How the FIRE movement saved me from myself
The idea of gaining the kind of financial independence that allows you to quit working and live your best life has gained traction with the mainstream over the last few years. The so-called FIRE movement (short for Financial Independence, Retire Early) has become especially popular among millennials who have had a more challenging time with financial independence than previous generations and need more guidance on navigating the world of money management.
I learned about FIRE by way of travel hacking, and it completely changed my perspective on money and long-term financial goals. I’d always wanted to be financially independent, and, to me, that meant earning a good income, living below my means and not having to factor money into important life decisions. Those were the goals. Actually achieving them proved to be difficult.
FIRE, it turns out, gave me a way out of bad habits.
Here’s what FIRE didn’t do: It didn’t turn me into a house-hacking penny-pincher intent on retiring by 35. It centered me from the opposite end of the spectrum, where I had no savings, retirement account or long-term financial plan. FIRE provided goals I could work toward at my own pace. As a result, I learned how to better manage my money.
A framework to set financial goals
Before I’d even heard of FIRE, I knew I needed to plan for retirement and to buy a home one day, but those goals seemed far off. My immediate goal was to pay off my student loans. At one point, I even cashed out my 401k — which I wouldn’t recommend to anyone — just to put a dent in it.
Eventually, I became debt-free and earned a substantially higher salary. But having focused on paying off debt for so long, I didn’t know what to do with my disposable income. I began spending it frivolously and making lifestyle upgrades rather than saving for the future — because “saving” was a slow process that didn’t feel as rewarding as spending.
I soon learned that financial goals don’t need to be as far off as retirement or homeownership. I can set short-term goals for things that will enrich my life. Before joining the FIRE movement, I had heard the phrase “make your money work for you,” but I didn’t quite know how to apply that. FIRE gave me a framework to set and pursue long-term financial goals. With abundant educational resources, I began to understand the elements of sound investing and just how much wealth it can generate.
Use your disposable income to grow wealth
Having spent most of my 20s broke, I finally established several income streams in my 30s. Of course, once I was debt-free and earned a good living, I began spending it on frivolous purchases, including a new car. I didn’t realize that investing the money in an index fund would yield greater returns than the interest I would pay on a car loan. So I bought the car with cash, which I now realize was a terrible financial move.
The folks in the FIRE community were enthusiastic about investing, whether it was in real estate or the stock market. I began researching my options diligently and realized this was a much more sustainable outlet for my disposable income than spending it on lifestyle upgrades. Investing money doesn’t feel as passive as stashing it away in a savings account.
The process of managing investments is active and rewarding. You watch your portfolio grow over the years; it becomes something you tend to constantly. Nowadays, I don’t “reward” myself with material goods. I put those funds toward investments I’ve been eyeing — knowing they will pay off greater over time.
By understanding how to build wealth through investments, I took a step closer to securing my financial future. Suddenly every big splurge seemed more substantial when considering the investment yield I would be giving up. That realization is all it took for me to do something more productive with my income.
Self-sufficiency > traditional ideals of success
For years, I struggled with not having a conventional career. I left my full-time job to be a blogger and freelance writer. Since that didn’t feel successful, I kept going back to the workforce, chasing titles and benchmarks that now seem trivial compared to the freedom and financial independence I have as a freelancer.
The FIRE movement taught me that job titles and responsibilities don’t carry the same weight I was giving them. Moreover, my pursuit of them got in the way of my full potential. When I embraced the value of being a freelancer and dedicated myself to building my business, I broke free from a path that held me back with promises of meaningless accolades. I doubled my income and gained recognition in my area of expertise when my work was more widely circulated than in just one publication.
Today, I value my time and peace of mind above anything else. I’ve received job offers from companies offering me progress and prosperity. But if FIRE has taught me anything, it’s that I’m capable of bringing those things about for myself and in even greater abundance. Because no one else will invest in my talent and financial well-being like I will.
The bottom line
The FIRE movement has been a life-changing resource that provided the tools I needed to set and achieve my financial goals. There’s nothing like having a community of like-minded people to cheer you on and support you in your journey. While I haven’t quite embraced every principle of the movement, it’s been helpful to mold them around my specific goals.
If it hadn’t been for FIRE providing invaluable educational tools and community support, I would probably continue to spend most of my income “buying happiness” while earning a fraction of my income potential. In fact, I might be worse off financially than I was as a new grad, making $40,000 per year and cashing out my 401K to pay off debt.
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