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FIRE Movement Meaning
The FIRE movement stands for "Financial Independence, Retire Early." It’s a lifestyle and financial strategy that has gained popularity among those who want to take control of their financial future and achieve the freedom to retire well before the traditional retirement age.
The core idea is to save and invest a significant portion of your income, typically 50-75%, to accumulate enough wealth that the returns from your investments can cover your living expenses indefinitely.
FIRE Movement Tips: 5 Key Ideas
Save Aggressively
One of the core principles of the FIRE movement is saving a large portion of your income. Aim to save at least 50% of your earnings. This may require significant lifestyle adjustments, but it’s crucial for accelerating your path to financial independence.
Invest Wisely
Investing is essential to growing your wealth. Focus on low-cost index funds, which provide broad market exposure and have lower fees compared to actively managed funds. Diversifying your investments can also reduce risk and increase your chances of achieving consistent returns.
Reduce Expenses
Cutting unnecessary expenses can dramatically increase your savings rate. Evaluate your spending habits and identify areas where you can cut back. This might involve downsizing your home, driving a more affordable car, or adopting a frugal lifestyle.
Increase Income
Finding ways to boost your income can significantly speed up your journey to FIRE. This might include asking for a raise, changing jobs, starting a side hustle, or investing in your education to enhance your earning potential.
Stay Motivated
The journey to FIRE can be long and challenging. Setting short-term goals and celebrating milestones along the way can help you stay motivated. Engaging with the FIRE community, whether through online forums, social media, or local meetups, can also provide support and inspiration.
FIRE Movement vs. FI Movement
Although this post includes the thoughts of JL Collins on the FIRE movement, what he reinforces is that he is passionate about FI, not FIRE.
While the FIRE movement emphasizes both financial independence and early retirement, some people prefer to focus solely on financial independence (FI).
The FI movement is about reaching a point where your investments and savings generate enough passive income to cover your living expenses, giving you the freedom to choose whether or not to work.
For couples, deciding between FIRE and FI involves evaluating your shared goals and priorities. Some may find the idea of early retirement appealing, while others might prefer the flexibility of financial independence without the pressure to retire early.
When One Spouse Wants FI, and the Other Does Not
When one spouse is enthusiastic about pursuing Financial Independence (FI) and the other is not, it can create tension. The key is to find common ground and work as a team. Here are some practical steps to help you navigate the disconnect:
Start with a Conversation
Openly discuss why FI is important to you. Share your dreams and how achieving FI could benefit both of you. Listen to your partner's concerns and reasons for their reluctance.
The best environment for this conversation is on a Money Date. Dr. McCoy shares a great tip for how to begin a money date in our Marriage Toolkit. You have access to her explanation in the free Marriage Toolkit preview.
Find Compromise
Look for ways to incorporate elements of FI into your current lifestyle without drastic changes. For example, you might agree to save some of your income or cut back on specific expenses.
Set Shared Goals
Focus on financial goals you both value, such as paying off debt, saving for a vacation, or building an emergency fund. Achieving these smaller goals can build trust and demonstrate the benefits of a more intentional financial approach.
Educate Together
Start by watching a documentary. The two I recommend are Minimalism, which is now free on YouTube, and Playing with FIRE. Read books or listen to podcasts on FI together.
Learning about the movement as a team can spark interest and provide a deeper understanding of its principles.
If your spouse isn't as passionate about FI as you, you can still incorporate some strategies and retire earlier by compromising.
FIRE Movement Books
There are excellent books on the FIRE movement that can provide valuable insights and practical tips for couples. Here are my favorite two.
"The Simple Path to Wealth" by JL Collins breaks down complex investment concepts into easy-to-understand advice. We hosted JL on our podcast, which you can find embedded at the bottom of this post.
“FIRE For Dummies” by Jackie Cummings Koski simplifies the process into easy to follow digestible steps couples can use to gain financial independence. We also hosted Jackie on our podcast, which you can find embedded at the bottom of this post.
FIRE Movement Health Insurance
Using HSAs to gain financial independence
Health Savings Accounts (HSAs) can be an effective tool when saving for retirement within the FIRE framework. HSAs offer a triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free.
For couples, maxing out HSA contributions each year can build a substantial tax-advantaged fund to cover healthcare costs in retirement. Additionally, once you turn 65, HSAs can be used for non-medical expenses without penalty (though you'll pay income tax on those withdrawals, similar to a traditional IRA).
This flexibility makes HSAs a versatile component of your overall retirement strategy.
Health insurance after retirement
One critical consideration for those pursuing FIRE is health insurance. Retiring early means you may not have access to employer-sponsored health plans, and navigating the health insurance landscape can be challenging. Couples need to plan for this significant expense to avoid financial pitfalls.
Options for health insurance include the Health Insurance Marketplace, where you can purchase individual or family plans, though costs can vary widely. Some couples may qualify for subsidies based on their income level.
Another option is health sharing ministries, which are not insurance but can cover medical expenses in a community-driven model.
Additionally, some part-time jobs offer health benefits, providing a potential bridge until you qualify for Medicare.
FIRE Movement Podcast Episodes
About Jackie Cummings Koski
Jackie Cummings Koski, a single mom of one adult daughter who retired as a millionaire at the age of 49. She is the author of the recently released “F.I.R.E. for Dummies.” Jackie earned CFP® and AFC® credentials; and went back to school to get a master’s degree in financial planning & financial therapy from Kansas State University.
Show Notes
00:00 Introduction
01:19 Where did your passion for financial independence come from?
03:42 What is the FIRE Movement
08:52 The difference between FI and FIRE
12:15 Can you walk us through the mindset and psychology of FIRE?
17:17 Was there a moment while you were building up to your FIRE movement that you realized how incredible of an experience the journey was for you?
21:07 How do you organize your finances for FIRE?
29:14 Make the company pay the 401k fee.
30:58 What are your favorite hacks to increase your savings and investing commitments?
34:21 What strategies do you recommend to reduce your debt, expenses, and taxes?
46:14 Can you FIRE with debt?
49:45 What is one piece of simple and actionable advice you want to leave our listeners with?
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About JL Collins
JL Collins is the author of "The Simple Path to Wealth," a highly regarded personal finance book that simplifies investing and financial independence. With a background in the corporate world, Collins turned his focus to helping others achieve financial freedom through his blog and book.
JL Collins is regarded as the godfather of the FI movement.
Show Notes
00:00 Introduction
01:32 JL helps our listeners understand what the FIRE movement is and the different types of FIRE movements.
02:47 JL shares ideas for listeners who might not want to go all-in on the FIRE movement but want to apply some of his countless lessons
05:35 FU money
08:43 Why a house is a lousy investment, and other pitfalls of spending money you don’t have.
11:53 JL’s approach to eliminating the chains of debt.
14:15 The most important rules of the road for couples who want to save more.
17:04 Defining and explaining the power of investing in index funds
23:01 How to manage money in a way to have less stress and more freedom in your life.
29:54 Conclusion
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Subscribe to the Modern Husbands Podcast for winning ideas from experts to manage money and the home as a team. 2023 Plutus Award Finalist: Best Couples or Family Content
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