The worldview of financial independence and early retirement has been under assault recently. Suze Orman proclaimed to the world her hate for the FIRE movement on the Afford Anything podcast and set off a firestorm that culminated in a Washington Post article and a belated apology in the form of back-stepping her comments; seems she misunderstood the FIRE movement before passing judgement. (Or, perhaps, books sales were involved. Just throwing that out there.)
Foolish Idealist Returns to Employer
rather than Financial Independence/Retire Early.
What precipitated the rebuke was a simple one-month market decline. December 2018 was the worst stock market performance by most broad indexes since 1931. And the death of the movement was declared and a new acronym was created with the hope of replacing the Old World Order. What has so far been the shallowest of bear markets (defined as a 20% or greater decline from a recent market top) has heralded the end of times once again. And we barely (pun intended) entered bear market territory!
It is true the market could once again turn lower and inflict pain on the foolish. It is also true I’ve been critical of the FIRE community myself a time or three. And don’t think for a minute I didn’t catch hell for it too, only on a smaller scale. (Guys, you know when you link an article on Reddit, the web host—that would be me—can see it. I heard the nasty things said about my pedigree.)
As critical of the the FIRE community and the movement as Orman, Dogen and a certain wealthy accountant who shall remain unnamed are, the movement is never going to die! That’s right. The FIRE movement has grown large enough it can make the economic needle wobble now and again and that makes some people nervous. But the movement, the community, will never die.
Who Started the FIRE Movement?
Modern acolytes can be forgiven for thinking Get Rich Slowly, Early Retirement Extreme or even Mr. Money Mustache kicked this whole thing into gear. The truth is the concept of the FIRE movement has been around for a very, very long time.
Retirement, or at least the ability to to live a hedonistic lifestyle, appeals to many people. Age has nothing to do with it. Punching a clock working for the man gets old real fast when you don’t have perspective. Until you realize how useless life becomes when you spend each day creating no value and have no real reason to live do you begin to understand. Then the job looks more appealing. Or starting a business. In either case you get real interaction with people on a similar mission and it brings the spice back to life. (Redditors, fire up your engines!)
But I contend, as I often have in this blog, that retirement had nothing to do with the FIRE movement. It was never about retirement; that was the dream sold to get victims in the door. FIRE has always been about wealth, about independence and freedom. People never wanted to be retired like and old worn out machine. They wanted meaningful activities. Financial independence allows the freedom to choose and that is what people really wanted all along.
And still they keep searching because they don’t understand what it is they really desire.
The beauty of the FIRE lifestyle is it encourages elimination of debt and all the stress it brings and investing intelligently in index funds with a long-term time horizon. Without debt you can withstand a lot of economic instability. Every minor wobble in economic activity has the debtor soiling his, ah, well . . . We’ll leave it at that.
People hate living paycheck to paycheck and love the idea they can choose their destiny. FIRE delivers on that promise. And the concept is not a modern one.
Benjamin Franklin spoke often of money and wealth. In a way he was the father of the American FIRE movement. But if you go back 2,000 years you can read the parables of Jesus and see that over half his recorded teachings involve money and wealth. But even that isn’t the beginning! Proverbs in the Old Testament teaches plenty of lesson about money. I don’t want to go all religion on you, but I do want to point out that the teachings of the FIRE community are not new.
In fact, if you want to know who actually started the FIRE movement you have to go all the way back to Grog, the caveman, as he taught around the evening campfire. He would say to the young and old, “No debt!” Grunt. “Debt bad. Invest in community coconut index fund.”
As funny as I might think I am, man discovered these principles early on. Shakespeare peppered his verse with financial wisdom. Every religion I studied speaks about wealth, debt and money. Great leaders in business from the beginning of time had to acquire the skills of the modern FIRE community if they wanted to survive.
The truth is the FIRE movement discovered some of the oldest lessons of the species and dressed it up in contemporary clothing. Nothing wrong with that. Except some, the snake oil salesmen, don’t get it because they are peddling large loads of manure and they need to discredit the wise to move today’s load of. . .
The FIRE movement is not dead; it is evolving. A long bull market in stocks has lured many new converts. Secretly they kept their debt while plowing at least a bit more into index funds. As long as the elevator raced higher on the back of a SpaceX rocket things would be good. Besides, you saw how Elon Musk developed rockets that gently land themselves, ready for instant reuse.
