I quit my miserable day job the day after turning 32 years old.
And I never turned back.
That was more than five years ago. Life has been wonderful.
I gave up millions of dollars in exchange for time and freedom. Absolutely zero regrets.
Financial independence and retiring early (FIRE) was the ultimate goal for me. I realized in my late 20s, after losing my job during the Great Recession, that I could not stand to live a life that wasn’t free. I needed to live on my terms.
And so I set out toward buying my freedom. I took on that mission with an almost inhuman level of consistency, focus, and determination. I went from below broke to financially independent and retired in just six years.
It’s worked out tremendously well. FIRE is a dream come true. And it can be a dream come true for almost anyone out there, as I lay out in 5 Steps To Retire In 5 Years.
I was able to start covering my personal essential expenses in life with my personal passive income at 33 years old. Mission accomplished.
That, for me, is the definition of FIRE.
As long as I can make sure rent is paid, food is in my belly, and the basic bills are covered (without having/needing a job), I’m good to go. The rest tends to work itself out.
Now, I’ve always looked at financial independence as the beginning, not the end. Achieving financial independence should be just one chapter in an otherwise fantastic book of your life.
Financial independence is simply a financial platform that allows you to build a customized and enjoyable lifestyle.
My FIRE lifestyle these days is all about waking up when I want, consuming/creating content, exercising, eating delicious food, and spending time around people I love.
I try to go to bed each day smarter than I woke up, make the world a slightly better place, and have a great time along the way.
It’s the perfect lifestyle for me. It’s the same lifestyle I’d choose to live even if I had millions of dollars.
This customized lifestyle is possible because of financial independence. I put a financial platform in place that allows me to live my best life.
Likewise, if you want to live the FIRE lifestyle of your dreams, you need to put your own financial platform in place.
But it’s impossible to put this platform in place if you don’t know what it is.
You can’t arrive at a destination if you don’t know where you’re going.
Define Your FIRE Number
If you want to achieve FIRE, the first thing you must do is actually define FIRE and your FIRE number.
If you don’t know what it is you’re trying to achieve, you can’t possibly achieve it.
Maybe your version of FIRE is just being able to cover the basics in life so that you can quit your job, dabble with hobbies, and spend more time with family.
Or maybe FIRE is $100,000/year in passive income because you like yachting around Ibiza.
The important thing is that you actually define what FIRE is for you.
What kind of lifestyle do you want? How much will it cost? When do you want to achieve it?
I’ve always been a big fan of SMART goals.
If a goal isn’t specific, measurable, achievable, realistic, and time-bound, it’s unlikely you’ll achieve it.
As such, you need to put up a number and a time frame to shoot for. You absolutely must define FIRE for yourself and the number that is required for you to be FIRE.
For example, you need to say, “I’m going to earn $1,500/month in passive income by the time I’m 40. I think that’ll be enough to cover my basic living expenses at that time. That’s FIRE for me, which allows me to quit my job and do stuff I enjoy.”
That’s a specific, measurable, and time-bound goal example.
Whether or not it’s achievable and realistic will depend on a host of individual factors.
Your FIRE vision and number can certainly change a bit as time marches on and you learn a bit more about what you want/need.
But without putting up this number in the first place, you’re driving in the dark. You can’t possibly reach FIRE if you don’t know what or where FIRE is.
I think, just as well, it’s very important that you define your “enough” in life. If you don’t know what enough is, you’ll be forever cursed to chase more.
Vicki Robin defined enough like this:
Enough is not the minimum amount for survival; it is the exact amount that gives you fulfillment without excess. There is nothing in your life that is more valuable than your time.
I couldn’t agree more.
For me, my FIRE goal was the same as my enough. When I hit FIRE, I stopped focusing on money. I had enough.
But it’s impossible to ever have enough if you don’t know what enough is.
Define your enough. Aim for and achieve it. Then live life on your terms.
My FIRE Number And Definition Of FIRE
I shared my definition of FIRE above, but I’ll repeat it.
My definition of FIRE is being able to cover personal essential expenses with passive income.
That’s it, folks. It’s not complicated for me.
I’ll give you some real-life perspective on this.
My personal essential expenses these days average about $1,100/month.
That’s including my rent, the food I eat, electricity, transportation, toiletries, my mobile phone, etc.
That’s a very favorable spread between passive income and personal essential expenses.
Now, I have some luxuries in my life. I have a gym membership. I drink a lot of fancy coffee. I’ll travel occasionally. I also cover some expenses for my significant other here in Thailand.
These are all voluntary and complementary additions to an everyday life that is already very enjoyable. Most additions are covered by passive income anyway, because of the spread. Beyond that, active income kicks in.
Way too many people endlessly obsess over the early retirement math. That early retirement math is mostly moot.
I might have some luxuries and additional expenses that I choose to have in my life, but I don’t need to make sure passive income covers all of this. It’s unnecessary to make sure every dime I ever spend is covered by passive income.
That’s because I’m not 90 years old and incapacitated. I’m still in my 30s. I like to take on passion projects. And these projects sometimes generate income.
I’ve received plenty emails from potential coaching clients who feel like they need to have 200% or 300% of expenses covered with passive income. I think that’s total overkill.
Maybe these people suffer from OMYS. I don’t know. But waiting until you have some ridiculous margin of safety for FIRE sounds a lot like waiting for Godot to me. It’s almost like they’re subconsciously making it too difficult to reach, so that they don’t have to overcome their own fears and actually pull the trigger.
