WEBVTT - A Beginner’s Guide to the F.I.R.E. Movement 0:00:00.080 --> 0:00:02.600 The Fire Movement, what it is, and how to be 0:00:02.640 --> 0:00:07.680 a part of this very powerful financial movement, A biginners guide. 0:00:07.920 --> 0:00:11.559 Welcome back everyone to Sugar Mama's Fireplay. So today we're 0:00:11.600 --> 0:00:14.400 talking about one of my favorite topics when it comes 0:00:14.400 --> 0:00:18.000 to personal finance, and that is the Fire Movement. If 0:00:18.000 --> 0:00:21.959 you've ever dreamt of having financial independence, retiring early, and 0:00:22.040 --> 0:00:25.360 having freedom over your time, this is the perfect episode 0:00:25.360 --> 0:00:28.600 for you. But before you get too excited, let me 0:00:28.680 --> 0:00:32.280 be clear. Fire is not a get rich quick scheme. 0:00:32.920 --> 0:00:37.720 It requires patience, discipline, and a really strong commitment to 0:00:37.800 --> 0:00:42.440 a long term financial strategy. So in today's episode, I'm 0:00:42.479 --> 0:00:44.879 going to break down exactly what the Fire movement is 0:00:44.920 --> 0:00:47.680 all about, the benefits, the challenges that come with it, 0:00:47.960 --> 0:00:50.559 and most importantly, give you a step by step guide 0:00:50.600 --> 0:00:52.960 to follow so you can see for yourself how you 0:00:52.960 --> 0:00:57.360 can start working on your own financial independence. So relax, 0:00:57.600 --> 0:01:02.080 sit back, and let's talk about this very powerful, exciting 0:01:02.280 --> 0:01:08.839 movement that's changing people's lives forever. All right, First of all, 0:01:08.959 --> 0:01:11.160 let's kick off and just explain the basics the one 0:01:11.160 --> 0:01:15.320 io one of what Fire really is. So Fire stands 0:01:15.319 --> 0:01:19.520 for financial independence, retire really and the core principle behind 0:01:19.520 --> 0:01:23.959 it is very simple. It's about saving and investing aggressively now, 0:01:24.080 --> 0:01:26.920 earlier in life, so that you can build enough wealth, 0:01:27.560 --> 0:01:30.119 a great fat nest egg, to be able to quit 0:01:30.160 --> 0:01:32.399 your nine to five job and just live a life 0:01:32.400 --> 0:01:36.840 on your own terms. Now, traditionally, we most of us, 0:01:36.920 --> 0:01:38.959 have been told, and we've witnessed through our parents and 0:01:39.000 --> 0:01:42.240 perhaps our grandparents and great grandparents, that we work until 0:01:42.280 --> 0:01:45.880 we are sixty five in some cases seventy, and then 0:01:46.040 --> 0:01:49.960 when we retire, we live off our savings or superannuation, 0:01:50.400 --> 0:01:54.880 or sometimes a government pension. So the Fire movement completely 0:01:55.280 --> 0:01:58.720 challenges this, It turns it upside down, and it's about 0:01:58.920 --> 0:02:02.040 encouraging people to take control of their financial future far 0:02:02.320 --> 0:02:05.440 earlier in life, and actually, you know, not have to 0:02:05.440 --> 0:02:07.680 wait until you're in your sixties or seventies to actually 0:02:07.760 --> 0:02:11.000 enjoy the fruits of your hard work. Work hard now, 0:02:11.160 --> 0:02:14.720 go aggressively, and then retire early and actually be able 0:02:14.800 --> 0:02:17.000 to be young and fit and full of energy to 0:02:17.160 --> 0:02:19.880 enjoy all the fruits of that hard work, not delaying 0:02:20.000 --> 0:02:23.840 until later in life. Now, Fire isn't a one size 0:02:23.840 --> 0:02:25.880 fits all, which I think a lot of people assume 0:02:25.880 --> 0:02:28.560 when they first hear about it. There are different types 0:02:28.600 --> 0:02:31.639 of fire, which I'll explain in a moment, but some 0:02:31.680 --> 0:02:35.639 people really aim to retire extremely early. I've seen situations 0:02:35.639 --> 0:02:37.720 whe people that have retired in their thirties or forties, 0:02:37.760 --> 0:02:41.320 whilst others actually want to reach financial dependence so they 0:02:41.360 --> 0:02:45.040 can have I guess a greater flow or balance, like 0:02:45.160 --> 0:02:48.520 work less, take more holidays, or have like a passion 0:02:48.520 --> 0:02:51.800 project on the side without having to have that financial 0:02:51.880 --> 