[Mornin’ money lovers! I’m excited to share this guest post written by Steve Cummings a.k.a The Frugal Expat. Steve talks about why so many people get their knickers in a knot arguing about FIRE, particularly, the RE part of things. My favorite bit is at the very end where he notes “3 steps to change” — things we can all do to be more open-minded and progress as a cohesive community.]
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Early retirement is something many people desire. In fact, the pursuit of early retirement birthed a whole movement that’s been picking up steam. This “financial independence-retire early” (FIRE) movement started when a group of people decided to get out of their corporate jobs and do what they wanted to do.
Their path to financial independence (FI) follows some basic financial principles:
- Spend less than you make
- Save and invest the difference
- Reduce or eliminate debt
These are simple concepts in theory. Few execute them effectively. Many who subscribe to these principles save 50% or more of their income. They live simply and avoid debt like the plague. Some are frugal to the point of being minimalists.
To me, that sounds like a reasonable pursuit. Many, if not most, personal finance bloggers subscribe to the principles of FIRE. But these principles aren’t just for the FIRE community. We should all be following them to better manage our money.
As the FIRE community has grown, it’s received more public attention. You hear about FIRE in the media a lot these days. Some of the articles are supportive. Many are not. But the argument isn’t about the three basic principles; it’s about the idea of “early retirement.”
It seems everyone has a definition of retirement that leaves no room for nuance, no room for alternative views. Like many modern-day arguments, people are making them loudly, sometimes hatefully. I guess it’s a sign of the times. But it’s troubling to me.
I want to explore why this is happening and see if we can convince people to calm down. Okay, the last part is probably unrealistic. But I’m an optimist, so here we go.
Early Retirement and FIRE Are Not New
Some say the concepts of FIRE started with the book Your Money or Your Life by Vicki Robin and Joe Dominguez. It was originally published in 1992, with revised editions published in 2008 and 2018. It’s sold more than 1 million copies to date.
The authors promote the three pillars of personal finance listed above. Many people take exceptions with parts of the book. That’s not surprising. I can’t say I’ve ever read a book where I agreed with everything. Overall, though, I think the book and its principles are sound.
The Early Retirement Dude traces the history of FIRE back much further. Read this article if you want a detailed walkthrough history up to modern-day FIRE. Mr. ERD spent some serious time putting this together. He traces FIRE back 800 years! Mr. ERD points to the little guy getting access to the capital markets in the early 20th century as the turning point for the modern-day financial independence culture.
Though good arguments are made against it, FIRE is for anyone who wants it. One criticism lodged is that the FIRE movement is made up of white males who made high incomes in the tech world and cashed out and into early retirement. There is some truth to that argument. But nowadays, I find the community to be very diverse in many respects.
The Poster Child for Early Retirement
Pete Adeney gets credit (rightly or not) for launching the modern-day FIRE movement. His blog, Mr. Money Mustache, gained fame and made Pete a small fortune (a slight exaggeration, but close to $500k a year ain’t bad) for his efforts. He was a prolific writer when he started his blog. He wrote an article every day. As a blogger, that blows me away. We’re not talking about short, pithy little articles. We’re talking in-depth articles with incredibly detailed descriptions of financial concepts.
He published his first article on April 6, 2011. Though many bloggers have been around much longer, Pete’s blog took off. He gets millions of page views every month. Pageviews are bloggers’ lifeblood. The eyes on the page are what we all seek. It attracts advertisers, affiliate relationships, and sponsored content to monetize (make money from) our blogs. Though not everyone blogs for revenue, Pete showed the kind of money available to bloggers.
Pete’s success and his telling of his journey to FIRE spurred many Millennials to seek FI. Side hustles became their way out of the “rat race.” Many started blogs. Others invested in real estate. Some used dividend stocks and funds to create outside sources of income. A few do all of these things.
The idea behind Pete’s success is to save 25x your expenses and use the 4% rule to let your investments replace the income from your corporate job. Applying the three principles of spending less, saving and investing more, and reducing debt are the steps to follow to get to your number quicker.
Fast Forward
Pete’s wasn’t the first personal finance blog. There are others who started long before Pete and write with equal or greater expertise. It’s just that Pete found the magic combination to attract media attention and pour fuel on the FIRE (pun intended) that had already started. That fuel gave birth to the current personal finance blogging community.
