Living The Dream
What if you could get paid to sleep? Or for going about your day however you choose – working out, hiking, indulging in your hobbies, or chatting with friends? What if you could even get paid during months where you felt overwhelmed, and just needed to chill for a while… movies, beaches, video games, reading marathons… whatever restorative downtime you needed?
What would you do with your life if you didn’t *have* to clock into a job from 8-5 (or whenever-to-whenever)? What kind of creativity could you unlock, and what would you create with your life, if you didn’t have to be a slave to the demands of your job?
There’s a movement out there that aims to help people answer these questions, and achieve this (seemingly impossible) dream life. It’s called FIRE — Financial Independence / Retire Early. The author of today’s book, Jason Fieber, has achieved this dream, and writes to help others achieve freedom, too.
The “retire” part is optional, and more or less subjective, as many people who have FIRE’d already still spend much of their time enjoying meaningful pursuits that ALSO just so happen to generate income. Whether or not that “qualifies” as retirement isn’t the point. The point is, they’re free from financial stresses, able to focus their time and effort on both productive and restorative activities of their own choosing, in whatever allocation feels balanced and personally optimum (no vacation request forms required).
The biggest impediment to achieving FIRE is not, as one might think, the lack of income. The biggest road block that keeps people from considering and pursuing FIRE is the lack of an open mind, where money is concerned.
Each FIRE journey is different, and it is easy to look at how one particular individual got to FIRE, and say, “I couldn’t make XYZ sacrifice that THEY made, so FIRE can’t be for me.” But the beauty of FIRE is that is customizable for each person. So I ask that, as you read this post (and follow its links), you think not of the things that would stand in your way of following the *exact path* that Fieber took, or that anyone else has taken, but instead, allow your mind the freedom to roam with creativity and ponder what avenues and methods might be available to you, personally.
Another amazing thing about FIRE is that it isn’t a “succeed or fail” type deal. Every bit of progress you make towards FIRE reduces stress, encourages a sense of freedom, and improves your future retirement prospects — whether or not you achieve the amazing outcome that Fieber did.
Even more interestingly, the process itself of working towards FIRE has many non-financial benefits. It:
- builds your creative problem solving skills,
- grows your self-discipline,
- helps you find true contentedness in what you have and where you are today,
- and compels you to identify what is really important to you, personally.
So, How Do You Get FIRE’d?
The simple equation is: (1) spend less than you earn (ideally by a significant percent), and (2) invest those savings in something that will provide ongoing income for you (ideally in something that requires little-to-no effort from you).
And here is where we meet the resistance and pushback. Spend less? “But Juli, you don’t understand… I don’t make that much and I have a lot of bills, and then you just gotta live, too, you know?” Trust me, I do know. I was right there, vehemently protesting that I couldn’t trim any fat from my budget, not too many years ago. And I’ve been surprised on my own journey to see how much I was spending on things that actually weren’t giving me value for my dollars, and that I’m doing just fine without, these days.
First, there’s this sneaky thing called lifestyle inflation, which makes it hard for people to save at any income level. Wherever you start on the income spectrum, there are people whose savings rates are lower AND higher than yours. Second, we really don’t know as much as we *think* we know about how we spend our money. Lastly, we’re notoriously bad at predicting what will make us happy or unhappy (see: Stumbling on Happiness), so oftentimes what we’re so afraid of giving up really isn’t a big deal after all, once we’re in the midst of it.
More importantly, though, is the concept of rejecting this whole beautiful idea of FIRE, and the possibilities it could provide, just because of some road blocks. Will it take some people longer than others to establish financial security, because of certain life circumstances? Sure. Do some people have advantages due to the home they were born in, the income they bring in, the freedom from debt they may currently have, and other privileges? Of course! But just because some people have a head start doesn’t mean others shouldn’t try at all. And there are so many benefits to living the *process* of FIRE, regardless of when you get there, that it makes a lot of sense to suspend judgment, and see what FIRE could do for you.
Ready to take a peak at the process? Here we go…
PART 1: Increase Your Savings Rate
This can be done either by reducing expenses or increasing income.
Important note: due to hedonic adaptation (shoutout to my original FIRE blogging hero – Mr. Money Mustache!), reducing expenses never ends up feeling as bad as you think it’s going to feel. Something to keep in mind as you read the following list.
Some ways FIRE-focused people have chosen to save money:
- Tracked their spending. Tracking every expense (tedious as it may sound) turns out to be a simple task that gives you invaluable data to work with. I think this is the #1 place to start. We all think we know what/where we spend, but the numbers often prove different from our presumptions. I fought this recommendation for way too long, and now that I’ve been tracking for a few years, I am wowed by the results. I find tracking FAR more helpful than budgeting.
- Downsized their living situation. Especially in the USA, most of us have a lot more living space than we need — and we pay for it (rent/mortgage, heating, cooling, cleaning, etc).