0:02:56.480 stress linger. So that's essentially what the fire movement is. 0:02:56.520 --> 0:03:01.480 It is about financial independence earlier in life. Now, why 0:03:01.520 --> 0:03:04.480 would you want to do this? Well, okay, there are 0:03:04.520 --> 0:03:07.400 a few reasons why someone want to pursue the fire movement, 0:03:07.560 --> 0:03:10.520 but here are just a few. The first one, obviously 0:03:10.560 --> 0:03:14.760 is freedom over your time. You no longer work by force, 0:03:15.080 --> 0:03:19.480 you work by choice. You have enough income to pay 0:03:19.480 --> 0:03:22.760 the bills, You can decide how you want to spend 0:03:22.840 --> 0:03:24.880 your time, whether you want to go to work today 0:03:24.919 --> 0:03:27.440 or whether you want to maybe go on holiday tomorrow. 0:03:27.919 --> 0:03:31.440 So it really brings back that choice and that freedom 0:03:31.560 --> 0:03:35.000 and that time and even a luxury back to the 0:03:35.040 --> 0:03:38.120 person who's controlling their fire. The second benefit to fire 0:03:38.200 --> 0:03:42.000 is obviously less stress about money. Financial independence means having 0:03:42.080 --> 0:03:44.800 enough money to cover your lifestyle without actually having to 0:03:44.840 --> 0:03:47.560 rely on earning a paycheck from somewhere else or by 0:03:47.560 --> 0:03:51.960 physically doing something. It's really about building passive income. Passive 0:03:51.960 --> 0:03:54.920 income is money that you earn whilst you sleep at night, 0:03:55.560 --> 0:03:59.640 so you completely eradicate that sort of pressure and stress 0:03:59.680 --> 0:04:01.440 to have to go to a job every day and 0:04:01.560 --> 0:04:03.800 show up and put a suit on, or stare at 0:04:03.800 --> 0:04:06.280 a computer screen, or work with people that you don't 0:04:06.320 --> 0:04:09.040 necessarily like. The other thing is it gives you more 0:04:09.080 --> 0:04:12.120 opportunities for personal growth. When you're not tied up to 0:04:12.160 --> 0:04:15.000 a full time job, you have obviously more time to 0:04:15.080 --> 0:04:19.799 explore those passions, those hobbies, travel, even start a business 0:04:19.800 --> 0:04:22.680 on the side. You have this choice with fire and 0:04:22.720 --> 0:04:26.960 then of course allows better work life balance. You may 0:04:27.000 --> 0:04:30.960 not necessarily want to completely retire and up shop, but 0:04:31.000 --> 0:04:33.800 instead you might want to maybe look at part time work, 0:04:33.960 --> 0:04:36.480 or look at doing some passion projects or even doing 0:04:36.560 --> 0:04:40.800 some volunteers. So it doesn't necessarily mean you completely quit 0:04:40.920 --> 0:04:43.520 the workforce, unless of course you want to. But you 0:04:43.640 --> 0:04:45.960 just have a complete flexibility. You might decide, okay, well 0:04:45.960 --> 0:04:47.919 I'm going to take a six month contract job, but 0:04:47.960 --> 0:04:49.760 then for the remainder of the six months of the year, 0:04:49.760 --> 0:04:52.680 I'm going to actually switch off, relax, do some courses, 0:04:52.800 --> 0:04:55.680 do some charity work, and of course travel so you 0:04:55.720 --> 0:04:57.920 have a greater sense of work life balance, and of 0:04:58.000 --> 0:05:01.280 course that closing improving your own health and fitness along 0:05:01.320 --> 0:05:03.640 the way. So now that we've spoken about the benefits 0:05:03.640 --> 0:05:06.160 of firelet it's actually talk about the negative side, the 0:05:06.279 --> 0:05:10.680 challenges of fire. Because there are challenges of fire. There 0:05:10.720 --> 0:05:12.320 is a reason why not everyone is part of the 0:05:12.360 --> 0:05:14.440 fire movement, and I'd say these are the key reasons 0:05:14.480 --> 0:05:17.960 why people get stuck or don't commit long term to 0:05:18.000 --> 0:05:22.160 see the results and all the beautiful benefits. So all right, 0:05:22.560 --> 0:05:27.360 the fire lifestyle is not really for everyone. It requires 0:05:27.520 --> 0:05:33.280 extreme discipline and patience. You have to be incredibly intentional 0:05:33.320 --> 0:05:38.919 about saving and also saving and investing, and for most 0:05:38.960 --> 0:05:42.960 