F.I.R.E. – Financial Independence, Retire Early. It’s an interesting concept I’ve followed. There are several groups on Reddit dedicated to it. I’m interested, but obviously we didn’t follow the last part…
My problem with it is that many of those involved seem to be pretty self-centered and uninterested in doing anything great with their lives. Their whole goal is to save enough to drop out early. They often talk about isolation from their peers and coworkers, and their general need to leave them behind. Maybe I’m missing a greater goal some of them may have, but it doesn’t come across regularly.
One of the YouTube producers I like is Toby Mathis. One of his “rules” is the 70-30 rule, which basically says, live on 70%, put 10% towards debt reduction, 10% towards investments and 10% toward charity. If you can’t put aside 10% for charity, give in another way, such as volunteering. This fits with our general policy of living below your means. We’ve always given to charity, but mostly, in lieu of cash, we have given our time. Sometimes charitable groups like the Community Foundation or Midwest Assistance Dogs, and sometimes civic organizations like the Chamber of Commerce or serving on community subcommittees. As Toby discusses, it’s a good thing to do and it also puts you in contact with others that are charitable and often influential. Those contacts can lead to job opportunities, introductions to others that can help you. Generally the successful people that give back, want to see other giving people succeed too. Example: You’ve heard me talk about the underground bowling alley we built. That client got to know me through my service on the MCCF Investment Committee.
So, my preference to F.I.R.E is having F.U. Money. I first heard the term from JL Collins on a Motley Fool Podcast. You don’t quit your job and drop out, You continue to work, participate in society and do good things. But F.U. Money gives you the option that allows you to say “Fuck You!” and walk, when you don’t want to do what you’re doing. That’s a similar freedom to what you get from F.I.R.E., but without the anti-social side.
Plus, for Becky and I, a lot of our identity is tied up in our careers. You may or may not be in that same situation. Using the same 70-30 division, we’ve continued on past achieving F.U. Money, since we enjoy 70% of what we’re doing. Honestly that’s wearing thin these days. That’s how we know we’re coming up on the right time to walk away. But we’ve saved well. We have had F.U. Money for a while. With that, it’s just a matter of deciding when to pull the trigger. I believe that’s easier when you work for someone else. It’s hard to shut down you own business. You have a huge amount of freedom working for yourself on one side, but on the other, you’re somewhat limited by your commitments to employees and clients.
In my mind, F.U. Money is variable, based on where you are in life. F.U. Money when you’re younger can be enough to walk away from a bad situation (job, divorce, house, bad investment, natural disaster, etc.) and live off savings as you sort things out. F.U. Money later in life is more about the ability to drop out, if you want. F.U. Money is not necessarily going to have the same monetary value as Finished Money. Finished Money is the amount you need to retire and live comfortably. Finished Money might be a goal you’re saving towards or one you achieve and just hold until you pull the trigger. I want to have F.U. Money on top of my Finished Money at all stages of life, including retirement… That’s the money to do things with, give away or just plain blow.
Strive to build up your own F.U. Money cushion. That number differs for everyone, but you probably know what it is. Good luck!