Traditional retirement never quite made sense to me. Similar to my outlook on vacations, I question the norm that “work” and “escape” must be separate. Why limit the joy of living to specific moments when it can be part of our everyday experience? (Living for the weekends, anyone?) In any case, I’m not interested in pursuing a life that makes me crave a vacation, let alone one I would want to retire from—at least not in the conventional sense! Enter FIRE.
What is the FIRE Movement?
FIRE, or Financial Independence, Retire Early, is a movement that prioritizes financial independence and personal freedom. It challenges the standard of retiring at age 65 and advocates for a life where individuals can freely live as they choose without being tied down by financial obligations. This ambitious goal requires saving and investing aggressively to build assets for self-sufficiency without a 9-to-5 job.
Originally introduced in the 1992 book Your Money or Your Life by Joseph R. Dominguez and Vicki Robin, the FIRE movement isn’t necessarily a new concept. However, it has gained renewed traction in recent years, thanks to popular online personal finance communities and resources. Financial independence communities not only share strategies and success stories for reaching early retirement, but they also celebrate different paths to personal wealth and fulfillment.
Variations of FIRE
The FIRE community recognizes that each person’s journey is unique to particular circumstances and aspirations. Of course not everyone is going to share the same set of priorities or FIRE strategy! There are different variations of FIRE, including:
- Lean FIRE: Minimalist lifestyle achievable through a modest income and extreme frugality
- Fat FIRE: Luxe living with comfortable amenities, requires high income and strategic asset location
- Barista FIRE: Partial retirement with enjoyable part-time work for stress-free supplemental income
- Coast FIRE: Maximize early contributions to “coast” into retirement via investment growth, less stress and demand with flex work options
- Cash Flow FIRE: Generating sufficient cash flow from multiple investments and passive income streams to cover living expenses
When I initially learned about FIRE, I found that many opponents described the movement as ‘too restrictive.’ Perhaps these critics had not been aware of diverse strategies that allow for flexibility and personal choice. FIRE is ultimately what you make of it! I appreciate the fact that there are multiple paths one can take to achieve financial independence and early retirement.
Marriage and Retirement
American author and entrepreneur Ramit Sethi isn’t wrong to include ‘Marry the right person’ as a top money rule in his guide to building life-changing wealth. He expresses,
The person you marry is one of the biggest financial decisions you will ever make. That person will affect your earnings, where you live, what you eat, your family structure—they will affect everything… They will affect the way you will talk about money and feel about money for the rest of your life.
Ain’t that the truth?! Before things got serious between Brian and me, we had very different attitudes toward money. Our perspectives have evolved over time as we have grown together in our relationship. Honest communication, respect, and compromise go a long way in marriage.
Candidly, Brian and I initially had contrasting views about what retirement would look like. To be fair, I had spent an extraordinary amount of time thinking about early retirement and personal freedom, more than was typical for a 20-year-old. My dream of vagabonding the world as a real estate investor working freelance was a stark contrast to Brian’s acceptance of a traditional career and “lack of creative thought on retirement” (his words).
One mortgage-free home later, along with diversified investments, successful DIY projects, and heaps of teamwork and experience, we are now enjoying a satisfying balance in our approach to early retirement.
Investing for FIRE
We recognize and appreciate that strategies for achieving FIRE can shift and change just as life changes. This flexibility is what allows individuals to recalibrate their plans and create a sustainable path to financial freedom that works for them. Brian and I are currently exploring a combination of Coast FIRE and Cash Flow FIRE. I’m also an advocate for Lean FIRE, but Brian isn’t shy about letting me know that he’d prefer to opt out of that one!
Maximizing tax-advantaged investment accounts
I don’t know about everyone else, but I like to keep the money I earn! Brian and I prioritize maximizing tax-advantaged investment accounts to lower our taxable income and reduce our tax burden. By contributing to our 401(k)s and IRAs, we not only protect more of our earnings from taxes but also benefit from tax-free growth over time!
Intentional budgeting
An intentional budget is more than a financial tool; it provides a strategy for meaningful living, allowing us to invest in what truly matters to us. My frugality continues to be one of my favorite guiding principles, as purchasing decisions come super easy. Though at times, I can tell that Brian wishes I spent just a little more freely! Luckily, our intentional budget is a motivating balance of purposeful discipline and flexibility.
Our shared views on finances have naturally influenced our lifestyle choices and commitment to FIRE. With a values-based approach, Brian and I consistently review our financial goals and progress. Regular check-ins motivate us to fund our investments, contribute to our sinking funds, and enjoy a life that aligns with our priorities. We’re mindful about how we spend, making it possible to put away 30-45% of our income for investments (depending on our travel expenses, of course!).
Allocating funds to brokerage accounts
We allocate money to our brokerage accounts every single month. It’s a lovely little line in our budget that reminds us that our money is working for us. We fund index funds and individual stocks just like a savings account. Instead of trying to time the market, we choose to focus on time in the market!
Having time on our side means we can follow a dollar-cost averaging strategy and take advantage of compound interest. Each contribution gets us closer to our goal of financial independence!
Actively searching for investment properties
This is the big one in our next step of securing financial freedom! Our first foray into real estate investing outside of our primary home was back in 2017. As you can imagine, the market has changed a lot since then. Our original plans fell through due to unsuccessful negotiations, which ended up being a blessing anyway as Brian and I discovered that more time would be beneficial for us to fine-tune our financial future. And so here we are now, a few years older and armed with greater wisdom, experience, and teamwork.
Our hope is to successfully acquire profitable investment properties to help us achieve FIRE. Aside from financial gains, we find incredible satisfaction in the workmanship and creativity we pour into our projects. There’s far too much predatory behavior in the market, and we are deeply motivated to create affordable access to quality housing without the BS and fear of exploitation.
So, wish us luck! We’ve been looking at fixer-uppers but haven’t landed on one that speaks to us just yet.
Hands-on learning and self-investing
I’ve always been drawn to the value of Independence. I appreciate solitude, learning, and exploring new ideas on my own terms. As Brian and I work toward achieving FIRE, we’ve adopted a DIY approach to all kinds of tasks and projects. Investing in ourselves and what we can learn has been eye-opening. Through home projects, car repairs, and financial management, we’ve transformed our skills and mindset while maximizing our savings.
Instead of immediately outsourcing, we view each project as a learning experience. If we can figure it out, then great—we’ve gained new skills and saved some cash. If we run into situations that are unsafe or too complex, then we reassess and hire out. Simple! Hands-on learning has been extremely valuable in how we save and invest our time and money.
Freedom
While our idea of retirement differs from the traditional pursuit of leisure in later years, it still shares the same spirit of freedom. There is no reason why we need to wait until our 60s to live the life we want. Our goals are achievable without requiring an enormous amount of wealth, unlike Fat FIRE.
By pursuing Coast and Cash Flow FIRE, we’re focusing on achieving a positive cash flow that allows us to explore flexible opportunities alongside various investments. Brian and I hope to eventually enjoy life on our own terms, totally and completely free from the dependency of a 9-to-5 job. If we do take on full-time roles, it will be out of genuine passion and interest, not out of need. Flexibility and freedom are key for us, giving us the chance to hit the road, enjoy our interests, and work on projects that inspire us.
Has the FIRE movement influenced how you invest?