people like myself as well, that includes cutting back, cutting 0:05:42.960 --> 0:05:46.679 back obviously on luxuries, but also cutting back on things 0:05:46.720 --> 0:05:49.800 that are sort of in between needs and wants. You've 0:05:49.800 --> 0:05:53.040 also got to be incredibly patient. The more financial freedom 0:05:53.080 --> 0:05:56.080 you want, the more passive income you want, the more 0:05:56.120 --> 0:05:58.919 time it's going to potentially take all the biggest sacrifices 0:05:58.960 --> 0:06:01.000 that are needed. So you need to understand that and 0:06:01.040 --> 0:06:03.240 make peace with that and accept that if that's what 0:06:03.279 --> 0:06:04.560 you want, you've got to build it. If it was 0:06:04.600 --> 0:06:07.279 that easy, everyone to be doing it. The other downside 0:06:07.320 --> 0:06:10.760 of the fire movement is the potential for burnout. And 0:06:10.800 --> 0:06:13.039 this is something again i've actually seen a lot of. 0:06:13.720 --> 0:06:16.520 So you know, initially people are full of motivation, which 0:06:16.560 --> 0:06:20.680 is fantastic, but three months in a year in some 0:06:20.720 --> 0:06:23.599 people have had to go to such extreme lengths, you know, 0:06:23.680 --> 0:06:26.280 juggling multiple jobs and saving you know, up to say, 0:06:26.320 --> 0:06:30.000 seventy percent of their income. This ends up being exhausting 0:06:30.400 --> 0:06:33.320 and when you're going at this aggressive pace, it is 0:06:33.600 --> 0:06:37.320 not sustainable. And the problem is when we're burnt out, 0:06:38.279 --> 0:06:40.960 a couple of things tend to flare up. We then 0:06:41.040 --> 0:06:44.360 have a blowout where we undo all our hard work. 0:06:44.800 --> 0:06:46.680 You see that often with people who've been trying to 0:06:46.680 --> 0:06:49.360 pay off debt aggressively and then they just something happens 0:06:49.360 --> 0:06:50.600 and they get a trigger and then they go and 0:06:50.640 --> 0:06:52.880 blow it all on new credit card debt, and you know, 0:06:52.920 --> 0:06:56.159 they're back to almost square one again. It's exactly the 0:06:56.160 --> 0:06:58.400 same with any strict diet where you've got to cut 0:06:58.400 --> 0:07:01.159 out huge amounts of your normal every day diet. You 0:07:01.240 --> 0:07:03.000 do it for a week or two, maybe three, and 0:07:03.000 --> 0:07:06.560 then you just something happens and you know, you overindulge 0:07:06.560 --> 0:07:08.880 in all of those things that you try to cut out. 0:07:08.920 --> 0:07:11.840 So you've got to be very careful of having a 0:07:11.880 --> 0:07:13.960 finger on the pulse with burnout. And I'll come and 0:07:14.000 --> 0:07:18.680 talk about that in a second. The other downside of fire, 0:07:19.040 --> 0:07:21.200 and this is a really big one that no one 0:07:21.480 --> 0:07:25.320 talks about enough, and that is inflation and market risk. 0:07:26.040 --> 0:07:29.680 So the thing with the fire community, it's not based 0:07:29.720 --> 0:07:35.120 on necessarily just savings, no cash accounts. If you want 0:07:35.280 --> 0:07:39.240 long term financial freedom, you've got to be investing. And 0:07:39.440 --> 0:07:42.960 typically for a long term financial freedom independence has got 0:07:43.000 --> 0:07:45.440 to have a certain amount of risk involved, which typically 0:07:45.440 --> 0:07:50.320 falls into the the property market and equities. So the 0:07:50.320 --> 0:07:54.000 investment portfolio you're building and creating that passive income has 0:07:54.040 --> 0:07:57.200 got to last for decades. And if you're dealing with 0:07:57.240 --> 0:07:59.840 these types of assets like for example, shares and property, 0:08:00.320 --> 0:08:03.440 these are assets such are naturally and it's very normal 0:08:03.760 --> 0:08:07.880 to be very volatile. They have downturns, and those downturns 0:08:07.960 --> 0:08:13.360 can be dramatic and can really create an emotional reaction 0:08:13.440 --> 0:08:15.320 in a negative way that then triggers a knee jerk 0:08:15.360 --> 0:08:17.960 reaction that often comes with a regret. So you need 0:08:18.040 --> 0:08:22.840 to understand what the risk versus reward equation is, where 