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1 Book rec

On early retirement, FIRE

On simple living

“Less Makeup, More Confidence”

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Last week I read a book about extreme frugality and the simple life. The premise is to save more and save early to gain financial freedom. You don’t need to be a rocket scientist or Wall Street Banker to do so, though it helps if you’re college educated and employed. The point is to actively and aggressively save / invest in order to create enough wealth to no longer work for the man. Or woman, as it may be.

Such a movement is predicated on the long game, that is delayed gratification. It’s almost un-American, the anti-consumer sentiment — to put off buying. After all, tis the season to be spending. Fa la la la la, la la la laaaa. I mean how badly do you need those Jimmy Choos or that third dinner out this week? Increase the savings, invest up front, and let your wealth build.

“Spend less than you earn—invest the surplus—avoid debt. Do simply this and you’ll wind up rich.” JL Collins

The idea has been around and there are many F.I.R.E versions of “Financial Independence, Retire Early.” It gained popularity with millennials. There’s the LeanFIRE, FatFIRE, CoastFIRE, BaristaFIRE, among others. They hinge on the idea of cutting costs to increase savings. The more aggressive the savings, the faster you FIRE. Because, let’s face it: gone is the fat pension plan when employees retired at 65, assuming they’d been at the firm for a lifetime. And, equally relevant, gone is the willingness to work at the firm for a lifetime.

The term F.I.R.E. was new to me–and unknown to most Americans with one article citing 11% even aware of the movement–but the concepts are not. Here are definitions of popular terms.

• Fat FIRE: This is for the individual with a 9-to-5 job who aims to save substantially more than the average worker but doesn’t want to reduce their current standard of living. It generally takes a high salary and aggressive savings and investment strategies for it to work.
• Lean FIRE: This individual is devoted to minimalist living and extreme savings, necessitating a far more restricted lifestyle. Many Lean FIRE adherents live on $25,000 or less per year.
• Barista FIRE: This individual wants to exist between the two choices above. They quit their traditional 9-to-5 job and use a combination of part-time work and savings to live a more-than-minimalist lifestyle. They might purchase health coverage while keeping their retirement funds intact.
• Source: Investopedia.com

Please search the FIRE movement or check out AI to learn more. Key rules include the 4% rule for withdrawal on assets. Another way to think about that is the rule of 25 which states that you need roughly 25 times your annual expenses to F.I.R.E. There’s a lot out there on the topic, such as this book I read.

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The Frugalwoods*

Elizabeth Willard Thames wrote a memoir I happened upon on the Monthly Picks Shelf while waiting for my niece at the library. The newlyweds were dual income, nearly debt free, and “moving up” at their places of work. So they thought. Thames realized after some years into her career and her marriage, that she no longer liked her life, herself, her marriage. She and her husband went on a much needed hike which tuned out to be a transformational event for them. They wanted to take back ownership of their lives, to get out of the rat race. So they started planning and learning how to become financially independent. Fast.

The Frugalwoods (so named because of the website her husband set up and the couple’s extreme frugality) took just under four years to FIRE (age 32) and buy the homestead of their dreams, 66 acres in Vermont. She tells the story in the book. She does not share details of their financial position–a criticism from readers–but she does share how they got there.

Here are passages of interest.

It’s not like Nate and I have been invested for thirty years yet; we were only thirty-two years old at the time; but we’d saved at such a high rate that we’d walked our way right out of the culture of more and right into financial independence. Nearly anyone with a decent job could do what we’ve done, yet very few do. Why? Because it takes short-term sacrifice, long-term planning, and a conviction that what we want out of life isn’t sold in a store. (Meet the Frugalwoods, p. 199)

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I don’t work because we need the money. Our frugality allowed me to quit that lifestyle before I turned thirty-two. I work because I enjoy it. Because it enriches me and brings deeper fulfillment to my days. (p. 203)

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Our unifying activity as a culture is shopping, and the one thing we all are is consumers. Consumption has become our spiritual outlet, our means of building relationships, of identifying ourselves by the brands emblazoned on our clothes, cars, shoes, laptops, and it has supplanted our interpersonal dependencies. (p. 210)

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Nate [software engineer] and I both crave a balance between work that is cerebral, done between our fingertips and a keyboard, and work that’s physical, done across wide swaths of our property. (p. 216)

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Frugality removed the myopia of my perfectionism, of my fears over what other people thought of me, and my drive to meet conventional metrics of success. Thanks to frugality, I have perspective. (p. 225)

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“Less Makeup, More Confidence”

I liked what the author learned about beauty, so much so, I wanted to stop reading to send copies of a chapter to my two daughters, titled, “Less Makeup, More confidence.” The $120 haircuts and expensive shoes, the daily regimen and ongoing search for the next great fix or cure. Accepting who she was and letting go of this “pursuit of perfection” were central to the book’s theme and the author’s growth.

I’d internalized what society said was important, and made it important to me. I was learning that this pursuit of perfection I’d enslaved myself to from the age of fourteen was a hoax. It was designed to keep me buying things I didn’t need and working a job I didn’t care about, in order to slot myself into preconceived societal expectations. I was done with that. (p. 123)

It’s extreme, the Frugalwood plan. Thames didn’t buy clothes for three years and her husband cut her hair. Photos on their homestead remind me vaguely of the Amish with his beard, her long dress, growing their own food. A recent site photo has her in a longish pixie cut, definitely NOT Amish. This brand of retirement strikes me as LeanFIRE and a return to earthy, rural living. The purchase price for their Vermont homestead of 66 acres was $389,000 and their Cambridge rental provided $4,400 montly.* That’s surely gone up since publication in 2018.

For all the criticism and faults about the book and the FIRE movement, the ideas are worthy of consideration. If you’re not retired or feel tethered to a Dilbert-esque job, there are other pathways to the Exit. The ideas may seem simple but execution is another thing. I leave you with this chart of those who are retired by age bracket.

“According to Motley Fool data gathered between 2016 and 2022, here is the percentage of Americans who are retired in four age brackets:

• 40 to 44: 1%
• 45 to 49: 2%
• 50 to 54: 6%
• 55 to 59: 11%

Source: Investopedia.com

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FOOTNOTES

*Financial Independence, Retire Early (FIRE): How It Works By Alexandra Kerr. Investopedia article, Updated October 25, 2024

*The FIRE Movement, Wikipedia link

*Elizabeth Willard Thames. Meet the Frugalwoods, Achieving Financial Independence Through Simple Living. (Harper Collins, 2018). Website: frugalwoods.com. Thames has a blog and financial consultant business, though no updates in a while. She has dealt with depression after the birth of her children, and if the idea of happiness or contentment in the woods was appealing or remains so, it is not without challenges. This from a post four years after the book.

*Book Review, Vermont’s Independent Voice. “What I Learned from ‘Meet the Frugalwoods’” by Sally Pollack. April 4, 2018.