46 Random Thoughts on F.I.R.E.

I recently wrote a long thread on Twitter about Financial Independence, Early Retirement, and Financial Freedom. If you are on Twitter, you can check it here and retweet it to help spread it.

Since many readers aren’t there so I thought I will publish those tweets as a list for a wider audience here.

So here are my random thoughts on Financial Independence (and FIRE):

1. F.I.R.E. = Financial Independence Retire Early.
2. Less than 1% of people really understand the true meaning of financial independence. And even less than 1% (of that 1%) are capable of aspiring for it. And even less than 1% (of that 1% of that 1%) are capable of achieving it.
3. Most people won’t achieve it. And many more don’t believe its possible. It’s tough no doubt. How can something like this be easy? But that is the whole reason why most people don’t or won’t achieve it. And they will continue to write it off.
4. It is achievable. But people, systems, and society are designed to make you believe it’s not. But it’s achievable though requires persistence.
5. Not having to worry about money is the best part of financial independence. It s actually very liberating and unburdening to feel that way.
6. You can do what you like. Really. And even better is that part about being able to completely avoid doing what you don’t like to do!
7. As Suze Orman once said – “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”
8. My view is that the best thing that enough money can get you is to give you back the ownership of your own time. You have been trading time for money. Reaching FI allows you to trade back money for time.
9. “I had a considerable passion to get rich, not because I wanted Ferraris – I wanted independence. I desperately wanted it.” – Charlie Munger said this. That’s how you should think about money. As a way to achieve independence. A means to an end. Not an end in itself.
10. Your spouse will play a major role in your journey to Financial Independence. You both need to be in sync. And for couples not talking about money, it may not work smoothly.
11. Financial Independence doesn’t mean Early Retirement. Though it gives the option to do so.
12. I aim for early Financial Independence and not early retirement. And both are not the same. And I am not FI yet.
13. Financial independence is simply about having the option to not work for money as you have enough already. It doesn’t mean that you shouldn’t work. You can just be choosy about how you wish to spend time.
14. An alternate meaning of F.I.R.E can be: FIRE = Financially Independent REMAIN EMPLOYED. It is not necessary to retire after achieving FI
15. Financial Independence Vs Early Retirement Vs Financial Freedom. Not sure about the difference? Do read Financial Independence Vs Early Retirement.
16. High savings rate + Living below means are necessary conditions. What more? Some luck with the sequence of return risks.
17. If you spend to show off but don’t earn well accordingly, then you won’t achieve FI. Forget about it.
18. Don’t let your expenses keep up with income. Keep increasing that gap. And the bigger the gap, the better it is. In fact, this is the real SECRET of accelerating your financial independence plans.
19. Let’s say you start with 25X formula of financial independence (just assume). X is the annual expense. Now if the X (i.e. Annual Expense) is small, you can save more and, in turn, reach the target of 25X faster.
20. Strongly suggest reading this – ‘The Secret’ – How to Accelerate your Financial Freedom?
21. Talking of the role of expenses, one thing is clear – Normal living expenses are very low. It’s just the show-off and lifestyle that makes it expensive. If you aim for FIRE, then you need to understand this aspect really well. This is the key. Read about how normal living expenses are low.
22. You really should be clear about your expenses – from being a NEED vs. being a WANT. The more you show off and convert WANTs to NEEDs, the more money you need for your FI.
23. Controlling expenses is fine. But there should be a limit to this. I don’t believe in living ultra-frugal penny-pinching life just to accelerate the achievement of FI. You need to enjoy the journey too.
24. People overrate How fast you are able to reach financial independence. And underrate How enjoyable is your journey on way to financial independence. Do read my thoughts on this at Is going Very Fast in F.I.R.E really Good?
25. No point in being the richest man in the graveyard and having lived frugally all your life.
26. Don’t kill yourself every day just to begin living after several years.
27. Financial Freedom is not a race. You don’t have to beat anybody. Set your own pace.
28. Something that a Chinese guy told me in Egypt about – something on the lines of ‘Don’t postpone life for tomorrow’ – This gives a different angle to this discussion. Do read What a Chinese man told me in Egypt? to get a different perspective on this aspect.
29. Achieving FI gives you the power to say NO to most things you don’t like. And also gives you the superpower to use the F word.
30. Not having enough money at the right time is what worries most people. And having FI liberates you from that cycle of worry.
31. Chase freedom that having-enough-money brings. Don’t chase money itself.
32. Everybody wants to go to heaven. But no one wants to die. Similarly, everybody wants financial freedom. But no one wants to save and put in the required efforts.
33. Be very careful of attractive quotes on FI and ER on the internet. They are indeed motivational. But they hide the effort and persistence required to achieve it.
34. Don’t just be under the impression that a high rate of return on investment will help you. You also need to increase the quantum of savings substantially if you want to achieve FI early. It’s a non-negotiable.
35. Your FI corpus should be large enough so that you don’t run out of money before running out of years. And that is the longevity risk to think about. Do read running out of money before years.
36. How much should you save? You need to do maths and random figures like saving 10-15% won’t work. Do solid maths to find out. Or take professional help from an advisor. Don’t go by random suggestions made by random people.
37. There is a reason why Retirement Planning has rightly been called the NASTIEST PROBLEM in Finance. And so true for true financial independence.
38. There is a big difference between taking FI in Bull market Vs Bear market. Very very very important to understand the difference if you don’t want to derail your FI plans later on.
39. In fact, those aiming for FI should eventually build buffers for a few extra years to accommodate the risk of bad luck (or bad sequence of return risk – assuming you know what it is).
40. Even if you don’t want to retire early, you should still be prepared for some degree of Involuntary or Forced Early Retirement. Why? Sh** can happen when powers above are not in favour.
41. And to those who say money doesn’t buy happiness – True it doesn’t. But it does offer a level of freedom that is quite acceptable. And to be really practical, money is needed no matter what you, me, or anyone else has to say about it.
42. That reminds me of a quote – “Money can’t buy happiness, but it will certainly get you a better class of memories.”
43. FIRE stands for Financial Independence Retiring Early. If you are interested, then do read more about F.I.R.E.
44. The impact of becoming financially free is not limited to personal finances. It can have a positive impact on relationships and health as well.
45. I leave you with a quote – “If you will make the sacrifices now that most people aren’t willing to make, later on, you will be able to live as those folks will never be able to live.” -Dave Ramsey
46. Also, if you can achieve FI (and it’s really worth it), then good for you. But if you can’t, don’t worry. Life is still good. Live on.