Financial Independence, ERE, scale

I was thinking about The Wheaton Eco Scale and how it helped me understand how to get better. When I showed this to others they could understand what I was doing and where I wanted to go. But I do not know of a scale like this that is for financial independence. I find myself trying to see the path to financial independence and getting lost in the noise. I feel that a scale would help convey these ideas better. Ok here is my very fast scale breakdown (not logarithmic and just a start):

Levels	Actions
-1 or Lower	In debt like a lot of student loans, home loans etc.
0	Wanted to be out debt and starts reading up on ERE, FIRE etc.
1	Starts cutting costs and paying down debt
2	Builds skills and knowledge?
3	Thinking about income streams
4	Debt Free?
5	Building income streams
6	Job income less than income streams
7	Income streams over 90% of income?
8	Tells boss to (input full beauty of the English language ) off
9	Financial Independence?
10	Makes pizza and pie

I think I am a 6, but already did 8.  I think 8 can be tricky to figure out where it goes, but probably goes somewhere after 4.  Of course I am not good at following modern patterns, and am perceived as different.  I do like the chart idea.  Could really help somebody reach their goals. There is nothing like putting down on paper and checking off where you are and want to go. Thank you for sharing.

I am making pizza and pie. Or wishing for cooler weather so I can.

Can I ask what ERE and FIRE are?  Mr. Google was not helpful in any way.

Anne Miller wrote:I am making pizza and pie. Or wishing for cooler weather so I can.

Can I ask what ERE and FIRE are?  Mr. Google was not helpful in any way.

FIRE is short for financial independence retire early. I have not read a lot on FIRE.

ERE is a book by Jacob Lund Fisker. I read this book about a year ago. It is a great read!

I was thinking about the scale and trying to add more detail to the levels. So for levels under zero the number could represent the amount of debt. So -2 would be a ratio of $2.00 in debt per $1.00 of income. Any thoughts or ideas about levels?

I like your idea, but feel like the steps would be different for everyone

My ultimate goal is a little different. I have no interest in developing income streams. It's way easier for me to just go to work for someone else one or two days a week. That takes care of my minimal social needs, too 😁  Once I have my costs cut to the point I can do that (and I'm pretty close), I consider myself retired. I have enough money kicking around here and there I could live for at least a year if I had absolutely no income coming in for some reason, but I don't want to have to use any of that.

I do have some things I could do to make a bit of money, and maybe I will at some point. I love having a job i don't have to think about when I leave the office, though.

I haven't seen any passive income schemes that would work well for me without quite a bit of effort initially. I'd rather be in my garden.
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I love what you have here...! maybe at 100 you have
Tony Stark: Genius, billionaire, playboy, philanthropist. Who uses his money to save the world...

I agree, the paths to early retirement are very different for everyone.  Then again, Paul's scale is for Paul's version of permaculture, so your scale for ERE could be fit your ideas.

A scale could include things like your cost of living vs your debt, or vs your earnings or vs your savings.  When your cost of living is less than your earnings - yay.  When your savings are 2x your cost of living - yay.  When your savings is 30x your cost of living - double yay.  When your abode is paid off - yay.

You might want to rethink 8, unless it’s totally tongue in cheek.

It’s not good karma. I’ve been there, done that. It felt good at the time, but I still regret it 25 years later. It occasionally crops up in my dreams which I assume is my subconscious reminding me not to be a dick. You never know what twists and turns life has. Your paths may cross again. I’ve also been a boss but just part of a chain. I found it really hard, I lead by example and had too high expectations - I was lacking in empathy. I was never taught empathy, I didn’t really understand what the word meant. So some of the people who worked for me probably wanted to do a number 8 on me.

Anyhoo . . . I think this is a great idea and something well worth exploring. I took a different path and married a workaholic. I became a stay at home Dad at 37. It was hard. In the last few years it’s got a lot easier. I’m a homemaker who loves to make things. So I get to do lots of things people do when they retire. As a family, we’re not financially independent though.

We’ve had huge debts in the past. You might want to check out YNAB (You need a budget). It’s the only household finance management solution I’ve found to work. I’m sure there are alternatives, but unlike most finance tools, it’s all about allocating money to pots, rather than just being really good at telling you what you’ve spent it on. There’s some great advice on their site on how to get out of debt and stay that way.

I already did ERE, now that I know what it stands for.

For Level 2: Build Skills and Knowledge:

I would like to recommend Dave Ramsey's Baby Steps.

