pATH TO FIRE
There is more to life than work and yet we spend most of our lives working. Many people fail to realize this in today’s modern day and age. The standard cycle of our lives includes birth, school, work, retirement, and then death. Straying from this process seems to bring on shame and societal rejection, but there is a solution! It is the path to Financial Independence Retire Early movement.
Some of us cling to work as if our whole lives depend on it. Poverty drives people to “work until you drop,” and the fear of not earning enough income to take care of our families is stifling. Unfortunately, this financial situation holds most people down for most of their lives, requiring them to work for more than the standard eight hours each day to earn money from a job they hate, causing many to ponder “What is the point?” Still, this is the reality for most people in order to survive.
The Path to Financial Independence Retire Early (FIRE) movement has gained many followers as it spread through mainstream media in recent years and garnered questions such as:
“Could a person really retire that early?”
“How can I retire in my 30’s with $1,000,000 in the bank? Is that even possible?”
“Is this the answer to the redemption of life outside of work?”
The Financial Independence Retire Early movement is a concept going against the status quo, and it is spreading like wildfire. But first, what is it?
What is FIRE?
Financial Independence Retire Early (FIRE) is a movement where its community practices prudence and competence in applying their efforts to achieve financial independence. For the majority of those who have achieved FIRE, early retirement is optional.
In most cases, increasing one’s savings rate allows for the choice to retire much earlier than traditional retirement, but how early? Whether FIRE is achieved in the 30’s or even 20’s, anyone can do it. Some take longer and others choose sooner.
The FIRE movement is as simple as lifestyle optimization. Banks and investment plans offer hundreds of tips on how to maximize one’s money, but it really comes down to life goals. For example, if someone dreams of traveling the world, they should minimize expenditure on things they do not need and save for the trip. Keep those credit card rewards for times of urgent need or airline tickets. Another goal may be to have one parent stay home and raise children. Many families afford this by curbing their spending on fancy things like cars or other embellishments.
But there is no pressure to figure out one’s whole life plan in one sitting. Financial Independence Retire Early promotes freedom and choice; whether it may be quitting work or just switching careers. Going back to school and starting a business are options as well. The FIRE movement equips everyone with the freedom to choose how they want to spend their time.
STEPS TOWARDS YOUR JOURNEY TO SURE FIRE:
How Can the Movement Benefit Its Members?
Early retirees didn’t jump into the bandwagon for nothing. That financial independence and retiring early is a great idea, and everyone is in unison in reaching it. If your income is in a 401(k) or IRA, then most financial advisors would recommend your savings percentage to be at least 10-15. Meanwhile, the FIRE movement will promote to have 50% of your income for your savings. Limitations in certain retirement vehicles should be kept in mind, though. You will only need basic mathematics to know that investing 50% of your income would reward you with a big return soon enough. This savings rate will allow you to retire in about 16 years. Mr Money Mustache wrote a simple blog about it. Click here.
Such numbers are enough to spark aspirations of a retirement plan that will kick off as early as 25 years from now. But before you proceed to readjust your financial goals, you must learn first how to do Financial Independence, Retire Early the right way.
PATH TO Financial Independence Retire Early
One can tackle a variety of different paths on their way to financial independence and early retirement. In fact, among the reasons why people choose to pursue this course is the accessibility of its system. The path to FIRE was designed for easy adaptation and a touch of strategic thinking, making it an excellent system that could cater to people of all walks of life. Truth be told, there is no one way to achieve FIRE. That is the extent of the freedom and choice that it grants; you have the full authority to choose which plan will work best for you and your lifestyle.
The rising fame of the Financial Independence, Retire Early subsequently leads to more demand. Therefore, making a career out of it would just be one of the many opportunities that you can make out of the movement.
FIRE In The Hole
Back to the nature of the concept, the FIRE movement is promoting life outside of work. Nonetheless, you must not let yourself lose sight of it in your haste to achieve it in real time. Working double shifts is definitely not an option, as it won’t be able to address the issue in the first place. It would even be a complete opposition to the goal. Hence, you would need a job or side hustle that will not only gain you more income but will also grant you the freedom and choice for your life.
A good example is by working as an insurance agent or consultant wherein you are your own boss and can earn residual or recurring income. You as an insurance agent will help people choose policies that best suit their needs and resources. Every year that your insurance policy you sold stayed on the books or renewed with the same health plan or car insurance, you will continually get paid every year until they decide to cancel. It works the same as royalties with actors or musicians. Every time their music or movies are played, they’ll receive a royalty income. The nice thing about this career is, you can also work as a full-time, part time or sometime. You’ll have a considerable amount of freedom compared to other occupations. Some agents are independent and work for insurance agencies, while others are captive agents from insurance carriers. Becoming an agent is one of the fastest ways to financial independence because there’s no ceiling on how much you can make and you’ll continually get for the work you’ve done in the past. This was my path to financial independence. I was able to build a 6 figure renewal/recurring income in less than 14 months.
Your viewpoint in life must align with all the other components in your life. The number one rule to achieve financial independence is that you must create margin between what you earn and what you spend. And then invest the difference wisely to produce additionational revenue or income. Therefore, get out of debt, make more money, save more, invest better and retire sooner. This is the most common path to financial independence retire early.