Search Results for: early retirement

Fat FIRE (Financial Independence Retire Early) is being able to live it up in retirement without having to sacrifice your spending. You can easily survive without a job because your investment income more than covers your best life’s living expenses.

Fat FIRE allows you to:

* Live in the most expensive cities in the world which all have wonderful culture, food, nightlife, entertainment, schools, and arts

* Live in a comfortable house with at least three bedrooms, two bathrooms, and a yard if you have one or more kids, or a luxury two bedroom or greater condo if you are a childless couple or individual

* Save or have enough to pay for all your children’s college education

* Travel for 8 or more weeks a year while living in 4 or 5 star hotels

* Drive a safe and reliable car that’s not older than five years

* Eat and drink the finest foods

* Afford excellent healthcare

* Take care of all your parents financial needs since they sacrificed so much to raise you

* Have no need for either partner or spouse to work every again

Fat FIRE is at the opposite end from Lean FIRE, where individuals cut their expenses to the bare bones in order to survive.

Lean FIRE examples include:

* A couple living in a cramped studio, van, or air stream

* A couple deciding never to have kids due to costs

* Being unable to afford living in the world’s greatest cities due to costs

* Not saving up enough to pay for private grade school or public or private university

* Living in a low cost area of the country where it’s pretty homogenous

* Living abroad to lower costs

There’s nothing wrong with Lean FIRE. Having a minimalist lifestyle while doing what you want is great. Fat FIRE and Lean FIRE are simply two ends of the early retirement spectrum.

In between is Barista FIRE, where an early retiree works a part-time job or forces their partner or spouse to work a part-time or full-time job for extra income and benefits.

In a previous article, I highlighted how generating passive income allows both my wife and I to be stay at home parents for our son. Our goal for the first five years of his life is to stay retired so we can spend as much time with him as possible before he goes to kindergarten. Given the economy is booming, we’ve often been tempted by attractive job offers, but we’ve refused!

According to every child development book we’ve read, the first five years of a child’s life are the most important years. They are the foundation that shapes children’s future health, happiness, growth, learning achievement at school, and relationships with people.

At birth, the average baby’s brain is about a quarter of the size of the average adult brain. By the end of the first year, the brain doubles in size. It keeps growing to about 80% of adult size by age three and 90% by age five.

Given this knowledge, we figured we might as well go all-in as parents since we intentionally decided to have a child. Yes, we are sacrificing our careers and lots of money for our son. But there comes a point in everybody’s life where they must decide how much is enough.

We have a strong philosophy that there’s always another dollar to make, but never another second to create. So we said screw the money. Let’s focus on parenthood.

The reason why I retired from corporate America at 34 was so that I could take back my time. Retirement has always been about buying time, because time is finite.

When I was just 13 years old, a friend of mine died in a car accident at age 15. He was speeding down the highway and lost control. He hit a tree straight on and his 15 year old front seat passenger also died. This was the first time she had ever gone out clubbing at night.

My friend’s death served as an incredible wake up call to stop messing around with my life. Once high school started, I hit the books real hard.

And once I got my first job on Wall Street, I saved every other paycheck and invested 100% of every bonus for 13 years in row to be free. My goal was to amass enough after-tax investment capital to produce enough passive income to cover a comfortable life.

In 2012, at the age of 34, I had around $80,000 a year in passive income coming in. I decided to negotiate a severance and finally buy back my freedom.

The DIRE Movement has replaced the FIRE Movement for early retirement seekers after the economy peaked in 2018.

With droves of young adults finding it difficult to live off their meager investments while freelance work opportunities dry up, the DIRE movement is only going to increase in popularity over the next decade.

While the desire to be financially independent and retire early from jobs they hate will continue, people will wisen up to the foolishness of leaving work in their 20s and 30s. Building a great wealth and achieving financial freedom is all about allowing your investments to compound for a long enough time in order to live off your passive income.

If your passive income cannot cover your best lifestyle expenses, you are not financially independent, no matter how loud you claim to be. Let’s look at DIRE in more detail.

The DIRE Movement Rises

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