FIRE

Why Financial Independence is Important to Me

If you haven’t heard about FIRE yet, read this post first.

So I’ve been thinking this past week about why I believe in and aspire to be financially independent. I guess the big attraction of financial independence for me, is having more choice. I can choose where to work, live, eat and travel, without having my choices constrained by my next paycheck. If I’m in a bad situation, I want the finances behind me to leave and not look back.

For me, the goal of FIRE is not necessarily about early retirement (although I may choose that), but the ability to make choices from a position of strength.

I think part of FIRE philosophy has been instilled in me by my mother, who, through her own hard work and smart investments, has been financially independent for most of her life. She made the decision to keep working because she wanted to, not because she had to. I believe financial independence is a worthwhile pursuit, because you buy back your time.

Yes, I may have to learn to live with less and find fulfilment in the simpler things in life, but I’ll be able to choose how my time is spent. In an ever-changing world full of chaos and uncertainty, the key truth is that it all comes to an end. We don’t know when or where or how, but we do know that it’s the only certainty in our lives.

So what am I going to do with my one chance at life?

I’m going to embrace change, step outside of the box, finish my studies, travel overseas, learn as much as I can at work and most importantly, start putting money aside in order to be financially independent within the next 20 years. Big goals with lots of planning — but there’s no second take, so why not!

To those out there who have told me that it’s a ridiculous goal to strive for and who have pointed out the many reasons why it’s not possible for XYZ reason — I’m quite aware that it’s a big goal. I understand that inflation may rise leaving me with less purchasing power, I understand that we may be in a bear market for an extended period of time and I also understand that if I have a family down the track the numbers will have to change. But even if I don’t reach financial independence by 40, I’m going to be in a much stronger position financially than I would without pursuing this path.

With this goal, evening failing to achieve the desired outcome will set me up in a much better position.

So what’s the worst case scenario if I don’t reach FIRE?

  • I have a solid understanding of my own approach to money and investing.

  • I know how to create and manage my budget.

  • I have enough saved up to ensure that I never run into financial difficulty if I get sick or lose my job.

  • I have learnt how to plan and work towards my financial goals.

  • I am comfortable speaking about money with friends and family.

  • I know how to invest and grow my money.

To me, the benefits of striving towards this ambitious goal are just as important as actually reaching it, so let’s catch FIRE! As I continue on my FIRE journey I plan to share what I learn and discover here, as a record of my discoveries and growth. Please feel free to share your FI questions or stories with me, I’d love to hear from you!

Until next time,

Kate

Discovering the FIRE Movement in Australia

FIRE stands for Financial Independence, Retire Early (or as some people like to call it, FIOR - Financial Independence, Optional Retirement).

It’s as much of a mindset as it is a way of life or an aspirational goal. Over the last year, I discovered this movement in Australia (which is already quite large in the US), and have dived deep into learning as much as I can.

FIRE is all about increasing your savings rate, consuming less, pursuing happiness and having the financial freedom and flexibility to choose if, how and when you work. FIRE is not necessarily about frugality (although some pursue it that way) and retiring to do nothing all day. The retirement part is optional, but by being financially independent you have more opportunities to direct your life and make decisions out from a position of strength.

When you achieve Financial Independence you gain the ability to live off of your personal finances, without the requirement of a salary to maintain your lifestyle. A common aim of the FIRE movement is to have 25x your annual cost of living invested in a diversified portfolio, with a safe annual withdrawal rate of 4%.

I guess the big attraction of financial independence for me, is the feeling of empowerment and self-sufficiency it can give you. For me, it’s not necessarily about early retirement (although I may choose that), but the ability to make choices from a position of strength and give back to the world.

My discovery of FIRE came from reading through copious amounts of online content and clicking from site to site. To get you started I have listed below some of my favourite FIRE resources from around the web (which I will add to regularly).

Here are some of the best FIRE resources from around the web:

And some more resources that are specifically Australian:

And of course some Podcasts (via iTunes):

And finally some of my favourite financial independence-themed books at the moment:

As I continue on my FIRE journey I plan to share what I learn and discover here, as a record of my discoveries and growth. Please feel free to share your FI questions or stories with me, I’d love to hear from you!

And as I read in the April 2018 edition of Money Magazine Australia - ‘Don’t make your life about money. Money is a means to an end, not an end in itself. Don’t get lost along the way.’

Until next time,

Kate