World on FIRE
I've always been intrigued by the FIRE movement, where in people intentionally lead a very frugal lifestyle so they can pile money into savings and retire early. There are many blogs about this, almost all of which have a "do like I did and you too can wander the world at a young age." Leaving aside the potential detail that the 4% rule might not make sense if your savings have to last far more than 30 years, the lifestyle advocated by these blogs is not dissimilar from the idea of working for a tech startup: you have a lot of short term "pain" with the hopes that the payoff is very substantial.
That's all good so far as it goes. A lot of startups fail, and I suspect a lot of FIRE aficionados don't succeed in their retirement goals either. As you'll be unsurprised to learn, quite a few of those bloggers seem to have either started out wealthy (or at least not in debt), had extremely good salaries in cheap places, or had so few other interests that you wonder if they had to find hobbies when they did make it to the retire early stage of the plan. In any event, a lot of the advice is pretty straightforward stuff that you see on any financial blog, like "make dinner at home instead of eating out" or "get books from the library instead of buying them" or "buy well maintained used cars and drive them forever" and the like. Others are a little more extreme like "rent in the cheapest safe place you can afford". Ultimately, they drive money into stocks.
I'm sure this all looked really good in the long stock market rise from 2010 until the current pandemic tanked the market. While the market has rebounded, we're looking at what may be a long recession, and I wonder how many of those FIRE folks will suddenly be back at a job, assuming they can find one.
In any event, since we've been locked up in the house for the last 41 days and counting, we haven't been spending any significant amount of money. No eating out, no movies, no concerts, no baseball. No other shopping, not that I do much other shopping. No gas, because we're not driving anywhere. Groceries have been limited - M has concerns about the virus on fresh vegetables in particular, so we've spent less on those. In fact, on my last credit card bill, fully 1/2 of the charges were related to Tulip's health challenges. Another 1/4 were gifts for my sister's birthday. This meant that this bill was dramatically smaller than my usual bill, and much less than last month since last month had Orlando and the start of the vet charges on it.
I looked at that bill and though, ok, this is what my bill might look like if I was doing FIRE. Of course, if I was adopting that lifestyle I probably wouldn't own a house either, although if my rent had gone up $50 a year from my last apartment in 2007, it would be close to my current mortgage note, given how minuscule mine is. I could theoretically have a lot more in the bank, although I presumably would have lost more in my divorce too.
I'll be honest. If I'd heard of FIRE back in 2002, I might have tried that approach. I probably would have succeeded too, although I would have missed out on so many things. The giant lists of movies would probably have been cut to only things I saw on video from the library. The concerts would have been limited to just the ones I could get for free. The baseball stadium tour wouldn't have happened, and my state list would be shorter, and I damn sure wouldn't have been at Game 7. I wouldn't have a house or all the related expenses, nor a Tulip without a house.
I suppose there's a chance I might have retired by now, but I'm not sure it would have been worth it to miss all of that and the people I met along the way. And while M and I have talked about potentially retiring overseas for at least a portion of the year, I really like Cleveland, and the people I know here, and the things I do here, which means having a house has proven to be a good choice. It'll be paid off in four more years (at most), and the value has risen dramatically - before the pandemic crash I would have guessed I could get double what I paid for it, and probably more. Maybe that makes me depressingly bourgeoisie. It turns out that I've been living less like I'm on FIRE and more like The Millionaire Next Door, which I didn't read until last year but which I've been inadvertently following my entire adult life, because it's basically how my parents live.
As with so many things, it probably comes a lot more to luck than we are really comfortable with. My parents are people who worked hard, emphasized education, and spent money wisely. I was fortunate to pick up on that, and equally fortunate to find a job that paid reasonably well that I mostly enjoy doing that was still a start up when I came on board and is now substantially larger and more successful, and which appears to be largely recession proof. I've been along for the ride, as has my stock. Let me assure you, none of it was planned.
If lighting yourself on FIRE works for you, go for it. I'm pretty satisfied with how my life has turned out so far, at least financially speaking.
That's all good so far as it goes. A lot of startups fail, and I suspect a lot of FIRE aficionados don't succeed in their retirement goals either. As you'll be unsurprised to learn, quite a few of those bloggers seem to have either started out wealthy (or at least not in debt), had extremely good salaries in cheap places, or had so few other interests that you wonder if they had to find hobbies when they did make it to the retire early stage of the plan. In any event, a lot of the advice is pretty straightforward stuff that you see on any financial blog, like "make dinner at home instead of eating out" or "get books from the library instead of buying them" or "buy well maintained used cars and drive them forever" and the like. Others are a little more extreme like "rent in the cheapest safe place you can afford". Ultimately, they drive money into stocks.
I'm sure this all looked really good in the long stock market rise from 2010 until the current pandemic tanked the market. While the market has rebounded, we're looking at what may be a long recession, and I wonder how many of those FIRE folks will suddenly be back at a job, assuming they can find one.
In any event, since we've been locked up in the house for the last 41 days and counting, we haven't been spending any significant amount of money. No eating out, no movies, no concerts, no baseball. No other shopping, not that I do much other shopping. No gas, because we're not driving anywhere. Groceries have been limited - M has concerns about the virus on fresh vegetables in particular, so we've spent less on those. In fact, on my last credit card bill, fully 1/2 of the charges were related to Tulip's health challenges. Another 1/4 were gifts for my sister's birthday. This meant that this bill was dramatically smaller than my usual bill, and much less than last month since last month had Orlando and the start of the vet charges on it.
I looked at that bill and though, ok, this is what my bill might look like if I was doing FIRE. Of course, if I was adopting that lifestyle I probably wouldn't own a house either, although if my rent had gone up $50 a year from my last apartment in 2007, it would be close to my current mortgage note, given how minuscule mine is. I could theoretically have a lot more in the bank, although I presumably would have lost more in my divorce too.
I'll be honest. If I'd heard of FIRE back in 2002, I might have tried that approach. I probably would have succeeded too, although I would have missed out on so many things. The giant lists of movies would probably have been cut to only things I saw on video from the library. The concerts would have been limited to just the ones I could get for free. The baseball stadium tour wouldn't have happened, and my state list would be shorter, and I damn sure wouldn't have been at Game 7. I wouldn't have a house or all the related expenses, nor a Tulip without a house.
I suppose there's a chance I might have retired by now, but I'm not sure it would have been worth it to miss all of that and the people I met along the way. And while M and I have talked about potentially retiring overseas for at least a portion of the year, I really like Cleveland, and the people I know here, and the things I do here, which means having a house has proven to be a good choice. It'll be paid off in four more years (at most), and the value has risen dramatically - before the pandemic crash I would have guessed I could get double what I paid for it, and probably more. Maybe that makes me depressingly bourgeoisie. It turns out that I've been living less like I'm on FIRE and more like The Millionaire Next Door, which I didn't read until last year but which I've been inadvertently following my entire adult life, because it's basically how my parents live.
As with so many things, it probably comes a lot more to luck than we are really comfortable with. My parents are people who worked hard, emphasized education, and spent money wisely. I was fortunate to pick up on that, and equally fortunate to find a job that paid reasonably well that I mostly enjoy doing that was still a start up when I came on board and is now substantially larger and more successful, and which appears to be largely recession proof. I've been along for the ride, as has my stock. Let me assure you, none of it was planned.
If lighting yourself on FIRE works for you, go for it. I'm pretty satisfied with how my life has turned out so far, at least financially speaking.