TAMPA, Fla. - Are you counting down the time until you can sail off into the sunset and retire? Or maybe you want to save enough money to start your own business. You can make those goals reality with something known as FIRE, or Financial Independence, Retire Early.
Steve Fasano did it. He's 45 and lives in Sarasota - and is retired from his career as a consultant, thanks to FIRE.
“Extreme FIRE followers cut spending to under $1,000 a month, sometimes less. I'm not that. What I do, I list my expenses, largest to smallest, and I think of ways to cut - rent or food,” Fasano said.
He made small changes and started investing instead of spending.
“The idea is, I buy a coffee for $2 or $4 and then look at it like monthly, annually, or over my entire life. Well, how much money would you make if you invested it instead?” he explained.
To start, track your spending. Then decide what you value and what you can cut.
Kristen Graham is in a MeetUp group with Fasano that focuses on FIRE.
“There are no hard-and-fast rules with how you spend. You don’t have to live off ramen noodles. You define what your goals are and put away what you can with the intention of living below your means and saving, sometimes 50 to 70% of your income,” Graham explained.
She breaks down what’s known as the 4% rule - which helps you figure out your magic number to stop working.
“So, with FIRE, the concept is you need 25-times your annual spend in order to retire. If you want $40K a year, you want a million.”
Graham runs a business that helps female entrepreneurs called My Dream My Terms. She says financial independence isn't only about retiring early.
“For some, it’s about changing careers. Leave corporate America and start a business, or go travel,” she said.
FIRE followers believe retirement depends primarily on how much of your take-home pay you're able to save. They say, as soon as you start saving and investing your money, the sooner it starts earning money all by itself.
“When you start out, you don't have a lot to invest, so it's really about what’s your behavior around saving?” said Graham. “The first goal is to get a month ahead so you're always paying this month’s bills with last month’s money. The second is: reserve account. Third is: start investing."
And that's how to bring FIRE to your finances.