Playing With Fire
Have you heard of FIRE? It's short for Financial Independence, Retire Early. It sounds great, right? Who wouldn't want to have a million bucks in the bank and sleep in everyday? On today's MoneyWise, we take a hard look at the budding movement called FIRE, where it came from, where it might be going, and whether believers should grab on or pull away like it's a hot stove! The FIRE idea comes from a 1992 best seller calledYour Money or Your Life. The premise is that you compare the number of hours you have to work against the number of hours in your life. Every expense increases your working hours, so you cut your expenses to the bone, while at the same time putting every single penny you can into savings. Fat Fire. That's someone with a traditional lifestyle who saves more than the average retirement investor. A Lean Fire is someone with a highly restricted lifestyle and extreme savings. Barista Fire. This is someone who's saved enough to quit their high-paying job but still works part time to reduce the need to withdraw from their retirement fund. Coast Fire. That's someone who still works part time even though their retirement fund has enough to support their current lifestyle. The FIRE movement differs from the advice from MoneyWiseby pushing you to put up to 70 percent of your income into investment accounts. So instead of retiring in 30 or 40 years, their goal is for you to be able to quit working completely in half that time or less.