The FIRE movement is on fire! The acronym, which stands for financial independence, retire early, is an inspiration to many young people who dream of retiring in their 30s and 40s.
The norm for retirement has always been late 50s/early 60s, though many are forced to extend their working years to pay off debt and and cover unexpected expenses. In fact, according to PEW Research Center, more Americans ages 65 and over are working than at any time since the turn of the century. Furthermore, a greater number of Americans over the age of 65 are working full time.
Statistics like these, as well as growing disenchantment with the rat race, are what inspire the younger generations to become more financially independent. FIRE enthusiasts hope to save enough money to quit their full-time jobs and to pursue their passions.
According to New York Times article, Hacking Your Way to Retirement, followers of the FIRE movement tend to be male, and typically working in the tech industry. There are various offshoots of the movement:
Lean FIRE: people who want to practice extreme frugality.
Fat FIRE: for individuals who want a more typical lifestyle that focuses on saving and investing.
Barista FIRE: retirees who have almost enough to fund their lifestyle, but still need a part time, lower paid job to cover their full expenses.
Although the concept of living simply is not a new one, the inspiration for many FIRE enthusiasts is a book written in 1992: Your Money or Your Life by Vicki Robin and Joe Dominguez. The book guides individuals to place more value on time than money. It focuses on helping people transform their relationship with money and to change their financial habits. The goal is not to amass a fortune and to have an extravagant lifestyle. On the contrary, the idea is to find and have “enough.”
As our world becomes more complicated and more driven by consumption, followers of the FIRE movement are placing more importance on taking control of their finances to gain financial independence.
Although there is no specific formula to retiring early, there are some simple ways to achieve early retirement.
- Define your goal. Do you want to retire completely and stop working? Or do you want to find a less lucrative but more interesting job that will allow you to pursue your passion? This will give you an idea of how much you have to save to accomplish your ultimate goal.
- Drastically cut costs and automate saving. The FIRE community believes that an individual must save 40-60% of their income. With so many apps committed to helping consumers cut their expenses with very little sacrifice, there’s no excuse not to save. Automation is key.
- Commit to changing your lifestyle. Do you need a large home if a smaller house will do? Can you live in a less expensive area? Do you need the expensive car? Evaluate your spending and identify how you can live more simply.
- Eliminate debt. You can’t succeed if you are constantly paying interest on accumulating debt. Commit to paying it off.
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