The Requirements of FIRE

Photo by Mark Duffel on Unsplash

I'm here to fix the blurred line between what the FIRE movement is and what is isn't.

Here's what FIRE is: 

A lifestyle optimization strategy that focuses on saving an unconventional amount of money in a much shorter amount of time than normal so you're eventually able to do whatever the fuck you want with your time, 7 days a week.

• Said money is designed to relieve financial stress in the short-term (not at FIRE yet) and reclaim the years/decades spent at a career in the long-term (at FIRE).
• FIREwalkers typically rely on the 4% Rule to estimate the amount of money needed.
• Once you've saved your FIRE number, you can authentically claim to never need to work again (although it's very unlikely you'll never earn a single dollar again).

The blurred line is caused by the mainstream blogs and podcasts that advocate a weak savings rate (<50%) and then continue to sell Financial Independence anyways as if it is still feasible. What they are actually doing is watering down the FIRE movement for their own marketing and branding purposes in an effort to increase their viewership and sales. 

FIRE is hard to accomplish. Hard things in life are hard to do. Rather than convince people to do hard things, let's lower the bar and make it easier for everybody else who can't achieve hard things. 

More specifically, FIREwalkers have rejected consumer culture and are therefore hard to sell too. Marketing FIRE to existing FIREwalkers is not all that profitable but attracting newbies is. But remember, FIRE is difficult to accomplish.. so focus on selling the dream of FIRE to the newbies (because who doesn't want to "travel the world for free!" which by the way isn't actually true) while loosening the difficulty in achieving FIRE (my favourite is "Don't worry about your savings rate").

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 net pay

• This isn't easily done but it's the clearest view of the FIRE movement as a whole. I cannot emphasize this enough. It's hard to get to 50%, but it's a must.
• 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 - You MUST reject consumer culture

• 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 dammit!
• 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 must be financially literate

• Your base knowledge should include what an RRSP is and how the TFSA works for the most part. There is always additional learning to be done so don't think you need to be 100% fluent in nerd. There are tactics the FIRE crowd uses to push financial vehicles even further and that's definitely part of the reason why you're reading FIRE content.
• I want to make it clear I am not suggesting you read the Dummies Guide to Investing or be able to list the differences between VEQT and XEQT. If you don't know what futures are, good. Keep it that way, trust me.
• What are your expenses? What is your net income? What is a discount brokerage? If you can't answer these, add all three of these questions to your to-do list right now.

Requirement #5 - Entrepreneurship-ish

• Anyone who can save 50% of their take home pay is an entrepreneur, even if they collect a T4. Why? Because they are in business for themselves.
• 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.
• 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! 
• Capitalize 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 #6 - 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 #7 - 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, hone your decision-making process and best of all, solidify your FIRE number to its lowest possible value. 
• 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 #8 - 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.

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.

Thanks for reading. Hope this cleared some things up.

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 (I respond to everybody)