Search Google for “what is FIRE?” and you’ll get over one million results. Here’s my favorite definition of FIRE on the web, from our friends at Reddit:
FI/RE is a combined acronym. FI stands for Financial Independence, which represents one’s ability to stop trading their time for money while remaining in a capitalist society. RE stands for Retiring Early, which represents the actual act of stopping the aforementioned time. The two are related and you can’t retire early without first becoming financially independent, so it’s useful to talk about both at the same time.
https://www.reddit.com/r/Fire/wiki/index/
The Beginning.
In 2011, we got engaged and were renting a townhouse in the PNW. One night, Mr. Scribbles and I have the following conversation:
Mr. S: “What’s the least amount of money you can live off of?”
Mrs. S: “Excuse me, what?!” [heart races, panic ensues, where is this going????]
Admittedly, I was defensive. I grew up with a sense of lack. Promises made and broken. So when I started making my own money I enjoyed it! I gave very little thought to retirement. I saved the default 4% in my company’s 401k plan, had zero savings, a car loan, students loans, and carried a credit card balance most months.
Mr. Scribbles knew early in his working years that he didn’t want to have to work forever. He discovered the power of investing and took advantage of his company’s 401k matching, paid off car loans, and didn’t use his credit card much.
It took me some time to get on board with saving and investing for the future vs enjoying my money now. It took lots of conversations with Mr. Scribbles, listening to podcasts like ChooseFI, and developing spreadsheets to track and project our net worth over time. As our projections became reality, I was convinced that we could reach our FIRE number.
Doing this work fundamentally changed our lives. When we got raises or a windfall of cash, we saved and invested. We set goals for our money: paying off my student loans, paying off cars, not carrying credit card balances, buying a rental property, getting raises or new jobs to increase our earnings, investing in crypto, and spending money on what matters most to us.
Types of FIRE.
When you get into FIRE, you’ll notice that there are many approaches…
- Cost-Cutters – These folks focus on dramatically reducing their costs. By lowering their cost of living they can save up to 70% of their income to reach FIRE in 5-10 years.
- Income-Increasers – These folks focus on increasing their income by starting businesses, investing in real estate, building new skills, asking for raises, job-hopping, etc. to be able to make more, save more, and invest.
- Middle-Pathers – And there’s a spectrum of people who live somewhere in between the cost-cutters and income-increasers. This was us.
We were squarely middle-path FIRE advocates. We stopped spending on things we didn’t value but we didn’t drastically change our spending habits. Instead, we focused on making as much money as possible and making an investment strategy that we could stick to in good markets and bad markets.
During our FIRE journey, we…
- Got excited about calculating our FIRE number and setting goals
- Talked to everyone about FIRE. Newsflash: they won’t care
- Become spreadsheet junkies, constantly tweaking, and building a valuable professional skill at the same time
- Got excited about annual increases to the 401K contribution limits
- Tried not to panic sell when the market dipped
- Felt hopeless, like we’d never reach our first $100K in net worth, then…
- Were surprised how fast we reached the two-comma club ($1M in net worth)
- Felt content, because what we value most doesn’t cost a dime
When you have reached FIRE, you(r)…
- Have enough money to sustain your desired standard of living
- Can use your time and energy to do whatever you want
- Are a badass mother trucker who has mastered your money mindset and habits
- Friends and family still won’t care or understand, but we still love them
Resources.
If you’re interested in FIRE, you should check out these resources to learn more and join a community of like-minded people:
- ChooseFI – Great content on personal finance and FIRE concepts.
- Reddit/r/personalfinance – Good starting place if you’re new to managing your finances.
- The following are great to see other people’s real-life situations, get ideas, and ask questions:
We LOVE to talk about FIRE. Do you? Have questions? Reach out here.
