Learn how 3 people are working toward their FIRE goalsA post from the Fidelity Viewpoints blog looks at how people are planning ahead for financial security. Reprinted with permission. Please visit fidelity.com/viewpoints for more details.
Whether it’s sleeping in on Monday, taking a month to travel, or doing work that feeds your heart more than your wallet, having the ability to choose what you do and when you do it is a luxury many people can only dream about. But it may be more attainable than it first appears, if you’re willing to make a few tradeoffs.
The FIRE movement (financial independence, retire early) preaches the value of aggressive saving and prudent investing. Many people who adhere to FIRE principals don’t even plan to retire early—but they do want the ability to make choices without being tethered to a traditional day job.
Here are 3 real-life people who are walking the walk. The common denominators: They’ve all made some lifestyle compromises in the short term in order to achieve financial independence and are navigating FIRE within their relationships.
Short-Term Sacrifices for Long-Term Goals
Bridget Dunn’s path toward financial independence started early in her career and she was firmly on the savings path before she and her husband got married—having aggressively paid down college loans.
Though they aren’t planning to retire early, they are both motivated by financial options. They’re on the same page about their financial goals and act as a team to accomplish them.
“The big thing we started together was when we decided to get our MBAs. We did evening MBA programs and we decided going in that we were going to pay cash, not use loans,” Bridget says.
“We weren’t zealots about it, but it did help that we were on the same page. Could we have lived in a nicer apartment and closer to the city? Sure. But it was really important to both of us that we were able to pay for school,” she explains.
The couple shares a car that’s paid off and it doesn’t make financial sense for them to buy a new one yet. And they eloped in 2021. “It was nice to be able to have a fun day that was about us that also didn’t end up destroying our financial goals,” Bridget says.
Besides their 30-year mortgage, they are totally debt-free. Though they have made some lifestyle adjustments to get to this point, it doesn’t feel like a sacrifice. Skipping restaurants and cooking meal kits at home for a change of pace, and getting books at the library instead of buying them new are just a couple of examples. “It’s more about thinking creatively about how we can access an experience or item at a slightly lower cost,” Bridget says.
Retired at 44 to Pursue Her Passions
Ramat Oyetunji credits her early failures trading stocks in the early 2000s as the beginning of her financial journey. After being laid off after 9/11, she went to grad school and began saving $100 a month. She used that money to start investing for the long term.
The habit snowballed and helped set Ramat up for success later on. “I drove my old car for the longest time. I started saving more as soon as I could contribute to my 401(k) and before that, I at least contributed to an investment account—putting money away bit by bit,” she says.
Later on, after she was married, post-financial crisis, “We ended up buying a duplex, which my husband renovated. We lived on one side and got rent from the other side. Friends would ask, ‘Why are you living in an apartment?’ These were the choices I made to get me to where I am now,” she says.
Her husband isn’t as enthusiastic about FIRE but they agree on their joint goals. Ramat manages her own money and their joint household money while her husband manages his money himself.
“I wanted to get into real estate together, but it meant a lot of work that he didn’t have time for because of his challenging job,” Ramat says. “I went into it by myself and chose properties that didn’t need much work or factored the cost into my return to know if they were good investments.”
Her passion now is teaching her daughter about finances as well as other women. Her company, The FI-Woman, is geared toward helping women achieve financial independence.
“Financial independence is important for everyone, but for women especially, it gives you options— for example, the option to walk away from a bad relationship or a bad situation,” Ramat says.
Though she has given up some things along the way, “I have not felt they were sacrifices because I value having financial freedom and spending on things that are important to me,” she says.
Working Toward a Future Free of Financial Stress
MaryAnn and her husband are on the FIRE path for the FI not the RE.
Many FIRE adherents have a specific dollar amount they aim for before embarking on their next adventure, but MaryAnn and her husband are in it for a future lifestyle. “We don’t have a date or a number but more of a life that we see for ourselves. I want my husband to find a job where he can feel fulfilled and not worry about the finances,” MaryAnn says.
MaryAnn works as a wedding photographer, so her income varies while her husband holds a salaried position. She and her husband are on the same page about their short- and long-term goals and their savings come out of his paycheck.
“It goes to 3 places, so one-third to taxes, one-third to retirement and investment accounts. And then one-third goes to a checking account for our spending, bills, and mortgage,” MaryAnn explains.
Her income is left in cash and is used for big purchases like house renovations or some extras like travel and restaurants. At year-end, the money that isn’t spent goes into investments.
When it comes to investing, they do have tax-advantaged accounts like IRAs, and a 401(k). They also have real estate investments. The couple is debt-free except for their mortgage. For now, it makes more sense for them to invest their money rather than paying off that low-interest loan.
“We could spend more on fancier cars, nicer clothing, etc. but we feel like none of that will make us any happier. To us, having security and future freedom is way more valuable than having nicer stuff,” MaryAnn says.
5 Tips and Tricks From FIRE Supersavers
1.) Take advantage of workplace benefits. Says Bridget, “I think a lot of people just don’t understand the benefits they might have. If you have benefits available, it’s important to really understand your benefits in order to maximize them.” For instance, even if you’re enrolled automatically in your employer’s workplace savings plan, it may be at a contribution level that misses part of the match from your employer, which is basically free money. To get the entire match, you may need to take action and increase your contribution.
2.) Make a detailed budget. ”You have to be detailed, you can’t be wishy washy—you are not going to manufacture money,” Ramat laughs. “My fun money has been $200 a month, $50 a week for years. Everything is allocated to something else,” she says.
3.) Set goals. ”Having a goal in mind helps you stick with it,” MaryAnn says. Whether it’s a lofty dream for your future life or saving a specific amount of money, keeping your vision for the future in mind can help you through periods of lagging motivation.
4.) Avoid lifestyle creep. ”We used to make a quarter of what we earn now, but we were fine and it was comfortable. But that bar seems to go up as our income does. It’s something I try to be conscious of—when is it enough?” MaryAnn says.
5.) Automate. ”Our savings come out of the paycheck automatically; we don’t get used to having it and we just never even see it. So it’s not even part of our daily awareness,” says MaryAnn.