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canyonwalkerI saw an interesting article about saving money the other day. "A couple who retired early with $4.3 million says the FIRE lifestyle is wearing thin: ‘We don't want to just keep throwing money on the pile and keep being cheap.’" The story has been picked up by a number of news outlets. Here's a Yahoo! article link (25 Jun 2023) because it's the least likely to disappear behind a paywall. The story tells of a couple, Mindy and Carl, who are multi-millionaires but spend too much time and emotional energy agonizing over small purchases. Their habit of extreme frugality has made it hard for them to enjoy the fruits of their labor.
Let me offer a definition here for those who are wondering. "FIRE" is Financial Independence/Retire Early. The term was coined in 1992, in the book Your Money or Your Life. The FIRE movement, as it's often called, has gotten closer to the mainstream in recent years as bloggers and influencers have popularized it with younger generations of adults getting an early start on planning ahead for retirement.
The idea of FIRE is simple: you save aggressively, and invest your money wisely, building a portfolio of assets big enough to make you financially independent (FI-), enabling you to quit your job and retire early (-RE). How big is "big enough"? Big enough that the cash flow you earn from your investments basically replaces your need for salaries. And how aggressive is "save aggressively"? Ah, there's the rub.
Typical FIRE success stories tell of couples who worked well-paying professional jobs for as little as 10 years, saved every penny they could, and retired by age 40. Common in these stories is financial self-denial. People take their upper-middle class incomes from jobs as software developers, finance pros, and lawyers and budget themselves like starving grad students. They live in small, plain apartments or houses, even leeching off generous parents if they can to avoid paying for housing, stint on travel and material goods, and eat meals of cheap foodstuffs like rice and beans.
Let me emphasize, people who live in shared housing, or buy cheap groceries and rarely eat out, or own a bicycle instead of a car because they can't afford more are different from FIRE followers. FIRE people typically earn 6 figures, often well into the 6 figures, and save half or more of their pay.
One of my computer-engineer colleagues in the late 1990s was a FIRE adherent. Instead of renting an apartment in pricey Silicon Valley he kept a bedroll under his desk at the office and slept there. He showered at the company gym in an adjoining building and kept a few of his possessions locked in the trunk of his well-used economy car down in the parking garage. "I'm saving an extra $15k a year not paying rent and utilities!" he boasted. Today the figure would be at least double.
Sleeping under your desk and showering at the office to avoid renting an apartment may seem like taking frugality to an extreme, but that's the sort of tradeoff FIRE adherents seriously consider. I've always been a frugal person myself, or at least have always had frugal tendencies— see my example from a few years ago about how long I wore a pair of sandals before spending to replacing them— but to me that's beyond the pale. I decided back in school that as I embarked on a well-paying career I would strike a balance between saving money for the future and enjoying the fruits of my labor in the present.
Let me offer a definition here for those who are wondering. "FIRE" is Financial Independence/Retire Early. The term was coined in 1992, in the book Your Money or Your Life. The FIRE movement, as it's often called, has gotten closer to the mainstream in recent years as bloggers and influencers have popularized it with younger generations of adults getting an early start on planning ahead for retirement.
The idea of FIRE is simple: you save aggressively, and invest your money wisely, building a portfolio of assets big enough to make you financially independent (FI-), enabling you to quit your job and retire early (-RE). How big is "big enough"? Big enough that the cash flow you earn from your investments basically replaces your need for salaries. And how aggressive is "save aggressively"? Ah, there's the rub.
Typical FIRE success stories tell of couples who worked well-paying professional jobs for as little as 10 years, saved every penny they could, and retired by age 40. Common in these stories is financial self-denial. People take their upper-middle class incomes from jobs as software developers, finance pros, and lawyers and budget themselves like starving grad students. They live in small, plain apartments or houses, even leeching off generous parents if they can to avoid paying for housing, stint on travel and material goods, and eat meals of cheap foodstuffs like rice and beans.
Let me emphasize, people who live in shared housing, or buy cheap groceries and rarely eat out, or own a bicycle instead of a car because they can't afford more are different from FIRE followers. FIRE people typically earn 6 figures, often well into the 6 figures, and save half or more of their pay.
One of my computer-engineer colleagues in the late 1990s was a FIRE adherent. Instead of renting an apartment in pricey Silicon Valley he kept a bedroll under his desk at the office and slept there. He showered at the company gym in an adjoining building and kept a few of his possessions locked in the trunk of his well-used economy car down in the parking garage. "I'm saving an extra $15k a year not paying rent and utilities!" he boasted. Today the figure would be at least double.
Sleeping under your desk and showering at the office to avoid renting an apartment may seem like taking frugality to an extreme, but that's the sort of tradeoff FIRE adherents seriously consider. I've always been a frugal person myself, or at least have always had frugal tendencies— see my example from a few years ago about how long I wore a pair of sandals before spending to replacing them— but to me that's beyond the pale. I decided back in school that as I embarked on a well-paying career I would strike a balance between saving money for the future and enjoying the fruits of my labor in the present.
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Date: 2023-06-27 10:05 pm (UTC)~Sor
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Date: 2023-06-27 10:58 pm (UTC)