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I’m thankful to be able to work with Vicki to make financial independence available to everyone. We can make a positive impact on people’s lives by working together.

But back 8 years ago when I started my own financial independence and early retirement journey, there were very few people on the FIRE path. I didn’t know about a few of the fire bloggers. The FIRE community has grown a lot over the years.

Today there are thousands of bloggers documenting their financial independence journey’s, an incredibly active financial independence subreddit, hundreds of podcasts, and even a documentary about the FIRE movement that I’m in called Playing with FIRE.

I am very excited about it. I’m counting the days until I can experience it for myself. There is a preview of the documentary. The full documentary will premiere next week.

I wrote a folk song for the fire movement because there wasn’t one. I was inspired to write a song after hearing stories of people who had achieved financial freedom at a conference. I am playing a folk song. I hope you enjoy it as much as I did.

How To FIRE: 9 Steps to Financial Independence Retire Early

For anyone interested in the movement, here is how it works.

It is a little more difficult to execute than it is in theory. It is possible to execute the plan with the right strategies and dedication.

To make it simple, here are the 9 steps to reach fire. You can achieve financial independence and retire early if you follow these nine steps.

Step 1. Think about what kind of life you want to live. What does a meaningful life look like to you?

Mainstream personal finance and money advice is all about money. The other aspects of financial literacy, such as budgeting and debt management, are often overlooked.

But what’s more important than money is life. You can always make more money, but you can’t get back your time. Making the best use of your time is an important part of creating a successful and fulfilling life. Think about what kind of life you want to live before you start thinking about money. The things that will bring you lasting happiness are the things that you want to spend your time on. Write it down. Before the test, make sure you review your notes.

What does a perfect day look like? A day filled with sunshine, laughter, and time with loved ones would be the perfect day. Why is it perfect? It’s the perfect time to spend a day outdoors, with the sun shining and the temperature just right. What are the 10 things that make you happy? There are 10 things that can bring a smile to your face.

When I did this exercise, I realized that most of the things I enjoy in life are free or inexpensive. It doesn’t cost any money to walk my dog in a park on a My wife and I are going to play guitar with my friends on Saturday. It’s been too long since I’ve strummed a few tunes, so I think I’ll go for the guitar session.

It was easier to prioritize where to save and spend my money once I started thinking about the life I wanted to live. I have more money to do things that bring me joy, which has led to an improved sense of financial security and freedom.

Money doesn’t matter if you live a life you love. It’s important to remember that life isn’t just about money, it’s also about experiences and memories. I’ve always believed that money is not the goal, time is. What kind of life do you want to live? When you have identified what is important to you, make every decision with that in mind.

It’s always easier in life to chase that next thing – whether it’s the next job promotion, raise, or save 1 million dollars.

What’s harder to do is take the time to figure out what actually makes you happy and what kind of life you want to live. But once you look within instead of just outside, the easier it will be to plan for financial freedom.

Action Steps:

• List the 10 things that make you happy.
• What a perfect day would look like to you? My perfect day would start with a cup of coffee in the morning, followed by a long walk in nature, and end with a cozy night at home with my family.
• Read one of my favorite books on life, The Art of Living by Thich Nhat Hanh

Step 2. Start by doing the simple math: How much do you really need?

The next step is to figure out how much money you need to live that life awesome life! I remember being in college and dreaming about driving a Maserati and living in a big lake house, but now when I see a Maserati driving down the road I don’t see $200,000, I see $1,200,000 in 30 years!

I didn’t set a goal for how long it would take when I started my financial independence journey. I knew I had to make the most of my time and resources to reach financial independence. I knew that I wouldn’t be able to retire if I only saved 10% of my income. I began to look for ways to increase my income so that I could save more and retire sooner.

It was very easy to do the math. I was able to complete it quickly. If I was able to save $5,000 per year maximum, even with an expected compounding rate of 6%, In 30 years, I would have $433,000. I want to invest my money in a way that will allow me to grow my savings even more. It isn’t going to be that much money in 30 years because of taxes and inflation.

