How to achieve Frugal Life with FIRE movement

Why more people should try to achieve FIRE (Financial Independence and Early Retirement)?

The Definition: Financial Independence, Retire Early (FIRE) Financial Independence, Retire Early (FIRE) is dedicated to a program of extreme savings and investment that allows proponents to retire far earlier than traditional budgets and retirement plans would allow.

FI - Financial Independence: A lot of people associate FIRE with financial independence. And while that's half the equation, it's not all of it.​ My definition of financial independence means that you have enough money that you never have to work again. You can choose to work because you want to, or get bored, but you don't have to.

A lot of FIRE bloggers (and individuals) have a mindset of "well, if I run out of money, I can go back to work or I can supplement". And while that is true in a financial planning sense, I argue that if you have to supplement your savings, you are not truly financially independent.​

RE - Retire Early: When it comes to retiring early, this means stopping work. So, you can be financially independent but not retired. Maybe you don't want to retire because of boredom. Or maybe you simply left your main job, but not work a bunch of odd jobs. Either way, if you're working in some form, you're not retired.

So, when I discuss true FIRE, I'm talking about people that are working towards true financial independence so that they can retire early (and not work). ​There are definitely hybrids of this in every sense, so keep that in mind as we go.

Now, speaking of FIRE, there are two major branches in the FIRE movement. One is called the "lean" FIRE movement, and the other is the "fat" FIRE movement.

In order to reach FIRE, I leave here one strategy left by Melissa, my finance aid friend, it is to get rid of money that cost you money and save money to have money work for you.

Simplified in 4 steps:

  1. Get rid of the money that cost you money:

  2. This is your student loan, credit card debt etc.

  3. Maintain the same life style, or only inflate your lifestyle a little bit, earn extra income, and save it!

  4. This can be physical time spending work like driving Uber, Freelancing work, rent out a room on Airbnb etc. "We ran Airbnb for a short period until we are expecting our first kid. We don’t want strangers in our house anymore. We’ve also tried things like Fiverr, or teaching English online etc. But none of them lasted very long."

  5. This can also be starting your own side business, build a drop ship site, be an influencer etc. "We had two side eCommerce businesses we still ran, they generate enough to cover our monthly spending, but the income can also be volatile, so we try to find other streams of income as well."

  6. This can also be leverage your current job/profession - ask for a raise, a promotion, change your job, obtain a better offer from another company. This is by far the easiest, and quickest way to make extra money! "A lot of people go directly to “other” work (like driving Uber, or start a side business) without asking for a raise at their current job first. I changed my job, and I doubled my salary and had a better work-life balance. My husband secured a competitive offer from an out of state company, and asked his current company to match it. His salary went up over 30%! We would need to drive Uber days and nights in order to earn this much more money. So, do this first before you sign up for Uber/Fiverr or build your eCommerce site. It’s never hurt to ask."

  7. Invest the extra money earned from step 2.

  8. This could be traditional passive income generating assets, such as investing in index fund, rental houses etc. "We had several rental houses in mid-west, where it costs as little as $10K downpayment to get a rental house that returns decently each month. We also invest regularly in index fund."

  9. This can also mean investing in yourself! "This can be the best investment - my husband got a master degree, paid the tuition with the saving we had (no student loan), and he doubled his salary! The tuition paid back itself within 1.5 year! I can hardly find any other investment that can beat this rate of return."

  10. Repeat step 2 & 3 until you have enough money generated passively.

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