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I REGULARLY READ blogs written by those who retired early to a life of ultra-frugality. Do you consider yourself careful with money? Even so, I doubt you’d enjoy the frugal lifestyle of many followers of the FIRE (financial independence/retire early) movement.
I certainly wouldn’t. If I go on another cruise, I won’t be booking an inside cabin. I can’t imagine my wife buying clothes from a thrift store and wearing them for the next 10 years. Things that strike me as too frugal: Never going out to eat. Never traveling. Not owning a car. Living on a remote piece of land and chopping firewood for heat. Picking up toys from the curbside for the kids. Moving to Mexico for the low cost of living.
And, no, I’m not trusting my eyeglasses to an online service to save money. Don’t get me wrong: I shun designer frames and designer everything else. I lean toward frugality. I avoid impulse shopping, buying the latest trendy thing and accumulating unnecessary stuff. Still, you usually get what you pay for. Have you ever read about the things you should never buy from a dollar store?
But it isn’t just the extreme frugality of the FIRE folks that bothers me. Rather, it’s also the related claim that they’re financial independent.
Don’t get me wrong: I’m not mocking these frugal folks, nor am I being a snob. But it’s important to understand the lifestyle necessary to be financial independent if you’re living on a tiny budget.
To be sure, these folks seem happy with their choices. Many are actually income-earning bloggers, authors and podcasters who are sought out by the media. In that regard, I’m jealous. Nobody seeks me out. Being an old school dinosaur is not news.
One blogger claims to have lived on $7,000 a year or less for a decade. Another says his family of five lives on $40,000 a year and spent just $296 on groceries in March. The U.S. Department of Agriculture puts a low-cost grocery plan for a family of four at $892.90 per month. Even a thrifty food plan is estimated at $676.80 per month.
This same family pays almost zero for health insurance premiums because they keep their income low enough to collect Affordable Care Act subsidies. Meanwhile, in March, their “net worth went up $68,000 to end the month at $2,648,000.” The lesson: Because the government typically counts income but not wealth, some of the frugal few are able to qualify for subsidies and tax credits.
A couple, who “retired” 30 years ago at age 38, says that “as of the end of 2020 we spent $28,133 or $76.87 per day. Plus we blew the $2400.00 stimulus check on repairs in our humble abode in the States. Our average spending for 30 years of financial independence or 10,950 days, is $23,241 annually or $63.67 per day.” They now live in Mexico mostly, travel and have lived around the world. Frankly, it’s all beyond my comprehension, but it seems to work for them.
When I stopped working after a 50-year career, I retired. Now, I’ve learned that retired may not mean what I thought it did. Some people claim to be retired early when, in fact, they simply left their current job for something less demanding—a life of doing your own thing, so to speak, but not actually ceasing to work for income. Does the $6.70 I earn each month from my blog make me a hypocrite?
Each to his or her own. But where would we be if everybody retired at age 38?
Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.
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From an old TV show: “There are eight million stories in the naked city. This has been one of them.” I think about this when I read personal finance articles. I also think about what my dad said: “Teach it to them in black and white and they will shade it in themselves.” In general the FIRE movement is a positive if it inspires people to take control of their finances and live below their means to become self sufficient. It may also vary by the stage of your life. When I was younger I lived in a studio apartment with a pulldown Murphy bed. Being retired now that doesn’t have the same money saving appeal. At 20 it’s hard to know what you’ll be thinking at 65 but you’ll be glad you put some money away for the later stages of your life.
FIRE might mean something else to others…to some of our family members, we retired ‘early’ by Husband bailing at 62. (It was one of the smartest things we’ve ever done, by the way.) I keep trying to persuade other family members to do the same, even if it means they must barely survive on a paltry $45,000/yr or so…but am not having much success. Yet.
So…are you advocating NOT buying quality goods from thrift stores? Shopping at discount and remainder stores? I’d much rather get imported Japanese udon noodles from Amazon’s Warehouse Deals, and pay 50% less, then be a snob and insist on paying full price. Ditto for the cashmere sweaters I find now and then at thrift shops.
I’ll keep saving wherever I can on quality items because 1) they last a lot longer, 2)I prefer them now to the ‘cheap stuff’ — coffee’s a good example, and 3)I can use that money saved for something else. But it’s not because I HAVE to do it. Because I don’t.
Just sayin.’
I disagree with including moving to Mexico among the list of things too-frugal to consider! I retired to Mexico two years ago. And I’m not a fruga