You will need to pay tax on that money when you take it out, assuming a 30% tax rate that cuts the after-tax value to $308,000, which when adjusted for 2% annual conservative inflation amount (it could be higher than this even!), then the future value of that money after taxes When planning for your financial future, it is important to consider the impact of taxes and inflation.

It isn’t going to be $170,000 in 30 years. Over the next three decades, inflation will reduce purchasing power. It will not be enough to live on for more than 20 years. A plan for retirement should include other sources of income as well as Social Security.

Typical wisdom is that you need 25x your annual expenses to retire early. I assumed my annual expenses would be at least $50,000 in the future, but who knows if I will actually be able to live off $50,000 in the future. I think it’s important to plan for these expenses so that I can achieve my financial goals.

I decided that I would need to save $1,250,000 because it was the best starting point. I achieved my goal of saving that amount over the course of 10 years. It was my target, but that is a big number. I’m proud to say that I’ve accomplished it.

You can sit down with a piece of paper and see how much money you need to retire early by checking this calculator I built.

Step 3. Save more money by spending on what you value and not on what you don’t.

Savings Rate (the higher your savings rate the faster you can retire)

Saving can be used to live a life you love. In the long term, it can help you achieve financial freedom and security. It isn’t a sacrifice. It’s an investment in your well-being. You are always going to be in a scarcity mindset if you view it as a sacrifice. You will be able to see that there are positive outcomes if you shift to an abundance mindset.

If you want to reach financial freedom and FIRE, you need to save as much money as you can and invest it to grow. Set realistic financial goals and work hard to make them a reality.

Do you remember what I said about living differently? It’s never too late to start living the life you want if you allow yourself to take risks. A 50% savings rate is more common than you might think among the FIRE crowd. It is possible for members of the FIRE community to achieve their financial independence goals within a reasonable amount of time. I know a lot of people that save a lot of money. These people have created great habits for themselves and are committed to their financial security.

Saving 50%+ of your income is definitely going against the status quo, but that is how you fast-track wealth. Taking control of your money is the first step to financial freedom, and saving 50%+ of your income is a great way to get there. If you want to go deeper, here are two posts on how much money you should be saving and my investing strategy.

Tracking your savings rate is the easiest way to see how much money you are saving. It’s important to remember that your savings rate should be high in order to reach your financial goals. Your savings rate is the percentage of your income that you are saving. It’s important to save as much as you can so that you have enough money in the future.

To calculate your savings rate, you want to add up all of the dollars that you save, both in pretax accounts and after-tax accounts, and divide it by your income. It is possible to use your savings rate as a tool for budgeting and planning for the future.

If you have a $100,000 income and are saving 40 percent, it looks like this. $40,000 is the amount of money you would put aside each year for savings and investments.

It’s pretty simple. It can grow if you save more money. Make small but consistent contributions each month to kick start your savings journey. A majority of Americans will never be able to retire because the average savings rate in the United States is 3.2%. It is important to save more than the average rate in order to ensure a secure retirement.

You will be able to cut years off of your retirement if you can get a savings rate of 20%, 30%, or 50%. You can start to think about financial freedom once you reach that level of savings.

Action Steps:

• To help you easily calculate and monitor your savings rate I built a savings rate calculator.

Budgeting (aka the only budget you’ll ever need)

Most people can’t fast-track their financial independence because they can’t keep a budget. It is possible to make a budget work for you with the right attitude and discipline.

I don’t want you to create a budget or cut back on expenses. You should consider ways in which you can reduce your expenses and make more money. Balance how much you spend is what you need. It’s important to create a budget and stick to it. I have always viewed saving as an opportunity.

To increase how much you save, you need to find a way to reduce how much you spend. One way to reduce your monthly expenses is to look for ways to save money, such as cutting back on unnecessary purchases.

Reducing your housing, transportation, and food costs is the easiest way to do it. One way to reduce these costs is to look for ways to save money, such as searching for cheaper housing options or shopping for groceries at budget-friendly stores. The average American spends 70% of their money on housing, transportation, and food, so if you can spend less on them (say 25% or so, then you can bank the difference). If you move to a smaller apartment, walk to work, and cook at home, you could increase your savings rate to 25%+ or even higher. Reducing your cell phone plan is one way to reduce your monthly expenses.

