Exit Strategy/What's your "number"?

108 Replies

Originally posted by @Bryan Danger :
Originally posted by @Jay Hinrichs:

what does FIRE  stand for ??   

Won't claim to be the expert, but in my understanding Financial Independence Retire Early

 That is the acronym, but the underlying principal is like a mixture of Dave Ramsey and the hippy movement. Dave Ramsey pushing the idea of low cost of living and high savings rate. Hippies pushing the idea of quitting your job, following your passion, living life for freedom and rejecting materialistic needs. It is really different than the traditional entrepreneurial financial freedom mindset, which accepts wealth as a recognition of accomplishment and welcomes a higher standard of living as a reward. Someone in the FIRE movement may believe someone who keeps working after reaching financial freedom is greedy. That is where the hippy mindset influences their perception. Someone in the traditional mindset may believe someone who quits producing (quits working) is lazy or non productive in society. There is also a Fat FIRE movement which supports a higher standard of living and challenges the idea that sacrifice is necessary. 

My aunt and uncle were doing "FIRE" back in the 1980's. They rejected material possessions, saved all their money, quit their jobs, traveled in other countries. They even "house hacked" a duplex. None of this is new, it is just new generations discovering alternate life styles. It is easier to be financially free today with advances in technology. Forty years ago if you wanted to buy stocks, you had to call your broker on a land line and place a trade order. No index funds, no online trading, etc. The internet and mobile phone technology have empowered amazing things. When my aunt and uncle left for South America in the 1980's, they disappeared for six months. Today people traveling the world are giving daily blog or YouTube updates and making money doing it. 

The freedom seekers should be thankful that not everyone is following their path. The economy would collapse if everyone quit their jobs. You need producers and consumers for an economy to thrive. Even the government only survives on the backs of producers and consumers.

@Jay Hinrichs google Mr Money Mustache this pretty much says it all. While they say all they do is buy index funds he is pretty handy fixing places up and very smart. He is a brand.

Originally posted by @Joe Splitrock :
Originally posted by @Bryan Danger:
Originally posted by @Jay Hinrichs:

what does FIRE  stand for ??   

Won't claim to be the expert, but in my understanding Financial Independence Retire Early

 That is the acronym, but the underlying principal is like a mixture of Dave Ramsey and the hippy movement. Dave Ramsey pushing the idea of low cost of living and high savings rate. Hippies pushing the idea of quitting your job, following your passion, living life for freedom and rejecting materialistic needs. It is really different than the traditional entrepreneurial financial freedom mindset, which accepts wealth as a recognition of accomplishment and welcomes a higher standard of living as a reward. Someone in the FIRE movement may believe someone who keeps working after reaching financial freedom is greedy. That is where the hippy mindset influences their perception. Someone in the traditional mindset may believe someone who quits producing (quits working) is lazy or non productive in society. There is also a Fat FIRE movement which supports a higher standard of living and challenges the idea that sacrifice is necessary. 

My aunt and uncle were doing "FIRE" back in the 1980's. They rejected material possessions, saved all their money, quit their jobs, traveled in other countries. They even "house hacked" a duplex. None of this is new, it is just new generations discovering alternate life styles. It is easier to be financially free today with advances in technology. Forty years ago if you wanted to buy stocks, you had to call your broker on a land line and place a trade order. No index funds, no online trading, etc. The internet and mobile phone technology have empowered amazing things. When my aunt and uncle left for South America in the 1980's, they disappeared for six months. Today people traveling the world are giving daily blog or YouTube updates and making money doing it. 

The freedom seekers should be thankful that not everyone is following their path. The economy would collapse if everyone quit their jobs. You need producers and consumers for an economy to thrive. Even the government only survives on the backs of producers and consumers.

