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My wife and I recently saw the Playing with FIRE documentary which inspired me to write about FIRE. FIRE represents a movement of individuals from all walks of life who are committed to making fiscally responsible choices, allowing them to stop traditional work much earlier than most. The movement was birthed after the book, Your Money or Your Life was written. This book discusses the challenges that typical Americans face regarding their finances and gives a blueprint for living a different – and better – life, based on making wise financial choices.
Why Pursue FIRE?
Many people get confused when they hear about the FIRE movement and think it’s about “retiring” and sitting around with nothing to do. In reality, it’s quite the opposite. FIRE is about living life on your terms. We all need to determine what we want retirement from traditional work to look like.
Can you imagine what life would look like if you actually had a years worth of savings in the bank? Or if you were debt-free? Or if you didn’t have a home mortgage?
Would it impact the kind of job you had? Would it impact how much time you spend with your friends and family?
For me, the pursuit of FIRE is about living life on my own terms. Many people don’t really think beyond the traditional “work for 40 years, then retire… which might look like working part-time to supplement Social Security.” To me, that is simply depressing. If that is where you are, please know I am not insulting you. I just want to make sure (as you should) that those who come behind you don’t suffer the same fate.
Life is not guaranteed either. Sadly, my mother passed away unexpectedly, less than two months ago. I wish I could have flown back East to spend more time with her more frequently. She was a full-time caretaker for my grandmother, so it was not possible for her to fly out to see us in Arizona.
I was on my FIRE journey before my mother passed away, and now I am even more focused on being there. More than that, I have a goal of helping others catch a glimpse of what FIRE looks like.
Starting on your Road to FIRE
The first step to getting on the road to FIRE is simply acknowledging that you want better.
Next, know what your goal is to achieve FIRE. There are a few formulas for what your target financial picture should look like. Many people espouse a model that says to multiply your annual expenses by 25 and have that much in liquid assets. Others say to multiply the annual expenses by the number of years you plan on being retired, which would be more than 25 if you retire at a young age. In theory, you should be able to live off of the interest of your funds and not draw them down. This is why it is important when setting your retirement budget, to not be too conservative, otherwise, you will need more money than you will be earning in interest and you don’t want to have to tap into the principal.
A few things to keep in mind about your FIRE retirement goal:
- If you develop residual income, you can also obtain FIRE without having such a large nest egg.
- Eventually, Social Security, Pensions, and 401k funds will be available to you, so you may just need to plan on a certain about to live on until you reach the age where you can access protected retirement funds without penalty.
Your FIRE Gameplan
There are 2 targets you can set for achieving your FIRE goal. The first is maximizing your savings. This is typically accomplished by a combination of decreasing expenses and increasing income. Although some people may find that they have a lot of excess in their budget, most people can only cut so much from their budget. Increasing income is often a big component in both paying down debts and increasing savings. You can increase your income by getting a higher paying job, getting a second job, working more hours (if they are available), or starting a side hustle. Side hustling is quite common in the FIRE movement.
The second target you can set is growing your residual income. This is often accomplished by investing in rental real estate, however, it can be accomplished by other means such as starting a blog or other business.
Lastly, you can seek to achieve FIRE by utilizing a combination of savings and residual income building, which is the approach I am taking.
You’ve Achieved FIRE, Now What?
As I said at the beginning of the article, FIRE is not about sitting around doing nothing. In fact, it’s quite the opposite. Being financially free gives you the ability to live your best life and live it on your own terms.
Also achieving FIRE does not mean that you don’t work. It may mean that you work doing what you want to. It means that you don’t have to show up at a job that you hate, but rather you can pursue a job that you love because you are no longer working for money, but because you enjoy it.
Some of my FIRE goals include spending more time with my family and helping inspire people to live their best life.
I was encouraged by our local ChooseFI group to write down “the top things that bring you joy” and I want to encourage you to do the same. If you want to know what you will do when you achieve FIRE… look at that list.
Want to Get Inspired for FIRE?
If you have not seen the Playing with FIRE documentary, I encourage you to check out this link where you can potentially find a local showing. You can check out the trailer here:
Here are some recommended books on the topic of FIRE:
- Your Money or Your Life
- Playing with FIRE (the book)
- The Book on Rental Property Investing
- The Simple Path to Wealth
- You Can Retire Early
And here are some great FIRE websites with podcasts:
I hope you found this helpful, If this is your first introduction to FIRE, please let me know as I am always encouraged when I can help spread the message of hope that is known as FIRE.
I’d love to hear about your FIRE journey – whether you are starting, far along the way, or enjoying FIRE – so feel free to share in the comments or send me an email.