You guys may hear about FIRE (Financial Independence Retire Early). We were told to work in a cubicle from 9 – 5 during the best years of our lives, with only 14 days’ vacation a year. Then we finally can start living life maybe when we are 67. That is the typical societal norm in the US. But sometimes you have to question whether this norm makes sense or not.
So then, we start considering having more flexibility and freedom in our lives.
Essentially, you can achieve FIRE by doing these three things:
– Saving money aggressively and cutting costs on the things that don’t matter
– Increasing your income
– Investing the surplus
The rest is waiting – which sometimes is the hardest part 😊. Yes, the strategy is quite simple but it takes a long time. If you are not sure how to start, here is a flow chart to start prioritizing your spending.
While achieving FIRE has a lot of upsides such as allowing you to spend more time with family and/or work on the things you love – However, some people have mixed feelings about FIRE.
Some people feel that they are missing out on life because they are trying to save too much.
FIRE lifestyle can be hard. Some people may feel that they have delayed their happiness too much for the future. One also may feel resentful that they could have enjoyed a bigger house or traveled to a few places. Or, maybe they overwork to make money for the sake of making money.
Frankly, creating a balance between spending for current happiness and saving for FIRE is still something that I’m constantly working on. I think prioritizing your spending, having a budget, and knowing where to shop can definitely help.
It is also very tempting to think that FIRE is the finish line and that our life before FIRE is full of unhappiness. I did feel that too that thinking FIRE will solve all the problems and life will be a bed and roses. But the truth is once we achieve that, maybe boredom will be invading which could be another problem.
Potential downsides of FIRE
Loss of Identity
When I quit my job without having another one lined up, I suffered from an identity crisis. Soon, I searched for another one. One might build financial independence but some might still be dependent on their work to feel fulfilled.
It’s probably a good idea to start thinking about what your retirement will look like. Some may spend more time with family. Others are traveling to new places such as apurplelife. I admired what MadFientist does, he is pursuing another career as a music producer. Whether it is traveling, spending time with family, or working on your favorite projects, having plans for early retirement can help you mitigate this problem.
Lack of structure
When you have all the free time in the world, it would be so tempted to sleep in until noon or play video games all day. Some people might find it difficult to create a new structure for themselves because they are so used to the schedule when they are still working. I can see myself falling into this ☹
Lack of social interraction
One of the common downfalls of FIRE is if you don’t have many friends/family – you most likely have to actively look for ways to interact with others. If not, you will lose your social interaction and we know that social isolation can be difficult. I am an introvert myself, and I know how it feels to live in a foreign country with little or no friends, and it can be so lonely.
Concern if you can return to work after a long gap in your career
I’m not sure with other fellow-FIRE, but this has been constantly in my mind. What if I didn’t like FIRE and wanted to return to work? This may not be a concern if your gap is not too long or your field is demanding, but I was wondering what would be the case if the gap is more than several years. Maybe you can do part-time consulting to mitigate this. But part-time consulting also comes with tasks that I don’t like such as finding clients or maybe creating legal documents. I think we can always find a job eventually, but some circumstances might change such as receiving lower pay or rank in the company.
Potential upsides of FIRE
FIRE buys you freedom
I think this is the most attractive benefit of FIRE. While FIRE doesn’t directly buy you happiness, but freedom is a big part of it. For me, this means no longer working for (potentially) another shitty boss. You can work on any projects that you like without being pressured financially. You don’t have to get permission when taking a time off.
Time is the only currency you can’t get back, and you can spend your time on anything you like. Maybe with your kids and/or your aging parents. While freedom and more choices may not always solve our true problem, but I would take freedom over constraints any time of the day. You can always create your own constraints, but not necessarily gain freedom/flexibility at any time.
More FIRE benefits:
- Having less stress in life and potentially living a more meaningful and joyful life.
- FIRE teaches us that there are many ways to improve our finances, how to prioritize our spending and we can still be happy by living below our means
- When you feel miserable at work, knowing that you can walk away anytime helps you feel better (whenever I had a shitty conversation with my shitty manager, I would typically open and stare at my personal capital account. This makes me feel better)
My realization
One day in July – I went to a park with my hubby. We walked a little bit but he had to leave earlier to see his mom. Then, I was sitting on the bench by myself and started to feel a little depressed. My current job work-life balance is pretty great (although my boss is shitty), and I have lots of time to work on my project. It is (almost) a full-time remote and I can run or walk to the park anytime in the day.
At this point, my net worth has achieved 70% of my FI number. While watching the leaves falling, I started to question myself – well… after achieving my FI number, what I’m going to do for the rest of my life? I’m only 32 now. I’m not sure if I want to have a kid. I’m too scared to go full-time with my music career. Sitting out on the beach all day is not going to make me happy with my life. I derive happiness from being productive and creating things, and probably tie my self-worth too much with what I do, which I wish was not the case.
I felt a little depressed when thinking that my data analytic career is going to be over. At the same time, I wish I had achieved FIRE number because I truly dislike my boss. I still enjoy what I do, but my learning has slowed down a bit. I also haven’t spent time on my music because I felt frustrated with my learning progress.
I was tempted to pursue music full-time but to be honest, I’m not 100% ready, both financially and emotionally. I’m a little terrified that if I do that 8 hours every day, I’ll be too hard on myself for not making enough progress. I feel safer spreading my identity into three roles, one in my full-time job, one as a musician, and another one as a writer in my blog. As I’m writing this, part of me feel sad because why the heck I don’t want to go full-time with my music, and the other part feels that I should be less judgmental because I will eventually figure that out later or sooner.
I’m also thinking about my mom – she is still working now. I feel a little bit selfish if I retire before she does. One thing that crossed my mind is maybe I should let her retire first by sending her money every month. Doing would require me to continue working – but I don’t mind actually.
After reflecting on my historical career, the main unhappiness is coming from working for a shitty boss. It’s not really what I do. I don’t love it, but It is quite interesting to me.
3 months later, I found myself interviewing for two data analytic positions in Stockholm. Because the US job market is so hot at this time, I’m also interviewing for four full-time positions. Although this process is very stressful, I feel a sense of progress in my life. I realized, at the end of the day, I still want to work but, I want to keep that FIRE option open.
As of today, I’ll have three incoming offers. Two from a Swedish company and one from the US. In five hours, I’ll have a discussion with HR regarding my salary expectation (Swedish company). This is my favorite company, but at the same time I realized I have to take a ~30% pay cut and I’m still ~120k away from my FIRE target. Part of me is crying but the other part is grateful because I can live in another country.
What will I do next?
Honestly, I’m not sure. I’ll see what the offers are and see from there. I don’t want to think too much yet. Maybe I’ll stay in the US or maybe I’ll move to Sweden.
But I’ll keep investing as much as I can. I still want to reach my FIRE goal despite knowing the potential disadvantages. How about you?
Vi, a software engineer with a keen interest in personal finance, had planned to retire once she reached her lean FI/RE (Financial Independence/Retire Early) goal. However, after achieving the goal, she took few months of a mini-retirement filled with travel and adventure and decided to continue her career.
For the past five years, Vi has been using Personal Capital (Empower), a free financial tool. Her favorite features include the dashboard for net worth, allocation, and planning, which help track her FI/RE goal and keep those investment fees in check.