Can you save $2 Million by 2020? Read about a young professional that has that goal in her sights.
Disillusionment with unfulfilling work, the decline of the traditional social safety net (who has pension anymore?), and a desire for more economic security after the 2008 financial crisis are reasons that many FIRE enthusiasts say they’re making the commitment to save TON now for financial security in the not too distant future.
Many of the FIRE folks are living well beneath their means and some are even going to great lengths to save a high percentage of their income. I remember the days post 2008 when you’d see communities of coupon fanatics on Facebook who either paid nothing for a cartload full of staples or the store GAVE THEM MONEY BACK. The couponing took a lot of time but I don’t turn my nose up at it at all! Never buy full price!
FIRE groupies are taking it to the next level by making big sacrifices now. …and maybe they’re not BIG SACRIFICES. That was dramatic. They’re not living up to the marketing pressures of modern America. They’re driving their cars longer and buying used cars. They’re living in a smaller house. They’re not buying expensive bags, clothes and cosmetics. Instead, they’re putting away well beyond the 15% many financial advisors recommend to save to secure a solid retirement… after 35 years of work. These FIRE starters on on the fast track. They understand the power of compound interest over time and have figured out a way to do some low-cost investing. Read this great article from the Wall Street Journal that provides an window in to the FIRE experience.
A few headwinds:
Millennials have a higher jobless rate than the market overall. Many of them have student loan debt and those loans eat into their ability to save. An interesting fact: In 1970 90% of 30 year olds earned more than their parents did at a similar age. In 2014, only 50% did. Salary and wage stagnation is the name of that game.
If this is your first time reading about the FIRE movement or you’re interested in personal finance check out this resource for more information.