I’m Unwilling To Change The Rules Of FIRE To Win The Game

I've been documenting my journey in Financial Independence Retire Early (FIRE) since July 2009. I’m not aware of any other blogger who commenced their FIRE journey earlier, is still currently retired or unemployed, and has maintained a consistent writing presence like I have on Financial Samurai.

When I began sharing my FIRE experiences, I was a 32-year-old investment banker in equities, grappling with burnout after 11 years in the field. As time passed, the allure of the business dwindled.

The global financial crisis left a lasting impact, with numerous friends and colleagues losing their jobs, and clients understandably becoming more demanding and anxious. Concurrently, chronic pain in my back, legs, and jaw frequently reached debilitating levels.

In light of these challenges, I wanted out.

This post will discuss:

  • The three rules of FIRE
  • Why we like to change the rules of FIRE
  • My financial journey and the challenges I faced
  • Why I'm unwilling to include active income to win at FIRE
  • The importance of enjoying your financial independence journey
  • Why you should embrace the first rule of FIRE, even though there is temptation not to

The Most Important Rule Of FIRE

To truly achieve financial independence, I established a crucial rule for attaining FIRE:

To be deemed financially independent, one must amass sufficient investments capable of generating passive income that covers basic living expenses.

I instituted this FIRE rule in 2009 for myself and anybody else who wanted to follow. Then dedicated two years and nine months to achieving it before retiring in March 2012. The last of my WARN Act pay finished in June 2012.

Upon retirement, my net worth stood at approximately $3 million. Excluding the equity in my primary residence, my investable net worth was closer to $2.4 million.

This $2.4 million generated around $80,000 per year in passive income. With no dependents and a fixed-rate mortgage, I could cover my basic living expenses in San Francisco. Although, as you'll read on, I wasn't truly comfortable during my initial years of FIRE.

Financial Samurai FIRE journey to millionaire status

The Second Rule Of FIRE: Negotiate A Severance

Thousands of Financial Samurai readers, and many more, embraced my primary rule of FIRE. The movement gained momentum when other bloggers, such as MMM, joined and contributed guest posts on Financial Samurai three years later to help spread the word.

The second rule of FIRE that I advocated is to always attempt to negotiate a severance package. The rationale behind this is that if you are planning to quit your job and retire early, it's worthwhile to try negotiating a severance package as a parting financial gift. There is no downside.

Upon my retirement in March 2012, I successfully negotiated a severance package that equalled five years' worth of regular living expenses. This negotiation proved to be one of the most rewarding and unexpectedly satisfying revelations of my employment history because I wasn't initially sure it was possible.

Drawing from this experience, I authored the bestselling ebook, “How To Engineer Your Layoff,” aiming to assist others in following the second rule of FIRE. Receiving a severance package from a job you wanted to quit anyway feels like winning the lottery.

Over the subsequent twelve years, thousands of readers of the book shared their severance negotiation experiences. Consequently, I continually update my book with new strategies and situations to empower more individuals to break free from a job with money in their pockets. HTEYL is now in its 6th edition.

People Are More Fearful Of The Second Rule Of FIRE Than The First

Due to a combination of misconceptions and a fear of confrontation, my second rule of FIRE did not gain as much traction as my first rule. Ironically, I believe it's actually easier to have a heart-to-heart conversation with your manager to negotiate a severance than it is to generate enough passive income to cover your basic living expenses.

However, I understand why people might be apprehensive about trying to negotiate a severance package. In our current technological age, where social interactions often occur more on our phones and laptops than in person, breaking up over text and ghosting have become more common.

While technology has its benefits, it has also diminished our in-person social skills and courage. When these skills are underutilized, negotiating a severance can seem intimidating, even with a detailed guide to help you through the process.

For those who identify as keyboard warrior introverts, a common trait among personal finance bloggers, there may be more resistance to attempting a severance negotiation.

Many bloggers and podcasters in the FIRE movement chose to quit their jobs rather than negotiate a severance. It's easier to do so. Consequently, suggesting that people logically try to negotiate a severance may serve as a reminder of their own reluctance to do so.

Wanting To Change The Rules Of FIRE Is Understandable Because Achieving FI Is Hard

I get it. Achieving financial independence my way is hard. But good things aren’t supposed to come easy. If you get something easily, you will take it for granted. Let’s not change the rules just because we lack patience or determination.

Since securing my first job at Goldman Sachs in August 1999, I've been diligently saving with the goal of early retirement. After just a month of consistently working from 5 am to well past 7:30 pm, I realized I couldn't sustain this pace until my 60s. Consequently, I adjusted my goal to retire by the age of 40 in 2017.

