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7 Things You Can Learn From The FIRE Movement

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Meet the FIRE movement, a lifestyle system followed largely by millennials that’s focused on the goal of achieving financial independence and retiring early.

FIRE adherents are uber-savers ― they save 50 percent or more of their income ― who strive to stop working for others sooner rather than later. They aren’t interested in gaining more wealth in order to have more to spend; it’s quite the opposite. They are intent on living their best lives for less. And it starts by rethinking their relationship with money, with an eye to achieving financial independence.

Adherents closely track their spending and consider every purchase in terms of opportunity costs. Dollars spent are equated to “hours of life energy,” a phrase coined by Vicki Robin, the now 72-year-old co-author of the 1992 bestseller Your Money or Your Life who has unwittingly become an idol of the FIRE movement. So if you earn $300 a day and want to buy a $100 pair of shoes, you should ask yourself whether those shoes are really worth nearly a third of a day of your precious time on Earth, as Time explained in a piece earlier this month.

FIRE devotees gather in multiple forums, camps and retreats, and, of course, they write blogs, and more blogs. There is also a growing FIRE subreddit called /r/financialindependence that now has more than 365,000 subscribers. There, followers discuss strategies, techniques and lifestyles with the goal of simplifying and redesigning how they live so they can reduce their overall spending and instead save and invest their money for the future.

Success stories are celebrated, tips are shared and there is much conversation about separating needs from wants and how to find contentment with less. Those interested in gaining wealth for the purpose of excessive consumption are in the wrong subreddit, for sure.

But it quickly becomes clear reading the forum that while FIRE is a lifestyle choice, it is not one totally free of issues. Those who adhere to a “financial independence, retire early” philosophy sometimes struggle finding partners who share their values and approach to money, and are often misunderstood by family members who conflate the idea of not wanting to work until a traditional retirement date with being “lazy” or “unambitious.” Community acceptance among like-minded people seems to be one reason the subreddit thrives.

The message of the FIRE movement is this: Let’s blow up the idea that we should work for 40 to 45 years of our life before having fun and getting to do what we want. Why spend the bulk of our healthy years working for someone else?

Even if retiring at a young age isn’t necessarily your goal ― or you’re in a job that hardly pays enough to save at all ― there are lots of practical tips to take from FIRE that will help you save and manage your money. Here are a few:

1. Make saving money your default action.

Most people treat savings as whatever is left over after all their monthly expenses are paid. Reverse that and fund your savings first, said FIRE devotee Justin McCurry, a transportation engineer who retired in 2013 at age 33 and now has $2 million in investments with his house paid off.

McCurry lives in Raleigh, North Carolina. His wife retired a few years after he did, and the couple has three children. Two of them will be attending college in less than five years, an expense McCurry already has covered.

He says success all starts with your approach to spending. Here’s what it should look like, he told HuffPost: When you get paid, immediately put half of it in a savings/investment vehicle, and then whatever you have left is what you will live on.

And, yes, people living in high-rent areas like New York City and Los Angeles are going to struggle with this, he allowed. “But you really can’t spend 50 percent of your income on housing” and expect to retire early, he said.

2. Use a money tracker to know what you spend.

Just like keeping a food journal of what you eat for a diet accountability program, FIRE adherents track what they spend. You should know where every dollar goes, McCurry said.

He uses Personal Capital to track all his spending as well as all investments. It provides a summary of all income, expenses and investments on one screen ― and, yes, it is free.

3. Having a social life can cost a lot of money but doesn’t have to.

Many of us socialize around food. We eat out and drink with friends as an evening’s entertainment. It’s a budget-busting behavior, and it’s one that’s hard to change.

Newbie FIRE starters, unsure how to engage with friends in other ways, are advised to get out in front of the problem and start organizing less-expensive activities for their friend group. Hikes, bike rides, a beach picnic, board games and concerts in the park are all free. So are programs at the public library, many events at local colleges and just binge-watching TV at home with friends.

Begin by tackling work-arounds for eating and drinking out, like a potluck meal or enjoying drinks in someone’s home. Be creative: How about an Instant Pot potluck? Or a wine-tasting at which everyone brings a different bottle to find the best bargain for under $10?

If you do go out for drinks, bring enough cash for just one drink and nurse it. If you go for dinner, order an appetizer only or get a reasonably priced dinner and drink water. If a friend wants to “just grab dinner,” be ready to suggest a couple of places and talk them up as “hole in the wall” joints with great food but low prices.

