FIRE!
This post isn’t about tropical islands or beaches, etc. It’s also not about fire, as in flames and smoke. It’s about gaining control of your money, and pursuing happiness. If you’re not interested in being happy, then you should go ahead and skip this one, but I hope you won’t. 🙂
I just read an excellent article at MarketWatch about the concept of FIRE, which means “Financial Independence, Retired Early” and variations of that. You can Google this subject, there's a lot of good info out there, including this one, and this one too. I’ll link to the piece that inspired this blog below, but I’d like to put my take on this subject first. Many people who are really into FIRE retire at very young ages (is 30 early enough for you? Some do this!), and they do it with smart investing and extreme levels of frugality. There are jokes about re-using dryer sheets, shopping from your neighbors’ junk on the curb, and how driving a car makes you a fool. Side note: I just found out Deb re-used dryer sheets (ha!), also we had a table in our home for years that came from someone's street-side cast-off, not mention all the garage sale furniture.
Actually, many of the FIRE people are not retired in the classic sense, because they generate income with properties but have to work on advertising, closing contracts, and especially maintaining the properties. Or they write a blog, publish it, advertise, and pull income from that. Or they find ways to monetize other hobbies. Those are all fine, but to the frugality point, I'm only willing to go so far. Managing to extreme frugality becomes a job in itself. But they have retired from the corporate world that was running their lives, just like yours truly.
In reading this article and many others, I’ve come to realize that many of these concepts don’t just apply to those financially motivated individuals and couples that want to retire decades ahead of schedule. This is bigger than that, more important than that, the lessons can be applied by almost anybody regardless of their retirement plans, in their own pursuit of happiness.
So let's talk about the pursuit of happiness. Don’t gloss over that phrase - it is a powerful idea. The Founding Fathers of the United States of America considered Pursuit of Happiness an inalienable right bestowed upon us by God, right alongside Life and Liberty. Think about that. Life and liberty are pretty basic fundamental rights, wouldn’t you say? You have a God-given right to live, and to be free. But Pursuit of Happiness? The Founders held this in such high regard that they grouped it along with life and liberty as inalienable rights. That’s how important it was to them and that’s how important it should be to us all!
If you don’t make a single effort toward your own financial independence, if you don’t save a single extra dollar, if you don’t retire even a week earlier than normal, I hope you will at least consider this: pursue your own happiness. This should be intertwined with your own values, the things that matter most to you. It’s your spouse, your family, your friends, your personal hobbies and interests, or that special place that touches your soul. For Deb and I, it was about getting out and seeing more tropical places, meeting and befriending people who are different from us, speaking new languages, exploring beaches and reefs, and living in very different communities. We pursue happiness, we don’t just go through life on autopilot. Of course if you are married or otherwise with a partner for life, we hope those values and those things that make you happy are similar and compatible. Deb and I are certainly blessed that way. So pursue happiness together, and pursue it with gusto!
The phrase I picked up somewhere and often use is to “live your life on purpose”*. Live your life on purpose. What does it mean? Well, let’s talk first about the people who live life by accident, on autopilot. So many people go through life this way. They grow up, go to college or pick up a skill, get a job, work at that job to make money, spend that money on whatever they see on TV, on the 4000-channel satellite TV package, those cute sunglasses they walk by in the mall, whatever restaurant they happen to drive by, or on a string of expensive cars throughout their lifetime. And of course with most people, this spending is enabled only by going into debt, with credit cards, car loans, home loans. They repeat this for 40 or more years, and eventually retire on a meager Social Security income. That’s when they discover they didn’t live their lives on purpose. They sleep-walked for decades, being manipulated by advertising, driven by their own thoughtless urges, and by an entire culture built around consumerism. Did it really make them happy? Maybe...but did it really? So they retire at the mercy of the government, and lenders, because they’ve only managed to save a year’s worth of salary over 45 years.
*In this case, I'm not talking about living your life "with a purpose". The concept of having an "ikigai" is a great one, that gives life meaning. But it's a little different from what I'm talking about.