Joe this went back to my first response on the post it kind of reminded me of my early days selling real estate in Northern CA to folks that wanted to live an alternative lifestyle be it those with money .. or those without really much money and tended to live the communal lifestyle that was prevalent in N. CA in those days it was the hippies leaving the Haight Ashbury and flowing right up Hwy 101 to Mendocino Lake and Humbolt counties.. weather there is not as nasty as the Sierra NV and its quite remote even to this day.

its only been since about 2000 or so when cash flow rentals became a kind of mainstream investment for the mass's and this was really promulgated by the advent of the OOS turn key investing models.. I started in it in 2002 in Detroit and all the buyers were LA based.

Of course i was the financing not actually owning the assets..  prices in those days were 120 to 160k  then the crash happened and those houses went to ZERO to 40k  and now they are back up to 100k plus .. pretty wild curve though.. 

Originally posted by @Joe Splitrock :

The freedom seekers should be thankful that not everyone is following their path. The economy would collapse if everyone quit their jobs. You need producers and consumers for an economy to thrive. Even the government only survives on the backs of producers and consumers.

Well thanks I guess!! ;)

@Bryan Danger Good point, there are multiple ways to get to an endpoint. My comment wasn't meant to suggest everyone in FIRE does it the same way. I have just read some profiles of people that have done it that way and it seemed very limiting to me. I am sure there are others that don't do it that way.

@Joe Splitrock I never thought of FIRE that way, but it does have that flavor when you look at it that way. I also never considered the technology angle and how much easier it is to do it today vs. when your aunt and uncle did it in the 80s. We tend to forget over time "how things used to be" when we get so used to the way things are now :)

@Bryan Danger

3.  When your looking at retiring or financial independence you have to look at your needs and your investment types.  You need to decide how much liquid assets or cash you have versus long/midterm investments.  Your investment strategy of having an asset appreciate as your main funding is good for long term, but not as a short term strategy as you found out.  Its a personal risk assessment question.  Do you want 1 year, 2/3/4/5 years of liquid assets relative to your personal needs and how you view both your long term investment strategy and the world.

How many years usage of  cash or liquid assets are you carrying?   What mix do you recommend at the moment or before you go to Financial independence?  Many people who are nearing (5 to 10 years out) never get educated or advised on moving their mixes from aggressive to conservative.  They are 64 and getting ready to retire and a stock market crash.  They have to keep working since they were still at 90% aggressive stock. Same holds true for people seeking Financial independence, just a different age.

That is the personal needs approach.  You have to have an approach above, or your just gambling and running on negative cash flow. Hoping your long term appreciation materializes at the correct time.

Same thing for your rentals.  When someone says they are cash flowing $200 per month on a rental and another person says the same thing.  Not sure both are calculating the same way.  Need to take into account less than 100% occupancy rate and also set aside funding for capital needs.  Roofs, HVAC, Windows, etc depending on the nature of the properties.

With the above said that person needs to actually set aside those funds.

How many months of Occupancy and Capex funding do you have set aside?  What is your approach in calculating?

What steps for the two above should people do, given your recent experience with the two above?

My impression of FIRE is that it's not a mindset of abundance. It's financial freedom through careful planning and calculation. And I think to its credit, it teaches people that achieving a realistic retirement at an earlier age is more achievable than some folks think. The basic goal, from what I see, is to reach a certain minimum through frugality until you can quit your job. 

On the other hand, I think the mentality of many entrepreneurs is about financial freedom by reaching monetary escape velocity from the system. There's a different risk psychology, and there's probably a higher statistical chance of failure. But there's way less interest in counting all the pennies, with the emphasis on productivity, growth, and financial reward.

I don't think they are mutually exclusive concepts.

Originally posted by @Robert C. :

My impression of FIRE is that it's not a mindset of abundance. It's financial freedom through careful planning and calculation. And I think to its credit, it teaches people that achieving a realistic retirement at an earlier age is more achievable than some folks think. The basic goal, from what I see, is to reach a certain minimum through frugality until you can quit your job. 

On the other hand, I think the mentality of many entrepreneurs is about financial freedom by reaching monetary escape velocity from the system. There's a different risk psychology, and there's probably a higher statistical chance of failure. But there's way less interest in counting all the pennies, with the emphasis on productivity, growth, and financial reward.

