The desire to retire early and live a financially independent life has been around since the beginning of organized labor.
In 1992, the book, Your Money Or Your Life, was published by Joseph R. Dominguez, Monique Tilford, and Vicki Robin that helped encourage people to choose their lives over grinding away at work forever. Joe unfortunately died in 1997, and the book really didn’t get mainstream until the rise of the internet and blogs in the early 2000s.
It wasn’t until 2007 and 2009 when two personal finance sites started to popularize the idea of Financial Independence Retire Early (FIRE) to the masses. Early Retirement Extreme and Financial Samurai.
The Modern Day FIRE Movement
The first blog I’m aware of that started regularly talking about FIRE was Early Retirement Extreme by Jacob Lund Fisker in 2007. Jacob discussed extremely radical ideas such as living alone in a trailer in the woods off less than $8,000 a year to achieve financial independence.
A lot of folks, were in disbelief at his lifestyle. But his frugality helped encouraged his readers to live way below their means. He helped question whether we were frugal enough.
From 2012-2015, Jacob was lured back into full-time work as a quantitative investor at a private equity firm. Subsequently, he stopped writing about FIRE regularly. Despite his lack of posting, his website still gets a decent amount of traffic as people find his older work through search.
The second site that really helped ignite the modern day FIRE movement is Financial Samurai. Sam started Financial Samurai in July 2009 with the motto, “achieving financial independence sooner, rather than later.” Millions of readers began to resonate with his message as they tried to make sense of the financial chaos during the recession.
In 2012 at the age of 34, Sam retired from his full-time job in finance where he was making a base salary of $250,000 to live free. Back then, walking away from such a large salary at such a young age was unheard of. He credits being able to negotiate a severance package as a key catalyst.
The severance paid for a full five years worth of his current living expenses. He argues that if you are going to retire early, you might as well try and negotiate a severance since you have nothing to lose.
In 2015, Sam helped his then 34 year old wife negotiate a severance package to reach FIRE as well. He chronicles the experience in the post, How A High Performing Employee Can Negotiate A Severance Package.
The concept of engineer your layoff in order to negotiate a severance is slowly becoming more and more popular among the FIRE crowd. After all, if you’re going to quit your job, you might as well try to see if you can leave with money in your pocket. A severance package is instrumental for FIRE proponents because it extends the financial runaway or creates a nice financial buffer during the transition period to early retirement.
As of 2020, both Sam and his wife are still FIRE and still not working traditional day jobs. Their retirement income generates about $265,000 a year, which provides for a comfortable lifestyle for four people in expensive San Francisco.
Below is Financial Samurai’s latest FIRE portfolio for 2020-2021.
On average, Financial Samurai currently attracts over 1.5 million organic pageviews a month and is one of the largest FIRE-related blogs today.
What makes Financial Samurai unique is that he not only writes about achieving financial independence early, he also writes about various topics including: real estate, career strategies, wealth management, investing, family finances, education, relationships, travel and more to keep things interesting.
Sam believes that once you achieve FIRE, there’s no need to keep talking about FIRE topics. Life just goes on. With two kids under three years old now, Sam is busy being a full-time dad with his wife. Kids have increased the value of FIRE tremendously.
Other Popular FIRE Blogs
On April 12, 2012, almost three years after Financial Samurai started, Financial Samurai invited a new site, Mr. Money Mustache to do a guest post on Financial Samurai entitled, Early Retirement: It’s Not As Risky As You Might Think.
This guest post helped propel Mr. Money Mustache into one of the most popular FIRE blogs today. Although MMM doesn’t post much, his forum is an active place for many FIRE followers to congregate.
With the rise of MMM based in Colorado, many other FIRE blogs started sprouting out in the Midwest and Southern parts of America where the cost of living is cheaper.
As of 2020, there are very few, FIRE blogs, other than Financial Samurai that have kids and live in an expensive coastal city such as San Francisco, LA, New York, and Washington D.C.
Other popular FIRE or FIRE-related blogs and podcasts include:
- Physician on FIRE
- Retire By 40
- Montana Money Adventures
- The Retirement Manifesto
- ESI Money
- Firedrill podcast
- Financial Samurai podcast
There are supposedly over 2,000 FIRE blogs and podcasts today. There’s really something for everyone, and the list is growing by the day.
For as long as people want to live a life with less financial stress and more freedom, the FIRE movement will only continue to grow.
The FIRE Movement Critics
With the emergence of any popular movement, there will always be critics. Here are some of the main criticisms:
- FIRE bloggers are simply trading their time making money from a day job to making money for themselves through blogging, podcasting, writing books, and selling e-courses
- The majority of FIRE bloggers and FIRE adherents have only invested during a bull market since 2009 and do not know what it’s like to experience a downturn. See: DIRE: Delay, Inherit, Retire, Expire
- FIRE bloggers are predominantly white males and females who lack diversity and representation of Americans today.
- FIRE bloggers and adherents are predominantly based in the Midwest and South, despite half the population of America living on the coasts.
- Many FIRE followers are not really FIRE because their investment income does not cover their best lifestyle expenses.
- Many FIRE bloggers are too inexperienced and/or don’t have kids. Therefore, they haven’t fully calculated how much their lives will truly cost.
- Many FIRE bloggers have just rebranded themselves and are simple stay at home dads or stay at home moms.
- Many FIRE bloggers are simply regular workers who aspire to FIRE, but are nowhere near financial independence.
Many of the criticisms have merit. However, only you can decide what’s financially best for you and your family. The entire goal of FIRE is to live your life on your own terms because of the financial cushion your investments provide.
If you want to work as a greeter at Walmart, go ahead. If you want to write about your journey in a blog, go ahead. Everybody should have a website and plant their flag online. It’s the internet age.
If you want to pursue a brand new profession that interests you or if you want to get your Master’s degree, go ahead. That’s the beauty of the FIRE lifestyle. You can do whatever you want, whenever you want.
Different Types Of FIRE Lifestyles
There are three main FIRE lifestyle subtypes.
The first subtype is the Fat FIRE lifestyle. The Fat FIRE lifestyle allows FIRE adherents to live in the most expensive parts of the country or the world and really life it up in early retirement.
Then there’s the Lean FIRE lifestyle, as mentioned above where some people choose to live extremely frugally to live a life of freedom. There’s absolutely nothing wrong with this lifestyle, so long as the person isn’t constantly stressed about money.
Finally, there’s the Barista FIRE lifestyle, which is a hybrid of Fat FIRE and Lean FIRE. The Barista FIRE person choose to supplement his or her retirement income with part-time work out of necessity. But the part-time work is enjoyable.
Baristas at Starbucks famously get healthcare, which is a big cost for many FIRE strivers. For example, Sam from Financial Samurai pays $21,500 a year in healthcare premiums to take care of his family.
Many FIRE followers end up living the Barista FIRE lifestyle whether they need a part-time gig or not because they always want to be doing something interesting. Often times, these interesting things lead to revenue.
Investment Income Is The Key To FIRE
Every person looking to achieve FIRE must build an after-tax investment portfolio that generates passive income. It’s good to max out a pre-tax retirement account like a 401(k) or IRA. However, to retire early, an after-tax investment portfolio is a must since one can’t tap their 401(k) or IRA before 59.5 without a 10% penalty.
Financial Samurai wisely introduced the post, Ranking The Best Passive Income Investments, to help FIRE followers strategically develop their FIRE portfolio. He uses a five factor model to rank the eight best passive income investments.
As long as a FIRE-seeker is steadily building investment income, achieving FIRE is an inevitability. Save aggressively and save often. There’s only one life to live. Better make it a good one!