all that long ago, I stumbled across the FIRE (Financial Independence Retire Early) community. Having always loved numbers, I found myself digging in to all kinds of websites and blogs to learn more about why people pursued FIRE. After starting my own website and blog, I recently started asking myself a bit more seriously why I am pursuing FIRE. You can read more about why I pursue FIRE here. Identifying the why is a major factor in pursuing FIRE. Almost as important as to why is the how. So, I started thinking more about how I’m going about pursuing FIRE. Here is what I came up with.
At first, my thoughts on FIRE were scattered. It sounded good, I loved numbers, I could do that, and other similar ideas ran through my head. Then I sat down and put some real thought into it. I reviewed my budget, calculated my net worth, figured out where I could cut back and how I could save more, and ran ten, twenty, thirty, and forty year scenarios. Retiring by 45 became my goal…an intentional target based on data and my life. That leads me into the realistic part.
Realistically, retiring next month is out of the question. What about two years from now though? Well, if I cut out all the fun in our lives – things like eating out on occasion, taking a vacation with the kiddos once a year, cable, shopping insurance aggressively, and so on and so forth, I could push my savings rate to 65 to 70 percent.
Two years to FIRE would be tough, but not impossible. But do I want to cut all these things out? The reality is no, I do not. I’d like to enjoy life. I want my kids to see the world. I also want to get Starbucks here and there. Now, if I reduce my savings rate to 50 percent, we can do all the items mentioned above, pay off our house in seven years, and save a healthy chunk of money. Practically speaking, I’ll reach FIRE in just under eight years…enjoying each and every one of them until reaching my goal.
This plays into both the points above. Without being intentional and realistic, I don’t reach FIRE on my schedule. To make sure I was being realistic, I needed to be sure I was being transparent with my wife. By paying more than twice our required mortgage payment each month, I am intentionally allocating significant sums of money that could be used on something else. Sharing the goal and plan with my wife so we could adjust as needed was important. Ultimately, it’s about our combined financial independence not just mine. We can only accomplish that if we are transparent in the plan and in adjustments along the way. FIRE takes discipline, commitment, and a little luck. Eight years is a long time and life will happen. With transparency, we can work through anything.
As a side note, I want to be transparent with my readers. I am fortunate to have progressed my career to a point where I make a very good living. My salary is more than most but less than some. This level of income helps make this all possible. Reaching this level of income took two decades of hard work, a college education, and a little luck. FIRE is ultimately a game of ratios though so even without a larger salary, FIRE is still very achievable.
The older I get, the more firmly I believe in balance in life. From what you eat to how much screen time you have each day to exercise (I find the extreme workouts don’t do me as much good as they used to these days), the better the balance the better things work. Life is about more than money. While money generally makes things a little easier, it isn’t an end. Rather, money is a means to an end. If I’m out of balance in this journey, I stand to regret reaching FIRE rather than celebrating it. What good is FIRE if I am divorced, if my daughters do not view me as a good dad, and if I do not have my health? Is having all that money worth it? I honestly hope I never have to answer that question.
Without all of these items thought out and communicated clearly with my wife, my pursuit of FIRE wouldn’t work. The level of compromise and or sacrifice required to reach my goal by the age of 45 is significant. It isn’t a phase or fad. FIRE is a choice requiring discipline, commitment, and a little bit of luck. At the end of the day, if you are pursuing FIRE, it is important that you have very clear answers to why and how you are going to get there.