FatFIRE is a concept that defines a lifestyle of early retirement with a higher spending rate and, subsequently, a higher net worth.
FatFIRE folks typically have a net worth of several million and spend nearly $100,000 or more each year.
Just how high a net worth? If you’re a Trinity study follower, a $100,000 a year annual spending rate means your net worth is probably $2.5 million in the neighbourhood.
The financial freedom is what we are talking about here.
When you gain financial liberty (also known as financial independence), you break through the chains of “time” that bind you.
FatFIRE is a financial freedom variant that allows for more flexibility on how much is spent on retirement.
During the week, having to go to work at a given time and complete specific tasks restrict how you can use your available time.
You probably don’t have a choice. You have bills to pay and maybe you have a family to feed.
What if you could reach a place where, if you wanted to, you could quit your job? Do you want to? How do you spend the time?
I thought about what I would do if I didn’t have a regular 9-5 career any more.
It’s an interesting thought, because I love a lot about what I am doing now.
After thinking about this idea for some time , I realized that what I want to do isn’t going to be easy.
I have just started hearing the term FatFIRE.
The idea is to build a large enough nest egg, so you don’t have to cut spending and live in a very urban setting.
I think that what we’re working on is FatFIRE.
Can FatFIRE be of assistance in what you are doing now
Think of what brings you pleasure, and make your heart glad.
It is a good way of figuring out what you are going to do when you gain financial independence.
Below are a few things I just enjoy doing:
- Problem Solving
- Spend time with relatives
- Future planning which could include activities, holidays and finances
- Building things
- Having focused time to work on this blog
- Spend time with friends whom I relate with.
What influence does financial freedom have on me
Attaining financial independence would mean that I’m the master of my time, and I have total control on how i soend it.
There are other things that I would like to pursue besides focusing on things that I already like to do now.
Some of them are not activities per se but, nonetheless, they are changes.
- Neither have to worry about being paid
- Touring the world
- Eat more
- Giving family and friends lovely gifts
- Read more
- Learning to relax and enjoy nature
- And probably that’s just the tip of the iceberg.
And I’m hoping to pursue some of those things before I get financial independence.
Financial independence could be an uphill task.
Looking at this list, I ‘m surprised how much that’s going to cost.
Certainly some of those products cost nothing (or very little), but on this list are some big dollar bill items.
Moving to a town with a walkable urban area would definitely mean a higher cost of living.
It doesn’t really have to be costly to fly around the world, but plane tickets aren’t cheap.
Eating more means spending time on eating out. Buying more family and friends gifts will drain out my wallet.
FatFIRE and LeanFIRE: Which is more comfortable
Like I said, FatFIRE is a concept that defines a greater net worth and a higher degree of lifestyle spending. Conversely, Lean FIRE is the opposite.
Lean FIRE retirees spend significantly less than their FatFIRE counterparts per year and have a lower net worth.
A common factor that I found as I began writing down these thoughts was that we are reducing the amount of items that we own, and the scale, and concentrating more on what can bring us value in our lives during this period.
We can decide to move around or find a place that will serve as our long-term travel base. Or maybe we want to move closer to our family, temporarily to help them out.
The point is being able to have variety of options to choose from at anytime .
The bigger our egg in the nest, the more choices we’ll have. I don’t want to be financially inefficient, but with everything we do, I don’t want to feel like I’m forced to be ultra frugal.
There’s a time to be frugal and cut spending, but when it comes to financial independence, I dream of loosening up our budget.
I don’t want any extra space to store the junk that I’ll never use. We already have a whole house full of crap which we don’t need.
We ‘re starting to change our habits, but I want to simplify our lives even more once we ‘re attaining financial independence.
With respect to FatFIRE, How much money would it cost to live that lifestyle
That’s one tough question. A big part of the equation is in which we decide to stay.
If we can find an urban setting in which we can be happy, which doesn’t have excessively expensive real estate, we might lead comfortable lives for far less money.
But this is a huge IF. When we look at cities outside of the US, our options will open up.
And we might decide to live in a cheaper location to save money, that isn’t super walkable. It’s not like there is any law that tells us that we can not compromise.
What if our goals are not met
Life is happening and expectations are shifting. If we are not able to meet our goal, are we doomed?
Changing our plans might require us to. Or it may mean that we’ll have to work a regular job for longer.
But that is not going to be the end of the world.
We are still early on our FIRE journey, so we don’t have a target date set at this time.
Yet if we keep working hard, there’s a fair chance we may be able to reach our target faster.
Reaching our target earlier could be from work hikes or from side hustles rising our profits.