Comment by ahelwer | Hacker News Reader

Comment by ahelwer | Hacker News Reader

This article isn't very good. The author tried being frugal and saving 50% of his salary for a month, got bored (no drinks with friends or dates with girlfriend). The first half-year of FIRE living isn't even representative, because you can still live off the largesse of your past life. It's certainly true that your friend group changes, though, from meeting up over weekly drinks/dinners to meeting up to do a sport with low marginal costs like backpacking or rock climbing or basketball.

I've been more or less on the FIRE train for three years now. It's very easy when you have a software engineer's salary in Seattle. In my best year I only spent $21,000, but was fairly unhappy - saving money is a lot of work! All chores take longer and require more mental effort to figure out the least-expensive way of accomplishing your goal.

At this point I've actually found areas of technical interest I can expect to get paid for in the future, so I'm not as laser-focused on the goal. If you manage to bring in even a bit of cash in retirement, the safe withdrawal rate calculus tilts considerably in your favor.

To head off people saying "but you won't really be retired!" you should know the in-group has a term for you: the retirement police. The real goal is freedom, and not the type where you're lying to yourself that this is what you want to be doing.

Came here to agree with you and also add that while I've never heard of this movement over here in Europe I do know of a certain type of loosely based community of blogs, forums and people who invest hundreds of dollars each month into stock.

Special stock (I'm at a loss of english financial terms here) that give off a certain percentage of value back to you each year or month.

So the goal is the same, once you own enough of these stock you're supposed to live off the accumulated winnings from them. And of course these stock can be sold off too if you want to free some money. Or if the company announces that they're going to lower their percentage of value that they give out.

I've been doing this for a couple of years now, started late compared to my peers. I'm a slacker and so far haven't calculated much of anything. Simply jumped on a bandwagon, read some blog posts and got started.

But a co-worker who tipped me off to this "movement" claims he's calculated that he will be able to live off his return in 10 years.

This all depends on how much you're putting into your stock each month of course. Personally I buffer money and only buy stock every 3-4 months.

The trick is to find old well established businesses whose stock has been stable for many years, many of them fluctuate up and down over decades.

New companies do not tend to give off this return. I don't know the details but only certain companies give a return on their stock just by owning them. My stock trading app shows this info when you click on a stock.

Once you've bought into some company you might get a letter home saying that they're going to lower or raise the return depending on how well they're doing.

I believe you are referring to dividend investing? Investing in a portfolio of stocks that pay higher than average dividends. I'm not an expert in this, but dividend stocks don't normally have as high of a growth potential so the math may be different. Usually when the FIRE community refers to investing, they usually refer to an index fund that includes either the S&P500 or global stock index so you can track the movement of the broader economy and count on the economy growing year over year.

With dividend investing, it's not really the same thing and the math likely won't work out the same.

Also, depending on your jurisdiction, you pay taxes on dividends. So, it makes sense (while you earn) to invest in shares or funds that don't give you income (they pay dividends that you have to pay tax on), but capital gains (they increase in value, but you don't have to pay tax on that until you realise the gain, ie sell).

Once you're retired, you can switch from a capital growth portfolio to an income providing portfolio.

I'm guessing you lived with other people? $21k without roommates in Seattle seems particularly difficult these days. I managed under $10k/yr while in Seattle (living alone) but I lived a very poor lifestyle and had an incredibly cheap rental situation. ($400/month)

Managed to find a (pretty bad) 1bd apartment in Capitol Hill for $900/month, but rent increases had me moving into a comfortable 2bd where I paid $800/month. $400/month sounds amazing! I now have a mortgage so it's a bit more difficult to figure out what counts as housing costs and what counts as housing investment.

$800 with a roommate, right?

It was amazing... I envy that financial situation I had so much (being able to have such cheap base expenses). Now I pay over $2k for a little 400sqft shack in the peninsula of the bay. Haha.. ha... ha... :'( Wish I at least had more than a fridge and stove for that price.

I view any interest as housing costs and all principal paid as investment. But that's coming from someone who can't afford a home talkin'...

For someone who's never heard of the system it's good enough to get me interested. I'd love to see one with your history though. Great point.

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