For all intents and purposes, my family has achieved FIRE. This is why I finally have the time and resources to work four jobs.
Yes, you heard that right…I guess. My wife either jokes, complains, or humble-brags about me having four jobs as it suits her needs.
I know the Internet Retirement Police are probably already on their way. According to them, a person isn’t allowed to be “retired” if he or she still does even a single moment of work. You may have noticed that I’m a pilot, which means that I could care less what the IRP (or anyone else) thinks.
I think the Financial Independence community gets too wrapped up in phraseology, and seeks out dogma in a movement that is as individual as it gets. If having investments equal to [25 x Annual Spending] constitutes FIRE, then what constitutes Lean FIRE or Fat FIRE? I say, who cares?
I also think it’s unfortunate that “Retire Early” makes such an accessible acronym when coupled with “Financial Independence.” If there’s one thing we can learn from the early leaders of the FIRE movement, it’s that society’s idea of retirement is overrated. Nobody can sit around the house all day binging Netflix, or even sipping margaritas on the beach. People need more fulfillment from life.
We’ve seen how the Mad Fientist and his wife abandoned their original plan that involved at least 6 months of travel each year. They realized that they value community and productivity that they can only get at home. The Financial Samurai recently announced that he “failed” at retirement, and planned to return to a regular-ish job. Even the great Mr. Money Mustache has continued pursuing commercial activities that include running a highly-profitable blog and a co-working space so cool I’ve tried to convince my wife she’d love living in Longmont, CO.
None of these people leads a life that society at large would define as retirement. And yet, none of that takes away from the only fact that matters: whether they work or not, their investments will cover their families’ needs forever. (Well, I’m not sure about the FS. He makes it seem like he needs more money. I say he could move almost anywhere else on Earth and be just fine.)
This is all that really matters in the FIRE movement. Does the passive income from your investments cover your family’s needs forever? If so, you’re FIRE. Done.
My wife and I both continue to work because we find fulfillment in our jobs. If I were to describe my ideal retirement (by mainstream standards) it would include owning or having access to a variety of aircraft. I’d wake up in the morning and go fly one for a while. I’d probably land long enough to eat lunch, and then go back up again. I love flying like some people love golf, or knitting, or watching TV. Flying for me is both fulfilling and fun.
I could certainly make sure that my nest egg is large enough to cover the cost of operating an aircraft or two. I guess we’re probably there anyway. However, given the choice of paying tens (or hundreds) of dollars an hour to fly my own airplanes, or letting other people pay me hundreds of dollars an hour to fly their airplanes, why not spend a few hours “working” here and there?
I don’t plan to share the specifics of my family’s finances here, but I’ll admit that we spend far more than the Root of Good family or most of my other favorite FIRE bloggers. We feel comfortable spending at our level because our jobs pay well. However, COVID-19 has recently reminded us that even our fantastic jobs aren’t guaranteed.
I’m an airline pilot, and our industry is getting pounded right now. I’ll almost certainly get “displaced” from my cushy Captain seat and forced to fly as a First Officer again in the next few months. This will entail about a 40% pay cut. I’ll be lucky if that’s as bad as things get. I’m also potentially vulnerable to a furlough that would reduce my pay to zero.
My wife is a pediatric dentist. Her office has been shut down for a couple months. They finally have approval to open back up, but they can’t get their hands on any N95 masks. (Thanks to all the hoarding heroes who have been wearing medical-grade masks to the grocery store and to collect takeout from restaurants.) We hope she’ll be able to work for pay again someday….
What if it didn’t happen though? What if my wife and I lost both of our jobs, and our ability to find equivalent work forever?
It’s extremely unlikely that all four of those things would happen, but I think the thought experiment is worth going through.
First off, we have enough in our investments that we could cover our spending needs through passive income. This probably includes spending more than we strictly need to right now, and owning a fancier home than any self-respecting personal finance writer should. I think we’re both conservative enough that we’d look at ways to cut costs if we both lost our jobs.
We also happen to own a house in Rapid City, SD. It’s an accidental rental property. My wife bought it when she arrived for her first operational Air Force assignment and we couldn’t afford to sell it when we she left two years later. (Note to Active Duty military members: don’t ever buy a house when you PCS, unless it will make sense as a profitable rental property. Ideally, it should work as a house hack while you’re at that assignment.)
It’s a great house. It has 4 bedrooms, 2 1/2 bathrooms, a 2-car garage, and a nice yard on a big corner lot. It’s walking distance to the nicest elementary school in town, biking distance to a grocery store, and 5-15 minutes closer to Ellsworth AFB than most of the houses in town.
Since this house has been a rental for the last 12 years, we have quite a bit of equity in it. In our absolute worst-case scenario we could pay that house off, pack up our whole lives, and move to Rapid City.
This would take a necessarily dire situation. We Florida, sunshine, and warmth. I’d have to convince my family that it’s fun to have our house occasionally look like this:
We’d definitely try to sell our current house in Florida. We have some decent equity in it, and we’ve used our high incomes to increase its value. We’d definitely get enough cash from this sale to pay off our Rapid City house. Optimistically, we’d have enough after that to cover living expenses for a while.
If we got scared and only broke even on selling our Florida house, we could still pay off Rapid City. We started a house payoff fund last year, and it has almost enough to pay off the Rapid City house right now. Worst case, we could sell some of our other investments to come up with the rest of the cash we need.