I don't think they are mutually exclusive concepts.

I agree 100% - and think the true beauty lies very much in between!

Originally posted by @Joe Splitrock :
Originally posted by @Bryan Danger:
Originally posted by @Jay Hinrichs:

what does FIRE  stand for ??   

Won't claim to be the expert, but in my understanding Financial Independence Retire Early

 That is the acronym, but the underlying principal is like a mixture of Dave Ramsey and the hippy movement. Dave Ramsey pushing the idea of low cost of living and high savings rate. Hippies pushing the idea of quitting your job, following your passion, living life for freedom and rejecting materialistic needs. It is really different than the traditional entrepreneurial financial freedom mindset, which accepts wealth as a recognition of accomplishment and welcomes a higher standard of living as a reward. Someone in the FIRE movement may believe someone who keeps working after reaching financial freedom is greedy. That is where the hippy mindset influences their perception. Someone in the traditional mindset may believe someone who quits producing (quits working) is lazy or non productive in society. There is also a Fat FIRE movement which supports a higher standard of living and challenges the idea that sacrifice is necessary. 

My aunt and uncle were doing "FIRE" back in the 1980's. They rejected material possessions, saved all their money, quit their jobs, traveled in other countries. They even "house hacked" a duplex. None of this is new, it is just new generations discovering alternate life styles. It is easier to be financially free today with advances in technology. Forty years ago if you wanted to buy stocks, you had to call your broker on a land line and place a trade order. No index funds, no online trading, etc. The internet and mobile phone technology have empowered amazing things. When my aunt and uncle left for South America in the 1980's, they disappeared for six months. Today people traveling the world are giving daily blog or YouTube updates and making money doing it. 

The freedom seekers should be thankful that not everyone is following their path. The economy would collapse if everyone quit their jobs. You need producers and consumers for an economy to thrive. Even the government only survives on the backs of producers and consumers.

 I'm kind of that guy. I spent a good number of my younger years following the Dead around. I've been a musician all my life. Bernie is my guy. But I'm also a hard working SOB who has no interest in living a poor slob life - did that, got the t-shirt when I was a kid. Being without money sucks. And I don't suffer lazy people or fools very well. I also believe that if you have real talents - call it a calling or your purpose or your spiritual point or whatever - that you are robbing the rest of civilization by withdrawing those talents to pursue purely hedonistic interests. I think everyone should feel some sense of responsibility to others, and so I don't really get on board with the typical things I hear about FIRE - spend all your time traveling, hiking, walking on the beach, sipping Appletinis. To be fair, I think a lot of people who might identify with the idea of FIRE aren't really planning on checking out so much as just changing course, and for that reason I really kind of hate the acronym. I prefer my own acronym, which is FICO (wait, someone used that already 🤣 ): Financial independence, change objectives. Meaning you can shift your mindset from having to kill it to keep you and yours alive to applying your interest and talents to other endeavors that may be more satisfying and useful to society but perhaps don't pay as well. That's what Money Mustache does. I wouldn't call a guy who runs a community center, builds houses, and maintains a website and blog "retired". Paula Pant is not "retired", she just doesn't have to sit in a cubicle 5/40. Jay Hinrich is not retired, he just gets to pick the projects he wants to work on, and gets to do things like mentoring (Jay was our guest speaker at one of our mastermind group meetings a few months back). 

Overall I think the first part of FIRE is ridiculously useful and worth pursuing for everyone. No one should depend on the government, their family or anyone else to provide for their financial well-being. The last part (RE) only really started becoming a "thing" 4 or 5 years ago; before that it was always just FI (as in ChooseFI, for example). I'd like to see the last part be dumped. 

There is no specific number, it’s truly infinite for me. I love the thrill of the deal, for myself and when helping others. Growth, learning, achievements and helping others are what fuels my energy, my soul, in every aspect of life.

