Ruth's Two Cents: Playing With FIRE (Financial Independence Retire Early)

Hi Ruth,

I was recently reading an article that mentioned Mr. Money Moustache (MMM), and it kind of captured my imagination! I went down a FIRE (Financial Independence Retire Early) rabbit hole and resonated with not waiting until retirement to live the life I want. However, the frugal side of things has given me pause — I’m not sure that living off beans on toast is worth it. Should I strive for FIRE, or should I go my own way? Where would I even start?

Pete Adeney, AKA Mr. Money Mustache (MMM), has been a huge catalyst for many to set their financial lives in order and become happier as a result.

He gets you thinking about one of the critical questions you must address: What do you want? You talk about not waiting until retirement to live the life you want. But do you know what that life even looks like? I suggest you start there. You can then work out if each action you are performing today gets you closer to it.

In regards to becoming more frugal, so that you can stop wasting money (money which you could instead be investing), just start where you are. It starts with budgeting and knowing where your income comes from and goes to, but it rapidly expands. Mr. Money Mustaches’s ultimate aim is to be happy, and it turns out that you don’t have to spend much to achieve it.

His recipe for human happiness includes friendships, freedom and security, health, good nutrition, meaningful work (paid or unpaid), and community. None of these things need to cost us money. In his view, happiness is the only logical pursuit. With these bases covered, we have enough to be happy. But the marketing departments of product and service-producing companies are very adept at using this recipe against us, which is where the problems begin. Where once we thought we had enough, it is pointed out to us at every turn that we probably don’t. Enter consumerism.

Finding happiness in less…

Having heard MMM speak many times and read most of his website, there is no doubt that what he proposes from a mathematical perspective works. Put simply, if you spend less on life and invest aggressively in a couple of big index funds, your wealth will rapidly grow. I’ve had the good fortune to meet people who have systematically followed his advice, and within ten years, they had enough money invested to make going to work entirely optional. Math doesn’t lie. If you spend less, you have more money.

The sticking point, however, is you!

Letting go of your need to purchase things that bring you a quick dose of joy or make your life easier makes you feel like you are taking frugality to the extreme. You should approach frugality in smaller steps, just like you build up your fitness slowly over time.

The most challenging concept you and others struggle with is finding happiness in less. Because that is the secret weapon MMM has in his toolbox — he is on the ultimate quest for happiness and has found that it is not to be found in purchasing things. It’s to be found in good food (which might just include some beans on toast), good friends, and meaningful work.

He cracked the secret code in many ways; live on a lot less than you make, and invest the difference. In time, that investment money makes more money than you will ever really need.

…Then maximize it each day

Because he found happiness without the price tag, it freed him up to invest most of his income into index funds, and in several years, they built to such a level that they then provided income, too. All the while, he never felt he was missing out; quite the opposite. He said he was surprised that when he quit his job because he had more money than he could ever need, none of his colleagues were in a position to do the same. He invested his money; they spent theirs, trapping them at work.

He is flat-out maximizing his happiness each day. He might be sleeping in the back of his car (which is a Tesla these days) on his friend’s property while they work on building a cabin together, where he will then be welcome to enjoy future summers. Or he might be hanging out with his son and helping him with his schoolwork, stopping and enjoying the company of good friends, or cooking a delicious and nutritious meal that may or may not contain beans.

He has found his ‘enough’. You need to find yours, which will look different from his.

At the moment, you are focused on what you may have to give up. Focus on what you gain.

Where might you begin?

I’ve heard him say, “The key to success in early retirement and, indeed, most areas of life is to get the big picture approximately right and then not sweat the small stuff.” Improve yourself in increments as you move towards your big picture. Each time you work something out, add this insight into your new and improved self.

How can you quit spending when you have spendy friends? MMM suggests you take over the organization of friend meet-ups. Instead of Saturday nights at a bar downtown, where you quickly spend $200 on food and entertainment, take charge by having your friends round to your place with their favorite playlist ready to blare through your speakers and their favorite tipple that they want you to share — $40 tops. You’ll have time with the people you like, still have a great night, and save a small fortune.

Focus on community and the cost per use of an item. If friends already own or do things that you want to enjoy the use of, then be useful yourself. Fix the deck of their holiday home, wash their windows, and cook a meal while you stay for free. Instead of buying a truck for the two times a year you need to cart a load of goods, borrow your friend’s one, but detail it inside and out, and fill up the tank as a thank you. They will want you to borrow it again! You have saved money, got exercise, achieved a job that needed doing, and caught up with a friend. Winning!

MMM does a lot of DIY and finds that ticking smaller jobs off his to-do list gives him more satisfaction than completing everything at once. He is intent on creating as many moments of happiness as he can. What things do you have on your to-do list that could be broken down into many enjoyable moments instead of one gargantuan task?

Choose to do things that include as many ingredients from his recipe for human happiness as possible.

Remind yourself why you want to FIRE

List out your top life priorities and keep them in a handy place. Before you decide to do anything, consult your list, which will anchor you. My top priorities are maintaining friendships, consistent parenting, physical movement and health, and financial independence. What are yours?

MMM said, “Stop doing what other people are doing and live differently.” To you, the word frugal has negative connotations. To MMM and myself, it only has positive connotations. To me, it means freedom. It’s all in how you go about things, and I can assure you that living this way is absolutely worth it.

The simple answer is that you should strive for your version of FIRE. And ‘go without’ more than you currently do. I’ve never spent so little yet had such a rich life. I promise frugality won’t harm you.

Got a burning money question for Ruth? Send them through to [email protected]!

Ruth blogs at thehappysaver.com all about how she and her family handle money. What’s the secret? Spend less than you earn, invest the difference, avoid debt and budget each dollar that flows through your hands. She firmly believes that if you can just get the basics right, life becomes easier from there on in.