FIRE

[DonkeyApple]

Sambucket said:

The abnormal bit is aggressively accumulating assets at the same time as cutting all non essential expenditure to near zero. Was this combo ever normal?

Edited by Sambucket on Wednesday 15th January 17:01

Outside of Yorkshire or Scotland? Even then, it’s closer to how the non feckless once lived.

[NickCQ]

DonkeyApple said:

But a cost drain while you are waiting for your inheritance, which is the brutal plan of many true FIRE followers I suspect.

At the very least, granny will get tapped up for school fees and first flat deposits.

But the simple arithmetic of life expectancy minus age at which parents had kids, plus end of life costs + taxes quickly makes waiting for the big lump of capital look like a bad idea.

[DonkeyApple]

NickCQ said:

DonkeyApple said:

But a cost drain while you are waiting for your inheritance, which is the brutal plan of many true FIRE followers I suspect.

At the very least, granny will get tapped up for school fees and first flat deposits.

But the simple arithmetic of life expectancy minus age at which parents had kids, plus end of life costs + taxes quickly makes waiting for the big lump of capital look like a bad idea.

I’m not sure a lot of people have worked that out yet. Nor appreciated the number of parents who have inherited from theirs more than they ever expected due to asset inflation and are intent on partying until the equity release man comes to change the locks on their new asset.

FIRE really does strike me as a fanatical over reaction to the era of excess consumer spending. It’s the takin of what was once normal and applying a bit of fanaticism and dishonesty to then sell for profit as a cure to consumers who know they are spending too much bit like all addicts cannot stop until they find a new replacement addiction.

As for having partners who overspend on a lifestyle they cannot consistently maintain, just sit down and decide as equals how much of your income this year you will save, how much you will piss away for fun, treats and luxuries. And for the latter amount, put that into an account in your partner’s name as a lump sum and say that they are responsible for the fun budget and then if it all gets pissed away before year end it is their fault for failing to budget and failing to be responsible.

The reality is that if you are part of a family unit and you wish to personally adopt an extreme fiscal policy you have a responsibility to ensure your personal choices do not negatively impact on those around you. You need to openly discuss the household budget requirements and agree to settle your share fairly.

But again, it still amazes how many modern men earning above the basic income level where there is excess income, so grown up choices to be made as to how best use that excess simply can’t deal with the basics of running a household.

Edited by DonkeyApple on Thursday 16th January 08:11

[red_slr]

DonkeyApple said:

FIRE really does strike me as a fanatical over reaction to the era of excess consumer spending.

I think it depends on who you know who is following FIRE.
The majority of people don't go sifting round in bins for food or walking 8 miles to work each day to save their bus fare.
Most don't cut their spending to zero. Most don't try to accumulate millions of pounds.

Your average FIREist, in my eyes is mid 30s and trying to accumulate enough to retire on by their mid 40s. They generally have a good handle on savings and most, IMHO, save no where near the 70% that is suggested by "the method".

Most are fairly normal people but they tend to cut out, as you point out, the excess consumer spending. This makes them seem "weird". Sambucket says its weird, I get that but I think you have to live your own life goals.

Yes you get the odd attention seeker who is 24, has a £200k a year job and blogs about spending 72p on their weekly shop and will be retired by 28.

Travel bloggers are another group who I would throw in with the majority of FIRE bloggers. They seem to travel everywhere first class for no money and stay in the best hotels for no money and ram it down your throat that you too can travel the world for... you guessed it.. no money. Just by my "travel hack" book for £39.99 and all will be revealed. Yeah right.

[red_slr]

NickCQ said:

But the simple arithmetic of life expectancy minus age at which parents had kids, plus end of life costs + taxes quickly makes waiting for the big lump of capital look like a bad idea.

Agreed. I know a couple of people who are my age (40 ish) and stand to inherit quite serious sums. They are up their parents behinds 24/7 and I think the parents simply know the kids are there for their every need because this carrot on a stick that might one day come. They think their parents will die at 70... not realising that they will probably live till 80,85 maybe even into their 90s. What use is inheriting a huge estate when you are in your 70s yourself. Its just this massive sum of money that gets handed from one generation to the next.

[anonymous-user]

Thinking about it, my elderly dad was always very frugal and retired early too, only to go back to work when he was bored.

This is saving me a fortune in therapy that I can reinvest into jam jars and EVs.

One thing different is he spent hours a week managing stocks and still does. One driver of FIRE movement perhaps, is vanguard ETFs. And also the fire calculator sims that simulate your savings through historical downturns. They take a lot of the work and anxiety of the endeavour.

Watching my dad Penny pinch into his 80s definitely influenced me to loosen up a little after a long period of extreme FIRE.

I don’t think it’s healthy in his case. Bordering on hoarding. There is a healthier middle ground , and hopefully these blogs can help us find it.

[NickCQ]

Sambucket said:

There is a healthier middle ground , and hopefully these blogs can help us find it.

https://www.reddit.com/r/fatFIRE/

Accumulate £5-10 mm and enjoy £100k+ of passive income

[untakenname]

The guy in the article makes some good points regarding the interest rates, before we had the new normal 'emergency' rates you could live comfortably day to day in retirement if you had £500k but now that same £500k will only get you a few thousand worth of interest per year.

