What is FIRE_ Financial independence, retire early

Written by Alli, scroll to bottom for video

If you've seen November's Kiplinger issue you may recognize Clifford in there! We wanted to talk a little bit about the article and what FIRE means to us.

FIRE is financial independence, retire early!  If you're curious as to what that means, how to go about achieving financial independence, and how we achieved financial freedom at age 28, keep reading!

So, what is FIRE?

FIRE stands for financially independence, retire early, obviously. But let’s split it into two and talk first about what financial independence is and what it means to us.

Financial Independence

Financial independence means to us that you have enough money that you could support yourself without ever working or generating any more money for the rest of your life

Retire Early

Retire early means basically what it says-- that you retired before the stereotypical sixty-five. In order to retire early you must either be financially independent or have a plan to bring in some income while you are retired.

Early retirement is really redefining how people look at retirement. A lot of people think of retirement as hanging out on the couch, watching TV, playing some golf, or traveling. But when you retire so early with 40-50 years left of your life, you can't spend that just playing golf and sitting on the couch.

So what does FIRE mean to us?

About four years ago we discovered this FIRE movement and started saving a huge percentage of our income. We started at about 40%, then ended up ramping up to about 70% toward right before we quit. Initially, we were planning on working for ten years at that savings rate but we ended up leaving early.  

We quit after four years of working and we did that because we had the confidence in ourselves to make money while we were in retirement. We knew that we didn’t want to quit working completely at 32, so we thought we could just start those businesses now, start that fulfilling life now that brings us joy. We knew we could make up the extra money in the interim.

In the article they discussed the four flavors of fire, which we break down below!


Lean FIRE: They defined it as living on less than $40,000 a year.
If you guys have been reading our blog you know that we are doing a $40,000 a year challenge. So we thought that it was really funny that we fall right into that category.

Barista FIRE: This is where people are close to being financially independent but still need some part-time work or something to provide for their living expenses. I also almost put us in that category too. We left our jobs before hitting our FI number but we've picked up other activities. For instance, trying to start Primal Noms, which is going to bring an income and should get us to that point well before 65. We're working on projects that we'd love to do and would be working on if we had fully retired.

Full FIRE:  This is where you've fully funded your early retirement. Within the FIRE community, there's a rule of thumb, called the 4% rule.  Basically, if your annual expenses are 4 percent of your total net worth that you have in investments, you should be able to spend that amount for the rest of your life without ever running out of money.

Fat FIRE: People who are pursuing FIRE but planning to live on $100K per year or more in retirement. We know of a couple people that are doing this and they're either doctors or in the financial industry. They had really high paying jobs and were able to accumulate several million dollars in their net worth. With that 4% rule, this gives them a pretty solid annual income
in retirement.

Tenants of FIRE:


One of the main tenants of FIRE is frugality. So being frugal with how much you spend, obviously. If you're only spending $40,000 a year then you're not excessively spending on things. This kind of comes with a wave of an anti-consumerism movement, so we kind of look down on people who buy new cars and people who are constantly buying new things. We do this because we realize that we have this earth that's beautiful, but we only have a certain amount of precious resources. We basically want to optimize and enjoy our life to the maximum amount here. We don't believe that buying more things contributes to the greater good of Earth or contributes to our happiness.

It basically boils down to you having a choice. The choice to buy your freedom so you can do whatever you want with your time or you can buy things. The things can be a ball and chain that keep you in the job you don't like or in a location you don't like. By giving up some of those things, you purchase your freedom to be able to live an unconventional life doing what you want.


Another tenant of FIRE is investing. In the FIRE community, it is generally advised to invest in a total stock market index fund. It is recommended to keep it super simple by investing in the whole market. Basically, leave it in there for the long haul and don't touch it. There are other segments of people who are more involved in investing like doing real estate investing or trading but for most people, the best bet is to put it into index funds and in 10-15 maybe 20 years you can retire.

FIRE on a low income?

I want to touch briefly on being on a low income and trying to achieve financial freedom. So when you are on a low income it is really impossible to ramp up your savings rate. You are just trying to make ends meet and we totally understand that. This movement is not for everyone BUT for those who are on a low income and who are interested in achieving financial independence and retire early, you have to increase your income somehow.

Thankfully we live in the age of the internet and the age of acquiring skills super easily and super cheaply. It is easy to be able to leverage those skills for money using the gig economy or entrepreneurship. It’s easy to pick up a part-time job.

Being on a low-income and pursuing FIRE is imperative to work hard and not make excuses. So that being said, I know some people are in really crappy situations financially and they just can't seem to get their head above the water and I get that, but I also you have options too!

So, take a breath, think of your options, and go after one of them to raise your income! Whether that means getting a better higher-paying job, taking a side gig to earn some extra money, or signing up on the gig economy choose one go for it! Even bringing in an extra one hundred or two hundred bucks a month makes a huge difference in the long run.  

If you need a resource to help manage your money check out our 10 minute checklist linked below. That free checklist will give you the same framework that we use to really get on top of our finances and get to that 70% savings rate.  In 10 minutes a week you'll be on your way to financial freedom!

Also, make sure to click here to check us out in this month's (November 2018) Kiplinger magazine!

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[…] we discovered FIRE (Financial Independence, Retire Early), we spent the next 4 years ramping up our savings rate, eventually saving 70% of our after tax […]