 |
| Photo by Mark Duffel on Unsplash |
The reason for such gatekeeping is to fix the blurred line between what the FIRE movement is and what is isn't. The blurred line is caused by the mainstream blogs and podcasts and the million niches within them are actually watering down the FIRE movement for their own marketing and branding purposes in an effort to increase their sales. Hard things in life are hard to do so let's lower the bar and make it easier for everybody else who can't achieve hard things and profit as a result. Fun!
With that I would like to dispel a few myths, crack a few heads and position the FIRE movement as a IN or OUT policy without much of a revolving door. While I think everybody has a unique circumstance when it comes to their personal finance and lifestyle optimization, there are easy and hard requirements to fitting yourself into the FIRE movement in Canada.
This post is the first in a two part series. Link to Part Two is here and at the bottom of the page.
Requirement #1 - You better be saving 50% of your pay
- This isn't easily done but it's the clearest view of the FIRE movement as a whole. Stop wasting your money on things you don't actually care about. Stop trying to impress others with your spending, you've been programmed god damnit! By saving 50% of your income, you've put your money where your mouth is and plan on executing FIRE in the not-so-distant future (max 17 years but probably sooner since you're a switched-on individual). The formula for achieving this is increasing your income and reducing your expenses. It may take a while but keep at it. Rome wasn't built in a day as they say.
Requirement #2 - Reject consumer culture
- Part of hitting that 50% savings rate is looking around you and realising the amount of marketing bullshit that's out there, waiting to lure you in by pretending to meet your needs when really they are just tricking your brain into thinking your wants are actually your needs. Humans don't actually need a lot to get by since we are very adaptable creatures. Unfortunately, that fascinating ability can make us fat, care what others think, and greatly increase risky behaviour because hey - everybody else is doing it, right? Start thinking for yourself as an individual and ignore the ads. What do you want to do? What makes you happy on a weekly basis?
Requirement #3 - You don't need to be a certain age, you need drive
- I think the FIRE movement appears biased towards the younger crowd because people still fall for the 'Sunk Cost Fallacy'. Sissy excuses usually follow like 'I wish I knew this sooner' and 'I'm just too late to the game'. Getting a hold of your finances whether or not you pursue FIRE is always a good idea. I'm not here to decide whether or not the FIRE movement is right for you yet I can tell you with 100% certainty that you need to figure out your financial shit ahead of time. Not doing so will lead to a life of stress and inevitably force you into frugality because a government pension is the only thing standing between you and sleeping under a dumpster.
Requirement #4 - You need to risk it in the stock market
- Increasing your income and reducing your expenses is all good but only 2/3 of the pie, you have to invest your money in the stock market. Interest rates are so low that they will be of little use besides keeping up with inflation (for now). Since you do not possess a crystal ball and therefore the future of the stock market, you need to put a lot of your money into it knowing its a good long term position to hold. PLEASE do not confuse my suggestion here as financial advice. I am not licenced to tell you what to do, I am merely telling you that without investing a significant portion of your money into the stock market as of 2020 is a FIRE deal breaker. Once in drawdown mode, your risk will change, perhaps dramatically and that's A-OK.
Requirement #5 - Start communicating your plan
- Whether it be to an online forum, my comments section or to a financial planner, you need to put yourself and your numbers out there. Feel free to create a fake account like I have (Myricks is not my actual last name). Tell people your plan, even if it looks similar to the rest of the crowd because chances are somebody is going to say "Looking good!" or "WTF are you doing?" Money is probably the most complex topic in the world and everybody has an opinion about it too yet by talking to others, you'll help iron out your values, your decision-making process and best of all, your FIRE number. If everybody stayed silent, the movement would've never took off and you wouldn't be reading this blog if I wanted to stay silent and lurk too. Talk to anybody who will listen, especially those you deem wiser than you on the subject matter.
Requirement #6 - Entrepreneurship-ish
- You can start a blog, podcast or youtube channel about FIRE. You can create a side hustle and drive for car-sharing or figure out your own business. Chances are, you've already thought of something like this or you're doing it right now. Awesome, you are perfect for the FIRE movement because everybody who pursues FIRE is an entrepreneur! Think about it, you're in the business of buying your time with your money. You have to spend time to make money and this requires a savvy individual indeed. It's not easy to hit a 50% savings rate and you've got to be clever and find efficiencies wherever possible otherwise your business is in serious trouble! Capitalise on the opportunities as they are found, hell sometimes handed to you on a gold platter. This takes a smart business person to manage money like this and that person is you.
Requirement #7 - It doesn't matter how much debt you have
- I've been preaching to the choir here and now my fellow FIRE practitioners are sharpening their pitchforks as I type, so I ought to make this a quick requirement before I get skewered. As long as you are saving 50% of your income and using it to pay down your debt, you are on your path to FIRE and no different from anybody else. You can't just snap your fingers and get rid of debt. You start at the exact same starting point as others figuring this whole thing out - which means you're looking for ways to increase your income and reduce your spending just like everybody else. There's no difference besides a negative number but don't beat yourself up for the past. All you can do now is move forward. I'd proudly call a reader with $60k worth of student loans and a savings rates of 51% a FIRE walker over somebody saving 12% of their income with $43k in networth because you know what? That FIRE walker is gonna blow that weak saver right out of the water once those loans are extinguished.
