[1]I achieved financial independence in seven years and retired early six months after that. Documented the journey, too. From initial plan, through battling FIRE1 [2] demons, to finally ending my career and starting a new life.
I learned a lot along the way – but I appreciate you haven’t got seven years to relive it with me.
So let’s distill down that knowledge into a single capsule post that you can swallow and digest to smooth your own path to FIRE.
To begin at the beginning
Managing my mind was probably more important than managing my finances. So I’ll cover the psychological aspect of FIRE first, and in more detail than the money side.
If you think FIRE is only for the rich or young, know that my salary flattened out at mid-five figures and my partner’s at low-five.
We didn’t have kids. But we were facing other headwinds:
- I was past 41 before I resolved to attempt FIRE.
- At age 35 I didn’t have a pension nor a single penny of the mortgage paid off.
- We didn’t scoop an inheritance nor did I have a lucrative side-hustle.
The point is you can achieve financial independence and have the option to retire early without a six-figure salary.
You don’t need to make any big investment bets, either. A low-cost, diversified passive investing [3] strategy can do the trick.
I didn’t do anything special bar stick to the plan.
One final warm-up point: you’ll find plenty of great insight in the reader comments if you follow the links to the original posts.
Many in the Monevator community are financially independent or heading for FIRE. You’ll discover interesting voices, answers to questions, and encouragement from readers along the way.
FIRE psychology
The financial side of FIRE is well-documented. The difficult part is staying the course once things cut up rough, as they inevitably will.
Origin story
Something sets you off on the FIRE track. Perhaps a horrendous work situation, or the realisation that life on the hamster wheel isn’t for you.
My financial origin story [4] is rooted in one of the biggest economic shocks of the past century:
Plugs were pulled. Projects terminated… We stopped hiring. We let people go. My inbox started to fill up with CVs from ridiculously overqualified people looking for refuge.
I wasn’t getting any younger and digital disruption was spreading through my industry like ash dieback. It was adapt or die time.
If I moved hard and fast enough then I could afford to be unlucky, ill, or old – the kind of hand that gets dealt to ‘other people’.
The 2008 recession made me realise that my own departure was inevitable. I decided I’d rather be in control of the timing.
FIRE plan: the first cut
Your initial plan probably won’t be your final plan. It just needs to get you off the launch pad.
For me:
The plan is to be financially independent in a decade. I can see now that it can be done. And I can see how it will be done.
The thought of it is making me tingle. This will be the biggest and most rewarding challenge of my life.
My first-cut FI plan [5] did change, but the direction of travel remained true:
- High savings rate: I consistently hit 70%.
- Moderate income goal: this was super-lean at the start. I’ve had to fatten it up somewhat.
- Utilising the UK’s tax breaks, and especially making the right call on ISAs vs SIPPs [6].
- Modest expected investment returns [7].
- Realistic Sustainable Withdrawal Rate (SWR): I started with a cautious 3% SWR. Further research told me that a higher dynamic SWR [8] was possible, but not the naive 4% rule [9] popularised on the Net.
(See the FIRE investment planning section below for more.)
You don’t need to know everything to begin. Just enough to get yourself on the front foot.
Everyone makes mistakes along the way, but the biggest mistake is to listen to eejits who warn:
- You’ll be knocked over by a bus tomorrow.
- Communists will take over the day after that.
- The financial system is a giant Ponzi scheme.
Or insert suspiciously dramatic neurosis de jour here. Or world weary fatalism there.
For all the ‘end of the world as we know it’ millenarian [10] paranoia I’ve heard, it’s my own financial situation that’s been transformed.
Early doubts: quarter of the way there
Okay, fast-forward to two years down the road. All the initial excitement has gone. With a long journey still to go, this leg felt like a horrible grind [11]:
It feels like I’m rowing solo across the Atlantic. The planning is done, the course is set and all I gotta do is row.
Behind me are hundreds of miles of flat, grey ocean. There’s nothing on the horizon. In front of me, are thousands of miles of flat, grey ocean. There’s nothing on the horizon.
It’s hard to tell I’m moving at all.
That post focused on the mind games I used to keep hope burning. It also included links to others in the community who inspired me.
Later on, I wrote a stronger post on the mind hacks [12] that kept me motivated. This was boosted by some suggestions from the Monevator massive.
Doubts dispelled: three-quarters of the way there
More than five years in, and things look very different [13]. I didn’t realise I’d be on the brink of FI in one more year. But the scent of freedom was in my nostrils:
The FI dream feels real. The way ahead looks like a downward glide. Is it me, or are those milestones spaced a little closer together now?
With so much achieved, many of my financial worries had disappeared. My brain is moving on to think about how I need to reinvent myself for a new post-work life.
The upside of FI is that I’m less worried about a financial deluge sweeping us away. We can’t defend against every risk. But at least these days we live in a house on stilts.
The downside is that now I’ve freed up that brainspace, it’s as if I’ve nipped down to the anxiety exchange to see what other troubles are available.
Psychologically, I needed to think about what my FIRE life would look like.
