The FIRE Debate

The FIRE Debate

Today’s post gives my take on the current debate around FIRE.

My take

Towards the end of 2019, Monevator kicked off a debate around the purpose and meaning of FIRE – Financial Independence, Retire Early.

  • He published five articles showcasing a debate between the three main authors on the site, who each have different takes on FIRE.

As usual, the articles drew a lot of comment, and other bloggers have joined the discussion.

  • I was particularly impressed by a post on Simple Living In Somerset.

The central questions appear to be:

  1. How frugal should you be in order to hit your FI number as soon as possible?
  2. Should you RE as soon as you are FI?

My take on all this is that unlike many areas of finance and investment, there’s no right answer here.

  • And that there is a continuum between what are being presented as all or nothing decisions.

If we break FIRE down:

  1. FI is a pretty good thing, for almost everyone.
    • It’s freedom, and your time becomes ever more valuable as you get older.
  2. Whether you should RE depends on a few things, including:
    • Your personality – can you cope with being at home when everybody else is at work?
    • Whether you enjoy your work.
    • The availability of said work at a convenient location and in an environment you can tolerate, for wages that you don’t find insulting.

Some people will want to RE (I know I did) and others won’t (my partner, for instance).

My journey

I grew up poor, which I didn’t like, for pretty shallow consumerist reasons.

  • I wanted the stuff that my richer friends had, and that I could see on TV.

I was good at school, and the teachers promised that if did the right subjects (ie. not the enjoyable ones) I would end up with a good job.

  • I won a scholarship to a top university, where my lack of cash came to the fore once again.

I toyed with research but decided there was no money in it.

  • So I joined the workforce in the teeth of the early 1980s recession.

All I could get was a crappy, poorly-paid job (which until the recession had been done by non-graduates) which was 250 miles from home in a town that I had to look up on the map.

  • At this point, I decided to follow the money.

Big Bang (deregulation) hit the City of London a couple of years later, and I headed towards the banks – I was writing software, running dealing room networks and eventually managing property projects.

  • With each job change (and there were a lot of them), I targeted a pay rise.

I got some decent jobs, but not the best ones, as I’m not a good enough bullshitter and I can’t keep my mouth shut.

  • Y2K put the kibosh on the pay escalator, and post the Millenium, I was generally doing more work for less pay.

But I got there before the end.

Around the time I decided to focus on cash – way before I had heard of FIRE – I built my first long-term spreadsheet model of how I would put together enough money to retire.

  • Divorce in my late 30s knocked me off track, but we didn’t have kids, so the blow wasn’t fatal.

Favourable tax changes in my 40s allowed me to save much more easily and I hit FI at age 50.

  • I retired for a year and then when back for a brief stint at a charity before retiring forever.

That was eight years ago.

What’s changed

In some ways, a lot has changed since I started work, and in other ways not much has.

  • It was never easy to buy a decent house, whatever people say, though it used to be easier to persuade people to lend you the money
  • In a similar vein, old people have always had a lot more money than young people – we all exchange human capital for financial capital as we move through life

What has changed?

  • Interest rates are much lower, which means that debt is “easier” and prices are higher
  • Grade inflation and the Blair university revolution means that education has been devalued
  • The internet makes it much easier to be a bluffer, and people are less likely to take the time to learn things properly
  • Social media means that we hear a lot more from people who aren’t winning at life
  • Workplaces have generally become more precarious and more toxic and therefore work less enjoyable
  • The world, in general, has become more juvenile, and people in their twenties and early thirties lean on their parents a lot more than they used to do

But the general approach to FIRE – and to life – is still the same.

The recipe

The recipe for FIRE is pretty simple:

  1. Work out what standard of living you need in retirement, and how big a pot you will need in order to generate that cash each year
  2. Maximise your earning potential to the level that you can tolerate the associated downsides
  3. Spend less than you earn
  4. Avoid debt other than a mortgage on the house you live in
  5. Invest in a diversified portfolio with as much risk (and hence reward) as you can stomach
  6. Check your progress every year or so and adjust course as necessary
  7. Be patient – unless you are lucky, this could take decades (25 years in my case)

Where people disagree tends to be around the level of money needed in retirement (hence BaristaFIRE, leanFIRE, fatFIRE etc – though you can adjust for much of this in the UK be relocating to a low cost of living – LCOL – region) and the time you should take to get there (eg ExtremeFIRE ), which in turn drives the level of frugality required.

  • Some people want to work part-time rather than retire completely, but I think that fulfilling part-time work is pretty much non-existent at present.

There are also variations based around whether you want/have kids (FIRE is significantly easier without) and the attitude of your partner to FI and RE.

Note also that if you retire very early, you have a very long retirement to navigate.

  • And the decumulation phase is much trickier than the accumulation phase (because you don’t know when you will die).

The paradox here is that those who stress the RE part of FIRE usually justify this by saying that work is horrible.

  • Yet they say that you should suck it up for 20 years so that you can be rid of it.

This isn’t such a big paradox for me.

  • Working hard is easier to take when you are young, and it becomes ever harder to remain attached to the greasy pole once you are past forty.

A related issue is the tendency of the hardcore FIRErs to decry spending money on anything – they say that pretty much everything isn’t worth the money.

  • Again, I think there is a continuum here – some splurging is good, but not so much that it no longer feels like splurging.

You just need priorities, a budget and the discipline to stick to it.

Getting back to the personal, I live in a very expensive area (central London) so I had to save a big pot of cash.

  • I’m also not frugal in all areas of spending, and I used to be worse in my 20s and early 30s.

So the FIRE journey took me a fair amount of time, which I was fine with.


FIRE is a journey, not a competition.

  • There’s no pressure to retire earlier than someone you read about on the internet, or even than your neighbour.

You get to choose how hard you save, what you can sacrifice, what you need to get by and how long things take.

  • Focus on the FI and the RE will take care of itself.

You’ll know when the time comes – if it comes at all.

  • Until next time.

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Mike Rawson

Mike is the owner of 7 Circles, and a private investor living in London. He has been managing his own money for 35 years, with some success.

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