In case you have not heard of him, here are some posts you might find interesting:

https://permies.com/t/140785/saved#1104242

https://permies.com/t/132587/Great-Big-List-Easy-Ways#1040864

I've been making my own pizza for 17 years. I don't see the correlation there.

I guess I don't tie my financial independence to our land. Being debt free, living well below our income and totally enjoying what I do for a living. I consider myself financially independent.

Jan White wrote:I like your idea, but feel like the steps would be different for everyone.

Yes, I agree.

Mike Haasl wrote:
A scale could include things like your cost of living vs your debt, or vs your earnings or vs your savings.  When your cost of living is less than your earnings - yay.  When your savings are 2x your cost of living - yay.  When your savings is 30x your cost of living - double yay.  When your abode is paid off - yay.

I like this and will work on this next.

Edward Norton wrote:You might want to rethink 8, unless it’s totally tongue in cheek..

It is meant as tongue in cheek.

What got me started on this scale was communicating the idea of financial independence short and sweet. Something like "Look I am going to do things that may look odd or cause you to worry about me. But the reason I am doing those things is I want to be debt free. Also I want to do fun and interesting things. "  Yes, there are many paths and people at many points on the path will do things differently and that is cool.  

So I have done some thinking and reading. Here is my Financial Independence scale version 1:
Earning and debt is a ratio. So if one has $100,000 in debt and earns $20,000 a year the ratio is 1:5.

Earning	debt	saving as a percent of earning
1	5 and up	none
1	1 to 5	1% to 5%
1-2	1 and lower	5%-25%
2 and higher	none	25% and up

I am also thinking that each level as an issue, something like this:

Ratio of 1: 5 and up
Main Issue: How do I get out of debt?

Ratio of 1:1-5
Main Issue: How do I get more money and can it be done?

Ratio of 1-2:1 and lower
Main Issue: How do I strengthen my income?/ Make my money work for me?

Ratio of 2:0
Main Issue: What do I want to do today?

Hi,  When it came to step 8 I hated my boss. Yes hate. So I quit and went to work for myself and found out I was working for a crazy person. (smile) It did require sacrifice but I did retire early.

The Ramsey plan is a good outline more than a chart.  ie...

step 1 :   A:  Have an emergency fund of 2k.
           
                     1. Get an extra job and save all that money.

Sep 2:     B:  Get out of debt/ The debt snowball

                      1. Pay more on the lowest debt.
                      2. Add that paymedt to the next lowest debt,
                      3. Keep adding until all debt is gone.  

Step 3: ,,,,,,,,  

The 1,2,3 are how you do the main topic

T Blankinship wrote:Earning and debt is a ratio. So if one has $100,000 in debt and earns $20,000 a year the ratio is 1:5.

This made me think of a blog post by Mr. Money Mustache which is kind of related.  He calls it "The Shockingly Simple Math Behind Early Retirement".  Rather than looking at the ratio between earning and debt he is looking at the ratio between cost of living and savings, or put differently how much you bring in compared to how much you spend.  In it he has a nifty chart showing how many years to retirement you are based on what percentage of your income you are saving and investing.  This is based on some assumptions, like a 5% rate of return on investments and a 4% withdrawal rate after retirement.  Also it's assuming you are starting from zero net worth, which sadly for many means climbing up out of a hole first.  Obviously things shift as these numbers shift, but this chart gives a nice overview of how important your savings rate, rather than your rate of income, can be to reaching early retirement.  Especially interesting to note is how much more important it is to move from saving 5% of your income to 10%, cutting 15 years off your working life to reach retirement, compared to moving from 90% to 95%  where you only cut off about a year.

T Blankinship wrote:

Levels	Actions
-1 or Lower	In debt like a lot of student loans, home loans etc.
0	Wanted to be out debt and starts reading up on ERE, FIRE etc.
1	Starts cutting costs and paying down debt
2	Builds skills and knowledge?
3	Thinking about income streams
4	Debt Free?
5	Building income streams
6	Job income less than income streams
7	Income streams over 90% of income?
8	Tells boss to (input full beauty of the English language ) off
9	Financial Independence?
10	Makes pizza and pie

I think there is a good one here: ERE wheaton levels, and I also think that there is a difference between "good" debt and "bad" debt. Like your house, land, student, and maybe tool loan may be good debts as they help you earn more if they are a low percentage of your income and you have a good interest rate on them or even better pay them off in an introductory period.  So I wouldn't give those a negative number. I would 100% give high consumer (bad) debt and spending all of your income every month a negative number.

Is it just old school of me to think of debt that is for consumptive/luxury goods as bad and debt that obtains you and asset or education you need to earn more is a tool at your disposal that can be a positive thing? For example: Leverage in real estate.