Now let’s look at someone who’s living life on purpose and pursuing happiness. They recognize that advertising has one job, which is to separate you from your money. They see that buying things on a whim doesn’t buy happiness. They learn that most restaurant food is full of fat, sugar, and salt, and that with a little learning they can make better, healthier, and far less expensive food at home (and often in less time). They know that a car is a tool to take them from Point A to Point B, and that a new car is only new for a week. So they don’t spend money on things that the culture tells them to spend it on, they spend it on the things that are in line with their values, that allow them to pursue happiness. They shop for discounts, they cook great food at home, they drive used cars. They avoid debt like the plague. But they enrich their lives with hobbies, sports, good friends, learning a language, or whatever it is they truly love, and spending money on those things is OK! They find a way to have fun everyday. And they enjoy their lives more, because they’re in control. They’re also very likely to retire early because their money isn’t disappearing behind their backs, or in front of their faces.
Back to the recent MarketWatch article, I love it because the advice given still allows you to be you. You don’t have to ride your bike to work every day in a snowstorm if you don’t want to. You don’t have to shop at Goodwill. You can go on vacation, and you can eat in restaurants if you like. But if you do these things on purpose, if you know where your money is going, you are in control. Which brings me to the family budget – the primary tool to understand your spending. If you find out where all your money is going you immediately gain control over your life. So you simply start by tracking your current spending. There are lots of tools online like Mint and its associated mobile app, along with a bunch of other apps like GoodBudget, YNAB (You Need a Budget) and others, and there's always good old paper and pencil. Once you know where it’s going, you’ll naturally spend less. And you can direct your spending toward the things that make you happy, toward long-term goals (retirement maybe?), hobbies, travel, on whatever you like. It’s not the TV advertisers’ money, it’s your money! So take control of it and take control of your life. That’s a really good feeling.
Finally, I want to say it’s never too late to start living your life on purpose. If I was aware of these concepts in my 20s or 30s we would have retired a LOT earlier and I would have been much happier with much less stress during all those working years. But I was blessed with a good education and jobs that paid well, which made up for a lot of ignorance.
Our personal journey to FIRE was a slowly growing snowball that started in our late 20s with the very basics of saving just enough (3-4%) to take advantage of things like a company 401K match. Later we added IRA contributions, and started investing in stocks. We worked to get out of debt, except for the house. By the time we were in our mid-40s we were seeing real progress toward our retirement goals and our motivation grew. We had great credit because we paid all our bills on time, and we used that to buy, renovate, and flip a house. But we didn’t really get serious about slashing our spending and driving hard toward retirement until we were in our late 40s, almost 50. We paid off our house, which was a tremendous feeling, and we were immediately pouring tons of money into our accounts (saving upwards of 40% of our income). A few years of that and we finally we took the plunge, retiring in 2017 at ages 56 and 52. My point is that you can do little things to start, at any age, and grow those as you see progress and gain your own motivations. Do it on purpose, do it for yourselves and for your families. Best of luck to all of you in your pursuit of happiness!
Here’s the link to the article - it’s short and a very good read. Let me know your thoughts please - I love this subject.
https://www.marketwatch.com/story/you-can-retire-early-without-adopting-mr-money-mustaches-extreme-frugality-2018-01-11
TODAY'S SPECIAL: “Buy Me a Boat” by Chris Jansen – it's a fun take on the whole money thing, and maybe one day we'll have a boat. 🙂
Love this Norm.. esp after a couple of IPAs :-).. There is an old saying I have taken to heart: "There is a leisure class at both ends of the income spectrum." 🙂 :-). And also Einstein’s (I think) comment about the most powerful force in the Universe – compound interest. I really tried to make that our kid’s mantra. So far, I don’t see them getting it yet! LOL
The kids will get it just like we did, in our 50’s!
Thanks for putting things back into perspective. Today I was going to buy an expensive car (Acura TL), but now I’ve reconsidered.
You should do what I did, and buy the USED Acura TSX (the cheaper model). And then drive it forever. 🙂
Riding a bike in a snowstorm – humm – don’t put it past me – I’m one cheap bastard.
