The Financial Independence Retire Early (FIRE) movement is gaining popularity in the U.S. Here’s a brief overview of how it works and whether it might be right for you.
The concept began with Joe Dominguez’s book “Your Money or Your Life,” where he shared his story of retiring at 31 with complete financial independence.
FIRE is built on extreme saving and frugality to retire well before 65. Here are the basic principles:
• Spend Less: Cut expenses drastically. Avoid dining out, vacations, and brand-name purchases. Opt for cost-saving measures like biking to work.
• Save More: Save 50% to 70% of your income by identifying your minimum living costs and saving the rest.
• Earn More: Maximize your income through career advancement, side hustles, or smart investments. Prioritize income-producing activities over hobbies.
• Set a Goal: Aim to retire early by reaching your financial goal as quickly as possible. Even older individuals can adopt a modified approach.
Some FIRE achievers struggle with boredom or overspending. “Coasting” offers an alternative by downshifting to a less demanding or more enjoyable job, combining financial freedom with ongoing income.
While FIRE isn’t for everyone, adopting some of its principles can help you achieve financial independence sooner.
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