Money Q&A

Everyone dreams of achieving financial independence from work and the possibility of retiring early to focus on pursuits that are more personally fulfilling, but few people manage to actually retire before the usual range of 62-67. Why is that? One reason is the popular movement, financial independence retire early or otherwise known simply as FIRE.

A number of reasons exist as to why so many Americans fall short of their retirement goals, including a lack of retirement savings, narrow margins on income-to-debt/expense ratios that prevent folks from accumulating a sizeable savings, few outside income opportunities to supplement their meager Social Security check, entering retirement age with considerable debts to repay, etc.

If you’re in your 20s, 30s, 40s, or even 50s, there is still time to prepare for your golden years through the FIRE approach, which stands for “Financial Independence Retire Early.” It’s not easy by any means, but for someone with the motivation to attain financial independence beyond their bi-weekly paycheck and enjoy the benefits of retirement at an earlier age, the FIRE approach was designed to teach people how they can achieve their lifelong financial goals without having to work 40+ years to make it happen.

Financial Independence Retire Early (FIRE)

Here are a few aspects of FIRE to implement into your life for greater financial independence (and possible early retirement):

Lowering Your Monthly Expenses

While many personal finance experts recommend saving at least 10-25% of your monthly income, the FIRE approach appears much more demanding with its recommendations for 40-50% savings based on your monthly income. This might seem like an outrageous suggestion for anyone living paycheck to paycheck, but the combination of lowering your monthly expenses and developing new income streams (active or passive) can make this possible.

Obviously, this requires a great deal of self-discipline to restrain your impulsive spending habits and trim your expenses for the most efficient budget possible, as well as educating yourself on the best opportunities for side incomes and actually pursuing them, rather than pushing off your income goals with excuses like, “Someday I’ll have time to pick up a side hustle” or “Someday I’ll have more time to learn about passive income opportunities.”

As the acronym suggests, FIRE wants to jumpstart your financial goals by getting started right away. It will take considerable time and effort to analyze your current budget for areas to slash, as well as researching viable passive income options beyond your day job. However, if you are truly motivated to achieve the two goals outlined in the financial independence retire early (FIRE) methodology, then why wait for the “right” time when you can hit the ground running today? [click to continue…]

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