Why We Need Different Types of Financial Independence

Personal finance is truly personal.

This is a maxim that can be difficult for some to follow. While some folks find one recipe to achieving financial independence resonates with them, some other individuals find it easier to tread a different path, whether due to their own circumstances, starting point, income, or more.

Just as there are many roads to Dublin, there are many ways to reach your goals.

As this guest post, which originally appeared on the Money Flamingo, discusses, that’s a very good thing.

 

 

Financial independence is the end goal for pretty much everyone in the FIRE Community. If you intend to become financially independent at some point in your life, then FI is what you strive for.

It doesn’t matter if you want to reach FIRE and retire early in your 30s or if you are happy working (even if it’s just on a part-time basis) until you are 60 or 70 – the end goal is the same. It doesn’t even matter if you want to achieve Lean FI, “Standard” FI, or Fat FI. The math is the same for everyone.

But the answer to the question of how to best approach financial freedom isn’t as simple and looks different for everyone.

You are probably aware that there are many FIRE acronyms and “types” of financial independence these days. These often get made fun of in the FIRE community. Sure, some of them have hilarious names.

Terms like “Flamingo FI”, “Barista FI,” and “Baby FIRE” (the latest term I have come across) definitely sound a little silly, so it’s easy to dismiss new approaches like this.

But let me tell you one thing: If you roll your eyes every time someone comes up with a new FIRE term, you are missing the point.

In this article, I’m going to make the case for all these different types of FI that have sprung up over the years. In fact, I hope we’ll see even more of them in the future.

But first, let me tell you a personal story.

 

The YOLO Trap

 

When I first found out about FIRE, shortly after I started my first “real” job in early 2012, I was over the moon. I hated the prospect of sitting at a desk for the next 40 years and was so glad I had found a way out of the rat race.

I ran our numbers based on our incomes at the time and quickly realized that in order to get to FI we would have to be ultra frugal and save every penny we could find for 17-20 years. I was gutted.

So I did…nothing. For several years. I actually did less than nothing, I started to waste money and developed some pretty bad habits (both financially and health-wise).

Finding FIRE, daydreaming about how awesome my life would be if I could get there, and then realizing that it was out of reach was depressing.

The thing is that at the time (almost 10 years ago at the time of writing), most people who shared their journey to FIRE were male engineers from the US on high incomes (at least compared to my entry-level paychecks).

There was only one path to FIRE back then – the “traditional” path. Work hard, earn a lot of money, cut your expenses, save like crazy, invest, and in ten or so years you are free. I didn’t think that this was possible for Mr. Flamingo and me, and even if it was, the price we’d have to pay seemed too high, and the timeframe required too long.

I fell into the YOLO trap (“if I can’t be free, I might as well just enjoy myself”).

When financial independence seems out of reach, it can be pretty demotivating.

 

 

 

The Moment That Changed Everything

 

Fortunately, I kept reading personal finance books and blogs, so the idea that we could one day reach FIRE never disappeared completely. One day in early 2016 I had a lightbulb moment – couldn’t we use the power of compound interest to somehow create a shortcut to freedom?

What if we only saved 50% of our FIRE number and then just worked part-time until our nest egg had doubled? Flamingo FI was born. And that’s when our lives turned around and our journey to FIRE really began.

The rest is history. You can go back to the archives to see how we went from a net worth of almost zero to hitting our goal and semi-retiring in under 5 years. I can honestly say that our lives are 1000% better now and I am proud of what we have achieved.

Sometimes I have to pinch myself because I can’t believe how lucky we are to live this awesome life that allows us so much freedom and time for our young family.

When we came up with Flamingo FI everything changed for us. Creating an alternative FIRE strategy that suited us, our goals, and our lifestyle made all the difference.

To be completely honest, I am pretty sure we would be nowhere near as financially secure as we are today if the “traditional” path to FIRE was still the only one out there.

Finding our perfect FIRE strategy did wonders for our happiness, health, and wealth.

 

The Incredible Power of Finding YOUR perfect Financial Independence Strategy

 

The magic behind creating an approach to FIRE that was more in line with our goals is simple: it motivated us to get started. The timeline to freedom (semi-retirement in our case) turned from over a decade to just five short years. That was an amount of time we were willing to “sacrifice.”

The funny thing is that the moment we got started, all aspects of our lives improved almost immediately and kept getting better all the time. My outlook on life improved. My health improved. Work became enjoyable (and I actually love my job now!). Plus, we didn’t actually feel like we were sacrificing anything.

And now that we have created our financial snowball and are done saving, FIRE is an inevitable outcome for us, probably much sooner than expected, too.

I am sure I am not the only one who got demotivated after first finding out about FIRE. If you are in your 20s with a high-paying job and no dependents, it’s easy to get started with the standard approach to FIRE.

