Playing with FIRE

(Financial Independence Retire Early)

by Scott Rieckens

I have been following the FIRE movement since Mr. Money Mustache launched his blog and opened his frugal life to the world so furious the consumer culture is still shaking from his wake. I have listened to FIRE and FI podcasts, read their guru’s books (Simple Path to Wealth by J.L. Collins and Your Money or Your Life by Vicky Robin) and attended one of their CampFI conferences.

This book is an easy and captivating read about difficult significant life-changing decisions. For anybody to do what Scott, the author, and his wife Taylor did to change their life in only two and a half years was terrific. Just think about this: Transitioning from the hideous, unhealthy and dominant consumeristic American culture to one with more life meaning is not for wimps.

From this older adult’s perspective, the FIRE community and the author message of seeking a deeper meaning remind me of my youth. My generation sought the same deeper meaningful life during the tumultuous 1960s and 70s too. We introduced and practiced deep personal reflections via meditation, yoga, and of the wholesome and humanistic “consciousness-raising” growth encounter groups that sprang up at every street corning. Confronting authorities about the Vietnam war, discrimination of people of color, women, disabled, freedom to grow our hair long, and for LGBTQ were the norm. Believe it or not, my baby boomer generation rejected materialism too! We knew way back that “things” did not make for long-lasting happiness.

In the last fifty years rejecting materialism disappeared from my generation and the chronic borrow and spend culture took over like an addiction, and we don’t have a clue why. Despite it all, the millennials are revitalizing what it means to live a happy life. FIRE is the refreshing 21st-century version of the mid-20th-century counterculture movement. For example, on page 21 the author wrote “hopeful” twice. That’s a powerful word that I had not heard in our American public discussion since the Kennedy Administration. Americans loved our young and hopeful President, his family, and the ideas he presented. Looking forward to the future was everywhere. Despite the Cold War, Americans were happy. However, so many adverse events happened after that terrible day in Dallas on November 22, 1963.  Several times the author mentioned how he and Taylor learned to be careful when talking about his FIRE excitement. People asked if he and his wife joined a cult! Living within your means is understandably threatening to people unconsciously caught up in the unhealthy consumer and materialistic world.

Here are some of my favorite takeaways:

• Decisions based on individual values instead of society’s expectations.
• “I (the book’s author) was inspired by the transformational effects of living a simpler, lower-cost lifestyle.”
• Talk openly about finances! It takes guts to talk about money because the opposite is unhealthy; it leads to relationship break-ups and unnecessary stress. Unfortunately, according to research, people feel more comfortable talking about death, religion, and politics (politics? heaven forbid!).
• Invest in Vanguard index funds. JL Collin’s book A Simple Plan for Wealth frequently cites the great Jack Bogle’s work and philosophy found in the company he started, Vanguard and its low-cost indexing empire. I have most of my money in Vanguard.
• The simple math of achieving wealth. From Mr. Money Mustache, “Latte Factor” idea, save the daily $5.00 that would have been spent on a Starbucks coffee and invest it.
• Cut back on the four significant consumer expenses: home, transportation, food and the four, not necessarily a consumer item, but…
  • The fourth source of financial drain, the hideous expense of investments and a financial adviser/broker/insurance agent.

Dozens of finance books have repeated the above bullet points ad nausea. But few people do it.

What wasn’t mentioned are investment costs. The financial industry wants to keep this from the public for obvious reasons. 1.0% advisory fee for a million-dollar portfolio would be a whopping $10,000 per year, and that’s not counting the costs of the funds. That’s a HUGE for a $1,000,000 portfolio. By investing in Vanguard Index funds as the FIRE people smartly recommend, people, get three excellent investment strategies:

1. a simple diversification plan which most can understand
2. 1.0% financial adviser is not needed. Index funds are not managed, hiring a financial adviser is redundant and wasteful!
3. Index fund costs are minuscule

But the catch is that you control and manage the portfolio yourself. It took a few months for the author to grasp the construction and to manage their family’s financial portfolio. As the author said there are plenty of free resources to get started and most discovered that it isn’t complicated.

My late husband and I learned the investing process over ten years with many mistakes as well as success. We saved a ton of money on investment fees and managing our portfolio without an expensive adviser for 25 years.

Since I retired at 61 ten years ago, just saving on fees alone, I could afford to buy two new electric cars (one a Tesla), solar panels, updated kitchen and master bath by only paying about 1/10 the cost of professional advice. I only pay about $1100 per year! It’s a simple math comparison. Ten years with 1.0% assets under management (AUM) fee which most fiduciary fee-only advisers charge, I would have paid $100,000 for needless and expensive professional advice! ($10,000 x 10 years). Instead, that money stayed in my portfolio and grew.

