How Did we Decide to Seek Financial Independence/Early Retirement (FIRE)?
THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE SEE MY DISCLOSURE FOR MORE INFORMATION.
Once, I started working full time, we bought the two cars, and the house, and then I tried to search for advice on savings/investing online, but never found anything too helpful. Luckily I made many wonderful and intelligent friends in college. While at a small birthday get together we got on the topic of investing, banks and financial planning. One friend happened to mention vanguard (whew, I had just opened a vanguard Roth IRA in the previous month, so maybe I had learned something useful on the Internet) and discussed the stock market with a level of understanding much greater than my own. The next Monday I emailed him and asked about a blog he had mentioned. I started reading it, and was hooked.
I realized that options are out there other than the traditional work until you are 55 or 65. We were ready to learn a bit more about financial independence/early retirement (FIRE).
Steps After Finding FIRE
Engineering is definitely the field that teaches you how to learn, be decisive, analyze options, and consider the life cycle of a project. That’s probably why there are so many people interested in FIRE that come from engineering. My schooling didn’t teach me how to memorize and regurgitate basic concepts, but focused on how to be a lifelong learner and use practical skills to solve problems.
Even now as I question if I want to spend my working ages employed as an engineer I know that the school was worth it. With engineering I feel like I could take on any job.
Disappointment Stage – Missing Out
While I’m disappointed I didn’t know of FIRE from the start, at least I learned about it at the young age of 26, and my husband and I had already paid off $55,000 of the $60,000 in debt accumulated from buying cars, medical debt, and undergrad. I moved from reading about stocks and VTSAX (and the Simple Path to Wealth) onto Mr. Money Mustache and his radical idea of very early retirement and finding happiness not from things. His words spoke to me in general, however I definitely still struggle with implementing some of his amazing money saving tactics.
I have always envisioned happiness not coming from belongings. However, before discovering FIRE, it was easy to emulate the typical middle class lifestyle and get caught up with the concept that “busy is better.”
Developing Our FIRE Plan
The immediate goal to set after spending a month reading so many FIRE blogs was to increase our savings rate. Before discovering FIRE we were saving roughly 20% of our take home pay, so we were doing great by conventional wisdom.
We are currently hovering around 65%, with the goal to stretch it to 75%. In our 2.5 years since discovering FIRE, we definitely set off on the fast track. Thanks to a raging market, embracing frugality, and setting our finances on autopilot, we could be three years away from FIRE. (But I don’t believe in setting a FIRE date, since I’d surely fail.)
Here’s how we plan to do reach FIRE:
- Max out 401k and 457 contributions (we both have access to both)
- Fully invest in IRA (no longer Roths based on Mad Fientist research)
- Take any extra money and open a taxable VTSAX account
- Don’t pay off our mortgage early (as tempting as that is, mathematically it does not make sense)
- Live on $2,000/month (see our spending summaries here)
Things that might get in the way:
- Home renovations, we bought our house planning to do a complete remodel totaling about $40,000. We’re tackling the projects slowly, but we’ve been itching to build our dream kitchen and I want my large soaking tub. It’s tough to say now whether we will funnel our savings towards FI or home improvement over the next few years. Things are functional!
- Travel, this is a weakness of mine. I love traveling to new places. Luckily, I try to live like a local while I travel and mostly camp, stay in inexpensive hotels, airbnbs (sign up and get $40 off your first stay!) or hostels. We use credit card sign up bonuses to offset travel costs and book hotels using Ebates to earn cash back on spending we would have made anyways (sign up through this link and get $10 after making your first $25 purchase)!
- Middle class spending…we have five weddings (only two local) this year. Plus we inflated our lifestyle some once I got a full salary, so time to deflate spending.
- Groceries, Back in 2015 we ate a primal diet and our excess income allowed us to be lazy in our hunt for deals and keeping our grocery budget down. For two people we spent roughly $600/month on groceries. This was way too high, by the end of 2016 we got it down to $300/month. (2017) The goal is to cut it to $200/month, my job has pushed us to go vegan, which has saved us major money, we doubled our garden, found access to free plants and seeds for the garden, and we are trying to EAT EVERYTHING by cleaning out the cabinets.
- Chronic Illness, Mr. Kiwi suffers from constant headaches (diagnosed as either chronic migraine or new persistent daily headache). We definitely don’t cheap out on health care expenses, and have been seeing doctors on the reg since this started in 2014.
Now the FIRE Waiting Game
After finding FIRE and building a frugal life we love, all we have to do is sit back and wait. This is the hardest part, especially when you aren’t satisfied with your job.
But the plan can change, while the goal stays the same:
Save money until you can support your lifestyle indefinitely. Work = Optional
That magical number is somewhere in the range of 25-30 times your annual spending.
So get all your accounts logged into Personal Capital. Start tracking your net worth and spending. Then one day you’ll reach the FI side of FIRE. From there forward, it’s up to you when you’ll go for the RE side of the equation!
Good luck on your FIRE journey, and realize you aren’t alone. We each have our own struggles, excuses, and dreams. Much like a snowflake no savings goal is the same!
How’d you find FIRE? What’s your FIRE plan? Are you already retired early? Go ahead and rub it in!