If you’re ready to start your FIRE and don’t know where to start, Dylin Redling and Allison Tom have written a great primer on what it takes to reach financial independence and retire early.
Their story actually parallels mine in several ways. They were high-earning professionals. When they learned about financial independence, they realized they had already achieved it.
As a result, they retired in their early 40s. Yeah, sounds like a familiar story!
Start Your FIRE: A Modern Guide to Early Retirement
The book I’m discussing today, whose title is the same as that of this blog post, is a well-written and easy to understand guide to FIRE (Financial Independence Retire Early).
Clocking in at just over 100 pages plus references and an index, it is not the most thorough book on the subject. If you’re looking for a thorough treatment of taxes in early retirement or a deep dive into dividend investing, this book does not deliver those.
If you are a regular reader of this and other FIRE blogs, you’ll probably pick up a few nuggets from this book, but much of it will be review.
I would say the target audience of this book is those that are not yet intimately familiar with the what, why, and how of all things FIRE. In other words, about 98% of the population.
This book would make a great gift for someone who has a solid income but struggles to save much of it. For someone caught up in the hedonic treadmill who may not even realize it. The friend that doesn’t quite get you or your frugal weirdo tendencies.
In the time it takes to watch The Wolf of Wall Street, a person could read this book two times over. It could be read cover to cover in about the time it would take to watch two episodes of Ozark. If you’re new to FIRE, or only vaguely familiar with the concepts, the time spent will be well worth it.
Building Your FIRE
The first of five chapters, Building Your FIRE, is an overview of what FIRE is all about, covering the benefits, potential challenges, and misconceptions about the FIRE movement.
In this section, and throughout the book, Dylin (the main author) and Allison do a good job of incorporating their own stories, experiences, and work histories into the text.
“Of the 11 companies I worked for in my 17-year career, I was laid off four times due to downward trends in the economy or downsizing. Six of the companies have shuttered, and the other five have either changed their business model or been acquired by another company.” -Dylin Redling
While frugality was a part of their story — she was more naturally frugal than he was — they were also generous on their path to financial independence.
That generosity includes splitting the down payment and mortgage payments on a home for his mother until they decided to go ahead and pay off the mortgage entirely. This is a wonderful example of the fact that you don’t have to pinch every penny and live miserly as you progress towards financial independence.
The chapter closes out, like each chapter does, with a few action items to complete before moving on to the next chapter. The focus this time is on finding your Why of FIRE, making short and long-term plans, and envisioning your ideal day.
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Lighting the First Match
The next chapter is devoted to a key aspect of financial independence — that is, how much you spend.
You’ll never know how much money you’ll need to retire if you can’t approximate your annual cash outflow. A great place to start is to calculate how much you’re spending right now. There will be some adjustments to make for predicted retirement spending, and those are addressed, but it’s best to start with your current spending.
Dylin and Allison aren’t extremely frugal — their combined salaries probably matched or exceeded that of many physicians — but they did have some good frugal habits that afforded them a high savings rate and a very early retirement.
They delve into the fact that most of our money is spent on a few prominent categories, namely housing, transportation, food, and entertainment / travel.
If you’re spending too much in any or all of those categories, they offer tips to help you reduce your expenditures. It’s not a sin to splurge in one area, but if you want to achieve financial independence, you’re not likely able to splurge in all of them.
Your action items in this section include finding ways to lower your expenses and automate them.
“I’m a FIRE starter. Twisted FIRE starter.” –Prodigy
Fanning the Flames
The other half of the savings rate equation is how much you earn, and that’s the focus of the third chapter.
Allison made much of her money with one very famous internet company. Dylin jumped around like House of Pain. Both of them managed to increase their salaries substantially throughout their careers; there is no one true path to a high income.
The authors used real estate as their primary side gig, using geographic arbitrage by moving to a more affordable nearby city and renting out their former place(s) in San Francisco.
Like good FIRE devotees, they also invested in the stock market using primarily low-cost index funds.
