The Fleecing of the FIRE Community

The con artists have a new target loaded with cash: the FIRE community. They are walking in, head held high, when they make their offers. It might look like the investment of a lifetime. Here is how to protect yourself. #protection #risk #investments #scams #fraud #FIRE #financialindependence #independence #retireearly #retirementThey call us snowbirds.

Every year as the the temperatures turn south, so does the traffic from the northern climes, bleeding into the sunny south on the latticework veins of varicose highways. 

Mrs. Accountant and I have enjoyed warmer weather in January with a trip to the land where summer never ends for many years now. Some years we miss, but most years we take a pre-tax season gander south before the pace of a busy tax season sets in.

For several years we made the trip south dual purpose, mixing business with pleasure. The last time we did this we were walking the streets of Gainesville, Florida waiting for one of the various FIRE (financial independence/retire early) camps to begin. 

The camp was outside town a few miles. These gatherings generally are a reasonable mix of fellowship and education. But this one was going to have a surprise.

One of the presentations had a slick offering of real estate. A small community was planned with narrow street for bikes only. Each house was small so everyone was forced to spend more time outdoors. Home was for sleeping and not much else.

A large centrally located community building had a community kitchen. Each night members of this community would dine together. Families would take turns preparing meals for the entire group.

I turned to Mrs. Accountant and she knew what I was thinking instantly. This project didn’t have a snowball’s chance in Hades.

It was a nice presentation, but what part about the “I” in FIRE don’t you understand? These people value independence highly and this was the exact opposite of “more” freedom. These people would never think of buying a non-conforming home with massive community rules and a requirement to feed the town periodically.

Then I turned to view the reaction of the room. After I winched my jaw back into place I understood what had just happened. 

The FIRE community had reached a critical mass and was prime for a fleecing.


Baa, said the Sheep

A few weeks back I published a critical review of the FIRE community. As expected, many readers agreed with my assessment, while a few disagreed. The disagree camp didn’t have a lot to stand on because their argument (in one comment) boiled down to ‘I was wrong because I made a spelling error.’ Of course, those who follow on social media knew I hid Easter Eggs in the post, noting there were several layers to unravel. (I needed certain letters!)

Ya also know ya hit the nail square when the arguments take those kinds of turns.

However, I was wrong on at least one account. My allegory of these communities as ‘communistic bike towns’ were off base and it wasn’t the message I wanted to convey. My connection to mid-19th century Russia was a stretch for sure.

But I wanted people to think about what they were doing! I saw a slick developer looking to pluck a relatively naive groups of potential investors.

Non-conforming homes will have a harder time holding value, especially in weak markets. The number of people willing to live in these communities also reduces the number of potential buyers.

And what about conflict resolution?

Well, they had an answer for that. The problem again is that this group of people looking for more ‘independence’ would lose a large part of that independence with a serious amount of their time and assets if they invested. 

The old adage: Good fences make good neighbors, was forgotten by this crowd.


Two Problems FIRE Must Address

I saw a seasoned developer carefully carve the group.

The willingness of so many to embrace this concept without serious thought made me nervous. The only relevance we got from the developer was, “They are doing it in Europe with great success.” And since we are in Florida, I have some land I’d like to sell you, too.

One thing was clear. The FIRE community, the FIRE movement, has reached critical mass. There are enough people with cash available to fleece. The old Microsoft Support Scam and IRS Scam are peanuts to what can be pried from the fingers of this group.

Many who follow FIRE bloggers are quick to crack their wallets when a leading blogger thinks an investment is a good idea. This is a terrible idea! You understand many of these bloggers have something in it for them and even if they don’t there is no guarantee they know what they are doing. They might be retired, but they still line their pockets with blog revenue. 

And I’m no exception! Everything I say or do should be questioned! I throw out ideas and tax strategies non-stop. My record of wealth creation is solid, no doubt, but I have no lock on smart investing. Remember, good ‘ol Warren Buffett is taking a shellacking on his Kraft-Heinz investment and he is probably the best investor of all time. The lesson: do your own research.

If the FIRE community is ever to survive it must address two serious issues. 

Scams are hitting the FIRE community at a torrid pace. FIRE is now a large enough movement that scammers are focusing on the group and their large pile of savings and investments. #savings #investments #scammers #risk #FIRE #FIREcommunity #FIREmovementFirst, many in the FIRE community are relatively new to the movement. They had their come to Jesus moment, crucifying debt and massively funding their retirement accounts. Then they start building their non-qualified accounts. And don’t think the shysters of the world haven’t taken notice.