I was able to fast-track my financial independence by increasing my savings rate to 40% and sometimes as high as 80%, by reducing what I spent on my housing, transportation, and food costs. The only way I was able to fast track was by cutting way back on my living expenses and investing the difference.

To save the most money, focus on where you spend the most money. Investing in a budgeting app or tool can help you track where your money is going and identify areas where you can save. Cut back your housing expense as much as you can through a strategy known as house hacking where you rent or buy a 3 or 4 bedroom apartment or house and rent out the other room. You will save more money by doing that than by cutting out things. It’s a great way to stretch your budget.

I am not here to tell you what to buy or not to buy, but it is important to remember that you are actually trading your freedom for something. Before making a purchase, you should ask yourself if the tradeoff is worth it.

I was happy moving to a smaller apartment, closer to my office, and eating out less in order to bank the difference, but at the end of the day it comes down to a personal choice. I was able to save at least an additional $13,000 per year by cutting back. I’m glad I took the time to review my budget because the savings I made by cutting back on my expenses were incredible.

I believe I saved more than $100,000 in my investment accounts by cutting back for 2 years before buying my first home. I plan to apply this same approach to my future financial goals after learning about the power of disciplined saving and investing. 2 years ago, I decided to let it grow and I hope that will compound into 20 years into a lot more money. With a disciplined approach and sound investment strategy, I will be able to reach my financial goals. I had to cut back on my three biggest expenses. The decision to reduce my spending has made a huge difference to my finances. Try it out.

When I was on my financial independence journey, I calculated that for every $100 I saved, I would buy a week of freedom in the future. By becoming financially independent, I am able to make decisions that are in line with my true values and dreams, rather than being bound by the constraints of money.

Action Steps:

• If you want to calculate how much money you need to buy a week of freedom out my FIRE calculator.

Step 4. Pay down your bad debt, use your good debt

Debt isn’t created equal. Different types of debt can have different impacts on your financial health, so it’s important to understand the differences between them. Good debt is better than bad debt. Understanding the difference between good debt and bad debt is important in order to make responsible financial decisions. You can make money with some debt. Taking out a loan to invest in real estate or the stock market can be an excellent way to make money with debt.

Good debt is debt like mortgage debt you use for investing in real estate or building a real estate empire or in some cases student loan debt if it helps you get a better job or make more money over your career.

Credit card debt has an interest rate of over 20%. It is important to make sure that you pay off your credit card balance each month because carrying balances on credit cards can quickly lead to an unmanageable debt burden. If you have credit card debt, pay it down immediately. Making only the minimum payment on your credit card debt will cost you in the long run, so it is important to pay down your debt as soon as possible.

The best debt payoff strategy is to pay down your debt with the highest interest rate first, followed by any personal loans, student loans, and then mortgages. This method will help you save money in the long run and help you eliminate your other debts faster.

Just like your investments can grow and compound over time, so can your debt.

It is like getting a percentage return on your money if you pay down your highest interest rate debt. Understanding the different interest rates on your debt will help you maximize the return on your money.

If you pay off your 20% interest rate credit card, it will be like you made 20% because your debt is no longer growing, as opposed to paying down your student loan balance with a 5% interest rate. Paying off your high-interest credit card can save you money in the long run and give you an opportunity to make a significant return on your investment.

Action Steps:

• To understand where you need to begin, order your debts from highest to lowest interest rate. A list of your debts should include the interest rate for each debt and the remaining balance.

Step 5. Hack your full-time job, get a raise, and build new skills

Since your full-time job is where you make the most money, it is important to try and get paid as much as possible. If you can find a higher paying position in your field, you should research other job opportunities.

Most people deserve a raise, but they are too afraid to ask for one. They may never get the raise they deserve if they don’t ask. A single raise of a few thousands of dollars can add up to a lot of money over time. When it comes to investing the extra money from a raise, compound interest can work in your favor.

You can make hundreds of thousands of dollars richer over the next twenty to thirty years by investing and compounding the small raise difference. The power of compounding can work wonders on a small amount of money, so investing in yourself and your future is always a smart idea.

