The stages of FIREing

I became Financially Independent and Retired Early (FIRE) in 2012. I can’t believe it’s already been more than 5 years since I FIREd – time does indeed fly when you’re having fun!

When I reflect on my own FIRE launch, I realize that I rocketed through many stages  breaking free from the gravity of Wage Slavery and finally entering the float-like freedom of FIRE. If you’re FIRE-aspiring, you’ll also blast through stages to achieve your own FIRE mission objective. Of course, I can’t guarantee your stages will be exactly like mine, but I’ll bet they’ll be similar with minor course corrections. 🙂

Anyway, I’ve identified seven distinct stages, so hold onto your seat because here we go.

Stage 1: Discovering FIRE exists

The first stage is when you realize that FIRE exists and you want to chase after it. The good news is that since you’re reading this, you’ve already passed through this stage. Congrats! You’re way ahead of most people because most never even discover FIRE. It’s just too unconventional and requires too much outside-the-box thinking.

Our experience

Mrs. FF and I have always been fairly Freaky Frugal but I never thought about retiring early because it seemed impossible. At best, I assumed we’d retire when we hit late fifties or early sixties. My dad was able to retire at 58, but he had a good, old-fashioned pension. I didn’t have one of those.

One day my high-school-age son told me about a website called Early Retirement Extreme (ERE) run by Jacob Fisker. Jacob is a crazy-smart, pragmatic philosopher with a degree in nuclear astrophysics. You’d think he’d be a rocket scientist, but instead Jacob FIREd in his early thirties mostly to prove he could do it. And he managed to live on only about $7,000 a year! I had no idea that somebody could live on that little in the US. It seemed insane.

Nevertheless, I devoured his blog posts and read his excellent book Early Retirement Extreme twice. I highly recommend it, but be Freaky Frugal and get it at your local library.

The book talks about the savings, math, and philosophy of retirement. I specifically remember the philosophy discussion about Plato’s Cave which later inspired me to write about being an Oblivious Wage Slave.

Not long after finding ERE, the great Mr. Money Mustache (MMM) started his blog and wrote a guest post on ERE. MMM seemed like a regular guy with a son, wife, and house – similar to me – and he was a Software Engineer – exactly like me. The big difference is that MMM FIREd on around $25K per year in his early thirties. I was already over 50, spending more, and definitely not FIREd. I was jealous.

But I figured if ERE and MMM could FIRE, then maybe, just maybe I could too. I had discovered FIRE.

Stage 2: Save like a mad dog

Once you realize that it’s possible to FIRE, you start saving like only tomorrow matters. The Rule of 25 means cutting even relatively small monthly expenses will have a big impact on how much you need to retire. And doing everything you can to increase your income means you’ll have even more to invest toward FIRE. This stage typically lasts years.

You also start to take a serious interest in DIY investing. You want to make every single dollar be like a factory worker who works around the clock to produce ever more compound interest. There is no time to waste!

Our experience

By the time I realized that FIREing existed, we’d already saved and invested in the high six figures. There wasn’t much I could do to increase our income so I focused on cutting monthly expenses. I became an expert at shopping for insurance, saving on utilities, and minimizing grocery expenses. Mrs. FF and I started eating out less. No expense was too small for me to investigate. I may have gone a little overboard. 😳

This stage only lasted about 2 years for us because we’d already been frugal for so long. I also had a good investing attitude and primarily used low-cost index funds from Vanguard.

Stage 3: Within spitting distance

One day you finally realize that you’re REALLY close to having enough to FIRE. You run and rerun your retirement calculations to make certain you aren’t crazy. This stage usually comes within 1 year of having enough to FIRE.

Our experience

I used FireCalc to run and rerun my calculations. I also created a spreadsheet to estimate our annual retirement budget to see whether our spending would be low enough to FIRE. I wanted to have an extra Safety Margin. When FireCalc said that we would be under spending by about $20K per year, I felt like I could sleep at night and we were ready for the next step.

I began discussing the idea of FIREing more and more with Mrs. FF. She had concerns but supported me in whatever I wanted to do. She’s a great wife!

