FIRE, which stands for Financial Independence and Retire Early, is getting more popular.
People following FIRE try to save a lot of their money in investments, aiming for a goal amount that lets them withdraw enough to cover what they’d make at work.
Jessica Fick and her husband, Corey, who run The Fioneers, a financial independence website, say this plan isn’t for everyone. Jessica points out, “Not everyone earns a lot or can live on $30,000 a year.”
The Ficks, both 36, have defined five levels of financial freedom. Right now, they’re at the third level, called “Coast FI.” This means they’ve saved enough to retire in their 50s and use their current income for daily expenses.
Here’s a look at the five stages:
- Freedom from Debt
First, you need to get rid of debt. The Ficks think some debts, like a mortgage, can be okay for your finances.
But, it’s important to pay off debts with high interest, like credit card bills, to have more money for retirement.
Corey says, “Getting out of debt lowers your monthly expenses. Without debt, you can save more or work less.”
- ‘F You’ Money
This level isn’t just about having a certain amount of money. Jessica says, “It’s about feeling safe. It’s having enough to leave a bad situation or try something new, like quitting a stressful job or starting a business.”
The amount you need changes based on things like family or job options. It might include investments, but you need to be ready to use this money.
Jessica adds, “It’s not really ‘F You’ money if you’re scared to spend it.”