While I didn't quite make it to age 40, my early retirement was facilitated by a severance package. Recognizing that the severance would cover over five years of living expenses, retiring at 34 with a severance felt akin to retiring without one at age 39. The timing was close enough.

Despite having a financial safety net in the form of a severance, I still harbored nervousness about retiring at such a young age. It seemed unconventional to relinquish a six-figure job in my mid-30s, a time when careers typically gain momentum. Nevertheless, I identified my “enough” amount and chose to take the leap of faith anyway.

This is when I became tempted to change the the definition of FIRE. My fear and uncertainty over whether I made the right move took over.

The Start Of FIRE Subtypes: Barista FIRE, Lean FIRE, Wife FIRE

My safety net was my wife, who is three years younger than me. I conveyed to her that if FIRE worked out for me after three years, she too could retire by age 35. In the interim, it made sense for her to continue saving and investing while taking advantage of subsidized healthcare benefits, especially as we were contemplating starting a family.

Around 2012, the year I left my job, marked the emergence of Barista FIRE, Lean FIRE, and Wife FIRE.

Barista FIRE is a type of FIRE where individuals work part-time or lower-paying jobs to bridge the gap between their passive income and expenses. A common example is working as a barista at Starbucks, where employees often receive subsidized healthcare insurance, a significant hurdle for those aiming to retire early.

Lean FIRE is a FIRE approach involving living on a bare-bones budget to facilitate early retirement. An extreme example is Jacob from ERE, who lived on a boat and spent only $7,000 a year for a couple of years before transitioning to become a quant trader in finance. Others, typically without children, might opt for the van life, traveling around the country.

Then there is Wife FIRE, a financial independence strategy where men rely on their wives to work, allowing them to retire early. It's a fascinating shift as more women become breadwinners. Some men find it uncomfortable to say they are a stay-at-home dad.

Bending The Rules: Three Years Of Hybrid FIRE

Even though I could have sustained myself with $80,000 a year in passive income, I likely wouldn't have pursued negotiating a severance at age 34 if my wife had not continued to work. In that scenario, I likely would have persevered working until 2017, the year I turned 40. I wanted another $500,000 – $1,000,000 in investable assets.

During the period from 2012 to 2015, I found myself living a hybrid lifestyle encompassing elements of Barista FIRE, Lean FIRE, and Wife FIRE. I embraced a frugal lifestyle, even contemplating the sale of our house in 2012. Meanwhile, my wife persistently earned, saved, and invested. Additionally, from 2013 through early 2015, I engaged in part-time consulting work for Personal Capital, now known as Empower.

Was this changing the rules of FIRE? More like bending the rules because I was unable to feel 100% settled on $80,000 a year or passive income. After one year of true retirement of traveling and dilly dallying, I wanted to consult again for excitement and for supplemental income.

The Next FIRE Challenge Begins: Dual No-Income Household

In 2015, at the age of 35, my wife finally joined me in early retirement. We were now a dual no-income household (DNIH).

Initially hesitant to negotiate a severance package, she questioned, “Why would my employer lay me off with a severance package when I'm a good employee?” Despite her reservations, being a woman with over 10 years of service made her one of the best candidates in my studies.

She successfully negotiated a hybrid severance package that ultimately exceeded $100,000 in value. For more details on how we achieved this, you can refer to the post, “How To Negotiate A Severance Package As A High-Performer.”

Presently, my wife remains out of the traditional workforce, engaging in many tasks such as editing my posts and podcasts, handling back-end work for FS, and dedicating time to raising our two young children. It's a full-time job being a parent. But there will be a void to fill once our daughter goes to school full-time in September 2024.

Both partners not having a day job with healthcare benefits is tough to do. But thanks to three years of hybrid FIRE, we made it happen. However, once we had kids two years later, FIRE got even harder.

I Don't Want To Change The First Rule Of FIRE To Win The Game

I provide this background on FIRE and our FIRE journey to offer perspective before sharing what comes next.

As one of the original architects of the financial independence movement, I am steadfast in my commitment to maintaining the integrity of the first rule of FIRE, both for my benefit and yours.

In response to comments on my post about blowing up my passive income for a house, some have suggested incorporating active income to regain my financial independence. However, I consider this approach to violate the first rule of FIRE.

If you require active income to cover your living expenses, you are no different from a person who has to work for a living! In this situation, you are not FIRE.

These Posts Don't Write Themselves

These posts do not materialize effortlessly—they demand hours of dedicated writing and undergo at least 50 revisions before publication. Even after publishing, ongoing updates are required, and there are comments to approve and respond to. Give writing a 3,000-word post a try yourself and you'll see.

I also don't regularly write affiliate posts for search engines, a common practice among bloggers seeking online income. Instead, my content revolves around the intersection of money and life, often lacking a direct income component.

