Amelia and I started following the Financial Independence, Retire Early (FIRE) movement around the same time we decided to sell everything we owned back in Denver and move abroad.
We found the simplicity of the FIRE philosophy to “save more, earn more, and invest more” to be easy, refreshing, and attainable.
The ultimate goal of FIRE is to achieve financial independence and leave the traditional workforce far earlier than the standard retirement age. That part was especially appealing to us several years ago.
However, as we’ve moved through the process of paying off more than $60K in debt and maxing out our retirement accounts for the past few years, we’ve come to realize that none of the commonly accepted FIRE strategies fit us perfectly.
Based on some negative media coverage of the FIRE movement over the past year, it doesn’t appear to work for a lot of people, especially those who are struggling to put food on the table every day.
That sparked the idea that we need a new type of FIRE strategy that’s more flexible to current life circumstances, as well as changing future goals.
Before I dive into what we think is the best way to fund your ideal lifestyle, let’s take a deeper look into the FIRE movement.
What is the FIRE Movement?
FIRE is all about financial freedom and having the choice to work on your terms.
It’s not a product or service that’s for sale (it’s not like Crypto). It’s a savings methodology that helps you take control of your finances.
It’s not strictly about early retirement, although that’s the focus for a lot of people. Instead, it’s more about the freedom to choose what you do with your time (the only thing that diminishes every day and you can never get back).
Here is an overview of the three main pillars of the FIRE movement:
#1 Save More Money
Most of us waste FAR more money than we realize. The first step in FIRE is to reduce your daily, monthly and yearly expenses as much as possible by canceling subscriptions you don’t use and reducing or eliminating expensive habits you don’t need.
One Starbucks run per week adds up to several hundred dollars a year in money down the drain (in your bathroom).
Eating out several times a month can add up to thousands of dollars per year.
That car payment, insurance, tags, taxes, fuel, maintenance, parking, tickets, and car wash can add up to $700,000 or more during a lifetime!
And don’t even get me started on smoking! This unnecessary, life-threatening habit literally sends financial liberty up in smoke!
We downsized by selling our house and moving into a one-bedroom apartment when we still lived in Denver. We also sold a car and cut our other expenses, but it wasn’t enough. We still had nothing left to save at the end of the month.
That’s when we committed to moving abroad to a lower cost of living country (we chose Ecuador), which allowed us to immediately cut 70% off our monthly expenses.
This FIRE strategy is called Expat FIRE for obvious reasons, and it worked like a charm for us. We were able to pay off all our debt in 3 years and we’ve saved more for retirement in the past 3 years than we saved during the previous 15 years combined!
#2 Earn More Money
Even though saving money is the first step, it’s still easier for most of us to earn $1,000 more than it is to save another $1,000 by cutting expenses.
You’ll eventually reach a point of diminishing returns when there just isn’t any more to save, or your life is so miserable from counting the cost of every bean and grain of rice on your plate that you can’t take it anymore.
If you’re scraping by and barely making ends meet (or going into debt every month) on the money you already earn, the only solution is to earn more money.
Here are a few options to put more money in the coffers each month.
Earn More from Your Job
If you have a job, you can ask for a raise, or at least ask what it will take to get a raise. That might mean working toward a promotion with a higher salary.
Despite a tight job market, a lot of employers are still hesitant to pay existing employees more to do the same job, so you might need to look for a new job, either in the same company or at a different company.
Get a Part-Time Job
Getting a second (or third) part-time job is a good way to earn more money if you have the time and energy available to do it.
That sounds like a nightmare and a recipe for burnout to me, but it works for some people.
Start a Side Hustle
The approach we prefer is to start a side hustle that allows you to be your own boss, work from home in your spare time, and offers unlimited income potential that might eventually replace your main job with more than enough to execute your FIRE strategy.
Thankfully, that’s never been easier with the proliferation of online income opportunities that you can do from anywhere. This is the approach Amelia and I took.
See Also: Earn Online Income
How We Earned More Money
When we moved to Ecuador in 2017, Amelia still worked full time for a company based in Denver. I had a bank of web design clients that paid me about $800/month in recurring managed web hosting fees.
During the first year of our channel, we earned almost nothing. During the second year, we earned around $10,000 and after 5 years, we’re earning 6-figures per year.
Amelia still works part-time (about 10 hours per week) for her “real job” back in Denver. However, we’re now earning more from our “side hustle” than we did from Amelia’s full-time job and my web design clients COMBINED back in 2017.
