#30: Traditional FIRE Is Flawed. Here's Why..

August 29, 2023 • Estimated Reading Time: 8 minutes

I’m a huge fan of the Financial Independence, Retire Early (FIRE) movement. 

That’s what my social media is about! And it’s how I became financially free somewhat.

Traditional FIRE is about living minimally, cutting expenses, saving up the excess, and retiring once you build up to your target FIRE amount.

However, I quickly realized that there are flaws. Keep reading to learn why.

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The Basics of FIRE

The FIRE movement, which stands for Financial Independence, Retire Early, is a lifestyle that emphasizes on achieving financial independence and retiring earlier than the traditional age of 65-67. It has inspired many people to rethink their approach to work, money, and life.

The foundation of FIRE is built upon disciplined savings, smart investing, and mindfully spending. 

Earned Income → Minimal Spending → Difference Invested

The gist of FIRE is that if you save aggressively and invest it into diversified funds, you’ll be able to retire earlier. 

Sounds like a smart plan in theory, right?

Well, people often get hung up on the savings side of it when it comes to execution.

How FIRE Is Poorly Executed

Although most people are probably better off doing FIRE than not, there are drawbacks.

FIRE Requires Sacrifice But Not All

It’s true. Delayed gratification is a common practice for people working towards FIRE. 

Instead of saving and investing your money for the future, you could be spending that money on things that bring you happiness.

But delayed gratification should be a balance. What’s the point of depriving yourself until your target retirement age if you’re not living in the moment too? 

Imagine having a target retirement age of 45. From your first job out of college, you focus so much on FIRE that you miss out on the present. 

When you finally hit your number, what happens after? Are you going to call up your buddies at age 45 and be like “Hey! Let’s go to Europe like we planned for a bros trip!”. People’s’ lives do not revolve around your timeline so it doesn’t make sense to miss out on the present for this imaginary finish line.

People Focus On The Small Things

The first part of FIRE is minimizing your expenses. 

It’s recommended to focus on the big ticket items like housing, transportation, and food since those have a big impact on your recurring expenses and avoiding luxuries like buying Starbucks coffee or having a financed car.

That makes sense when you’re starting the FIRE journey. In consulting terms, these are the low -hanging fruits that come with a positive impact.

What I see a lot of people doing wrong is staying stuck in this cycle and even doubling down on it. Everything becomes a “money-saving” mission. 

Examples I’ve Done / Seen

  1. Driving 3-miles to get $0.05 cheaper gasoline → additional time spent to save $1.00

  2. Reducing insurance coverage for a cheaper policy premium → puts yourself at financial risk if an accident occurs

  3. Driving a 15-year old car because it’s paid off → could be more costly than a new vehicle due to repairs and inconveniences

  4. Driving around different fast food restaurants to get free birthday meals → time spent driving to consume an excessive amount of unhealthy food

  5. Keeping an old phone that has slowed down and having to constantly deleting photos and messages to free up storage → impacts productivity

People will do absolutely anything to save money, even if it negatively affects their life. At some point, you have to decide if it’s really worth it.

Not Seeing The Bigger Picture

People get into this never ending cycle of saving money and it’s tough to break out of. At one point, I thought about living in my car to save on $1,300 of rent a month in Los Angeles. 

It was very doable for me. My time in the Army prepared me to live in any condition. I could sleep anywhere, I didn’t have many possessions, and I already had a gym membership to shower. I would’ve considered this “luxury homelessness”. 

I was mapping out how I would actually do this and what were my solutions to different scenarios like where I’ll keep a water source, which areas I would park overnight to avoid tickets, etc. 

Then I thought about how much this would negatively impact my life. I would have to time my showers. I would have to find a restaurant or gym when I needed to use the restroom. I wouldn’t be able to cook. There would be so much inconvenience in my life all for saving $1,300 a month. In a year, that’s $15,600, which doesn’t even take into account the higher fuel costs and meals that I’d have to buy since I can’t cook. I quickly realized (not quick enough) that it was not worth my inconvenience.

Instead of going drastic with saving money, I decided to focus on increasing my income. After the initial measures of saving money, it becomes much easier to maintain the same lifestyle and make more money than it is to decrease your lifestyle in order to save money. 

It was this realization that made me stop focusing so much on saving money and to start finding ways to make more money. 

If you’re struggling to find the balance between financial wellness and fulfillment, I highly recommend reading Die With Zero by Bill Perkins, a successful energy trader as a hedge fund manager and high-stakes poker player. Bill wrote a well structured book and used real life stories to reason his point to readers.

I WISH I READ THIS YEARS AGO BEFORE I REALIZED THAT SAVING MONEY SHOULDN’T BE THE MAIN FOCUS! 

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