I was first introduced to Financial Independence, Retire Early (FIRE) by a YouTuber named Mina Irfan. Ironically, I stumbled across her content while researching Louis Vuitton handbags. Picture it, I’m in debt up to my eyeballs, and I’m shopping for a $1200 purse. It’s ridiculous, and absolutely true.
I wasn’t a dummy, I swear! Heck, my bachelors is in astrophysics. The problem was my lack of awareness. I wasn’t on FIRE then, because I had no concept of that idea. It was just being introduced to me. But once I grasped the idea, and my husband was on board, there was no stopping us!
I am confident many of you have heard of the FIRE movement. This post is for those of you who haven’t. You need to be aware of this idea and decide if/how you want to use it.
What exactly is FIRE?
To FIRE, you throw away the idea that retirement happens when you get to a certain age. You cast away the idea that you have to wait until 65 (which is number I had in my head). Rather you calculate your FIRE number and then you work hard and live below your means until you hit it. The basic principle is that the higher you can get your savings rate, the earlier you’ll be able to retire.
Does everyone FIRE the same way?
Heck no! That’s the beauty of FIRE. You can go super lean, pursue minimalism, drive one car, practice sustainability and learn to live off of $30,000 a year. In this case your FIRE number is $750,000. Conversely, if you have expensive tastes, want a vacation home, to travel in luxury, and drive a Tesla you may need to live off of $250,000 a year. In this case your FIRE number is $6.25 million.
Whichever retirement you want, you need to work out the numbers. When your net worth is 25 times your annual expenses, you’re considered financially independent. I share exercises with my clients to calculate their number. It’s incredibly empowering to know your number, and again, I’m not talking an age!
Can you work after FIRE?
Heck yes! My father-in-law sent me this video of one of my favorite bloggers, Mr. Money Mustache. I read much of his blog, and had no clue he finally had a YouTube channel . I love his story. He and his wife retired at 30! In their 20’s they set a goal to retire before having children – which they totally accomplished.
Back to the video, in it Mr. Money Mustache talks about FIRE and what his life is like now. He expresses how much more enjoyable work is when you don’t need to do it. Being able to walk away from work you dislike, and pursue work you thoroughly enjoy, makes life that much more sweet.
Have I won you over to the idea? I sure hope so, but I must warn you. Retirement accounts have rules for withdrawals. Therefore, it’s important to speak with an investment advisor, and create bridge accounts. These are investments that you build up with post tax dollars. They are important to have, because you don’t want to lose any of your hard-saved IRA or 401k dollars to early withdrawal penalties.
Let me know what you think about FIRE in the comments. I’m excited to know if this is a new idea for you, or if you’re well on your way. As always, thanks for engaging with my content!