0:08:22.840 --> 0:08:25.480 it fits with you, where your risk profile is, and 0:08:25.520 --> 0:08:29.000 you invest accordingly, and you're also ready to weather the 0:08:29.000 --> 0:08:33.280 storm when those market downturns hit. The other important element 0:08:33.320 --> 0:08:37.400 of this is the rising costs. So this is where 0:08:37.440 --> 0:08:39.560 a lot of people who've thought they set themselves up 0:08:39.600 --> 0:08:42.880 for a lifetime of fire actually sadly and unfortunately, and 0:08:42.920 --> 0:08:46.640 I don't say this to patronize them, but they've basically 0:08:46.679 --> 0:08:49.800 had to go back to work because the rising cost 0:08:49.840 --> 0:08:53.319 of living and the recent impact of inflation has really 0:08:53.400 --> 0:08:57.640 eroded into their strategy. Now this doesn't mean it's completely 0:08:58.000 --> 0:09:00.959 you know, you can't avoid this from it. You need 0:09:00.960 --> 0:09:04.960 to understand the impact of inflation, the impact of rising costs, 0:09:05.240 --> 0:09:08.599 and make sure that your portfolio and your financial strategy 0:09:08.920 --> 0:09:11.720 prepares for this in a proactive way and you know 0:09:11.760 --> 0:09:14.760 how to navigate it if you hit certain boundaries where 0:09:14.800 --> 0:09:19.560 you see your investment portfolio being hit with volatility and 0:09:19.679 --> 0:09:22.040 of course the rising cost of living. This is why 0:09:22.080 --> 0:09:25.040 it's so important to make sure you build enough passive income, 0:09:25.520 --> 0:09:28.120 ideally a little bit more passive income than what you need, 0:09:28.280 --> 0:09:30.280 so that you never eat into the capital and you 0:09:30.400 --> 0:09:32.559 never force into a situation where you have to crystallize 0:09:32.640 --> 0:09:35.680 losses and sell things because your passive income no longer 0:09:35.920 --> 0:09:39.320 covers your cost of living because of inflation. So always 0:09:39.320 --> 0:09:41.760 obviously keep that in mind. But you need to prepare 0:09:41.800 --> 0:09:44.520 for this and have safety nets in place. And of 0:09:44.559 --> 0:09:46.840 course a lot of people don't realize if you set 0:09:46.840 --> 0:09:51.000 yourself up for financial independence retirement early earlier in life, 0:09:51.000 --> 0:09:53.960 sand your thirties, you need to also keep into consideration 0:09:54.600 --> 0:09:58.960 your natural lifestyle evolving. I know one person in particular 0:09:58.960 --> 0:10:04.040 who created successful fire strategy in their late twenties early thirties. 0:10:04.400 --> 0:10:06.880 Everything was going great. They had so much freedom, so 0:10:07.000 --> 0:10:10.720 much time, so much choice, so much travel. And then 0:10:10.760 --> 0:10:13.360 they met someone and they decided to have a family, 0:10:14.080 --> 0:10:17.920 and seeing what their cost of living changed you with 0:10:18.080 --> 0:10:21.559 children with childcare, with having to have a bigger home 0:10:21.960 --> 0:10:26.800 with more bedrooms, that person had to return back to work. 0:10:26.960 --> 0:10:28.960 Of course, they didn't have to return back at the 0:10:29.000 --> 0:10:32.120 same pace that their friends were to keep up with 0:10:32.200 --> 0:10:36.120 the living expenses, but their fire strategy wasn't able to 0:10:36.160 --> 0:10:39.120 evolve with them. Not that that's necessarily a bad thing 0:10:39.160 --> 0:10:40.680 at all. I don't think so. I think it's an 0:10:40.679 --> 0:10:42.880 exciting thing and great to be able to back in 0:10:42.920 --> 0:10:45.120 the workforce and using your brain. But you need to 0:10:45.160 --> 0:10:48.320 keep that in mind. How much flexibility do you need 0:10:48.360 --> 0:10:51.120 for financial independence? How much do you want and you 0:10:51.520 --> 0:10:56.680 will things like retiring, maybe having a healthcare scare, maybe 0:10:56.760 --> 0:10:58.480 wanting to live in a different country where there are 0:10:58.480 --> 0:11:00.439 different tax rates and different cost of living. How is 0:11:00.679 --> 0:11:03.920 your financial fire strategy going to evolve with you and 0:11:04.000 --> 0:11:06.520 your needs? Think about these things if you want a 0:11:06.520 --> 0:11:10.400 really robust one. And then the fourth downside i'd say 0:11:10.520 --> 0:11:14.600 of the fire movement is social challenges. Not everyone is 0:11:14.600 --> 0:11:17.720 on board with the fire movement. Again, again, if everyone, 0:11:17.720 --> 0:11:21.160 whiles everyone be doing this, there are going to be 0:11:21.280 --> 0:11:25.480 family and friends who may not necessarily understand your choices. 