The appeal of a lifestyle determined by choice versus commitment has attracted an enthusiastic community of hundreds of thousands of FIRE followers — and plenty of vocal critics, including financial expert Suze Orman. Here's a closer look at what the FIRE movement is really all about.
What FIRE is (and isn't)
The fundamental philosophy of FIRE is “to lead the happiest, most satisfying life you can possibly lead," according to Pete Adeney, otherwise known as Mr. Money Mustache, an early adopter and advocate of the FIRE movement. On his site, he explains that reaching “financial independence" does not necessarily mean the end of your working years. Likewise, “retire early" doesn't have to mean you stop working when you reach whatever number you've identified is “enough" to reach financial independence.
Ultimately, FIRE isn't really about wealth. It's about choosing what you do with your money, your time, and your energy.
Anyone can strive for FIRE. FIRE is based more on controlling what you spend and save than on what you make. On his site, Adeney points out that people with higher incomes tend to have more bad habits to break when they decide to commit to FIRE, compared to someone who makes less money and is already accustomed to spending less.
When he first heard about FIRE, Pauly was saving about 20% of his $75,000 a year salary. Once he came to understand the fundamentals behind the movement, he slashed expenses and began saving aggressively. “I began saving 55% of my income, by maxing out my 401(k), HSAs, and Roth. I opened a taxable account with what was left over," says Pauly.
Retirement is more flexible. Traditional retirement is based on the idea that you work for decades to eventually earn the freedom to spend your time and energy how you want. The “retire early" aspect of the FIRE movement means you choose what to do — regardless of the pay — rather than remaining in a job you don't like, because of the pay. With that definition of retirement, you may never stop working — and may not want to retire.
Most FIRE devotees calculate their “goal" number for financial independence based on their annual spending level multiplied by 25. Based on the FIRE model, a person who spends $30,000 a year, for example, could retire once they've saved $750,000. Pauly's goal number is to have $1 million saved by the time he's 39.
Choose where and how you spend money. FIRE devotees are all for choosing what's worth spending money on, based on personal values. You don't have to become extremely frugal or a minimalist to adopt the FIRE movement. The choices of where you spend, and how you save and earn income, are yours.
To eliminate his expenses, Pauly secured rent-free living with a wealthy family, in exchange for ten hours a week watching their children — on top of his day job. “In FIRE fashion, I was able to leverage my soccer coaching skills, piano playing abilities (years of lessons as a kid), and tutoring proficiency (I tutored writing in college) to live in a private spot in a beautiful suburb, close enough to walk/bike to work," says Pauly.
Last year, Pauly had saved enough to leave his desk job, and focus entirely on his new business and personal training. He says he's still on track to retire before he turns 40.