Living on minimum wage. It’s something many have had to do, especially when we were younger. Maybe you had a minimum wage job when you were living at home with your parents or as you were working through school. Or maybe you are living on minimum wage right now. Depending on where you’re at in your life, minimum wage can be a right of passage or a serious threat to your financial health.
In the world of FIRE and early retirement is that "what" and financial independence is the "how." Simply stated: no FI, no ER.
Financial independence, or FI for short, is when you're investments generate enough cash to cover your expenses. That's the holy grail because it means that money is no longer an object. You're financially free!
Not Everyone Should Pursue Early Retirement
Not Everyone Should Pursue Early Retirement, but EVERYONE should absolutely strive to become financially independent.
When you're financially independent, you've got options. You can go to work or quit. Take a vacation or lie on the couch all day. What you do doesn't matter because you're financially free.
The Best Thing Money Can Buy
The best thing you can buy with your money isn't more stuff - it's freedom. When you no longer have to trade your time for a paycheck, then suddenly you can do whatever you want with your time. You're free! And that's what financial independence is all about.
The FIRE Movement
What is FIRE and how does it work? In the world of personal finance, FIRE stands for Financial Independence Retired Early, or some variation thereof and there is a growing movement behind this concept.
Within the FIRE Movement, one is considered to be FIRE, or FIRE’d, when their living expenses can be covered by their investment returns. At that point, you are financially independent (FI) and can retire early if you so choose (RE) because work is optional for you.
But FIRE is so much more than budgeting, investments, or a math equation. FIRE is a way of life and a growing movement that is spreading across the globe and being embraced; not because people suddenly love budgeting and personal finance but because FIRE provides hope.
For anyone that’s ever felt trapped by the thought of a working career that could last into their late 60’s or early 70’s, FIRE provides a feasible alternative to the traditional path that society peddles. And once embraced, the idea of reaching financial independence and retiring early is nearly impossible to snuff out. That’s because, at its core, FIRE is reclamation of one’s personal freedom.
And people long to be free.
The Law of the Harvest has biblical implications, but for the non-religious among us there are some parallels we can draw that will also help us set and achieve our financial goals. In my quick’ish style, allow me to do just that.
If you’re fixin to boil a frog, one popular technique warns against dropping the critter into a pot of boiling water. Not surprisingly, a frog will immediately hop out of a pot of boiling water. #shocking
The best way to build wealth and achieve FIRE is to invest your money. The best way to invest your money is to index and chill!