0:11:25.880 --> 0:11:29.599 If they see you being incredibly frugal with your spending, 0:11:29.920 --> 0:11:33.400 they see you aggressively saving every penny, They see you 0:11:34.120 --> 0:11:37.840 investing every dollar and maybe taking risks with it comes 0:11:37.840 --> 0:11:41.720 to investing that they wouldn't necessarily take themselves. You may 0:11:41.800 --> 0:11:45.200 find it a confronting experience and it can at times 0:11:45.640 --> 0:11:50.400 feel isolating. However, whilst these people may not understand what 0:11:50.440 --> 0:11:54.080 you're doing or may judge you even or think that 0:11:54.160 --> 0:11:58.520 you're missing out on amazing opportunities in life, such as 0:11:58.559 --> 0:12:01.040 travel or those spontaneous that ativities like going to a 0:12:01.080 --> 0:12:04.120 concert and all those wonderful things, you also need to 0:12:04.160 --> 0:12:05.840 know that you actually have a lot of power within 0:12:05.880 --> 0:12:08.280 you to inspire those people who may be judging you 0:12:08.520 --> 0:12:12.640 or maybe criticizing your personal financial decisions in life. So 0:12:13.120 --> 0:12:16.079 understand that it goes both ways, but it definitely can 0:12:16.240 --> 0:12:19.160 be isolating, particularly if you're having to say no, I 0:12:19.160 --> 0:12:21.160 can't come to dinner, or no I can't go to 0:12:21.160 --> 0:12:23.640 that concert, or no, I can't go on a holiday 0:12:23.800 --> 0:12:28.480 this year. It can feel incredibly lonely. But again, turning 0:12:28.520 --> 0:12:31.400 to a community online is a great opportunity to help 0:12:31.480 --> 0:12:34.079 find that support and also obviously that motivation to keep going. 0:12:34.120 --> 0:12:36.760 And I say, for someone who's been investing for a 0:12:36.840 --> 0:12:39.400 very very long time, not just as a financial planner 0:12:39.400 --> 0:12:42.360 but myself personally, and if you can push through these 0:12:42.360 --> 0:12:46.920 particular challenges or downsides, the rewards are most definitely worth it. 0:12:46.960 --> 0:12:50.240 I never have regretted investing, all right, So let's move 0:12:50.320 --> 0:12:52.560 on now. To a step by step guide as to 0:12:52.600 --> 0:12:55.960 how to do fire for yourself. Now, this is the 0:12:56.000 --> 0:12:57.920 one step that I think a lot of people miss 0:12:58.160 --> 0:13:00.560 because they just are so motivated and decided to get started, 0:13:01.000 --> 0:13:03.280 and if they haven't done this, when they hit challenges, 0:13:03.320 --> 0:13:04.920 this is where things can start to go wrong. So 0:13:05.000 --> 0:13:08.080 in best time, please and listening to step one and 0:13:08.160 --> 0:13:12.439 doing something about this. So this all starts with your mindset. 0:13:12.520 --> 0:13:15.640 So the first step is understanding fire is a marathon, 0:13:15.960 --> 0:13:21.679 not a sprint. There are going to be moments of frustration, disappointment, sacrifice, 0:13:22.360 --> 0:13:25.800 and even boredom, and you are going to be it's 0:13:25.800 --> 0:13:28.520 like watching paint dry when you're watching your investment portfolio grow. 0:13:29.000 --> 0:13:33.760 But if you can stay committed, dedicated, keep showing up, 0:13:34.400 --> 0:13:38.080 this is essential and your future self will most definitely 0:13:38.400 --> 0:13:41.680 thank you. So what I would recommend for you is 0:13:41.720 --> 0:13:44.240 to do a list, a list of at least ten 0:13:44.320 --> 0:13:47.160 points as to why you want to do this for yourself, 0:13:47.559 --> 0:13:52.040 so that your mindset shift happens and you understand what 0:13:52.280 --> 0:13:54.720 you are doing and why, so that when those setbacks 0:13:54.720 --> 0:13:58.440 and challenges happen, you are strong, you are resilient. Yes, 0:13:58.480 --> 0:14:00.000 they may get you down for a day or two. 0:14:00.120 --> 0:14:03.200 But once the clouds pass, you're back on it and 0:14:03.240 --> 0:14:06.000 you hit the ground running again because you know your why. 0:14:06.400 --> 0:14:09.960 So bullet point, why do you want financial freedom and independence? 