Since I’ve known the concept of FIRE, I’ve wondered if it really is a destination for me or more a step-stone to something way bigger. I’ve found 2 good definitions which could be used to describe FIRE.
Financial independence is having enough money in passive income that you can stop working. Essentially, the money you have invested and saved provides you enough of a return that you don’t rely on a traditional income anymore, hence the term financial independence. People that pursue FI generally have plans to pursue their passions and other things in life.
Early retirement, while similar, takes an ode to its traditional retirement counterpart. It generally means that you retire early and stop working. But instead of retiring at 65, or later, you may retire at 45 or 55. In general, people that want to retire early want to enjoy the traditional benefits of retirement.
However I could still find myself in the FI definition, the Retire Early is not a thing I would pursue. I mean, I don’t want to be sitting on a chair watching through the window all day at age 35.
Nonetheless, the FI definition can be interpreted in many ways. To me there is a big difference in the ability to stop working VS. pursuing other passions and things in life.
In Belgium, an individual could survive with €18,000-€20,000 a year with a modest lifestyle in my opinion (mortgage/rent included). Without a mortgage or rent, €12000-€14000 should be enough. However, this doesn’t imply traveling to exotic locations, fancy ski holidays or expensive dinners.
Some people enjoy sitting at home, which I fully respect. However, I think this becomes pretty boring soon enough and people tend to spend more money when not working (at least in my case). By seeking new opportunities, money will be required. The portfolio income will thus not be sufficient to cover extra or unforeseen expenses.
What if you want to go Down Under with your family? What if you would like to start a project which requires a sum of money? What if you would like to roadtrip the USA? I don’t plan these things years ahead so it is hard to budget this.
I rather pay for experiences than for possessions, meaning I’d rather go on a roadtrip to the USA instead of buying a new design leather couch set. I would love to go scubadiving around some cool islands. Or throw a party on a boat with some friends on a hot summer night. Unfortunately these experiences tend to be rather pricy. However, there is a very thin line between prestige and these experiences. I really appreciate a nice car with a roaring motor and some cool options to play with. Is it about the experience of driving it, or about the prestige? It can provide thoughts for an endless discussion.
Knowledge is power, but so is money. Money creates opportunities. As I’m turning 22 soon enough, I’m keeping my eye on the real estate market. Old apartments need a lot of renovations and are still expensive. New apartments cost a lot more but enjoy the benefit of low energy costs and fewer maintenance costs the first 20 years. Then I started thinking if I could buy a piece of land and build let’s say 8 apartments. I can’t, because I don’t have enough money. However it would be way more economic instead of buying just one. I could sell or rent out the other 7. I’m pretty sure I could make a profit out of this, but on my current budget it simply is impossible. I could try to find like-minded people to help me fund it, but I rather have the full control in my own hands.
I would really enjoy those projects on my own or fund start-up businesses and invest in them. Having enough money to fund these kind of initiatives, is only were my FIRE starts… Being able to do something for the good of the community or start your own business. A whole lot of opportunities and possibilities…
Do you sometimes have similar thoughts in which FIRE for survival just isn’t enough?