I also operate without a paywall or donation option. My primary motivation is the enjoyment derived from building a community, discussing interesting topics, learning from each other, and creating something out of nothing.

Recognizing that there will be a time when I lose the motivation or health to write, I am mindful that relying on active online income to sustain my life and family in such a scenario would be problematic.

Consequently, after accounting for business expenses—of which there are many when running a website—I strive to reinvest 100% of my active income into building sustainable passive income.

Why You Don't Want To Take A Shortcut On Your Way To Financial Independence

Taking shortcuts can be tempting. But if you take shortcuts, you will only be hurting yourself.

Here are the reasons why true financial independence is achieved only when you have enough passive income to cover your basic living expenses. Resorting to the easier routes, such as incorporating active income, relying on a working spouse, or changing the definition of FIRE, is not the way.

Changing the rules of FIRE may:

  1. Strip away your sense of pride and satisfaction derived from achieving genuine financial independence after a long journey.
  2. Result in having less wealth than necessary to attain financial security.
  3. Halt the challenge of continually creating and producing value for society, for both you and your spouse.
  4. Jeopardize the safety and security of your children due to potential conflict at home. If you're trying to trick yourself into FIRE, then you may feel more financial stress given you aren't really FI.
  5. Lead to feelings of failure and shame for altering the rules to accommodate your progress. Deep down, nobody feels good beating a game if they didn't win by playing on the same playing field.

If you alter the rules of a game to secure a victory, you may experience temporary happiness at most. However, this could be followed by a lingering sense of emptiness because the victory wasn't achieved in the right way.

Feedback From People Who Took The Shortcut Approach To FIRE

I spoke to someone who identifies as Coast FIRE, and they candidly admitted that it served as a way to feel better about not being further along on their financial journey. Recognizing that Coast FIRE is essentially no different than a working person with retirement savings, they acknowledged overspending in their 20s and 30s, putting them behind their peers.

I spoke to a dad whose wife works as an optometrist making six-figures. He tells his buddies he retired early, but deep down, he feels bad he's not the provider for his family. His wife has worked for over 10 years since he retired early. Despite regularly playing pickleball at his private club, he feels his life lacks purpose and meaning. At least he’s a damn good pickler.

As a Financial Samurai, the philosophy is not to rig the game in your favor, even though others may do so. Instead, the approach is to respect the rules of engagement. Embrace hard mode. It’s not like we’re battling on the beaches of Normandy. The worst thing that happens by following the rules of FIRE is that it just takes longer than desired.

While I arbitrarily established the first rule of FIRE in 2009 when starting Financial Samurai, I do not claim to be the ultimate authority on FIRE. However, after 15 years of writing about FIRE, my first rule has become established and accepted by millions. Let’s embrace the challenge.

The Third Rule Of FIRE: Use A Multiple Of INCOME Not Expenses

Finally, allow me to highlight another way in which my approach differs from the majority when it comes to establishing a target net worth figure. The divergence lies in whether one uses expenses or income as a variable to determine their target FIRE net worth.

Using EXPENSES As a Variable to Establish a Net Worth Target

Most individuals adhere to the 25X annual expenses guideline before claiming financial independence. It is the inverse of the 4% Rule from the mid 1990s, which is outdated.

For instance, if your annual expenses amount to $40,000, achieving a net worth of $1 million is deemed reaching FIRE. However, the reality is that you need $1 million worth of investments, which, when withdrawn at a 4% rate, can cover your $40,000 annual expenses. Factoring in taxes, you actually need closer to 30X annual expenses.

The 25X guideline reveals the intricacies of determining financial independence, but I take it a step further by introducing a multiple of income.

Using INCOME As a Variable to Establish a Net Worth Target:

I advocate for individuals to aim to accumulate at least 10X and ideally 20X their average annual income over the past three years to achieve financial independence. I incorporate income as a variable because it keeps FIRE enthusiasts challenged. The more you earn, particularly as your career progresses, the more you must save and invest to meet your target net worth.

With the income method, it's more challenging to “cheat” your way to financial independence by drastically reducing your expenses. While cutting expenses to boost saving and investing is foundational to FIRE, claiming financial independence on $500,000 simply because you live with your parents and have reduced expenses to $20,000 may not be a sustainable lifestyle. Your dad will eventually kick you out.

I write for the majority of people who don't want to retire early and live in poverty. Instead, most readers have hobbies, enjoy socializing, love to travel, and perhaps aspire to start a family one day. Allowing room for growth is why using an income variable is more realistic.

To be clear, both using expenses or income to determine your FIRE number is acceptable, as both approaches can lead to the same FIRE number. However, focusing on income adopts a growth mindset, which is more powerful for building wealth.