It’s about realizing my full potential by being exceptional in every area of my life. I refuse to accept that I have to give up excelling financially to be righteous, an exceptional husband, exceptional father, scratch golfer etc. I strive to be all of these things and I 100% believe I can be exceptional at all these things. Otherwise I won’t be.

So many golfers love the game (myself included) because you can improve your game very late into your life. RE is no different in my mind; an endless pursuit of improving, winning, & maxing potential.

So my exit strategy is how I turn it all over to my well loved, well prepared, and financially educated children, in my final years. Who will also never be satisfied at any level of excellence in every area of their life so they can grow to their full potential and influence generations to come.

Originally posted by @JD Martin :
Originally posted by @Joe Splitrock:
Originally posted by @Bryan Danger:
Originally posted by @Jay Hinrichs:

what does FIRE  stand for ??   

Won't claim to be the expert, but in my understanding Financial Independence Retire Early

To be fair, I think a lot of people who might identify with the idea of FIRE aren't really planning on checking out so much as just changing course, and for that reason I really kind of hate the acronym. I prefer my own acronym, which is FICO (wait, someone used that already 🤣 ): Financial independence, change objectives. Meaning you can shift your mindset from having to kill it to keep you and yours alive to applying your interest and talents to other endeavors that may be more satisfying and useful to society but perhaps don't pay as well. 

Exactly!  Like I said... somewhere in the middle (and i like the FICO idea)!!

What baffles me is that so many people from both crowds are so staunchly "against" the other.  It's almost like it's political. 
Each approach may seem odd from "the other side" but somehow that turns into a strict labelling and generalization rather than trying to find parts that might also be a good fit.

- The FIRE crowd (generally) seems so preoccupied with the stock market and hitting a single "number" that they can't possibly consider diversifying into real estate or the fact that some passive monthly income (through rent) now could shave a decade or more off how long they have to work that job they hate - but are apparently willing to keep trudging away at it anyway.  Most of the FIRE forums I've joined send all real estate interests/questions to a set of posts talking about how horrible it is to be a landlord and plunging toilets.

They also apparently can't cope with the fact that anyone might choose to "work", follow a passion or take on a project/side hustle after hitting their number (I presume because it makes then question why they just spent so much time trying to reach that number when they could have left earlier and still found a way to make money afterwords).  And all that work and rigidity, to retire only a couple years earlier than the national average?  Yikes!


- Most of the BP crowd however (in my humble opinion and experience) seem to be so driven by the deal or success or "more" that they can't possibly imagine any benefit to freedom or free time.  

Given the replies here, most also can't imagine doing anything else with their time, have no other passions or hobbies to follow, see no value in actually sitting and being with themselves and their family for more than whatever hours are left at the end of a successful workday and a couple vacations a year. 
The very mention/idea of freedom in this thread alone has brought back negative responses of "hippies", "sipping appletinis" and as someone actually stated earlier "freedom is boring".  

Freedom... the ability to choose to say and do whatever you want... is boring.  Mind Blown.
Surely this impressive crowd of entrepreneurs and creative thinkers can't be that unidimensional... but the responses certainly seem to hint at it. 

Most here also seem so preoccupied with the "more" or income side of the equation that they forget the simple fact the "less" spending improves your cashflow situation just as rapidly (and no, that doesn't have to mean living in strife, pinching pennies or moving to a commune at the end of a dirt road... in fact VERY far from it).

Both these ideas can very much happen in unison and at least for us, the result has been very beneficial. 
We've now spent almost 10years living free in the prime of our lives checking off what most would call bucket list items and living each day like we're on vacation staring at the ocean and following our passions - but while ALSO growing a portfolio, starting a few passion projects that happen to make good money on the side, helping others achieve their goals/follow their passions, and doing/learning/experiencing things we could have only hoped to achieve decades from now. 

I struggle to see why that would seem like a bad idea to anyone.  Why wouldn't we borrow from all mindsets to have the best of both worlds?