0:14:10.200 --> 0:14:13.360 Perhaps it's something really deep and personal. You want to 0:14:13.559 --> 0:14:16.640 break the pattern you maybe grew up in poverty or 0:14:16.960 --> 0:14:20.320 grew up in a financially volatile environment. You want to 0:14:20.360 --> 0:14:23.600 create consistency, You want to create stability, you want to 0:14:23.640 --> 0:14:27.280 create peace of mind. Also, you might think, well, I 0:14:27.360 --> 0:14:30.120 really am passionate about helping people. This is going to 0:14:30.160 --> 0:14:32.720 help me. Having financial freedom and independence is going to 0:14:32.720 --> 0:14:34.600 allow me to give back. It's going to give me 0:14:34.680 --> 0:14:36.760 more time for my children. It's going to allow me 0:14:36.880 --> 0:14:40.360 to afford to educate my children or educate my grandchildren. 0:14:40.760 --> 0:14:44.240 Least at least ten important points to you as to 0:14:44.400 --> 0:14:47.120 why this is important to you and what your true 0:14:47.120 --> 0:14:49.000 why is really about, and go as deep as you 0:14:49.000 --> 0:14:52.040 possibly can. The more you write down, you'll be surprised 0:14:52.120 --> 0:14:55.120 how much more flows, and how much more was lingering 0:14:55.160 --> 0:14:58.760 around in your heatheart and soul that you now actually 0:14:58.800 --> 0:15:01.680 understand about yourself. It's quite beautiful experience, So please do 0:15:01.760 --> 0:15:04.440 this mindset work. Step number two is to know what 0:15:04.520 --> 0:15:07.600 type of fire you want so before you start, you've 0:15:07.600 --> 0:15:10.720 got to get clear, crystal clear. There are various versions 0:15:10.760 --> 0:15:12.960 of fire, so you need to work out which one 0:15:13.000 --> 0:15:16.240 actually resonates with you. So here are just a few 0:15:16.400 --> 0:15:20.640 to consider. Number one is the lean fire movement. So 0:15:20.760 --> 0:15:25.200 this means living off a minimal budget, literally living off 0:15:25.240 --> 0:15:29.320 the scent of an oily rag, and you aggressively save 0:15:29.600 --> 0:15:33.320 and invest absolutely everything in order to be able to 0:15:33.400 --> 0:15:37.040 retire as soon as possible. Now I should point out 0:15:37.080 --> 0:15:40.520 with the lean fire strategy, yes you are living in 0:15:40.560 --> 0:15:43.720 a very lean way, but you're also creating a very 0:15:43.920 --> 0:15:47.160 lean fire strategy because you're trying to retire as soon 0:15:47.200 --> 0:15:49.360 as possible. You may have actually not given that passive 0:15:49.400 --> 0:15:53.840 income a love time to flourish and grow and compound 0:15:53.920 --> 0:15:58.280 to give you a comfortable fire strategy. So yes, it 0:15:58.360 --> 0:16:02.760 means living lean today, but also potentially living lean tomorrow 0:16:02.840 --> 0:16:05.160 as well. Not necessarily a bad thing, but for people 0:16:05.160 --> 0:16:08.960 who are happy to live on a very type budget, 0:16:09.000 --> 0:16:12.080 they like that that fits in they're with their lifestyle. 0:16:12.480 --> 0:16:15.720 This is potentially the path to choose because obviously it 0:16:15.720 --> 0:16:17.880 means they can retire earlier, but they're also be able 0:16:17.920 --> 0:16:20.960 to maintain that type budget for the rest of their lives. 0:16:21.520 --> 0:16:24.640 The second one is the fat fire movement. So this 0:16:24.720 --> 0:16:28.640 means of course saving and investing aggressively, but you're doing 0:16:28.680 --> 0:16:31.640 it more to retire with a higher standard living, so 0:16:31.640 --> 0:16:34.440 it's sort of one up from the lean fire strategy. 0:16:34.920 --> 0:16:37.600 You are trying to build more passive income so that 0:16:37.680 --> 0:16:41.120 you have greater freedom, greater choice, more time, more luxury. 