The Honor Of Following The Rules Of The Game

During my high school coaching days, I was watching a match when my player called an in ball out. I overruled him because I wanted him to play with honor. The ball he called out was clearly in by a couple of inches.

He ended up cussing me out by saying, “F*ck you Sam! Go watch some other match!” I was shocked by his outburst because I would never treat an elder in this manner. But after writing online for so long, I'm also used to the cussing, insults, and racist tirades I see against me and others online. It's very similar to how some people get so angry at my household expenses and stringent rules for financial freedom.

My student ended up winning the match and apologizing, which I accepted. Sure, I wanted to yell back at him for being so disrespectful. But I trusted he would eventually come around to realizing that winning the right way is better than winning by cheating.

Losing the right way is also better than winning by cheating.

Nothing Beats The Satisfaction Of Succeeding On Your Own

Throughout my journey, I've encountered numerous adults born into wealthy households. While they possess ample free time courtesy of their riches, many lack fulfillment and meaning because they haven't created their own wealth. Consequently, some create trust fund jobs to regain a sense of relevance.

Despite their desires for successful careers or the creation of personal fortunes, many find it challenging to surpass their parents' financial success. This struggle often leads to a growing sense of emptiness. As parents, we must be careful not to give our children everything!

I spoke to a 34-year-old venture capitalist who lives in a $8 million house she bought four years ago. Amazing! She worked at a fintech company that IPOed then fell 90% over the next three years. She revealed she and her husband didn't buy the house on their own. Her parents did.

Then she talked about feeling uneasy as a VC because she's never built a company before or has had a successful exit. She constantly lives in self-doubt because so much of her wealth and opportunities were given to her. She even semi-joked whether her parents secretly donated to Stanford to get her in.

Embrace The Hard Mode Of FIRE And Stay Productive

Since leaving my day job in 2012, I can confidently assert that work holds significance. It's one of the reasons why I've introduced and embraced fake retirement. Reach FIRE, but stay busy. Even for those with generational wealth, continuing to be productive in ways that also yield income is crucial for your mental health.

Though I am no longer financially independent, I welcome the challenge of reattaining financial independence by adhering to my first rule of FIRE. I've set a target date for June 15, 2029, at the age of 52. I aim to beat that deadline.

Retiring early with two kids in an expensive city presents greater challenges than doing so without children in a smaller town. But I welcome the challenge!

This time may be easier due to the presence of a larger Financial Samurai website, additional investments, and increased experience. Conversely, it may pose greater difficulty due to aging, heightened expenses, fading energy, another bear market, and the responsibilities of raising two children.

Regardless of the outcome, I am determined to appreciate the journey. I hope you do the same.

Reader Questions

Would you feel good about changing the rules of FIRE to win? If so, how do you overcome that uncomfortable feeling that you didn't win the “right way”? Or maybe there is no right way, only your way on the path to financial independence.

Is changing the rules of FIRE similar to getting massive financial help from your parents in terms of a house, car, or college savings to get ahead? What about using your identity or connections to outperform others?

If You Want To Retire Early, Negotiate A Severance

If you plan to retire early and gain financial freedom, then you must read How To Engineer Your Layoff. The book teaches you how to negotiate a severance package. Given you wanted to quit anyway, there is no downside in trying to negotiate a severance.

I negotiated a six-figure severance that paid for five plus years of living expenses. It was my #1 catalyst to leaving his well-paying finance job behind. Think about a severance as giving you a financial runway during your transition or buying back time.

I incorporate all my wisdom and strategies on how to negotiate a severance package in his book. How To Engineer Your Layoff is now in its 6th edition as it's continuously updated with new strategies and rules. Use the code “saveten” at checkout to save $10.

How to engineer your layoff - learn how to negotiate a severance package and be free - the best book on FIRE and how to achieve financial independence

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40 thoughts on “I’m Unwilling To Change The Rules Of FIRE To Win The Game”

  1. Good Morning Mr. Dogen,

    I came across some of your blogs and articles some years back (esp during the Covid era) and found the articles and perspectives interesting. It had elements of what I had always targeted, with a specific new name tied to it.

    It’s been very interesting to see how things have panned out across strategies, investment areas and general economic trends since I really started becoming aware of FIRE movements (prior to that I always just heard the general objective in the context of DINK/TINK, just without a specific target of the ‘retire early’ – what a novel concept!). Sorry to hear that you were a bit priced out in your current situation, however, I admire and appreciate your ability to roll with the punches and adapt to your changing needs.

