LIGHTING A FIRE (financial Independence, Retire Early)

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The FIRE or financial independence and early retirement community is the fastest growing personal finance movement online. The dream of acquiring enough money and assets in the form of real estate, stock and bonds portfolio, and other investments that you can live off the proceeds and retire while still relatively young is the DREAM. For a long time, this dream was unreachable for mere mortals. Not anymore. A lot of people have demonstrated that retiring early is achievable. Mr. Money Mustache FIRE’d at 30. Sam of Financial Samurai retired at 34. Paula Pant became financially free through real estate investing before she was 30.

Wanting to achieve FIRE is nothing new. In fact, many credit Vicki Robin and Joe Dominguez’s book Your Money or Your Life, published in 1992, as the inspiration behind the movement. I personally encountered the term financial independence or financial freedom from Robert Kiyosaki’s Rich Dad, Poor Dad in the late 90s. The lure of financial independence was used by multilevel marketers and pyramid schemes to entice people into investing their money into shady companies since, well, ever. So if you had a partner, family, friends, or acquaintance who was into MLM or pyramiding, you probably heard of the term financial independence before.

But before people had access to the internet, those of us who are not tech prodigies or do not belong to the richest families can scarcely imagine retiring early and being financially independent. The most many of us can dream of was being financially okay, with a fully paid off house and car when we retire in our 60s, and a pension barely enough to cover daily expenses so we hope that our adult children can pitch in every once in a while. And we pray to god or whatever higher power we believe in that we won’t contract or suffer from expensive and/or chronic diseases or live too long after the money runs out because frankly, we can’t afford extending our life without being a burden to our loved ones.


Now that everyone and their cats has a social media account and a blog, access and exchange of information has never been easier. We now have access to reliable financial and investing information online to help us sort through all the jargon, like Investopedia. Many regular people who already achieved the FIRE dream put up blogs to share their experiences and tips for those who want to do the same thing. Those who are actively working for FIRE chronicle their financial journeys and publish their strategies and exchange ideas with those who are on the same path.

In the past, people learn investing by:

  • Belonging to a rich family where they’re either trained from childhood or learned through osmosis;
  • Going to school to specifically learn about investing;
  • Working in the industry; and
  • Having an investment mentor

In short, information about investing was hard to come by. Only a few people, usually related or belonging to the same class/social group, had a monopoly of knowledge. As a kid, I envisioned fancy old men calling their stock brokers from their giant phones while on a break from playing golf with their compadres.

But now with the growing FIRE and personal finance communities online, access to information about investing has been democratized. We now have access to financial and investment models that people used to achieve FIRE. Regular people, people like you and me, were able to successfully save and invest income from regular jobs to achieve FIRE. These people held regular 9-5 jobs or owned small businesses, may or may not have went to college.

Not to negate from their financial achievements but there’s nothing special or distinct about them compared to the average person. I’m pretty sure people who already FIRE’d are not necessarily smarter, more charismatic, taller, or more attractive than the rest. Yes, it takes focus, determination, and sometimes, stomach of steel (due to changes in the stock or property market), but we can train ourselves for these. And if some people can FIRE, what’s stopping me and you from getting there?

In short, free access to all these information and people talking about their experiences gave us viable ways to work for FIRE. FIRE was transformed from a dream into a goal.

In front of literal fire
Me doing the tree pose beside actual fires of the Door to Hell in the middle of the Karakum Desert, Turkmenistan


There is no strict definition of FIRE, but its elements can be summarized in these ideas:

  • Have enough passive income to cover all your expenses.
  • Be debt-free.
  • Own your primary residence.
  • You do not make life decisions solely based on money.
  • Not having to work for money. You work because you want to, not because you have to.

Passive Income

Passive income is the income you have that you do not have to actively work for. Sources of passive income include income earned from rental properties, dividends from stocks, royalties from books, music, etc. For FIRE, a lot of people set their goal to amassing 25x their annual expenses in their portfolio. For example, if your annual expenses is Php 300,000, you have to multiply this with 25, which is equivalent to Php 7,500,000. This means you must have Php 7.5 million in net worth (excluding your primary residence and other non-income generating assets) so that you can safely withdraw money for your expenses without touching the principal.

The 25x guideline is based on the popular FIRE guideline called the 4% rule. This basically means that to ensure that you will have enough money to last your entire life, you should only withdraw the equivalent of 4% of your net worth every year.

Debt-free life

One of the major pillars of FIRE is paying of all debts. When you’re living off passive income, it’s best not to owe anyone money. If you’re planning on achieving FIRE, it is best not to waste your hard-earned money on interest payments. Your interest payment becomes somebody’s passive income.

For example, many of those who are on their way to or already FIRE’d only buy with cash, including cars and homes. If they can’t pay for brand new cars, they will simply buy second (or even third) hand so that they won’t get into debt.

People who are planning on achieving FIRE save as much money as they can and avoid unnecessary expenses, whatever that may be in their case. In my case, I don’t have a car because I can walk to the office in 15 minutes. Plus, public transportation in Korea is so efficient and cost-friendly that I don’t see a point in buying a car. Having a car is nice when I want to travel outside of the city but it’s just an unnecessary expense. There are other things where I can put my money. Like, towards my child’s college fund, Philippine index funds, US index ETFs through my TD Ameritrade account, my retirement account under PERA.

Freedom from having to work for money

For many, it is the freedom to have control over their lives that makes FIRE extremely attractive. A lot of people for whom FIRE resonates deeply are those who want to pursue a vocation or career wherein the salary is not first and most important consideration. These people want to pursue their careers and lives under their own terms.

It is a myth that people who achieve FIRE don’t work or do nothing all day. As a matter of fact, many of them work harder and earn more money than they did before they retired. But this time, they are working because they want to, for projects and causes that matter to them. Isn’t that what financial freedom is about?

Additionally, people who achieve financial independence don’t have to retire. There are people who want to achieve financial independence to give them a choice whether or not to continue their careers or vocations. For example, Physicians on FIRE continue to work as an anesthesiologist even after achieving FIRE at 39. I personally have no intention of retiring early because I enjoy my job and I feel like I’m making a real difference in the world.


Now the challenge is to actually take steps to start our journey to FIRE. If you are beginning your FIRE journey right now, I suggest you read my post about How to Achieve a Total Money Makeover in the Philippines. I wrote this post with the Philippine setting in mind, with options on how to save and invest for retirement in the Philippines.

There are many things to consider about FIRE and this post is only the first of many that I will write about this topic. One of the challenges of Filipinos and those who live in developing countries who want to FIRE is that almost all FIRE bloggers are based in the USA and other Western countries. Naturally, their experiences will vary from ours. I want to dig into these differences and explore ways to remedy any disadvantages that we have.

Have you heard of financial independence and early retirement before? Do you think it’s achievable for those living outside of Western countries? What do you think our challenges or advantages are? Let me know in the comments.

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Katie Scarlett

is a personal finance advocate working towards achieving financial independence and early retirement (FIRE).

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