Joe DiSanto, Wealth of Geeks
As frustrated, frugal Americans struggle to make ends meet amid inflation and mounting debt, some spurn traditional savings accounts for a FIRE lifestyle: “Financially Independent, Retire Early.”
This economic trend, the subject of countless self-help books, courses, and podcasts, promotes investing between 50% to 75% of your salary and retiring early. Fundamental FIRE principles include maximizing earnings, living within one’s means, and investing heavily.
Like most fiscal strategies, FIRE has fans and critics, but this plan can benefit would-be savers — provided they’re ready to stoke the flames.
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Early retirement, but at what cost?
In a recent episode of The Dave Ramsay Show, a caller discusses his burnout as he pursues a FIRE lifestyle. Meanwhile, host and personal finance guru Dave Ramsay reveals his disdain for it.
“The FIRE Movement burned down, did you notice?” jokes Ramsay. His gripe is that the caller has already amassed enough wealth for a great retirement one day. Therefore, burnout shouldn’t even be in the equation.
On paper, Matt has exceeded most Americans’ expectations, amassing a $350,000 IRA and three rental properties before turning 40. However, this quest for financial freedom has come at the expense of quality family time and physical health. He works 12-hour days, finding little time to enjoy being a father.
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Take a step back
“What you’re doing is not sustainable,” says Ramsay. “You didn’t build a life — you built a financial portfolio.” He adds that Matt can relax now, let his investments grow, and look forward to a lucrative retirement.
The money management veteran believes financial freedom shouldn’t mean missing out on everything that defines life, such as quality time with kids.
—————
The Flint that kindled FIRE
The FIRE movement began far earlier than most current proponents would imagine — before some were even born. A notable early mention of the term appears in Vicki Robin and Joe Dominguez’s 1992 self-help book Your Money or Your Life. It wasn’t until the last decade the mainstream press used the acronym.
We have grown accustomed to the idea of working our whole lives, saving carefully, and investing anywhere from 15% to 25% of our income. This tried-and-tested strategy means savers can retire at 65 and enjoy the “golden decade” before old age catches up.
FIRE disrupts such an ideal, giving people hope they can retire far earlier and relish financial freedom for decades. The movement comes in several guises, each catering to a variety of demographic profiles.
—————
What kind of FIRE are you?
Investment advice platform Fiology defines nine FIRE lifestyles, including:
• Lean FIRE: Geared toward those at the cutting edge of minimalist living. Lean FIRE adherents live very frugally, only spending when necessary.
• Coast FIRE: For those in the upper tier of wealth who have already saved enough. Coast FIRE fans lean on investments and fund retirement using compound interest.
• Fat FIRE: This FIRE strategy serves savers wishing to maintain a dynamic lifestyle, serving investors who are not content with having “just enough.”
• Barista FIRE: Works for people who see themselves as part-time retirees, using extra revenue to supplement retirement income.
• Slow FIRE: A gradual move towards early retirement. Adherents work fewer hours as they near their goals, keeping work-life balance in better shape.
Based on such principles, the “Slow FIRE” method could better serve Matt than the “Lean FIRE” strategy. Ultimately, the FIRE ethos is adaptable, suiting varied incomes, lifestyles, and personalities.
—————
Catching alight
Some might view Ramsay’s comments as inflammatory, considering how the FIRE ethos has transformed lives over the past few years.
One such testimony comes in a Vice profile of Abel Van Staveren, a former corporate worker in London. One might say that Van Staveren, who retired in his mid-forties, has been plain sailing.
“We spent last year on the UK South Coast (sailing) all the way to the Isles of Scilly, and this year we sailed to the Baltic,” says the interviewee. “In the winter, we mainly cruise Thailand and Malaysia and all the tropical islands in between.”
—————
Principled living pays dividends
Other successes include Female Invest writer Katie Donegan, who gained financial freedom at age 35. Her inspiration came upon meeting her husband, who helped her deviate from the standard route to retirement. Through diligent saving, low travel overheads, and a “me first” mentality, she achieved her goal of self-sufficient income generation.
“How did I do it?” she writes. A regimen of staying in the same two-bedroom apartment for many years and driving a “tiny three-door Skoda Citigo.” Moreover, Donegan spent hours learning about index investing. Of course, she could have allowed lifestyle creep to harm their plans, but her “razor-sharp focus paid off.”
There is a uniting theme in both FIRE success stories: once some enter the FIRE mindset, it is hard to shake it off — even after reaching financial freedom.
—————
Finding balance
Adam Hardy explored the FIRE movement in a Money op-ed, speaking with Raymond James financial advisor Randall Watsek. Watsek compares the FIRE trend to another extreme fad: crash dieting. “Some folks, he said, are naturally cut out for it,” writes Hardy. “They can easily make drastic lifestyle changes and keep up with it.”
Ramsay’s guest, Matt, falls into this category of Lean FIRE disciples, though his sacrifices are starting to catch up with him. Still, many Americans would consider Matt’s progress an impressive achievement — albeit with some collateral damage.
