentation for it being the thing to do is lacking.