A simple study that looked at an annual 3 percent versus a 4 percent raise each year showed that after thirty years the 4 percent raise was worth $578,549 more when that small 1 percent difference was invested in the stock market.

Your base salary affects your future earning potential. It is important to consider a variety of factors when negotiating your salary and benefits package. Many people don’t do anything about their pay.

Eighty-nine percent of Americans think they deserve a raise, but only 54 percent want one in the next year. Only a fraction of those who plan to ask for a raise will get one.

We typically spend more time planning for a vacation than working to improve and optimize our careers, which is a missed opportunity.

In reality, most of the jobs that will exist in 20 years haven’t even been created yet, so while traditional advice is that you should become an expert in one thing, it’s actually more valuable to have a broad range of skills.

For example, if you know how to use Google Analytics, you should also learn about branding and how to start a blog.

Action Steps:

• Check out my post on how to get a raise.
• Check out the most valuable future skills

Step 6. Start a Side Hustle

Outside of your full-time job, a side hustle is anything you do to make money.

While you can make money doing anything, the best side hustles are the ones where you can make money doing something you enjoy and have control over. You can use a side hustle to supplement your income, explore new areas of interest, and enhance your skills.

There are too many people who drive for the companies who are limited by the hours they have to drive and what they get paid because the rates are set by the company, not the drivers. Many drivers feel like they have no control over their earning potential.

While there is an infinite number of side hustles that you can launch, I like the side hustles that you can do online because they give you the ultimate flexibility to make money from anywhere in the world and on your own time.

Some of the best current side hustles are learning how to become a virtual assistant, start a blog using Bluehost (check out how to make money blogging), and running Facebook ads.

Action Steps:

• Check out my detailed step by step post on how to pick, launch, and grow a profitable side hustle
• Read Chapter 10 in my book Financial Freedom: A The path to all the money you will ever need is proven. With the right strategies and mindset, you can achieve financial freedom and the life of your dreams.
• Read 100 Side Hustles by Chris Guillebeau

Step 7.  Invest as much as you can, as often as you can, in low-cost total stock market or S&P 500 index funds

It is necessary to switch from saving to investing. The sooner you switch, the more likely you are to have long-term financial success. It is not possible to fast-track financial independence by keeping your money in a savings account.

Most of the money I have made is in my sleep. I’m proof that smart investing can lead to financial freedom. When I looked at my investing returns over a 90-day period, I realized that I had made over $15,000 in gains from one of my investments, which is more money than I made in 6 months working at my first job after college. You need to invest as much money as you can if you want to make money. To ensure you are making the best decisions for your financial future, you should research different investment options.

Investing your money is what really accelerates your ability to reach financial freedom faster because your money starts making money and then the growth accelerates.

The most reliable investments are stocks, bonds, and real estate. It’s important to do your research before investing in any of these options, as they all have their own risks and rewards. You need a short-term investing strategy (money you’re going to need in the next 5 years) and long-term investing strategy (for the money you’re going to need in 10+ years).

Note: It’s always worth keeping at least 6 months of expenses saved in a high-interest online savings account for any unexpected emergencies in what’s known as an emergency fund.

Your short-term investments should be kept in a high-interest online savings account and your long-term investments for retirement should be largely kept in low cost highly diversified index funds like the Vanguard Total Stock Market Index Fund (VTSAX) or something similar that holds most of the stocks in the U.S. stock market.

You can invest in a total stock market or S&P 500 index fund in most employee retirement plans like a 401(k), 403(b), or 457(b), as well as individual retirement accounts like a Roth IRA, There are traditional IRA, SEP IRA, and solo 401(k) accounts. Saving money for the future is possible with these retirement plans. While I personally invest in a few individual stocks, I largely recommend that you avoid investing in individual stocks unless it’s with less than 10% of your total net worth.

Investing is simple and easy to learn, but there are too many steps for this post, so check out the detailed video and links below.

Action Steps:

• Check out my post on How to Start Investing
• Check out my detailed Investing Strategy
• Check out my Early Retirement Strategy
• Read Boglehead’s For an easy to follow investing book. Regardless of your experience level, there are plenty of resources available to help you become a successful investor; be sure to check out a publisher’s website or bookstore shelf.

