Passionate people like to define boxes that help them make sense of their worlds. “If you just follow these steps, you will be happy.” They like to make definitive statements.
The problem is, we all have unique situations. There is not a one size fits all plan that will be best for everyone. I think we do the FIRE space a disservice by making definitive statements that might not be the best option for everyone.
The Financial Independence Retire Early (FIRE) movement has done a lot of good. People are thinking about their finances on a deeper level, and understanding how their future could look. But I'm advocating for making the conversation more gracious and opening up the discussion to other perspectives.
What Most FIRE People Agree On
Below are a few things that I think most FIRE proponents agree on. There is going to be some varying opinions even with these items, but I think they are exceptions from what I can tell.
I think most people would agree that financial independence is the most important aspect of FIRE.
Getting to a spot where our net worth is growing on its own gives us flexibility and options. It is a good thing when we start thinking about our financial future, and the consequences + benefits of our financial choices.
This part of the FIRE movement excites me the most. Getting to a spot where our money is making money on its' own. Where we don't have to work a job in order to generate income. Where our time 100% belongs to us.
Credit Card Debt
Having massive credit card debt stalls your financial future. You end up decreasing your net worth when you spend more than you make. Most FIRE proponents agree that avoiding revolving credit card debt is a smart move.
But they also like to use credit cards for normal spending as a way to get free rewards and travel hack. They view credit cards as a powerful tool. When credit cards are used responsibly, they can be beneficial and simplify budgeting.
Index funds are the bread and butter for most people pursuing FIRE. Low fees are commonly brought up, and the fact that the market has generally beaten active funds over long periods of time in the past is a huge benefit.
The fact that you are not limiting yourself to the success of a few companies, but instead are assuming the market is going to continue to appreciate over the long-term, means you don't have to try to time the market.
It would be interesting if at some point index funds become too popular and are overtaken by actively managed funds. But I think most people would agree this is probably not going to happen in the short term. Index funds have built-in diversification.
Less Popular FIRE Opinions
Now let's go through some FIRE opinions that are not as widely agreed upon as the above. There are definitely FIRE blogs out there that hold the below opinions, but I think they are exceptions.
Getting Away from a Job You Hate
Not everyone hates their 9-5 day job. In fact, there are a large number of people who love what they do and are not desperately trying to get out of their current job.
In my case, I enjoy the problems I am solving on a daily basis. But I do want more flexibility and options in the future. We will talk about timelines below, but I also am not super confident in when I will be able to quit my day job. So making sure that I enjoy what I do is important because it could mean I have to work longer than I was expecting. Having a job I like increases my current happiness level.
Instead of dealing with a job you hate for multiple years, why not find something that is a better fit? I know specific situations make this harder, and maybe the negative aspects of your job are worth holding on to for the pay or benefits in the short term. In either case, it is worth thinking about.
Shooting to retire in ten years after you start pursuing FIRE is often touted as the “correct” way to pursue fire.
The issue is that not everyone is earning a level of income that makes that timeframe possible. Some people are trying to pay off massive amounts of credit card debt and will not start to have a positive net-worth for multiple years. Others are working through complex financial situations, such as divorce or starting in their 30's, 40's or 50's.
Also, the ten-year timeframe assumes a very beneficial period in the stock market. If you happen to start your FIRE journey in a massive bear market that spans a considerable amount of time, ten-years might not be enough time for things to recover and start going up.
I'm not saying it is a mistake to get to a spot where retiring in ten years becomes an option. But I don't think this timeline is possible for a large number of people.
The amount you want to spend when you retire varies greatly, depending on who you talk to. This has a huge effect on the timeline, as you might need a larger nest egg to generate the income you need. For example, at this stage, we are thinking we probably fall into the FAT FIRE camp, given how much traveling we want to do and where we want to live.
Often saving money and reducing expenses is touted across most FIRE blogs. But the level of budget cuts varies greatly in the FIRE community. Some will scream that you should only own one car and ride a bike everywhere. Others have an issue with people owning trucks. If you live in a house that is larger than 1,500 square feet, that can be looked at as being excessive and not needed.
The extreme views are often highlighted, but I don't think most people would 100% agree on all the areas that should be cut in their budget. For example, there are going to be things I try to fix and maintain in my house, but sometimes I am going to pay for a professional to come in and make sure it is done right.
We need to realize that we are not all going to agree on how much we should spend in each budget category. Some of us will want to go out to eat more than others, while there are people who think you should avoid eating out as much as possible.
Saving money and frugality often get mixed into FIRE content. And it makes sense. But I don't think there is a wrong or right way to manage your budget, as long as you are moving towards your financial goals.
Definition of Retirement
The meaning of “retirement” in the FIRE movement is used much more loosely than how most people use that term. Not everyone is going to agree on how they want “retirement” to look.
In fact, I think most FIRE bloggers are looking at a partial retirement where they work for themselves, as opposed to how most people view retirement. I think they use the term “retirement” when they really mean quitting their day jobs and running their own business. This isn't bad, but it has confused time flexibility with the idea of not working. These things are separate pursuits, and I think we need to clarify what we are talking about when we talk about the RE in FIRE.
How I want retirement to look for me is not going to be the same for everyone else.
I think it is worth clearly defining what the RE means when we talk about FIRE. I would also be curious about how many people who have accomplished FIRE are not working in any capacity. I would venture to guess that most are doing some kind of work, with much more flexibility than what they had before.
In my case, I can't imagine not doing some kind of work when I reach FIRE. But I want it to be on my terms and be optional.
Passive vs. Active Income Streams
How you funnel your investment money varies depending on who you talk to. Some are 100% focused on using index funds. Others have decided to build up their real estate portfolio and bring in rental income.
I see many bloggers trying to build up their readership so they can bring income from their blogs. This isn't the case for everyone, but it definitely is common. It explains the massive quantity of personal finance blogs that have popped up in recent years. They look at their blog as a way to get out of the rate race and generate more income.
There is not a wrong or right way to generate income. As long as you think about what you are doing, and enjoy it, there are many options you can pursue. From starting your own business to creating a blog that generates income. I think the key point is creating as much income as possible.
Some people in the FIRE space look down on anyone who uses a financial advisor. They are generally looked at as charging fees that are unnecessary with the DIY approach. Why would you pay for something that you can do yourself for free? Financial advisors are assumed to always not have the best interest of their clients and are out to push products that benefit them financially.
There are financial advisors that fit the above mold but to assume that is the case for all of them is ignorant. There are other reasons someone might want to go with a financial advisor, and we need to be careful in assuming it is always best for everyone to go with the DIY approach.
You might decide to not go with a financial advisor. But we shouldn't make people feel guilty if they do decide to use one.
What Works for You Might Not Work for Everyone
I'm advocating for allowing a wider range of perspectives in the FIRE community. What I'm not saying is that we should all 100% agree on everything.
I grew up in a very conservative Christian environment. It was often touted that questions and doubt are welcome, but this was only the case if you didn't ask certain questions. If you started asking specific questions that challenge what people consider core Christian ideas, they would start to look at you differently. In other words, it became a culture where people's confidence was built upon the idea they agreed on everything.
But diversity in opinions is a good thing. If our ideas are not being challenged, our growth becomes limited. Our opinions and views are probably going to change with time, and so we need to be careful about proclaiming definitive statements that might not be true for everyone.
Having respectful disagreements with each other helps everyone.