3 Paths to Financial Independence and why my FIRE may not be your FIRE

September 4, 2020

A while back, I responded to this tweet from Camp F.I.R.E., which was a guest post by Rod Rogers, of the blog make money by cleaning offices.

The tweet, and my reply, started me thinking about FIRE. The many paths that you might take to get there. The realization that one person’s fire may not be another’s.

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What is FIRE

An acronym commonly used by personal finance (PF) bloggers is FIRE. It stands for financial Independence, retire early.

Many of you that may be reading this have a certain thought when you think of retirement. That thought is often, I will work to 65 or 70, save money incrementally, and then retire. 

This is not how people in the FIRE community think. Most of us think of retiring in our 20s, 30s, or 40s.

FIRE superstars

Before you think that’s impossible, have a read of some people who have done exactly that:

  1. Peter Adeney, of mr. money mustache
  2. Bobby Hoyt, of millennial money man
  3. Michelle Schroeder-Gardner, of making sense of cents

For some, like me, it’s not about retiring, it’s about achieving financial independence, which equates to flexibility. Specifically, I will never retire and at some point in my life, I will be my own boss.

When I think of Peter, Bobby and Michelle, I am absolutely certain that each of them is working as hard, or harder, than the average person.

The difference is that the average person is likely going to work, being miserable from 9:00 – 5:00. On the other hand, these three are living their dream.

That is not my path, that is not the path of a PF blogger in the FIRE community.

Some time ago, my wife was taking our youngest son to tutoring and hip hop. This left me with our oldest boy .

When I asked what he wanted to do, he thought and said let’s go to a restaurant and talk like we did that time we went running [I also remember that as one of our best father son conversations, which was about UBER and being an entrepreneur].

I suggested that we instead go to Starbucks. There, he could eat and I could have a coffee while enjoying my intermittent fast. After all our health correlates with our net worth.

We discussed FIRE and how to get rich. This allowed me to flesh out my ideas using the Feynman technique. This is a technique with four simple steps that I have taped to my desk at work. I simplified my approach, like I was explaining it to a fourth grader, because I was. The three methods to reach FIRE we discussed are:

  1. Reduce your expenses
  2. Increase your income
  3. Be entrepreneurial

Reduce your expenses – the Frugal Method

As a trained accountant, I tend to think of things using financial statements; specifically, the balance sheet (net worth statement), the income statement (budget) and the cash flow (a cashflow). These are three of the most important things to track on your journey to FIRE.

By reducing expenses, we are increasing our net income, which in the FIRE community is referred to as your savings rate. Read this post by maximum cents, regarding savings rates. Most think that a savings rate of 10%, perhaps they’ve read the wealthy barber, is sufficient, or in some cases AMAZING. It is not. People in the FIRE community focused on the Frugal Method target savings rates in excess of 50% – 60% of their take-home pay. Personally, our target savings rate in 2017 was 31% and 41% in 2018. Thereafter, we target in excess of 50%.

Despite the Frugal Method being focused on an ever increasing savings rate, I also suggested to my son that he follow some very basic principles on increasing his income.

Now, when you ask a child to how be frugal, how do you think they respond?

Just spend less Dad

Was the response that my son gave me, while staring at me with a look that said Jesus Dad, you’re stupid!

Spend less examples

I chuckled and asked him how our family could spend less, and we wrote:

  1. Travel less, or at least, more economically
  2. Less eating out and more cooking at home
  3. Buy less clothes and be happy with what you have
  4. Go to a public school and not pay for the boys’ Catholic School
  5. In general, buy less stuff, which I believe was targetted at his father [me]

If you are in a good school catchment, I may agree with #2. Else I disagree and would quote Marcus Aurelius, on his great-grandfather’s teachings:

To avoid public schools, to hire good private teachers, and to accept the resulting costs as money well spent.

Meditations, by Marcus Aurelius, 1.4

In my early learning on the subject of Stoicism, this is the approach that would appear to adhere to it’s principles the most.

Increase your income – the Growth Method

For some of us, there is a preference for fat FIRE, including:

  1. Me, Clint Robert Murphy
  2. Dom, of GenYFinanceGuy
  3. Todd Tressider, of Financial Mentor

A key difference between fat FIRE and lean FIRE is that people don’t want to spend the RE years of FIRE living off of a lean income. Instead, they may want to continue to live off of a larger number, such as a hypothetical $100,000+ in retirement.

Considering that most who follow the FIRE method consider a safe withdrawal rate to be 4%, you need to have 25x your annual spending rate. This is why spending less is 80% of the FIRE equation.

While followers of the fat FIRE method focus on growing their income base, they also recognize that spending must be controlled. It is, after all, a greater part of the financial independence formula.

How to increase your income suggestions

How might someone increase their income? I wrote a post in detail on this; however, I summarize my thoughts below:

  1. Figure out what you want to do, using the image below
  2. Go to school and put in the effort needed to get a job in that field
  3. Work harder than anyone else is willing to work
  4. Put yourself in as many sink or swim opportunities as possible and swim, baby, swim
  5. Never stop learning

Doing this should allow you to get your income to the $150,000+ range, which would hep facilitate an eventual fat FIRE lifestyle.


The third path to financial independence is to start on that path from the beginning, by being an entrepreneur.

Talking about this with my son, we looked at different paths some of the wealthiest people have taken:

  1. Some graduated from college, others did not
  2. Some have computer science degrees, others do not

The truth is, there are many paths you can take to become an entrepreneur. For example, I did tell my son a great path would be a joint computer engineering and philosophy undergraduate degree with a masters in business administration [I wasn’t putting too much pressure on him at nine, am I]. Maybe that is why he said that I am like Caiden’s father in the Elementium Chronicles.

Curiosity for an entrepreneur

A consistent thing you will find in most entrepreneurs is an insatiable curiosity. Questions they may ask:

  1. Could this be done better
  2. Can I build a better mousetrap
  3. Could this industry be disrupted
  4. If I were running this business, how would I run it differently

By asking why and how questions relentlessly, you will have ideas that surprise you, and some that you can even monetize.

Entrepreneur example

An example I gave my son was from his basketball game last week. Two mothers were talking behind me and said they found all the various painted lines on the court so confusing and they wondered how the children knew which were for which sport. I immediately thought that with today’s technology we should be able to have court lines painted in a way that could be turned on, or off [aside: I was able to teach him about the binary system of 1s and 0s].

It turns out that someone else had that same idea and they’re building world class gym floors that have embedded LED lights that allow you to change the floor to a specific sport when you want to. While they’re expensive, I do think that there will be a way to do it in an affordable manner in the future.

Standard Gym Floor

My beautiful picture

LED gym floor

The key, I told my son, is to always ask questions, turn the questions into ideas, and then check if someone is already doing it. If they are, and you cannot do it better, rinse and repeat. Nobody is doing it? First make sure you haven’t come up with a solution for a problem that does not exist. If you haven’t, then come see me and we will determine whether to do it together.

One of the benefits of parents that have reached a moderate level of financial independence is we may be able to fund his ideas.

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