- How Has Covid-19 Affected Your FIRE Journey? Part 2 - May 29, 2020
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- How Has Covid-19 Affected Your FIRE Journey? Part 1 - May 11, 2020
“The FIRE is spreading.”
One of my favourite things about the FIRE acronym is how powerful it is. Finance is generally a dry topic, so when most people think about finance, they think about spreadsheets, charts, graphs, reams of numbers—I just fell asleep in the middle of that sentence. It’s difficult to give it feeling and pizzazz. But the term “FIRE” makes finance sexy. So, when people hear the phrase “the FIRE is spreading”, it makes their heart pound faster, and as a result, they’re driven to act.
This is why I love that phrase. And guess who came up it?
One of my favourite podcasts and the biggest FIRE community founded by Jonathan Mendonsa and Brad Barrett—with over 45,000 members on Facebook and counting. Whenever new people find out about FIRE, I immediately refer them to the ChooseFI community because I know how vital it is to have support on this difficult but worthwhile journey toward financial independence.
Brad and Jon have done exceptional work in the FIRE community by educating the masses about how to become financially independent and providing the framework for like-minded FIRE enthusiasts to meet all over the world. Because of Brad and Jon’s hard work, FIRE is no longer just a one-off concept implemented by a handful of weirdo bloggers, it’s now a movement.
If you want to find like-minded FIRE people in your local community, be sure to join your local FB Choose FI group here:
Wanderer and I recently went to a Toronto ChooseFI meet up and we talked for so long with our peeps that we shut down the mall. I have no idea how, but 5 hours just flew by! And I’m so excited to see some of the attendees again in Portugal at Chautauqua—the highlight of our year!
And for all the FIRE enthusiasts out there, I’m beyond excited to announce that ChooseFI is releasing a book today, called “ChooseFI FI: Your Blueprint to Financial Independence”, co- co-written by Chris Mamula, Brad and Jon!
This is a comprehensive book that covers everything from “The Stages of FI”, to “ Start with your why?”, “Hack College (or Just Skip it)”, “Invest in Your Career”, “ “Invest in Index Funds”, “Build a Business” and “Invest in Real Estate”.
To sum up this book, it gives you multiple paths to FI using examples of people who’ve done it in the FIRE community. In that sense it’s a “choose your own adventure” guidebook to FIRE.
So whether you want to become FI by investing in index funds, starting a business, or doing real estate investing or even a combination of all 3, this book has you covered.
Here are the points in the ChooseFI book that I found the most useful:
1) Hacking College
This was the most fascinating chapter to me. I wrote about how all degrees aren’t created equal in Quit Like a Millionaire (link), but I had no idea you could hack the cost of university by attending community college first. I won’t give away the exact details because I want you to read the book, but this blew my mind. Why pay a for a 4-year expensive degree when you could get away with paying a fraction of that price?
And in some fields, does it even make sense to get a degree at all? While becoming an engineer generally requires a 4 year bachelor degree, Wanderer and I managed to become authors and write professionally without a creative writing degree, so why would you ever bother with paying for one?
This chapter teaches you tricks to hack college, so you don’t have to end up with mountains of student debt—a big drag on the journey to FI.
2) Invest in Index Funds
If you already know about how to invest in index funds, this chapter is more of a refresher, but for those who are just discovering FIRE, this chapter gives you an overview of how to use the most passive method to build wealth and become FI. It re-iterates many of the best points in JLCollin’s bestselling book “The Simple Path to Wealth” and discusses how to mitigate risk during inevitable market downturns.
3) Build a Business
My favourite quote in this chapter comes from Todd Tresidder:
Investing in stocks, bonds, or real estate requires you to create or borrow capital to invest, but starting a business is different. Tresidder said, “In business, you’re literally creating equity out of thin air.”
This is most likely what attracts most people to building businesses. You don’t need anything other than your skills and the sky’s the limit when it comes to earnings.
Now, you may think you need starting capital to get a business going, but as Alan Donegan the co-organizer of the Chautauquas, says, his business “Popup Business” school shows people how to start businesses with no money.
Alan is one of my favourite people ever and his enthusiasm is contagious. You’ll read about his nuggets of wisdom in this chapter, along with examples of other entrepreneurs who took a leap of faith, worked their butts off, and came out on top.
Building a business isn’t easy and at the beginning, requires far more work than most people’s 9 to 5s, but for those who can stomach the risk, are good at thinking on their feet, have the passion and drive to add value to as many lives as possible, this path can be far more rewarding and lucrative than a 9 to 5 job.
4) Invest in Real Estate
Unlike index investing, which passively relies on the long-term gains of the stock market, real-estate investing involves actively hunting for value.
Now, I’m sure long-term readers on this blog, know about my feelings on real-estate (expensive, time consuming, and risky). It’s because we didn’t buy an over-priced million-dollar house in Toronto that we were able to retire so early. The only real-estate I ever want to own is in the form of REITs (Real-estate Investment Trusts). But what people keep getting confused is that my views are on primary residences and overpriced real-estate, not real-estate investing.
Real-estate can be a great investment and get you to FI faster than index investing. But only if you know what you’re doing. It’s not the end-all be-all solution to wealth that’s touted by smarmy real-estate sales people. And although using leverage can help you build wealth faster, it can also break you. As Todd Tresidder says in this chapter:
“Financial leverage is the only type of leverage that cuts both ways. It can kill you if you get it wrong, and it can make you very wealthy when you get it right.”
And according to Scott Trench of Bigger Pockets,
“People who have no income, no assets, and years of bad personal financial behavior turn to real estate investing thinking it will be their cure-all.
Forget this approach and take a completely different view of real estate investing. You have to get your financial house in order first, and then invest from a position of financial strength in order to accelerate your position.”
For those who can do the math and find undervalued properties, real estate investing provides a faster path to FI for those who aren’t afraid of rolling up their sleeves and doing some work—aka “sweat equity”.
If you’re interested in building “sweat equity”, read this chapter to get an overview of the real-estate investing path to FI.
5) The Stages of FI
This chapter summarize FI best by breaking down the milestones you achieve on your path to FI.
When trying to accomplish a big meaty, long term goal like becoming financially independent, it helps to break it down into digestible chunks and celebrate each milestone along the way. This chapter helpfully breaks down this goal for you, so you can track your progress toward each milestone (eg. Getting to Zero, Fully Funded Emergency Fund, hitting 6-figures,etc). The more you can simplify the path FIRE and breakdown the milestones, the more attainable it’ll be.
Overall, I found this book a great reference for all the different ways to get FI from real retirees in the FIRE community, and a useful comprehensive overview for those who are just discovering this lifechanging phenomenon.
Plus, we’re featured in it as well!
Get your copy today! (full disclosure, this is an affiliate link so I will get a small commission if you buy their book.)
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