F.I.R.E. explained and debunked

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F.I.R.E. is a very popular acronym is the Personal Finance blogosphere. It stands for Financially Independent Retire Early. Over the years, this concept has become more and more appealing, and no wonder. With major changes in the workplace, such as stagnant wages, the disappearence of pension plans and a higher unemployment rate, a growing number of people aspires to quit the grind….myself included.


Unfortunately, it will take some time before anyone is in a position of pulling the plug on their dreaded job, as a sufficient amount of money needs to be saved first.

Said amount will require thorough calculations first. Conventional wisdom says it should be 1 million or 25 times your yearly expenses. I say conventional wisdom needs to be challenged! I will save this for another post.

In order to save for the magic number, you need to make money, there is simply no way around this!


When you take a look at F.I.R.E. bloggers, most of them were making a decent income – well into the 6 figures, combined or not- before becoming financially independent (F.I.) . Some of them don’t have children or had them long after being F.I. Others chose not to buy properties or graduated with no student debt or had no debt at all.

The above definitely gives a head-start to anyone choosing F.I.R.E. It doesn’t mean you can’t achieve F.I.R.E. if the above-mentioned doesn’t apply to you. However, it may be more challenging and take longer.

The harsh truth is that F.I.R.E. will remain a dream for a lot of people.


In order to achieve F.I.R.E., you not only need to earn money, but also to cut down on expenses.

By doing so, you may realize you need less than you initially thought to live on.

Being frugal can be borderline with being cheap at times.

Frugality is not for everyone either. That being said, not being frugal does not prevent anyone from reaching F.I.R.E. either. It will just take longer.


A lot of people achieving Financial Independence actually do not retire or stop working. They choose to pursue different career paths instead, the most popular being becoming a writer and/or a blogger.

This is where the problem lies, in my not-so humble opinion. A lot of people blogs about retiring early and never working again, when they are actually still earning income instead of drawing from their savings!

The core concept is that F.I.R.E. gives you the ability to choose when and where to work as well as what to work on. Money is no longer part of the equation. This is what I personally find really attractive.


I would love to reach Financial Independence sooner than later. That being said, I don’t know if it is a possibility right now, and it is OK. I fully acknowledge my economic reality and the limitations of the F.I.R.E. concept.

I would also caution anyone not to take at face-value anything read on the Internet from people claiming to be F.I.R.E. We never have the “full picture” of their situations. We don’t have access to their bank accounts, investment portfolio or tax returns. We can never be sure where their income comes from.



Four phases to financial freedom

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If I asked 10 people about their definition of “financial freedom”, I would most likely receive 10 different answers.

Financial experts and PF bloggers have identified 4 financial stages that most of us will be in at some point. Most of us will eventually be in stage 3, financial independence, but very few of us will actually land in phase 4, financial freedom.

  • Phase 1, Financial dependence: we all start there. We are first dependent on our parents. Then, we are dependent on our paychecks. Money -or lack thereof- is not really a concern. We may be racking-up debt, not saving anything or both. During that period, we tend to make financial mistakes after financial mistakes after financial mistakes. We are usually jostled out of this phase by a single event, for example a job loss. In my case, it was becoming a homeowner.
  • Phase 2, Financial stability: at this stage, we take our money more seriously. We are focused on paying debt-off, on ensuring our bills are paid in full and on time and on having some sort of financial buffer, a.k.a. emergency fund. We may also start saving for retirement and learn about investing and personal finances.
  • Phase 3, Financial independence: In this phase, we are consumer debt-free. We may still have other debts such as a mortgage. Some will actually be completely debt-free. We also have a significant buffer and are well on track in our retirement savings. In this phase, we start realizing we have more options for our lives. For example, we may be able to change jobs or take extra time-off without any hardship on finances.
  • Phase 4, Financial freedom: This is the ultimate Graal. In this phase, we are free to live the life we want to live. Money is truly not a concern.

A lot of people confuse financial independence with financial freedom. They are not the same. The truth is that achieving financial freedom can be hard and take a long time.

I personally am in phase 2, financial stability, but teetering on phase 3. What about you? What financial phase are you in?