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A lot of folks in the personal finance community are pursuing something called FIRE: Financial Independence / Retired Early. This kingly status means you’re not only debt-free, but you’re able to live off of income or dividends in perpetuity.
It sounds like a hogwash fairytale, but plenty of people achieve FIRE by staying frugal and socking away their earnings in investments.
Over time, those investments yield dividends. Once those suckers get large enough, they evolve into what I like to call “f-you” money.
In other words, you’ve got enough cheddar to do whatever the heck you want.
Work is optional. You can sleep in until noon every day. Go hiking at 10 am on a Wednesday. Nobody can stop you!
Problem is, FIRE comes with so much freedom that some folks feel antsy about pursuing it. What’s life about when you don’t have to work?
5 next steps when you retire early
What comes next when money is truly no longer a concern? This time in your life is about going the road less traveled and finding new purpose. Use these 5 next steps to plan your personalized FIRE escape route.
1. To work or not to work?
As a FIRE’d individual, you don’t have to work. Your dividends cover all of your expenses.
So, what does that mean?
Maybe you’re FIRE, but you choose to work anyway. That’s certainly valid! Plenty of folks choose to keep working because:
- They want cheaper health insurance.
- They love their coworkers, boss, or job.
- They believe in the organization’s mission.
- Their job is part of their identity.
… and a ton of other personal reasons.
This is up to you. Some people love working for others, and some people can’t stand it.
Maybe you cut back your hours to part-time or maybe you quit work altogether.
Now’s also your chance to try self-employment. If you’ve always wanted to start a business but worried about the time or money, FIRE could be your key to self-employed bliss.
P.S. I’m not FIRE, but I am self-employed, and I can tell you it’s the bee’s knees.
2. Take care of yourself
If you’ve put yourself on the back burner during your pre-FIRE years, this is your golden opportunity to indulge in self-care.
And that doesn’t mean you have to take bubble baths every morning, either.
Taking care of yourself might look like:
- Finding an exercise regimen that you actually enjoy.
- Cooking nutritious meals at home.
- Meditating or journaling daily.
- Attending faith services.
- Getting some much-needed mental health counseling.
You do you, boo. FIRE is about having the time to care for yourself.
FIRE folks don’t have to go into the office every morning. With free-flowing money on their hands, they’re free to travel the world!
Plenty of FIRE people buy a van and trek across America. Some even take advantage of geoarbitrage (a fancy word for saying, “move somewhere cheaper”).
I have a frugal friend living in Panama right now. It looks like he’s at the dang resort every morning—I’m not jealous at all.
4. Pursue your hobbies
Got a love for model cars? Dog training? Painting? Acrobatics?
Well, if you’re working less, you’ve got time for those hobbies. Whether you devote more time to your existing hobbies or try something new, FIRE gives you that option.
Some folks take classes to get scary-good at these hobbies, too. Tim Ferriss actually went to the Tango World Championship (yes, it’s a real thing) in 2005 this way.
5. Give back
But maybe you’re not much for hobbies or work or travel. How can you pass the time in a meaningful way?
FIRE can include a charitable component, too. While some folks, like Mr. Money Mustache, donate much of their wealth, you can donate your time, too.
Animal shelters, Meals On Wheels, Habitat for Humanity, Big Brothers Big Sisters—they all need help. And, since you’re available during traditional business hours, you could do a lot of good during your early retirement.
The bottom line
FIRE is about having the freedom to pursue your dreams. The cool thing about financial independence is that it’s different for everyone.
Whether you love working your 9-5 job or want to sail away to Costa Rica, FIRE gives you more options.
Use this freedom to pursue your dreams. After all, a 40-year retirement is awfully long. Look forward to retiring by making a plan now.
Whatever you do, do something. FIRE is a big deal, and you deserve to live the life you dreamed of.
How about you? What’s on your FIRE list?
If you’re not FIRE yet, then learn ways you can earn some extra money to get there.
Contributor’s opinions are their own. Always do your own due diligence before investing.
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