The acolytes are fresh from foolish financial decisions and with a small amount of knowledge built serious wealth. Most are not millionaires, but sitting around with $300,000 incubating inside an index funds is a ready source of cash if you can offer the right deals these suckers, ah, fine young people take a fancy to. 

The second problem is the neophytes now as a group command a serious amount of money. The old ‘invest in an index fund and forget it’ advice isn’t going to cut it.

FIRE members love buying real estate. Several bloggers act like it is all easy money. Well, it isn’t.

I have well over $40 million in real estate transactions in my own account. This is more than some real estate sales professionals ever sell. My stories include the good, some really bad and the down-right ugly. I live this stuff.

Real financial education is lacking. I know this because I get more consulting requests than I can handle. Maybe 10% get a hearing and I charge $350 an hour. People in the FIRE community are digging some deep financial holes and some are creating massive tax and legal problems for themselves. 


What YOU Must Do

Neither you nor I can fix all the problems in the FIRE community. I can preach from my small perch of this blog, but in the end it is up to you.

The FIRE movement is such a desperately needed movement. People are so lacking in basic financial knowledge. 

The illusion of saving half your income in index funds salves all financial woes is misleading. 

The seasoned hucksters have noticed our quaint little group. They know exactly what to say to get your money. They will not peal a couple hundred dollars from your stack; they want six figures!

Scams are tricking even experienced investors. Take these steps to avoid being scammed. #scam #experience #investing #thewealthyaccountant #assetprotectionSince you managed to acquire a respectable nest egg you think you are an experienced investor. It is doubtful you are!

What you MUST do is step back from any new investment. If the deal needs immediate action you MUST take a pass. Don’t worry. Another deal will always come along. The hurry-up deals are all too often scams anyway.

Buying into an unconventional investment, which these bike communities are, should never happen unless you are very experienced financially and have the ability the lose 100% of your money without changing your lifestyle one iota.

I’ve been publishing more on investing lately. (It is outside tax season so I wanted to write about something else for a bit. More tax posts are coming soon.) The reason for this is the number of readers crying out for help.

You have no idea of some of the people on my desk I’m helping. These are serious issues; small fortunes completely destroyed unless I can find a way to preserve their wealth. I don’t always win.

To keep this short I will close with one last suggestion. If you can’t read and interpret financial statements like a seasoned accountant you have no business being in any kind of exotic investment, real estate included. Stick to index funds and money market accounts.

You might not shoot the moon, but you will not suffer a catastrophic loss sending you back to square one, as a neophyte in the FIRE community once again.



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Keith Taxguy


  1. planedoc on August 19, 2019 at 8:36 am

    Wise words. I have learned that I am *not* a sophisticated investor. I will never get the “over the moon” returns some (allegedly) have. I’ve developed a couple of rules:

    -When a blogger/leader starts hammering my inbox with “offers” and “courses”, I generally stop reading their blog. (Some exceptions: J.L. Collins, White Coat Investor…although you don’t have to buy his stuff to read his info on the blog).

    -When a “deal” comes along, what I learned trading horses (literally), and losing money (also literally) is true. “There is always another horse”. The higher the pressure is amped up, the more likely you are to get hurt.

  2. Star on August 19, 2019 at 8:49 am

    Hi Keith,

    I’ve been following your site for a while and wanted to let you know I appreciate what you’re doing. Whether you’re sharing tax strategies or pointing out the issues with FIRE, it’s great to see someone sharing valuable information and calling it like it is.

    There’s a saying that when everyone is getting into an investment, it’s time to get out. I think that’s some of what we’re seeing with both the FIRE movement and the rage of index funds. It’s not that the FIRE concept is wrong or index funds should be avoided entirely, but that one needs to pay attention to what is going on and look at the long-term consequences, not just the current hype. Otherwise, one might fall into the traps you’re warning about in this post.

  3. Steveark on August 19, 2019 at 8:53 am

    That’s fascinating. I had always assumed frugal FIRE folks were naturally immune to shady investment offers but now that you have brought it up I realize I had no solid basis for that opinion. It is a community with a lot of liquid assets and a sense of urgency, that would tend to make them a fat target of opportunity. I’ve been handling tens of millions of dollars of other people’s money for much of my career and over time developed a deep suspicion of anything that sounds too good to be true, but that’s certainly not the case for most people. I’m jealous though, the most I ever get to charge as a consultant in my retirement is $250 per hour. I’m going to have to raise my rates!