0:16:41.480 --> 0:16:43.640 This is probably one of the ones which I probably 0:16:43.760 --> 0:16:47.240 recommend and probably resonate with. Then of course there is 0:16:47.280 --> 0:16:51.239 the coast fire strategy. So this is reaching a point 0:16:51.400 --> 0:16:55.160 where your investments grow on their own and allow you 0:16:55.240 --> 0:16:58.400 to slow down without having to stress about additional savings, 0:16:59.040 --> 0:17:02.160 so you are in on a regular basis. It's not 0:17:02.200 --> 0:17:05.760 necessarily as aggressive from a time point of view, but 0:17:05.960 --> 0:17:08.760 you are being consistent over a longer period of time, 0:17:09.200 --> 0:17:12.360 and you are focusing on the power of pounding interest 0:17:12.400 --> 0:17:14.880 where you can get to that sweet spot where that 0:17:14.920 --> 0:17:18.960 passive income now grows on its own. It's being reinvested, 0:17:19.320 --> 0:17:21.359 and you can obviously take some of that income if 0:17:21.359 --> 0:17:24.840 you don't want to reinvest it with it adding value 0:17:24.840 --> 0:17:27.960 to your life and never involves tapping into the actual 0:17:28.000 --> 0:17:31.400 capital or eating into your savings. So the Coast fire 0:17:31.440 --> 0:17:34.520 strategy is very much focused and it has a strong 0:17:34.600 --> 0:17:39.000 bias towards long term growing passive income for that freedom. 0:17:39.600 --> 0:17:41.760 Then there is the Barista fire, and I think this 0:17:41.800 --> 0:17:44.720 is one that I think is a really healthy one 0:17:44.720 --> 0:17:47.520 that I think is really achievable, and I think would 0:17:47.520 --> 0:17:51.080 fit into a lot of people's lifestyles, particularly you know, 0:17:51.119 --> 0:17:53.560 people who are having a family. So this is enough 0:17:53.760 --> 0:17:56.680 having enough financial freedom in order to be able to 0:17:56.720 --> 0:18:00.640 cover most of your living expenses. But you still need 0:18:00.680 --> 0:18:04.400 to work, but maybe on a part time basis or 0:18:04.840 --> 0:18:08.400 on a sort of a contracting basis, so you still 0:18:08.440 --> 0:18:12.120 have your finger on the pulse. You're still getting experience 0:18:12.160 --> 0:18:15.040 in the workforce, you're still adding value to the world. 0:18:15.520 --> 0:18:19.199 You're still acts of service and doing all those important 0:18:19.200 --> 0:18:20.600 things you might have like a business that you work 0:18:20.640 --> 0:18:22.440 on part time, or you might have a part time job, 0:18:22.520 --> 0:18:26.600 or you're doing contracting work. But your living expenses are 0:18:26.640 --> 0:18:30.920 also supplemented by that passive income or that investment portfolio 0:18:30.960 --> 0:18:35.359 that you have built over time. So the last three 0:18:35.400 --> 0:18:38.000 ones I think are I think the most healthy. You know, 0:18:38.520 --> 0:18:40.560 I'm coming from someone with twenty two years experience in 0:18:40.600 --> 0:18:44.719 financial planning. They allow their realistic. I feel they allow 0:18:45.119 --> 0:18:47.640 the best of both worlds. They allow you to keep 0:18:47.720 --> 0:18:51.040 using your brain, keep making sure that you have your 0:18:51.080 --> 0:18:54.119 skills there, you know, adding value to the world. But 0:18:54.160 --> 0:18:57.040 also it understands that your life is changing and evolving 0:18:57.320 --> 0:18:59.280 and you're still building up that passive income. You can 0:18:59.400 --> 0:19:02.320 still have that, particularly with a burist one, to earn 0:19:02.359 --> 0:19:05.680 extra money that you continue to contribute towards your investment portfolio. 