If you need further motivation to cut down on dining and drinking out, just look hard at how much you spend each month at restaurants and bars. For what a glass of wine with dinner costs in a restaurant, you could likely buy a whole bottle. Apply the “what is it worth to you” question here: Is the act of having someone else pour the wine and wash out the glass really worth paying three times what you would spend if you did that yourself?

Be the one who issues the invites for less-expensive activities, advised a subreddit poster. Ultimately, the poster added, you just may need to make more friends ― ones with less-expensive tastes.

4. Do it yourself whenever you can. And if you can’t, offer to swap services.

Mow your own lawn, clean your own house, walk your own dog and make your own lunch instead of having UberEats deliver it. When you pay for convenience, you are spending money that could be saved.

Instead of paying for a ride to the airport, ask a friend to drive you and promise to repay the favor when they travel. Exchange pet sitting services. Help your neighbor’s son with his homework if he helps you paint the garage.

Learn to change your own oil, fix your own sink leak and refinish your own table.

When you change your money priorities to funding your savings first, you will have less to spend on convenience, and doing things yourself will ease the pain of paying someone to do things for you.

5. Shop just for necessities, and do it smartly.

End recreational shopping, both online and in stores. Don’t buy things just because they are a good deal; buy only what you need and will actually use. Having a bad day is not an excuse for binge-shopping.

You can borrow books from the public library for less than it costs to own them. Hit thrift stores before you buy something new. Garage sales are also great for shopping on a budget. Organize a clothing exchange with your friends or at your children’s school. Never buy new clothes for a single-use occasion, like a wedding, a ski trip when you live in a warm climate or a dress-up outfit for your child. Instead, try to borrow what you need or make due with what you already have.

FIRE followers also suggest that for gifting occasions, ask for gift cards that can be traded or exchanged. They also buy them for themselves when they are on sale or cost less than the stated value.

6. Kids don’t have to be budget-busters.

The estimated cost of raising a child from birth through age 17 is $233,610, or as much as almost $14,000 annually, the Department of Agriculture says. That doesn’t include paying for college, and it may actually be higher in urban areas.

It behooves parents to ask why kids cost so much. Who hasn’t seen a toddler play more with a cardboard box than the toy that came in it?

Without question, children will cost money. It is not surprising that in a survey of FIRE followers on Reddit, 77 percent said they didn’t have and weren’t planning to have children.

Raising your kids to be savers will do all of you a favor. They really don’t need to upgrade their phone every time Apple releases a new one, nor do they need expensive summer camps, designer clothes they outgrow in two months or the latest and greatest electronic games.

Instead, spend time with them, McCurry says, which, if you retire early, you will be able to do in spades. When we spoke to him, he had just spent two weeks volunteering at his kids’ school on a project.

“I never would have been able to do that if I wasn’t retired,” he said.

7. Yes, you can still travel ― but do so more frugally.

There is no place like home when it comes to staying on a budget. But who wants to do that when there is a whole world out there waiting to be explored?

FIRE adherents travel, and they stay with friends or relatives, do house-swaps and use discounted gift cards, for example.

“I bought $200 worth of Airbnb gift cards for $173 at Raise.com [a gift card buy/sell exchange] when they offered 10 percent off sitewide,” said McCurry.

Another reader tip is to get loyalty rewards whenever you can. Many cruise lines offer special pricing for repeat customers who join their cruise membership programs. Some use ebates.com to book travel (and shop) to get further discounts.



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This Is How Much You Should Save In Your Emergency Fund

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You might say Matt Matheson is the perfect picture of stability.

As a full-time educator, he enjoys great benefits and job security. He also runs a successful freelance writing and blogging business. He’s married with two healthy children, “one who’s potty training right now, which is the biggest ‘emergency’ I typically have to face on a daily basis,” he said. And yet, Matheson is no stranger to financial disasters.

Over the last seven years, Matheson estimates his family has averaged one $1,000 emergency every year. “One time it was the water heater, and another it was an unfortunate incident involving our laptop and some piping hot coffee (it didn’t end well for the laptop),” he said. “We’ve had unexpected deaths in the family requiring expensive flights, car repairs that went way beyond what we had budgeted for and an iPhone die an untimely death in a mug of hot tea.”

The one thing that saved his family’s finances each time? An emergency fund.