Two criticisms I have read about FIRE, 1. “they are doing nothing original.” I beg to differ. What I have learned in a lifetime of frugal living, index investing, and learning to live with a deeper purpose and meaning, these folks already know it in the 20s and 30s. That’s new! It will be interesting as time goes on what undiscovered financial or frugal living discovery that nobody predicted.

The second criticism is that FIRE can only be achieved by over the top elite bloggers, intrapreneurs, media specialists, famous book authors, and talented engineers turned bloggers. I say, “so what?” Of course, to be leaders, you must have some talent and passion. And some FIRE folks are from privileged backgrounds with supportive families and then earned a ton of money and became financially independent at 30. The FIRE people will say that while financial independence is the goal, there is plenty of flexibly to include everybody. Heck, not everybody can reach it at 30, or even 40, nor want to live a Spartan life. It’s their message that just about everybody above the poverty line has choices about their lifestyle and money and about finding quality time, and their meaning in life. The author says that people might find their meaning of life while working. Alas, that’s been my experience, and that’s the primary point in this book from cover to cover.

The FIRE generation opted for financial independence by rejecting the consumer and corporate lifestyle status, unhealthy competition, and financial stress without end. Remember, with those high paying jobs carry a ton of responsibility. While many people love responsibility and belong to an expensive country club, wear fancy clothes, drive expensive cars and pollute the atmosphere, go to expensive restaurants to beholden to the corporate image/culture. If you love the costly life, this book is NOT for you!

If you are a person who finds your work pays well, but it is lifeless for lack of deeper meaning, READ THIS BOOK. You work for somebody else’s meaning and values. FIRE people what to work for themselves and their values. It’s simple.

How they are doing the impossible is original. The FIRE community is organizing meetups and formal conferences around the country. They are teaching and supporting each other face to face. The topics can be about investing, life hacking ideas, real estate management and investing, and stocks and bonds, and just by being with like-minded people. It takes a ton of support to earn that financially independent status by going against the borrow and spend American culture.

Finally, many excellent personal finance books have a male author’s POV who don’t include their spouse. Scott courageously wrote about himself, about Taylor and how the couple compromised and settled serious financial differences (Taylor loved her expensive BMW!). Scott and his wife Taylor are engaged in all the development, conflicts, decisions, and discussions of their drastic change in lifestyle. While this book is for both individual investors and couples, it is a much-needed book for couples.

• My only suggestion to attract people from all income levels is to stay focused on rejecting the materialistic value system and opting for a simple life.
• Time with family, friends, with their daughter and making the world a better place than when they found it all make them happy. The author and his wife bring this ancient idea to our modern 21st century American life.
• My generation started and then mysteriously lost that ideal.
• FIRE and all the gurus cited in the book know that participating in the “rat race” is a loser’s game.
• FIRE millennials are fighting back, and for that, I am deeply respectful for Scott, his book Playing with FIRE and the FIRE movement for their courage.

Steve’s Bio

Stephen A. Schullo, Ph.D. (UCLA ’96) taught elementary students in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Because of his negative experience with annuity agents, unions, and his school district benefits personnel over the most horrific tax-deferred plan in history, the 403(b), Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) newspaper for 13 years. 

So he became a 403(b) activist and talked to anybody who listened about reforming this terrible plan. He simply wanted to inform his colleagues that districts and the insurance industry are looking out for their best interests, and not the teachers. The media began listening for the first time in the entire history of the 403(b) plan commonly known as the TSA in 1998. From 1961 to 1998, nobody in or out of education ever talked about this terrible 403(b) specifically with k-12 school districts. I kid you not!

Consequently, he was thrice featured retirement plan advocate for reformed 403(b) plans for public k-12 colleagues that were in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group (403bAware with a colleague, Sandy Keaton) for teacher colleagues. He also wrote 7,000 helpful posts in three online investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings and honored with the “Unsung Hero” award by United Teachers Los Angeles (UTLA) for his retirement planning advocacy.

For the last thirteen years, he continues to serve on LAUSD’s Retirement Investment Advisory Committee (RIAC) as a “Member-at-Large” and former co-chair. The committee monitors the district’s 457b/403b of 55,000 former and current LAUSD employees, worth $2.5 billion in total assets. Lastly, Steve and his late husband, Dan, were featured participants for the award-winning documentary, PBS Frontline: The Retirement Gamble, aired April 23, 2013.

Steve is the co-author with his late husband Dan of a book on learning the investment process from the ground up, Late Bloomer Millionaires. It’s a heartfelt story about two ordinary chaps and how they discovered investing and money management without a professional financial adviser. They list all of their successes and massive mistakes and they still retired earlier than most Americans.