Money Smarts Blog
Life on FIRE: Tips to help you retire early
Aug 5, 2022 || Adrian Brambila, Consultant and Self-Made Millionaire
In 1993, Saturday Night Live gave us comedic gold. The classic Van Down By the River skit saw Chris Farley as a “motivational” speaker who lived in … well, a van down by the river. Ultimately, his tenement on wheels was portrayed as a negative thing, something you wanted to stay away from.
Fast-forward to 2020, and living in a van (a fully-customized Sprinter passenger van, in fact) is something my wife and I did for a whole year. Not because we were burnouts or slackers, but because the nomad-style van life allowed us to experience life in a minimalist way and continue to enjoy traveling throughout the pandemic.
As 30-something entrepreneurs, we’re living the FIRE lifestyle. “Financial Independence, Retire Early” is a growing movement among millennials who want to earn financial freedom early-on so they can spend their days doing what makes them happy. With a lot of hard work, re-prioritization and sacrifice, my wife and I managed to find an alternative to the typical nine-to-five desk job — and you can, too.
Achieving early retirement isn’t without its challenges, though. Are you up for it?
Spend less, save the rest. Think about the things in life that give you the most joy. Chances are, it’s the people you love and the experiences you’ve had together, right? I’m here to tell you: You don’t have to buy things to make you happy. Spend less on the latest kitchen gadget (it’ll just clutter your cabinets), less on the expensive new car (it’s probably a gas guzzler) and consciously save more.
If you’re serious about the FIRE lifestyle, you should be saving and investing 50% of your income or more. Not sure you can make that work? Start smaller — but the point is to start somewhere. When I made $33,000 a year at a call center, I reduced everyday expenses by not eating out and living with roommates. I was able to save 30% of my income during that time.
Living in a van is obviously a more extreme example, but not having a house payment and all the stuff that goes along with it drastically increases your savings!
Eliminate debt. The first step here is to track your spending. Once you know where your money’s going, create a budget, which includes a clear plan to start paying off debt. Strategies include paying off your most expensive loan first, paying more than the minimum when you can and consolidating debts. Plus, because debt often comes with such a high interest rate, it’s in your best interest (get it?) to pay it down as quickly as possible. Eliminating any unnecessary spending can also make a huge difference here. If that means pausing subscription services or avoiding Starbucks to put that money toward clearing debt, do it.
Invest, invest, invest. A big part of the FIRE lifestyle isn’t how much is on your paycheck — it’s how you’re saving and investing. Wise investments are critical to boosting your portfolio and helping you reach your financial goals. Reach out to our team today to get started.
The path to a financially independent lifestyle that allows you to retire early is an investment that’s well worth the effort. But even if you’re not sold on the more aggressive FIRE lifestyle, following these tips can still help you shorten your retirement timeline and boost your wealth.
Tips on reaching financial freedom: adrianbrambila.com.