A reader had asked me to write a post about FIRE. I’m no means a FIRE guy just because a) I kinda like my job and 2) I probably spend too much (especially on dinners) to be qualified for FIRE. In my head, FIRE guys like to live extremely frugally so they can build up a big nest egg and retire early (in their 30’s.) I could be wrong, but that’s how I view them in my head. I don’t really meet those qualifications, but let me tell you how *I* am planning for retirement and my tips and tricks for you as well:
DISCLAIMER – This post is for entertainment purposes. Please do your own homework before you do any kind of financial investing.
Hey, this isn’t an article in Cosmo. Yeah yeah, you should marry for love, but if all else being equal, marry the richer person. Money won’t buy you happiness or guarantee you won’t get divorced, but it will improve your quality of life. I had typed some more stuff, but don’t want to get into a debate on love vs money or “money won’t bring you happiness.” Remember, this is a post about FIRE, not love!
Also, try not to marry into debt unless that person’s a doctor or a lawyer. If you’re marrying a social worker who has $50,000 of school debt and $10,000 of credit card debt, then you have a loooong way to go to get to retirement.
Marry a frugal person
If you’re frugal and your SO likes to spend money on frivolous things, then that’ll push back your retirement. Luckily my wife doesn’t like purses or expensive shoes. Her vice is expensive dinners. She also likes to buy the “value pack” of chicken thighs because it’s $.99 a pound versus $1.99 if she buys a smaller pack.
Save half your income
When I started my first job, a coworker told me that his retirement plan was to save all of his wife’s income. You married rich right? That piece of advice stuck with me ever since. Thus, we actually save all of my wife’s salary. Whatever her take home money is, I put it into a brokerage account and invest in the S&P500. That means my salary pays the mortgage as well as all the monthly expenses like groceries, utilities, eating out, etc. If you’re single, it’ll be difficult, but try to save as much as you can. Then marry rich.
Buy a single family home
We bought a house about 4 years ago. It was a new construction in an up and coming suburb of Seattle. Before that, I lived in an 800 sq ft 1 bedroom condo in downtown Bellevue. The condo has since appreciated 20% in value and my house has appreciated 50%. The “American dream” is to buy a white picket fence; it’s not to live in a cramped condo with a $400 HOA every month.
I realize some of you rent cuz you hate the real estate market or some of you hate mortgages and/or debt, but mortgage debt is a good thing if you believe that real estate will appreciate. I have a FB friend who is very anti-mortgage and thinks that if you have 100K, you should buy the house outright with the money and rent it out for income. He fails to see the bigger picture that if I use that 100K to put a down payment on a 500K house, in 5 years, if the market goes up 20%, he’s up $20K while I’m up $100K. Leverage your money!
Heck, even Mark Zuckerberg has a mortgage! How many real estate millionaires and billionaires paid CASH for their real estate? I’m guessing none. They leverage other people’s money (that’s another topic.)
I also realize not everyone lives in a hot real estate market, but no matter where you live, I think real estate is a solid play. Just don’t over-leverage yourself and buy a house you can’t afford. Remember, one person’s salary should be able to make the mortgage payments.
Buy life insurance
I don’t know what the proper rule of thumb is, but I got my wife and I a policy that would pay off the mortgage if something ever happens to one of us. If you’re single, you may not need it, but if you have a family, I suggest you get some.
Find a side hustle
Some readers once asked what % of my income comes from side hustles (reselling, MS, etc,) and I told them my hustles generate about half of my income. This is how I help pay for the monthly bills, etc. I’ve tried to convert a few friends whose hobbies are video games to finding a different hobby that could generate side income. I have since I’ve given up on doing that and let them do what they do.
Max out your 401K and stay away from risky investments.
The first part is pretty self explanatory. The 2nd part is to tell you to avoid stock options unless you are very advanced at stock trading. I think most people go through a phase where they learn about options, buy a few naked call options, make some money, then go buy more naked call options, and then lose it all. Then they learn about covered calls, but then the juice isn’t worth the squeeze, especially if the underlying stock skyrockets on them. Then they stop doing options all together and write a post about NOT doing options ever again.
Put your 401K into the ‘high growth’ fund
Usually your company will offer between 5-10 funds you can invest in. I’ve always picked the high growth ones just because technology stocks seem to fall into that category. If you are older and want to be more conservative with your money, then maybe pick an index fund that’s closely tied to the S&P 500. I don’t bother with bonds, but that’s just me.
While I do invest in individual stocks, I’ve slowly stopped doing that because I want the stability of the S&P 500. The individual stocks are in my ‘play money’ brokerage fund versus my retirement fund. The stocks are large companies too; I don’t mess with penny stocks anymore (yes, I said anymore.)
If you’ve been following this blog for a while, you know my wife and I like to dine at Michelin star restaurants. I also buy new cars apparently too often. Both of these things are very anti-FIRE. And I also don’t care. My parents were poor and never traveled or splurged. My entire Vietnamese family don’t have retirement accounts or savings. They are very YOLO…WAY TOO YOLO. So I try to balance YOLO with retirement. I’d rather work an extra 10 years and have YOLO’ed in those 10 years versus being frugal and be FIRE in those 10 years.
With all that said, when do I plan on retiring? I don’t know..maybe in another 10 years. My work pays me well; I have a great work/life balance. I have time to side hustle. I haven’t put much thought into a number we’d need to hit to retire. Maybe 2MM in the bank that earns 5-10% in the S&P500? Then do some side hustles for extra play money? Plus, what would we do all day? You can’t travel forever. I’d be bored out of my mind at home.