[Samantha Morell]

I’ve been immersing myself in personal finance and investing for the past four years, following various financial experts and their guides to get my financial life in order. While these frameworks are excellent for a typical career spanning several decades, I recently delved into the concept of Financial Independence and Retiring Early (F.I.R.E.).

F.I.R.E. is all about accumulating assets that can sustain your desired lifestyle, whether you choose to work or not. It’s about regaining control over your time, allowing you to make decisions that lead to a fulfilling life.

As I explored more about F.I.R.E., I noticed a lack of a comprehensive framework similar to DR’s Baby Steps or the F.O.O. method. So, I decided to create my own. Here’s a brief overview, keeping in mind that I’m currently on Step 5:

1. Save one month’s living expenses: Similar to DR’s Baby Step #1, this step aims to create a mini-emergency fund, adaptable to different living conditions.

2. Pay off debt (except the house): Building on DR’s Baby Step #2, living debt-free has brought me peace and simplified my buying decisions.

3. Create a second active income stream: Maximizing earning potential is crucial in retirement planning, except for individuals already at the top of their field or saving over 50% of their income.

4. Save for short-term obligations: Bundling short-term financial responsibilities, such as emergency funds, major life events, and down payments, ensures financial security in the short term.

5. Make your job optional: This step focuses on building a portfolio that can sustain a bare-minimum lifestyle, known as Lean F.I.R.E., offering flexibility in job choices.

6. Put down roots: Choosing where to live and paying off your home is essential. It’s about exploring living scenarios aligned with your vision of a fulfilling life.

7. Minimize Regrets: Achieving financial freedom means crafting a purposeful retirement, focusing on non-financial aspects of your dream life.

I believe this roadmap could be beneficial for anyone embarking on their F.I.R.E. journey. What are your thoughts on this approach?

[Evan McFarley]

I retired at 54 without a concrete plan for building my nest egg. I believe much of my success was due to luck rather than meticulous planning. I just had $1k in pocket money with no job lined up, I spent my time reading the New York Times, where I stumbled upon an ad from Vanguard and began working, saving, and investing in Vanguard funds.

Over time, I managed to purchase a house and paid it off in just five years. Additionally, I bought an apartment for my son. I also dabbled in investing in physical gold, which unfortunately didn’t yield favorable results. However, I had a successful market timing experience in 2020, which further bolstered my financial standing.

Interestingly, I didn’t follow any investment gurus along the way. Instead, I attribute much of my success to luck.

[Beth Wilkes]

Here’s a snapshot of our financial situation: I’m 45, he’s 47, and we have one child who’s 6. We live in a very high cost of living area.

Assets: We’ve managed to pay off our house, which is valued close to $1M. Additionally, we have $250k in our 401k, $60k in index funds, $100k in a high-yield savings account, and our family car, a Toyota Corolla, is fully paid off.

After taxes and maxing out contributions to our 401k and my HSA, our monthly take-home pay amounts to $14.5k (excluding our annual bonus, which adds another $40k per year post-tax).

Here’s how our monthly spending breaks down:

Property tax for our paid-off house: $850
Home and car insurance: $300
After-school care: $600
Utilities (electricity, gas, phone, etc.): $500
Gas for the car: $50
Food: $1200
All other expenses: $1500
Investing in index funds: $9000
Leftover fun money: $500
We have no debts.
Regarding our annual bonus, we typically split it between various purposes: investments, vacations (usually spending $10k-12k annually for one international trip plus several domestic getaways), home repairs, and contributing $10k per year to a 529 college savings account. However, these bonus allocations are not factored into our monthly income or expenses.

Both of us hold advanced degrees (JD and PhD), which led to a later start in our careers, necessitating a catch-up with our 401k contributions. Fortunately, we’ve managed to clear our student loan debt.

[Cody Bently]

While I wouldn’t strictly label us as Fat FIRE, my diligence in managing finances early in our marriage has set us up for the possibility of retiring or working part-time earlier than usual, probably between ages 45-50. I’m eager to escape the rat race as soon as possible. Here are some key lessons we’ve learned along the way:

Income tends to rise quickly in the early years of your career. To maintain your desired quality of life later on, it’s crucial to start saving a much larger percentage of your income early on than the typical 15%.

Lifestyle inflation and unexpected life transitions are real challenges that can eat into your ability to save. It’s important to be mindful of these factors and prioritize savings accordingly.

Compound interest is a powerful tool, and the earlier you start saving and investing, the more time your money has to grow.

Back in 2016, when our combined income was around $90k, we committed to saving 15% of our income for retirement, not including employer matches or mandatory pension contributions. This resulted in maxing out Roth IRAs, receiving a 4% match from my employer, and my wife contributing 12% into a pension system, totaling an effective savings rate of around 25-30% for retirement alone. Additionally, we saved aggressively for a house down payment and managed to purchase a home in 2018 for $160k with a $35k down payment on a 15-year fixed-rate mortgage at 3.25%. As our income increased, we continued living at the same quality of life to avoid lifestyle inflation and focused on paying off the house early, which we achieved in 2022.

By the time our combined income peaked at around $120k, and with my wife expecting our second child, I received a job opportunity with a salary of approximately $100k. We realized that with our intentional avoidance of lifestyle creep, we could comfortably live off my income alone and avoid childcare costs and logistical stress. With a recent raise, my current salary is around $110k.

My current employer contributes a generous 12% of salary to a SEP IRA, and we continue to max out our Roth IRAs and Family HSA. This brings our retirement savings rate back to around 30-35%. Additionally, we allocate $1000 total per month ($500 each) into 529 college savings accounts for our kids, as well as $400 per month into a high-yield savings account for miscellaneous savings. At 30 years old, we have roughly $300k in retirement savings, $280k in home equity, and other savings and assets totaling around $50k.

As we receive raises moving forward, we plan to enjoy life a bit more, especially as our kids reach ages where we can enjoy experiences together. While I’m not dead set on retiring at 50, I value having the mental freedom to leave any employer without hesitation. If my wife decides to return to work when the kids are older, we may have even more opportunities for FIRE or FAT FIRE. Looking ahead to age 60 with our current savings rate shows a comfortable, inflation-adjusted lifestyle, so we’ll see where life takes us.