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A Case for Lifestyle by Design
A Primer on FIRE
If you are reading this blog, you are likely aware of the concept of FIRE (Financial Independence, Retire Early). Once your passive income reaches a level where it completely covers your expenses, you never have to work again.
This is commonly accomplished with retirement funds and a Safe Withdrawal Rate of around 4%. Reaching financial independence via this method is about saving as much as you can, typically 50% or more of your income.
Saving more essentially looks at two sides of an equation. You can
There are plenty of other considerations, such as side-gig income or other passive income techniques. But the savings version is potentially the most basic and easily grasped method.
Now that the road to FIRE has been paved, it's tempting to slam on the accelerator.
"What if we stop going to restaurants completely? That will save us a ton."
"I could pick up a second job in the evenings. That would give us even more money!"
"Maybe I could sell a kidney...?"
Hopefully you'll know you've gone too far before that last one. Still, it's natural to focus on the exciting future FIRE promises, with a disregard for today. But it's important to remember that life has a way of sending you twists and turns.
Tragedy can strike, jobs can be taken, and moments spent away from family are lost forever. Lost moments are especially frightening for me, as I prepare to transition into fatherhood. I cannot imagine a bigger regret than missing our children's first words or steps.
This is why balance is so important. I agree with the greats who have said this before me - I want to create a "lifestyle by design."
LBD - Not as Catchy as FIRE
Okay, the acronym is not nearly as good as FIRE. But the idea is very attractive to many FIRE-chasers.
Lifestyle by Design is all about intentionality. It allows for small luxuries to be built in the journey, with FIRE remaining the destination. Frugality matters even more with LBD, because frugality is concerned with maximizing value for the cost.
Consider why diets do not typically work. Most diets are focused on deprivation - "stop eating this" or "only eat that."
Diets are the gastronomic version of "being cheap."
After a while, habits, lack of time, and cravings make the diet harder to keep. Eventually, you break. Three pints of Ben and Jerry's later, you can't look at yourself in a mirror.
Frugality is equivalent to a well-balanced diet in this metaphor. All things are permissible in moderation. If the value is there, the cost is more-easily justified.
I'll give you an example of this in action. My wife and I attend "movies on the lawn," a free event offered throughout the summer in our small town. Sitting under the stars watching a blockbuster and eating popcorn is about the most retirement-like thing we do regularly. And for the $2 it cost for the popcorn, we are getting an incredible value.
Having a reason to retire
Let's imagine I ignore the above and actually hit my goal. I'm 35 and just hit my financially independent target. I'm sharing with a co-worker my plans for the future. The conversation may go like this.
Me: Well, this is my last week. I'm sure looking forward to retirement.
Concerned Co-Worker: Retirement?! You're only 35! Are you really going to just sit around for the next fifty years?!
Me: Now that you mention it, I'm not really sure what I'm going to do.
This exchange scares me even more than coming to my 9-5, and I'm not alone. How many times do you hear about that newly retired person dying six months into retirement. We say, "they didn't have anything keeping them going any more." No, I do not plan to be that person.
But that means taking time to think about retirement now.
The FIRE community spends a great deal of time looking for frugal wins, life hacks, and efficiency-optimization strategies to win the game of life. I subscribe to these same activities and it actually does bring me joy to think about the concepts.
I'm a nerd like that.
But it's worth a reminder on occasion to stop and smell the metaphorical roses, to take stock of one's life and plans moving forward. It's worth it to think about retirement before retirement, and take part in those activities now.
If you love to travel, why not travel? A trip around the world might cost more than you find in value, but a trip to the next town over might offer adventure on the cheap.
State parks can offer amazing outdoor activities for next to nothing.
Lifestyle by Design is a compromise that reminds us to enjoy the life we have now.
It may mean turning down an offer for $40,000 a year more than you're making today, because the new job would force you across the country, add more stress to your life, and take time away from your family.
Money is not everything, even if you want to FIRE. The journey is just as important as the destination.
If money was no object, what would you spend it on? Where would you live and what would you do to fill your days? Can you get a taste of that now without breaking the bank? Is time optimization or a mini-retirement a-la Tim Ferriss in The 4-Hour Workweek worth a consideration? Whatever you decide, do not leave this reflection until you retire! Otherwise you might fall prey to the most dangerous of all states - boredom.