Brief disclaimer, before you read my opinions on the FIRE community, you should be warned that I have some criticisms/concerns with the FIRE movement (financial independence retire early). Note that I am not a financial professional, nor a journalist or well seasoned FIRE expert for that matter. So my comments are more for entertainment value. Yes, based on my birth year I am on the border of being a late GenX'er and a early Baby Boomer.
Key FIRE sources:
I've been actively reading about the personal finance space for many years as a self-directed equities investor, real estate investor and avid saver. I've read and listened to quite a bit of information from people/groups such as Mr Money Mustache, ChooseFI, MadFientist, BiggerPockets, and the like. I've also read many of the key personal finance books dating back to the 1980's. After reading about the FIRE movement for some time, I have come to several key conclusions about the Fire Movement:
(i) I like some things about FIRE,
(ii) I dislike some things about FIRE,
(iii) I clearly don't understand many things about FIRE, and lastly,
(iv) I believe my mid 50's age and first generation American status may be a contributing factor in not understanding all of the benefits of FIRE.
Below are my thoughts on these four statements listed above:
(i) What I Like about the FIRE movement:
I enjoy reading and listening about people from different age groups and socioeconomic backgrounds who hyper focus on their finances, their spending, their net worth and yes, their debt reduction planning. This is the type of focus I certainly wish I had when I was first starting in my professional career.
Understanding your spending patterns, your goals and putting together a well organized financial plan yourself is a sign of maturity and self-reliance that took me many years to figure out. When I read about people in their 20's hyper focusing on saving and investing I am very impressed with their drive and focus to plan out their financial future. I also like the fact that many people in the FIRE community recognize the purpose, practice and impact of the banking system/consumerism, and specifically the impact of debt on their finances.
Hyper Focus on Experiences vs Building More Assets
I listen to quite a few FIRE podcasts, and I keep hearing a similar theme on the benefits of having time to ride your bike to the coffee shop, experience the time to contemplate your existence instead of working fifty hours per week. I don't know that there is a correct balance between building wealth and having memorable experiences traveling abroad and living in a yurt temporarily, but experiencing people and places outside of your comfort zone certainly sounds enjoyable at a young age versus traveling in bus tours and cruise ships as a less mobile senior citizen.
(ii) What I dislike about FIRE.
Extreme Frugality/Splitting Pennies: I believe putting so much focus on extreme frugality instead of wealth creation will limit your future asset attainment and growth- In my opinion building assets should be a primary direction that will lead you to build a sound financial future for you and your family after you are gone. Time is the key variable that makes compound interest so great, I prefer to focus on decades of growth, not just one decade. Although I certainly understand the benefits of frugality for the purpose of saving money in the short term to help you read a specific goal. However, if you are spending the majority of your efforts trying to split pennies, find discounts on discounts, and becoming a professional hack-the-system-discount Frugalista- well then perhaps you are overspending your time on things that yield a minimal savings as opposed to growing your assets.
Expanding versus shrinking your career:
For example, another use of your time could be spent mastering your current or future profession, obtain additional education and certifications. You could also meet with other seasoned successful people in your profession to learn how to design an accelerated path for your career. This all assumes however that you are interested in expanding your career timeline, which is not a common theme I hear in the FIRE community.
(iii) What I clearly don't understand about FIRE.
A typical FIRE blogpost or podcast I read often lists the steps to obtaining a minimal amount of wealth in a short time using extreme frugality in order to quit a full time position at an early age. This set amount of wealth enables FIRE participants to permanently live off a small percentage of their nest egg through minimal spending on things like new clothes, restaurants outings, real estate, automobiles and anything else that is viewed as non-essential to maintain a frugal existence. I am not on board with wearing twelve year old socks each week with holes so I can work less years later, I clearly don't see the benefit of that type of frugality.
I recently listened to a very good podcast from ChooseFI.com about a young Canadian couple who famously saved 500k in order to buy a home. This couple then decided that home ownership just wasn't for them, so they invested and grew their savings which allowed them to travel and live off a 30k - 40k annual budget without working again, however they own no physical real estate. The show's guests and hosts discussed the benefits of avoiding the costs/traps of home ownership. However, my path to Financial Independence never would have occurred without the growth of the real estate markets on the west coast of the US and my insistence to learn how to make money in real estate as a side hobby/compliment to my professional career.
Again, owning real estate is expensive, and requires good timing, effort and significant focus and sometimes luck to make money- all of which never would have occurred to me if I had decided that renting for the remainder of my life was the plan for me. I also decided early on that maintaining passive income in real estate was the right thing for me. I hope others will do the same as I did in Real Estate as opposed to limiting their financial gains to minimal / subsistence living.
(iv) I believe my mid 50's age may be a contributing factor in not understanding all of the benefits of FIRE.
Listening to FIRE community members who are in their 30's and 40's talk about their carefully planned out financial goals and lifestyle is both interesting and motivating. I believe I am learning a lot listening to others who are essentially trading years of their future career in a cubicle for free time at a young age. I've worked in a professional capacity for nearly thirty years, and I could not imagine a lifestyle in my early years that would have included so much emphasis on contemplation and experiences. My continued focus on wealth creation, career/business development and entrepreneur ventures in real state and other professional ventures has given me experiences and rewards that I valued greatly then and now.
No Moon Landing:
In speaking to a colleague recently about the notion of FIRE, he asked me an interesting question. "What if Neil Armstrong (the first man on the moon) had decided that he wanted to travel to a remote island and contemplate his navel instead of manning the first spaceflight to the surface of the Moon?" We had a good laugh about his comment, and it got me thinking about so many great accomplishments I have witnessed in my lifetime. I am curious if the world's future accomplishments will be limited in any way by the focus of making just enough money and effort to get by.
Another friend brought up his own upbringing and early exit from Castro's Cuba as a comparison to FIRE. He simply did not comprehend any of the motivation behind the FIRE movement. I lent him a few books on the FIRE movement so that he could at least understand the core concepts- we'll see if he decides to consider the benefits of the FIRE movement.
If my opinion, if you or family grew up in a third world, less politically stable country with only limited resources, and limiting beliefs on self reliance and upward mobility- the concept of FIRE my seem foreign and completely out of step with plan to build a solid financial future in a developed county. I understand that everyone's upbringing and experiences are different, and therefore may provide different motivations.
I don't know if the FIRE community has or ever will permeate the Boomer generation. Thus far I have not seen the FIRE movement as a common discussion point among my similar aged peers. Please point me to those online discussions if you are have seen them. I certainly hope to learn more about the FIRE community so that I can someday provide some educational value on the topic as later stage of life career. Thanks for reading this post.
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Note that I am not a financial or legal professional, nor am I licensed to sell securities, or any other financial instruments. Given this statement, I strongly recommend that you consider this blog as entertainment value. Although, I sincerely hope that I can motivate you to learn to build your own financial knowledge and wealth.
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