Financial Independence Retire Early Explained – Using The FIRE Movement 💰

Updated : Sep 06, 2019 in Articles

Financial Independence Retire Early Explained – Using The FIRE Movement 💰


Financial independence retire early is a growing concept that I want to make sure that you are aware of now Don’t worry, if you’re turning your head, like what the hell is he talking about? Because I didn’t know much about it at first either if you were in the process of paying off debt Then don’t dismiss taking this time to learn about this right now because once you get your debts paid off This could be the natural transition for you in this video I wanted to gather as much of the basic Information as I could about the topic of fire so that I could save you some time looking around everywhere For what? You actually need to know to understand the basics as you watch this video Let me know in the comments below if this sounds like something that you may want to Eventually pursue then. Let me know why or why not I’m very curious financial independence retire early is also referred to as Fi re fire So why do I think this concept of fire is only going to get bigger as time goes on as more and more younger Generations realize that we were sold this shitty bill of goods When it comes to going to college to climb that corporate ladder only to waste our lives away doing Meaningless shit in a cubical for 10 to 20 vacation days a year The idea of fire will become something a lot more people like you and I will look at as a real option going forward Financial independence and early retirement have everything to do with first getting out of debt And yes that means your student loans that car payment and Possibly the house that you own that might be a little bit bigger than you actually need the reason is because this concept doesn’t work very well if you’re aggressively trying to save and invest on one end of the spectrum while you’re also hemorrhaging money so the interest that you’re paying on the other end like your but once again for that reason This would be the natural transition for you. Once you become debt free. So pay attention Let’s start out with the most important part fire is the acronym of two concepts The first one the FI is financial independence the second two letters Are e is retire early or early retirement? I like early retirement better. I think they probably should have just stuck with f IE r because it looks cooler, but whatever I don’t make the rules one thing to know don’t go googling fire because unfortunately Actual fire is way more popular research result I’ll have to admit that once you get really deep into the fire world Some people take it really really Personally when it comes to the difference between financial independence and early retirement as long as you understand the overarching Concept then you’ll be fine, and you’ll understand What it’s about from what I’ve gathered some people switch back and forth between being financially independent and being in early retirement You’ll see once we dig deeper into the meaning of both of them. So hang on for a minute So what is early retirement? Well, basically if you were in an early retirement, you are considered to not be working or not working for money It’s just like if you were retired at 70 years old but at a younger age someone who is an early retirement has enough money to live off of every single year and Sustain a particular lifestyle that they’ve saved up for and invested for now I would consider someone in the early retirement who is taking an extended period of time To travel or someone who is enjoying playing horseshoes with their friends on a regular basis if that’s even still a thing Volunteer work is another one or even someone who is enjoying their time working on a hobby that they enjoy so then what’s financial independence? To be financially independent might be seen as the ultimate goal think think of it like someone that has a few money that is still working and Making money a few money doesn’t necessarily mean that they have to have tens of millions of dollars it has to do with having enough money between investments and savings just to say sustain the The lifestyle that they choose the basics around financial independence has to do with having the option to choose Whether you want to work for money or not, for example, you may have enough money to retire early But you decide to continue to work your current job making money because you would just enjoy the work someone else who is also financially independent is someone who has enough money to retire now but chooses to switch careers to work a lower pay job because that hits Them right in the fields by working at that job now Let’s go into switching back and forth from financial independence and early retirement The reason they refer to it as fire is because some of the people will move back and forth between both terms financial independence and early retirement You may be financially independent and still work at your but then decide that you were kind of over it So you want to retire early to do some traveling in Southeast Asia? And then while you’re traveling emid, you may have discovered something new that you’re passionate about. You’re like, oh, I love this new thing So you want to share it with the rest of the world? So what do you do? You create some sort of product or service to sell at that point You’re moving from being retired to financially independent because you are back to making money So why would you want to be financially independent or retire early when the average person thinks about retirement? We think about working into will we’re seventy years old collecting Social Security having enough money to enjoy the last few years of our lives not working and Banking on the fact that our bodies and minds are still functioning enough to actually enjoy that time fire is the same idea Except speeding up the process so that you can do more enjoyable things for a longer period of time at a younger age What have really gathered from this is that being financially independent is about doing things that give you more energy in life as opposed to Doing work that sucks all of that energy out of you to really grasp the understanding think about those days that you leave work and you were absolutely drained Physically and mentally so much that all you want to do is just lay around and veg out and not do anything else I know you’ve had these days I’ve had these days in the past too Some of us may have a lot more than others. Which kind of sucks I might be one of you were eight nine ten Eleven hours at your full-time job only to be forced to spend the hours and days that you are Working just to recover from those hours spent working Your full-time job doesn’t only take away from your time while you were there It takes away from your time while you’re away as well How messed up is that for example? let’s do some math now be prepared to pick your jaw up off the floor after you see these numbers if you make $30 per hour for eight hours of work then you make $240 per day agreed hashtag math but not if you account for everything else that goes into You getting to and from work you getting ready for work and the time that you spend recovering from those draining days of? Work so that’s eight hours of work One hour for one one hour of travel time one hour to get ready and we’ll just call it three hours per day to mentally Recovery if you’re even able to do that in three hours Which most people want don’t? throw up yet, because I’m gonna go over some more numbers if we take those hours into account and you’re actually only making $17 per hour and if you work more than in those eight hours Then you were actually making less than that per hour You would actually be making less than $17 per hour If your particular situation calls for more time to be spent on things that have to do with your job Oh, yeah And this isn’t even counting your recovery time on the weekends or any other things that have to do with your particular situation That I haven’t named listen. I don’t want everything we talked about to discourage you Please don’t walk into your job and demand more money right away or just quit That would be bad for everyone and I do not want to take ownership of that let this concept of financial independence and early Retirement sink sink in for a little bit for yourself Think about it on your own talk about it with your significant other or your wife or husband It doesn’t make sense for everyone it really doesn’t I know a lot of people who are who really enjoy that the work enjoy the work that they do and They have no desire to ever pursue a life of fire And that is okay pursuing this future takes a lot of questioning and second-guessing of your actions in the present It’s not easy to do the things to become financially independent and retire early If you are not going to be all-in, I truly believe that anyone on any income can do it But you first have to start with paying off all of your bad debts and becoming debt free keep that in mind Let me know in the comments down below if you liked this video and want me to make more videos on this topic make sure to smash that thumbs up button and pick up your free copy of the debt-free prep work but link is down in the description or some work around my stupid head I’d love to have you as a subscriber as well so we can start getting you to the point where you are financially free Thank you so much for watching. I shall smell you later friends videos

