What is the FIRE Movement?

A Brief Definition of FIRE

The FIRE (Financial Independence Retire Early) Movement is a lifestyle movement whose goal is to achieve financial independence and the ability to retire early, much earlier than traditional budgets and retirement plans would allow.

The concept is predicated on the same principles that have built lasting wealth in both businesses and personal finance for generations. The FIRE Movement optimizes this concept utilizing a strategic process by which you systematically reduce your expenses and/or increase your income thus increasing the gap. Those seeking to attain FIRE intentionally maximize their savings rate thus affording a much larger margin of investable income.

How FIRE Works

These investments (assets) grow exponentially due to appreciation and compounding returns (growth which in itself also grows too, multiplying exponentially over time.) Accumulating this wealth early in a career, results in much more growth momentum and over a much longer investment period compared a traditional working career.

The objective is to accumulate assets until the resulting passive income from the growth (appreciation) provides enough money to pay living expenses in perpetuity. Once the appreciation on assets provides enough income of its own to sustain your living expenses you are financially independent and no longer need to work to pay your living expenses. In other words, your wealth, which I like to call your perpetual money-making machine, earns enough money on it’s own to pay your bills without you going to work.

When you reach this point of critical mass you are able to quit your job and live solely off comparatively small withdrawals from your portfolio. Stashing enough cash to reach the critical mass point allows your wealth to maintain or grow in peripuity which is why I call it your perpetual money-making machine. An interesting point is that critical mass is not a fixed number but rather a different simple equation for everyone based on your individual expenses.

Stay tuned for the next article (sign up for email list) as I break down exactly how this works in greater detail and go in-depth on the ‘4% Rule’ and ‘Safe Withdrawal Rate.‘ Don’t worry the math is easy to follow.

How Long Might This Take?

The rapid accumulation of wealth allows patrons of the FIRE Movement with a 65% saving rate, for example, to retire in 10 year whereas a traditional retirement plan with a savings rate of 15% would have a working career of 43 years. For more details on this see “The Hope and Simple Math of Extremely Early Retirement.”

Make no mistake, this is not a get rich quick scheme but rather a method of building wealth in the most efficient and optimized path using a time tested proven concept. FIRE is achieved through aggressive saving, far more than the standard 10% – 15% typically recommended by financial planners. The more or the faster you save investable income the more momentum you build in your perpetual money-making machine.

Why You Are Here?

Maybe you heard about FIRE from a friend, read about it in a blog article, or stumbled upon it on your own. Perhaps, by happen-stance, you entered just the right search term that lead you down the rabbit hole like me. The FIRE Movement is a community of people willing to break from societal norms, take command of their wealth building, and design the lifestyle of their dreams.

I say lifestyle despite it being an oversaturated colloquial buzz term, because there’s so much more to FIRE than money, it’s about freedom, flexibility and ultimately a lifestyle of fulfillment. It requires an entire paradigm shift.

The complete list of the virtues of fulfillment can be found here.

Who is FIRE For?

Sounds almost cliché but… FIRE is for EVERYONE! There is no age, income level, job title or any other factor that prevents anyone from taking control of their finances. If you are living at minimum wage these strategies will bring you up into the middle class where you can really speed up this journey. If you are in the middle class you are primed and ready to engage. If you are in the wealthy class it was likely a combination of these strategies that got you there and I will show you how to refine and optimize your continued wealth building in the most efficient way.

Everyone’s path to financial independence is unique but all paths are some degree of increasing income and/or decreasing expenses with an objective of growing your savings rate during your working years. The sooner you apply the strategies on this blog, the better position you will be in. Whether you’re a student, married with kids or approaching retirement, it’s never too early or too late to begin your journey. You don’t have to be an expert with a degree in finance to understand these concepts!”

FIRE for Me

On the outside I look like most of my neighbors and coworkers. I live in a similar house in a great neighborhood and school district, wear similar clothes (or better looking, so I think). I drive a reliable vehicle. I take annual vacations both domestically and internationally.

Inside my financial books, I spend approximately half as much as my neighbors and coworkers. You can learn about how a cut $13,000 from my expenses just last year with no felt impact on my quality of life. I invest the balance of income in my perpetual money-making machine which will provide enough income to live in the not too distant future.

Your Goal

Your goal might be to retire early because you are unfulfilled by your job. You may wish to buy back your time to invest in your family or personal interests. Perhaps you want enough wealth to live off of passive income from investments with enough left over to watch your wealth perpetually grow. You may simply want to take command of your personal finances.

It is your choice whether you will live life by design or by default. But if you don’t live intentionally for your own goals you will end up working for someone else’s goals. No matter what your situation is, you can expand your knowledge with these FIRE concepts and take action so that you can optimize your journey, design a lifestyle of complete fulfillment and join those already on the path to financial independence.

Keep the FIRE burning my friends.