I’ve been loosely following FIRE folk in the early retirement and financial independence space for about twenty years now. Which is pretty scary by itself. Whilst FIRE-related material was a rare commodity in the early days, there’s now a ton of information out there to plough through if you are so inclined.
Yet it seems to me that the more that gets written about FIRE, the more confusion it can create. Especially for anyone just starting out and curious what it’s all about.
These days, it seems everything has to have a name to be worth anything. And I mean that literally. How else are you going to market something if you don’t name it first?
And once it has a name? Apparently, you then need to define it. With a ton of rules about what it does and doesn’t mean. How to do it ‘right’.
Now, I personally don’t get the obsession with having to categorise everything. To make everyone fit into a neat box with rules. But then, I guess that’s why I’m living the apparently unusual life that I am. A marketer’s nightmare.
I also remember the confusion back at the start of my own journey to financial freedom, when lacking the knowledge to know what was useful and what was pure marketing. So, I figured it might be useful to take the time out and go through a few of these so-called ‘rules’.
Let’s take them apart as to what they all mean – and more importantly – if they can actually be useful or not.
Rule One - You Don't HAVE To Retire
This one constantly irritates me when I see people pull the whole FIRE concept apart purely because of the focus on the ‘RE’ ( “Retire Early” ) component.
Yes, I get it – the label clearly sounds like you must never work again or contribute meaningfully in any way to society. Please go direct to your armchair, turn the TV on and wait for the rest of your life to drain away. But hey, congratulations – you are truly ‘FIRE’d’ – enjoy your shiny badge with pride.
When you put it like that, it sounds truly ridiculous, right? After all, no-one thinks of ‘real’ retirement like that. There is a plethora of information about how to stay active and engaged in whatever you choose to spend your time on.
And that for me is the whole point of the Retire Early component of FIRE. Decisions on what to do are no longer driven by money. You don’t need to work a job you don’t enjoy because it’s the only way to cover the mortgage.
But you may well choose to work a few hours a week on something you enjoy, that keeps you socially connected or makes you feel like you are contributing something worthwhile, helping others.
And if that choice and the cash-flow it can bring in means you can leave a job or situation that you don’t enjoy much earlier, all the better, right? After all, working additional years of something you enjoy is likely to work out far better for you than sticking out one or two more years of something that is making you miserable.
But I’ve seen so many articles and commentary ripping people apart for calling themselves ‘FIRE’d’ when they’re still earning money in some form or another. As though anything apart from living solely off investments doesn’t count as true FIRE. The fact that these people are doing exactly what they want to do doesn’t seem to matter to these purists.
Personally, I find this obsession with fitting people into neat boxes bizarre, so let’s try and give it a rest eh. FIRE is very much a personal balancing act around organising your cash-flow choices how they work best for you.
Which leads neatly to ‘rule’ number two…
Rule Two – I Don't Need To Be A FIRE ‘Type'
Again, enough with the boxes and labels! Apparently, it’s not enough these days to say you are aiming for FIRE – there’s a whole new layer of FIRE types too. But does knowing this actually help anyone achieve their goals?
It can be a bit of a bewildering maze of options for anyone starting out for sure. With the ever-constant pressure on money-making blogs to churn out more fodder for the Google machine, many different flavours of FIRE have been created and written about at length.
Off the top of my head, I can name five types that all have plenty of webspace dedicated to each. In no particular order these are:
'FAT FIRE'
Essentially a short-hand way of saying you are aiming for an annual expenditure budget that the average person would dream of. Likely to live in a HCOL area – and probably not in a tiny studio. Expensive hobbies and leisure time activities. Not having to sweat about buying whatever the next new toy is. Basically, a lifestyle most would consider as pretty lavish.
As a result, the target FIRE numbers will seem outlandish to most people. But normal in the sphere of this group. Often found struggling to be comfortable with the idea of leaving high-status careers.
This group also seem most at risk of ‘one-more-year’ syndrome, as the reluctance to cut back on lifestyle and financial security is usually high. Until they reach the point of burn-out. Or divorce.
'LEAN FIRE'
Essentially, the complete opposite of the above. This FIRE-type is aiming to keep the annual budget to the barest of bones. This one’s all about what you are willing to go without in order to obtain financial freedom. Often willing to live in low-cost countries and consider lifestyle choices that most would consider uncomfortable if maintained for too long.
This one’s usually targeted at the younger folk starting out – largely given the relative ease of reaching the required level of funding compared to other FIRE paths.
The obvious risk here is that what you think you are willing to compromise on can change dramatically over time.
'COAST FIRE'
This is an interesting one, where the aim is to front-load your saving and investing into your early years. Before kicking back and relaxing over the next twenty or so years whilst time and compound interest does its thing. The idea being that it all grows into an early(ish) retirement pot without anymore investment (or stress) on your part.
This one is for those who believe they won’t regret the compromises required in your early years to make this work out. But want to kick back after that initial hard work and wait it out, rather than continue and risk burn out.
I get the attraction of doing it all upfront – but personally would have found it harder to save meaningfully at that time. It wasn’t until later in my career I really had the capacity to do so.
'SLOW FIRE'
This concept is essentially about consciously choosing to take longer to reach financial independence than you could actually technically achieve it in. As in, not cutting everything back to the bare bones and living miserably but choosing a level of life you can enjoy but still make meaningful progress to your financial independence goal.
This one is probably closest to how I would describe my own journey if I was forced to choose. It’s all about fine-tuning the balance of living now vs the future.
This path can often easily end up quite ‘normal’ – as in earning/saving/investing more than the average person but not to any extreme. Often ends up retiring early but only by a few years.