But maybe you don’t have a high-paying job. Maybe you are older and feel you left it too late. Maybe you have a young family and are desperate to have more time with your kids while they are little. This is where alternative FIRE strategies truly shine because they offer people options that suit their goals and priorities.

 

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Choices, Choices, Choices

 

Of course, our approach – Flamingo FI – is just one of many different ways to approach FIRE (although I know it resonates with many people). There are now many different subcultures in the FIRE community and many different strategies people use to claim their time and freedom back. This is something we should celebrate.

A few years after we got started the concept of Coast FI surfaced and started becoming more popular. It turns out that Flamingo FI is actually a variation of Coast FI. And as I’ve said often on this blog, you can tweak the principles of Coast FI to create your own FIRE and semi-retirement strategy. This will allow you to create more freedom for yourself and your family much sooner than if you stayed on the traditional path to FIRE.

Mini-retirements are also a great option. Working for a few years and then taking a significant amount of time off during your journey to FI gives you something to look forward to all the time and offers regular rewards.

This is a short article and I can’t list every single type of FIRE, but that’s also not the point.

 

CoastFIRE, Flamingo FIRE and Traditional FIRE are just some of the many paths you can take to Financial Independence

 

If You Struggle To Get Started, Do This One Thing

 

My main message is this: if you struggle to get started; if you feel like FIRE is out of reach for you, too far away, or that you left it too late; don’t do what I did in 2012. Don’t bury your head in the sand. Don’t fall into the YOLO trap. Instead, spend some time researching alternative FIRE strategies. Make your own plan. Break it up into manageable milestones.

One of the primary reasons I have written about this stuff for over three years and continue to do so even after we reached our goal is that I want to help others avoid the mistakes I made.

And if using an alternative FIRE strategy (or creating your own!) helps you to get started, you should go for it, even if others think it’s silly.

I have had plenty of people make fun of Flamingo FI over the years. I’ve received my fair share of rude and sarcastic comments.

But you know what? Flamingo FI has changed my life. It has freed up my time and allows me to spend quality time with my kids every day. Because of Flamingo FI, I don’t worry (or even think much) about money. It has improved every aspect of my life. And while it’s not the right concept for everyone, I truly believe that there is a perfect strategy for every single person who wants to achieve FIRE.

Remember, personal finance really is personal. And so is your path to FIRE. There is no such thing as a “one size fits all” solution in personal finance. And there definitely isn’t one in the world of financial independence either.

 



 

Which path to FIRE are you on? Are you following an alternative FIRE strategy?

 

2 thoughts on “Why We Need Different Types of Financial Independence”

  1. Great post. Can relate to most of that. Certainly fell into similar yolo traps after dental residency. Luckily fell back on some simple financial habits that got me to this mini-retirement stage you described.

    Actually something I’m struggling with because it’s bittersweet. Opportunity for Mini-retirement from clinical dentistry at 32. But hearing it come from someone else makes it sound less crazy in my own head haha

    Thanks for sharing!

    Reply
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  3. I have always felt that YOLO was the natural enemy of FI (Financial Independence), so I appreciate your description of YOLO as a trap.

    As I consider the benefits of Flamingo FIRE, CoastFIRE, or some of the alternatives to the more traditional FIRE path, I considered some additional benefits of these more leisurely paths to FIRE.

    One benefit has to do with Social Security. 7 days from now, I have a telephone interview with Social Security. In this interview, I will put into motion my plan to take Social Security retirement benefits under my own earnings later this year–when I turn 70. This had me thinking about quarters as I read your post. No! No quarters of dollars! Quarters of earnings as Social Security counts them. Additional years with at least some earned income will replace zeroes as Social Security calculates your earnings over your lifetime. We’ll see what happens to Social Security benefits over the next decade or two, but under today’s format, more quarters of earnings is a good thing.

    A second benefit of Flamingo FIRE and other more lengthy alternatives is that they will likely include less than full time positions which include benefits, including healthcare insurance. When my stepson aged out of parental coverage under ACA, he didn’t have a job with benefits. He had to pay for his own insurance. I was shocked when I heard that he was paying $800 per month for healthcare insurance–almost $10k per year–for a single man in his mid-twenties who was working only part-time!

    A final benefit of more lengthy FIRE pathways regards lifestyle and adaptation. A step-wise approach to FIRE allows time for one’s lifestyle to adjust to having more time outside of the office or other treadmill to earn a living.

    When I was a young medical student, I was taught that, for men, the 5-year mortality rate of retirement was 50%. Wow! Way back then, in the mid 1970’s, fully half of men who retired died within 5 years! That is/was a truly grim statistic!

    A more leisurely path to FIRE gives people time to adapt to their changing circumstances. For parents, they can spend more time with their kids. People can develop other interests which enrich their lives. Rather than the sudden leap into retirement of the traditional FIRE pathway, a slower path lets people have the time to adapt and grow into the freedoms that their increasing free time allows.

    Thanks for your post!

    Reply

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