Let’s have a look at who FIRE-ish is…
I am going to keep this anonymous to begin with, mainly because I am still working and don’t want to draw unwanted attention from current and prospective employers but don’t worry, the day I “retire” is the day I shall unveil all!
We are getting a little ahead of ourselves, jumping ahead to retirement day? HA, that is at least years away so let’s stick with now with both feet planted firmly on the ground. I am 28, currently living in Ireland and still very early in my career. I grew up and spent several years overseas and moving around a few countries but eventually settled back in Ireland for now.
My first taste of work
I never considered myself particularly good with money. I always had a good work ethic, getting my first job at 16, working as a shop assistant for below minimum wage (maybe €6.50 /hr), working my way up to a lavish €13.50 /hr for a great job during university. My second job during university was cut short because I didn’t need that extra €60 a week for a crappy floor staff job in a crappy club, surrounded by drunk college students…..FUN TIMES!
While I had these jobs, I never saved particularly well unless it was for something. Most of the money went towards weekends out or summer holidays or weekends away. In fairness, I have done a lot of travelling (I think close to 50 countries) so I still consider that money well spent, but looking back, I could have been a lot smarter about it and certainly less frivolous!
My first qualified job
After finishing University, I started working straight away, in a standard salary for my first year (€32,000/year before tax). Unfortunately, that also came with 60 – 80 hour working weeks which I was OK with at the time because I was fresh out of University and rearing to go!! Luckily, I went to university in Ireland and that meant graduating without outrageous debt. I was only €10,000 in debt as I foolishly took out loans to fund expensive holidays across the 5 years. I still count this as lucky because you hear of the horror stories out of the United States where people start out their working careers €300,000+ in the red. Amounts I can’t even fathom at this stage.
The foolish years
After this long and stressful year, like most at the same level as myself, I emigrated for green pastures and increased my salary to about €45,000/year before tax for a couple years. Has I stayed in Ireland, this would have increased incrementally to €34,000 and €38,000 per year so the trip overseas was financially more lucrative. But the Foolish FIRE-ish (think I’ll refer to myself as this for my ignorant years) fell victim to lifestyle inflation… I bought a car on finance, lived in a too nice a neighborhood for my salary and went out far too much. The Foolish FIRE-ish is right!!
Back to reality
Next up was the move back to Ireland after the 2 frightfully frivolous years. At this stage I sold the car, I had paid off the €10,000 loan from University and started saving. I moved to Dublin where I currently live. Moved into a place that was close to work and the city centre. However, the Foolish FIRE-ish poked his head up and bought a car that was far too expensive and needlessly so. I rarely use it in the city and definitely not using it enough to make it worth the cost. But that’s a whole other post – stay tuned!
The first year back, I was on a €55,000 salary before tax and tried to save up regularly. Fast forward to now, new job, raise to €57,000 before tax, paid off the car fully, so COMPLETELY DEBT FREE, and savings of €20,000 in a brokerage account…again more on that later.
- 28 years old
- Year 5 of working
- Living in Dublin, Ireland
- Current salary of €57,000 before tax
- €20,000 in a brokerage account
Year 0 Net Worth: €20,000
Not a bad starting point, I only wish I started sooner but I can’t change that now, I can only control my finances going forward.
We have seen how the Foolish FIRE-ish has spent the first few years of his working life. We all agree that he wasn’t the most financially savvy…or was he?
While I hadn’t saved a large amount and spent recklessly compared to my new found frugality, I always kept one thing in mind…..DEBT IS AN EMERGENCY!
Now, this is a complete over generalisation. Some debt is acceptable to some people, such as a mortgage. More on the minefield of mortgages later, but let’s stick with the general rule I followed….DEBT IS AN EMERGENCY!!
I’ll say it a few more times in this article and likely in later ones, but it kept me in the straight and narrow. Through all the frivolity, I always paid down part of my debt, usually paying off more than the minimum monthly repayments. Over the course of 2 years while overseas, I had roughly €15,000 in loans between university and the car. I completely cleared this in 14 months and I honestly felt like a huge weight was lifted. Now I was debt free, I could start saving and gain some stability.
What do I do with all these savings though?
I was still in my Foolish FIRE-ish stage when I started saving and the money went into a very low interest savings account with my bank. I think in a year, I earned like €28 interest in my savings, laughable!!
Then I found the wonderful world of FIRE and I was introduced to the world of investing. I was terrified about investing but I eventually came around to it.
Ultimately, I came to the conclusion that I had started off doing the right things:
- Pay off highest interest debt first
- Pay off other debts
But then I had to decide where to put the money:
- Invest savings into a low cost index fund – my choice is the iShares Core S&P 500 UCITS ETF (Acc)
- Create a cash cushion to cover 3 months of living expenses in case of emergency – kept in the highest interest cash account I could find with a bank (in Ireland, there interest rates are very low so you aren’t going to make a huge amount of compounding interest on this cushion)
This is my plan, keep it super simple, eliminate the costs that come with active investing (and risks) and sit back and let it grow!
Another option that I am considering is applying for a credit card, with low costs and good rewards. This will allow for emergency access to funds and then immediately pay these credit card bills before the interest kicks in. Now this is a little more risky simply because there are extortionate interest rates in credit cards and I don’t want to be charged those if I ever was unable to pay down that credit card bill for whatever reason caused the emergency. Therefore, for now, I am happy to keep that cash cushion that isn’t earning any money, in order to make sure I will never be in that credit card situation.
But why FIRE?
I have discussed FIRE with people I know, who are all at different stages in life. Friends, parents, siblings, friends in Ireland, and others who aren’t. To my surprise, I am one of the few people actually interested in doing this among my friends. In fact, I think only 3 people have seemed open to doing it themselves.
It got me thinking….why wouldn’t people jump at the opportunity to be financially independent?
I don’t get it!
But also I do get it!
I realised that people equate Financial Independence to Retiring Early. Most of them say “I don’t want to retire early, what would I do all day?”
I didn’t have an answer for them at the time because I don’t know what each individual wants.
Now I finally have the answer for EVERYONE… What would you do when you are Financially Independent?
ANYTHING YOU WANT!
Wow FIRE-ish……that’s totally deep! *rolls eyes*
Well let me go through why I want to do it and see if any of it matches up to what you want, and if it doesn’t, that’s OK too!
Rather than focus on the reasons that I don’t enjoy work enough to keep doing it for 40 years, I am focusing on the reasons why I want to have financial independence. FI will mean I have enough passive income to cover my yearly living expenses so I no longer have to slave away, exchanging my precious time for money, thereby giving me the free time to do everything that is important to me:
- One day I want to have kids. Call me strange but I want to raise them myself rather than pay for them to be in daycare all the time. The idea of being a stay home dad sounds better and better the older I get.
- I have always wanted to learn how to build things myself, this will give me the time to pursue that further.
- Another one that people find odd is gardening – I find it strangely relaxing and I love seeing something that I helped create, grow into something amazing.
- Reading – I never seem to find the time to read everything I want to because I am “too busy” (how many of you have used that excuse for xyz?)
- Outdoor activities such as cycling, hiking, camping, pretty much any outdoor exercise.
- Being able to up and travel at the drop of a hat, or even take an extended overseas trip should I fancy.
Essentially, think of all the things you want to do at the weekend or during your precious time off, except you could do it everyday!! Better yet, you can do it while you are younger and healthy enough to actually still enjoy everything you want to do!