Further, firing your boss too early can actually hurt you, because you want your income and investments to snowball so that if something happens you don't have to start over or come crying back.

I respectfully disagree on good and bad debt.

I am debt free and retired early at the age of 42, but went back to work at age 47.

Some of it was due to cancer where it cost me 1.2 million to just stave off three types of cancer in 4 years. But by being debt free you really can bankroll some money away whether it is in tangible assets like equipment and land, or cash to pay for things.

This is where it gets interesting. I am about to sell a few hundred acres of land and some houses. Is that good or bad?

What does it matter? For the interim I am not spending  $19,000 a year on property taxes and can put that money other places. But if I miss owning a large tract of land, I can just buy more it’s what I call “passive assurance”. The potential is always there to retake what I had.

I did that with working. I always liked to work, but knowing I do not have to now, makes working even better. But it is also the best way to make money. The stock market averages a lousy 7 percent, I get 2500% by putting $50 in my lunch pail every week, and convert that to a $2100 a week paycheck making renewable power. It is silly not to go to work.

In the meantime I do have residual income streams from my 12 books I have written.

I am in a really good place right now but it’s from working hard, spending my money wisely, not having vices, and being debt free.

People sadly will defend their money to the death even though they know they are broke. It’s too bad because the ONLY way to beat the economic system is to not play.

Your Money or Your Life.  

A classic book that has a great approach to analyzing where your spending is going and tracking it so you can focus on how you are spending your money.  It talks about not only paying down debt and saving but also making sure you can spend money on things that mean the most too you.  It plays well with permaculture principles.

I need to reread it so I better focus on my long term goals.

Hi, I've been lurking recently as I'm ramping up to begin my dive into permaculture. This thread jumped out at me because I've been heavily involved in the ERE community (I'm AxelHeyst there) since 2020.

Jacob Lund Fisker took the Wheaton Eco Scale and made one for ERE. Cat posted a link to the wiki article, but here is the full table:


There's quite a bit of discussion about the table here for anyone interested.

The forum is very active and I suspect many permies would like it. ERE is based on applying holistic systems thinking not just to one's financial life, but to one's relationship to consumer society. The 'real' aim of ERE is to become a postconsumer, a broadly competent person, who is not beholden to the dysfunctions of consumer society.

Clearly much overlap in goals and values, I think! I am here because building my ERE system has brought me the freedom and autonomy I felt I needed to be able to approach my permaculture education with a bit of breathing room. My ERE system is nearing a state of stability and maturity that it doesn't require so much attention, just a bit of maintenance and tuning here and there.

Concept wise, I agree with most of this thread. What bothers me is the underlying assumption that the individual does not like outside employment.   I have worked only about 18 months in my life, the rest of the time I have had fun.  Only once, did I work in a job I did not like. I have heard people tell me that they dreaded going to work every morning. …yet they kept their jobs for years. It never made sense to me.  My 18 month compromise was when I was involved in a paper chase going after a degree, and the job provided flexible hours, good pay and experience in a tight job market.   The problem was I has a paranoid boss who figured I was after her job.

I realize, this thread is about financial independence, but independence can be built in a variety of ways.   I have spoken with a number of business owners who felt trapped by their jobs.  I adopted the philosophy that independence for me  is best obtained through multiple income streams.

Tyler Disney wrote:Clearly much overlap in goals and values, I think! I am here because building my ERE system has brought me the freedom and autonomy I felt I needed to be able to approach my permaculture education with a bit of breathing room. My ERE system is nearing a state of stability and maturity that it doesn't require so much attention, just a bit of maintenance and tuning here and there.

Welcome to Permies!

As I read more and think about ERE. I find myself asking for a road map or the question "what is the next step?". When I look at the Eco Scale I see that in some areas I am doing well and in other not well at all. So on level 4 "power bill is 30%  of average". I am around 50% of average for my home. However I am not growing 50% of my food more like 1%, if that. Yet looking at the scale gives me some direction to go and what is the next. I do see a lot of overlap in ERE and permaculture. It is my hope that getting to ERE will make permaculture easier to do.

One thing we talk about in EREland is that the most critical column or component of the 'levels' is the mindset, the attitude, the kind of thinking. Indicators like 'Savings Rate' or 'household expenses' are merely that: indicators. In the business world we might call them lag metrics: things that will likely approximately happen *as a result of* postconsumer thinking, or advanced frugal consumer thinking, etc. It is more effective to pay attention to 'lead metrics', which is gotten at by how do you make your decisions, how do you process information, do you think in holistic systems or in linear processes, etc.

