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'O Capitalism' relaunched -- Welcome to Catching FIRE!

June 17th, 2014 at 03:55 pm

In honor of the relaunch of this blog, I am rechristening it! It's new name is Catching FIRE.

"FIRE" was an unknown term to me until recently. It all started when I was listening to an episode of Marketplace Money, and heard an interview with the man who runs the website, Mr. Money Mustache. That interview caught my attention because he described the simplest way I've ever heard to determine whether one can retire.

Take your annual spending, and multiple it by 25. If your retirement fund is worth at least that, then you're good to go. If not, you need to either save more or cut spending until you reach that magical 25 times or 4% ratio.

Curious, I tried it. Our current annual household spending is around $40K. Multiply it by 25, and you get one million dollars. With my net worth sitting at around half a million, and the SO's at around $400K...

Wait, what? Is it true that we're that close?! That can't possibly be! I know we're very good savers, but to be 90% of the way to retirement by age 30 is simply absurd. As they say in The Princess Bride, "INCONCEIVABLE!"

I've been saving for retirement since my first job out of college, but actual retirement has always been a very abstract concept because it was such a long way off. I knew that theoretically I should front-load retirement savings while time and the power of compounding was on my side, but I never thought I'd actually reap the fruits until decades later.

In The Millionaire Next Door, financial independence was defined as the ability to maintain one's lifestyle without working for a wage. While that sounded like an awesomely powerful achievement, most of the millionaires in that book were self-employed entrepreneurs. I knew that entrepreneurship wasn't really my style, so I figured that particular brand of financial independence was out of my reach. I'd have to run the traditional rat race, and just do the best that I can in that arena.

So I put my head down and plugged along, and resigned to continue plodding for the next three decades... until this 4% rule blew my mind out of the water. And after browsing on the MMM forums, I was introduced to the concept of FIRE -- Financially Independent, Retired Early -- and it all started to come together. You don't have to be a small business owner to achieve financial independence. All you need is to grow enough assets to generate the cashflow required to support your living expenses. That's not rocket science. I mean, I can do that.

All of a sudden, financial independence and retirement went from a dreamy and remote "someday" to concretely achievable in the not-so-distant future. And what an awesome, dream-come-true achievement that would be. Rather than some abstract and impossibly far away concept, I have a solid goal to plan and strive for now.

We're gonna catch some FIRE.

4 Responses to “'O Capitalism' relaunched -- Welcome to Catching FIRE!”

  1. creditcardfree Says:

    Good for you! Love the Princess Bride reference. Smile

  2. Another Reader Says:

    You should re-name the subtitle as well - from prodigious accumulation of words to prodigious accumulation of wealth!

    The MMM blog and forums are a little over the top at times, but the message is simple. The higher your savings rate, the faster you will reach FI and, if you choose, ER.

    Fore a slightly more conservative take on FIRE, check out www.early-retirement.org.

  3. MonkeyMama Says:

    I look forward to reading your blog! I love Money Mustache.

  4. amberfocus Says:

    Ah, but when I first started this blog, all I had were words! Smile I'm not really a PAW yet officially (although I'm getting close… salary bumps and bonuses keep changing the goalpost).

    The MMM forums can be a little intense and hardcore at times, but truth be told, when I was reading it, it was one of the few times I didn't feel like a freak of nature. (I don't think I would forgo a hospital birth just to save money though. That's a bit much even for me, ha.)

    But yes, I am also looking at the early-retirement.org and Early Retirement Extreme forums, but trying to ease in and pace myself. Can't absorb it all in the span of a few days.

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