65 Comments

  • Found the FIRE movement about a year ago when I stumbled upon Mr. Money Mustache's website. Completely changed my life.

  • I remember you mentioning FIRE on one of our calls. The idea of retiring abroad has been on my mind. Seems like it could be a good way to keep expenses low and stretch retirement dollars. Need to do more research on the idea, but it's enticing.

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  • How can someone on an income making $11 an hour retire early? I'm 25 and I would like to retire before I'm 40 but it feels like I need to be making 6 figures before I can even consider reaching that goal.

  • If you can’t tell by my channel name, yes, yes I’m all in on FIRE! Lol

    Very well done! New subscriber, I’ll have to binge through your channel!

  • If we can get a national healthcare plan it would go a long way towards helping everyone with FI/RE. I swear some of the Health Insurance monthly premiums are enough to give me heartburn.

  • The other positive of FIRE is it teaches you to live on half your income. I just ran the numbers and between my job of $65k and one rental home of $15k which I own outright, After taxes and retirement contributions, I've been living on $1,675 net per every two weeks for a total of $43,550 per year net. With $1.2 million now saved, I can withdraw $48k per year at the 4% safe withdrawal rate. I ran the tax calculations which in my state there are no state taxes on "retirement income" and after paying taxes comes out to $43,900 or 1,688 net so yes I am technically financially independent but still afraid to take the final leap even though my wife wants to continue to work and will supply health insurance.

  • To most, retirement means sitting on the beach under the sun and drinking cocktails. The truth is far from this cooked-up vision. Retirees get bored or disgusted because of a purposeless life and are far more likely to develop physical and mental ailments. Retire early?—no, thanks.

  • What are the actual steps by steps? If someone doesn't have a good job, pensions, work benefits, how can one really save/invest. Curious to know.

  • I can see building in the commute time but recovery time? That's kind of ridiculous since most people aren't hammering away doing hard labor for 8 hours a day. That being said thanks for the information.