The guy also says he went 13 years working 60 hour weeks which is just throwing away the best years of your life.

I actually met one of these mythical FIRE people over the holidays, went for a few pre christmas drinks and this person (was a friend of a friend) had already pre drunk at home so turned up steaming at 7pm and then lamented the fact that his partner had left him and was annoyed at the fact that he went from renting a nice flat to living in a small studio flat by himself which cost more per month.



In my circumstances when housing and travel costs are so high there's little point in trying to scrimp and save a few pounds here and there, I do the easy things such as getting a Tesco meal deal for lunch each day which costs £3 whereas my colleagues go out and spend £10-15 and over the year that probably adds up to a couple of thousand saved.

[mikeiow]

Sambucket said:

Thinking about it, my elderly dad was always very frugal and retired early too, only to go back to work when he was bored.

This is saving me a fortune in therapy that I can reinvest into jam jars and EVs.

One thing different is he spent hours a week managing stocks and still does. One driver of FIRE movement perhaps, is vanguard ETFs. And also the fire calculator sims that simulate your savings through historical downturns. They take a lot of the work and anxiety of the endeavour.

Watching my dad Penny pinch into his 80s definitely influenced me to loosen up a little after a long period of extreme FIRE.

I don’t think it’s healthy in his case. Bordering on hoarding. There is a healthier middle ground , and hopefully these blogs can help us find it.

Pinching Penny can get you arrested these days.....

[anonymous-user]

MMM just posted this on tweetsy. Look familiar?

[durbster]

Sambucket said:

MMM just posted this on tweetsy. Look familiar?

Not sure that's accurate though.

Human beings are generally terrible at predicting what will make them happy and often do the opposite of what actually works. Many of us are inclined towards insular behaviour and limiting contact with people but it's wrong. We are social creatures and interactions with other people (including strangers) has a positive effect on your well-being.

[DonkeyApple]

Sambucket said:

MMM just posted this on tweetsy. Look familiar?

Indeed. It’s the traditional middle class lifestyle. It’s how millions lived before Ocean Finance got its license to bank roll the great global sofa purchase epidemic.

Today obviously very many people are desperate to belong to something because they are so lonely. Everything has to be an elite or extremist club. You can’t just decide you don’t really want to eat meat you have to join a paramilitary wingnof society and be incredibly vocal about it. And you can’t decide that you just want to do what all middle class family’s have always done and save money and not piss it away on expensive cars, holidays, gadgets and domestic refurbs. No you have to join an extremist savings group.

No normal person can spend the first 20 years of their life earning nothing then work for 10 years as a modern consumer and then ten years as a member of an extremist cult and then stop working at 40 and spend 40 years not working and trying to live off just a decade of savings.

It’s not even like these people are going to go and live in the middle of the woods and not have children. Their entire plan is reliant on being able to sponge off the State and get others to pay for them.

These people are not just selfish turds but arguably mentally damaged.

Not shopping yourself into poverty is normal. Saving money and accumulating wealth is normal. Eating well, being prudent is normal. What isn’t normal is twenty five years of endless, insane, reckless shopping and the result that almost no one with a middle class income has a middle class mindset any longer. It’s all flat roofed pub spend spend spend and farcical extremist groups have come out of their tiny remote corners of lunacy and been rebranded as some form of logical solution to the random need to endlessly buy tat.

Cut your cloth, invest appropriately. It’s that simple. Oh and it’s always worth checking the bank accounts and lifestyle of the gurus selling their extremist dreams.

[red_slr]

I am amazed MMM forums have not imploded.
There was virtually no mention of COVID19 until perhaps a week ago.
Despite some massive market drops.

Those who had fire'd in 2019 must be in serious trouble, esp anyone who went lean fire.

My fire date is basically in the bin now. Hopefully things will get back to normal but I can see this putting 3-4 years onto my fire date.

[Derek Chevalier]

red_slr said:

I am amazed MMM forums have not imploded.
There was virtually no mention of COVID19 until perhaps a week ago.
Despite some massive market drops.

Those who had fire'd in 2019 must be in serious trouble, esp anyone who went lean fire.

My fire date is basically in the bin now. Hopefully things will get back to normal but I can see this putting 3-4 years onto my fire date.

For those that fire'd in 2019 how were they stress testing their plans?

[deanobeano]

I went FIRE back in 2016 and got quite used to seeing the total value of assets increase month on month.
Now they are down c25%!

However, Our 'number' is still deliverable on the reduced pot size.

I think the biggest thing preventing me from excess worry currently is our cash buffer. My wife, being more risk adverse than I insisted we had a 3 year cash buffer minimum before pressing the FIRE button.

Currently the plan is to draw this down (and not be tempted to buy at the bottom, as any dead cat bounces would instil more worry!!)