Matheson said having emergency cash on hand made covering these expenses way less stressful. “It also gave me a sense of financial empowerment and pride knowing that I had planned and executed a strategy to protect my family from financial hardships,” he said.

But despite the many benefits of having an emergency fund, many people don’t. In fact, nearly a quarter of Americans have no emergency savings at all and only 39 percent could cover an emergency of $1,000.

“It’s not a question of if you’ll have an emergency, it’s a question of when.”

– Rachel Cruze

Maybe that includes you. If so, don’t worry ― it’s never too late to build up an emergency savings account. Here’s how much you should aim to save.

What’s the right amount for an emergency fund?

Depending on whom you ask, the “perfect” emergency fund can come in different sizes. But one thing all experts agree on is that you need something set aside for unexpected expenses. “It’s not a question of if you’ll have an emergency, it’s a question of when,” said Rachel Cruze, a New York Times best-selling author and personal finance expert. “It’s important to build an emergency fund so that you’re not tempted to rely on debt when life happens. And trust me, it will happen!”

The generally accepted principle for an emergency fund is three to six months of after-tax living expenses, according to Mike D’Andrea, a financial planner and chartered financial consultant. He also said those funds should be saved in a stable, liquid interest-bearing account. That means you shouldn’t tie up your emergency savings in the stock market or illiquid assets like property; it should be readily available in a savings account that still lets you earn a bit of interest, too.

And although three to six months of expenses is the general standard, that might not be the right amount for everyone. Often, the size of your emergency fund should be based on your particular lifestyle and financial situation.

Here’s a look at how much you should have socked away if you fall into one of these circumstances.

How much to save if…

Digging yourself out of debt can be a vicious cycle. You put every dollar you have available toward paying it off, and just when you’re about to become debt-free, a major expense hits. Now you have to borrow money again to cover the cost.

That’s why you should focus on building a small emergency fund before you think about tackling your debt. “If you have debt, the first thing you need to do is build a $1,000 starter emergency fund,” Cruze said. “Having this emergency fund in place will help to avoid the temptation to go further into debt to cover any surprise expenses.” Once you’re truly debt-free, you can go back to focusing on fully funding your emergency fund.

You’re the sole earner

If you have a partner or family member who contributes to the household income, financial emergencies can be easier to manage. But if you’re the sole breadwinner, “that income is more vulnerable,” D’Andrea said. “Six months would be the ideal minimum liquidity reserve in this situation.”

Your income is inconsistent

If you work seasonally, on commission, a contract or freelance basis, or rely on bonuses for compensation, your income likely fluctuates month to month. It can be harder to predict your income and expenses. In this case, it’s a good idea to have a bit more set aside for emergencies. “Some of those individuals may feel more comfortable with six to 12 months of accessible funds,” D’Andrea said.

You’re self-employed

“The benefits of self-employment are vast and for another letter, but one of the benefits that are typically lacking are, well, benefits,” D’Andrea said. Working for yourself can make it more difficult and expensive to get the same benefits you would under a group plan, such as disability insurance and life insurance. “Also, you are likely to be responsible for other people’s income and may have to forgo paying yourself to pay staff.” For these reasons, D’Andrea recommends setting aside at least six months’ worth of living expenses so you have more flexibility and peace of mind while running your business.

How to get your emergency fund started

Building up an emergency fund from scratch might seem overwhelming at first. But if you focus on taking small steps, your fund will grow over time. After all, the longer you wait, the longer it will take. Here are a few things you can do to get started right away.

1. Follow a zero-based budget. According to Cruze, the easiest way to build up your emergency fund is by having a solid budget. “I recommend doing a zero-based budget, which means that your income minus your expenses equals zero each month,” she said. “Tell every dollar where to go.” By following this method, you’ll quickly see the areas where you’re overspending and could be doing something better with your money, like building an emergency fund. Cruze uses an app called EveryDollar to manage her budget; you can also try others such as Mint, YNAB or Mvelopes.

2. Increase your income. There’s only so much scrimping and saving you can do, but there’s no cap on how much you can increase your income. “Maybe you work a little overtime, pick up a part-time job or start a side-hustle,” Cruze said. “There are probably household items you don’t need that you could sell for some quick cash, too!” Remember that you don’t have to hustle forever. The situation can be temporary as you work to build up your fund.