  • This is a very interesting concept for sure. Who wouldn't love to spend their lives financially free, and pursuing their dreams?! However I work in health care, and I've seen first hand the financial devastation caused by unexpected illness and injury. Have you seen the Afford Anything podcast featuring Suze Orman on why she hates the FIRE movement? I made a few comments there that better explain my worried about the people who do this without a huge nest egg and kick ass insurance 😀 I'd love to retire early but would need to be hugely prepared! Thanks for the vid ❤️

  • While I can appreciate many of the savings and thrift principles behind the FIRE movement, the math does not make sense to me for people to be able to retire comfortably in their 30s with only a decade or so of work at average or slightly above average salaries. The stories of these people are usually light on substance, I am guessing that many of these people worked in areas where even though their salaries may have been average, they either made it big on stock options or were in specialized fields where bonuses that were many times their salary were achieved. I tend to think that their stories usually omit this fact.

  • I seen your YouTube video on my really successful Financial friends computer and in his favorites as number one. I'm so glad I looked in his favorites because I love you man. Except he may read this now.

  • F.I.r.e : tip the strainer when you wash dishes before you apply soap. Can catch alot of food. Enough for 7 to 10 meals.

  • I’ve seen this movement continue to grow for years, however, I don’t really understand how people can live like this… All of this saving and gambling seems excessive and irresponsible. The assumption with the 4% rule seems absurd, owning equity always has risk, so it really seems living on edge. I might be being a little harsh but I’ve struggled to comprehend how people can be so blind to the risks in the current economy. Maybe it’s me or something but this movement seems like a good way to get screwed at 70.

  • Step 1: Get a high paying tech job, like a software developer.
    Step 2: Save 75% of your income by eating rice and beans and live in a van. Give up contacts for hipster glasses.
    Step 3: Put everything into low expense ratio S&P 500 index funds.
    Step 4: Hit $1,000,000 and draw only 4% of it to live on every year.
    Step 5: Move to Florida so you don’t have to pay income tax. Six other states have no state income tax, but cost of living and climate in Florida are most favorable for many. Find a retirement community where everyone gets around in bikes or golf carts so you don’t need a car.
    Step 6: Do nothing for the rest of your life. Like, you can’t afford to go anywhere or do anything. Just hang out with old people, I guess. All your friends will be at work.

  • You asked for comments, so here you go:

    A poor summary of the FIRE movement. One less YouTube yackster that I will need to follow!

  • My only disagreement is that I think people should start saving for retirement even with debt. Debt is a mindset and Paying it off usually only is a means to get back into it. #sadtruth

  • I don’t love my job. I love the financial security. Hopes and dreams don’t fund retirements and pay bills. Money does. Until such time as my portfolio income can fund my cost of living I will work as much as I have to in order to up my savings. Compound interest is much more significant if your grub steak is significant. 500% return on $10K is great. But 500% on $200K is life changing.

  • Step 1) Save 1 Million Dollars and quit your job.
    Step 2) Invest in safe bonds that pay 2.5%.
    Step 3) Earn $25,000 per year in interest income.
    Step 4) Get your old job back because $25,000 isn't enough to live on.

  • Well done. Cost of work goes further if you have a wardrobe that is work specific etc. Pretty incredible when you think about it.

  • Jarad, you are a very attractive good looking and intelligent young man. But please, abbreviate a little bit. Come to the point quicker. I don't have the time to listen to bunches of pre-speeches. Sorry, no offence meant. I like you a lot. Thank you!

  • The FI/RE movement is one that I'm apart of. Working hard now so that one day I can choose when and what to work on. Great video, Jarrad!

  • Sure early retirement sounds great but nobody talks about health insurance. Here in the USA you don`t qualify for Medicare until age 65 and buying it on your own is very expensive.

  • I'm not sure I qualify to be considered a Member of the Fire Movement.

    My first day of Retirement was May 31, 2014, ~three months before turning 56. Some might consider me to be too old for "Membership."

    The most debt I ever had occurred in 1988. I bought a house for $86,000 and put $66,000 down. But since my mortgage payment was less than my rent had been, I had a plan (including an interactive amortization schedule on Excel) to pay off my $20,000 mortgage in four years. Then, my Grandmother passed and I "blew my inheritance," the result being that I became mortgage-free two years after buying the house.

