Fire At 24…Kind Of
As I would define it, financial independence (FI) is simply the ability for your assets to cover your expenses. If you have a $1 million portfolio, people often point to the 4% rule as a rule of thumb for withdrawals, meaning you could take $40,000 per year in distributions to cover your expenses. So, if your expenses are $40,000 per year and you have a million, technically, you are FI.
How I Achieved FI at Age 24… Kind Of
Based on the above, it’s pretty easy to determine your financial independence number. Take how much you spend per year and multiply it by 25 to estimate how much you’d need to be financially independent.
Using our example: $40,000 × 25 = $1,000,000 — that’s how much you’d need to cover that lifestyle.
Here’s where things get interesting: technically, I was FI at age 24 without even realizing it. Now, to be fair, I say this somewhat jokingly because while I am technically FI right now, it won’t last forever. Let me explain.
My expenses are very low. I live at home, so many costs that others typically pay for, like housing, aren’t currently in my budget. I also don’t pay for groceries, which is another big expense for most people. My main expense by far is transportation. Some of that is self-inflicted and some is necessary. My next biggest cost is health, dental, and vision insurance. Altogether, my spending comes in around $10,000 to $13,000 most years. If I sold my secondary “fun” car, it would drop just below $10,000.
That means if I wanted to support this lifestyle based on assets alone, I’d need somewhere between $250,000 and $325,000. That’s when I realized I was already technically FI. However, this will change once I move out.
Real FI
So, being a little clever, yes, I’m currently FI. Based on my estimates, the least I could possibly spend living on my own is around $30,000 per year. That number would include a little fun but nothing extravagant. Bumping that to $35,000 would provide a much better lifestyle, in my opinion.
What that really means is that I’d need a minimum of $750,000 to support a $30,000-per-year lifestyle on my own or $875,000 if I wanted $35,000 per year.
The good news is that, at age 25, I’m already 35% of the way there based solely on my designated FIRE investments.
The Really Crazy Part
Here’s where things get even more interesting. Say I wanted to move down to part-time work. Based on my estimates, it wouldn’t be hard to earn at least $18,000 post-tax from a part-time job in my area. That means if I were okay living on $30,000 per year, I could reach a Barista FIRE scenario in less than three years. If I wanted my “baller” $35,000 lifestyle, it would only take about four years.
What’s Actually Going to Happen
I know this has been a little all over the place, but what I’m trying to say is this: if you’re pursuing FIRE to any degree, as you progress, a whole world of options opens up to you. For me, that’s the best part about FIRE—or even just FI: options.
A common phrase I repeat to myself is:
“No money, no options. Little money, few options. Lots of money, lots of options.”
I know it’s kind of cheesy, but it’s true. I came to this realization recently after reflecting on how far I’ve come and how far I still have to go.
Realistically, I don’t see myself pursuing Barista FIRE. I think what’s more likely is that I’ll continue to work and, hopefully, around age 35, I’ll be close to traditional FIRE with a higher overall yearly spending number. Even then, I might still be too cautious to jump straight into full FIRE, so I could ease into it with a year or two of part-time work.
That being said, nobody knows what tomorrow will bring. All plans are just plans until they come true but I thought it was an interesting thought experiment.
How My Thoughts on FIRE Have Changed
I’ve also been reflecting on how my thoughts about FIRE have evolved over the years. I’ve been on this journey for about six years now, and to this day, I haven’t told a single person in my life about these hopes and plans. I’ve brought up the concept a few times, without mentioning that I’m pursuing it, and the reaction is always the same: a little laugh and dismissal.
Most people don’t believe it’s possible, so the idea that someone they actually know might be pursuing it seems too far-fetched to even consider.
That used to affect my own beliefs, too. In the beginning, I was skeptical. I understood the math, but the idea still felt impossible—just like it does to many others. But over time, and with the help of the internet, I’ve come to understand that it is possible and achievable.
Plans will always continue to change and evolve but that’s not necessarily a bad thing. As you gain clarity on your goals, the path ahead becomes clearer too.