We have some amazing mentors in the Millionaire Money Mentors forums. Some of them are even accomplished authors!
Over the next few months I’ll be sharing excerpts from some of these authors’ works.
Today we have an excerpt from F.I.R.E. for Dummies — a book that I loved reading and is now my go-to for introducing people to F.I.R.E.
It’s written by one of the mentors in the forums and makes for a great Christmas present (if you need any ideas).
The section today covers some basics of F.I.R.E. that often aren’t discussed on other sites, which is why I like it. It will be pretty basic for most ESI Money readers, but I wanted to share this so you can see how it starts from the ground floor — which makes it a perfect gift for those in your life who “just don’t get this FIRE thing.” 🙂
With that said, let’s get to today’s excerpt…
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UNDERSTANDING F.I.R.E. PHILOSOPHIES
There is no doctrine or fixed set of rules you need to agree to in order to be a part of the F.I.R.E. community. There are, however, some common tenets to help achieve the primary goal of buying your time back and creating freedom in your life.
Here are some of the philosophies of F.I.R.E.:
- Living on less than you earn: That may mean earning a higher income, lowering your expenses, or both (see Chapters 10 and 14).
- Maintaining a high savings rate: The gap you have created between your income and your expenses will give you room to save and invest more than the average. A savings rate of 50% or more is considered high, and it’s the goal you want to work toward. The more you save and invest, the faster it gets you to F.I.R.E (see Chapter 4).
- Keeping investing simple and low cost: The strategy is to invest in index funds that offer a diversified basket of stocks or other investments and stay the course even when the market is down (see Chapter 12).
- Minimizing taxes: Taxes are controllable, and there are many opportunities to reduce your tax liability when you understand how taxes work. This includes big areas such as tax advantaged retirement accounts and other investments with favorable tax treatment (see Chapter 15).
- Optimizing corners of your life that matter most: It’s impossible to optimize everything, but everyone has superpowers in certain areas. Common places in which the F.I.R.E. community optimizes are travel rewards, house hacking, and real estate investing (see Chapter 2).
- Being a lifelong learner and doer: Some of the smartest people you will find when it comes to personal finance are F.I.R.E. people who are curious and act on that curiosity (see Chapter 2).
- Valuing community and connections: You will find support from other like-minded people with common goals. The community has grown big enough that you can connect with others in all kinds of ways: online, in person, one on one, small groups, big groups, and so on (see Chapter 3).
- Enjoying the journey: How you feel and your happiness is key even when you are hyper-focused on your goals. The psychology of F.I.R.E. is real and deserves as much mental energy as the math (see Chapter 3).
WHO WANTS F.I.R.E. AND WHY?
Many people would choose to spend their time in different careers and jobs if money were not a factor.
If all careers and jobs paid the same amount of money, would you change yours? Do you feel stuck in a job you don’t love, or would you simply like to do the work you love on your own terms without being beholden to an employer?
F.I.R.E. is a whole community of people who reject the default construct of work and retirement. Thinking differently about the balance of labor, leisure, and life leads many people to want more freedom to define this themselves.
Most of the F.I.R.E. concepts are simple and aren’t new. They are just updated versions of the advice from wise people — parents, grandparents, and other influential people — who came before you.
If you’ve read the book Your Money or Your Life by Vicki Robin and Joe Dominguez, you had an early glimpse into what financial independence and retiring early looks like. Just think about the legacy this iconic pair built and how many people they’ve touched since reaching F.I.R.E.
If you’ve never imagined having an identity that did not include your job or career, you’re not alone. But there’s a lot of power in creating your own identity with you as the lead character and everything else in a supporting role.
There are many different reasons people navigate toward F.I.R.E. Here are some examples:
- One tough day at work pushes someone to the point where they’ve just had enough.
- Someone has a series of reminders that they don’t have the control of their time they’d like to have.
- A person discovers a passion or project that they can’t do because of commitments to work.
What’s on the other side of F.I.R.E. can motivate you more than what you’re moving away from. Think about your “why.”
Every person’s why is different than the next person’s. One of the great things about F.I.R.E. is that it’s flexible, and there’s not one precise way to do it.
My why for F.I.R.E. was to follow my big dream of creating a financially literate society. I know. I have a lot of work to do, but it’s work I love, and I couldn’t do it the way I want while at my full-time job. I tried, and it just became progressively more exhausting to do both.
Don’t let what the larger F.I.R.E. movement does dictate your goals. You are unique, and the only person who can design what time freedom looks like for you, is you.
EXAMINING THE PUBLIC PERCEPTION OF of F.I.R.E.
As aspirational as F.I.R.E. may seem to me and you, it doesn’t always get a fair shake from other people. It’s healthy to take a critical look at things and examine a situation from other perspectives.
In the early days, there were some stereotypes assigned to the F.I.R.E. movement. As a member of the F.I.R.E. community, I could understand where they came from, but like most stereotypes, they were overgeneralized.
Here are some examples of the stereotypical perception of a person who could achieve F.I.R.E.:
- Mostly high-income people
- Mostly white men working in the tech or engineering fields
- Mostly people without kids or other extended family obligations
- Mostly people who are extremely frugal or excessive minimalists
There’s a lot more I could add to this list, but I got depressed just looking at some of these because I definitely don’t fit the mold, and you may not either. These descriptors in no way fully represent the F.I.R.E. community.
The source of these stereotypes was probably clickbait articles or other media content with limited scope.
I remember my first exposure to a diverse voice talking about F.I.R.E. on a major media platform. It was Jamila Souffrant, host of the podcast Journey to Launch and author of the book Your Journey to Financial Freedom (Hanover).
I admit that I was a skeptic when I first started exploring what F.I.R.E. was all about (back in 2014). I read some salacious headlines that got my attention, but my curious nature led me to do a lot more digging than reading a single article.
I started diving into it by devouring all the F.I.R.E.-focused podcasts, blogs, and books I could find.
I recall platforms with names that focused on the more extreme parts of F.I.R.E. like frugality or minimalism. Years later I felt that focus shifted toward things like simplicity, choice, and the wealth part of F.I.R.E. from sources like these:
Needless to say, there are a lot more platforms, resources, and communities where you can learn about F.I.R.E. I mention many throughout this book and offer a list of some of my favorites in Chapter 21.
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That’s it for today…just a taste of the book for now to get us started.
Future excerpts will be much more detailed and lengthy, so brace yourself for some good stuff coming for the next several weeks!
Why are you calling out white men? Anyone who has high income can do this. Might I add, per capita there are more Asian men who earn at high levels than white men. Seems like you are a bit anti-white.
No, you missed the point by 180 degrees. Before choosing to feel offended, reread that section again. Slowly.
Those philosophies of FIRE are all wonderful affirmations that we are on the right path. It reads as living such a rich life, not by depriving yourself, but enjoying the journey, and instead of comparing ourselves to others, getting to know others and creating a community. It’s so simple yet so out of reach for many. Spend less than you make and let the rest build wealth for you.
I for one know that if all jobs paid the same, I would like to venture into pursuing passions such as advocacy, multimodal transit, and sustainability. Gotta give back while you can!
I can attest that the Millionaire Money Mentors is a diverse and accomplished group of friendly and focused individuals who have achieved financial abundance or are well on their way. I’ve had the privilege of meeting many of them in person, and nearly all of them electronically. They are the real deal.