#3 Invest More Money
The final step in the FIRE strategy is to invest the extra money wisely in (mostly) stable, broad-market index funds that track major stock market indexes like the S&P 500.
DISCLAIMER: This information is for educational purposes only and is NOT intended to be financial advice. Please do your own research and consult a financial expert before you make any investment decisions.
Exchange Traded Funds (ETFs)
The major benefit of investing in ETFs is that if one stock on the index tanks or even goes bankrupt, the other stocks help shore it up so your investment doesn’t fluctuate as much.
There are other indexes that are tracked by a number of ETFs, such as:
- Vanguard Total Stock Market Index Fund (VTI) – tracks the entire US stock market of nearly 4,000 stocks
- Invesco QQQ Trust (QQQ) – tracks all the stocks on the NASDAQ stock exchange (mostly tech)
- iShares Russell 2000 ETF (IWM) – tracks the Russell 2000 index (the smallest 2,000 stocks out of the top 3,000 US stocks)
- SPDR Dow Jones Industrial Average ETF Trust (DIA) – tracks the 30 large-cap stocks on the Dow Jones Industrial Average
Other ETFs track things like foreign markets, precious metals, and bonds, or specific sectors like real estate, tech, retail, commodities, environmental causes, etc.
There are thousands of ETFs that will allow you to invest in things that are important to you while minimizing your risk.
Some people are more ambitious and want to take a more active role in their investment strategy, so they buy individual stocks, usually Blue Chip stocks like Amazon, Tesla, Apple, Meta, Coca Cola, etc.
The downside to this approach is if the company misses its earnings estimates or something bad happens to the company or the entire sector, your stock value could plummet.
We actually own several individual stocks that we bought before the stock market correction in 2021 and they still haven’t recovered.
We prefer to minimize our risk and we don’t like spending a lot of time thinking about our portfolio so we’re going to stick with ETFs, at least for now.
The bond market has taken a beating since the financial reset of 2022. When the Fed raises interest rates, the face value of bonds decreases because investors are more interested in buying new bonds at the higher rates than old bonds at lower rates.
It’s a complicated system and beyond the scope of this article. However, bonds are typically more stable than stocks so the older you get, the more you might want to have invested in the bond market.
How you choose to invest your savings is a personal decision and based on many factors. Your goal should be to have a diversified portfolio with some stable investments and some higher-risk growth investments. Then leave it for 10 years or more.
Dollar Cost Averaging (DCA)
One final note about your investment strategy is to implement Dollar Cost Averaging. This means that you invest at the same time every month regardless of what the stock market is doing.
When your investment is down, you’ll buy more shares at a lower price. When your investment is up, you’ll buy fewer shares at a higher price. In the end, your investment value will be balanced out by normal market fluctuations.
There’s an old investor manta that states, “Time IN the market always beats timING the market.” Avoid the temptation to wait for the price to fall before buying because it could just as easily go back up and you’ll miss the opportunity to buy low and average the cost.
We have investment accounts with Charles Schwab and Vanguard. We’ve heard good things about Fidelity and there are several other brokerages you can use to manage your investments.
Calculating Your FIRE Number
Your FIRE number is the amount you need saved to live comfortably without needing to work anymore. It’s based on your annual expenses, including housing, food, healthcare, leisure activities, etc.
The standard approach is to multiply this figure by 25, which is the number of years you can expect to be retired and assumes a 4% annual withdrawal rate.
If you retire at 60 and live to 85, you shouldn’t run out of money as long as your annual expenses don’t dramatically increase, or your investment values don’t plummet.
For example, if your annual expenses are $50,000, your FIRE Number would be $1,250,000 (25 x $50K or $50K / 0.04).
Some financial analysts now argue the annual withdrawal rate should be closer to 2% to be more conservative, which would double your FIRE Number.
For example, $50,000 / 0.02 = $2,500,000.
If your plan is to continue working at least part-time into your 70s (like us and a lot of people) while living abroad in a low cost of living country like Ecuador, your FIRE Number will be much lower because you’ll have fewer years in “no work” retirement and your annual expenses will be lower.
Personally, we feel comfortable with the 25 year/4% annual withdrawal calculation so that’s what we use. That means our conservative FIRE number is roughly $30,000 x 25 = $750,000. We still have a long ways to go, but we’re making progress.
