FIRE

Financial Independence Retire Early

The short version is that we live below our means, and save and invest a significant portion of our income. Unlike like so many I see around me, we do not spend every last penny we make. Saving and investing, in combination with very limited debt, is enabling us to build wealth, and the assets that will one day provide our primary income. Combine that with the flexibility afforded by being self-employed, and you have the answer I give to the often asked question of how we can afford to take extended moto trips.

(Its also possible to travel a lot more cheaply than most Americans do on a more mainstream vacation, which helps us to be able to travel longer. Other overlanders have discussed this at length.)

When I decided to try and become even better with money in an effort to work less and live more, I was astounded to discover how easy it really is to build (a moderate amount of) wealth in this country. Having grown up in a standard middle class household with a decent but basic financial education, I had no idea that financial independence was even an option for the non-wealthy. That it was an option for me, personally, as a member of the middle class. That I don’t have to work a full time job until I’m 65.

That last part hit me like a ton of bricks. I’d always found being perpetually chained to the American style work, earn, spend treadmill to be very depressing, and limiting. It made me depressed to think that I had to work 40 hrs a week, with limited time off to pursue anything else, for most of my life, and during the best years of my physical health, just to have enough money to live comfortably. Discovering the FIRE movement helped me understand that I have a lot more freedom to live the life of my choosing than I ever realized. Work really can enhance my life, I don’t have to be a slave to it, I don’t have to work full time, and its possible to have the option of fully retiring much earlier than my 60s. That realization sparked an ongoing interest in learning to better manage my personal finances, which is providing clarity and focus to my ongoing efforts toward achieving financial goals.

As it turns out, for me, its not about retiring at all. The freedom of having enough saved to know I can weather downturns and income disruptions is worth far more to me than any increase in material lifestyle. Lack of financial stress is an incredible feeling. It wasn’t the work, it was the obligation to show to a job I hated every day. Now that I no longer have to do that, and have found more satisfaction in my work-life balance and how I earn money, I don’t feel the same pressure to escape the workforce as soon as possible. Currently, our goal is to achieve financial independence (the ability to fully retire without having to work for an income), but not actually retire fully time any time soon. We have businesses that we would like to continue to run for some time, although we are pursuing the ability to keep them running with increasingly part time effort from us, so we can pursue other interests.

I believe that any middle class American has the option to be financially secure and at least moderately independent.  Make the psychological shift from asking “How can I spend money to make me happy now?,” to “How can I use my money to buy financial freedom in the future?”. It really is possible for most middle class Americans, and does not require entirely sacrificing the present for a future that is not guaranteed. You are how you spend your time. Personal financial education is providing a fantastic return on investment.

About/Intro to FIRE

• START HERE – If you read nothing else about FIRE, read this.
• A Growing Cult of Millennials Is Obsessed With Early Retirement. This 72-Year-Old Is Their Unlikely Inspiration – This is a reasonable, not too long overview that covers the high points.
• Work less, live more: The way to semi-retirement
• Want to Become Financially Free? The FIRE Movement’s Saving Plan Can Help You Get There Sooner Than Expected
• 7 myths FIRE haters perpetuate about the early-retirement movement
• Money expert Jean Chatzky on how Americans should save for retirement and what you’re getting wrong about the FIRE movement

Common Financial Behaviors of Millionaires

• A researcher who studied over 600 millionaires found they do 3 things to forge a clear path to financial independence
• I interviewed over 200 millionaires, and about half of them followed the same straightforward path to wealth
• I spent 5 years analyzing how rich people get rich — and found there are generally 4 paths to wealth

How To

• The young and financially independent share their best practices to retire early
• The path to financial independence and retiring early, in one simple chart
• 10 Steps to Achieve Financial Freedom
• Why NewRetirement is my favorite retirement planning tool
• I never thought someone like me could be financially independent, but 3 steps are helping me reach that goal by 45
• Once ‘financially clueless,’ now we’re on track to retire: These 4 books and 4 podcasts helped

Mistakes

• 5 Things Keeping You From a Life of Financial Independence
• 8 Retirement Planning Mistakes To Avoid
• An author who studied more than 10,000 millionaires says homeowners can fall into 3 traps that ruin their chances of getting rich
• 23 Reasons you will always be poor

Examples

• These parents saved over $1 million to retire in their 30s—here’s how much they spend each year
• Want to retire early? Tanja Hester went from freewheeling spender to financial independence, and says it’s simpler than you think
• Retired at 38. Here’s What I Didn’t Expect.
• I retired at 34 with $3 million—here are 5 downsides of early retirement that no one tells you
• This woman retired as a millionaire at age 31. She says anyone can do it.
• I retired at 34 with $3 million: Here are 7 benefits I didn’t expect
• This Super-Saver Used Her ‘Yield Shield’ To Safely Retire At 31 With $1 Million. She Explains How It Works
• This Anesthesiologist Retired At 43 By Avoiding The Normal Traps That Trip-Up Doctors’ Savings

Considerations

• THE 6% RULE FOR FINANCIAL INDEPENDENCE

Resources

• Mr. Money Mustach – Funny name, outstanding blog.
• r/financialindependence – down the rabbit hole you go
• The Simple Path to Wealth  – the blog, but definitely read the book

Recommended Books

• Your Money or Your Life – The gold standard classic and foundational text of the FIRE movement for a reason. Change your mindset. How you think about money is probably wrong, and its holding you back. This book is different than most other personal financial books out there. If the tone bothers you like it did for me, ignore that. The concepts and mindset are essential; if they are new to you, they are life changing.
• The Simple Path to Wealth – Invest with confidence. Still my favorite for clearing up my confusion and intimidation about personal investing. If you know you are supposed to invest your money, but don’t know how, read this book. If you are already investing, read this book.
• I Will Teach You to Be Rich – Practical advice.
• All Your Worth: The Ultimate Lifetime Money Plan – Basic personal budget guide for regular (non-rich) people, good for people starting out. Practical, easy to implement advice for getting started with a household budget if you don’t have one. (And yes, you need a budget). If you can just implement the 50-30-20 rule, you’ll be most of the way there.
• The Millionaire Next Door – My personal experience is that people who complain about the rich don’t seem to know much about who the rich actually are, how money actually works, or how wealth is created. They aren’t willing to change their financial behaviors to match those of financially successful people, and then complain that they just can’t get ahead, and that “capitalism” or “the system” or whatever is keeping them down. (The rich are just trust fund kids who don’t “deserve” their wealth, or wealth is only accumulated by exploiting other people, and/or getting government handouts). Its just envy, ignorance, and resentment due to the false perception that they themselves can never be rich. (Stop caring about what other people have or don’t have, focus on improving your own situation. Material wealth has nothing to do with moral value or happiness). Despite being weirdly negative due to inappropriate expectations of this book, this review is very good.