Stage 4: Pulling the trigger

Some people become Financially Independent but never pull the trigger and Retire Early. That’s fine as long as it’s a conscious decision because they love their work and are not Oblivious Wage Slaves.

But some people get stuck at this stage because their afraid to FIRE. The idea of being without a job makes them feel anxious and rudderless. They ask themselves:

  • What would I do?
  • How would I structure all the time that I’m used to having structured for me?
  • What would other people think?
  • What if I miss work?
  • What if retirement sucks?

Or some people are afraid because even though they conservatively calculated how much they need to FIRE, they never feel like they have enough. They’re terrified a Black Swan event could happen and wipe out their wealth.

Others know exactly what they want to do when they retire and can’t wait to FIRE as soon as possible. They pull the trigger and quit their job the day they have enough money.

Our experience

I was in the later group – I was sick of the commute and I no longer loved software development. I wanted time to read, get more involved with my Zen center, exercise, and fiddle around with different ways of filling my time. I thought it might take awhile to learn how to manage lots of unstructured time, but the sooner I started, the sooner I’d figure it out.

I pulled the trigger and gave 2 weeks notice at 52. I had some very interesting reactions when I gave notice. Lots of people tried to slyly find out how much money I had. They would ask a question like “How much money does it take to retire?” Or make statements like “You must have x $millions of dollar” in hopes that I’d nod my head yes or no. Sneaky, eh?

Another group of people just didn’t believe I was retiring. They thought I was going to a competitor and just lying about it. In our company, if you were moving to a competitor, HR escorted you out the door immediately and paid you your 2 weeks severance. I could have lied and told them I was going to a competitor and then I could have left 2 weeks earlier but I didn’t want to lie.

Mrs. FF, by the way, decided to keep working part-time as she had been. She loved her work as a Personal Trainer and Yoga Teacher.

Really Stupid Comic #15

Stage 5: Honeymoon

The Honeymoon stage is great because, well, it’s like a happy honeymoon! 🙂 It can last anywhere from a few months to a couple of years.

What does the honeymoon stage feel like? Well, remember when you got out of school for the summer and you wake up the first morning of summer vacation? And you realize you have no school and no homework you have to do? And you have the whole day ahead of you to do whatever the hell you feel like? It feels like that.

Our experience

The day after I FIREd, I woke up and realized I didn’t need to go to work today or any other day. Holy smokes! I felt an endless sense of freedom, wonder, and possibility.

I got started on all the things I wanted to do more – exercise, Zen, reading, biking, long walks – but never at a hurried pace. I could take my time.

And Mrs. FF gave me all the space I needed to explore. Did I mention she’s a great wife?

I did feel strange telling people that I’m “retired”. Some people would say “You look to young to retire.” And I’d reply “I was fortunate to be able to retire early.” What surprised my the most was that very few people asked the logical follow up question of “How did you do it?” Other people would look at me kind of funny – like maybe I’m just out of work and don’t want to admit it.

The Honeymoon stage lasted about a year for me.

Stage 6: Hedonic adaption

Hedonic Adaption definition: The hedonic treadmill, also known as hedonic adaptation, is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes.

Eventually being FIREd becomes the new normal. This usually happens when you start contemplating what you really want to do with the rest of your life. It’s a bit of a let down, but perfectly normal. This stage can last anywhere from a few days to several years. I suspect some people like MMM skip this stage completely.

Some FIREd people hit this stage and search for a new job or business that’s more meaningful. Some search for a hobby that might be fulfilling and engaging. Some think about going back to school in some subject that interests them. Some do volunteer work.

Our experience

I started to ask myself questions like “What else do I want to do with my time?” and “How can I still feel useful?” I went through analysis paralysis – thinking and thinking and thinking. I became almost frozen – afraid to try new things because, hey, what if it’s doesn’t work out?

I thought I was going to start woodworking again. I had lots of equipment from when I’d built furniture for our house. But woodworking is an expensive hobby – I didn’t want a woodworking business – and I really didn’t have room in our house for more furniture. Plus we wanted to downsize eventually so we wanted less furniture not more.