Step 8. Track your net worth and investment performance

The first step in calculating your net worth is to take your assets and subtract your debts. To get a clear understanding of your financial situation, it is important to assess all of your assets and liabilities accurately.

A simple way to track your net worth is using this net-worth calculator I built and to track your net worth over time you should check out the free app I use to track my net worth called Personal Capital.

Action Steps:

• Sign up for Personal Capital and start tracking your net worth
• To learn more about the steps to FIRE check out the very detailed step-by-step blueprint in my book Financial Freedom: A The path to all the money you will ever need is proven.

Step 9. Then take it one day at a time, but build the best daily habits

Financial independence is all about effort and execution. Financial freedom will be rewarded with hard work and dedication. You have to be consistent. Consistency will help you reach your goals. Consistency is more important than anything else. Consistency is a must if you want to see real results. You will prioritize it if you want it. You can make it happen if you focus on what really matters to you and make it a priority. You can start slowly or quickly.

At 24 years old, with no money, I didn’t know how I was going to save my money. I came up with a few ideas, but they weren’t enough to save them. It has been shown in a bunch of research studies that our brains are too large and abstract to comprehend the amount of money. The majority of people can’t see the value of large sums of money. It was difficult to say the least. I was not prepared for the challenge. I didn’t know how I was going to make that much money. I had to find a way to do it quickly and easily.

A lot of retirement calculators are not effective. It’s important to remember that retirement calculators are just a starting point, and they should not be relied on as the sole source of information when planning for retirement. You will need $2,000,000 saved in 30 years, but don’t break down the steps to get there.

Studies show that our brains work best when we break large goals into daily goals. We can feel a sense of accomplishment and motivation if we break down our goals into smaller, manageable tasks. To reach $1,250,000 in 30 years using my investing strategy, I would need to save $50 per day for 30 years. If I increase my savings rate to $100 per day, I will be able to double my retirement savings by the end of 30 years.

I would fast-track my financial independence if I could save every dollar after $50. I pushed it a few dollars more when I could, but I didn’t start at $50 per day.

In 2010 when I made the decision to chase financial independence, I jumped in 100%, but that was just what I needed to get going. I knew I had to work hard to make my dream a reality, but it was worth it. The key to building any sustainable results is to start at your own pace, start making more money where you can, and really push your investing percentage higher 1% at a time.

Every $1 you invest today will compound as long as you keep it invested. Your financial future will be impacted by this over time. As I’ve mentioned before every $1 The investment I made in 2010 is worth almost $4 today.

Research shows that we should use better habits to accomplish our daily goals. We need to create a routine that works for us and stick to it. Our daily habits are the key to building wealth. The better our money habits, the more money we will make. Good money habits can lead to a more secure financial future. To go deeper, here are my best money habits.

It took me five years to go from broke to financially independent. The hard work paid off in the end. The stock market has grown a lot over the past 7 years, but I was ready. I’m thankful that I was able to take advantage of the growth. Building wealth is about letting it grow and controlling as many variables as you can.

Best FIRE Books

For a full list with reviews check out Best FIRE (Financial Independence Retire Early) books

Best FIRE Bloggers

There are now thousands of FIRE bloggers, but here are some of the originals and my favorites in no particular order:

• Mr. Money Mustache – Pete Adeney was the father of the fire movement. Mr. Money Mustache started writing in 2011. One of the most popular personal finance websites in the world is Money Mustache’s.
• Mad Fientist
• Root of Good – I don’t know anyone else who knows more about tax optimization than McCurry.
• Mr. 1500
• Go Curry Cracker
• Millennial Revolution
• JL Collins
• Get Rich Slowly
• Physician on FIRE
• Early Retirement Now
• Couple Money Podcast

FIRE Movement FAQs

Can people with kids pull off FIRE (financial independence retire early)?

Absolutely, I think you can definitely FIRE with kids. There are many ways to reduce the costs of having kids or to make adjustments in other areas of your life that will help offset the cost of having kids. Each family has to make a decision about what works for them financially.