    • Keith Taxguy on August 19, 2019 at 9:42 am

      If you are protecting your clients from scams and fraud while providing a long-term plan and solid financial advice you need to charge for it. I’ve had people tell me they would pay me $1,000 per hour, especially if I would have fewer clients then so I could dig even deeper for them. You’re providing value so smart people consider it a good investment.

  4. Mr. Hobo Millionaire on August 19, 2019 at 8:58 am

    Now that I’m in my 50’s with some wealth, I have a tiny fond appreciation for the dumb investments I made in my 20’s and 30’s. It made me super-leery of most anyone looking to do something with my money and not their own. Unfortunately, most people trying to sell you something in this world are NOT looking out for your best interests.

    • Radiobirdman on August 19, 2019 at 9:28 am

      I am in my mid 50’s as well. The investment advice I learned long ago that “if you don’t fully understand an investment, it’s goals and objectives, it’s target market and how it will market the concept, PASS!” still holds true. When it comes to investing money, The only easy thing is losing it! Question everything, validate everything, and if it seems too good to be true, it probably is.
      Great article.

  5. Jamie V on August 19, 2019 at 9:08 am

    I’ve been noticing something similar too in the community. It’s become difficult to navigate. As an introvert, those tiny-home communities sound horrible for me. I would wilt under such a regime, and that’s not Independence to me, at all. No, I want a quiet cottage in the middle of my acreage that includes meadows, forests, natural streams, lots of animals (I mean, I’m not on this path of savings so I can live somewhere jam-packed where the only wildlife is rabbits and squirrels. That’s what I get now, living in the city of MKE, and it is sooo not me.). If anything redirects me from my goal of a) travel or b) life in the middle of nowhere, then it isn’t for me.

    We’ve considered getting into real estate, but I refuse to until we understand it better. However, I can’t just read a book or blog and learn, unfortunately. I’m one of those people who needs to be doing it to learn it, otherwise it’s just words-words-words to me. I’ve seen signs around the neighborhood “learn how to buy real estate“ classes and I’ve been super curious but figured I might get fleeced, so I don’t sign up. Not sure how else to learn about RE, though.

    • Mr. Hobo Millionaire on August 19, 2019 at 9:38 am

      Jamie, check out CoachCarson.Com. I found a lot of his materials easy to understand… and it’s all free. He has books and such to sell, but you can learn a LOT from his free stuff.

      Also, a BIG tip on RE that took me a long time to realize. You CAN find RE that cash flows IMMEDIATELY. What do I mean by that? I mean you put 50K down on a property and you immediately start making a 7-10%+ return on the 50K down ($3500-5000/year net profit after paying mortgage and all costs). I speak from experience as someone who bought properties that did NOT cash flow immediately. I was looking to “break even” and simply have the rest of mortgage paid over next 15-30 years. That is NOT what the successful RE investors are doing. They are cash flowing from Day 1 — it’s pretty close to “can’t lose” investing. Now understand, it takes work to find these deals, but it’s not impossible. And it may not be possible in your current city, but it is possible. If you’re not making a 7-10% return on your down payment from Day 1, don’t do it. Period.

      • Keith Taxguy on August 19, 2019 at 9:50 am

        I second Hobo’s comment, Jamie. Consume the free stuff (there is value there too) and don’t be afraid to pay at least a small amount to educate yourself. The education either comes from experience (painful) or from people willing to share their painful experiences (and successes). Note: I never used CoachCarson, but heard many good things.

        • Jamie V on August 19, 2019 at 10:29 am

          Thank you both! I will check that out! I’d love to start the cash flow on Day 1, and be a success. I really appreciate the input.

    • Keith Taxguy on August 19, 2019 at 9:48 am

      Let me clarify, Jamie. I am willing to spring for a reasonably priced course on almost any subject. Yes, I might get fleeced of a couple hundred dollars, but with rare exception I learn something so I do get value. Just don’t buy RE at such courses. That would be a really bad sign.

      Also, talk with your accountant or attorney. These people see it all and have a sixth sense for sniffing out BS. You don’t have to know everything; you do need trusted people “on your side” not getting paid “on the side” from the investment. There is never a guarantee, but you can stack the odds quite well.

    • Katy on August 19, 2019 at 2:30 pm

      Maybe it would be helpful to partner with someone in a real estate or adjacent industry.

      Also there are typically local groups where RE investors get together (its to their benefit to be able to stay on top of local politics for example as a group.)

      Even buying your first home in sub-optimal condition and making a plan to fix it up and sell it, or look into a cash out refinance then rent it, would give you some experience in RE transactions and give you a vested interest in learning more about your local market.