If so much of this sounds familiar, almost like it’s part of some magic formula for FIRE, it’s because it more or less is. It works simply, and it simply works.
Your job at the end of this chapter is to earn more money at your job, add a second job, or find a new higher-paying job.
Like you did with your spending, you should also automate your investments to the extent that you can. Create a written plan — yes, you need an investor policy statement — so that you’ve got a document to consult when investing questions arise.
Is Your FIRE Hot Enough?
In Chapter 4, FIRE readiness is the topic at hand. Turns out it’s not just about the money.
Yes, it’s best to have at least 25x your anticipated annual spending saved up, but that’s just one piece of the puzzle.
There are social considerations. Are most of your friends “work friends”? That’s going to have to change. How will you occupy your time? Do you have aspirations to be charitable with your time and/or money?
Back to the money piece of the equation, do you know how you’ll access the money you’ve saved up? In what order will you withdraw from your various retirement and non-retirement accounts? Will passive income streams play a prominent role in your cashflow situation?
Finally, health care is addressed. The landscape could certainly change, but as of now, you’ve got to set aside a significant budget to ensure you’ve got adequate health care, assuming you live in and plan to stay in the U.S.A.
As you wrap up this section, your charge is, unsurprisingly, to know what you’ll do for healthcare, craft a basic drawdown plan, and have some inkling as to how you’ll spend your time once retired.
Keeping the Flame Alive
The title sums up the closing chapter nicely.
“Once you do reach FIRE, your life may never be the same. You’ll experience a sense of freedom that you’ve probably never known before. But you will face new challenges, such as how to make the most of it, how to enjoy it, and how to maintain it.” -Dylin Redling & Allison Tom
FIRE sounds like a dream to working class heroes, but it’s not all sunshine, rainbows, and double IPAs.
It’s not uncommon for new retirees to feel guilty, complacent, or even without purpose after leaving a primary vocation. This chapter helps you sort through those emotions while suggesting ways to combat them and be truly happy.
The authors offer up a number of ideas to keep you fulfilled, purposeful, and joyous in this new post-FIRE existence.
They also point out that a good FIRE must be maintained. Circling back to the beginning, we’re reminded that knowing your expenses is key to knowing that you remain on track for a lengthy retirement that you can indeed afford. A very nice looking spreadsheet appears, and is made available for download for those who purchase the book.
Final exercises include adding to your bucket list, finding ways to connect or reconnect with others, and brainstorming ideas to get you outside of your comfort zone. This, from the couple that brought us 9 Fun Things to Do Naked in California. Yup, that would be several miles outside of my comfort zone!
What’s Missing in Start Your FIRE
I honestly didn’t find much at all in the way of errors or misguided statements. Only one stood out to me was a mention on page 15 that the 4% safe withdrawal rate based on the Trinity Study does not even consider post-retirement income from sources like dividends or income from rental property or side businesses.
The Trinity Study and other safe withdrawal rate studies do factor in dividends as part of the total return from stocks and bonds.
The only other complaint I have, and I realize this was done by design, is that the book is essentially an overview of FIRE without much in the way of detailed explanations. I would have liked to have seen more depth and examples to back up the information presented.
That said, what was presented was, with one exception, spot on. And I’m told a second book is in the works which may address the shortcoming that is this book’s brevity.
“Whoa, whoa, whoa. I’m on FIRE.” –Bruce Springsteen
Who Would Benefit from Start Your FIRE
As stated in my introduction, this book is a great way for those with some interest in personal finance to become very interested in financial topics by showing them what is possible.
For those who doubt that it’s possible to truly retire early or simply have never been shown the way, this is a perfect book and a quick read.
If you’ve read extensively on all topics FIRE, this book will reinforce what you’ve learned, and it would be a great gift to someone who doesn’t care to subscribe to FIRE blogs, lurk in the forums, and listen to the podcasts like you might.
I highly recommend this book for beginners, doubters, and the uninitiated.
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