In FIRE We Trust

Many of my regular readers know how passionate I feel about FIRE (Financial Independence Retire Early). It is a goal that I live and breathe by. I think achieving FIRE at an early age, especially under challenging circumstances is the greatest demonstration of positive personality traits.

This is why I felt slightly affronted when this article appeared in my newsfeed.

Disclaimer: I am 100% pro-freedom-of-speech. Articles like these, whilst I do not agree with, bring diversity into the debate and injects positive intellectual stimulation into the community. I, therefore, would like to thank Hank Coleman for making the contribution and encourage everyone to continue creating deep and meaningful content like this one.

Problem 1: it doesn’t understand the philosophy behind FIRE

FIRE means that you work hard, save and invest early in life to retire before reaching old age.

This was the central argument against FIRE in the article. There are two key errors in the logic:

  • It is framing these activities negatively. I don’t think anyone can argue that working diligently, exercising financial prudence and literacy are bad traits. So why on earth would these be held against the FIRE community?
  • Mistaking the means of achieving FIRE as the end. Correct, FIRE does involve working hard, saving diligently and invest the savings early. However, these activities are performed to enable the attainment of financial freedom, which is ultimately linked to greater happiness and fulfillment. These actions themselves are not the goal but merely the means to achieve the end goal (i.e. personal happiness).

Problem 2: stereotyping the FIRE community

The main problem with the FIRE movement is that it implies you hate your current job and want to escape it as soon as possible by retiring early.

My second criticism against the article is that the author decided to group the entire FIRE community into the stereotype of job-loathing desk drones eyeing at the fire escape and ready to leave as soon as the conditions are right. In reality, I don’t think this can be further from the truth.

Granted, a proportion of the community or even a significant minority do dislike their job and are seeking the aforementioned escape from the daily grind. However, most of us do not pursue FIRE in order to escape from our jobs. In fact, people who do that tend to run into issues in retirement because they had nothing to retire towards, just as the author had identified in the article quoted in his own post.

Instead, we pursue FIRE because it offers freedom:

  • Freedom from unforeseen expenditures without getting into debt
  • Freedom from financial hardship caused by no-fault employment change (e.g. redundancy)
  • Freedom to pursue your passion
  • Etc…

Most importantly, having the freedom to live lives on our own terms without it being dictated to by a boss or external circumstances is what motivates most of us in the community.

Problem 3: retirement needs redefining

Further, many people say that they ‘retired early,’ but that’s not truly the end of their working life. That’s why FIRE is a bit of a misnomer.

Here’s the dictionary definition of retirement: the action or fact of leaving one’s job and ceasing to work.

This is what I call a negative definition because it is describing something that is not happening (i.e. ceasing to work, or not working) as supposed to something that is happening (e.g. actively pursuing another hobby).

The benefit of using a negative definition is that it is logically easy: if one has left work and is no longer seeking work then that’s retirement. Period. However, it leaves many gaps unfilled. If I have left formal employment and yet I receive income by writing this blog, a passion, does that count as work? Or does that count as retirement? Or maybe an active retirement?

As you can see, the boundary between work and retirement becomes increasingly blurred once FIRE has been attained and using the traditional definition of retirement simply isn’t sufficient in this community.

In fact, the author agrees with me as he then went on the write that FIRE simply means retiring from one career to the next, a more fulfilling one.

Problem 4: FIRE defies reversion to average

If you truly enjoy working overtime every week and saving as much money as possible, more power to you. However, if you would prefer to live in the moment, work average hours, enjoy hobbies, socialize on a regular basis and retire when you’re ready (instead of on a tight deadline), then the FIRE movement is probably not your best bet.

Imagine there’s a group of you who study the same number of hours each day for a test. Let’s also say that you all have the same level of concentration. When it comes to the big day, the key differentiator that drives different scores will be your own aptitude (i.e. how effective did your brain process the information encountered during the periods of study). If you look at the distribution of the results as a whole, you’ll likely to see a typical normal distribution curve. This is because aptitude is inherent as some people are born more intelligent than others.

An example of a normal distribution curve where the majority lies within the average range (the mean).

However, in a real world, people don’t dispense the same level of effort. Some are more conscientious than others and as a result, the ones who are born with less aptitude may apply themselves harder than some with greater aptitude.

This is the division between talent and skill. Talent you are born with, skill is a result of hours and hours of honing on your craft.

This often leads to instances where someone who is or average ability (e.g. Richard Branson being dyslexic) achieving outstanding results (through tireless trying and self-improvement).

The points made in the article (i.e. living in the moment, working average hours, socializing etc.) are not inherently right or wrong.

They simply represent life choices people can make.

Most people go through life living the exact lifestyle prescribed by the author. They form the majority on the normal distribution curve. They are not FIREd. People who are in the FIRE community have made the choice of foregoing the aforementioned activities and focus their energy to pursue activities often unimaginable to the rest of the population. They are the outliers by definition. That is why they could achieve a feat unimaginable to the rest.

Wrap up

The central thesis of the article seems to be that people who pursue FIRE are at the expense of their current happiness and fulfillment. In reality, this cannot be further from the truth. The underlying philosophy of FIRE isn’t really about finance (although it does play a critical role), it is about freedom. FIRE is not the end in itself but a means to achieve happiness and fulfillment in life.

Do you agree? Do you think the FIRE movement needs improving? Are you a supporter or critique? I’d love to hear your thoughts. Please comment away as usual.