What is FIRE?

FIRE is an acronym that stands for Financial Independence, Retire Early. The FIRE movement has become a popular lifestyle for millions of people around the world. It’s picked up particular steam among Millennials over the past few years and sparked a community of bloggers, books, consultants (including yours truly), podcasts, and online communities. Reddit.com, in particular, has several such communities like financial independence, FIRE, leanFIRE, and fatFIRE.

The goal of FIRE is to “buy” your freedom. Once you have achieved your financial independence threshold, you are now free to do whatever you choose with your time. This might mean more time with your spouse or family. Perhaps it’s the time freedom to travel at-will. In many cases, FIRE means still working but doing work that you find more fulfilling, rather than just cashing a paycheck. If you ask most FIRE adherents, you will learn that money is often less important than the lifestyle component.

FIRE has its roots in the books Your Money or Your Life by Vicki Robin and Joe Dominguez and Early Retirement Extreme by Jacob Lund Fisker. While there are several variants of FIRE and a wide variety of opinions regarding approach, the concept is centered around 3 main principles:

1. Earning More
2. Spending Less
3. and Investing

Earning More – making more money is a key tenet of FIRE. If you are saving 50%, 60%, and sometimes even 70% of your income, making $80k/year will help you reach financial independence much faster than earning $30k/year. Boosting income can include everything from getting a degree, asking for a raise, having a side hustle, or even changing careers entirely.

Spending Less – another principle in FIRE is spending less. Living within one’s means (and often *substantially* below one’s means) is the main accelerant to a the RE of FIRE. Reducing expenses and living a less “consumeristic” lifestyle are key drivers for most advocates of FIRE.

Investing – a shift from working-for-money to having-your-money-work-for-you is the third key principle of FIRE. This means investing a big portion of your earnings in vehicles that allows appreciation, growth, and ultimately passive income to sustain your lifestyle.

That’s FIRE in a nutshell! Next up, the variants of FIRE…