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BitcoinFinancial independence

LeanFIRE vs FatFIRE

By February 15, 2019 No Comments

Ok, so FIRE is Financially Independent Retire Early. You can retire early in different ways. If you know how to live off of $500 per month you can easily achieve LeanFIRE.

When thinking about FIRE it’s good to realize what the goal is. In my view this means to never have to work for someone else. It doesn’t mean that you will never work. Most people enjoy doing things they find meaningful, and this work may or may not have monetary rewards. If it has, all the better, it’ll give you a good opportunity to work yourself up from LeanFIRE to FatFIRE.

LeanFIRE

With lean FIRE you prioritize retiring as early as possible.  If you make $3000 per month after tax and you only spend $500 per month you can save $2500 per month, so 30k$ per year. If you use a conservative withdrawal rate of 4% this means you retire with $150k saved, which you will achieve in less than 5 years. For most people $500/month is too little though, but we know plenty of people who live happily with less than this. It involves pretending to be poor, like going to the market to pick up left over vegetables, and staying in squats, it’s not for everyone, but many people even enjoy this type of activities.

If you want more, you can also save a bit longer. With a saving rate of 50% anyone can get to leanFIRE in a decade.

Your saving rate is paramount to when you can retire. It’s good to strive for maximum savings. It works both ways. First of all you spend less, second of all the money you need to retire is much lower.

MediumFIRE

MediumFIRE is a good choice for most people. $3000 or €3000 per month is a good amount to strive for.

FatFIRE

FatFIRE is the the pursuit of financial independence and/or early retirement on at least an upper-middle class lifestyle.

How much FatFIRE means specifically depends on lot on your desires and lifestyle choices, and where you choose to live.  It also requires working quite a bit longer – or smarter. Or investing smarter. As a Bitcoin maximalist in 2019 the path to FatFIRE is not that tedious. Simply save up a little buffer, and put everything else into Bitcoin.

Given the strong volatility in the Bitcoin market it’s probably smarter to have a slightly different strategy. Permanent Portfolio comes in quite handy as it will give you the right mindset to deal with the highs you get from Bitcoin ATHs (all-time-highs) and coping with the lows you endure in bear markets.

Part-time FIRE

Most people don’t really retire completely when attaining FIRE, and there’s a lot to say for this option, where you start building your own business that gives you extra money every month (e.g. Adsense or affiliate income).  Like this you will reach FIRE much earlier.

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Nakamoto

Nakamoto

Not Nakamoto. Still, financial advice that does not suck.