The truth about FIRE is, it’s vital to have the three P’s – passions, productivity, and progress – in your life. No matter how rich or poor you are, you need a meaningful life that allows you to productively progress forward with your passions.
I have yet, in all of these years of meeting people from all over the world, to meet anyone who quit their job at a young age only to then never again earn another dollar of active income. That’s not realistic. You’re going to want to stay active and have hobbies you enjoy. And you’re gonna make a few bucks with some of these hobbies. It’s just the nature of things.
My original FIRE goal was to generate $15,000/year in passive income by the time I turned 40.
That was my FIRE number. I was targeting spending $15,000/year on essential expenses.
You’ll notice that I repeated this number many times in the numerous interviews I’ve done (like this one with USA Today).
But I started to lower that target ever so slightly over time as I grew weary of my job and simultaneously became more creative with keeping essential expenses down.
I found my personal essential expenses running about $1,000/month at 33 years old, which was covered by passive income. I hit my “crossover point” and reached FIRE.
Admittedly, though, I was only FIRE insofar that I was able to maintain a very low base of spending.
Moving abroad and taking advantage of geographic arbitrage has made living off of passive income much easier, as I’m now able to essentially live like a millionaire on 1/3 the money. I haven’t stressed about money in years.
Of course, I’m now way over $15,000/year in passive income. So I still met my original goal anyhow. But much of that, particularly over the last few years, is due more to the compounding dividend snowball than any of my own effort.
Your Definition Of FIRE Is Your Own
So that’s my definition of FIRE and what kind of passive income I need to be FIRE.
But it’s up to you to come up with your own definition and make your version of FIRE a reality.
Please keep in mind, your FIRE number doesn’t have anything to do with anyone else. It’s only about YOUR personal situation.
It’s your goal, your lifestyle, and your needs.
Don’t worry about what anyone else is doing. What your neighbor or co-worker is doing doesn’t have anything to do with you.
These competitive comparisons that people make only serve to cause more harm than good. People only compare upward, which is why Theodore Roosevelt was correct when he stated:
Comparison is the thief of joy.
I mean, there are millionaires out there who are miserable because they know some other millionaire has more than them. These people might have money, but they don’t have enough. Because they never defined enough. And so they’re cursed to chase more. It’s honestly sad.
Speaking of comparisons, one thing that has concerned and puzzled me over the years is how many comments, tweets, and emails I’ve gotten from people who are trying to “catch up to me”, as if this is some kind of competition.
Look, I’ve always wanted to inspire you to make your dreams come true. But your dreams are your own. And the amount of money you need for those dreams is up to you.
I’m transparent because I want to show possibilities and what the journey to and through FIRE looks like for one guy, but using me as some kind of proxy for yourself is a big mistake.
My FIRE number, and my lifestyle, almost certainly has absolutely nothing to do with you.
Unless you’re exactly me, I don’t see how my passive income or lifestyle objectives are relevant to what you should be doing.
I’ll give you a few examples of what I mean.
Some people have/want kids. Most of you readers live in the States. A lot of people own cars.
None of that applies to me.
I quit trying for FIRE more than three years ago, after I attained enough. The day I saw that passive income was covering my essential expenses in life was the day I laid off the gas pedal and stopped focusing so much on money. I was never interested in endlessly accumulating assets. Dying as the richest guy in the cemetery isn’t appealing to me.
Anyone trying to “catch up to me” is chasing a ghost. Saving money and buying stocks ceased to be a major priority in my life a long time ago. I knew that the power of dividend growth investing and compounding would mean I’d inevitably have way more wealth and passive income than I could ever conceivably need, even if I totally stopped investing.
Moreover, moving abroad basically tripled my local purchasing power. My $1,500/month in passive income is roughly equivalent to $4,500/month in any desirable US city. So that’s the number you’re actually shooting for if you find yourself unable to stop comparing things. But unless you’re Jason Fieber (are we twinsies?), these numbers are irrelevant to you.
I want my journey and ideas to be of value to you. If there’s anything I want to be remembered for, it’s inspiring people. But only in the sense that I inspire you to be free and live life on your terms.
Most people don’t have the same terms as me, so my numbers should only be looked at as a gauge for what’s possible based on the terms I share with you. You’ll have to adjust your numbers for your terms.
If you want to achieve FIRE, you must first know exactly what FIRE is and what kind of money it’ll take to achieve it.
Define it. Write down a number and a time frame. Make it a SMART goal.
Know your enough. Attain it. Then move beyond money and live life on your terms.
But make sure this is your enough. What someone else on some forum board thinks is enough has nothing to do with you.
FIRE as both a number and a lifestyle is highly subjective and individualized. The only thing that matters is that you’re content with the money you have the life you live. Having more for the sake of more, and/or living a life you don’t really like, isn’t gonna cut it.
I’m extremely happy with what I’ve got, what I’m doing, and where I am.
However, I could see how others might want more. I understand that some people want to have a big family. I also get that others want to live in the (more expensive) United States. Some might be just fine with a lot less, too. To each their own.
Don’t spend time worrying about what anyone else has got. That’s a total waste. Instead, pour your resources into attaining your defined enough and then living the life of your dreams!
What do you think? Have you defined FIRE? What is your FIRE number? What’s your enough?
Thanks for reading.
P.S. If you’re ready to achieve financial freedom as soon as possible, check out some awesome resources that I personally used on my way to becoming financially free at 33!