    I have always paid my credit card balances in full every month. Some Financial Advisors would consider that to be debt, others don't. They can think what they want. I don't care.

    Regrets? Two…

    In 1988, I had my hand on the phone to buy 20 shares of Berkshire Hathaway stock when it was "only" $3,000/share. Had I done that instead of buying the previously mentioned house, I could have retired at 45 instead of 55.

    With the benefit of 20/20 hindsight, I now realize I should have retired 13 months before I did, at the end of April 2013. It would have been a TERRIBLE time for me to leave. In fact, it is highly likely that my Jerk Boss would have had a second…and possibly fatal…heart attack had I bailed out at that time, especially if I only gave him two weeks notice. Had he had "The Big One," I would have brought a 12 pack of beer to his grave and had my own special Tribute/Ceremony LOL

    I absolutely APPLAUD all who join the FIER Movement. I realized LONG ago that today's consumption-oriented Madison-Avenue-driven lifestyle leads one to fiscal bondage, something I NEVER wanted any part of.

    Great job, Sir. Thank you for getting the Word out and encouraging people (especially young people) to follow a different path, one that is CERTAIN to lead them to a happier Life.

    All Best, Sir!

  • I'm over 40 and on FIRE with my partner, aiming for it in the next 10 years. It's a challenge for us but not a struggle, we will achieve our target. FIRE for those younger than us unfortunately is a MASSIVE challenge but not impossible.
    FIRE with a long term partner and someone you love is the best move. Much easier to achieve FIRE in a sound partnership.
    My FIRE partner is a babe. Love to her.
    Work to be debt free from major financial investments such as mortgages is key.

  • Whether FIRE is appealing to you now depends on whether you love your job now or not. Think about it…

  • The Fire movement isn't some new, radical concept. I took the exact same steps starting in the 80's nd retired comfortably at 42. What is the big deal? Isn't it just common sense?

  • Don't just think of the monetarial aspect of early retirement. Develop a few cheap hobbies or passions to occupy your time, both now & in retirement. Having a lot of spare time with limited resources can be a real drag if you don't consider meaningful fulfillment.

  • Great video! I am motivated by this movement. I just spoke to my financial planner and he told me that I could retire by 55. I just recieved an over 25% raise. I want to retire from the rat race and to do something Im most passionate about. I will sacrifice to get to my end goal.

  • Very interested in the f.i. side and not so much on the r.e. side. This is just a good idea. Who doesn't want the ability to be able to take time off from work and not have to worry about how they are going to pay their bills. With the f.i. side, anyone who is f.i. will be able to take the time off and still be able to enjoy their time off from work.

  • 3:36 that guy on the left owns his own farm, but continued to work for Dunder Mifflin because he was best at it. Then ended up buying his own building.

  • The FIRE movement is irresponsible bc it does not account for risk. Risk in the market and risk in your or your spouses health. In addition to children and aging parents. It’s the worst mistake you can make in your adult life.

  • 6:43 I see what you are trying to do but I don’t exactly agree.

    1) most jobs the 1hr lunch is included in the 8hr workday
    2) people who are “financially independent” still have to take the time to eat lol
    3) people who are “financially independent” should probably still be taking time to get ready for their day. Whatever that is.

  • Man, great video. Now I feel like maybe I should work constantly until I have enough to retire early. But I am so old I'll barely have enough to retire in my 60's as is. I wish I wouldve found out about this stuff 10 years ago.

  • I don't think the FIRE thing makes sense. Well, let me say, some people say that they are on the FIRE program while going crazily into debt, traveling the world, living a wild luxurious lifestyle #travelblogger and doing zero investment, and defending the program and acting like jerks. Maybe that's what I have a problem with 🙂 lol Such as the credit card points thing and using that for travel, I just don't buy that. It cannot exclusively fund trips. It can, however, build debt like crazy. However, the people that are investing 50% plus of their income, and actively working toward the goal, now that is commendable.

  • Does anybody every talk about how to do it? And what you need to do and where you need to save?? It’s all just explaining early retirement

  • My husband and I are in our 50s and we started some retirement but we are far away from retiring. We are interested in figuring out how to increase our retirement and diversify our streams of income. Any advise.

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