0:19:06.200 --> 0:19:09.280 So you need to spend time exploring which one resonates 0:19:09.280 --> 0:19:11.520 with you the most, and which one you decide that 0:19:11.560 --> 0:19:13.199 you want to jump on and be as part of 0:19:13.240 --> 0:19:15.840 your own financial strategy. And of course you can. You 0:19:15.840 --> 0:19:17.800 don't have to pick one to stick to it over time. 0:19:17.840 --> 0:19:19.680 You might want you to go start with a lean one, 0:19:20.040 --> 0:19:22.000 the lean fire movement, and then move towards, say the 0:19:22.000 --> 0:19:24.480 coast fire movement. It's completely up to you. But understand 0:19:24.480 --> 0:19:28.199 the different different categories and which one resonates with you 0:19:28.240 --> 0:19:31.879 the most. You don't necessarily into pigeonhole yourself. Then step 0:19:31.960 --> 0:19:34.440 number three, and this is the most important one we 0:19:34.600 --> 0:19:36.000 must all do if we want to do this, that 0:19:36.160 --> 0:19:40.960 is to start start investing. Start investing as soon as possible, 0:19:41.280 --> 0:19:46.280 but invest consistently. So the key to fire is making 0:19:46.320 --> 0:19:48.439 your money work for you. That is passive income, and 0:19:48.480 --> 0:19:52.120 this means investing in assets that generate passive income such 0:19:52.119 --> 0:19:55.600 as tibot ends, rant earning interest. So these types of 0:19:55.640 --> 0:20:00.000 assets to create that passive income are stocks, they are ETFs, 0:20:00.119 --> 0:20:03.320 listed investment companies, investment properties, and of course high DAN 0:20:03.480 --> 0:20:08.000 savings accounts or even bonds for security. So you really 0:20:08.000 --> 0:20:10.359 need to focus on the assets that will provide few 0:20:10.520 --> 0:20:15.720 long term sustainable growth and sustainable passive income through cash 0:20:15.720 --> 0:20:18.840 flow so that you don't actually have to actively rely 0:20:18.960 --> 0:20:22.560 on yourself to actually earn and make money. But I 0:20:22.720 --> 0:20:27.480 will say this, if you want long term growing, sustainable 0:20:27.560 --> 0:20:30.199 financial freedom and independence, you've got to be looking at 0:20:30.240 --> 0:20:33.200 two dimensional assets. Now I've spoken about this and lots 0:20:33.200 --> 0:20:35.359 of other podcasts, so if you want to learn more, 0:20:35.520 --> 0:20:37.960 definitely go listen to my episodes on investing in listen 0:20:38.000 --> 0:20:41.440 investment companies, investing in shares, investing in property. But essentially, 0:20:41.440 --> 0:20:45.000 a two dimensional asset is an asset that grows in value. 0:20:45.280 --> 0:20:47.080 So you know, a stock that grows from say ten 0:20:47.160 --> 0:20:50.760 dollars to eleven dollars, but it also creates an income 0:20:50.840 --> 0:20:54.400 stream and that income stream grows with the capital growth, 0:20:54.640 --> 0:20:58.280 so that ten dollars stock may pay, for example, fifty 0:20:58.320 --> 0:21:00.800 cents for the one year the stock goes up for 0:21:00.840 --> 0:21:05.240 simplistic terms, to eleven dollars. Next year, that passive income, 0:21:05.240 --> 0:21:09.120 that dividend is now fifty five cents. See how you've 0:21:09.160 --> 0:21:12.080 got two sets of growth happening. You've got growth in 0:21:12.119 --> 0:21:14.280 the passive income, the dividend income, and you've got growth 0:21:14.280 --> 0:21:18.120 in the capital value. Now, of course, yes, shares, property, 0:21:18.280 --> 0:21:21.240 these two dimension types of two dimensional assets are volatile, 0:21:21.840 --> 0:21:24.200 and they are long term investments. They're not selling you'd 0:21:24.200 --> 0:21:26.680 invested in for say two years, five years, or even 0:21:26.720 --> 0:21:29.520 I think seven years. They are long term growth. But 0:21:29.560 --> 0:21:32.480 my point is you want your passive income to be 0:21:32.560 --> 0:21:36.960 growing organically. You want that passive income obviously to be 0:21:37.000 --> 0:21:39.639 in reinvested, which helps it grow, but you want to 0:21:39.760 --> 0:21:43.640 have that element of two dimensional passive income growth. That 0:21:43.680 --> 0:21:46.720 will then mean with your passive income that you live off, 0:21:46.880 --> 0:21:49.760 it can help keep up with inflation, or even better, 0:21:49.880 --> 0:21:53.560 it exceeds inflation, so that you always earn more passive 0:21:53.600 --> 0:21:55.760 income than what you want. And that is what I 0:21:55.760 --> 0:22:00.120 would actually call the Rolls Royce fire strategy, which is mine. 0:22:00.359 --> 0:22:02.600 Now I will talk about this at the very end 0:22:02.640 --> 0:22:05.800 of the episode my own financial strategy, the Rolls Royce 0:22:05.800 --> 0:22:08.240