How to Escape the 9 to 5 and Achieve Financial Independence with F.I.R.E

INTRODUCTION

F.I.R.E Stands for Financial Independence Retire Early is a Concept that could help us to get early retirement as compared to traditional retirement and gain more financial freedom, it’s gives more priority to Investment, Savings, and Cutting down some expenses (this also involves mindful lifestyle choices like Eating home Cooked food and living at lower renting house). The ultimate goal is to save money or have capital large enough that it could generate passive incomes which should be more than the living cost.

Fire Concept was introduced in 1992 by Vicki Robin and Joe Dominguez in the Book “Your Money Your Life”

Joe Dominguez achieved F.I.R.E at the age of 31, Here is the Concept to achieve our F.I.R.E

Concept Of F.I.R.E

Here in F.I.R.E., people try to accumulate the corpus equivalent to 30 times their yearly expenses. When they achieve this corpus amount they retire from every kind of employment work or they choose a work that could make them happy.

Let’s take an example for a better understanding of how FIRE works

Let’s assume that our annual income is 7 Lakh, and we want to save at least 60% by which we can save around 4.2 lakhs per year. ( Rs. 7 Lakhs * 60% ).

Now let’s take that our annual expenses are around 2.8 Lakhs per year. our corpus amount which we need to accumulate is 84 Lakhs. According to our current saving amount of 4.2 lakhs, it would take 20 Years
(84/4.2 = 20) to save 84 Lakhs.

You can use different methods or ways to reduce the period of time taken to achieve the corpus amount.

Types of F.I.R.E

1. Lean Fire – It’s a method for Lean Fire, Where people start decreasing their spending and start living a minimalistic lifestyle(focusing on essential expenses and avoiding luxurious wants), Here we try to save 50% of our income, and we start investing by diversifying our portfolio.
2. Fat Fire – In this method we have to maintain between essential needs and Luxurious wants, we need to start upskilling ourselves and searching for other opportunities to earn more money. and in FAT Fire we need to Invest Aggressively for a long period of time. Here we need to live below our means not as much as we have to in LEAN Fire.
3. Barista Fire – it is an early Semi – semi-retirement concept, here we need to save enough to cover our Living expenses through investment but still we need to do a part-time job just to supplement to the income. This gives a very Flexible lifestyle with a steady income. It also gives us less stress as it helps us to leave our 9 – 5 Jobs.
4. Coast Fire – In this Concept we need to save and invest aggressively early in life and to reach a specific age or point where we don’t need to contribute to our saving or Investing. And we will leave our investment to grow. and we can shift to a part-time job or a low-income job which will lead to less stress or less workload.

5 Ways to Achieve FIRE

• Draft a Budget:- A budget is essential for the proper management of the cash flow. Creating a budget allows us to have a proper investment and saving planning.
• Investment Planning:- Planning our Investment is the most important part of achieving FIRE. We can hire a Fund Manager to plan our Investment.
• Aggressively Saving:- We have to cut our expenses and focus on our savings.
• Not being an Impulsive Buyer:- We should not buy everything that we want we should decide whether we actually need it or not.
• After retirement planning:- We should plan how we are generating passive incomes, What the Fixed expenses will get covered also look for proper health insurance.

Conclusion

It gives Financial Freedom and early retirement but it requires immense self-control and Discipline. On the other hand, it’s essential to understand that the FIRE method may not be ideal for everyone. If you prefer to live Frugally then surely this concept is ideal for you. And if something like saving and investing aggressively doesn’t suit your lifestyle then this concept might not be idle for you.