It’d suck to uproot ourselves and move away from here. Thankfully though, we still have friends in Rapid City and we could fit in there as well as we do in Tampa.
Once we got there, our cost of living would plummet without even trying hard. First and foremost, we would have shed a larger-than-necessary mortgage by selling our Tampa house. By paying off our Rapid City house, we’d eliminate any mortgage payments there. With nothing to worry about but taxes, insurance, maintenance, and utilities, we’d save a lot of money right away.
With neither of us working, there’d be fewer meals out. (I do a lot of restaurant dining as an airline pilot.) Neither of us works more than about 10 days per month, but we’d still save costs on commuting. In fact, we’d have no need for a second car and could slash expenses by selling one.
We’d go further though. I’m close to convincing my wife to cut cable out. Google FI is already cheap, but spending less time at work would mean using more wifi and less cellular data. If we were making a change as drastic as moving across the country, we’d get more diligent about meal planning. I’d also feel compelled to go full Mustachian for transportation and only ride my bicycle to places like the grocery store.
After the initial shock, I think we’d end up pretty happy with the situation. I feel like we have a lot of fluff in our lives that doesn’t need to be there. Moving in this context would naturally get rid of a lot of it. We’d have lots of time to spend together, and lots of time to pursue other interests. It’d be a lot like our daily lives right now, stuck at home not working because of Coronavirus.
With our investments strong enough to support most or all of our spending level in Tampa, we’d be very fat FIRE at our reduced spending levels in Rapid City. If we wanted to we could just enjoy our unemployment: hiking and rock climbing in the Black Hills, running and biking around town, skiing in the winter. It’d be glorious.
However, I’ve mentioned that I don’t think it’s realistic for anyone to live a life of total leisure forever. My wife and I are both driven enough that I don’t think either of us could last without pursuing some type of meaningful, paying work.
This isn’t a bad thing. My first instinct would be to pursue flight instructing. Losing my job as an airline pilot could be the result of factors that would also prevent me from doing other commercial flying, but let’s ignore that for a moment. I taught and towed gliders at the Black Hills Soaring Club last time I lived there. I’d definitely offer my services. I was also a mission and instructor pilot for the Rushmore Composite Squadron of the Civil Air Patrol. That’s a volunteer gig, but it’s fun and very rewarding. It also involves cheap or free flying and would be a good way to enjoy doing what I love.
Beyond those opportunities, I’d look for flight instructor jobs at schools in the area. As a former B-1 pilot, I could potentially get a job as a simulator instructor at Ellsworth AFB. (I could also pursue Air Force Reserve jobs as a B-1B or MQ-9 pilot at Ellsworth. I think they’d be a lot of work, but it’s nice to have options.) I also flew a lot with an FAA Designated Pilot Examiner when I lived there. I have the qualifications to do that job now, and I’d seek his advice on how to do that job. The FAA has a DPE shortage right now, and I figure I could easily make $600-1000 per day in that job.
Those are all nice, local flying opportunities. Assuming we only had to move there because of our current employers going under, I’d eventually be able to search for a fancier flying job with an airline, charter operator, etc.
That’s a lot of flying job opportunities, but I could also pursue paying opportunities outside of flying. I’ve been doing paid writing for a while, and I would definitely look for opportunities to do more. My first book is selling well, and I have no shortage of ideas for more books. In theory, not having a day job would free up time for me to get those projects done.
My wife and I also have several ideas for businesses we could start from anywhere. With the security that comes from having our basic needs met, we’d feel confident trying to make one or more of those ideas work.
I could go into more detail, but I think this gets the point across.
In case of dire catastrophe and total job loss, we’d be okay. We could:
- Sell our fancier-than-necessary house in Tampa and move to a home we already own in Rapid City.
- We have several different ways to pay off our Rapid City house.
- Our Treasure Bath is deep enough to support our current spending. However, between no mortgage, no job-related spending, less commuting, and other cost savings, we’d slash our spending requirements.
- We’d have plenty of time to enjoy a simple life together. However, there is no shortage of job prospects if we chose to pursue fun and meaningful employment.
Don’t get caught up in someone else’s definition of Financial Independence, or worry about whether or not you meet some arbitrary criteria associated with an acronym like FIRE. The labels and checklists don’t matter. All you need to care about is whether your streams of passive income can cover your family’s spending needs.
If they can’t, follow the well-established steps to reduce your spending, increase your income, and save everything in between. Your choice to do this is entirely in your power. Once you start, it is only a matter of time before you reach FI. As far as I’m concerned, it’s a shockingly simple mathematical certainty.
When you reach the milestone of FI, you can celebrate. However, that doesn’t mean you need to make any changes in your life. If your investments covered your spending yesterday, then as long as you don’t increase your spending tomorrow you’re still good. At that point, every dollar you earn is just gravy on top of everything…extra Treasure spilling over the edge of your Bathtub. If you enjoy that work, keep doing it until you don’t! If not, you have the freedom to make a change.
If you choose to keep working, you’ll have the option of increasing your spending. We have, but we still aren’t going crazy. We certainly aren’t committing ourselves to any long-term spending burdens. We’ve thought through our options in case this income goes away…and ended up with this FIRE Escape Plan.
Now it’s your turn. Is your Treasure Bath full, or close to it? If so, what’s next for you? If you choose to keep working and/or increase spending, whats your Escape Plan?