STARTING YOUR FIRE JOURNEY
Ready, Aim, FIRE! : Ways to setting ablaze your F.I.R.E Journey
Aspiring for your DREAM Life? It’s possible through F.I.R.E!
A lot of us are tired of running in circles, specifically with finances. Getting stuck with debt, living paycheck to paycheck, having constant worries about paying bills, mortgage, etc., are some of the financial nightmares that most of us want to get away from. Working our asses off with 9- 5 jobs is such a dreadful cycle to make a living. In search of financial freedom and to “retire early,” the idea of FINANCIAL INDEPENDENCE, RETIRE EARLY was born. It became a movement, and more and more people joined the journey towards achieving a healthy financial life and having a secure future – attaining the DREAM LIFE!
The FIRE movement has existed long before under various names and approaches. It has gained traction and momentum in the 90s, and since then, this movement has drastically changed many lives.
This movement primarily advocates living a life with financial freedom and retiring early through various strategies and “retirehacks.” Some thought of it as impossible to achieve, but more and more people have proven that this way of life is POSSIBLE, WORKABLE, and ACHIEVABLE, as long as you commit yourself.
As the movement gains momentum, variations arise because this concept is not “one size fits all.”
Here are some concepts to consider as you start your FIRE journey:
- Lean FIRE – Being willing to live a minimalist lifestyle; to cut expenses to save up for retirement. Lean FIRE people aim to survive on, say, $20,000 to 25,000 yearly. This is someone who has enough passive income to cover basic necessities and tends to work toward a more frugal lifestyle to reduce their expenses. It’s not for everybody.
- Fat FIRE– Being able to retire without reducing your current standard of living or lifestyle. This requires the most aggressive saving and investment strategies. This is more possible for someone who has a higher standard of living and can save more than the average person, possibly due to their higher income or the fact that they’ve saved longer.
- Barista FIRE– This type maintains more than a minimalist lifestyle in retirement through a combination of savings and part-time or side hustles. These people quit their 9-to-5 but intend not to touch their retirement savings. Instead, they let the savings grow and find an alternative source of income like a part-time gig to cover their expenses. They are between the two extremes of Fat and Lean FIRE.
- Coast FIRE– Similar to Barista FIRE except that Coast FIRE people have enough to fund their current expenses and retirement but choose not to touch it. They may have part-time jobs.
How do these FIRE concepts sound? Are you READY and know your WHYs for pursuing this way of life? The sound of ditching your 9-5 job, freeing yourself from debt, establishing an emergency fund, funding your retirement, and achieving a secured financial future might light a FIRE in you. How does traveling with your family, having more time to spend doing the things you are passionate about and that you enjoyed most, sound to you? How does a DEBT- FREE life, a beefed-up SAVINGS account, and RETIRING EARLY appeal to you?
Although it may seem like a far reach, you may want to start thinking now about the type of life you really want to build. It’ll help you with a vision and purpose, with your WHYs, which motivate you as you go along this whole FIRE journey. This will help you determine the exact number you’ll need to reach your own version of FIRE.
Now that you have an understanding of the idea of financial independence and/or retire early, it’s now time to AIM and SET YOUR F.I.R.E. through these, simple ways:
1. KNOW YOUR NUMBERS.
It is important to calculate first your numbers to know how you can achieve financial independence and be able to retire early.
You may start by determining the variation of FIRE you want to achieve or with the RULE OF 25. Identify your current annual expenses and multiply that number by 25. That is going to be your FIRE NUMBER. For example: if you want to live off $50,000 a year, you’d need $1,250,000 saved or invested. After getting your number, set your target date. By doing this, you’ll have a benchmark moving forward.
2. PAY-OFF HIGH INTEREST DEBT!
Debt can thwart you from achieving your financial goal. It MUST be prioritized to eliminate high-interest debt, including (but is not limited to) credit cards, personal loans, and student loans that will keep you far away from your FIRE number. To eliminate this type of debt faster, you need to pay more than your monthly minimum due. It is also a good idea to consider paying off low-interest debt (like a mortgage), so you wouldn’t have to worry about any expenses hanging over your head.
3. CUT BACK ON YOUR EXPENSES
Look over to every penny you spend. In order to get to FIRE faster, you need to lower the amount you’ll need to spend in retirement. Tackle your biggest expenses first (could mean housing, housing, food, bills, transportation). Think of ways to lower these expenses. You may consider moving to a smaller home, renting out a part of your home, refinancing your mortgage, trading your car for a cheaper one, or carpooling to work. You may also try to eat out less and negotiate your existing bills.
