What is FIRE?


There’s a growing trend with younger Canadians to stop following the “Canadian dream” of home ownership and deciding to take the road of FIRE instead. Just what is FIRE? It stands for Financial Independent and Retiring Early. Perhaps popularized by the writer of Mr. Money Mustache, the idea is to reach financial independence at an early age through financial self sacrifice and retire early to enjoy life when you’re still young.

This approach was replicated by the the popular Canadian dual that writes the Millennial Revolution blog, who accomplish the feat before the turn of their third decade. Of course, this isn’t the most ideal approach for everyone, but for those who dream of getting out of the rat race as soon as possible, it’s become a valid financial approach.

Frugal Living

Not everyone can live without their morning Starbucks latte. Some individuals have to drive an Audi. Some feel that thousand dollar Canada Goose jackets are the norm and wearing anything but a Prada bag on your shoulder is just blasphemy. It’s fine to enjoy these things when you’re in your twenties, but just don’t expect to have these luxuries and retire by 35. That’s a realistic expectation for the average.

Going the FIRE route requires living frugally. That means the more indulgences you can cut out of your life, the faster you can get to retirement. Mr. Money Mustache wrote about living frugally in New York City with only a $65K annual salary and getting “rich”. Some readers would think he’s not living life at all let alone “getting rich”. However, if someone can do live on a salary of $65K, in Manhattan of all places, then Toronto and Vancouver shouldn’t be much of a problem right?

Saving Matters More

I’ve written how saving helps more than investing. This can’t be more true for someone that is trying to go the FIRE route. Even through personal experience, I can say that saving more of your earned income drives your wealth faster than any investment could. Once you get used to living with less. The need to earn more money to keep up with your lifestyle fades.

The premise around this tactic is that if you’re able to live on a smaller portion of your salary, then you will need to save less. Of course this all assumes you don’t increase your standard of living after reaching retirement, you can live off a 4% withdrawal of your saving and that you invest your savings in a balanced investment portfolio.

Just Make More

All of the numbers provided above assume that you are saving and not getting raises. But what happens if you can keep your standard of living fixed while getting above inflation raises of 5% every two years?


What does this chart show? It means if you want to FIRE early then chase money. I know the whole premise nowadays is to do something you enjoy and love because your career is going to be 40 years long. But this is FIRE. Forget passion. Maximize earnings and get out of the game early. Does it really matter that you hate your job if you’re done in less than 10 years and you’ve freed up 30 years to enjoy life?

If you read how the Millennial Revolution folks got to FIRE, you know they didn’t love their jobs. They hated their desk jobs and hated their bosses. But what helped them more than anything was that they chose high paying, easy to find technology jobs that are in high demand. With two individuals earning over $70k a year, being frugal and saving for retirement was extremely easy.

It’s A Lifestyle Choice

Going FIRE is not an easy choice. In fact I think the FIRE route is only for the 1%. Despite the stories of success from a lot of online blog writers, FIRE just isn’t achievable for many people.

As I’ve mentioned, not many people can live frugally and cut out the luxuries in life. Everyday we’re surrounded by Instagram and Facebook posts by our peers about how great their life is. “I want that!”. Additionally, you would find it extremely rare to find any average Canadian that doesn’t want home ownership and the lifelong employment that comes attached with it. To top it all off, many Millennials just don’t trust the stock market. Getting to FIRE isn’t just about saving, but it requires the individual to invest their earnings to sustain their retired lifestyle. This is also something only the 1% would do.

If you’re tired of the rat race and want to get out early and you can actually manage to do all of the above 3 things then perhaps you have the mental capacity to achieve FIRE. Of all the financial strategies that have been thought of, this is probably the most challenging in today’s society and it’s not for the faint of heart. But the question htat only you can answer is, can you do it? Is it worth it to free up your latter years through early sacrifice?


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