What would you do with a financial safety net?

Inside view:

If I had a safety net for one year, I would program some open-source games and/or applications (business model: "if you like this game/app, please send me €5"), write a blog about programming games (business model: adsense), and then publish the blog contents as a book (business model: obvious). At the end of the year, if I had a stable income of €500 monthly, I would continue this strategy.

Outside view:

I would spend all day reading and commenting web sites, complaining each evening how short was this day. After half year I would become very anxious and try to find the best way to spend the rest of the year; while reading and commenting web sites all day. After 3/4 year I would become very depressed, and after 11 months I would swear that if only I had the same chance again, I wouldn't waste it.

Thanks for posting this.

Peter Thiel's 20 under 20 contest pays 20 exceptional young people a $100,000 each. This is a good starting place for thinking about this type of thing, but I don't know if I agree with how he implemented it.

My reasoning underlying the original suggestion was this: "Self-made" highly wealthy individuals are often risk-seeking. Speaking for myself, I feel that I would be more risk-seeking if I had a guaranteed financial safety net. Without such a net, each individual spends most of their own life establishing financial security and never taking the kinds of risks that could lead to significant wealth. Thus, there's a tremendous amount of duplication of effort, in the sense that we're all making our own careers and yet we all agree that there are specific "more important things."

Even one ultra-wealthy* Less Wrong-style rationalist could do tremendous good through calculated donations and funding of projects.

*There is some ambiguity here obviously. Let's just say this means having enough personal discretionary wealth to fully fund one or more focused and effective long-term research projects.

I quit my job in October 2010 and tried various things for a year before taking up another job offer in November 2011.

What I actually did:

• Professional: Tried to set up a consulting firm with a friend with the intention of being able to work at my own pace and earn as much money as I needed for my daily living expenses and a little bit extra for travel and not too much more. This was fairly successful, we got one project with a large company. The clients were pleased with our performance and wanted to give us more business. However, I found business development cycles were longer than I expected and my friend was too risk-averse to quit his well-paying job for this full time. I also found that I was not motivated enough to work on the business without some sort of peer group and support network. In the end, we had to say no to more business coming our way and shut shop.

Post this I was courted by a friend to join his start up developing a Natural Language Processing product. However, I did not find his business model compelling and the product was similar to many others already available in the market. At the end of this second experiment I took the first job I was offered in my old line of work.

• Physical fitness: I lost about 10 kgs in this year mainly through dieting and doing Kalaripayattu- a form of Indian martial arts. I'm more than pleased with the fact that I stuck with my Kalaripayattu training despite a lot of skepticism in my social cirlce - most Kalaripayattu artists start very young- at seven, and here I was, starting off at thirty. I'm far more flexible and fit than when I started out and much more comfortable with the way I look.

• Other: Took up sketching. I've not done this after school and even in school I was not considered good. I was surprised at how well this has worked out though. Turns out drawing really is mostly about observing! Who'd have thunk?

Buoyed by the success of the sketching experiment I decided to try and learn the piano. This did not go well at all. I managed to look up some youtube videos and then lost steam pretty quickly. Shall be attempting to restart this again. I guess what went differently in this as compared to sketching was that I did not get as many compliments as soon as I was starting off. Not too many people can be impressed with "mary had a little lamb" on the piano.

There were lots of failures. I had planned to try different jobs - teaching, volunteering at NGO's etc before deciding to move back to a regular job. However at the one year mark of leaving work I panicked a bit and started interviewing for jobs. Once I got a job it was rather difficult to say no.

I had planned to do a lot of studying. I ended up reading/studying about 10% of what I planned. So that went badly too.

Even tried organizing Less Wrong meetups in Bangalore. (life took over after the second meetup and there hasn't been one after August. So that should count as a failure.) On the whole, although it looks like I'm back where I was in 2010, I'm happy with the way things went. Before I attempt something similar again though I'll take JoshuaFox's advice to "produce something in your offhours to prove (to yourself) you're serious."

FWIW, I'm currently attempting a career change right now, in large part because of having a financial safety net.

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Are you people actually saving for retirement, or do you figure the singularity will come before you reach 65?

What magnitude of money are we talking about? A large enough pile to relieve one of the necessity of ever again depending on work to pay the bills, or something less, say a few years' worth of living expenses?

I'm currently accumulating a one year safety net so I can spend a year on a Masters programme at a prestigious university without having to get into large quantities of debt. I get to have the freedom of a student with the wisdom and spending power of a professional in their early thirties.

With only 1 year of expenses, I would probably get a larger safety net. That's because since expenses can go up dramatically, and income can change, a year of current expenses is much much less than would seem required to keep me safe.

For instance, while it is unlikely that I would receive a crippling injury that would be uncovered by insurance and that would lead to breaking up my marriage, since I have good insurance and a wife who cares for me deeply, It is certainly a forseeable set of events (It has happened to other people), and if that happened I would blow through a year of current expenses far too quickly since I would go from a 2 income to 0 income family with a new set of large bills.

I guess another way of expressing it is that my safety net would probably protect me from 1 bad event at the moment... but it wouldn't protect me from 2 consecutive bad events. And since it isn't that much harder to get a second safety net if you have the first already, I'd probably keep reinforcing it.

A financial safety net is just that, a safety net. It's about being secure in your lifestyle. A financial safety net is easy to come by if your budget isn't fat. When you're secure in your lifestyle, any long shot opportunities you might try are no longer risks - you're secure - they're just alternative ways to spend your time and effort.

I've been an ass about my own finances, but concluded that I can live on a pretty thin budget and still live well. Most of what people spend money on is to maintain a lifestyle image to impress other people. Let that go and finances solve themselves.

The material goods I want that will make an actual difference in my life are limited, and if I buy them used, eminently affordable even for high quality. Ebay and craigslist are wonderful. Canadian internet pharmacies are handy too. I lived in Manhattan for a while, and looking back, the $8 dollar takeout dinners were usually better than the $40 dollar dinners. The $5 dollar lunches at the deli buffets were great.

Instead of trying to get rich, I'd rather bet on some long shots to do something I'd really like to be doing. Being rich would allow that, but there are likely easier ways to accomplish that.

Me? Probably nothing much different than I'm doing now: mooching off of my parents and spending my savings on various ways to entertain myself. (If I had enough savings to retire, I could call myself retired.)

Note that people tend to risk more in poker if they have more cushion. My guess is that risk tolerance is relative (e.g. percent of your income/wealth), rather than absolute (e.g. dollar amount) for an average person. I doubt that a LWer is that much different. Google seems to weakly confirm this, but I cannot find a definitive reference.

I'd go someplace tranquil and solve the world's problems.