The Prudent Man’s Guide to Saving FIRE
The FIRE concept – financial independence, early retirement – is pretty simple. If you can save enough money in your youth (uh), you have a lot more flexibility later in life. You can quit your job and start your own business, or unload your home to travel the world. If you can save money, you can create a future that suits you instead of waiting for that magical day when you can start withdrawing money from your retirement accounts or start receiving Social Security benefits.
But as with all other pursuits, there are those that take the basics to the extreme. Someone might have a six-figure salary, but only spend $ 15 a week on groceries for a family of four. Or consider a couple who build their own tiny house in a relative’s driveway to avoid housing costs.
These extremists can gain attention because they are doing everything they can to achieve their goal. We all love success stories, right?
But, according to some in the community, success with FIRE does not require extreme measures.
Why you should DIY your FIRE strategy
Basically, FIRE forces you to spend less than you earn and save the rest on investments with low commissions. ChooseFI explains this as saving you 25x your annual expenses to achieve financial independence. To do this, you should try to save 40 to 50% of your income annually.
This savings rate may seem impossible to you. But lest you feel hopeless before you even start, the New York Times spoke to several women who follow the FIRE principles and adapt them to their lifestyles.
Here is Kirsten Saunders from Atlanta who runs the Rich & Regular blog:
Saunders admits that there is no one perfect formula for financial success. And so the pillars of FIRE, which include lowering your housing costs, driving a used car, increasing your income, cutting grocery bills, among others, should not be seen in any order. You also don’t have to live a completely humble lifestyle to be successful.
Again Saunders in The Times:
Some of the individuals mentioned in the New York Times have gone to extremes to gain financial independence. But the Saunders quotes are what makes you think about forgetting about personal finances: it’s about your values, not about reaching the magic number that you were advised to work on.
Options for new contenders for FIRE
In fact, some FIRE fans have even shattered their spirit into varieties that look more like a Choose Your Own Adventure book than a universal roadmap.
There is LeanFIRE: this is the place where you live as economically as possible. FatFIRE is for those who do not want to give up their lifestyle while they are saving. In addition, semiFIRE can help you plan early retirement and work part-time. Each of these varieties relates to the lifestyle you are looking for when you retire early.
Take Fritz Gilbert of the Pension Manifesto blog, for example. When they were younger, he and his wife used their entire vacation to start looking at the world instead of waiting for retirement. “Of course, we could have saved money more aggressively and retired earlier, but we felt that the ‘sacrifice’ we made by saving for retirement at the level we made was appropriate for our life,” he writes. …
After all, the goal is to be able to hatch 4% of your nest egg every year and still have enough money for years to come. But what if you’re still far from saving half of your income so you can extract that egg later?
ChooseFi advises focusing on one percent at a time. “You don’t need to eat an entire elephant today or even this year. Just focus on what you can do this week to get you 1% closer to your ultimate goal, ” advises the beginner’s guide. This could mean an increase in your 401 (k) contribution, or it could just mean packing up lunch for yourself to work. This could mean discussing a cell phone bill or thinking about an extra part-time job you might like. One percent extra savings here and there can make a big difference over time.