Weekend Reading: The Problem With FIRE Edition

The Problem With FIRE Edition

The FIRE movement (Financial Independence, Retire Early) has taken the personal finance blogosphere by storm of late, with numerous bloggers chronicling their journey towards financial independence. Several high profile bloggers have even achieved FIRE, gaining wide spread attention from mainstream media and leading to book publishing opportunities.

The quest for financial independence certainly isn’t new and often boils down to a desire to ditch the cubicle and “find your passion”, whether that’s blogging full-time, writing a book, or living a location-independent lifestyle.

But there’s an air of privilege surrounding most FIRE stories: A stereotypical tale is the high-earning, childless couple living in remote U.S.A., saving 70 percent of their income and looking to retire by 40.

There’s also the question of what early retirement actually means. Leaving a corporate job to pursue your passion isn’t retiring; it’s called a career change. Instead of answering to an employer, you answer to yourself. While that’s a dream pursuit for many of us, by definition it’s called entrepreneurship, not retirement.

The FIRE community is also dominated by men, a fact not lost on lawyer and freelance writer Madeleine Holden, who documented the batshit lengths these guys go to retire by age 40. Gender discussions are quickly shutdown on FIRE forums, ignoring the unique challenges of saving while female.

Another problem with FIRE is the idea that anyone can just pull up their bootstraps and save enough to leave their job within a short period of time. In conventional FIRE wisdom you need to save 25x your annual expenses before you call it quits. That’s a tall order for most of us, especially those living on a modest income or dealing with any number of challenging circumstances (health, location, etc.). It’s easy to preach FIRE from a position of privilege.

Michael James argues that FIRE is within reach even for those with modest means, but the problem he says is that we design expensive lives for ourselves with big houses and long commutes.

“A few good early choices can set you on a great path for life. But make the wrong expensive choices early and you’re committed to a path of paying off debt for decades.”

My issue with the FIRE community is not the pursuit of financial independence but the Derek Foster-ian “I retired early, and you can too” articles that fail to highlight the unbelievably extraordinary circumstances that lead to someone retiring at 38.

It’s no secret that I’m pursuing financial independence, but the idea of early retirement hasn’t entered the equation. If I decide to leave my public sector job it will be to continue promoting financial literacy through this blog, writing my column at the Star, and through my fee-only financial planning practice.

When work is highly enjoyable and fulfilling it ceases to become “work” and the thought of retiring full-stop rarely enters the mind. That’s my FIRE pursuit.

This Week’s Recap:

On Monday I wrote about solving the home bias in my portfolio by switching to Vanguard’s new all-equity one-ticket global ETF (VEQT).

On Thursday I offered some suggestions for what to do with your tax refund.

Promo of the Week:

TD Bank has released a trio of excellent offers for its travel cards that are worth a serious look for travel rewards collectors. First up, you can get up to $400 in travel and the first year free when you sign up for the TD First Class Travel Visa Infinite Card. I’ve used the card in the past but have never seen an offer this strong. Best to redeem these points for hotels on Expedia.

If you don’t meet the income requirements for the Visa Infinite version you can grab the TD Platinum Travel Visa Card. You’ll still get the first year free and up to $250 in travel rewards.

Finally, the best offer of the bunch is the TD Aeroplan Visa Infinite Privilege Card, which comes with a steep annual fee ($399) but offers a juicy 50,000 Aeroplan miles (25,000 miles after first purchase and another 25,000 miles when you spend $1,000 in the first three months).

Weekend Reading:

It’s been a while since the last U.S. recession (2007). Morgan Housel shares his thoughts on what lies ahead.

Squawkfox blogger Kerry Taylor looks at behavioural economics and how to rewire your brain to master money.

The Irrelevant Investor Michael Batnick explains the irrational behaviour of what happens when you win and lose.

Speaking of irrational behaviour, PWL Capital’s Ben Felix thinks one of the single biggest challenges for investors is understanding that dividends do not matter:

An interesting piece on why insurers write off your car rather than paying for the repair. It seems like new tech is to blame:

“We actually see more cars getting totalled than we have in the past because the cost to repair them is higher than it has been historically.”

Downsized: How a late-career job loss during prime earning years can derail retirement plans.