Nothing wrong with being a cheap bastard, if that’s what you choose, on purpose! 🙂
Loved the link to Mr Money Mustache, been reading it all day (snowy Sunday’s are good for that). Pretty convinced based on some of the pictures they live in FoCo, haven’t gotten to a post that proves it tho.
One thing I’m realizing is that the current retirement systems (401k, Roth IRA, IRA) are NOT geared towards early retirement. Ok, well the Roth is kinda good but the others can’t be touched till age 59.5. This means putting any extra money in index mutual funds to come up with enough to live on in early retirement to get to 59.5.
Lately I’ve stopped riding my bike (winter school drop offs) but miss riding in the snow. It wasn’t bad with studded tires and I always arrived warmer than if I took a car.
We USED to track our spending online with MINT but Karen was (perhaps correctly) uncomfortable with that much of our finances online. Need to start tracking again, suspect most of it is going into Amazon. Ok, I’m rambling…
Casey, glad you’re enjoying MMM. I’ve always thought he was in Longmont but I can’t remember exactly why I concluded that.
You’re also right about the retirement systems not favoring early retirement. The entire culture including the government is built around people working a very long time. So you have to build up money outside of 401K/IRAs. Our advantage was that we sold our paid-off house (and everything else) and put that money into investments, which will get us to 59.5, and the other key ages (62, 67, 70, 70.5).
To your final point (I can ramble too) because they sell so much variety, places like Amazon, Target, and Walmart make it hard in your budget work, figuring out what the money was spent on. Electronics? Groceries? Sporting Goods? Home Improvement? Maintenance? Let me know when you solve that one!
Hey Norm, Sorry, I have been a bit behind on the blog, work and life have been insanely busy (i’m sure that is something that everyone who reads your blog is in touch with). I really like that part about living your life with purpose, and trying to have fun every day. I have been trying to live that way for a long time.. I was really blessed for almost 19 years to work for an amazing company called Linear Tech. They paid well, the products were great, the people i workeed with were interesting and brilliant; and quite frankly i thought I would be content to work there until age 70 and be very happy until i left. Sadly, we were purchased, and to say things are not the same is an understatement. It really has me thinking about how i could retire early, and what could i do? I’m in the early stages of thinking about this, but I have been fortunate to have no debt, live below my means, and to having everything you really want. I am really starting to get reacquainted with the concept of freedom (which maybe is the pithy but less eloquent way of saying life, liberty, etc).. It would be great to meet over a beer and diet coke at Bent Fork to talk more, but the blog is a nice way too. Speaking of rambling, i’m putting you and Casey to shame:)
SQ! Good to hear from you. No apologies necessary – real life >> blogs (much much greater). Sorry about the work struggles but if it gets you to retire early, maybe that’s OK too. It sounds like you’re on a great track already. The key I think is figuring out what you can do for a long time and have fun at it, while still being able to afford it all.
PS. I like the word freedom…
Hey buddy, I was just at Centerra today thinking of you! gave a wave to Bent Fork. Work struggles are tough, but we get through them eventually. Your adventures are an inspiration. I’m not sure the beach would be for me what with all the skin cancer (off to the derm later today to burn off some more basel cells), But i do love me some warm weather with shade, and it looks like you enjoy that in spades on your back porch. You and me are in agreement on the word freedom. That’s a dandy. Looking forward to more adventures, and I’ll keep you posted on mine. I think this will be an interesting year
I get a mix of sun and shade, mostly shade actually, I can only take so much tropical sun (CO sun is actually worse due to the altitude).
Best of luck on your "interesting" 2018!
i did like your market watch article quite a bit. I think reading is a great thing to do, but armed with that knowledge, another thing i just read was all about how do you synthesize what you read into your life? you and deb are doing it, i’m trying to figure it out.
I’ve been playing around with a blog post that’s the first of a set of "how to retire" blogs. I think others have already done it much better than I could but I may lay out some of what I went through.