So with permaculture, it is interesting to note what percentage of your food you grow or what your energy bill is, but that's a lag metric. With enough money, books, and land I could throw petrochemicals at some dirt until I've grown 850,000kcals, but that's not my vision for how I want to procure my food. It's much more telling if I'm able to think in patterns to details, if I understand the importance of getting a yield, if I habitually seek to close loops (waste=food), if I'm always thinking about the flows of energy and matter across the boundary of my system...

I think that what we 'see' as a permaculture project, rabbits and chickens and growies and preserved foods and all the rest, is a result of applying permaculture *thinking* consistently and iteratively.

At any rate, I think that if you can see that ERE is somewhat like applying permaculture principles to lifestyle design with a special emphasis on personal finance, then the two seemingly separate disciplines can be incorporated into a fairly seamless approach to getting after your vision. That's how I'm seeing my journey but I'm starting from 'over there'.

I'm always happy to encounter discussions about financial independence in the permaculture space. I discovered permaculture about the same time I discovered FIRE (Financial Independence Retire Early). I wanted to be financially independent, but not by investing in the companies that are harming people and planet. Since my PDC about 10 years ago, I've put a lot of time and effort into exploring the finance & livelihood information covered in the major permaculture texts as well as learning how to direct the money I had previously invested in Wall Street onto Main Street and into other more regenerative investments.

Along the way I met another person in the permaculture space also bridging permaculture and FIRE in his content – Mike Hoag from Transformative Adventures. Last year Mike  & I pooled our knowlege co-wrote Growing FREE (Financially Resilient & Economically Empowered) Building the Life of Your Dreams Without Losing Your Soul or Destroying the Planet. In it we outline a path to FREEdom instead of FIRE that is steeped in the wealth building principles inherent to permaculture (such as community, skills, green businesses, and other regenerative assets).

We essentially took the teachings of Jacob from ERE, Vicki's Your Money or Your Life, and a bit of Mr. Money Mustache and mixed that together with permaculture tools and thinking. If you want to learn more about our book you can check it out here - https://www.richandresilientliving.com/growingfree/

And here are a couple of blog posts I've written on permaculture and $$/financial independence that some might want to read -

https://www.richandresilientliving.com/permaculture-money/

https://www.richandresilientliving.com/financial-permaculture-making-financial-independence-fi-more-meaningful-resilient/

https://www.richandresilientliving.com/permaculture-fi-optimizing-for-multi-capital-abundance-part-3/

Laura Oldanie wrote:
Along the way I met another person in the permaculture space also bridging permaculture and FIRE in his content – Mike Hoag from Transformative Adventures. Last year Mike  & I pooled our knowlege co-wrote Growing FREE (Financially Resilient & Economically Empowered) Building the Life of Your Dreams Without Losing Your Soul or Destroying the Planet. In it we outline a path to FREEdom instead of FIRE that is steeped in the wealth building principles inherent to permaculture (such as community, skills, green businesses, and other regenerative assets).

Welcome to the forum, Laura

Dear hubby and I retired early before we ever heard of FIRE.

My brother-in-law did the same thing so we just followed in his footsteps.

Would you and Mike be interested in doing a Book Promotion?

If so, let me know and I can put you in touch with our Book Promo person.

This is an old thread that might explain about this fun experience:

https://permies.com/wiki/56004/Book-DVD-Promotion-Info

Anne Miller wrote:

Would you and Mike be interested in doing a Book Promotion?

If so, let me know and I can put you in touch with our Book Promo person.

This is an old thread that might explain about this fun experience:

https://permies.com/wiki/56004/Book-DVD-Promotion-Info

Hello, Anne. I appreciate you informing me about that opportunity. Let me check with my co-author Mike Hoag about this because it would be even better if he and I pursued this together. I'll circle back once I've had a chance to discuss it with him.

Anne Miller wrote:

Welcome to the forum, Laura

Dear hubby and I retired early before we ever heard of FIRE.

My brother-in-law did the same thing so we just followed in his footsteps.

Would you and Mike be interested in doing a Book Promotion?

If so, let me know and I can put you in touch with our Book Promo person.

This is an old thread that might explain about this fun experience:

https://permies.com/wiki/56004/Book-DVD-Promotion-Info

Anne, I've chatted with my co-author and we'd like to move forward with the Permies Book Promotion. Please advise as to how to be in more direct contact with someone on the Permies team to proceed. Thanks!

Thank you, Laura

One of our staff members will be contacting you:

Christopher-Shepherd