Are you the money person in your relationship? Here’s why that’s problematic.

On that subject, Mark Goodfield of the Blunt Bean Counter blog shares some advice to help bridge the financial literacy gap with your spouse.

Is your company Group RRSP any good? Here’s how to make the best of a bad plan.

Nick Magguilli says the difference between the natural world and the investment world is there are no laws, only tendencies.

Cut The Crap Investing blogger Dale Roberts takes a long look at annuities and reviews the excellent book, Pensionize Your Nest Egg.

Finally, this father was shocked to learn the incredibly high fees charged on his child’s RESP, which his “advisor” put into segregated funds with an MER of 3.61 percent. Criminal.

Have a great weekend, everyone!

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  1. Gene on March 9, 2019 at 8:07 pm

    I enjoy reading your blog. Thank you for sharing your ideas and thoughts.

    • Bella on March 10, 2019 at 6:52 am

      This is nonsense and includes reference to another article that is downright offensive nonsense.

      Of course retiring exceptionally early requires exceptional circumstances, but the FIRE movement is about retiring early, as in, earlier than traditional retirement age.

      Many of the members of the FI community have retired in their 40s and 50s, which is still remarkably young in a society where people increasingly have to work into their senior years.

      The FI community isn’t actually very extreme in general. It’s about minimizing wasteful spending. It’s amazing the mental gymnastics people go through to try and criticize that.

      Sure, a few of the biggest bloggers are more extreme in either income or lifestyle or both, but that’s because no blogger will make it big writing about living a normal middle class lifestyle on an actual middle class income, while minimizing debt, and saving significantly more than most to retire earlier than 65…riveting…and yet that’s who most of the FI community are.

      Generalizing about our community based only on our few online celebrities is silly.

      Also, citing that terrible and offensive article by Madeleine Holden doesn’t give your article much credibility.
      I can tell you, it’s not the men over on some FI forums that are taking most offense to her sloppy hack job, it’s the women who are most enraged.
      Yes, the women, who make up a huge proportion of the FIRE community, where gender discussions are frequent and in depth.

      I get it, articles all spouting the same poorly researched and easily refuted claims about the FIRE community are all the rage today. I hope you benefit from the clicks, but consider writing something with more substance and perhaps more relevant facts.

      There’s a rich supply of angles you can take on the FIRE community and this one is hackneyed and Suze Orman already jumped the shark on it.

      • Gene on March 10, 2019 at 8:43 am

        Bella, I assume you didn’t meant to respond to my comment as your comments refer to the main body of the post.

        Every one has their own life and path to live. I simply enjoy reading different perspectives.

        I also get frustrated with people who say… “once I have FI I can do what I want”. This is a limiting belief.

        I’ve been doing what I want my whole career… from 10K in student loans, to a 350k mortgage, to debt freedom, to where I am now (which I won’t share).

        I have made experiences and income the priority, not frugal living. But I have also been deliberate in my spending decisions. My family and I spend a lot of money every year enjoying life… but we can also fully retire at any time and still enjoy life. However, I would be bored and wouldn’t have as much fun as I am now with work and family adventures. I like building businesses and the thrill of introducing new products to market. Also, having an income means dropping 10K on a family vacation to Europe doesn’t feel like a big hit into savings.

        I don’t blog about it as I prefer doing and building than writing about it. 🙂

  2. Kerry on March 9, 2019 at 9:04 pm

    Hi Robb, Thank you so much for sharing my post. It feels good to be back blogging. 🙂

  3. Frito on March 9, 2019 at 11:05 pm

    You are correct about the FI of FIRE being the more important of the two. Once you have gained financial independence your choices are unlimited. You can do what you want without the pressure of having to make a living at it. Besides, retiring itself has changed over the years. It’s not the same as what our parents or grandparents experienced.

  4. Dale Roberts on March 10, 2019 at 9:19 am

    Great post, most appear to move a new line of work. I always refer my current gig as a new life work stage. I’m a retiree that wakes up at 4 am or 5 am to start work that is not work.

    It will take a different shape and form for everyone. I am glad that I will never have to retire. I’ll just have that FI.

    Thanks Robb for the post and links.

