What is FIRE really all about?

Well, that really depends on who you talk to- though the end result somewhat tends to be approximately the same- retire earlier than the “normal” for wherever you live. In the UK that’s likely to be before the state pension age- though, having said that, record numbers of older people are continuing working past this age now.

For me it’s all about balance

Most people go to work, get paid an amount of money every month, and then, usually, spend almost all (or more than) every single penny that they earnt. Now, this isn’t nessercayily a bad thing if it’s rare occurance- eg. buying a large item like a car- is (likely) going to be more than your month’s wage. However, it’s about then balancing this up with saving (hopefully before) the purchase, or instead, paying off the debt incurred with this large purchase.

Why retirement doesn’t mean “retirement”

So, lots of people think that when you retire, it means watching tv, sitting at home, not “doing” very much. Now, that might be the case when you go and visit your grandparents, because they are 80+ and much likely to be as mobile at yourself. Now, think about if you were 40, or 50- would that retirement still mean sitting at home now doing anything? Or would it mean that you could take on that allotment you always wanted, or sail around the world- or visit Egypt in the off season? When I talk about early retirement, I see it as a massive freedom and I’m certainly not going to spend it sitting at home watching whatever content somebody else has created. I want to take advantage of slow travel- of off peak transport, Monday/Tuesday restaurant deals- without thinking I have work the next day.

Early retirement is freedom

So, this is my take about what FIRE is all about- it’s freedom. No longer do you have to get up early and do your 9-5 day job- or whatever the shift you currently have to turn up to. Instead, the schedule is yours- do as much, or as little as you want everyday. Sure, you might even still need/want to work a little- but as long as its totally on your schedule- you have the freedom that most people can only dream of.

FIRE is not about spending nothing

Some in the FIRE world (blogs etc) would have you think that you have to give up everything- no coffees, no lunches out, no takeaways, nothing. I mean, if your budget is out of control- and you are in debt, then it might be a good initial view to have- at least until the debt is repaid. For everybody else? I don’t think denying yourself whatever makes you most happy is worth it. Now- that does need balance, as if you just say yes to absolutely everything- then it’s likely you are going to run out of money in the first week after getting paid (if not sooner!)

Instead- I think it’s about having a budget for the things that you value in life (even if that is a coffee a day), so that you realise the cost (and therefore the time taken to earn this). If on the other hand you realise that £30 a month on dominoes is a total waste of money since you only ever eat half of it, and it’s seriously salty- then loosing this out of your budget (and the £360 a year) is a really easy decision to make. It’s having this budget that enables you to start making these longer term decisions.

You have to earn £40k+ to FIRE

Well, I’m not going to lie- the more you earn, the easier (it can be) to FIRE. Now, you have to keep a handle on your spending/costs, as if you are earning £100k, but spending £99k, then you are only saying 1% of your earnings and FIRE is going to be years away (ignoring taxes for the moment). Now, if you can maintain a healthy FIRE savings rate (let’s say anything above 20%), then the more you earn- the more real cash that’s going to be in your bank every single month. It’s this money that can then be invested to produce it’s own return that will get you out of the day job.

As long as you can keep your budget/spending low- then you can FIRE on pretty much any full time salary that pays minimum wage. Now- that will massively depend on where you are in the country- as housing costs can be a huge cost on your budget. If you are lucky enough to live in South Wales- then you don’t even have to live outside to capital to get a shared house for £300-400 a month.

FIRE means no work at all- doesn’t it?

This is totally up to you- but I’d suggest that you aren’t really FIRE until you aren’t working 9-5, or 30+ hours a week, since that’s not really retired. Now it might be that you actually love you job, so much, that it doesn’t feel like work- in which case you might say you are “retired” already, as you are doing what you want (see freedom above)