4. SAVE, SAVE, SAVE!
Being Frugal doesn’t mean depriving yourself of everything under the sun. Keep this in mind, the money you are saving buys you—– your FREEDOM! Start looking for sensible ways to have fun and still enjoy things in simpler ways instead of shedding hundreds of dollars. (See painless life hacks to SAVE MONEY)
5. Take the INVESTING MONEY ROUTE
After getting into the habit of saving money, now is the time to think of ways to invest money. There are many options to keep your cash flow from your passive income resources. But know that investing comes with risk, but the returns can be incredibly satisfying. Seek help from financial advisors to be guided through the pros and cons of various investing ventures.
6. OBTAIN MORE INCOME
You may want to lessen your expenses first before increasing your income. That way, you can save and invest more money, aiming for a much faster route to FIRE. There are a lot of ways to increase your income sources by finding ways to make money, such as side hustles, passive income, making money at home, and earning quick money.
7. CARRY ON
At this point, as you keep financial independence at the forefront, you may carry on with ways to make more money, keep on investing money, monitor your expenses, and save money. Adjust if needed fix areas that need changing to continue on your FIRE journey.
There is no easy way to achieve great results. One must go through tough times working toward a specific goal. It is no different for this FIRE journey. It may not seem feasible at the beginning. But once you change the way you look at it, start taking actions to move forward with it, living by its principles and always carrying out your WHY, you’ll be surprised at how far you can go. Before you know it, you are one step closer and closer to achieving your DREAM LIFE before you know it. So, what are you waiting for?
READY, AIM, F.I.R.E!
FIRE MOVEMENT MISCONCEPTIONS
FIRE fanatics have different reasons for pursuing this kind of lifestyle. Their purposes vary. For some, the root of the desire is to live a different life from what they used to have growing up. In comparison, others take this path in search of liberation from a life of running in circles. Whatever reason or WHY one has, it boils down to the fact that EVERYONE is yearning for a life of financial freedom and living on their terms.
Like any concept, the FIRE movement gained critics and has received misconceptions to lead people to believe that this lifestyle is not a one-size-fits-all concept. To shed light on this matter and help people fully understand this advocacy, here are common FIRE misconceptions:
- Extreme Frugality and living in deprivation – Many critics think this concept takes things to extremes. This movement isn’t about extreme lifestyle sacrifices but rather, living on a moderate lifestyle, fixing your eye towards what is essential, and cutting back what is not of great value.
- FIRE is about running away from your boring and unsatisfying work and quitting your Job- The concept of this movement is not only resting on the retirement early part but also emphasizing FINANCIAL INDEPENDENCE. FIRE isn’t just about running away from your 9-5 Job. The strategy is to cultivate multiple streams of income in various ways.
- FIRE is only applicable for High-income earners – Though it may be agreeable that financial situation varies from person to person, the concept of FIRE is simple that everyone can utilize it – whether you are an average earner or 6 digit income earner. The fundamental principles of FIRE – EARN, SAVE, and INVEST, will encourage you to establish financial goals. This concept teaches people to live substantially below their means, freeing yourself from debt that could hold you back from financial freedom, earning through passive income, saving money, and investing.
- FIRE adherents are obsessed with accumulating wealth- The main goal of FIRE is FREEDOM and not just getting wealthy. The movement is dedicated to adhering to life with frugality, venturing into different ways to earn money to save and establish a healthy financial future.
- FIRE is only for young people – FIRE is for everyone, regardless of age and income. The concept is rooted in retiring early and being committed to changing one’s perspective towards financial stability and independence. The message of FIRE is that it is never too late to start changing your financial situation. As long as you put your mind to it, you can change things. No matter where you are right now, the kind of career or salary you have, don’t fall for the misconception that you need a high-paying job to build the wealth you need to enjoy a worry-free life. What will set you apart is the action and determination you are willing to reach your financial goal.
There will always be misconceptions about any concepts- and FIRE is no different. Indeed, nothing comes easy. There is a lot to learn, and as they say, FIRE is a journey. Every journey is unique and is often full of twists and turns. But the promise of having control and living on your terms is what the FIRE journey is about. People can change their perspective and achieve their DREAM LIFE through F.I.R.E.
PATH TO FIRE
At some time in their lives, almost everyone wants to be rich. Some people prefer to live frugally to save more money, while others take risks to generate wealth by investing in high-return ventures. It may appear that accumulating riches is impossible, but it is pretty simple. In truth, you don’t need a six-figure income to make this goal a reality. You can gain wealth no matter how old you are if you are dedicated.