Most people spend 70%- 80% of their money on housing, transportation, and food. It is important to budget so that all of these needs are met in an efficient and cost-effective manner. That is where you will get the biggest savings. You can compare prices online to make sure you get the best deal, and that’s where you’ll get the most bang for your buck.

It is possible to save on all of these with kids, for example, moving to a different neighborhood, smaller house or apartment, or finding other ways to get creative about your living situation can reduce your biggest expense. You will be able to put more money towards your goals if you do this.

You can do that with kids. Having one car and cooking at home is the same. This can be a great way to save money and reduce your impact on the environment. You can use kids as another variable. Flexibility and compromise are important with kids in the picture. You don’t have to go all-in, just making a few minor adjustments in your life can have a huge impact. You can reach your goals in no time if you start with small steps.

Is FIRE an elitist movement?

There are many different people in the movement. Everyone has a unique way of interacting with the movement, which can be seen in how people express and interact with it. Some of them are definitely hardcore. Many fans have watched every episode multiple times and are passionate about the show.

Retirement can mean anything you want. There is no singular definition. There is a spectrum of definitions that can be adapted to each individual. To seek one that is black and white misses the point. There are many shades of gray in between.

Fire, like any language, has limits. It is a path you define for yourself. Some people dismiss the movement because they don’t want to make changes in their lives. The rewards can be immense for those who are willing to make changes and open their minds.

That’s okay. If you are open to that type of change, the principles of fire can transform your life. It is not true that you need a lot of money to fire. If you have a plan and are willing to sacrifice, you can fire with very little money.

The idea of increasing your savings rate or cutting down on your biggest expenses is practical and accessible to most.

What future do you think the FIRE movement has? Will it be a trend or will it transcend that?

This is a great question. I’m glad you asked. The FIRE movement has room to grow, but being able to label it also makes it easier for people to write off what is really good principles and a life-changing mindset. The FIRE movement can help many people make life-changing changes and gain financial freedom, which is something we should all strive for.

It will hit a ceiling, but I am sure it will continue to grow. I’m pretty sure we’ll reach the peak eventually. The status quo of working 9 to 5 for 40 years and retiring at 65 is starting to be questioned by more people. That is one path, but it is not the only path. You have the power to make a decision. There are many many paths to wealth and rich life.

I think there is an increasing number of people who are choosing not to follow traditional advice because there are so many examples. As people become more aware of the different paths that can be taken and more comfortable with taking risks, this trend is likely to continue into the future.

There are more and more examples of people building extraordinary lives on their own terms thanks to the internet. It is easy to find inspiration and motivation from the stories we read. That’s freedom.

It has never been easier to make more money and live differently. There is no limit to what you can achieve if you are willing to put in the work. The ideas help you regain your time. It’s possible to focus on what’s important to achieve your goals and improve your life by reclaiming your time. It is not about money at the end of the day, it is about putting money in its place and living an awesome life. Money shouldn’t be a barrier to living a life full of joy and purpose.

I don’t know if the principles will continue to spread, but I believe they will, which is all we can hope for. I’m hopeful that, no matter what we call it, more and more people will prioritize their financial future and create a life of freedom for themselves. You can either let money control you or control it. Taking charge of your finances will ensure that money works for you.

You never thought you could live if you control it. Control of your own destiny can be an empowering experience. That is open to everyone. This opportunity is open to everyone.

Why is it easier to reach financial independence or retire early in the US?

Many reasons. Low-cost investing options, a lot of income opportunities (including lots of ways to side hustle), low-cost of living areas, and probably most impactful are the many ways to maximize and minimize your taxes. There are many ways to keep more money in your pocket each year.

Taxes are higher outside of the U.S. It can be difficult for businesses to compete on a global scale. In the U.S., it is possible to eat up a lot of savings potential. There are many ways to save money. Using tax software or hiring a professional accountant can help you maximize the deductions and credits available to you, so that you pay the least amount of taxes possible.

You can live outside the US to make your money go further because the dollar is strong. Living outside the US can give you access to a different lifestyle and culture, which may be just as rewarding as financial gains.

It might be a little more difficult to do in Europe, but it is doable and worth the effort.