Can't get yourself FIREd? You can still have a LIFE.

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FIRE stands for financially independent, retire early. The movement continues to grow, with retirees in their 20's through 40's. It has caught on because it is unexpected - we don't picture retirees being so young. Yet it is entirely possible and there is an ever-growing number of blogs and books that prove it. The typical profile of someone who has achieved FIRE:

  • Graduated from college with very little or no student loan debt

  • Earned $100,000+ per year with benefits

  • Saved 50%+ of their gross income by knowing where every dollar is going

  • Is typically single, married without children, or married with 2 or fewer children (I haven't seen any with more than 2 kids, but with the increasing number of FIREs, I am sure there will be some!)

  • Is typically burnt out on their current job and would prefer to be done with working instead of finding more rewarding employment

Obviously, this is very hard to achieve if you are earning minimum wage in a job without health insurance, have a mountain of student loan debt, or a large family. Still, there are a lot of positive things to take from the movement. For example, it is good to be reminded that you have choices. You don't have to do what your parents did or your neighbors are doing. Some FIREs live full-time in an RV, stopped eating meat, started cooking at home, etc. Many say they don't feel deprived after these changes - they simply changed a habit and are just as happy with the newer, cheaper way of doing things.

There are also risks. For those without children, what if they end up having kids and doubling their annual expenses?  Are they prepared to forego soccer and birthday parties to stay within their annual budget? Did they factor in healthcare costs correctly or purchase long-term care insurance? Are they prepared for the next bear market? Most of the profiles I have read are of people who have retired recently, so we don't know the success of their plans given uncertainties. We can choose to take the best of what we have seen and make it more universally attainable. So even if you can't get FIREd, you can still have a LIFE.

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Live a more balanced life today

FIRE assumes a balanced life occurs after the retirement date. Don't wait a decade or more for that goal - life is too short. We created a plan for a client showing he could work part-time until age 40 so he could spend more time with his young children now, while they were home. This is the opposite of FIRE, but that solution made more sense to him. Evaluate what you can do today to achieve a more balanced life, whether it is carving out more family time or finding a different employer.

Imagine you are financially free

The goal of FIRE is to be financially free - so imagine you are retired. What would you do every day considering your family, friends and social network are busy during the week and have limited funds? After traveling the world and tinkering with your hobby, is there something you could do every day without getting bored? Can you make money doing it? We created a plan for a former stay-at-home Mom to go back to nursing school. She didn't need to work, she wanted to. She loves her new career and can see herself doing it for a long time.

Focus on what you can control

A good chunk of our monthly expenses are fixed: housing, insurance, and utilities are a few examples. FIRE user forums are filled with people who downsized or started biking to work. That is great, but for most people obsessing over every dollar leads to fatigue and they lose motivation for tracking expenses completely. Instead, focus on what you can control - the discretionary expenses. You can use our free FLEXCash system or whatever works for you, but the simpler it is, the more likely you are to stick with it.

Educate yourself

When people say they want to make a career change, we recommend they speak with someone who is currently doing that job. Learn about their daily activities, their work-life balance, and see if they are earning a livable wage. Similarly, if you want to retire early, talk to someone who actually did it. Were the sacrifices worth it? What would they do differently? If you retire early and end up needing or wanting to return, it may be difficult to re-enter your industry after a prolonged absence.

Keep reading FIRE stories if you enjoy them, but don't define success as being retired. Retirement isn't a race worth winning if you aren't happy in the end. Whether you choose to get FIREd or to get a LIFE, have a money roadmap in place so you know where you're going.

A Meaningful Resolution

For most of us, the start of a new year is the signal of a new beginning and an opportunity to start fresh in different areas of our lives.  I heard someone on NPR say that it is not just the new year, but also at the start of a new month, a new week and even on days off that we take the opportunity to reflect on our lives and set goals for the future.   My resolution has been the same for the past few years: to slow down and remember to appreciate every day.  We really have no idea what the future holds, so it is important to find that balance between preparing for the future and living for today.  Here are some cases I saw in 2015 which re-inforce this:

I met a woman in her 60's.  She told me how her mother said there was no need to save when she was younger because she planned on leaving her a sizable inheritance.  The mother is now in her 90's and has paid an astronomical amount on end of life care (medical needs, home aids, etc).  There is no inheritance to speak of and the daughter is not able to retire anytime soon.  

An otherwise healthy person in their 60's died of a heart attack.  She was a meticulous planner and saver and expected to have another 30 years ahead of her.

A man in his 50's was laid off and unable to find a job, essentially pushing him into early retirement which his portfolio cannot sustain.  He is working to develop new skills and / or to start a business that can help offset some of his expenses.  It is not where he planned to be, but he is having fun with the new challenge.

One couple tried for baby #3 and ended up with twins!  They are very thankful and feel blessed, but they are now dealing with the reality of how 4 children is different financially than 3.  Priorities are shifting and they are taking one day at a time.  

A young woman developed symptoms of a chronic condition that will be putting her on disability.  Thankfully, she has insurance, but her income obviously won't be as much as her full-time salary.   

Can Money Buy Happiness?

You may be surprised to learn that money CAN buy happiness - but only to a certain extent.  This Wall Street Journal article outlines some interesting findings: (1)  Life experiences give us more lasting pleasure than material things.   A once-in-a-lifetime trip still gives  you something to talk about long after your favorite gadgets end up in a landfill.  While it is important not to go overboard with any purchase, I try and encourage clients to make room in their budget for a monthly date night or an annual vacation.

(2)  Avoid the temptation to join the rat race.  The more money we make, the more money we spend.  When our salary increases, we may buy a bigger house in a better neighborhood, put our kids in private school, or invest in other luxuries.  These changes lock us into needing that extra income which may or may not be easy to sustain long-term.  They also expose us to an environment where we see other things we want that require more money - welcome to the rat race.

(3)  Spending on other people makes you happier than spending on yourself.  Decide how much you want to spend each year on gifts and charity.  Don't forget to also update your estate planning documents to list the beneficiaries of your wealth upon passing.

(4)  Get a shorter commute.  The article cites a study that reports that people with longer commutes reported lower overall life satisfaction, all else being equal.  Look at the option to move closer to work, so you can reduce the gas bill and spend more time with your friends, family, pets and hobbies.

Here are a couple more thoughts that are not from the article, but from the book Hector and the Search for Happiness by Francois Lelord.

5)  Making comparisons can spoil your happiness.  Don't compare yourself to your co-worker or friend.  If your life works, that is all that matters.  It is good to be motivated and ambitious, just don't focus on measuring yourself by others successes.

6)  Many people only see happiness in their future.  Don't let that be you!  Take time to reflect on your life daily and be thankful for what you have in the present.