Requirement #8 - Narrow your selection of content
- If you're not getting any value from what I'm writing, why the fuck are you reading? You're doing your brain and your time a disservice by indulging in something that has no value. Stop it. If you are getting value, awesome! That's my intent. Furthermore, start cutting out everything else you read on the web or listen to on your podcast app that doesn't actually help you. I call this the "Vortex of FIRE Information" and it's actually very damaging to try and keep up with all the content out there because most of it isn't applicable to you or its irrelevant. There's just too much noise - get rid of all the crap! I'd recommend creating an index of your top 5 content creators (per genre) and simply stay subscribed to that. Here's mine if you're interested (yes, I know its 6, but I recently discovered Justin's content and haven't given anybody the axe yet - and I may not):
- Mr. Money Mustache Blog [Pete Adeney]
- Canadian Couch Potato & Blog + Podcast [Dan of PWL]
- Canadian Portfolio Manager Blog + Podcast [Justin of PWL] *Just added*
- Common Sense Investing YouTube Channel + Rational Reminder Podcast [Ben of PWL]
- FI Garage Blog + Podcast [Money Mechanic & Friends]
- Eat Sleep Breathe FI Blog [Chrissy]
- Sources like ChooseFI and Afford Anything were once on this list but due to irrelevant information it just wasn't worth it to listen anymore so they eventually got the chop in favour of better more Canadian content. I'd rather re-read MMM than keep up with ChooseFI, hands down and I highlight that criticism here.
So there you have it. I think those 8 Requirements should just about do it. Now, it's time to address the people who claim to be a part of the FIRE movement and haven't met ALL of the criteria on this list. They're just turning the FIRE movement into something it's not (a fad) when really it's actually a radical lifestyle change opposing the current climate of consumer culture. I truly believe FIRE to be the future of personal finance in Canada
Go ahead and read part 2 now: Are you Turning the FIRE Movement into a Fad?
Ryan Myricks
You can email me here: canadianfire1@gmail.com
You can listen to me here: exploreficanada.ca
Well I would have to say that I’m more in the FI camp than the FIRE camp but meet the majority of your criteria. That being said my goal for this year is to hit a 50% savings rate. But I’m not willing to narrow my consumption of content. I’m a massive content consumer and can’t narrow it down to just 5, but I will skip over things that are irrelevant is maybe that’s a baby step - ha!
ReplyDeleteRead some of this out loud to my hubby great writing. Keep up the controversy.
Thanks for the compliment! As I'm sure you'll guess, I think that's a fantastic idea! I must agree with you that I have a hard time keeping content out as well - I forgot to add Million Dollar Journey to my list and I still enjoy re-reading Early Retirement Extreme from time to time, even though that blog is now defunct (but still up on the internet!). I definitely have more than 5, I'll have to re-work that somehow.
DeleteI also feel a bit of an obligation to read a lot of other new and emerging content because as a content creator myself, I like to support the other newbies like me but to also stay on top of the trends and see what the cool kids are posting about these days.
I think three blogs had the biggest impact on me during my journey:
ReplyDeleteERE ~ Early Retirement Extreme (I still love all Jacob's stuff and his book)
MMM ~ Mr Money Mustache (the forums are the single biggest resource/community for me)
Becoming Minimalist ~ Joshua Becker does a good job talking about consumerism (I like the Minimalists as well)
I don't listen to a single financial podcast at all, never been a fan. That being said now that ExploreFI exists I am a fan, Canadian content and the Canadian mindsets & commonalities are part of the package.
Books were YMOYL, ERE and Millionair Teacher.
I agree with all your points, I discovered FIRE at around 38 and left work 5 years later at 43. I was determined, motivated and knew what I wanted. As in rejecting consumer culture, I think we just need to revisit how we look at things, I am not at all against purchasing things but they need to not be impulsive and have a huge ROI across your full lifestyle spectrum and pursuit of FIRE.
I read part 2 before this one lol, good post dude.
Thanks for the kind words Chris!
DeleteERE had a huge impact on me as of course did MMM, which I consider the successor to ERE (and I think Jacob even said so with a bit of a wink). I'm guilty of not reading Andrew Hallam or Vicki Robbins yet but those books are on hold as we speak from the library.
I would like to see you expand on your 50% savings rate requirement. Why? Because when you make $32K a year, that leaves you with $16K per year. That is a reality. I have to double check but I think the average income for Canadians is around $35K pre-tax. I like the rest of your post and most of your content but the hard and fast 50% rule (the way its written here) ignores economic factors that can be difficult to work with. I personally make double the household income in my county ($26K HOUSEHOLD) but I struggle to get close to a 50% savings rate due to taxes and a mortgage. I'm fully aware that I can get a $20K+ raise if I travel the 1.5 hour commute into the closest city. But that completely erodes any free time I have. If I have one criticism about FIRE is that the constant talk about savings rate often ignores local economic factors and actual dollar amounts of savings. I grew up in SW Ontario and while I make less up here than I did in ON, my costs are significantly lower. I had a 60-75% savings rate before moving, now I get maybe a 30-35% savings rate but the actual dollar amount I'm saving hasn't changed all that much. But, hey, its nice to have a definition of FIRE that's clearly laid out because now I can say I'm not FIRE.
ReplyDeleteI put 50% as the rule so savers can actually achieve FIRE before social security will become available - local economic factors, age you learned about FIRE and so on can have huge factors on the individual savings rate but the rule remains the same even still. It's a great goal to have and you may be on the path to increase your savings rate even further - so find those tax optimizations, increase your income, churn credit cards, etc.
DeleteIf you want to hover at 30% you'll still have a great financial future but FIRE is very far off in your future, if at all depending on other circumstances in your life.