There are well over 2,000 blogs that list themselves as personal finance-related. Some focus on retirement. Some focus on budgeting and frugality. Others are broader in their content. When I peruse one of the online directories of blogs, I see that most of them are in the Millennial generation. That makes sense. Boomers are too late to pursue early retirement (although not financial independence!). People in their 20s and 30s are the ones with a reasonable chance to get to early retirement. Gen Xers have a presence in the community as well.
At the end of the day, it’s more about getting to financial independence than early retirement. The point is to have a choice. If you save and invest enough money to replace your current employment income, you have more choices in your work life. You don’t have to feel stuck in a dead-end job or one that feels pointless. Financial independence offers freedom! That’s the attraction to the movement as I see it.
Many who achieve FI choose to continue in their full-time jobs. Though they may not be ideal, those jobs provide the income that allows them to get to FI much more quickly. They don’t necessarily hate their jobs. Some do. But not all.
Those who reach FI and decide on early retirement seem to be the target of all the vitriol thrown around these days.
The Early Retirement Controversy
Sorry for the somewhat long-winded history and background. Some of you may not know this history. Others may not care. My goal was to help you understand why early retirement has become controversial.
To me, it lies in the definition of retirement. When we look at the “traditional” definition, retirement means that you worked at your job(s) as the means to the end goal of retiring and not working any longer.
Historically, the U.S. was an agrarian society. From there, it moved to industrial. With the onset of international trade, many manufacturing jobs moved overseas, where cheaper labor and less restrictive regulation made it easier to do business. That moved the country into more of a service and technology-based economy.
Throughout the agrarian and industrial periods, it was common for workers to stay at their jobs until they retired. Most didn’t have to worry about retirement income. In the old days, pensions provided a guaranteed income to retired workers. The higher your salary level, the greater your pension income. If workers lived by the three personal finance principles, they retired with low expenses and little to no debt. They had savings to take care of emergencies. Although some did, retirees didn’t need to work in retirement.
A Generational Gap on Retirement
So when the Boomer generation and those before them think about retirement, that’s the picture they have. And when they now see people retiring 20 to 30 years earlier than they did, it makes some of them angry. Some Millennial bloggers stir the pot when they disparage workers who stayed in their jobs, even though those jobs weren’t ideal, to provide for their families. Those older workers saw the sacrifice as something they needed and were willing to do.
So for many of the FIRE naysayers, it’s not the early retirement in and of itself. It’s the perceived attitude that goes with it. It’s the arrogance of some in the community.
How Workers With Lower Incomes React to FIRE
Another vocal group who finds fault with the early retirement crowd are those in the lower-income brackets. Many of these hard-working folks feel like early retirement is out of reach. They’re scraping by on incomes that barely support their families. In many cases, both mom and dad work. They’re paying for childcare for their younger children. They live modestly, saving what they can.
When they read blogs talking about how anyone can FIRE, they bristle. These writers validate the view that many personal finance bloggers are out of touch with the general population. When they write about saving 50% of their incomes and living on a food budget of $250 a month, they can’t conceive of some readers’ reality. They write about moving from a high-income area to a more affordable place. (The term for that is geographical arbitrage.) But here’s the thing.
Geographic arbitrage is expensive. If you’re living on a lower income in a high-expense area, it’s hard to implement that strategy. The concept is great. Many people benefit from it. But when people on modest incomes hear others saying how all you need to do is move to a lower-income area, they bristle. Again, they feel that the bloggers have left out the nuance and minimized the risk.
To be blunt, it pisses people off to hear bloggers shame people for not doing something they think everyone can do. In my opinion, it’s the shaming nature of some of these personal finance bloggers that brings out the anger in so many.
A Small Story From My Life
I never thought retiring in my early 40s would be possible. Working a job for the next 30+ years was the expected norm according to my parents and others around me. … until the day I saw a post from Mr. Money Mustache and wondered if I could do this, too.
What I really wanted to do was to travel the world. You see people on Facebook, in magazines, or on TV just traveling the world. Most people think that if you have lots of money, you can travel. That is, people who are retired can travel. But what about me?
As a Millennial, I am different from my Boomer parents. I think I can retire early and be able to live my dream life even before I retire. It wasn’t until I took a step outside of the U.S. that I saw this was possible.