'BARISTA FIRE'
This one is based on not waiting until you reach your FIRE target number before quitting or cutting down on hours in whatever stressful or full-on career situation you have.
Instead, the idea is to save/invest enough money to allow you to move into a (perceived) lower stress job, something that you’ll enjoy. The cash-flow from this replaces the need of saving for a bigger FIRE target.
I think this is a particularly interesting one to play around with. Especially when looking at the option to go part-time and ease the transition from full-on to financially free. That’s something I found particularly useful to get used to the extra free-time and lack of external structure.
It also seems particularly popular in the US as a means of getting healthcare coverage with a (perceived!) less demanding or stressful job. Again, helping with not requiring saving such a large FIRE number to quit.
Enough Already!
There are more FIRE types out there but these five are the ones I see pop up the most when discussing what kind of FIRE path you are following. I do agree that it might help in finding others with similar priorities and aims to yourself. That can be a great thing.
But I do find it bizarre how often they are held up as concepts, again with their own rules as to if you are/aren’t ‘doing it properly’. People tearing others to shreds over their Lean FIRE number being way too high. And vice-versa with the FAT-FIRE crew.
I find it especially odd because at the heart of it – all the above are doing the same thing still. They are all just alternative options on how much and when you need to earn the cash required to live a financially independent lifestyle. It’s the two basic questions you need to be able to answer to figure out your own FIRE plan.
Each FIRE type above is simply a different cash-flow plan choice for your life. Be it all upfront, slow and steady, or on-going, it’s just timing and choices. So honestly, I don’t see how it helps getting hung up on a name and a label.
Instead, what is crucial to the success of any plan is understanding your own requirements – and as importantly – the assumptions you believe will get you there.
Which is my next rule gripe….
Rule Three: My Way Or The Highway
Ah, the pages and pages dedicated to this subject! Why oh why do so many people think there is a ‘right’ answer – and that anybody doing anything different is a mad fool guaranteed to fail.
In fact, I find the best way to judge any website you are reading is by how certain they are of what they are saying. The more absolute they are, the more it’s their way or the highway – the more certain I am that they don’t know what they are talking about in reality.
Don’t get me wrong, it would be fabulous if there were a single set of assumptions you could use for planning out your financial freedom. Oh, how marvellously simple it would make everything.
Say, like a simple 4% withdrawal rule that for me is the bane of the many FIRE rules. Sure, it’s fine as a very rough ballpark, finger in the air, is it even vaguely possible type calculation.
But one thing I can pretty much guarantee you is that anybody like me, who has actually gone ahead and retired early, did not use that rule as their ‘am I ready’ decider.
The best sources of information out there will instead try and walk you through all the different underlying assumptions that combine to make something personal to your own situation. They will then encourage you to stress-test those assumptions. To think through each ‘what-if this happens’ scenario and how you would cope or respond in that situation.
My personal experience so far has shown that by far the best way to cope with this dismaying lack of perfect assumptions is by ensuring you build in enough flexibility to your financial planning. To know what expenses you could, or would, reduce if needed. To expect the unexpected without gold-plating it so much that you never manage to retire early at all.
It’s an uncomfortable truth that you have to accept that every plan will have its risks. The important thing about using any set of assumptions is not if they are ‘right’ or not. It’s about ensuring you understand your own plans.
Yes, it can be helpful to compare and assess how your assumptions compare to others. Benchmarking against a range of different opinions is a great way to see where you lie on the optimist/pessimist range. But please avoid anyone telling you (or selling you……) their perfect solution. There isn’t one that fits everyone.
Which brings me to my final point for now.
Rule Four - There are no rules
Sounds a bit like Fight Club doesn’t it? But to me, getting early retirement ‘right’ is not about following a strict set of FIRE rules. If anything, it’s about the complete opposite. Which is why I find it quite frustrating at times to see so much written about FIRE in such a prescriptive way.
I get it, dealing with these kind of grey, nebulous areas isn’t the easiest. Especially if you are looking to sell a simple idea to people. In today’s world where you are apparently lucky to get the three-second elevator pitch, it’s all about short, snappy solutions with great taglines.
But the only ‘rule’ I have when it comes to living a financially independent lifestyle – is that there are no rules.
I don’t think I’m unusual in this. From what I read and discuss, most people interested in this kind of thing are already comfortable with the idea of living differently to the normal. Of figuring out what will work best for them and their own specific situation.
It may take a bit more time and effort, all the good things do. But it’s the only way I know of that means you will have the confidence in your plans to actually pull the trigger when the time comes.
And after all – isn’t that kind of the point of it all?!
Other Random Musings On FIRE...
The fourth part of the FIRE Triangle mini-series about putting together your own plan for Financial Independence.
Read More
Like most things in life – the idea of early retirement seems to provoke a range of...
Read More
Financial freedom is a dream come true for many, including us. But will it match up to...
Read More
Nice post.
IMO there is far too much “noise” and “fuss about nothing” in a lot of FIRE blogs these days. HT for calling some of it out.
Thanks – appreciated. You don’t always get a lot of love for calling this stuff out! Nice to be appreciated for trying to be voice of common sense, hopefully 😁
Very good, thanks for this, Michelle and hope all’s good with you. I guess I too am going for Slow FIRE, though if I had to categorize, I would have termed it Balanced FIRE. It’s just FIRE, isn’t it and you’re right, there are no rules, just guidelines and ideas, no one-size fits all.
I sometimes check out FIREUK on Reddit and people who mention BTL or dividend income just get shouted down by the zealous 4% SWR folk.
Cheers Weenie, yep, all good here. Enjoying some sun whilst hiking around the Canaries 🙂
And yes, I occasionally check out that Reddit too and it is just so odd to me! And there was me thinking diversification is a great thing 🤣