For those wanting to achieve financial independence, the flame might be burning hot! Between lean FIRE vs fat FIRE, the differences are obvious and I’d rather be a fatty any day. But for those that want to achieve FI even earlier, there should be options.
As I venture on my journey toward leanFIRE, which basically covers the bare minimum of my yearly spending, I continue to wonder if I can call it quits earlier. I have my days where I feel completely content, but the bad days can outweigh those days and send me into a spiral of deep questioning on the practicality of sitting behind a desk all day.
Luckily, as a contractor, I don’t need to worry so much about those feelings lasting forever. This also paved a path to double my salary in less than a year. If the stress ever gets too high then I can just take a break after the project is over until I decide it’s time to go back – but I don’t want to worry about those feelings at all!
My main goal really isn’t to be useless in life, it’s to reduce the stress. It’s about evaluating the amount it would really take for me to call it quits from my career. I continually hear stories about others reaching financial independence and realizing they should have just pulled the cord years before.
Why do they come to this realization?
I believe they underestimate their willingness to work after hitting financial freedom. After all, our goal is to be free sooner. The whole point is to enable yourself to gain options. That’s exactly the reason I find myself working as an independent contractor.
If you find yourself driven toward financial independence it’s likely that you have a lot of motivation and drive. You’re likely a goal-seeker. I know I am. Maybe that’s why I like the idea of FIRE so much. It’s a community of motivated people and I’m attracted to that motivated attitude. That’s probably why I love all of the Rocky movies. I have the eye of the tiger for financial independence.
How soon can you pull the cord?
I’ve heard mixed amounts on this topic, but I’m nick-naming this ultra-leanFIRE because that’s what it essentially is. It’s cutting out a little earlier than hitting your true FI number. Some numbers I’ve heard are around 70% of your actual financial independence number.
So if you follow the rule of 25x then you would need 17.5x of your spending covered instead. A quick example:
- Spending = $30,000/year
- FI Number = $30,000 x 25 = $750,000
- Ultra-LeanFIRE = $30,000 x 17.5 = $525,000
It’s a substantial amount less than you would have had to originally save up. $225,000 less than the actual number toward FI. This doesn’t actually concern me as a driven person on the goal to FI. Personally, I have the confidence that I can always find work if I need to. For example, if the stock market decides to crash and you lose half of your current investments you’d hate to have to pull those funds at a loss.
Again, the goal isn’t to put yourself into a tight position in life. If you’re 70% toward FI, you’re in an amazing position anyways! You’ve already put yourself so far ahead of the competition that you can afford to walk for a bit.
As a matter of fact, if your spending was $30,000 per year and you need to supplement the 30% deficit, you would only need to make $9,000 per year, which is $173 per week. There are TONS of jobs that you can do part time that will bring you that income. Sign up for Uber or Lyft and you instantly have yourself a job that can supplement your 30%.
So is there an Ultra-LeanFIRE?
Technically no, because it defies the true definition of financial independence and retiring early. Although, you might get lucky and your investments grow like wildfire. It does however open the door to the option of getting out even earlier. There is no specific blend of the financial independence journey that is going to be right for everyone.
Here’s the thing – after hearing multiple case studies on people that are now financially free, they tend to argue that they could have done it years prior. Fear comes into play and they hold off.
Remember that if you’re on a war path then you’re a warrior! Don’t overthink the number. Just know that it doesn’t need to be so big to get where you want to go.
Do you plan on pulling the plug early on FI or waiting it out until you truly hit the big number?