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A Simple Introduction to the Financial Independence and Retiring Early (FIRE) Movement

If you’ve been following the personal finance space at all in recent years, you may have heard of the FIRE movement. FIRE stands for “Financial Independence Retire Early”, movement and it’s a growing movement of people who are striving to achieve financial independence so they can retire early. While there is no one right way to achieve FIRE, there are some basic principles that everyone pursuing FIRE should understand. In this article, we will discuss the basics of FIRE and how you can start working towards financial independence and retiring early!

The Basics of The FIRE Movement: “Financial Independence Retire Early”

Image courtesy of Declutter Finance

What is financial independence (FI)?

Financial Independence is defined as having enough income (from investments, passive businesses, real estate, etc) to pay for your reasonable living expenses for the rest of your life. You have the freedom to do what you want with your time (within reason). Working (full or part time), hobbies which generate income, or other activities are optional at this point.

What is Early Retirement (RE) within the FIRE Movement?

Retiring early (RE) is quitting your job and leaving the workforce before you reach traditional retirement age, achieved via financial independence (FI) based on passive income streams or independent wealth. There are a number of ways to achieve early retirement, but one of the most common paths is to save as much money as possible so you can live off your savings once you quit your job. This means you need to have a solid financial plan in place before retirement and be disciplined with your spending throughout early retirement.

Financial Independence Retire Early FIRE Movement
Though retiring early could look like this, it doesn’t have to – and will be a lot easier to achieve if it doesn’t

There are a few key things to remember if you want to achieve Financial Independence and Retire Early

  • Make a budget and stick to it. This is one of the most important steps in achieving FIRE, as it will help you figure out how much money you need to save each month/year in order to achieve your goal.
  • Invest your money wisely. This means investing in assets that will provide you with a steady stream of income once you reach FIRE.
  • Live below your means. One of the best ways to save money is to spend less than you earn. This can be difficult, but it’s crucial if you want to achieve FIRE.

There are tools/ levers to use for reaching financial independence and retiring early quickly however the following handful are essential. Reducing expenses, increasing income, and investing.

Reducing expenses

Reducing your living expenses to a reasonable level is the most critical step. Five-star restaurants, vacation homes, and jets are generally not achievable as a reasonable financial independence goal. But if you can realize contentment with significantly lower expenses, your ability to reach financial independence is greatly improved.

Increasing income 

If you want to achieve financial independence, it’s important to put effort into increasing your income. There are a number of ways to do this, and the most effective approach will vary from person to person but all either involve increasing your primary income stream or developing additional active or passive income streams. Some of the most common techniques for increasing income include:

  • Increasing your salary via promotion, earning additional certifications and qualifications that warrant higher pay or finding a higher paying job
  • Starting a side hustle
  • Investing in a passive income stream or semi-passive income stream (e.g., real estate, income-producing websites, information products and digital products with automated business models such as books sold via Amazon, e-books, courses)
  • Creating multiple streams of income

When it comes to increasing your income, there is no one right solution. The key is to find an approach that works for you, uses your inherent skills and experience in a way that pays a maximum dollar for minimal headache and hours worked, and ultimately that you are comfortable with. Keep in mind that unless an additional income stream, or an approach to increasing your primary income stream, leads quickly to FIRe then avoid additional income streams that significantly decrease your quality of life.

By focusing on increasing your income, you can make FIRE a reality!


When you’re heading towards financial independence, you need your money to work for you. We’re interested in long term sustainable investment returns. Money in a savings account won’t grow at the necessary rate.

Within the most common, most reliable, and most popular investments that pay passive or semi-passive earnings (real estate, financial investments such as stocks, index funds, crypto), starting businesses, etc.), nearly every method can work as a way to invest, ultimately making your money grow into more money. However, I highly recommend devoting deep education to each topic and gradually investing as you learn more, and diversifying to ensure your money is as safe as possible and exposed to as little risk as possible.

Image courtesy of the Times of India

Avoiding “Non-Beneficial Debt”

Non-beneficial debt, or the kind that does not serve our financial position well, is one of the biggest hurdles for people aiming to FIRE, and the best way to avoid debt is to not get into it. Granted, there is “useful debt” that when used wisely builds assets, pays income larger than its expense, and creates financial opportunities in the long term, such as student debt, or a mortgage on a house that is wise to buy.

On the other hand there is “non-beneficial debt” such as credit card debt accrued by living beyond our means, or student debt taken on for a job that shows little potential of a salary commensurate with its costs.

What is diversification and why is it important in FIRE?

Diversification is the act of investing in a number of different assets to reduce the risk of losing money. When you invest in a single asset, your risk is high because if that asset performs poorly, you lose all your money. However, when you spread your money across a number of different assets, your risk is lowered because some of those assets will perform well even if others don’t. This reduces the overall risk of losing money and protects you from experiencing a financial loss.

When it comes to financial independence and retiring early, diversification is one of the most important things you can do to protect your money. Diversification is one of the best ways to ensure your money is as safe as possible and is a key component of any successful FIRE strategy, avoiding the risk of losing it all once you’ve untethered yourself from other sources of income.

What are the best investment vehicles for diversifying investment according to FIRE Principles?

  • Real estate investment and rental properties
  • Financial investments
  • Stocks
  • Index funds
  • Crypto
  • Starting physical businesses
  • Lifestyle Businesses
  • Digital Businesses (Profit producing content websites, e-commerce)

Where can you learn more about each of the major types of FIRE investments

The best starting points for understanding FIRE, what it looks like in reality, and and understanding how current events are affecting current FIRE practitioners is Reddit.

