What is the FIRE Movement? (Financial Independence Retire Early)

F.I.R.E. is an acronym which stands for Financial Independence, Retire Early. It’s an online movement of people who are focused on retiring early by living frugally, increasing income, and investing every dollar they can now.

It’s said that the financial movement had its beginnings in 1992 with the “Your Money or Your Life” book written by Vicki Robin and Joe Dominguez. It has since taken on a life of its own and there’s no central authority or spokesperson for the group. Rather, it’s a loose network of people who tired of the retire at 65 path that the system set out for them and are doing something about it.

Where the FI/RE abbreviation originated from is hard to say as I’ve heard a few different explanations. The most likely is that it came from a member of an online money forum.

So What are the FIRE Rules?

There’s no official list of rules but here’s some generally agreed upon goals or guides for achieving FIRE.

• Make a Plan to Retire Early – Work out exactly what you need and how long it’ll take to get there.
• Be Frugal – Cut costs now so that you can live free sooner.
• Eliminate Debt – Especially bad debt like credit cards.
• Save as Much as Possible – Saving and investing 10% of your income is simply not enough to retire early.
• Increase Your Income – Look for side hustles or take on a second job.
• Invest Every Spare Dollar – Invest in income producing assets that increase over time. Especially dividend stocks and rental properties.
• 4% Rule – A strategy used upon retirement where you can withdraw 3% or 4% of your investments for at least 30 years.

Like I said though, there’s nothing saying you MUST do this or do that, people pick and choose to suit their wants and needs. The thing that unites the FIRE movement is a desire to retire early and there are 1001 ways to achieve that goal.

A Few FIRE Flavors

People seem to like labels and a variety of flavors so there are a few different types of F.I.R.E.

• Traditional FIRE – Regular vanilla FIRE is to retire early. It’s much like regular retirement but you’re not slaving away at a job for 45 or 50 years. It’s all about living frugally, investing every dollar, and increasing your income to achieve your retirement goal as quickly as possible.
• Fat FIRE – For those who don’t want to live frugally in retirement or they want a massive buffer to protect their income from volatility and black swan events. Saving ten percent while working definitely won’t work for these people. A life of luxury in retirement requires some serious income producing assets.
• Lean FIRE – Is for people who only want to cover their basic living expenses as they’re happy to be frugal. If you’re tight with your money then lean FIRE is the flavor for you. The good thing is that you can retire earlier as you won’t need as many investments.
• Barista FIRE – This is where you don’t have enough investments to retire yet but enough to choose to work part time. So if your investments are only paying you $500 per week but you need $1000 per week to live comfortably then you might have to only work two or three days per week.

What Do I Think About the F.I.R.E. Movement?

Anything that can get us closer to financial independence faster is a good thing. My only problem with it is that I have a pathological distrust of labels. I would never associate myself with any group or movement as whenever you identify as something you can be controlled and manipulated.

For regular people who don’t have my level of paranoia I would definitely recommend looking into the financial movement though as it’s a great way to get started, learn a lot about finance, and to keep motivated with others who are chasing FIRE. There are plenty of good FIRE blogs, online forums, Facebook groups, Youtube channels and money books to learn more than enough about retiring early. Just don’t limit yourself to the FIRE movement alone as finance and investing are wide fields with lots of different paths to consider.

What Do You Think About FIRE?

Let us know in the comments below.