Moving to Taiwan gave me the ability to live in a low cost of living area while saving more than 50% of my salary, which I put toward traveling and saving for financial independence. I met my wife in the process and we have designed our life for adventure, travel, and saving money.
This is controversial to a lot of people — not only Boomers but also Millennials.
I wrote a post called Those Money Haters Are Gonna Hate, in which I described how I took a lot of heat for my social media musings that most people have the capacity to amass $1 million. It amazed me that so many people had strong, opposite opinions about the social media post and were 100% against me.
Financial independence and retiring early is not for everyone. We all need to design our life the way we want to. As for me, if I want to travel the world, save 50% of my salary, and achieve financial independence by 40, that is what I will do!
3 Steps to Change the FIRE Controversy
Here are three things we can all do.
1. Be More Open-Minded
In life, there will always be people with whom we disagree. Rather than try to understand them, it’s popular to try to discredit them. When that doesn’t work, it often moves to personal attacks. Racism, sexism, and many other “isms” come out of closed minds. We have opinions about things we often have little experience with. Our opinions get shaped by what others say or by what we’ve read on the internet.
How about we try to learn about the opposing view; try to understand why that view exists. Are there things we find in common? What personal experiences do we have in common? Why does the other person have such strong beliefs?
Rather than blow off with a visceral, emotional response, how about taking a step back to see their side.
2. Be Less Judgmental
Living in society can feel like a contact sport these days. We think our viewpoint is the only one that matters. When our minds are closed (see point 1 above), we become more judgmental and can go on offense. But berating someone for something does not motivate them to listen to us. In fact, it does just the opposite. It makes them dig deeper into their belief and do the exact opposite of what we think they should do or think.
Those of you married and reading this know exactly what I mean. When I challenge my wife on something she’s doing that I think should be done differently, how likely is it she’ll do it the way I think it should be done if I’m confrontational about it? Right! The chances are slim to none.
When someone feels judged, they are not going to listen to the person doing the judging. They are certainly not going to change. Follow the advice in #1 and see if the results aren’t different.
3. Allow Space for Opinions/Decisions Different Than Yours
I’ll apply this one specifically to the idea of early retirement. Just because you and I may not conceive how it’s possible doesn’t mean it isn’t for others. The criticism of those who retire early often comes out of jealousy. That’s a trait that rears its ugly head far more than it should.
The comparison game is a losing game. There will always be someone who does what we do better. They will have more stuff, prettier husbands and wives, better jobs, and many other things. That doesn’t make them bad people. They’ve chosen the paths they’ve chosen. We’ve done the same.
I always try to remind myself we don’t live in a Facebook/Instagram world. You know that world, right? The perfect house, the two beautiful children, the happiest of families. The internet is a wonderful place to create our fantasy worlds. Don’t be deceived.
There’s much more to the story than what we see on Facebook.
Early Retirement Doesn’t Mean a Perfect Life
Everyone is fighting some kind of battle. We all have scars we don’t want anyone to see. People who choose early retirement are no different. Though their lives may seem perfect, they are not. Cancer can strike them just like anyone. Divorce can, too. Their investments can tank just like yours and mine. Their real estate investments can go sour.
My Thoughts on FIRE
As someone trying to seek early retirement, I realize my way of doing things isn’t the right way for anyone else. I strive to live my dream life through travel and saving, but I also see that many others may not have the same views as I do. Using geoarbitrage has helped me, but it may not be right for everyone else. We need to be open-minded to many different ways things can be done.
I try to take the advice of a very good friend who says, “Don’t let an incident become an indictment.” Translation — Don’t let the actions of a few become an indictment of an entire group.
Let’s be part of the group that brings positive change. Let it start with us, no matter what anyone else does. Be more open-minded, less judgmental, and leave room for views that differ from ours. It may not change the world. But it sure can change ours.
Now it’s your turn. Where am I off base? What would you add? What’s your experience with those who retire early?
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Steve Cummings is the founder of the personal finance blog The Frugal Expat. As a traveler and expat, he has learned a lot about how to save money, live frugally, and invest for the future. His mission is to help people in saving, investing, and reaching financial independence!
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Great question! All of the principles of FIRE are sound, well-reasoned pieces of advice. I think people get angry because they see retirement as some distant dream, not an attainable goal. Trying to tell them otherwise is a mindbender.