- Downgraded their car. Buying a reliable used car, instead of new, will save you gobs of money in the long run. Those monthly payments to the dealership can instead be payments to yourself, effectively “self-insuring” against any mechanical issues or needed repairs (which, if you stick with the most reputable brands, won’t happen all that often anyway). Plus, auto insurance is cheaper for older/humbler cars than for newer/sporty cars.
- Removed or reduced subscription services. This was a real battle for me, personally. There were some subscriptions I thought you could pry from my cold, dead hands… but over time, it grew easier to give them up, and honestly, hedonic adaptation has kicked in, and my levels of life-satisfaction without them are doing just fine. 🙂
- Used temporary shopping bans. This exercise in discipline can help curb impulse/discretionary spending.
Some ways FIRE-focused people have chosen to earn more:
- Started a side hustle (a job they work outside of their normal job’s hours). Preferably, this will be something enjoyable, so it doesn’t really feel like work, or something that adds value to life and/or helps you reach your goals. (I’ve heard of someone doing bicycle deliveries to earn extra cash and get in better shape at the same time.)
- Negotiated a higher salary at their primary job. Especially if you’ve been in your career for some time, you might not be compensated at the market rate. It’s worth looking into, and asking!
- Switched to a new job or even a new career. Depending on how quickly they intend to achieve FIRE, some are willing to take on a lucrative career that interests them less for a temporary period of time, to earn freedom for the rest of their lives.
PART 2: Invest
This can be done very simply, or far more complexly.
Some ways FIRE-focused people have chosen to invest:
- S&P 500 Index ETFs – this is a great place to start if trading individual stocks seems overwhelming.
- Dividend Growth Investing – this is Fieber’s specialty, as you’ll soon see
- Real Estate Investing – purchasing and then renting real estate can provide regular income
There’s LOTS of information out there, to help you get started. We’ll touch on that a little more below. 😀
Photo from Jason Fieber’s Twitter
Jason Fieber: FIRE Champion
I’ve been following Fieber’s journey for many years. He writes now for Mr. Free at 33, but I first found him at Dividend Mantra, a blog he later sold. I (along with much of the dividend-focused FIRE community) was devastated when his writing disappeared from Dividend Mantra. His unique voice could not be replaced. When he resurfaced in 2016 as Mr. Free at 33, I was thrilled. 😀
Jason’s story is so remarkable, particularly because his situation at the start of his FIRE journey was rather unremarkable. He had some debt and a job he didn’t like (and then was let go from!). He felt trapped, as many of us do, in the rat race. You can read his story in his own words.
The key for me is that he wasn’t a jet-setting executive, with a six figure salary — he was just an average guy (who actually had a significant amount of challenges to overcome), with a middle class job, who used his cleverness and creativity to build dividend income and escape a 40-year office-prison sentence.
5 Years to Freedom
Fieber’s e-book, 5 Steps To Retire In 5 Years, is worth every penny of it’s ridiculously affordable price ($2.99, at the time of writing). It is smooth and easy reading, and in its relatively short length, he concisely lays out a simple (though not necessarily *easy*) plan for escaping the rat race in 5 years.
Again — the beauty of FIRE is that it is customizable. There may be aspects of his plan that don’t seem doable in your situation (especially at first, when your frugality muscles need some strengthening), but if you stick with it, you’ll figure out creative solutions to make up the difference. If you’re blessed with a higher income than Fieber had to start, and can follow his steps to dramatically cut back expenses, you might get yourself to freedom in four years! Or, if you are in a situation with a lower income and a trickier-to-reduce expense line, it may take eight years… or twelve.. or even fifteen. But that’s still way better than forty, right??
And I want to emphasize that the inability to “finish in five” does NOT negate the purpose of starting. Like anything, the more you practice the tenets of FIRE, the better you get at them, and the better your results will be. Simultaneously, the more net worth you build, the more your financial dividends will be compounding to your benefit. It’s the ultimate win-win.
If you’re younger and have a lot of flexibility in your life, or if you’re just fed up with the rat race and willing to make some significant yet temporary sacrifices to free yourself in just five short years, this book lays out the path, saving you the trial-and-error of stumbling along the way. And even if you don’t feel up to a drastic change for the next few years, I’d still recommend grabbing a copy, intentionally dropping all judgment, and reading about a totally different way to attack the retirement problem. I guarantee, you will learn something interesting. 😀
Having all this information succinctly condensed into one simple, straightforward book is something I would have been really appreciative of, when I started out on this process.
Mr. Free’s *FREE* Advice
Since the e-book is already so concise and affordable, I won’t summarize it here. Seriously — go grab a copy. I truly believe you’ll get immensely more value for your three bucks than if you bought a cup of coffee, a hamburger, or whatever else.
Instead, in honor of this FIRE Champion, I’m going to share some of my favorite articles, written by Jason Fieber. If you’re not yet ready to drop the cash for his e-book, you can still learn a LOT for free on his blog.