FIRE Strategies: Exploring Different Paths to Financial Independence
The FIRE movement has blossomed into various strategies that cater to different lifestyles, income levels, and financial goals. Here are the most popular versions of FIRE:
Individuals pursuing Barista FIRE save enough to retire but continue working in a low-stress, part-time job or side hustle. This strategy helps cover some expenses and offers social engagement while prolonging the life of their nest egg.
WiFIRE is similar to Barista FIRE, but instead of working a traditional part-time job, you work online. This can be through remote jobs, gigs, or influencer outlets like blogging, podcasting, or running a YouTube channel.
- 7 Easy Side Hustle Ideas (Non-Technical Skills)
- 10 Best Ways to Earn Passive Income (while you sleep)
Coast FIRE means you’ve saved enough early on that you don’t need to contribute further to your retirement savings. You keep working, but only to cover current living expenses. Without the need to contribute more to your retirement savings, you might decide to take a lower paying job doing something you enjoy more.
Fat FIRE is for those who wish to maintain or enhance their current lifestyle in retirement. It requires a larger nest egg, allowing for more luxurious spending in retirement. If your current annual expenses are $50,000, you might want to double that (or more) for the Fat FIRE Number calculation.
Lean FIRE involves achieving FIRE by cutting expenses and living a minimalist lifestyle. It requires careful budgeting and a lifestyle often well below the average cost of living.
Expat FIRE involves retiring to a country with a lower cost of living. This can greatly reduce living expenses, stretching your savings further while immersing you in a new culture. We think this option will have the single biggest impact on your FIRE goals.
Slow FIRE is about taking your time on your way to financial independence. This strategy promotes incorporating elements of your dream retirement into your current life, balancing living for now with planning for the future. It might take you longer to reach your FIRE Number, but your life will be more enjoyable along the way.
MoFi (Moderate FI)
Similar to Slow FIRE, MoFi emphasizes the journey to financial independence over early retirement. It promotes balanced living while slowly building wealth over time.
Hybrid FIRE blends multiple FIRE strategies. For example, you might amass a large nest egg (Fat FIRE) but choose to live in a country with a lower cost of living (Expat FIRE) while still working online (WiFIRE).
FlexFIRE: A Customized Approach to Financial Independence
What made sense when we started (Lean FIRE), wasn’t as necessary after we moved abroad (Expat FIRE) and started earning consistent income from our YouTube business (WiFIRE).
Then, when we paid off all our debt, our strategy changed again when we wanted to increase our quality of life by spending more on rent and travel (Slow FIRE).
Now that we have more stable income from a variety of passive income streams, it has changed yet again (Fat FIRE).
After looking back over our years of implementing the FIRE strategies, we realized that our flexible approach to FIRE was missing from the list.
What we now call FlexFIRE incorporates aspects of Hybrid FIRE by combining different strategies based on what works best for the individual. However, FlexFIRE goes further by assuming continuous income from part-time work (Barista FIRE) or online income (WiFIRE) rather than a traditional “no-work” retirement.
It’s a highly adaptable approach that underscores the importance of living well now (tomorrow is not guaranteed) while still focusing on planning and saving for future financial independence.
Most importantly, it remains flexible to changing life circumstances and encourages you to reevaluate your strategies regularly based on what’s important to you and where you are on your FIRE journey.
FlexFIRE not only reduces the total amount you need to save for financial independence, but also encourages you to keep your mind and body active so you live a longer, healthier, more meaningful, and more Unconventional Life.
The FIRE movement offers a tantalizing alternative to traditional work life, highlighting freedom and flexibility over the standard 9-to-5 grind.
Whether you choose Barista, WiFIRE, Expat, Coast, Fat, Lean, Slow, MoFi, Hybrid, or FlexFIRE, the goal is to make your money work for you, providing the freedom to live life on your terms.
The beauty of FIRE is that it’s not about retiring from something—it’s about retiring to something. And what that “something” is, is entirely up to you.
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Hola todos! Welcome to my author bio page! Let's see. Where to begin... I grew up in the country on a lake outside a small Kansas farm town. As soon as I could, I got the hell outta there! Since then, I've lived and/or worked in Kansas City, Washington D.C., Denver, San Francisco, and Ecuador. I started and sold a dotcom, wrote a book about it, started a YouTube channel, and now I write a lot. Amelia and I have embraced the Unconventional Life and we want to help you do it, too!