This is the first post in a three part series. Last year, I found myself going down one of those internet rabbit holes on the topics of financial independence and early retirement. But, this wasn’t just a one night rabbit hole. This was more of a black hole. I ended up giving myself at least a two-month crash course on all things FIRE (Financial Independence Retire Early). Turns out there’s an entire online community dedicated to FIRE. These people are the ultimate personal finance lifehackers.
In this first post, I’ll quickly give you the gist of FIRE and then point you in the direction of the best resources I found after reading 100+ articles on this topic. In post two, I’ll summarize all my notes (fair warning: it will be long). And, in post three, I’ll outline my personal action plan.
What is FIRE (Financial Independence Retire Early)?
Obviously, FIRE stands for Financial Independence Retire Early. But, what does that really mean?
FI: In general, most people in the FIRE community refer to financial independence in the form of a number like total net worth (e.g. “My net worth is $2M, and I’m now financially independent!”). It means you have enough money to live for the rest of your life without working (if you wanted to never work again). Usually, this means you have passive income streams that will continue to carry you over many years.
RE: Retire early is the literal action of “retiring.” The reason I put this in quotes is because many of the people in the FIRE community are motivated, intelligent, intentional living, conscious consumers who may retire from the rat race but continue one or a number of side hustles that still bring in income (like blogging). One of the most popular personal finance bloggers, Mr. Money Mustache, says, “Work is better when you don’t need the money.” So, retiring early usually means quitting work you don’t enjoy to spend your time doing what you do enjoy. And, sometimes that still involves making some money.
All in all, FIRE means having and making choices.
What is ERE (Early Retirement Extreme)?
My FIRE research quickly led me to a founding father of the community named Jacob Lund Fisker who founded EarlyRetirementExtreme.com in 2007. He claims his current net worth is 127 years worth of annual expenses, so he’s certainly been doing something right!
Here’s how he defines it:
Early Retirement Extreme (ERE) is a movement of individuals integrating ideas from anti-consumerism, DIY, the Renaissance man ideal, home economics, individualism, environmentalism, and rentier capitalism toward the goal of achieving financial independence extremely rapidly. Putting ERE principles into practice yields a lifestyle that meets all needs while minimizing ongoing inputs of money, natural resources, friction, and effort.
He claims ERE is more than retiring early; it’s a philosophy on life:
A master in the art of living draws no sharp distinction between his work and his play; his labor and his leisure; his mind and his body; his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence through whatever he is doing, and leaves others to determine whether he is working or playing. To himself, he always appears to be doing both. — Lawrence Pearsall Jacks
Jacob’s blog recycles posts from 2007-2009 these days, but it’s still some of the best content out there. Highly recommended.
What are the goals of FIRE?
Aside from the definitions above, I think the following quotes do a nice job of summing things up:
What I wanted to do was write. But I found out quickly that writers made a very unsteady living. It was then that I started reading personal finance books. I decided that if I couldn’t do what I loved and make a living, I would be retired, because retired people could do whatever they wanted to do. I wanted to write, so I would need to retire first. — J.P. Livingston, The Money Habit
Today I look at myself as ‘Me, Inc.’ instead of ‘Who Cares, Inc.’ My day job would thus be a way of generating a consistent alpha (time based performance), but much of the my income performance is beta (market based performance) related. Taking control of my own investments has essentially turned investing into a second job for me. I can earn more managing my investments than I could taking on a second (minimum wage) job. This is also why I no longer need a ‘real job.’ — Jacob Lund Fisker, Early Retirement Extreme
Stop thinking about what your money can buy. Start thinking about what your money can earn. And what the money it earns can earn. — JL Collins, jlcollinsnh
Frugal choices early in life allow you to buy freedom at a discount. — Jeremy and Winnie, Go Curry Cracker
She was standing there in a cage she’d built herself, and had her own key in her own hand, but she was afraid to let herself out. — ER Dude, Early Retirement Dude
People don’t necessarily have to work until their 50s or 60s if they can save most of their paychecks for future freedom. We can still pay for some fun today, but save most of our assets for long-term fun in the near future. — Ms. ONL, Our Next Life
Favorite FIRE Resources:
The following lists include the resources that I felt were most beneficial during my research phase (and continue to be most beneficial in application). They are grouped by category but in no particular order under each category (unless specified otherwise).
