Playing with FIRE: My Thoughts
Playing with FIRE: The Documentary is available on Amazon Prime. The story follows a young couple with a small child who discover the FIRE (financial independence/retire early) movement and construct a new life that fits within the FIRE model. We hear from industry experts along the way, like Mr. Money Mustache, Vicki Robin, and JL Collins. The couple even meet early retirees to learn from them along the way.
My husband and I were intrigued with the idea that FIRE might be going mainstream through a documentary, so we decided to watch it. I’ll give a little overview, then give you my opinion on the documentary. Spoiler alert: I liked it a lot more than I thought I would!
The first scenes paint a bleak picture. According to the Federal Reserve:
The average American saves 3% of their income
Nearly half of US households cannot come up with $400 for an emergency without borrowing or selling something
69% of Americans have less than $1,000 in savings
34% of Americans have no savings at all
78% of US workers are living one paycheck from the edge
These are the expected results of building a traditional life by getting a job, living at your means, buying a house, and working until age 65. In many cases, Americans are spending money we don’t have to buy things we don’t need to impress people we don’t know. We are bombarded with messages about things that we “need” because businesses profit when we consume. It doesn’t help that as a society we don’t teach financial literacy and planning in school.
Those who adhere to the FIRE movement realize something not many others do. There’s another way: achieve financial independence (FI) by saving much more than the average American does, and in many cases spending a lot less. Being financially independent means that you have enough money in assets so that you don’t have to work a job and you can live off of the income from those assets.
How much money does it take to be financially independent? It’s different for everyone because everyone spends a different amount of money. The rule of thumb, which is based on a study called the Trinity Study, is that you can safely withdraw 4% from your assets without spending down what you have saved. This works because most assets earn more than 4% every year on average. Said another way, you are financially independent when you have 25 times your annual expenditures saved.
According to the documentary, FIRE is not about making all the money in the world (although growing your income is encouraged), it’s about doing the most with what you have. Cut hard on stuff you don’t care about and spend lavishly on what you love. The couple in the film look at three big things to start: housing, transportation, and food. They leave a high cost of living area and move in with their parents for a while to save for a down payment on a house in a lower cost of living area. They dispose of the leased BMW in favor of a used Honda. And they start buying and cooking in bulk to save money. As they make changes to their lifestyle, their savings rate and years until FI routinely pop up on the screen.
Once FIRE believers cut their lifestyle and spending, they are left with a large amount of savings. They don’t look at saving as a sacrifice, they look at it as an opportunity. They make investments in rental properties and/or index funds. They purchase or start businesses that can be run by a team of managers once they are FI. Over time, these investments grow into a portfolio that amounts to more than 25 times their annual spending.
One critique of mine is I wish the documentary showed different paths to FI. One half of a couple quitting their job while the other works remote, living with one set of parents and then another for months, and moving a state away is one path, but it’s a pretty extreme path. Throughout the documentary, interviewees that achieved FI at a young age offer tidbits about FIRE. I would have liked to hear some of their stories.
While the documentary fell a little short in one respect, it absolutely knocked it out of the park in another. When you first discover the idea of retiring early and you start living below your means and investing, it’s a very exciting time. After a period though, that excitement wears off. As the young woman from the documentary puts it, at that point you’re “just waiting for the numbers to work out in your favor.”
The young man is the driver behind this huge lifestyle change, this shift from traditional life construction to FIRE. His wife trusts him and the numbers enough to embark on this journey with him, but she struggles. The documentary does an excellent job showing the emotions that come with knowing you’re on the right path but missing some of your pre-FIRE lifestyle. In the couple’s case, they are a state away from their old friends, driving an old car, and living in their non-dream house. At one point, you start to wonder if their marriage will last.
The couple slowly realize it is essential to be happy during the journey. They make some lifestyle changes that they know will put off FI a bit, but they put happiness first. They are committed to their “why,” the reason they chose FI: to spend more time with their daughter. They are also committed to happiness in the meantime. The commitment is key because “no one can make you quit except you.” It requires discipline to go against the grain, and you have to want something more than you want stuff. By the end of the documentary, the wife is bought in and glad they chose the path they did.
FI ultimately means freedom. The sooner you achieve FI, the sooner you get out of survival mode. You may then choose simply to continue working in the same job. You may choose to transition to a less lucrative, more meaningful career. You may want to volunteer your time and give back. Or you may choose to traditionally retire at that time. Ultimately, Playing with FIRE teaches you that money is a tool, and there is a replicable model anyone can use. It just doesn’t happen to be the most popular or obvious path in our society, and sometimes choosing that path isn’t easy, but it is worth it.