Finding the balance between a realistic and achievable lifestyle will help any prospective FIRE participant reach their financial milestones.
This economic trend, the subject of countless self-help books, courses, and podcasts, promotes investing between 50% to 75% of your salary and retiring early. Fundamental FIRE principles include maximizing earnings, living within one’s means, and investing heavily.
Like most fiscal strategies, FIRE has fans and critics, but this plan can benefit would-be savers — provided they’re ready to stoke the flames.
—————
Early retirement, but at what cost?
In a recent episode of The Dave Ramsay Show, a caller discusses his burnout as he pursues a FIRE lifestyle. Meanwhile, host and personal finance guru Dave Ramsay reveals his disdain for it.
“The FIRE Movement burned down, did you notice?” jokes Ramsay. His gripe is that the caller has already amassed enough wealth for a great retirement one day. Therefore, burnout shouldn’t even be in the equation.
On paper, Matt has exceeded most Americans’ expectations, amassing a $350,000 IRA and three rental properties before turning 40. However, this quest for financial freedom has come at the expense of quality family time and physical health. He works 12-hour days, finding little time to enjoy being a father.
—————
Take a step back
“What you’re doing is not sustainable,” says Ramsay. “You didn’t build a life — you built a financial portfolio.” He adds that Matt can relax now, let his investments grow, and look forward to a lucrative retirement.
The money management veteran believes financial freedom shouldn’t mean missing out on everything that defines life, such as quality time with kids.
—————
The Flint that kindled FIRE
The FIRE movement began far earlier than most current proponents would imagine — before some were even born. A notable early mention of the term appears in Vicki Robin and Joe Dominguez’s 1992 self-help book Your Money or Your Life. It wasn’t until the last decade the mainstream press used the acronym.
We have grown accustomed to the idea of working our whole lives, saving carefully, and investing anywhere from 15% to 25% of our income. This tried-and-tested strategy means savers can retire at 65 and enjoy the “golden decade” before old age catches up.
FIRE disrupts such an ideal, giving people hope they can retire far earlier and relish financial freedom for decades. The movement comes in several guises, each catering to a variety of demographic profiles.
—————
What kind of FIRE are you?
Investment advice platform Fiology defines nine FIRE lifestyles, including:
• Lean FIRE: Geared toward those at the cutting edge of minimalist living. Lean FIRE adherents live very frugally, only spending when necessary.
• Coast FIRE: For those in the upper tier of wealth who have already saved enough. Coast FIRE fans lean on investments and fund retirement using compound interest.
• Fat FIRE: This FIRE strategy serves savers wishing to maintain a dynamic lifestyle, serving investors who are not content with having “just enough.”
• Barista FIRE: Works for people who see themselves as part-time retirees, using extra revenue to supplement retirement income.
• Slow FIRE: A gradual move towards early retirement. Adherents work fewer hours as they near their goals, keeping work-life balance in better shape.
Based on such principles, the “Slow FIRE” method could better serve Matt than the “Lean FIRE” strategy. Ultimately, the FIRE ethos is adaptable, suiting varied incomes, lifestyles, and personalities.
—————
Catching alight
Some might view Ramsay’s comments as inflammatory, considering how the FIRE ethos has transformed lives over the past few years.
One such testimony comes in a Vice profile of Abel Van Staveren, a former corporate worker in London. One might say that Van Staveren, who retired in his mid-forties, has been plain sailing.
“We spent last year on the UK South Coast (sailing) all the way to the Isles of Scilly, and this year we sailed to the Baltic,” says the interviewee. “In the winter, we mainly cruise Thailand and Malaysia and all the tropical islands in between.”
—————
Principled living pays dividends
Other successes include Female Invest writer Katie Donegan, who gained financial freedom at age 35. Her inspiration came upon meeting her husband, who helped her deviate from the standard route to retirement. Through diligent saving, low travel overheads, and a “me first” mentality, she achieved her goal of self-sufficient income generation.
“How did I do it?” she writes. A regimen of staying in the same two-bedroom apartment for many years and driving a “tiny three-door Skoda Citigo.” Moreover, Donegan spent hours learning about index investing. Of course, she could have allowed lifestyle creep to harm their plans, but her “razor-sharp focus paid off.”
There is a uniting theme in both FIRE success stories: once some enter the FIRE mindset, it is hard to shake it off — even after reaching financial freedom.
—————
Finding balance
Adam Hardy explored the FIRE movement in a Money op-ed, speaking with Raymond James financial advisor Randall Watsek. Watsek compares the FIRE trend to another extreme fad: crash dieting. “Some folks, he said, are naturally cut out for it,” writes Hardy. “They can easily make drastic lifestyle changes and keep up with it.”
Ramsay’s guest, Matt, falls into this category of Lean FIRE disciples, though his sacrifices are starting to catch up with him. Still, many Americans would consider Matt’s progress an impressive achievement — albeit with some collateral damage.
Finding the balance between a realistic and achievable lifestyle will help any prospective FIRE participant reach their financial milestones.