Free Personal Finance Software:
The two main personal finance tools out there seem to be Personal Capital and Mint. There are others like YNAB (You Need a Budget), but I’ve only used the two below.
- Personal Capital — “The best free finance tracking app available” (Macworld). Virtually everyone in the FIRE community recommends Personal Capital. If you sign up using the link above (or by clicking on the image) and sync one investment account (401K, IRA, brokerage, etc) within 30 days of registering, we’ll each get a $20 Amazon gift card (promotion is still going — I’ll remove this when it has ended). Full Terms & Conditions are listed at the end of this post. Personal Capital is best at tracking total net worth and investments. I was just using Mint for many years, but in 2017 I switched to a combination of Personal Capital (to track net worth) and a good old fashioned Excel spreadsheet (to track expenses). Personal Capital can track transactions/expenses at a high level, but I just wanted to be able to analyze my household spending data in more detail. Speaking of tracking expenses…
- Mint — Better at tracking transactions/expenses.
There are a bunch of FIRE blogs out there today. There’s even a blogger net worth tracker where almost 500 bloggers publicly share their net worths. The same site, Rockstar Finance, has lists of the best early retirement blogs and many other personal finance blogs that can be sorted by different categories: Best Overall, Saving, Investing, Debt, Early Retirement, Minimalism, Millennial, and Up & Coming.
Here are the ones where I spent most of my time, bookmarked them, subscribed via email, and/or kept coming back to:
- Early Retirement Extreme — I’m obviously a big fan (as described above). Check him out. It will be time well spent.
- Physician on FIRE — His POF portfolio breakdowns and updates are what I’m using to analyze my own portfolio.
- jlcollinsnh — Amazing post series on stocks.
- Root of Good — One of the first blogs I found that started everything for me. Retired in 2013 at age 33.
- Mad Fientist — Solid content. Has some spreadsheets and other resources worth checking out.
- The Money Habit — As I discussed in this teaser post about millennial retirement, maybe the youngest early retiree at 28 years old with over $2M.
- Mr. Money Mustache — Arguably the most well-known in the FIRE community. His approach is “Early Retirement through Badassity.” I read a few of his posts, but honestly I spent more time on the other blogs in this list. However, I did thoroughly enjoy one of his videos:
- Early-Retirement.org Forum
- Early Retirement Extreme Forum
- Bogleheads Forum They do have some community guidelines for asking portfolio questions.
- Rockstar Finance Forum
- The Crowdsourced FIRE Simulator (cFIREsim)
- Portfolio Visualizer Backtest Portfolio Asset Allocation
I will not even pretend to know a bunch about these tools yet. A simple Google search will give you plenty of reading material about comparisons, pros/cons, etc. This is just a shortlist of the ones that came up most frequently in my research.
Are you already familiar with FIRE? If so, please leave a comment with your best resources.
And, don’t forget to sign up for Personal Capital by clicking the image below. Sync one investment account (401K, IRA, brokerage, etc) within 30 days of registering, and we’ll each get a $20 Amazon gift card (promotion is still going — I’ll remove this when it has ended). Full Terms & Conditions are listed below.
Giveaway hosted by Personal Capital. A user must link at least one valid investment account (brokerage, 401k, IRA, etc) within 30 days of registering. An Amazon.com Gift Card valued at $20.00 will be awarded to each new customer who links a valid investment account and the customer who refers the new customer. All awards will be electronically delivered within six weeks from registration through Amazon to the customer’s email provided in the registration process.
The offer will apply only to the first-time customer when a unique account is linked and will not be applied if the same account is linked multiple times in the same or additional accounts, or for any previous account, which was previously closed. Personal Capital clients are allowed to participate in this program and may also receive 3 months free if the referred user becomes a trading client. Referring customers who exceed $600 in valued gift cards, will be issued a 1099 and may be subject to tax reporting. Please note Bank, Credit or Debit Cards, PayPal, Stash, Acorns and Coinbase accounts do not count towards the giveaway. Using an ad blocker may adversely affect our ability to determine your account eligibility in the program. Final determination of eligibility is at the sole discretion of Personal Capital.
The Personal Capital Amazon.com Gift Card promotion may not be combined with any other offers. Employees of Personal Capital are eligible for this offer. Personal Capital affiliates still qualify for payment pursuant to the terms of affiliate marketing agreement during this program.
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Also published on Medium.