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Retirement Discussions / FIRE Wannabees
|Subject: How to FIRE||Date: 8/9/2003 2:52 PM|
|Author: mazske||Number: 262 of 5016|
The way to FIRE is easy. You save up approximately 25 times your annual expenses and then you FIRE. Ok, how to do this you may ask.
First, you must be making money in some fashion in order to save up this money. That means you are more than likely working a job. There are many different jobs available out in the wide world. They may range from jobs you love that pay little to jobs you hate that pay a lot and many jobs that fall somewhere in between.
My recommendation is to find a career that you enjoy that pays fairly well. I may love to read, for example, but a job utilizing that talent may pay very litte. I may have great computer skills and jobs that utilize that talent may pay a lot, but I don't love jobs like that. So, I may have to settle for a job that pays in the mid-range that sometimes I really love, but other times I don't.
Now, I've touched in various government/military jobs in an earlier post. Jobs along these lines will many times have some sort of pension if you work X number of years.
There are many, many different types of "civilian" jobs. Most of these do not have your typical government pension, but they may have a 401K plan or something similiar. These jobs many times will pay more than a government job as well, but then you must factor in completely funding in your retirement versus having a government job that will fund a portion of your retirement.
In the meantime, no matter what job you end up in, you should live below your means, LBYM. That means you spend less than you make. Easier said than done, right?
Here are some basic tips for LBYM.
Evaluate each and every dollar that you spend. Yep, that means think about that 55 cents you spend every day on a candy bar and that dollar on a soda. $1.55 a day is $7.75 a week which comes to $387.50 for a 50 week work year. See how those dollars add up?
Now, let's say you want to buy a new couch this year. Instead of plopping down 2K for that nice lazy boy reclining couch, couldn't you shop around, be patient and wait until you find one on sale with $500 knocked off and 1 year of no interest?
Also, couldn't you peruse the papers until you found a nice, used lazy boy reclining sofa that looks as good as new that is marked down to $200. Trust me, these bargains are out there.
So, couldn't you at the same time start looking at thrift shops, yard sales and flea markets when it comes to outfitting your house/wardrobe. Now, this means you don't get hooked on yard sales where every week you are spending a hundred bucks at them, but you can pick up some great buys on things you "need".
Need?? Do you really need that new couch or will the old one last another 10 years? What about that new book that the library will be getting in next month where you can read it for free.
How about those expensive pharmaceautical drugs and doctors bill? Doesn't it make sense to exercise on a regular basis to keep yourself in better shape? Doesn't it also make sense to eat healthier for the same reasons.
As far as eating healthier, let's go back to the candy bar and soda example. Let's say you instead drank either water from the fountain or made a cup of green tea from tea bags that you brought with you. Hey, if I can go in 7-11 in uniform and make a cup of green tea, you can do it in the privacy of your own office. The health benefits of green tea are incredible so do yourself a favor and start drinking it.
Remember an apple of a day keeps the doctor away? There's is some truth to this.
What I'm trying to get at is that the healthier we all keep ourselves, the cheaper our medical costs "should" be. There is always that unknown factor that can get thrown in so there is never a guarantee.
Food is a big cost for a lot of people. Most supermarkets runs specials on a regular basis. Follow these specials. When chicken is marked down, buy extra chicken. Do the same when meat is on sale and fish is on sale. Stock up on soup when it's marked down and beans when they are marked down. Yes, initially you may get a surplus of whatever item is on sale, but over time you can obtain a good variety, all or most at discount prices.
Watch your utility bills as well. If it's overcast and 80 degrees, do you really need to use the AC or can you just open the windows and put a fan on? During the winters, does the heat need to be at 72 or can you put it at 66 and wear a sweater?
There are many ways to save money or to LBYM and there are other boards at TMF that will go into this subject in greater detail than I ever will. But, if you just remember some basics that will help. One other tip. If you call long distance, look at something like www.bigzoo.com or a calling card.
So what do you do with the money you are saving? Well, you need to invest it. How do you do this?
Something easy is to open up an account at a company like Vanguard and set up automatic monthly deposist into an index fund account. You can also do similiar things with your employees 401K, 403B or 457 plans.
If you like real estate, you should save up a down payment to purchase rental properties. Keep reading this board and other boards for more information on this subject.
The main thing is just to do something. Get yourself out of debt and start saving some money.
That's the other thing that sets FIRE Wannabees apart from those who aren't FIRE Wannabees. We try not to have debt. Sure, we may have mortgage debt because how many of us have 100K to buy our houses outright? However, we don't use our credit cards too much, or, if we do we try our best to pay them off every month so we don't have to pay interest. We do the same with any outstanding loans we may have. We normally try to pay them off, but if they are at 0% interest we may wait to that last month to actually pay them off.
OK, I think I've touched on some of the highpoints of preparing to FIRE. Normally, getting to the point of FIRE will take a number of years, different for everyone, so make sure you enjoy life in between.
Oh, how do you do that? Easy. Be nice and friendly to every one you meet. Life is much more enjoyable if you get along with people than if you don't.
Learn the beauty in looking at a pretty flower, or watching a deer walk through your backyard. Of course, try not to get too frustrated when those pretty deer start munching your pretty flowers. That's where a sling shot comes in handy. <grin>
What's better than drinking a nice cup of tea while sitting with your partner or friend looking at life outside your window or off of your porch. Nature is beautiful as are many man made things. Look at that beauty.
So you like to take vacations to get away, do you? Have you tried tent camping? Oh, come on. Take an air mattress with you and it's not that bad. Buy a little stove so you can do some basic cooking. Trust me, you will still spend money while camping, but you will save hundreds, if not thousands of dollars over staying in a hotel or condo and buying all of your meals out.
Kids love to camp so if you have kids, take advantage of this.
Ok, there you have it. This is how mazske tries to live in hopes of FIREing one day and you to can do the same. Of course, you may have some better ways to live or better tips to pass on, so feel free to add to this thread.
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