About a year ago, I never heard of FIRE. But when I started to get interested in investing, I came across FIRE a lot. It stands for Financial Independence, Retire Early. It is about building a passive income that is enough to live a normal life, without the need to have a job. Or to save up an amount that is big enough to live of your savings for the rest of your life. Either way, it means that you can stop working aka retire.
The beginning of FIRE
The first book about this subject is Your Money or Your Life (by Vicki Robin and Joe Dominguez) from 1992. And a well known blog on this subject is Mr Money Mustache, which started in 2011. Nowadays, lots of books and blogs can be found about FIRE.
The FI from FIRE is something that I think everyone wants in their life. When you are financially independent, you don’t have to rely on anyone to pay the bills, you don’t have to worry about money ever again. No stress if you can make it trough this month, no problems if you lose your job or would like to work less hours. Financial independence gives you the opportunity to do whatever you like to do with your life. You can start a new career, start a business, travel, it’s all up to you.
How to achieve this? Well, I’m going to write a lot more about that, but the essence is to spend less, earn more and save or invest the difference. For example, you can start a buy nothing challenge to change the way you think about money. Buy what you need, not what you want.
The RE from FIRE is not the best description to what FIRE means for a lot of people. We don’t all want to retire in our thirties and do nothing. That’s not what the goal is for most people and neither for me. Most of us just like to have the freedom to choose if we want to work less or quit. Or maybe start something else. But if you like your job and you get energy from it, why would you quit? The ultimate goal for me is to live a great life, with or without a job.
I just want to do things that make me happy, and it doesn’t matter if it pays the bills or not. So, the retire early part of FIRE doesn’t really cut it. The word retirement to me is for people that are over 60 and stop working after they have done so all their live.
More people are thinking about a change, for example:
- FIOR: Financial Independence, Optional Retirement. This is a nice one, I think it’s better than FIRE. (Mad Money Monster)
- EFI: Early Financial Independence (Money Mow)
The problem is this: FIRE is used so much nowadays, it’s hard to change those letters in such a big community. So we actually should just change the meaning of the R and E.
How about: Financial Independence, Relax & Enjoy life :-)
Well, in the end it doesn’t really matter what we call it, as long as we know for ourselves what we want to achieve in life.