Playing with FIRE

Chasing rainbows is a slippery slope.

IMO, it still boils down to understanding your needs versus your wants. Then you can make informed financial decisions regarding how much additional effort/time you're prepared to trade for the "wants" once you reach your "needs".

I'm not disagreeing per se, just looking at the same issue slightly differently to avoid chasing rainbows & this is what I've interpreted from the MMM messaging.

I see it as compartmentalizing your finances in order to empower better decision making. There's no right or wrong here and one size does not fit all.

 

When I first started investing, I aimed for a ridiculously large annual retirement income. I was young and we did not have kids and the prospect of lounging in pool villas and over water bungalows while travelling to tropical paradises seemed very enticing. In fact, I would hazard a guess that large motivator for the big income back then was purely for a luxurious travel budget. 8 years on, I have changed somewhat. Not necessarily because I don’t think my passive income target has become unreachable. On the contrary, I think we are in a much stronger position that even I had imagined back then.

Instead, having my daughter changed a lot for me and then also growing older has made me reconsider many things I held very close to my heart. For example, my little girl is at home over school holidays when I am back at work and will be for the entire month. It hurts me to even think of the joy I will see on her face if I go home tonight and tell her that I will be home the entire month and we can have as many adventures in the backyard as she pleases. If I then go on to tell her that I will not stop at that but also, for the rest of the year, take her to school every morning, stay for reading and play with her in the afternoon till sundown and read her a book every night, she will be delirious with joy. Turns out, I won't be having that conversation.

I will be at work for all of January and considering it is leading up to a busy time at work, I will come home exhausted most nights of the week. The older I get, the more I think that if somebody offered me just over half of what I was once aiming for, it will be very hard to knock it back. I have realised that I can be just as happy being at home, cooking healthy meals and occasionally going out for a meal or a holiday. We are so lucky to live in a country where beautiful beaches, national parks, walking and bike paths, mountains are all accessible to everyone and free of cost. I have realised that it is not the pool villa or that holiday to Maldives that will make me happy, it is my daughter’s laughter, time with my wife and an un-rushed, relaxed lifestyle which will determine my state of mind.

Some of what MMM says might be theatre (his real personality is actually a humble one). But I now have a deeper appreciation of his (abrasive) messaging: spending money, constantly travelling in search of “true local experiences”, dining out every other night does not by itself contribute to happiness unless you have worked out how to be happy without it. Like Steve McKnight once said, investing is a race. Not because we have beat anybody else at it but because we all die. Time is the most precious commodity of them all.

Like @Indifference said, no right or wrong. Just some rambling thoughts.

 

I'm not talking about chasing rainbows.

When you get right down to it a shack, maybe a blanket, a set of clothes and enough food and water to not starve are your only needs. Everything else is wants.

That being the case, my advice is be honest with yourself about what brings you joy, what is important to you and what sort of standard of living you want. Part of that is the wisdom and self awareness to know that satisfying every want you can think of is not the key to happiness. On the other hand, for some people, possibly most people, part of it is the wisdom and self awareness to know that sleeping on the ground in a shack with a blanket, a set of clothes and enough food to not starve isn't going to be the sort of existence that makes them happy and gives them fulfillment.

 

I think we actually agree.

My point of difference is in relation to most people being unable to compartmentalize "1st world needs" versus "wants" in one take, and therefore tend to start chasing rainbows. I'm not suggesting that's what you're implying but am suggesting that's what most tend to do.

It's that very mindset that the MMM approach is trying to challenge, IMO. If we start thinking in terms of a certain comfort level or standard of living that is over & above 1st world needs, we tend to start padding out our financial requirements..... this is what chasing rainbows is to me.

It's the old how much is enough conundrum that the vast majority of people struggle with as in IMO, most don't really know how to value their own time or more aptly, " life units". The result is people working far longer &/or harder than they needed with hindsight.

I get head shaking, sighs & eyebrows raised all the time when "semi retired" & my age come up. Why?
Many simply don't/can't understand, some believe I'm wasting my occupational potential, others can't fathom how I could fill my days at this age (as if age has anything to do with it anyway) & some just can't wrap their heads around how I value my time more than having extra $. Ie. They think I should work fulltime until I can fully retire. ..... sigh.... they just don't get that this last point is chasing rainbows.

When I understood the difference between my 1st world needs & my wants/desires, I realized that working fulltime was optional..... I admit to sometimes being tempted to chase my rainbow, but realize I'm not prepared to give away that much of myself for stuff that as you rightly point out, wouldn't really bring more happiness.

