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June 26, 2020
“FIRE” stands for Financial Independence Retire Early for a group of fired-up young people. In a nutshell, it’s about making some significant lifestyle choices immediately to try to achieve financial independence as quickly as possible. For most followers, it’s actually more about mindfulness, frugality and simplicity – not just about money and financial independence.
FIRE – Financial Independence Retire EarlyMost people planning for retirement have been working and savings their whole lives and start their thinking around the question “How much do I need?” Implicit in that question are a lot of assumptions around their current lifestyle, cost of living, where they will live, and what they will do with their time.
FIRE followers, many of whom are in their 20s and 30s, start their thinking around the question “What’s the shortest path to financial independence?” They are thinking hard about all the assumptions most people make about having a long work career and then retiring. Instead, they are asking themselves questions about what they really want to do with their lives and they really need to achieve those goals:
Having read the stories from people who are following the FIRE lifestyle, they are generally living in low cost areas and practice extreme frugality, so that they don’t need to accumulate millions to achieve financial independence. (Although some of them have turned writing about their story into a good business, since the idea of achieving financial independence is appealing to a lot of people.)
I’ve been reading a lot of blogs from people living the FIRE lifestyle and thought the following list would provide a good overview.
What FIRE followers can teach everyone:
What may not work for more traditional people:
As someone who has lived around Silicon Valley for many years, I’ve met a number of people who have achieved temporary financial independence. There are many people around here who have made million dollar plus paydays from startups, but it’s amazing how quickly the extremely high cost of living here and the willingness to take risk (by speculative investing which is part of the culture here) brings people back into the corporate workforce, where in most other places they would remain financially independent.
I’ve also seen the opposite – a very good friend of mine and I had this conversation several years ago when he was about 30.
Friend: “I’m taking off to travel for 10 years.”Me: “Ha ha.”
Friend: “I’ve saved $40,000 to do it.”
Me: “Per year? Ha ha.”
Friend: “No – I’m going to travel around SE Asia where I can live well for $4,000 annually”
Me: “You can do that?”
He took a freighter to China the next year and did it, which I applaud him for. He eventually started consulting part-time remotely on technology because he wanted to (not because he needed to).
Overall, the FIRE movement is compelling and probably going to become more relevant to many people as macro trends like the wave of boomers approaching retirement, automation and globalization put more pressure on the employment market and income from work. We’ll be looking at applying some of their principles to our own work and lives.
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