How Much Life Insurance Do I Need?
The Role Life Insurance Plays in Your Finances The purpose of life insurance is to...
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“You’re not the boss of me!”
You can almost see the defiant 5-year-old trying to establish his independence.
You can probably still feel that way deep inside where your childhood self lives. Especially when your boss tells you to…
I used to have a supervisor who would say to us…
When you experience this sort of thing daily, it becomes crystal clear that something has to change, and if it happened the following day it wouldn’t be quite soon enough.
You start fantasizing about firing your boss.
The term FIRE, standing for Financial Independence, Retire Early, starts taking on a second, more viscerally satisfying meaning.
In “How Soon Can You Reach Your Personal FIRE Point?” I present a matrix that tells you how many years it will take for you to become financially independent, based on the fraction of your income that you save, and the fraction of your income you want to live on in retirement. Here are some examples:
As you can see, if you haven’t yet saved much for retirement, firing your boss tomorrow isn’t in the cards. In fact, you’d have to become ultra-frugal for years and years, if not decades.
As stories shared online show, there are real-life costs for being frugal enough to retire super-early. People report turning down close friends’ wedding invitations, skipping date nights, not going on vacation, etc. Others put off plans of buying a home, or in extreme cases even having children.
To increase their income instead of just cutting spending, FIRE adherents often take up a side hustle, such as:
What these people often don’t realize is that these side hustles and gigs are really another job. One requiring you to deal with some awful clients, where you need to learn to market and compete. In many online gigs, your competitors may live in cheaper countries, so they keep underbidding you.
In general, cutting decades off your FIRE journey requires that you give up enjoying life now for a long time. Realizing it isn’t worth it, many throw in the towel after months or years of misery and stress.
If you’re like most people, denying yourself everything that makes life enjoyable for years isn’t sustainable. Similarly, working 70+ hours a week isn’t sustainable for years and decades. This even if you’re well compensated, let alone when starting a side hustle without much to show for it.
So, does that mean your quest for FIRE is doomed?
Here’s what you should do.
If your top priority is becoming a couch potato as soon as possible.
If instead, your top priority is making a difference in the world without being trapped in a job that holds no meaning for you:
If you know yourself to be one of the few who truly can commit to ultra-frugality along with the likely result that most of your relationships will wither away, go for it.
If you know that you’re not willing to put most of your relationships and life on pause and on the line, be more strategic.
In “Shhhh… The Dirty Little Secret about Money,” I talk about a few possible side hustles.
There are of course other options, including Uber, AirBnB, and various freelancing websites.
The best way to make your pursuit of FIRE sustainable is to:
Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.