    That, to me, was always the biggest gap with tradition (and even now, Coast/Barista FIRE) – the ENTIRE purpose of socking away anything (as opposed to working until our final days) is store proverbial fat for the upcoming financial winters. The longer the winter or the leaner we are, the more susceptible we are to succumbing to our environment – no doubt a bleak outlook. What I have found in my own FIRE adventure (still ongoing) and yours, is that to me FIRE isn’t the end goal – it’s a mindset, a methodology, a discipline that we can use to improve our financial situation. The portion that isn’t advertised (IMO) with any of the FIRE paths is the ‘F’ portion becomes a larger focus of your intention – ‘RE’ isn’t filled with years of ignorance and bliss sipping Mai Tai’s on a beach somewhere (unless, perhaps we’re talking FAT FIRE to the nth degree) but instead MORE focus on your finances, at least as much as was spent getting you to your FIRE goal.

    One area that I’ve always felt was a macro storm to the entire perspective and folks need to realize – I’d be curious of your perspective – is this: FIRE was borne out of burnout and general frustration over the traditional 40-year 9-5, retire, then die cadence. Fine. However, as more people plan to do some form of FIRE, who remains behind to work? I can’t help but see some tipping point in the years to come (or perhaps it’s already started) where time becomes the true resource again – time spent doing a service or building a good/product that other people value. If enough people aren’t participating in actively adding to growing a system (which, frankly FIRE and Retirement in general is about – we’ve ADDED to a system over the course of our years and now we’re ‘withdrawing’ from that system), either costs increase enough to price people out, or even WITH sufficient money, there’s not enough availability to adequately use that money (the core of supply and demand economics I suppose). It used to be that budgeting 1.5-2.5% of a home’s value yearly on maintenance was a good rule of thumb – but nowadays perhaps closer to 3-4% as available contractors, plumbers, etc. are harder to reserve, with much longer wait times. A nominal example nonetheless, but one a lot of people can probably relate to.

    That’s where I see the ‘sit-around-and-do-nothing’ vision that folks have, and still relying on others to do work for them that they can’t or don’t want to (creating food, fixing cars, remodeling, etc.), needs to be replace with the missing component from the FIRE’s – continued education and ‘work’, albeit in a different form and on a more-agreeable schedule.

    Perhaps you agree with some, all, or none of the above, but appreciate your perspectives and time. Best of luck on your ongoing goals and adaptation to whatever gets thrown at us – I look forward to reading of your next perspective.


  2. Thanks Sam, great post. It is always fashinating to learn more about your journey. I have one challenge with the 1st rule of FIRE. I really prefer investing in index funds that reinvest dividends over the asset classes that provide cash flow. Therefore, even if I feel financially very secure, I am unlikely to ever meet that definition.

    I’m 42 years old, and still working, because I kind of like my work. However, I cannot stress too much how important it has been to reach FI (or if not FI, at least very strong financial position). Not needing the pay check has significantly reduced my stress levels at work, and helped me to be more confident and happy.

    1. You could always elect to not have the dividends reinvested when you no longer can or want to work. But yes, having enough financial cushion where you can walk away from a job or not stress about work too much is very valuable!

      I took that for granted. But now that I’m going to do part-time consulting again, I think it will make me appreciate my net worth more.

      I’m glad you’re doing well!

      1. I don’t live in US, and here the dividends are taxed immediately when received. In a case where the fund reinvests the dividends, the tax is paid only when you sell the assets. That’s why I always select the reinvestment option.

        For me, the net worth is by far the most important figure to follow.I understand, it can be missleading if your asset allocation is off…

  3. Finance Ronin

    I enjoy your weekly newsletters and have said in the past that they should be posted on your site. While I mostly agree with your philosophy, I take issue with your definition of financial independence (“enough passive investment income to cover desired living expenses”). Buying a new house can increase expenses, but you made a choice regarding your mortgage size, thereby increasing your monthly expenses necessitating more monthly income. You could have also made a choice to sell more of your other assets and not increase your housing expense while still buying a bigger house. You would have maintained the same net worth, but in one scenario (by your definition) you are financially independent but in another you are not.

    My background and FI journey are very similar to yours. I’m a few years older than you with two kids now in high school and I’ve been FI for 10 years.

    At this point of our financial independence most of us are making choices about debt, equity, income and expenses, like moving chess pieces around. You’ve reallocated your assets to something you would enjoy more (e.g., housing vs. stocks). It’s not like you threw money into a volcano. You’re making a choice that you’d rather get a job to produce more income rather than sell assets to fund your new house.

    Like many retirees, I will be selling assets or refinancing my properties to fund my retirement if needed. My investment strategy focuses more on capital appreciation (which is tax free until/if you sell) vs. passive income.
    I don’t think financial independence obligates us to never draw down our principal given we’re all going to die at some point. It just means that we will have enough assets to take us to the finish line. Anything left over is a bonus for other people or institutions.

    Keep up the good work.

