At the end of last year, I stumbled upon the FIRE movement. FIRE stands for financial independence and retire early. I saw a Youtube video about a couple that retired at 40 years old even with two kids. I thought that was incredible and started watching their Youtube channel (Our Rich Journey) to see how they did it. They talked about how they cut down their expenses, increased their savings, and invested in real estate and the stock market.
I felt like I was already doing all of those things but didn’t see myself being able to retire early. I then started to read some blogs about the FIRE movement such as Mr. Money Mustache – he is famous for retiring at 30 years old so he could spend all of his time with his newborn son. I also started listening to podcasts about achieving FIRE such as Mad Fientist and Choose FI.
I was amazed to see how so many people were able to retire early in their 30’s, even with average incomes. I also learned the difference between financial independence and retiring early. Financial independence is when you have enough money saved up through investments, that you could live off of for the rest of your life if you want to. Your FI number is when you have achieved 25x your annual expenses. Once you reach your FI number, you can choose to start working part time, or even quit your job to start the business you’ve always wanted to. The point is that becoming financial independent gives you options.
Some people refer to having enough money saved up for a few years as “F*** You” money. So for example, let’s say you have always wanted to work from home but were too afraid to ask your boss. Once you have “F – You” money, you are able to take on more risk. Since you have enough financial cushion, you can now ask your boss for things you want without the fear of being fired. I realized that I have personally always had “F-You” money myself, and relied on it when I didn’t like a travel assignment and didn’t feel the need to stay.
The word retirement has the old connotation of being 65 years old or older and lying at a beach doing absolutely nothing. In the FIRE movement, retiring early is when you quit your job and decide to spend your time doing other things besides working. Some early retirees travel the globe year-round, others pursue artistic or sporty hobbies, while some just love being a parent 100% of the time.
The nice thing about FIRE is that once you achieve your FI number you don’t HAVE to retire if you don’t want to. So if you truly enjoy your job and don’t want to quit working in your 30’s or 40’s, you don’t have to. But let’s say you have kids; you can make the decision to work part time or even per diem since you now have the financial independence to do so.
In my next post, I will talk about my own personal FIRE journey.
