The Financial Independence, Retire Early Movement, or FIRE movement for short is a lifestyle choice to retire early by gaining financial independence at a relatively young age – usually aiming to retire in their thirties or forties at the latest.
In one way it’s something we’ve been teaching on our channel from the very beginning but never referred to it by its name.
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When we talk to people about early retirement, we generally get 1 of 3 responses:
- Complete and utter disbelief that it’s even possible – often accompanied by the sentence, “I can’t retire for another 40 or 50 years.” This really grinds our gears as these people have given in at life before they’ve even started, accepting a state dictated retirement date.
- Criticism for some reason for wanting to live your life to the full. Often accompanied by the sentence, “I wouldn’t know what to do” or “I’d be bored”. Honestly, we don’t get this one at all. Why on earth would these people not want to be masters of their own destiny.
- And a response that finally makes sense – general excitement and a desire to know how.
So, what is the FIRE lifestyle? How is it done? Do we agree with it? And can it really be achieved?
Although we think the concept of Financial Independence, Retire Early must have been around since the beginning of time, many of the main ideas have been credited to the best-selling book Your Money or Your Life, linked here, so make sure to get yourself a copy. If you learn anything from this book, then it’s been worth the price.
What is FIRE?
FIRE‘s formula is very simple: spend less than you earn and invest the surplus. FIRE is achieved through aggressive saving – and we’re not just talking about a bog standard 10-15%.
The objective is to accumulate assets until the resulting passive income provides enough money to cover living expenses in perpetuity.
If you can only save 10%, then it will take 9 years to save for 1 year of living expenses.
However, if you can pump those up to a 50% saving rate, then that is just 1 year of work to save for 1 year of living expenses.
Some people are able to go even further to 75% and beyond. Also factor in some investment growth and you’ll be financially independent in no time.
We can sense some people will think that’s impossible and that we, and all those that preach this stuff, are chatting complete bull.
So, How is it done?
Those seeking to attain FIRE intentionally maximize their savings rate by finding ways to increase income or decrease expenses.
The extent of how much you decrease expenses is up to you. If you can live off and are happy to live off rice, live in a tent and do nothing else, then you can probably save quite a high percentage of your income.
But most people, including us are unwilling to go to such extremes.
You can of course cut out all the unnecessary spending, and if you follow the teachings in Your Money or Your Life you will identify every single penny that comes into and out of your life.
This way you’ll finally see where you spend and potentially waste money.
We prefer to increase earnings, whilst being semi frugal.
Some ways we each maximise our savings rates is by increasing our earnings through multiple streams of passive income.
This includes ad revenue, which you may have seen on our YouTube videos and affiliate marketing.
We are also now live with the MoneyUnshackled.com website, which will bring more helpful information to you and hopefully an even wider audience.
Supporters of FIRE suggest the use of 4% as a safe withdrawal rate, meaning you would need an investment pot of 25 times your annual living expenses.
Of course, the 4% rule may be too high, but it could also be argued that you need far less if your investments perform far better than the stock market average.
A few investment properties could return 20%+. We’ve done a video on how this is possible, here.
Do we agree with it and can it really be achieved?
Absolutely. Personally, neither of us would want to scrimp and save to the point life was no fun but FIRE is not much different to what wealthy people have done for generations – living off their wealth.
Achieving it is not easy otherwise everyone would do it. But if you can build your income and keep lifestyle inflation to a minimum you can definitely achieve it.
We’re both already on the path to Financial Freedom and would love for you to join us.
“But I don’t want to retire”
Upon reaching financial independence, paid work becomes optional – you don’t have to retire.
For some reason, many people get confused with what freedom is.
You are free to do what you want. If that is work, in whatever form, then so be it.
Are you or will you be living a FIRE lifestyle? If so, we want to hear how you are doing this. Let us know in the comments section.
2 Comments
Good Morning Andy and Ben,
I hope you are well.
I am pleased to inform you that we have implemented a cashback bonus for our new lenders. All new lenders on Blend Network will receive a 1% cashback. So, I was wondering if we can now be included in the ‘cashback offers’ section of your website: https://www.moneyunshackled.com/offers-and-cashback
I look forward to hearing from you.
Very Best Wishes,
Roxana
Hi Roxana,
Feel free to contact us with any business matters at [email protected], and one of us will get back to you. Thanks, Ben
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