3. Create a separate account. Cruze said it’s important to separate your emergency fund from your day-to-day checking and savings accounts. “You’ll be tempted to spend it for non-emergencies and take a little bit here and there.” Instead, she recommends setting up a completely different savings or money market account. “That way it’s accessible, but not so accessible that you’re tempted to dip into it when you don’t really need to,” Cruze said.

4. Automate your savings. The physical act of transferring money from your checking account to your emergency savings account can be mentally painful. So painful that you might be tempted to skip a transfer when money is looking tight. But if you automate the process, either by setting up a direct deposit from your paycheck to your savings or an automatic transfer between bank accounts, you won’t have to watch it happen. In fact, you may not even miss the money.



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This Is How Much You Should Save In Your Emergency Fund

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You might say Matt Matheson is the perfect picture of stability.

As a full-time educator, he enjoys great benefits and job security. He also runs a successful freelance writing and blogging business. He’s married with two healthy children, “one who’s potty training right now, which is the biggest ‘emergency’ I typically have to face on a daily basis,” he said. And yet, Matheson is no stranger to financial disasters.

Over the last seven years, Matheson estimates his family has averaged one $1,000 emergency every year. “One time it was the water heater, and another it was an unfortunate incident involving our laptop and some piping hot coffee (it didn’t end well for the laptop),” he said. “We’ve had unexpected deaths in the family requiring expensive flights, car repairs that went way beyond what we had budgeted for and an iPhone die an untimely death in a mug of hot tea.”

The one thing that saved his family’s finances each time? An emergency fund.

Matheson said having emergency cash on hand made covering these expenses way less stressful. “It also gave me a sense of financial empowerment and pride knowing that I had planned and executed a strategy to protect my family from financial hardships,” he said.

But despite the many benefits of having an emergency fund, many people don’t. In fact, nearly a quarter of Americans have no emergency savings at all and only 39 percent could cover an emergency of $1,000.

“It’s not a question of if you’ll have an emergency, it’s a question of when.”

– Rachel Cruze

Maybe that includes you. If so, don’t worry ― it’s never too late to build up an emergency savings account. Here’s how much you should aim to save.

What’s the right amount for an emergency fund?

Depending on whom you ask, the “perfect” emergency fund can come in different sizes. But one thing all experts agree on is that you need something set aside for unexpected expenses. “It’s not a question of if you’ll have an emergency, it’s a question of when,” said Rachel Cruze, a New York Times best-selling author and personal finance expert. “It’s important to build an emergency fund so that you’re not tempted to rely on debt when life happens. And trust me, it will happen!”

The generally accepted principle for an emergency fund is three to six months of after-tax living expenses, according to Mike D’Andrea, a financial planner and chartered financial consultant. He also said those funds should be saved in a stable, liquid interest-bearing account. That means you shouldn’t tie up your emergency savings in the stock market or illiquid assets like property; it should be readily available in a savings account that still lets you earn a bit of interest, too.

And although three to six months of expenses is the general standard, that might not be the right amount for everyone. Often, the size of your emergency fund should be based on your particular lifestyle and financial situation.

Here’s a look at how much you should have socked away if you fall into one of these circumstances.

How much to save if…

Digging yourself out of debt can be a vicious cycle. You put every dollar you have available toward paying it off, and just when you’re about to become debt-free, a major expense hits. Now you have to borrow money again to cover the cost.

That’s why you should focus on building a small emergency fund before you think about tackling your debt. “If you have debt, the first thing you need to do is build a $1,000 starter emergency fund,” Cruze said. “Having this emergency fund in place will help to avoid the temptation to go further into debt to cover any surprise expenses.” Once you’re truly debt-free, you can go back to focusing on fully funding your emergency fund.

You’re the sole earner

If you have a partner or family member who contributes to the household income, financial emergencies can be easier to manage. But if you’re the sole breadwinner, “that income is more vulnerable,” D’Andrea said. “Six months would be the ideal minimum liquidity reserve in this situation.”

Your income is inconsistent

If you work seasonally, on commission, a contract or freelance basis, or rely on bonuses for compensation, your income likely fluctuates month to month. It can be harder to predict your income and expenses. In this case, it’s a good idea to have a bit more set aside for emergencies. “Some of those individuals may feel more comfortable with six to 12 months of accessible funds,” D’Andrea said.