[red_slr]

Derek Chevalier said:

red_slr said:

I am amazed MMM forums have not imploded.
There was virtually no mention of COVID19 until perhaps a week ago.
Despite some massive market drops.

Those who had fire'd in 2019 must be in serious trouble, esp anyone who went lean fire.

My fire date is basically in the bin now. Hopefully things will get back to normal but I can see this putting 3-4 years onto my fire date.

For those that fire'd in 2019 how were they stress testing their plans?

The base fire stress test is just 4% swr. Obviously most people do have some reserves in addition in case of SHTF but I doubt many will have been ready for such a sharp drop.

I think the biggest risk for fireists is the first couple of years. Once you get beyond that window things settle more and even fairly big problems wont generally have a huge impact as you are already well into the loop of costs vs retruns vs 4% and probably doing well, IYSWIM and can budget better and perhaps have some reserves but if you only just fire'd then it might be a baaad day.

[bitchstewie]

https://theescapeartist.me/2020/03/27/the-inestima...

[Derek Chevalier]

red_slr said:

Derek Chevalier said:

red_slr said:

I am amazed MMM forums have not imploded.
There was virtually no mention of COVID19 until perhaps a week ago.
Despite some massive market drops.

Those who had fire'd in 2019 must be in serious trouble, esp anyone who went lean fire.

My fire date is basically in the bin now. Hopefully things will get back to normal but I can see this putting 3-4 years onto my fire date.

For those that fire'd in 2019 how were they stress testing their plans?

The base fire stress test is just 4% swr. Obviously most people do have some reserves in addition in case of SHTF but I doubt many will have been ready for such a sharp drop.

I think the biggest risk for fireists is the first couple of years. Once you get beyond that window things settle more and even fairly big problems wont generally have a huge impact as you are already well into the loop of costs vs retruns vs 4% and probably doing well, IYSWIM and can budget better and perhaps have some reserves but if you only just fire'd then it might be a baaad day.

Forgot to reply to this. Just to be clear we are talking about the same thing

https://finalytiq.co.uk/withdrawal-rates-in-retire...

"He would later coin the term “SAFEMAX” to describe the highest withdrawal rate, as a percentage of the initial account balance at retirement, which could be adjusted for inflation in each subsequent year and would allow for at least 30 years’ withdrawals during all the rolling historical periods in his dataset. "

The SWR is based on a % starting rate of the pot at retirement and is increased with inflation each year (typically), so a downward month doesn't (or shouldn't) impact how much they are taking out.

[Derek Chevalier]

bhstewie said:

https://theescapeartist.me/2020/03/27/the-inestima...

Great article. Couldn't have put it better myself.

"Then we have the assets that act as “shock absorbers”. Assets such as cash and government bonds reduce risk and volatility in your portfolio. They help smooth the rollercoaster ride of equities."

This goes back to my point on another thread that you've really got to be clear what your non-growth pot is there for. If the non-growth part is roughly as volatile as the growth part, then why not go 100% growth?

"Your plan needs to exist outside of your head. You need to write it down. Writing is thinking. It’s a powerful process by which you organise your thoughts."

Definitely. We've discussed on here previously

"Yes, I’m biased but most people would do well to talk to someone sensible about their plan (or lack thereof). A robust plan is one that has been looked at and challenged by someone that is on your side."

Also mentioned - financial planners have financial planners


"Don’t be penny wise, pound foolish."

He borrowed that from Andy Hart!!!!

https://www.mavenadviser.com/podcast4/barney-white...

[JulianPH]

Derek Chevalier said:

This goes back to my point on another thread that you've really got to be clear what your non-growth pot is there for. If the non-growth part is roughly as volatile as the growth part, then why not go 100% growth?

I fully agree with you on the other sound bites, but not this (and I am not sure what you mean by "non-growth part"). ^^^

Diversification across non-correlated asset classes can reduce volatility, regardless of the volatility inherent in each asset class.

To put this another way, you can have assets classes that exhibit a roughly similar level of volatility, but are completely non-correlated or even inversely correlated.

So whilst some may prefer a portfolio that reduced volatility by increasing exposure to less volatile assets, others may prefer to reduce their overall volatility though a combination non (or inversely) correlated assets, or even simply high growth focused equities that also have defensive properties in downturns.

It goes without saying there is no right or wrong here, just different approaches designed to achieve the same thing, with various real term outcomes that depend on the efficiencies of each portfolio at different times in market cycles and therefore exhibit lower volatility, in isolation from other asset classes.

Basically, the whole "buy the world" argument has gained the vast majority of its traction over a decade of bull markets. People became used to seeing their money only go up and became immune to the concept of it also going down.

Therefore many people did not plan properly for this and have been burnt by more than they would have with greater asset diversification. It is absolutely fine to say that certain asset classes act as a drag during rising equity markets, but that argument falls flat when those assets protect from falling markets.

Regardless, each of us is now where we are, so there is no point crying over spilt milk, so to say.

Things will recover and I hope that when they do those who have only experienced this for the first time (or who have already forgotten the last time) take stock (no pun intended!) and adjust their portfolios to the correct level of risk/reward.