    1. No problem. We each have our own ways of doing things. And as I get older maybe I will have a change of heart about breaking my first rule of FIRE. I can see it happening, but I probably won’t because that’s a lot of time to build back up my passive income. You do make a good point about selling assets is the same as living off passive income. I’ll probably write a new post about this.

      The challenge is the journey and the journey is the challenge. It makes me excited to try and get back to FIRE over the next 3-5 years. It’s like I want to go back and rewind time and go on this journey again with other readers.

      And as I responded to one of your other comments, you having a working wife who enjoys her job and can cover all your household expenses is a blessing. In my household, the responsibility to earn is squarely up to me, so I may feel more pressure.

      But I have some plans cooking for the future where things might change!

  4. Hello Sam – I really enjoy your weekly writings and hope you’ll continue them.

    I applaud YOUR decision to return to work and wish you well; frankly, it’s no ones business but your own and I don’t feel it is in order for anyone to criticize YOUR decision. Each person need to live their own life.

    I retired 11 years ago (work now at a golf course in Colorado – minimum wage, but lots of fun) at age 71 and miss the daily interaction with others. Like you, I was raised in the Washington (DC) area. I worked 32 years in the Federal government and 25+ years in the private sector. My wife and I moved to Northern Colorado for the grand-kids, who are now independent and off to college – big mistake as we are city people (DC and New York).

    The whole FIRE movement is confusing to me; why would people give up productive work and work relationships for …. whatever they think they want to do? I enjoyed work and feel I made significant contributions in transportation R&D, electronics and navigation. Our retirement income puts us into the 97th percentile and moving to Colorado (lower living costs) allows us great financial freedom – but I do miss productive employment.

    Keep up the interesting weekly columns and best of luck.

  5. Hi. No offense, but if this so called “financial independence” brings this much anxiety, uncertainty and self pity to the guy supposedly doing it right, i cannot imagine how the average Joes that aim for FIRE are feeling.

    Id rather keep my job, but still save and invest agressively. Retirement will come naturally instead of forcing it just to say i did it before 40, which would be my most productive years.

    Also, having a job knowing you have a big safety net is quite liberating.
    So, I really dont understand why people would want to retire and their peak years only to despair.

    1. No offense taken. If you enjoy your job and can do it for decades, more power to you. I stopped enjoying my job around year 10 and longed to do something new.

      The 12 years of freedom I had were mostly priceless, but with some tough times thrown in as well, eg raising a baby and toddler during pandemic with school closed.

      Everything is rational in the end. You work because you enjoy the security. I stopped working because I preferred freedom. And now, I want to start working again to regain that security.

  6. Thanks for igniting the FIRE movement in 2009! It has helped my wife and I save and invest aggressively over the past ten years.

    I agree that technology has made people timid, shy, and lacking in social skills. The people with better social skills tend to get ahead at work. I’ll definitely try and engineer my layoff when it’s time to retire. My firm doesn’t provide a pension.


  7. Like D the Wall Street trader, I also have dreams of working elsewhere. It’s tough because my profession veterinary medicine many expect that I do not make a good living but as owner/operator we are taking home 1.3 million a year net income. The good thing is our savings rate is 50%. I will continue to ride the horse until I get bucked off as well. Thanks for the great content as always!

  8. Sam,
    Ten years ago, I developed a different definition of financial freedom.
    It is not an absolute Yes or No. It is measured in months and years.
    Your financial freedom is the time that you can live without working if you leave your job today.
    This definition has become very popular in Spain and Latam since I wrote a book explaining it (Ten peor coche que tu vecino).
    This definition has several advantages:
    1) It is easier for people to achieve 2 years of financial freedom than absolute financial freedom
    2) For many people, having 2 years of financial freedom is a life changer. It allows them to live where they want and choose a job they are passionate about.
    Thank you for your great work. Un abrazo, Luis

    1. Hi Luis. I live in one of those Latinamerican countries. I know i should ask you Sam, but since Luis also hails either from Latam or Spain, maybe he also has some local point of view.

      So what do you make of the following?:

      Im 40. divorces and pay alimony. I dispair because im always short of cash as i work on my own business in a very competitive industry. But i have been able to invest mostly thanks to not wanting to catch up with the joneses and finding good real estate oportunities. So, all in all, my debt to assets ratio is 1:4.5; If i sold my properties (i could even keep one small unit for myself) and pay my debts, and then proceed to eat the money, just letting it gain interest in government bond to at least pair with inflation, with my current spending habits i could live anywhere from 20 to 24 years without working. If i worked some light job or did some consulting to earn some extra cash, i could extend that more years.

      Yet, why is it that i always feel so concerned about money? meanwhile, people i know that dont even own their home, travel and spend like there is no tomorrow.