      Not everyone has the disposition or resources of our great Accountant friend to jump into it at scale. But even just thinking about how you can make a home purchase be to your advantage beyond a roof over your head (without the blase hope that it appreciates above what you dump into it) can get your feet wet and help you decide if it is something you want to pursue. Either way you end up ahead. That’s the path I’m taking anyway, as we are searching the question is, how can this property contribute to our financial future?

      • Keith Taxguy on August 19, 2019 at 2:40 pm

        Katy, once upon a time when I owned a lot more RE I did many tax returns for landlords. Landlords had a unique distinction in my office: they led my client list in net worth and bankruptcies. That tells me you either get it or you don’t.

        Now that I’m doing more tax returns for the FIRE community the old pattern is returning.

        I suggest starting small. A partner willing to teach and still lift their weight is ideal. Regardless, you want to understand the finances of any RE purchase prior to signing on the dotted line.

  6. Roger on August 19, 2019 at 10:41 am

    Keith, I appreciate your point.

    I have never really understood why people pay to go to Camp FI and other FIRE events. Wouldn’t they be better off taking the money they spend to go to an event and investing it? Can’t they get the same information from the web and free books from the library? Maybe the camaraderie makes it worth it?

    • Keith Taxguy on August 19, 2019 at 11:15 am

      It’s fellowship, Roger. I wouldn’t pay to go to those events either. Many of mine were free (as the one mentioned in Florida was) because they invited me. I got more irritated about going because I don’t like spending time on the road. Now I don’t go to any of them.

      For the folks who enjoy that kind of thing it is fine as long as they understand that isn’t a very frugal event. Hopefully people have full investment accounts already.

  7. JP on August 19, 2019 at 11:39 am

    So, I completely agree that some (many?) are quick to jump at these “investments” and are going to end up really sorry – completely got you there! However, that last post about people shouldn’t be lounging around designing communities just rubbed me the wrong way. And then, I went to see the da Vinci exhibit at the Denver Museum of Nature and Science…and that’s just what da Vinci did: he designed a bunch of cities (among other things). I think our society doesn’t have time to sit around and actually think and design and tinker, and that’s what the FIRE community is prime for. Let’s face it, our cities suck. And the thought that someone out there is tossing around new ideas, then bringing them to a conference to bounce around ideas with others that have time to think and tinker and build on those ideas, brings some solace that maybe, someday, our cities won’t suck quite so much. We need the thinkers to think and FIRE gives that opportunity.

  8. Jen on August 19, 2019 at 8:25 pm

    After reading this, I can’t help but think we need a “bloopers” post of some investment horror stories you’ve witnessed over the years. It would be a good learning experience! 🙂

    • Joseph k on August 20, 2019 at 12:16 am

      I second this request.

      • Nikki on August 20, 2019 at 8:02 pm

        I third it!

  9. Eric on August 21, 2019 at 3:07 pm

    “Financial independence” does not necessitate communal independence. To try to equate the two is quite lazy and I’m surprised to be reading such words here. It seems you are projecting your ideal scenario of independence (or retirement) and saying everyone else should live this way, at least in the first half of this post.

    Now, I do agree with the later portion. If bloggers, podcast hosts, etc. are saying, “Look, here are easy steps to reach financial independence” and then are turning around and saying, “Come, buy a place in my FIRE community! It’s so much cheaper than “regular” housing” then yeah, that’s dishonest and probably unethical. These people should, in theory, be smart enough to make the decision on their own. But if it’s just a bunch of retired people gathering together, understanding the terms, and wanting to live in a community – is that really all that bad? (Then again, I have not been solicited for such a community and really haven’t read up on them at all, so I’m going off of what was written here.)

  10. Morgana on November 11, 2019 at 6:19 pm

    I’m originally from Northern California, the Grass Valley/Nevada City area. The community there has two large co-housing projects like this. Most people love them, there is a waiting list to buy. Several friends of mine did buy, although this is a mixed all-ages community. Your house doesn’t appreciate much, but you can get out of it what you put in. Old people love this community. There is always someone giving a ride, and the kids run in and out of all of the houses so baked cookies are truly appreciated. The houses do all have small kitchens and eating area and there is a community garden. The elderly are cherished and they tell stories and keep the children busy while dinner is being prepared. Now the downside: the community rules call for consensus agreement, not majority agreement. It didn’t take long for a few people to realize that all they had to do was to hold out and eventually everyone would be so exhausted they would give in and let the stubborn people have their way. And nothing was too petty to hold hostage; it took 3 months to get the communal kitchen faucet approved. The end result was very, very good but it exasperated the developers and the early adopters. It’s not a choice that I would make but the people there are never lonely.

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