What is Financial Independence / Retire Early? with The Happy Hour Crew
Today is the last Friday of the month and my regular listeners know that on the last Friday of the month, I host the happy hour on the podcast where I gather great friends with me to drink cheap drinks and talk about money topics. Since the beginning of this podcast, which now dates back over 8 years, we always had a set group of people who joined me for Happy Hour. Starting in 2023, we’re going to test out a rotating one or two seats for Happy Hour.
This decision has come because of a few reasons, first of all, the monthly commitment required to co-host the happy hour is difficult for people to make when they have other businesses and interests as these seats are voluntary and there is no financial payment provided for the happy hour guests. Secondly, I’ve heard for years many of you wanting to join a happy hour and share your thoughts and honestly, I’d love to hear them because I have shared drinks with many of you in person and would love to also do it virtually and finally, this is a great way for us to amplify many of the voices in this community and discuss topics that you’re passionate about.
Joining us for this month’s happy hour is long-time listener, Liana. Liana joins us today to talk about her pursuit of FIRE or Financial Independence/Retire Early, and the various types of FIRE movements now. I love how the FI movement has grown to welcome many different paths and we discuss which FI path we’re on during the show.
What are we drinking?
Melanie- Ginger Tea
Liana- Maple Fig Manhattan
Alicia- Bartenura Moscato
Shannon- Gin and Tonic
Podcast Notes
Liana has been on the show before, getting financially naked, and then an update! She’s been a long-time listener and first heard about the show through Liz Frugalwoods. Appearing on Happy Hour is a dream come true.
Liz’s blog also introduced Liana to the concept of FIRE or Financial Independence/Retire Early. As a saver, Liana liked the idea of saving for financial independence, but the ‘retire early’ half never resonated with her.
She’s learned more about the different styles of FIRE, and she wanted to discuss them with Shannon and the other happy hour ladies.
What is Financial Independence/Retire Early (FIRE)?
According to Investopedia, FIRE is a movement of people devoted to a program of savings and investments that aims to allow them to retire earlier than traditional budgets and retirement plans.
The exact origin of the term is unknown, but many popular concepts among the FIRE community come from Vicki Robin’s book, Your Money or Your Life.
For a while, only one FIRE path was being discussed, centered around extreme frugality and savings. Now, there are all different styles of ‘FIRE’ movements.
What are the different types of FIRE?
Traditional FIRE: This is where you earn as much as possible while living as frugally as possible. The goal is for your investments to cover your current living expenses and to reach that goal in the shortest amount of time.
Fat FI: The goal with Fat FI is to save enough to cover more than your current living expenses once financial independence is reached. One benefit of this style is more flexibility in the future.
Coast FI: This FI style means you’ve saved enough money in investments that compound interest will work its magic to get you to the FI number by your target age. You’ve invested enough to no longer need to invest and can ‘coast’ the rest of the way.
Barista FI: This style of FI is when you’ve saved enough to cover part of your expenses and can supplement the rest with a part-time job. The idea is that the job is meaningful, enjoyable, or just low-stress.
Lean FI: This style of FI focuses on saving enough to cover the basics. For most folks with less than $40,000 in expenses each year, Lean FI is a great goal.
Flamingo FI: A newer style of FIRE, where you save half of your FI number. It’s similar to Coast FI, but the goal is to reach half of your number in investments, not just the minimum to ‘coast’ to FI.
Can anybody become Financially Independent? What if I feel behind?
Financial independence is a great goal, no matter how quickly you decide to pursue it.
Retiring is a massive shift, and it can be hard to pull the trigger and make it happen. You can always take mini-retirements along the way to try things and see how you feel.
Liana is pursuing Flamingo FI because she already reached her Coast FI number and realized she wanted more cushion. You can always change your goals.
When Melanie first started blogging and FI/RE was a popular topic, she was in debt, writing about how to pay that off.
If you’re feeling behind where you should be, that’s okay. There are always alternatives and options, no matter where you are now.
Takeaway: My biggest takeaway is that whatever FIRE path you take or whatever you call it, I hope that you work towards giving yourself the gift of independence and working because you want to work and not because you have to work. It takes time and energy, but it will also save you time and energy down the road as well.
Connect with The Happy Hour Crew:
Shannon McLay: The Host & CEO
Melanie Lockheart: Dear Debt & MelanieLockheart.com
Alicia Lazarto: COO at The Financial Gym
Liana Merrill: DinksOnABus | Instagram: @dinksonabus | Twitter: @dinksonabus
Resources Mentioned in the Episode:
If you have any topics you would like me to cover on this podcast, or if you’d like to get in the financially naked hot seat, I encourage you to email me at Shannon@fingyms.com, or join the private Martinis and Your Money Facebook page, and let me know what you want to hear.
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