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The FIRE Movement: What Can We Learn?

By Jarrod Musick, Client Wealth Strategist, CFP®

Have we all decided to be part of the Financial Independence Retire Early (FIRE) movement? I think so, and I’ll tell you how we can go further down that road without living out of a van. The FIRE movement is based on the idea that we can all turn our focus from accumulating assets to living life on our terms much earlier than we think. Entrepreneurs have done this since before the movement was around, and do it better.

Any idea taken to an extreme can seem crazy but also be very memorable. The extreme version of the FIRE movement is to drastically downsize your spending so that life appears to be a mix between monasticism and homelessness. My initial impression of the movement was the image of a bearded hippie eating ramen at a campsite next to his full-sized van, but the FIRE movement is actually incredibly nuanced, and its adherents are widely varied.

In essence, there are three core beliefs of the FIRE movement, as I interpret it:

  1. We are happiest when we have control of our time to do what we want.
  2. We buy too many goods and take on too much debt, which traps us into careers we don’t like.
  3. We can save at much higher rates than most people do by controlling unnecessary spending.

So what can the FIRE movement teach us as entrepreneurs?

The First Tenet

The first tenet isn’t a hard sell. We deeply understand the value that agency over your time brings. Doing the work you want, for whom you want, when you want is one of the biggest joys of entrepreneurship. For example, having the ability to go skiing or surfing on a Tuesday or taking your kids to their soccer tournament out-of-state on a Thursday makes life feel like your own. Self-ownership starts with time ownership and we are in full agreement with the FIRE movement on this.

The Second Tenet

We understand the second tenet of the FIRE movement, but we may disagree with its application. Generally, the movement’s beliefs orient toward broad minimalism.

  1. Driving down housing costs with smaller or less desirable living spaces
  2. Eliminating or minimizing transportation costs
  3. Broad avoidance of debt

I fully agree to ruthlessly cutting spending that doesn’t make you happier, but some spending truly does contribute to the quality of life. For example, living with people you care for in a comfortable house that gives you access to the life amenities of your choosing are all good things. Having reliable transportation that gets you where you need to go on time is a good thing. Walking more, riding your bicycle and not overspending on vehicles purely for social signaling are all good steps to take, but eliminating a car or driving a $500 one on principle goes too far.

Greg McKeown’s best seller Essentialism gives us a great framework for considering what we choose to take into our lives. “Focus on the vital few” is one of my favorite principles from that book, because it forces us to reevaluate everything in our lives and to focus simply on the very few items that actually do matter. Attempting to have the very best or the most optimal things all the time is a recipe for overreaching and creating new stressors.

The FIRE movement’s focus on the essential aligns very well with our philosophy. Take food, for example: I eat rather simply and am quite happy with most types of food, but I do have a few areas where I don’t compromise. I buy the very best coffee for my home, Intelligentsia, and overspend on espresso from my favorite coffee shop, Aviano. I only buy meat that is free-range and without hormones and antibiotics. I have my milk delivered rather than purchasing it from the grocery store. I am happy with basic fruits and vegetables, eat pretty much anything and am happy with my choices. Choosing to be minimalist in general, but with a focus on quality where it uniquely matters to me, is an area where I can feel commonality with the FIRE movement.

I believe that the largest possible difference between entrepreneurs and their FIRE friends is in the use of debt. The leverage that capital provides is significant and has likely, at the least, helped many entrepreneurs grow their businesses, if not outright made their existences possible. Entrepreneurs understand the value that leverage through labor, capital or technology provides, and how they are each tools to be used in the right ways. We all understand that debt is a very sharp implement that can slice the hand that wields it, just as easily as it slices through its intended use. Even so, dismissing debt entirely is not the right approach. Have a plan for why you are using it and what the structure looks like. Then, ensure that you actually need it before accessing it.

The Third Tenet

The final tenet of the FIRE movement, to save more and earlier in your career, can certainly be applied in your work as an entrepreneur. As your business and personal cash flows grow, you have opportunities to capture them and direct them to things that matter. Don’t waste those opportunities; seize them as they come. Be clear about where your hard earned cash flow from your very best years will be invested. Make sure that your values are represented in your investment approach and in how you continue to build business equity along the way. The power of entrepreneurship is in having choices about where and with whom you spend your time and in being able to do so at a much younger age than most non-entrepreneurs. Having a solid vision for where your priorities lie allows you to more easily allocate capital as it comes.

The FIRE movement represents ideas that we can agree with in general, but it takes them to the extreme. Taking control of your time and how you spend it, spending money only on what makes you happy, saving well when you can and using debt only when it makes sense are all ideas that we can agree with. Entrepreneurs were part of FIRE movement before it was even a term, and I hope that FIRE followers take the plunge into entrepreneurship to continue to grow their own personal freedom.

Important note and disclosure: This article is intended to be informational in nature; it should not be used as the basis for investment decisions. You should seek the advice of an investment professional who understands your particular situation before making any decisions. Investments are subject to risks, including loss of principal. Past returns are not indicative of future results.

Jarrod Musick


Posted: 12/22/2020

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