  5. mike on March 10, 2019 at 9:31 am

    Please do not use the “P”word unless you provide context, most FIRE people I know started from nothing and are self educated and put in long hours of work and lots of personal sacrifice to get to FIRE.
    I hate hearing that simply because I chose not to go into insane amounts of debt, invest wisely the money I make from a very physical trade job that I work 60 hours a week at makes me “privileged”. If you want to experience my priviIege come to my work and work on broken down crane over a 1000 degree tank of molten lead where one drop of sweat into the lead will get you maimed and going in for quarterly lead level tests. If that’s not fun enough we have the sulphuric acid tanks that are a laugh to work around.
    This a very well paying job and we are actively looking to recruit women to work with us but sadly when they realize the physical dangers and health/reproductive ramifications they are never seen again.
    A vast number of the people(men) would love to have their “privilege” taken away and given to someone else but no one wants it, they just sit safely on the sidelines and holler that we should not have “privilege” for our shorten lifespan and ongoing health issues and that we are experiencing.
    It is funny how demanding yet well paying physical work is now a privilege.

    • Gene on March 10, 2019 at 6:52 pm

      Well said Mike

  6. Alexandra Macqueen on March 10, 2019 at 10:25 am

    Thanks for the (indirect) shout-out! Interesting to me that Pensionize is getting some new attention . . . but I guess not really surprising, given the continuing demise of the DB pension + increasing lifespans (and increased awareness of longevity risk generally)

  7. Manish Shah on March 10, 2019 at 11:24 am

    Which Robo Advisor would you personally recommend; Nest Wealth or Wealthsimple?

  8. mike on March 12, 2019 at 12:49 pm

    According to Ms Holden, male FIRE are followers of incel, nerds who can not meet women, slobs and losers. If the article was written with this slant towards women it would be classified as misogynistic.
    Most of the men that I know that are in FIRE are doing it for a better, more fulfilling life for their wives and children and make these sacrifices willingly. By FIREing they have the ability to have family choices so if Mom wants to stay at home and provide for the children and nurture them she can(more of the loser traits I guess, that make these men undesirable).
    What most men do know is practice stealth wealth, where it is not flaunted since it draws unwanted attention, it use to be celebrated that a man could provide for his family financially and emotionally. Now a lot of men withdraw from society they are pillarized and labelled as incel.
    What I constantly hear from a lot of young women is how they can not find men who want to commit to relationships and why would they, just to get constantly beat down and ridiculed like in the above authors article.

  9. Lisa on March 15, 2019 at 1:03 pm

    everything about this article rubs me the wrong way. As a female, I don’t think it is any more difficult for me to lead a frugal lifestyle than a man. There is no law that says all women must spend hundreds of dollars a month on hair, nails, clothes etc. and there are cheaper alternatives if you feel you NEED that appearance. It is all about choices in life and spending money consciously on things that are important to you. For me those things tend to not be very expensive. I experience the outdoors, have friends over instead of expensive dining out. I do not miss $200 cable bills, I drive a 12 year old reliable car, the list goes on. I am 36 and on track to “FIRE” when I am 40. Nothing about reaching that goal has been because of privilege. I went though a divorce, sacrificed years working strenuous, remote jobs, did not inflate my lifestyle and made deliberate choices in pursuit of this goal. I have a chronic illness and working until Im 60 is not an option. Good for you if you love your job and cant imagine not doing it. To me that is privilege. Don’t look down on others who aren’t so lucky and are making other plans.

  10. David on March 27, 2019 at 4:56 pm

    The problem with FIRE is the majority of self proclaimed “early retiree’s” simply call themselves retired to further their new career choice of self-employment. Whether it’s a blog or podcast, they are looking to stand out to attract an audience that will allow them to make money…aka a career change. Who wants to visit a blog of a guy retiring at 50 when you can read about someone retiring at 30! Or how about 25! It’s ridiculous what these people call retirement. Writing multiple articles every week with click bait article titles trying and working hard to make money. By their definition of retirement, everyone who has ever quit a job to enter self-employment is also retired. I agree with Robb, go for the FI but be realistic about the RE. I love how Mr Money Mustache “retired” so young yet makes over 400k from his blog. Sounds like retirement to me.

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