A short market decline will not end the FIRE movement. The Great Depression didn’t kill the philosophy of the FIRE movement, though it had different names back then. The worse the economy the stronger the FIRE message appeals! Mild economic downturns and market corrections will not slow this animal down. If the economy and/or stock market get vulgar the FIRE community message will evolve as it should.
“It was the worst of times, it was the best of times, it was the age of wisdom, it was the age of foolishness. . . ” wrote Dickens to begin A Tale of Two Cities. Things haven’t changed much in 160 years. It doesn’t end any better either. (You can read the book to understand what I mean.) Things are good right now. Jobs are plentiful, prices relatively low and many investments have moved significantly higher over the past decade. But government, corporate and personal debt are all at record highs, some precipitously so. The best and worst of times. Especially when you realize the debt will be a harsh slave in the next economic cleansing, same as the last.
The best is ahead of us! The longest bull market in the U.S. lasted a decade, starting in the early 1990s until the current bull market. To put this in perspective, the two longest bull runs in the market happened in the past 30 years. The vast majority have no idea what it was like prior to 1980. For the old guys who do, we take extra caution to keep debt low, if we use the acid at all, placing our wealth in a broad mix of businesses throwing off a steady stream of income. We know there are no guarantees, but we structure our financial lives to withstand a very strong storm.
FIRE of the past was about frugality (it always was about frugality) and retiring from enforced labor due to financial condition. This is changing to something more valuable for the acolyte and society at large. Retirement is becoming less the goal and creating value the new mantra.
It’s not about work to fill the day; it is about fulfilling work. It’s about creating something of value, something we can be proud of. Curing a disease, building an advanced rocket or electric car is part of the New World Order inside the FIRE community.
We discovered it was easy in the modern world to save money and invest it. We discovered how easy it was to build a massive net worth, negating the necessity of work. But we also discovered it left us empty.
The modern incarnation of the FIRE movement is young, made up of millennials who thought the dream of retiring at 30 would make their lives meaningful. They now have the experience to know that was a lie.
Travel has been a massive draw for many entering the FIRE lifestyle. What was discovered is extended vacations or a gap year are perfect for exploratory travel. Then, when the road turns weary, there is a home where people gather most days of the week to create an even better world. Call it work; call it your business. Call it what you want.
Social media is filled with people in desperate need of financial help. Maybe it’s a tax issue, or debt or other unique challenge. A few weeks ago I saw in a private Facebook group a young lady who was worried about the market. She put the down payment to a home they wished to purchase in an index fund last June and the fund was now down 25%, or $20,000 for her. She wanted advice. Many offered. I said: If you put a home down payment in the market what you are saying is you will buy your home five or more years in the future. Any sooner and you should not have put the money in the market. It was shallow comfort, I’m sure. But if I’m lucky I helped two or three people thinking of making the same mistake.
Orman was wrong. So are most people inside the movement!
The FIRE movement is nothing to hate and the people inside the community should grow some thicker skin. It is said: Of which much is given, much is expected. Those in the community have built a larger fortune than most. Jealousy is a given, especially from those unwilling to take the simple steps outlined for thousands of years by one FIRE community after another.
People will hate you for being rich and hate you for being poor. I’d rather be hated for being rich; it’s less painful.
The modern FIRE community has a gift unlike previous FIRE movements. We are not limited to the few wise locals living the FIRE (or whatever name it was called in the past) lifestyle. We are a worldwide movement, community. The internet has made us legion. We have a massive support group and an awesome responsibility to our world, our community, our family, ourselves.
We have a gift we must share! A market decline, even a large one, will not unravel the FIRE movement. I disagree with Dogen and the MarketWatch article. We don’t need another acronym to identify with responsible financial activities.
The basics make us great. Michael Jordan wasn’t great because he could make the three-point shot (though he was darn good at it, too); he was great because he mastered the basics, like the layup.
Money basics are not that hard and work extremely well. Teach your children, family and friends. Teach your community and share with the world. Together we can make a difference; together we can change the world.
The FIRE community will have its challenges and may soon go under a different name. For those in the know, we know exactly what the message is. It is as old as Grog and his nightly chat around the FIRE.
Remember to share the same message with your children around the hearth.
It is our future. Our only hope.
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