Some high-profile members of the community had crashed and burned on quitting work. The FIRE movement no longer glowed with naive enthusiasm.
Typically, the British answered the relentless beat of the US optimism-drum with sombre notes. But it was still useful to learn that FIRE doesn’t automatically lead to a land of rainbows and unicorns.
The Investor, The Details Man, and I raked over some of the burning FIRE issues in a debate [14]. It helped clarify my thinking.
Financially, I rapidly rebalanced my portfolio from a risky equity skew by adding more government bonds. I wanted to try to avoid everything I’d gained being smoked in one big crash.
One year later that move helped me keep my mind [15] during the frightening coronavirus crash [16].
Financial independence was postponed by the losses of March 2020.
Few of us predicted what happened next.
Financial independence day
Just 18-months after my previous post I declared FI [17].
I hit my number. I hit my number. Sweet Holy Jesus, I hit my number! [Falls to the floor and sobs with joy].
It wasn’t time to hit the work eject button yet. I felt like I’d climbed a mighty peak and needed to admire the view, while watching out for altitude sickness:
I’ve watched too many others in the FIRE community quit their jobs, move to an exotic new location, and apply for gender reassignment all at once.
I’ve been sleeping well. KPIs don’t disturb my dreams. I’m not weighed down by that fat-suit of dread that I wore during the Global Financial Crisis.
My work stress has fallen away, now that I have the option to walk.
Being able to walk away makes walking away much less urgent.
So now I have enough to live on, how am I actually going to live?
A post on FIRE fears [18] was my answer to that question. It lays out some of the reasons why FIRE can fail, followed by my personal prescription for making the most of the opportunity.
Leaving work
This was the moment of truth. Six months after I’d hit my number, and I was champing at the bit to start a new life. I resigned and left my old world [19].
Just don’t mention the ‘R-word’!
In my mind’s eye, my last day was an Apocalypse Now of burning bridges as I dropped truth-bombs from my Stratofortress of freedom.
Financial independence demons
Many people fall by the wayside on the road to FIRE. They burn out, lose faith, or mistime the market, among other calamities.
Make no mistake, FIRE is a long and lonely path. I’ve previously tried to head off some of the demons [20]:
Some corners of the internet make financial independence sound like a short sprint to the finish line, blowing kisses to well-wishers along the way.
In reality, it’s a slog. The danger of a breakdown cannot be discounted.
FIRE investment planning
Monevator is primarily about investing. Let’s have some quick links to posts that will help you hit your FI number.
Passive investing guidance
Simple, effective, manageable, and proven – why passive investing [3] took over the world, if not the headlines.
How to create an FI investment plan
How to put together an FI plan [21] that fires you off the starting blocks.
Building your asset allocation
The how and why of asset allocation [22] construction.
Portfolio protection in a crisis
UK market history shows what works during depressions, World Wars, stagflation, and runs on banks. Ignore these lessons at your peril [23].
Risk tolerance
Half of YouTube is demanding you leverage up these days. Here’s some guidance [24] to help you estimate how much risk you can stomach.
Ideas for funds
Picking cheap tracker funds [25] – why you should keep it simple [26] and how [27].
Choosing your SWR
What you really need to know to choose your SWR [28]. Also, how you can improve [29] this lynchpin metric.
SWR: FIRE special
A deep dive [30] on choosing a global portfolio SWR that takes low yields into account. Plus FIRE time-horizons that last from ten to 50-plus years.
Maximising your ISAs and SIPPs
A UK-centric series on exploiting your tax shelters [31] to hit FI.
The ultimate FIRE calculation
This piece shows you how to hook everything up [32]. Plug in your target FI number and income, together with tax, ISAs, SIPPs, investment contributions, expected returns, investment fees, State Pension, SWR, and time horizon.
Personal inflation
This is hardly ever discussed but your personal inflation [33] experience will have a big bearing on your FI fate.
Saving to increase quality of life
There’s no money to invest without savings. But rather than make painful sacrifices, save in line with your values [34] instead.
Living a meaningful life on less
One of the founding fathers of the modern FIRE movement – Jacob Lund Fisker of Early Retirement Extreme [35] – wrote a guest post for Monevator on living a frugal lifestyle [36].
Jacob is inspiring. He’s still the most innovative voice in the FIRE community, in my opinion. I hope this reference will help more people find his work.
Decumulation
Accumulation is a tried-and-tested recipe. But living off your portfolio for decades is a whole other ball game. It’s still relatively new.
Did the pioneers of FIRE get their sums right? That story is unfolding every day and now I’m part of it, too.
Here’s my real-life decumulation strategy [37] and back-up plans [38].
(Also, we’ve kicked off a model decumulation portfolio [39].)
I’ll let you know how I get on.
Take it steady,
The Accumulator
FIRE updates
FIRE: at three months [40]
FIRE life [41] vs old life
Six months in [42]
Nine months in [43]
One year anniversary [44]
FIRE: cost of living crisis [45]
Mrs Accumulator [46] has her say
- Financial Independence Retire Early. [↩ [53]]