Are you ready to get lost down a rabbit hole of awesome links? Yes? Okay, awesome. Here we go:
- A DIVIDEND A DAY KEEPS THE UNWANTED JOB AWAY
Great companies will send you money for doing nothing, once you own shares of their businesses! How awesome is that??
- I DESERVE IT
A great look at what that phrase really means.
- THE TRUE COST OF EXPENSES
Shifting your perspective can have a massively positive effect on your spending/saving.
- FIVE REASONS WHY DIVIDEND GROWTH INVESTING IS THE PERFECT STRATEGY FOR FINANCIAL INDEPENDENCE AND EARLY RETIREMENT
One of the best and most succinct arguments I’ve seen for the dividend-growth-investing path.
- THE HEDONIC TREADMILL AND FINANCIAL FREEDOM
I believe the pursuit of FIRE will make you happier than the pursuit of consumer goods.
- THE MONEY IS JUST A MEANS TO AN END, NOT THE END IN AND OF ITSELF
This, to me, is the true heart of FIRE. I have no interest in yachts, expensive handbags, etc. The goal of FIRE is freedom.
- HARNESSING THE INCREDIBLE POWER OF OPTIMISM: OPTIMISM VERSUS PESSIMISM
There are always going to be excuses for why you *can’t* do something. Instead, find the reasons why you *CAN*.
- HARNESSING THE INCREDIBLE POWER OF OPTIMISM: BUTS VERSUS ANDS
Recognize that, with a moderate path like dividend investing, the odds really are ever in your favor.
- A DIVIDEND GROWTH SNOWBALL IN ACTION
The initial effort may feel Herculean in it’s difficulty, but once you get the ball rolling, it keeps rolling for you. 😀
- I WAS ALREADY FINANCIALLY INDEPENDENT
This post (and the original Dividend Mantra article from 2014 he references) hit me like a ton of (very welcome) bricks. Once you set the ball in motion… once you decide… success is inevitable. 😀
- A HIDDEN BENEFIT OF NOT HAVING BILLS
There are remarkable side effects to reducing your expenses.
- WHAT BETTER STORE THAN THE STOCK MARKET?
He perfectly explains why I get so excited about my favorite kind of sales. 🙂
- HOW MY ACTIVE INCOME COMPLEMENTS MY PASSIVE INCOME (AND VICE VERSA)
FIRE isn’t the end — it just allows you to become a better version of yourself.
- I SUCK AT MOST THINGS
Focus on your strengths and find your niche.
- IT’S NOT ABOUT THE MONEY: RENT VERSUS BUY
Fieber explains *perfectly* why I prefer to be a perpetual renter, and have very little interest in ever owning a home.
- WHY I NO LONGER WORRY ABOUT INFLATION
We have so many pre-programmed beliefs about finances. Fieber helps us see them from a different perspective.
- HOW HAVING OPTIONS CAN ALLOW YOU TO LIVE A MORE AUTHENTIC AND CONTENT LIFE
A big part of why I’ve willingly made “sacrifices” on the path to FIRE is that authenticity means a lot to me, and is worth working for. The amazing thing about the process, though, is that the sacrifices never feel as awful as you expect they will.
- ATTITUDE PLUS GRATITUDE EQUALS ALTITUDE
So much of FIRE isn’t about the money.
- I’M FINANCIALLY INDEPENDENT. JOHNNY DEPP IS NOT. HOW DID THIS HAPPEN?
The ability to achieve financial independence has relatively little to do with the level of your income, and so much more to do with who you are as a person.
Fieber also runs an amazing column called the Undervalued Dividend Growth Stock of the Week over at Daily Trade Alert. If you’re just getting started on this journey, and especially if you’re fearful of investing, I would highly recommend reading through his analysis of the undervalued stocks, to get a sense of this type of investing. Of course, I am not any kind of financial advisor, and my advice should not be construed as such. But Fieber’s insights on undervalued stocks have helped me a lot, so I think it’s a great place to start for those of us who don’t feel particularly knowledgeable or skilled in the market.
In Good Company
Intrigued? Here are some other FIRE Champions, whose excellent philosophies and strategies may help you along your way:
- Mr Money Mustache – The OG of FIRE (Okay, in reality, there were others before him, but of the people I know who are pursuing it, the vast majority learned of the concept through MMM. So, maybe the mack-daddy of FIRE would be a better moniker? haha)
- Four Pillar Freedom – Relatively new to the FIRE blogging scene, but absolutely killing it on all fronts.
- Casual Kitchen – Heavy on the philosophy side of FIRE, with lots articles to get you thinking and laughably cheap recipes to help you minimize the “food” portion of your budget.
- Millennial Revolution – These bloggers retired at 31 to travel the world, and they want to help others get on board.
Non Fiction Bingo 2018 Progress
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