FIRE: How To Make A Living Without Working

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Even if you love your job, sometimes, you just need a break. And if you don’t like your job at all, you’d probably leap at the opportunity to quit it if that didn’t mean forgoing money, which is certainly a necessity in this world. Some people, though, have figured out how to make a living without working, often through a method known as FIRE (Financial Independence, Retire Early).

If you feel like you’ve been seeing more stories lately about people who have retired at far younger ages than the average and travel the world on modest budgets, then you’ve read about the FIRE method in action. No, these young retirees aren’t financial magicians or monetary savants – they’re just following some fairly straightforward saving and spending rules that get them away from their former 40-hour workweeks. Here’s how attempting the FIRE method can enable you to make a living without working.

Save and invest – and then do it again

A fundamental tenet of the FIRE method is that aggressive saving and investing can allow for early retirement. If you plan to follow the FIRE method, you’ll need to save 50 to 75 percent of your income. This percentage may seem staggering – how can you afford basic costs such as rent and luxury costs such as vacations when only 25 percent of your income is available to use?

That’s why many people obeying the FIRE method simultaneously opt to increase their incomes while decreasing their expenses. This doesn’t just mean asking for a raise and canceling gym memberships – it means finding new revenue streams and dropping all wholly unnecessary expenses (and relying on money-saving tips for utility bills). 

Expand your income opportunities

The FIRE method beckons the question: How do you find new revenue streams? The answer can be as simple as using your job skills to start a freelance side career. As a freelancer – perhaps a blogger, graphic designer, or tutor – you may have more control over not just your pay rates, but how frequently you work and for whom you work. If you reach enough freelance capacity to quit your full-time job, you’re already partway toward retirement.

You can also consider inactive revenue streams. These sources of revenue require relatively little extra work from you. Think about renting out a room in your home – what do you have to do other than make yourself available for tenant questions and handle any landlord interactions? The same goes for dog sitting or dog walking – once you’ve tended to your client’s dog, you can sit back and relax while keeping an eye on the pup.

Don’t pay interest – earn it

Not all investments are created equal. A good investment for the FIRE method involves not just having money, but growing it. Traditional retirement plans such as 401(k)s and IRAs get the job done, whereas options such as savings accounts and certificates of deposit may have interest rates too low to grow your money quickly enough for early retirement. And just as you want to invest your money in places where it can earn interest, you should pay off your credit card debts and, if possible, student loans before starting FIRE – you have to pay interest on those, vastly reducing your ability to gain financial independence and retire early.

Would you ever try the FIRE method? Share why or why not in the comments!