First, welcome to Crawling to FIRE and our inaugural post. If you have not had the chance, please look at my about page to learn about my background. The goals page has my goals - both professional, personal, and financial. Today I am covering the definition of FIRE, what it means to my family, and why we’re crawling towards it.
So, what is FIRE?
FIRE is an acronym that stands for: Financial Independence, Retire Early. I delve into these two components below.
Everyone I talk to seems to understand "retire early" - that is a dream that most people agree would make them happy. Most of those people seem to have a hard time imagining what early retirement would look like for them. The most common response I see is "I'd not have to go to the office and deal with my boss/commute/schedule ever again".
We had a baby boy in July, and I was fortunate to be able to take 3 weeks off when we brought him home. It was about halfway through the last week when I finally had enough sleep to dream about a life at home with my family. It was my wife, my baby and I - 24 hours a day loving on each other. I will always appreciate that opportunity we had to bond. We were sleep deprived and working hard as new parents to keep this tiny human cared for. Not having to worry about the office for those weeks emphasized what retire early means. It does not have to mean sitting alone on your couch throwing back a 30 rack* every day, unless you want it to. It means having your health and ability to live life without the constraints of a job taking 8-10 hours 5 days a week.
About that 30 rack. Everyone knows that active co-worker who dreams of a couch retirement. They are retirement age or a bit older, active and healthy. They retire, have the company cake, and go off the radar for months and months. You know what happens next - you see them at the grocery store with a walker and they look 15 years older. You think is this the same person we celebrated not too long ago? That is the danger of the couch retirement - that inactivity ages you. The CDC agrees - "Physical activity can help delay, prevent, or manage many chronic diseases" - source. I implore you that when you reach early retirement, you banish yourself from the couch. Your health is a blessing, don't waste it.
* A 30 rack is a case of 30 12oz cans of beer.
Financial independence is the subject people seem to be more confused about. Wikipedia has a great definition of financial independence.
Financial independence is the status of having enough income (from investments, passive businesses, real estate, etc.) to pay for one's reasonable living expenses for the rest of one's life without having to rely on formal employment. - Wikipedia
Imagine for a moment a hypothetical guy, Steve. Steve has living expenses of $100.00 a month. Steve also has an internet business with a monthly recurring revenue of $105.00 a month. Steve is financially independent. Steve does not have to worry about his living expenses at all. Now imagine that Steve in his comfort decides to buy a new Tesla with a $500.00 payment per month. Look back at the definition of financial independence above. The key here is reasonable. A $500.00 payment may be reasonable for someone making a million dollars per year, but it is not for Steve. Don't worry, Steve didn't make this major error jeopardizing his financial independence. If Steve had gone through with buying the Tesla, he would have found himself in a large deficit in income.
Many Americans do not have a shutoff switch like Steve in this scenario. Generations grew up on the "American Dream" and that if you work hard enough you can have anything you want. That's the rub here though - we are ALL working hard. Everyone is working damn near to the point of exhaustion all the time, so it feels like we DESERVE that item. Part of financial independence is learning to live within your means. This allows you to control your money rather than your money controlling you. When I was single, I made about $50,000 dollars a year when I still lived at home. But at the end of the week I was still broke. It took me years to realize that my spending took almost no time at all to match my income dollar for dollar. Of course, I had a brand-new Jeep, an ATV and a trailer. I loved the possessions but not what they did to my financial status.
In the years since I met my wife and combined finances, we made several smart financial decisions. Often these met with disbelief from our peers. The main one was going from a 2-car household to a single car household. Friends seemed to take our decision as a judgement on their multi-car lifestyles. This despite our conscious effort to not "preach" but rather inform. I will write a future article about the decision and cost savings by going to a single car. In short, we spend more time together commuting and insurance + maintenance costs halved.
Now you're thinking that isn't financial independence if you look at the definition. You're still working and have debt. This is true. But the relief we have from having an emergency fund in a savings account is incredible. Having a few thousand dollars in the bank completely changes your perception. Not needing your paycheck on Friday is a form of financial independence on its own. In the past I've had a paycheck delayed due to holiday or payroll error. This caused me overdrafts (more fees to kick you while you're down) or late payments. This baby independence frees your mind to start working towards true financial independence. Everyone has a starting point - mine happened to be thousands of dollars in debt and not a dollar in savings. Now we have a healthy emergency fund, no credit card debt, and it is liberating. I can sit down and work on a side project or write a blog post without the feeling of anxiety over money washing over me.
📈Crawling towards FIRE
Crawling refers to the pace at which we are heading towards FIRE. If you're looking for stories of 80% savings rates and massive gains in passive income you will not find it here. My wife and I are in our early 30s with a new baby. We are going to enjoy our health while we have it. This does not mean we are going to splurge on unnecessary things or impact our savings. The goal of FIRE is always in the back of our minds influencing all our decisions. We are currently building our first and forever home. We plan on paying the mortgage down as early as possible while we both still work. To the end of financial independence, I work on side projects. Currently these make about $120.00 a month. Not even close to paying the bills but everyone starts somewhere. If you're interested in my side hustles, I have a listing of them here.
If you're still here please come join me on Twitter if you want to see my project updates and a few baby photos. Thank you and welcome to Crawling to FIRE.
Do you want updates when I post content like this? Please take a second and subscribe. I promise to never spam you, and I only post content once or twice a week.