And damn–I had no idea MMM generated close to half mil a year on the blog!? Well deserved, as his site is still a huge turning point for many, as it was with you.
You can lead a horse to water, but you can’t make it pursue FIRE :)
Curious, are you a white male too? If so, you may be perpetuating the stereotype.
The lack of representation or at least acknowledgement of others in the FIRE space is disappointing. Other FIRE blogs started before MMM.
Hey Derek! Actually many peeps don’t realize, but this BudgetsAreSexy blog started a few years before MMM came along. (Not sure if it was started as “FIRE” specifically, but definitely a turning point for so many readers who began their financial freedom journey!)
I think part of the controversy stems from bloggers not being forthright. For example, I followed the frugal woods for years and they would blog about how they work in non-profit jobs and save 70% of their income. Well, it turns out their income might have been a quarter of a million dollars! If my family had that income we would have been able to do the same. Instead, I was comparing myself to someone I thought was in line with my income but wasn’t and I had no idea.
Hey Aras! Ooooh – reminds me of a post I read once about a kid retiring in his 20’s and the NY times featured them in an article! Turns out, a few weeks later, everyone found out he actually inherited the majority of his money. It’s sad, because he did have great financial advice to share and was practicing the right principals… but he didn’t share the full story. Maybe he was embarrassed?
Anyway, I’ve met a lot of bloggers at conferences and meet-ups, and I honestly believe most are being as transparent as possible. If I ever win the lottery, get a baller job, or inherit a bajillion dollars… all you readers will be the first to know! haha.
Well written! The FIRE community is a force for good, but many balk at those who don’t follow their spending habits. I was guilty of this in the past, taking frugality too seriously and assuming my way was right. However, I wasn’t. Everyone has their way, and if some value certain things that make you uncomfortable, get over it! It is their money, after all. Example: MMM just bought a hot tub… many in FIRE would say that is a cesspool where money goes to die. For him, he values it and has the money to spend.
Additionally, after working as an advisor serving those with 401k plans, I realized that FIRE is impossible for everyone. As you discussed, those with lower incomes do not have the means to save. Telling them to work harder and find a better job is arrogant at best but is often what the FIRE community preaches. FIRE is not something everyone can achieve, but the 3 pillars are something that can help everyone.
I have some friends here in Los Angeles (more like acquaintances actually) that are quite wealthy. They roll around in Porsches and whatnot, which sometimes makes me uncomfortable because that’s not the way I would live if I had their type of money. But, they have certainly earned their wealth, and it’s not my place to judge at all!
Thank you for your work helping people with 401ks… I hope people are contributing to get their max, at least!!
I read an article somewhere (sorry can’t remember where) that a dollar saved could be worth as much as 21x as much decades later. If that isn’t incentive to save, I don’t know what is! My husband bought into his company stock several decades ago. It was doing well at the time and would split and then double, so he would ask himself when he wanted to buy something, is this worth it when comparing it to money that could be doubled in stock. He lived at home, had no rent, and left his paychecks uncashed sometimes for weeks. lol When I was a teenager, my parents gave me an allowance and I was responsible for buying my own needs, deodorant, etc. Both our parents were lower income and frugal and it helped both us when we got married. Early retirement is possible by many factors, one of which is our spending habits. He works in retail and is surprised how many employees buy snacks from the vending machine when they can walk a few steps to buy things on the grocery floor and save a LOT of money. I worked at a hospital and was surprised by how many people bought lunch at the cafeteria. Perhaps they are too tired to cook? But some of them were not making very good money. Not to be judgmental, but when adding up how much you save by packing your own lunch or even buying your own snacks, it is quite a huge chunk. But double it or 21X it, and you are amassing a great amount of wealth. Like I said, I know there are many factors involved; everything is not cut and dry, this is just one example.
Great article! If we were all just a little more focused on our own goals vs comparing ourselves to others the world would definitely be a better place! Everyone has different objectives in life and it is really no one’s place to judge others. My husband and I recently started aggressively targeting FI. Many friends and family members did not understand our choices at best and aggressively opposed our choices at worst…thank goodness they don’t have to live with our choices!