I did do more Zen stuff at my Zen center and became a Senior Student, but I got tired of having to give Zen talks, do Koans, and going to Zen retreats. I was very thankful for all that I learned as a Zen Student, but eventually I left.

I stayed in this stage for about 2 years.

Stage 7: Balance

The Balance Stage is pleasant and sustainable. You’ve found a good combination of things that challenge, inspire and interest you. You have a real FIREd life with friends, activities, and interests.

The combination of things may change over time as you experiment with new ideas and activities. You’re willing to take some risks on new things because, hey, what’s the worst that could happen? You can always stop doing whatever you’re doing and try something else. It’s fun!

You don’t even remember what it’s like going to work anymore and you wonder how people can keep going to work day after day, year after year. You feel grateful for the life and especially the freedom you have.

Our experience

The turning point for me came when we sold our house in the burbs and negotiated rent on an apartment in downtown Philly. Maybe I just needed a big change to snap me out of the Hedonic Adaption phase. I love going to the library because I’m a book junkie. I love running and socializing with the Philly Runners run club with Mrs. FF. I love to wander around the city on foot and by biking on a bike-share bike. I love to observe all the people and the fiendishly fast pace of the city. There’s always something interesting happening.

Mrs. FF continues to work part-time, but each year she works fewer and fewer hours. She’ll stop completely when she’s ready.

Wrap up

I won’t kid you – life’s not perfect or anything. I still have aches and pains, good days and bad, and other irritations. But it all feels normal or at least manageable. And overall it’s way, way better than it ever was before I FIREd. Being FIREd and truly free to control my own time is still wonderful. And there is no substitute!

Thanks for reading! How did you discover FIRE? What stage of FIRE are you in? Has your experience been different from mine?

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  1. Great inspiring post. When I quit my job to focus on my online business, the first two months was the toughest. I had a good plan but did not realize that there will be an adjustment period. That first two months, I was a little confused and at times did not know what to do on a day to day basis. There were days when I thought I should not do anything and there were some days when I kept myself extremely busy in front of my computer. After two months, I started to be more balance with everything that I do. I started feeling more accomplished and happier that I finally fulfilled my dream of retiring early. It’s been a wonderful ride from there. Good luck to you.

    1. Bernz JP – Thanks for sharing!

      Yeah, I was surprised by many of the adjustments that I went through as well. It takes time to find the right balance.

  2. I’ve been slightly early retired for over two years and there was no stage 5-6 for me. I walked out the door of corporate life with my new life pre-designed from my five paid side gigs to my half dozen non-paid volunteer ones. There was nothing unexpected that caught me by surprise, just some really challenging new adventures and a much shorter (two day) work week so I went straight to stage 7. I would have been unsettled by the thought of quitting my old life before building my new one. I wanted to know that I was going toward something defined instead of some amorphous “betterness”. What if it wasn’t better? Anyway we are all different and we both are happy so who is to say? Sitting here in 800 acres of wooded wetlands I can’t imagine living in a city but then you actually like it there. But my fleet wife and I do agree with you on having a running group, even in retirement we are up before 5 AM running in the frozen darkness, how fun is that!

    1. Steveark – Interesting! You were really smart to have a pre-designed life that you wanted to head towards. I admit that I drifted a little bit and probably could have been more efficient at getting through the stages. Lesson learned.

      I think you’re a more hard core runner than I am. Mrs. FF who has and will be running the Boston Marathon this spring may be more in your league. 🙂

      And yep, we’re city folks. I don’t think living in the country would work for us, but to each his own.

  3. Great post, I only made it to step 5 – the honeymoon before going back to work, albeit on my own terms and part-time. I think I still like contributing and earning. But I probably wouldn’t do it if my commute was over 3 miles and I was forced into full-time work.

    Most likely I will be back to blissful FIRE in 10 months or so.

    1. Hi Turning Point Money! That’s the great thing about FIREing – you can do whatever the hell you want. I look forward to seeing what happens when you stop working in 10 months.

      Thanks for sharing!

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