Specifically these subreddits

– r/FIRE

– r/FatFIRE

– r/LeanFIRE

Additionally, a competent and independent personal financial advisor should be the first person you consult with about your own financial health and before making any major financial decisions.

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Early Retirement

Philosophy and Mindstate

Variations on FIRE: Lean FIRE

Lean FIRE is a variation of the FIRE movement that focuses on living a frugal and modest life in order to achieve financial independence more quickly. The goal is to reduce expenses as much as possible so that you can save more money and reach FIRE sooner.

FIRE, or Financial Independence and Retire Early, is a movement that encourages people to save money and invest so that they can retire early. The goal is to reach a point where you no longer need to work for money, allowing you to retire whenever you want. There are a number of different ways to achieve FIRE, but the most common approach is to reduce expenses and increase income.

While both FIRE and Lean FIRE focus on achieving financial independence, there are a few key differences. FIRE focuses on saving as much money as possible and investing in a way that provides sustainable returns, while Lean FIRE focuses on reducing expenses to the point where you can save more money and achieve FIRE sooner. Additionally, Lean FIRE typically involves a more modest lifestyle, which can be less expensive overall.

Why would someone choose Lean FIRE over FIRE?

Lean FIRE is similar to FIRE in principle: teach people how to save more money by reducing expenses and increasing income.

However, lean FIRE differs from FIRE because the goal of Lean FIRE isn’t actually financial independence; instead, its main focus is quickening progress towards FIref by living frugally (i.e., not partying excessively or buying every.

Essential Elements to Analyze in your life as you plot your path to FIRE

What are your reasons for FIRE: What do you want and need financial freedom and freedom of time for?

FIRE Movement FAQ

What annual income do you need based on your annual living expenses to achieve FIRE? Based on your current lifestyle, how much do you do you need per year to retire early?

– How much money is enough money to retire early? A rule of thumb in the FIRE community is 25x your annual income is enough money to retire early. With moderately conservative investments in broad spectrum Index funds — stocks and bonds, most commonly VTSAX and VBTLX — a 4% return and a little extra to account for inflation with 25x your annual income invested. This approach would deliver a retirement income equal to your current annual income and will sustain you indefinitely.

– What retirement accounts should you maintain to achieve FIRE? If you have an employer that has retirement accounts and savings matching, leverage that opportunity. Additionally, any government related opportunities to receive a savings match or tax deferment (IRA, Roth IRA) should be leveraged. Last, a reliable, low fee investment account in low risk, broad spectrum low fee stock and bond funds with reliable yields is essential – I recommend Vanguard and researching the VTSAX and VBTLX stocks.

Next Steps

  • Define your financial goals. What does achieving FIRE (the amount you’ll need to save) and what you will do when you retire or achieve financial independence look like to you?
  • Aim for a position of financial stability, wherein your expenses do not exceed your income and you have zero debt.
  • Learn as much as possible about personal finance
  • Dig more into the FIRE principles and methodology to understand which methods work best for you, then execute on those options
  • Connect with other FIRE practitioners. Reddit is one of the best places for conversations on FIRE, Lean Fire, and Fat Fire, with each having its own subreddit for deep conversations, sharing tactics, and sharing wins.

My Experience with Financial Independece and Retiring Early (FIRE)

At this point in my life I am financially independent, though I will likely never retire early. As I write this, I sit at a coffee shop in Bali, Indonesia, updating my website (semi-passive income), checking my investments balance sheet (passive income), and live a low cost lifestyle of beach life, surfing, and the benefits of a geoarbitrage (lowering expenses). Before I left the US I cleared out all debt – no credit card debt, no car notes, and no mortgage. I gave away virtually everything, including my car, and bought a one way flight to Thailand (you can read about that in my “origin story“.

What started as a backpacking trip between jobs, was accompanied by freelancing, smart investing, and embracing the digital nomad lifestyle with a HUGE dose of geoarbitrage.

The current state I have achieved is I can live anywhere in South America or Southeast Asia with my partner off of passive income from investments. However, as a writer (and marketing consultant) I love what I do so I’ll likely never stop. Additionally, the “work” I do, publishing books, writing for my websites, and consulting for small businesses, trickles off plenty of income that makes my “FIRE pile” fatter and fatter, meaning the passive income from investments will eventually be enough for “early retirement” in higher cost places, such as France, northern Europe, and mega cities that generally cost a higher price.


Looking back on my journey to FIRE, reaching financial independence as a 36 year old digital nomad, these are the pivotal events and actions that made achieving FIRE possible.

Avoiding debt at all costs: If I couldn’t pay it off by the end of the month, I didn’t buy it

Invest in Index Funds as soon as possible: I started this strategy late (at 30, leaving my money in cash before I learned about FIRE). If I had begun investing my spare change at ~23, I would have been financially independent and retiring early at ~31 years old

Use geoarbitrage and leverage low cost of living places to maximize happiness: Living in Bali, Buenos Aires, Medellin, and Chiang Mai has increased by happiness 5 times over, while costing 1/3 to 1/4 what my life in Dallas, Texas and San Diego cost. Living in a swanky loft a 3 minute walk from the beach for $500 per month is hard to beat!

Figure out what you genuinely need to be happy, and then apply the knowledge: You don’t need Luis Vuitton and a Rolex to be happy. You may just need a beach, a coconut, and a surfboard like me. In that case, chasing what makes you happy (instead of what is pushed to you by societal standards) may be a much easier and happier path. I highly recommend reading my book (available free) A Little Guide to a Happy Life, Written by You which walks you through defining your desires, and creating a plan to get them – and eliminate the waste.

A Little Guide to A Happy Life, Written By You
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