Retire early with FIRE🔥

Today’s newsletter is about a financial strategy called FIRE: Financial Independence, Retire Early.

It refers to both a personal lifestyle and a broader financial movement that aims to help people attain financial independence and retire from traditional employment at an early age.

The core idea behind FIRE is to save and invest aggressively during the early years of one's career, often in their 20s and 30s, in order to accumulate enough wealth to sustain a desired lifestyle without the need for traditional employment.

FIRE proponents also question many assumptions that people have about their lives and careers, like:

• Why should I work full-time for someone else until my 60s or 70s before finally giving myself time to enjoy my life?

• How can I live a good life outside of mainstream middle-class consumer culture?

• Can I find a way to use my passions and personal interests to generate income to supplement my savings?

FIRE Fundamentals

The FIRE movement is oriented around two principles:

Financial Independence (FI): Achieving a point where your passive income (income generated from investments, such as dividends, rental properties, or interest) covers your living expenses.

Once you reach financial independence, you have the option to…

Retire Early (RE): Choosing to leave traditional employment to pursue other interests or activities.

Early retirement in the FIRE movement doesn't necessarily mean not working at all; it often involves pursuing work that aligns with personal passions and interests, even if it doesn't generate substantial income.

To achieve FIRE, individuals typically adapt their lives around these two strategies:

• Saving aggressively: FIRE advocates emphasize saving a large percentage of income, often 50% or more, to build a substantial investment portfolio.

• Living frugally: Minimizing expenses and adopting a frugal lifestyle to save more money and accelerate the path to financial independence.

Many FIRE fans also focus on investing their savings, finding side hustles, or creating sources of passive income to supplement their income from work.

Varieties of FIRE: 

It's important to note that the FIRE movement is not a one-size-fits-all approach, and FIRE fans have developed different approaches to FIRE.

Some people pursue Lean FIRE, aiming for a basic lifestyle with lower expenses, while others pursue Fat FIRE, aiming for a more comfortable and luxurious lifestyle in retirement.

Rethinking retirement & life after FIRE

Social media has played a significant role in popularizing the FIRE movement over the past 15 years.

The ideas associated with FIRE spread on forums and subreddits, and FIRE success stories are easily found on YouTube and other social media platforms.

One of the most well-known FIRE advocates is Peter Adeney, whose Mr. Money Mustache website is home to one of the most popular FIRE forums.

Adeney has been a major critic of the middle-class consumerist lifestyle that many FIRE fans want to escape.

In one essay, he calls on people to cure themselves of “Tiny Details Exaggeration Syndrome,” which he defines as a human tendency to “zoom in on increasingly irrelevant details as their material wealth increases.”

He writes:

He’s also written about the nature of retirement and life after achieving financial independence. In an essay entitled, “Early retirement doesn’t mean you’ll stop working,” he discussed the nature of a meaningful life:

Adeney is also a big advocate of bicycling as a way to save money, help the environment, and get healthy. (Adeney on his bike near his home near Boulder, Colorado)

In one essay, entitled, “What do you mean you don’t have a bike?” he even calls it an:

Some of his fans (who call themselves Mustachians) put together a Mr. Money Mustache greatest hits list.

Even if you haven’t been convinced to stop buying Starbucks and to start saving 80% of your income, Adeney’s blogs are well-worth a read.

ART OF THE DAY

The Sun by Edvard Munch. 1909.