I discovered the FIRE movement in lockdown – here’s how I plan to retire by my 43rd birthday

Follow money blogger Diandra Latibeaudiere-Gardner, Finance Dee, on her quest to retire by the time she hits 43

2020 was truly a life-changing year for me, as it was for many others too. With my work office permanently closed and 99% of the year spent in my house, I discovered the ‘Financial Independence Retire Early’ movement, commonly referred to as FIRE.

At first, I was sceptical about this concept of FIRE – did people pushing this movement really believe that retiring early was within reach for the everyday person?

The short answer is, yes – they believe this. My interest piqued – I began relentlessly researching to understand how someone like me could achieve FIRE and what exactly it would require me to do.

Fast forward to today and here I am (to my own surprise) well and truly a FIRE believer and breather. And I am going to tell you why.

What is FIRE?

Simply put, FIRE is pursuit of financial independence (FI) once you have enough money in your investment pot to sustain your living expenses year-after-year.

After reaching FI you then have the option to retire early (RE) or consider some variation of retirement such as: reducing weekly work hours, working half of the year and traveling the other half, or starting a whole new career entirely you’re passionate about but isn’t financially lucrative.

The FIRE movement traces its roots to the 1992 book ‘Your Money or Your Life’ by Vicki Robin and Joe Dominguez. It has only been in the last decade, however, that this movement has really picked up momentum, particularly in the United States.

How much do you need to achieve financial independence?

In order to calculate this number, you only need to figure out one thing – how much money do youspend per year to live? This should include housing, utility bills, insurances, transport, food, holidays, subscriptions, gym membership and any other recurring expenses you may have.

Then, you multiply that number by 25 to know how much you would need to achieve FI. For instance, if your expenses add up to £20,000 per year, multiply £20,000 by 25 to get a grand total of £500,000 – your FIRE number.

Why I decided to follow the FIRE movement

At first glance my FIRE number seemed like an intangible amount of money to save and invest. My husband and I would need to have an investment pot of £450,000 in order to be financially independent.

But once I broke the numbers down into bite-size pieces and started ferociously doing sums, I realised that I could, with dedication and consistency, invest around £1,100 each month to reach FI in less than 15 years.

This is a staggering 25 years earlier than the age the state pension kicks in for me, at age 68. Realising this, I seriously questioned why I would leave it to the powers-that-be to say when I could obtain total time freedom. I want to take matters into my own hands.

My FIRE journey thus far has taken me on a personal finance renewal journey. I have worked out a detailed plan to pay off debt, adjusted my budget so I no longer wonder where my money has gone each month, and gotten knee-deep in the world of low-cost index fund investing and passive income streams.

The truth is, whether you want to retire early or not, understanding more about the FIRE movement really makes you reflect on the type of life you want to live, and what (if anything) you need to do to get there.

We’ll be posting more updates on Diandra’s journey to financial independence in upcoming articles. Check back to follow her journey to FIRE here on Mouthy Money and find out more about her on her blog, Finance Dee.