Finance

Drawn to FIRE

FIRE

If you haven’t heard of FIRE (Financial Independence Retire Early) you’re not alone[1].

FIRE

 

However, awareness of FIRE is growing as evidenced by the attention it’s receiving from the mainstream media.

And then there was Suze Orman’s infamous take down of FIRE – “Suze Orman hates the FIRE Movement”.

It seems like FIRE is one of those things people either love or love to hate.

 

What is FIRE?

If you’re one of the 89% who is unfamiliar with FIRE, here’s a brief overview. The main ideas behind the FIRE movement are often linked to a book published in 2010 called Early Retirement Extreme by Jacob Lund Fisker. It provides the basic template of combining simple living with income from investments to achieve financial independence. It explains the relationship between savings rate and time to retirement which allows individuals to quickly project their retirement date given an assumed level of income and expenses.

Several influential blogs arrived on the scene around the same time: Financial Samurai (2009) and Mr. Money Mustache (2011). Both are still going strong. But the FIRE movement really took off a few years ago when millennials embraced it.

FIRE seekers often rely on the 25X rule which sets an investment goal of accumulating at least 25 times estimated annual living expenses. Upon reaching financial independence, paid work becomes optional, allowing for retirement from traditional work decades earlier than the standard retirement age.

Something for Everyone

Many workers are eager to achieve FIRE because they want the freedom to pursue a more purposeful life. Take Mrs. WoW (Waffles on Wednesday), an occupational therapist, for example.  “For me, being able to give back to communities and people is a big reason for FIRE. I love to travel and I am super passionate about my profession, so getting to do both and contribute to society in a meaningful way is my why. The days I volunteer are some of the hardest days I’ve ever encountered, but in the end it is worth it knowing that I am helping people live better and more independent lives.”

Work place stress is also drawing people to FIRE. According to the American Institute of Stress: “Studies show that job stress is far and away the major source of stress for American adults and that it has escalated progressively over the past few decades. Increased levels of job stress are associated with higher rates of heart attack, hypertension, and other disorders.”  As a result many workers are anxious to put the stress of the work world behind them as quickly as possible.

My wife’s reason to pursue FIRE is different. Her goal always (starting immediately upon graduating college) was to leave work as soon as possible in order to pursue her artistic projects. So she chose a career in accounting which offered steady employment, a good income, good lessons in financial literacy and good benefits (we’re both finance nerds as it turns out). She achieved FIRE and has been enjoying her artistic endeavors ever since.

Then there are longer tenured workers who have fallen behind in their retirement savings who turn to the principles of FIRE to help them catch up.

Many parents and grandparents play an important role in helping young people become financially literate. FIRE provides a rich source of teachable lessons which can lead to good money habits and better life outcomes.

Even if you don’t fall into one of those categories, learning about FIRE increases everyone’s financial literacy and provides valuable insights into the non-financial side of retirement too.

We Believe in FIRE

One of our life-long passions is education.  Given the relative newness of FIRE, we are excited about the opportunity to share our experience, perspective, tools, resources and success stories to promote the principles and practices of FIRE while at the same time improving financial literacy. Furthermore, we want to show that it is possible for regular people (i.e. like us) to achieve FIRE. Going forward, we’ll be producing more content that focuses on FIRE (which of course includes retirement).

What’s Up Next?

We are going to FinCon which is a favorite event among FIRE practitioners, finance nerds, introverts of all kinds, media and all types of influencers. We look forward to learning more about FIRE and networking with some great people.

Check out my just released presentation on Financial Independence. It’s available on my YouTube channel .

Then later in September I have an exciting announcement to make. Stay tuned….

[1] According to a November 2018 survey conducted by Harris for TD America

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