  9. My income has gone up so rapidly, and if I kept at it to become CFO next, would continue, that if I used the 10x income rule, I’d probably never retire since nearly 50% of my income is taxed now. Plus, I don’t spend anything close to my after tax-net income today. I plan on retiring in 2-3 years (~45 y/o) using a 2-3% “withdrawal” rate assumption (just dividends and net rental cash flow) without touching principle – to hit 10x my current income, I’d need to work 7-8 years and just not willing to deal with corporate america that long, especially since nothing extra I’d be able to spend the money on. I wouldn’t mind working part time in retirement, but my wife and I want to travel considerably, and its tougher to find part time work if you are gone 1/3 of the year.

    I plan on trying to negotiate to continue to let my RSUs and PSUs vest over time when I retire, in exchange for staying on till my replacement is hired, on-boarding them and willing to do consulting at $250/hr (vs $700/hr typical) for 3 years. Would give me $300k-$600k in stock that would continue to vest + any consulting income in that time. My job is very difficult to find a good replacement – it took them nearly 9 months to find me, so I feel like I’d be in a good position to do this. But we’ll see!

  10. I bought How To Engineer Your Layoff for my wife. But, she was not able to use it before getting a better job.

    I wound up reading it and your perspective pushed me to negotiate a sabbatical with my University. I now have almost a full year off to pursue personal interest projects at full pay.

    Thank you so much!

  11. Hmmm

    My wife hasn’t worked in 18 years and we have enough to walk a way (of course will get severance) – feel like I should ask her to re-enter work force since kids are almost all in college and wife fire!

    My plan was HD/Lowes PT with medical to stay busy – didn’t know there was a name for it – baristaFire!

    Come back to WS Sam, it’s so much fun and not draining or political anymore!

    1. Wonderful! Home Depot is great and its customers need a lot of help and guidance. I know I did when I visited quarterly during my 2-year remodel.

      Hope you do negotiate that severance package if you work on WS. It’s a no brainer.

      1. Yeah i get all my deferred vested and severance. Since im MD I get at least 3 months advance notice and 1 month/year…

        Have to get out of the one year more syndrome

          1. Late 40’s

            WS is def not great again, was being facetious.

            In that range but def down from COVID with M&A and trading being significantly down.

            1. Ah, gotcha. Making $2 million a year still better than a kick in the teeth!

              I would just ride that horse as long as possible until it bucks you off. Just make sure to enjoy your big bucks along the way.

  12. Bay Area Person

    Thank you, Sam, for these great posts, which are both entertaining and educational! Looking at the numbers you posted, if you had ~$2.5M in 2012, I’m guessing you must have something like a $30M net worth today. That’s including the value of the blog (someone in a different comment section on a different post estimated $10M for financialsamurai.com and their reasoning made sense). So that’s something like $20M in real estate and other liquid assets, which seems incredible! I’m curious why you feel like that’s not enough for FIRE? Have you thought about selling any of your investment assets and just taking a tax hit to have more a more liquid net worth to avoid having to go back to work? We’re at $10M in the Bay Area and can completely understand how that’s challenging with kids, private schools, etc. But $20M seems like more than enough. Would love your thoughts!

    1. Sadly, I don’t have $30 million. But that’s OK b/c I don’t need that much.

      With FIRE, cash flow is more important than net worth anyway. Cash flow is more real and is what pays the bills.

      One’s net worth is often an illusion as it can go up or down at any given moment. Cash flow is what pays for life. And my cash flow is sadly down ~$150,000. Now that challenge is to get it back over 5 years.

      How about you? What’s your FIRE journey situation? What are you targeting and when do you think you’ll get there?

  13. Sam, I just wanted to post a quick comment to thank you for the writing you have done over the past years. Your blogs are insightful, helpful, and full of real life experience. You are appreciated, and your work is super valuable. Thanks!

    1. Hi Chris! Thanks for your note. I appreciate it.

      Comments like yours keep me going. Seriously. It feels great to help people figure out their financial problems and maybe even entertain them once in a while.

  14. Can you clarify what you mean by using average annual income to calculate your FIRE number? Average of what? Past so many years or average of every full time working year?

  15. I am all for following rules if they make sense, are fair, and if there’s large enough consequences if you don’t ha. That said, I have bent the rules plenty of times from work to parenting and everything in between. We all have to some degree. It’s all about the circumstances though.

    I do admire your steadfastness to your FI rule and I believe your diligence and consistency with saving and investing for so many, many, many years has enabled you to accumulate a lot of wealth and success. You are also way more real, honest, and open than most writers in the PF space. So props to you for sticking with what you believe in and sharing your journey so openly with all of us. It’s not easy to put yourself out there especially in this day and age of public critiquing and criticism.

