This article may contain affiliate links in which if you click and purchase something I might earn a commission. This is at no additional cost to you but it does help the blog keep going. In this article, I write what my FIRE number is and the actions I am taking to reach it.
What is FIRE?
Why is it so low?
If you read the previous article, you will see my FIRE number is $344K, however, this number assumed continued debt repayment ($60K) and continued savings ($24K). If both of those are removed then we remain with $260K, I made it $288K to add an emergency fund cushion of approximately 2 years. Which is only a 7% increase from $260K.
Why is it so low?
I do not like spending money and I consider myself as somewhere between a minimalist and a maximalist. I like having everything I need and not any more than that. However, this is subjective, as some people might think they do not need decorations, but I do not like empty white walls.
This is exactly why I paint with watercolors, it is a sort of a hobby of mine. I use these, if you are interested.
In case you need another hobby or know someone else who would like a new hobby as a Christmas gift.
How I am reaching this goal?
I do not just save, I invest.
This is due to inflation shrinking savings. The rate of inflation is 2% a year, so that means you need your money to be accruing interest in a high yield saving account (HYSA) at more than 2% a year. The highest right now is 0.70%, not close enough to the inflation rate.
So I actively add into two brokerage accounts: Robinhood (get a free stock) and M1Finance (Get $10 when you fund your account). They are currently earning well above that inflation rate. However, these are younger accounts. I opened the M1 earlier this year when the market dropped so it has a rate of return (ROR) of 31.56%. I have had my Robinhood account for a couple of years and the ROR in the last year on that one is 9.22%.
Both with higher ROR than an HYSA. Unfortunately investing does carry a risk, so I could have it wiped out in a downturn, which occurs every few years. When it does happen, I will continue buying since I am not going to use that money until I need it . So, I do have to consider all of this in my FIRE number calculation. However, considering that these downturns are normal, which is why I am having a portion (2 years worth) in an HYSA. This is the 7% mentioned previously.
How they will be distributed
Ultimately, $260K will be in investments, tied into index funds, and some growth and dividend stocks. The remaining $28K will be in an easily accessible HYSA.
I do want to mention that these numbers can change. This is dependent on where I move to after my Ph.D. and if there are any additional costs (housing, health, etc.
Two books if you are interested in reading more about reaching FIRE.
The first is a workbook about reaching FIRE, the authors have retired to Portugal.
What is my projected retirement date?
If I am being honest, I do not have one. Instead, I will do mini-retirements or extended vacations and then re-enter the workforce.
I enjoy the career path I chose, which is why I decided not to pursue a career in tech or other high-stress/high-income positions. Choosing a career path that I thoroughly enjoyed was important so I did not one day grow old and think ‘what if.’
This does not work for everyone but it seems that I am one of the few within the FIRE community on Instagram who is not one of these positions. However, this position is only for a couple more years since I am doing a Ph.D. Upon graduation, my income should increase a bit, which means reaching this LeanFIRE goal will be easier.