Congrats on aggressively pursuing FI!… In my experience, your friends will come around, slowly. And if they don’t, that’s OK too. Like you said, tey don’t have to live with your decisions, and you don’t have to live with theirs :)
Steve! Joel! Thanks for combining epic forces to write and publish this article!
It was great read, interesting, and informative.
That 800 year stat about the origins of FIRE is too cool. Thanks to Mr. ERD for that one.
And as for a couple of the comments so far in this comment section – I’d take them with a grain of salt :) It’s always good to get feedback. And these folks are giving feedback in earnest. But that’s doensn’t require you to take that feedback as gospel.
Thanks again and take care!
-Jesse
Yeah, the 800 year old FIRE stuff is pretty cool. Reminds me of The Richest Man in Babylon. Slowly growing wealth, climbing out of debts, earning your own freedoms etc. The principles have been there forever :)
Good to see you on here, Steve!
I remember one of my friends in college tried to tell me, “yeah.. make sure to enjoy college as much as possible and don’t stress, you’re gonna be working 40+ years after college”.
I IMMEDIATELY quipped “I’M not gonna be working for 40+ years”. He didn’t know what to say. Early retirement will be awesome!
Thanks David!
I have friends and relatives talking about working 40+ years. I figured if you work hard enough to save and invest, you can have the freedom to do whatever you like.
Living that dream life or even that retired life seems like a fantasy to some, but to others, it can be a reality. We have to make a decision to pursue our dreams.
What’s weird about FIRE to me is that it’s overrepresented by people who seem to just retire….in order to write blogs about retiring. That makes it hard to take seriously their financial advice and their insistence that they no longer need to make money. It also makes the devotees seem dull. My husband calls the FIRE blogs I read “the dreary people” and it’s not because he’s a spendthrift – it’s because no one ever seems interested in writing novels or learning another language or joining the peace corps or learning judo with their spare time. I guess it’s possible that the really interesting early retirees are too busy to bother with blogs, but it makes FIRE blogs about net worths and savings rates a real slog. I mean, if you have enough money to meet your needs it’s not that complicated to save more of it.
I actually like that MMM never posts and hangs out building houses all day. That’s what you would do if you had outside interests and had gotten your feelings about money off your chest.
I can definitely see how it seems this way! But… have you ever been to a Camp FI or any ChooseFI meetup groups? They are filled with a bunch of early retirees and FIRE peeps who are *not* bloggers. In fact they are a really weird/fun bunch of overachievers with interesting hobbies, different backgrounds and various aspirations. Many are trying to figure out what’s “next” in life.
Totally agree about MMM spending his time elsewhere from the blog. But I also understand it truly brings him joy which is why he comes back to it now and then :)
I do not ascribe to any of the following, yet I ask the questions:
– Is there a concern of early retirees not adding to Social Security or Medicare through traditional means?
– Are the human emotions of jealousy or contempt rearing?
– Is something not understood when collectively looking at a group versus an individual?
Great questions Ginzu! I’ve wondered the same, particularly about the social security and medicare contributions form wages.
Excellent article! I really do think your ideas about being less judgmental and realizing that FIRE may be nearly impossible for some people is very important. I am 41 and 5-8 years away from FI. I am still undecided on what I will do when I reach FI. I really like my job and enjoy the social interactions at work. For me, right now, its more about the choice.
My experience with ingrained assumptions about a career mainly comes from comments from the Boomer generation. In particular, recently I heard someone (early 60’s) say something along the lines that family head “doesn’t have a choice and just has to work until they get Social Security.” I think culturally that is just what is expected as the norm, as you mention in your article.
I guess for me, I think if I do retire from working in a traditional job in my mid-late 40’s I probably will keep that to myself mainly. I will probably tell people I am a consultant working from home, etc. which would be true because I plan to keep working on multiple income streams in retirement anyway. Is it wrong that I feel like I might hesitate to tell people I’m retired (if I get there?)
Hey GG! I guess it depends on the way you tell people. Since the word “retired” has different meanings to everyone, you might want to explain your position in other words. Personally, I wouldn’t hide the truth or mislead people into thinking you are working when you’re not… Whenever I hear people say they’re a “consultant” and give a very vague description of what they do, it prods more questions than answers. :)
Thank you for this teaching and think it’s real too. There are so many choices to started. But early retirement can be a good thing and also can be bad thing. Sometimes it becomes scary because still there is many things are pending due to less timing.