 

How much is enough?
How much is enough when you are still reasonably young ( 38 ) and more than able to continue working and earning good money. As much as I on a weekly basis think I would love to walk away from work I can’t walk away from the potential earnings.
Even though I have a substantial investment portfolio I’m still anxious when it comes to being financially independent and possibly RE.
What if there is a major market correction and your portfolio became half of what it was? Should you work on having a portfolio double the size if possible of course so that in a crash you are still in a very strong position?
When you have 2 young kids in private school and a habit for nice cars and the yearly trip or two abroad it makes it very hard to ever be 100% comfortable and confident to RE.
I can’t help but feel that if I RE that I will one day look back with regret about the potential lost earnings. And with my situation it would not be possible to just go back into the my current work / earning capacity if I walked away now.
Very conflicted.

 

@Big Al FIRE is not for everyone & means something different to all of us.

It isn't a destination, nor does it need to be a nail in the career coffin. It's about choices, options, time.... the bigger the FI the more choices/options become available.

The decision to RE is a very individual one & also has different interpretations. Some want to go cold turkey, some want to cut back the hours & some just don't want to stop until they're unable to work (these are not the RE types).

FI allows the choice to RE, it doesn't mean you have to.

Each to their own.

 

At the end of the day, I’d much rather regret lost earnings than lost time

 

Thanks indifference, makes sense.
I go from liking the idea of RE one week to wanting to go even harder the next. I would love to be able to one day pass onto the kids a substantle invetsment pot that they could continue to build on.
My issue with work is the stress that comes with the business. I don’t mind the daily work tasks , or hours involved. I have plenty of flexibility and am compensated handsomely. But the stress of dealing with staff and clients on a daily basis is a menatlly draining.
Then again I spend a few days at home not working and go stir crazy.

 

@Indifference yes, I think we agree, just different terminology really.

 

My dad has retired a couple of times. The first time he was 30years old. He was never able to do it for long. He likes to be busy and even now at 72 isn’t fully retired and is generally really busy everyday. I would like to retire and have had periods when I didn’t work and or I worked part time. I think unfortunately I am like my dad and will need to at least work part time after a short period but I look forward to being able to choose what that work is. This would be FIRE to me.

At the moment I work where my skills lie which isn’t where my interests lie anymore. I would also like more time with my son but my work and my husbands is quite flexible so we are lucky to have a bit of balance.

Kassy

 

From what I understand, this is one of the key points of FIRE. It's not just retiring and doing nothing- it's more about having the choice of what to do with your time.

I'm a bit like BigAl - trying to work out how much is enough, and the benefits the extra time will give us. We're not true MMM - our cost of living will be much higher than most of the Mustachians but by no means are we blatantly wasteful with our money.

 

One factor to be aware of with the FIRE movement is that as it originates from the US, many of the strategies used are tailored specifically for the US market:

i.e. the lower cost of housing and lower cost of living, the fact their stock market is coming off one of the biggest bull runs in history (hence why indexing has worked), ditto on their housing market and their tax systems is more conducive for making $$$

So of course, if you get in early enough there is every possibility of reaching FIRE at a relatively young age if you have high wages coupled with fiscal discipline during the last decade or so.

And if you have the foresight/good fortune to start a blog relatively early - then there will always be the MMM, Mad Fientists, Financial Samurai's of the world who come out of this looking like shining knights.

I'd be much more curious to see how late adopters of FIRE (and there are many) try to achieve this given the increasing likelihood of an economic downturn and decreasing asset prices - some will be in for a rude shock and may need to recalibrate their expecations...

So what to do?

Horses for courses - some concentrate on maximizing their income , some concentrate on minimizing their expenses, others have a balance of the two, but I think you can't go wrong with the timeless message of "spend less than you earn and invest the difference" for asset creation - just depends on how much and how soon you want to get there!

End of the day FIRE is not about the 4% rule or 25x expenses or some arbitrary number or strategy on a page; as many of you pointed out - it's about time.

Pity it's such an intangible that we don't realize it until much later down the track!

 

What about the FIRL movement?

 

Yeah I might end up being part of the FIRL movement. Like to much of the finer things in life.
The amount I need to generate from investments to keep up with our annual spend means I need to keep going for a while longer.
Not a fan of this frugal lifestyle to achieve FIRE.

 

L - Later? Lighter?

 

I’m guessing late.

 

L = lifeless (i.e. dead)

 

That's the risk

 

Nah, I'm going for a different FIR... FIRB - Retire Balanced (sure there's a better word for this acronym, but I'll start with that). Reading the true FIRE'ers, they're a little too enthusiastic for me, so I'm taking mini breaks on a (hopefully balanced) path to a sustainable FIR.

 

FIRB - FI Rich Ba*tard sounds appealing to me.