Fire movement advocates frugal living, saving maximum and retiring early, so that one can take control of one’s time, enjoy life and spend time with family and friends.
The sparks of Fire movement started in early 90s, with the publishing of the book “Your money or your life” written by Vicky Robins and Joe Dominguez.
Fire is not an investment strategy, it is a lifestyle, a lifestyle of freedom with ones own time!
How can one achieve FIRE?
What amount one need to maintain their financial independence (FI)?
How do one plan for it?
What is the flip side of it?
The biggest of all why we are discussing it now, at this time, in 2023?
Let is find out answers in this blog.
As I said earlier, it all started with your money or your life. This book provides 9 steps to achieve financial Independence (FI), starting with what was your lifetime earing, what was the amount you spend etc.
But the highlight of this book is the underlying psychological framework. It makes us look at money from a perspective of our life energy. We trade your life energy in order to earn money. So, while making a spending decision, our mind goes like “is this worth the amount of life energy it is costing me?”
Through this book was published in 1992, its in late 2000s it picked up momentum. In my view the economic downturn of 2007-08 contributed heavily to the popularity of FIRE.
It is in 2000s 2 popular blogs on FIRE were started; Mr. money mustache and financial samurai. And these blogs remain the Goto place for recourses on FIRE movement even today.
Coming to the core of the topic, FIRE advocates retiring as early as in early 30s. That means, these individuals have to accumulate enough funds in their portfolio to support rest of their lives.
Hence FIRE is all about maximizing income, reducing the expenses by adopting frugal living and maximizing savings.
FIRE is a lifestyle adopted by not only entrepreneurs but also individuals in 9-5 jobs, tech industry etc. as well. For them, to support the early FI they might need to pick up side – hustle to maximize the income.
Coming to the numbers guiding FIRE, one needs to have 20-30 times of their monthly expense as investments, so as to retire.
To achieve this one should be saving 50-75% of their monthly income.
It also says that the safe withdrawal limit for sustaining the retired life is 4%
As FIRE movement spread across the world, people started customizing it to suit their lifestyle, resulting in some variants of original FIRE movement. Few worth mentioning are lean FIRE, FAR Fire, and barista fire
As with any lifestyle choice, there are pros and cons to it.
Are you ready for such extreme savings and the lifestyle adjustment?
Are you ready for delayed gratification of life? how does it impact your family?
There is a lot to think about here and it is a very personal choice one should make, after carefully evaluating pros and cons in the context of their life.
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