4 Tips to Conquer FIRE – Financial Independence Retire Early

FIRE is Trending
FIRE is the New DREAM

Do your regular Google search on this term and you will find thousands of pages with tons of information illustrating your path to financial freedom. There is a Reddit community of over 400,000 users who actively share their success stories and contribute ways how they converted this dream into a reality.

What FIRE is NOT ?

  • NOT a “get rich quick” scheme
  • NOT an escape route from your boring job
  • NOT defined by others dreams
  • NOT a cakewalk

Now that we know what FIRE is NOT, it’s important to understand that this movement isn’t necessarily something one MUST follow. Each one of us has built our unique definition of a perfect life, and you may not wish to be part of a trend just because everybody is talking about it.

While most people have a retirement age in mind, FIRE enthusiasts strive to achieve retirement quite early – 40’s, 30’s and sometimes even in their 20’s. An early retirement does not imply you would quit your job and do nothing, but it means that you would no longer be dependent on your job to survive. Your job needs you more than you need your job.

FIRE is a state where you can allow yourself to be free of financial anxiety and stress, and acquire the bonus of priceless time. This is the true outcome of being financially independent, where you can explore various interests you may have without letting money take over your lifestyle choices. Money will no longer be your master governing every decision.

Here are 4 tips to conquer your journey to financial independence 

FIRE Begins with Self-Reflection

If you simply search ” How much money is enough to be financially independent “, you would end up with various estimates from thousands of people. However, this is the first mistake most people end up making by deciding on a number calculated by someone else. Would you let other customers decide what you will eat tonight at your favorite restaurant ?

self_reflection

It’s simple. You already know your lifestyle and are completely aware of your finances. Picture yourself in a state where you no longer worry about paying the bills and enlist your goals for what you wish to achieve when you are financially free. Whether you plan to travel, write or even continue working at your present job, what is your true motivation to attain FIRE ?

Build your strategy around this motivation and plan your life accordingly. If you think you would need 10 years to get there, how much do you think you would need each month to survive ? To estimate an initial amount you may wish to read How much do you need to save for retirement?

FIRE will remain a dream if you have DEBT

I’m not going to paint a pretty picture of being financially independent and then crush your dreams by hiding the harsh reality. If you have debt, in any form, FIRE will remain a dream. pay_off_debt

Whether you are burdened with student loans, credit card debt or even both, start paying off these loans at the earliest. This would mean you can no longer give in to impulse buying or spontaneous vacations without a worry in the world. Paying debt requires discipline – picture yourself at 40 living debt free, while others continue complaining for their lack of commitment to a debt free lifestyle.

Here’s a few links to help you start paying off your loans:
Plastic Money – when debt comes disguised as wealth!
How I crushed a $35K student debt and saved $100K under 5 years

FIRE = Frugal Living

This goes without saying that you need to start budgeting your expenses each day in order to fulfill your dreams. If you save $ 100 on coffee each month, that is $ 1,200 a year and $ 12,000 in 10 years ! Start looking for practical alternatives and cut corners where you can. Avoid giving in to guilty pleasures such as the latest car or a new phone to keep yourself out of debt.

"You shouldn't worry about the bills, Dad. C'mon! Let's live a little!"

Being frugal does not imply one is cheap. Give yourself a treat once in a while, but don’t go overboard in doing so. Keep your long term goals as your top priority over things that only offer instant gratification. Frugality is a virtue you will cherish.

A few starters for a frugal living :

  • Cut cable and downgrade your cell phone plan
  • Lower housing costs
  • Opt for used cars
  • Start cooking at home
  • Use a credit card with cash rewards

Additional useful links:
Too Scared to Budget?
Are you an Impulsive Buyer?

Investing for FIRE

If you save $ 10,000 a year you would end up with $ 100,000 in 10 years. Sounds pretty good! But did you adjust this amount for inflation ?
You have been living paycheck to paycheck and cutting back on expenses, but investing is the high speed sports car to FIRE.

get-started-investing

Whether it is stocks, real estate or savings accounts, let your money do the work for you. Don’t set unrealistic goals of getting rich quickly, but secure your investments for long term gains. Avoid the urge to quickly buy and sell for profits because someday this will turn into an addiction hard to control. I have written a series on stock market investing that you may find useful. Make sure you learn all aspects of investing along with all its associated costs before you make a decision.

Understand that while you are investing and saving regularly, it is imperative to invest equally in yourself. Strive to enhance your skills each day by learning something new. This would broaden the number of opportunities you would have after attaining FIRE.

It may sound like a lot of hard work is involved in achieving financial independence, but don’t forget you are doing it to have MORE TIME.

More time for yourself
More time for family
More time for things you LOVE !!

Be Frugal, Be Smart, Be Rich !

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