  16. What about the net worth of the business you created? You diminish its income snd say you do it for enjoy and community ( which is wonderful) but you created an asset you could monetize ( understandably at the cost of not having something to do.). Not considering that asset value and its revenue in the picture seems unrealistic. It’s another income source that when you choose you can tap into. It’s like a significant insurance policy that you get to choose when it pays off and you don’t have to die – you get to enjoy the fruits of your labor. Separately you previously wrote about a home in Hawaii but don’t count those expenses? I’m really curious where that fits as I have a second home – isn’t it a cost of living expense choice, like the higher tuition costs?

    1. Having an online asset is certainly helpful and provides an insurance policy. However, it’s good practice to never count your chickens before they hatch. Many online assets have blown up overnight.

      Due to this reality, i’ve had a philosophy of consistently turning funny money into real assets.

      This is also an Asian philosophy, where real wealth is more in tangible assets. That one can see, enjoy, and touch.

      What is your philosophy and how are you doing on your FIRE journey?

  17. “To be deemed financially independent, one must amass sufficient investments capable of generating passive income that covers basic living expenses.”

    This article is confusing to me I think because from reading your blog Sam it seems like you have changed the rules yourself.

    First you say you achieved it in 2012, so you retired. But then you indicate that from 2012 to 2015 you were living a hybrid FIRE. OK, so I think you are saying you achieved the first rule but chose not to live it – even though you could have if you wanted to. That makes sense.

    That gets us to 2015 when I started reading your blog. The reason I had recently suggested to tap into your capital gains to cover some expenses (and it wouldn’t be breaking any basic rules of FIRE) is because I didn’t pick this up as an “original basic rule”, but more of a rule you evolved to in the last few years as your wealth grew. I recall a very impactful (to me) article you wrote to your FIRE readers indicating the 4% withdrawal rule was now outdated for FIRE folks. It didn’t come across to me that you were saying that if your do any withdrawal you aren’t FIRE, just that you were saying be very careful with it. I will reread it but didn’t seem like you were saying it was cheating. Then you wrote articles suggesting 2% max, then finally about a year or two ago you started espousing 0% withdrawal – living only on passive income. I don’t disagree with this goal, but reading this blog, I never got the impression over the past few years (until your recent going back to work article) that passive income only or you aren’t FIRE. Is there a FIRE name for those who have retired and live off combo passive income and 4% or less withdrawal from investments? I really don’t see the difference as long as you are not dependent on other income streams from working (you or spouse). The other thing that is trends against this rule is your recent articles on deaccumulation. I think it seemed to stem from what is the point since you can’t take it with you. You seem to be somewhat critical of those who die with millions and millions. But if you never withdrawal isn’t that you? Your “nut” will just keep getting bigger and bigger, no?

    To me FIRE isn’t about what you leave, but how you live now. The only thing that no withdrawal accomplished is leaving more for your heirs or charity when you die. But that isn’t a basic goal for FIRE, so I think the passive income only rule is confusing.

    1. The FIRE journey is dynamic, just like my FS Safe Withdrawal Rate guide of 80% X the 10-year bond yield.

      But what hasn’t changed is the main rule/definition of FIRE, to have enough passive income cover your living expenses. If you got it, you got it and can do whatever you want. If you don’t got it, you have to admit to the fact, and make adjustments accordingly until you got it, if you want to FIRE my way.

      Every way is different! No hard set rules. But I don’t want to break my own rule, so I will take action based on my decisions.

    2. From a passive income standpoint, I see no difference whether you are receiving income from qualified dividends or just selling equities at long term capital gain rate. Correct me if I am wrong, but they would be taxed at the same rate. Selling equities is more active, but you can control the timing and the amount, thus you will have more flexibility in determining your income/taxes for a given fiscal year. Where as with qualified dividends, you are at the mercy of companies issuing the dividends on the timing and the amount.

    3. All of this. Well reasoned. My sentimonies exarctly. This is a different kind of fire. It’s a generational wealth fire. Most of us want to have enough to be able to draw down without going bust before we die. Leave a few hundred thousand to a couple of mil to the people we love and peace out Cub Scout. I think this passive income play is awesome, don’t get me wrong, but it moves the yard stick much much further down the field as others have pointed out. And the income vs savings target is another move.

      Most of us need hope and shortcuts and to get it as close to right as possible without having to do 45 years of hard labor as it were.

      Love the challenges, but some are just too rich for the average financial samurai.

    1. It’s pretty common.

      People like Brandon from Madfientist, Joe from Retire by 40, and the Earn & Invest podcast host all have working wives bringing in six-figures after they retired. The WIFI movement is growing and I’m all for more working wives taking care of their husbands and families.

      More power to men!

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