FIRE
8th October 2018
I’m not the hot flamey type. The FIRE I’m talking about today is an acronym for Financial Independence Retire Early.
This is a growing movement, particularly in the US, in which people are living by certain principles that allow them to retire decades earlier than normal. This is interesting to me as it takes ‘financial freedom sooner’ to the extreme!
The FIRE equation is –
High savings rates (50-70% of income) + frugal living + low-cost index fund investing = financial independence with 10-15 years.
Of course, this only works for individuals and couples who are earning decent money, but there are many stories of these mid-high earners giving up their jobs in their mid-30s. Often it also involves moving from the city to an area with cheaper housing and making other ‘sacrifices’.
The movement does get a fair bit of criticism and is mocked by many in the finance industry. It does feel a little cultish and perhaps some of the FIRE stories stretch the truth a bit, but I think it is interesting to see just how quickly you can achieve ‘financial freedom’ if you really put your mind to it.
This extreme early retirement isn’t going to be right for most people; the sacrifices will be too great. However, many people could be a lot closer to financial freedom than they imagined possible if they were to give a little more thought to how they spent and saved their money.
The following New York Times article, published recently, explains a bit more about the principles, and tells the stories of some people who are living a FIRE lifestyle.
https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html