FIRE - A Realistic Alternative Narrative?
Can I retire early? Can I do it on a budget? Can I go for it today? Yes, yes, and yes. Here is how
The next generations had taken notice of that and are pushing the envelope even further. Gen X and even Gen Y are starting to do this too. They cultivate the desire to retire in their 40s and even 30s! This is what is pushing hard FIRE, the new American movement that is spreading around the globe now.
The founders of this movement are Joe Dominguez and Vicki Robin, who authored a book in the early 90s, called, “Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence”.
The proponents of the movement advise that it is possible to achieve FIRE by minimizing expenses or maximizing income, or ideally both. The goal is to reach the assets needed for a perpetual passive income sufficient to cover the expenses.
One way of doing that is following the 4% rule*, where multiplying your annual expenses by 25 should give you an estimate of how much money you need to reach FIRE. Of course, once you reach your financial independence you can still do paid work, but it is optional and more of a ‘keeping yourself busy’ kind of a choice. The point is to make your working life shorter, and your living-and-enjoying life longer.
According to Tanja, their first FIRE strategy was to cut spending and increase investing, even “without a real plan”, she shares. At the same time, she began a blog called, “Our Next Life.” where she records their steps along this journey. In this blog Tanja stresses the key points: be clear about the life you want, know how much would this life cost you, and how much are you spending.
However, Hester says there isn’t a FIRE template, “I think it looks different for everyone”.
Christina and Amon from Our Rich Journey would agree. They retired at 40 after eight years on the FIRE journey. They share on their YouTube channel their ways to make money, save money, and invest money.
It has been long eight years and a lot of hard work and sacrifices for Christina and Amon! But now the happy family is enjoying a fun lifestyle, full of rewarding dynamics and of doing what they love most, and of course, teaching their lovely kids about the key values in life. All of these are made possible by FIRE.
So yes, these are real cases of real people. People who refuse to follow what their parents and grandparents have done. People who look for alternative life narratives, and people who enjoy the fruits of their smart finds and efforts!
- It requires minimizing expenses or maximizing income, or better both, following the 4% rule*.
- It allows for retirement decades earlier and enjoying realistically your dream life.
Photo by Moosa Haleem on Unsplash
FIRE - the Financial Independence Retire Early movement is gaining popularity in younger and younger age groups, even Millenials! This alternative narrative to one’s lifestyle is kicking in at a full blast!
The Beginning
It use to be the Baby Boomers. They started to pull down the retirement age bar - from 65 to 60, to 55, and even 50 years of age. Many people were skeptical and even feared such a trend. But fear is what makes us take the greatest leaps in our lives, isn’t it?The next generations had taken notice of that and are pushing the envelope even further. Gen X and even Gen Y are starting to do this too. They cultivate the desire to retire in their 40s and even 30s! This is what is pushing hard FIRE, the new American movement that is spreading around the globe now.
Why FIRE?
Younger and younger generations are feeling the financial pressure from debts, housing, and escalating living costs. This is where FIRE can come to the rescue. Financial independence and retiring early is an attractive options, no doubt!The founders of this movement are Joe Dominguez and Vicki Robin, who authored a book in the early 90s, called, “Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence”.
The proponents of the movement advise that it is possible to achieve FIRE by minimizing expenses or maximizing income, or ideally both. The goal is to reach the assets needed for a perpetual passive income sufficient to cover the expenses.
One way of doing that is following the 4% rule*, where multiplying your annual expenses by 25 should give you an estimate of how much money you need to reach FIRE. Of course, once you reach your financial independence you can still do paid work, but it is optional and more of a ‘keeping yourself busy’ kind of a choice. The point is to make your working life shorter, and your living-and-enjoying life longer.
Is FIRE Working?
The short answer is yes. Let’s take for example this young couple, featured in a CNBC video. They are Tanja Hester and her husband Mark, who were blessed with well-paid jobs (of over $100k per year), but both their careers demanded exhausting long hours and traveling.According to Tanja, their first FIRE strategy was to cut spending and increase investing, even “without a real plan”, she shares. At the same time, she began a blog called, “Our Next Life.” where she records their steps along this journey. In this blog Tanja stresses the key points: be clear about the life you want, know how much would this life cost you, and how much are you spending.
However, Hester says there isn’t a FIRE template, “I think it looks different for everyone”.
Christina and Amon from Our Rich Journey would agree. They retired at 40 after eight years on the FIRE journey. They share on their YouTube channel their ways to make money, save money, and invest money.
It has been long eight years and a lot of hard work and sacrifices for Christina and Amon! But now the happy family is enjoying a fun lifestyle, full of rewarding dynamics and of doing what they love most, and of course, teaching their lovely kids about the key values in life. All of these are made possible by FIRE.
So yes, these are real cases of real people. People who refuse to follow what their parents and grandparents have done. People who look for alternative life narratives, and people who enjoy the fruits of their smart finds and efforts!
Key Takeouts
- Financial independence and early retirement is a realistic alternative narrative.- It requires minimizing expenses or maximizing income, or better both, following the 4% rule*.
- It allows for retirement decades earlier and enjoying realistically your dream life.
*The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4 percent of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.
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