You’re self-employed

“The benefits of self-employment are vast and for another letter, but one of the benefits that are typically lacking are, well, benefits,” D’Andrea said. Working for yourself can make it more difficult and expensive to get the same benefits you would under a group plan, such as disability insurance and life insurance. “Also, you are likely to be responsible for other people’s income and may have to forgo paying yourself to pay staff.” For these reasons, D’Andrea recommends setting aside at least six months’ worth of living expenses so you have more flexibility and peace of mind while running your business.

How to get your emergency fund started

Building up an emergency fund from scratch might seem overwhelming at first. But if you focus on taking small steps, your fund will grow over time. After all, the longer you wait, the longer it will take. Here are a few things you can do to get started right away.

1. Follow a zero-based budget. According to Cruze, the easiest way to build up your emergency fund is by having a solid budget. “I recommend doing a zero-based budget, which means that your income minus your expenses equals zero each month,” she said. “Tell every dollar where to go.” By following this method, you’ll quickly see the areas where you’re overspending and could be doing something better with your money, like building an emergency fund. Cruze uses an app called EveryDollar to manage her budget; you can also try others such as Mint, YNAB or Mvelopes.

2. Increase your income. There’s only so much scrimping and saving you can do, but there’s no cap on how much you can increase your income. “Maybe you work a little overtime, pick up a part-time job or start a side-hustle,” Cruze said. “There are probably household items you don’t need that you could sell for some quick cash, too!” Remember that you don’t have to hustle forever. The situation can be temporary as you work to build up your fund.

3. Create a separate account. Cruze said it’s important to separate your emergency fund from your day-to-day checking and savings accounts. “You’ll be tempted to spend it for non-emergencies and take a little bit here and there.” Instead, she recommends setting up a completely different savings or money market account. “That way it’s accessible, but not so accessible that you’re tempted to dip into it when you don’t really need to,” Cruze said.

4. Automate your savings. The physical act of transferring money from your checking account to your emergency savings account can be mentally painful. So painful that you might be tempted to skip a transfer when money is looking tight. But if you automate the process, either by setting up a direct deposit from your paycheck to your savings or an automatic transfer between bank accounts, you won’t have to watch it happen. In fact, you may not even miss the money.



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The Dos and Don’ts Of Holiday Tipping, According To An Etiquette Expert

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’Tis the season for giving. But how much? And to whom?

According to a recent Consumer Reports survey, 60 percent of respondents gave holiday tips to one or more service providers last year. The average tip was $45 ― up $5 from the prior year ― and housekeepers received the highest gratuities.

Even so, holiday tips aren’t necessarily expected. And your budget might not allow for a ton of extra spending around Christmas time.

We spoke with Heather Wiese-Alexander, an etiquette expert and founder of luxury stationer bell’INVITO, about who should get a holiday tip and how much you should give.

Holiday Tipping Etiquette

Wiese-Alexander said that when it comes to holiday tips, there are usually a couple of common concerns. One occurs when you have the cash available to be generous this holiday season, but you aren’t sure what tip amount is considered too little versus way too much. The other crops up when your budget is pretty tight and you need to know what the absolute musts are, as well as what you can skip.

“Be realistic about who you tip,” Wiese-Alexander said. “Who makes your life easier on a daily, weekly or monthly basis?” In other words, you don’t necessarily need to give a holiday tip to the stylist who trims your ends every six months. But your child’s nanny? Probably.

Holiday Tips Guide

Wiese-Alexander explained that as a general rule of thumb, an appropriate holiday tip is one week’s pay or one extra session, depending on the service. Gift cards can also be a solid choice, as long as they’re for a place the receiver actually frequents, such as Target or Starbucks. Below is a list of common service providers and the typical range tippers can expect to pay if they so choose:

Your doorman: If you live in a building with a doorman, you should base the tip on the value of your living space, according to Wiese-Alexander. Usually, that’s around $25-$100. “If you’re in a penthouse, go big or go home, so to speak. This person puts up with a lot more than you may realize.”

Maintenance workers: If you want to extend a tip to the maintenance workers in your building, office or home, a cash gift of $25 along with a hand-written note of appreciation goes a long way, said Wiese-Alexander. Someone like the building superintendent should get more: around $100-$200, taking into consideration the price of your home.

Outdoor help: For those who work on your lawn, garden or pool, a tip of $25-$50 is appropriate.

Janitorial service providers: Trash collectors and workplace janitors can receive $10-$20.

Gift wrappers, luggage porters and baggage handlers: Tip $1-$2 per person at minimum, up to $5 per person if you’re feeling generous.

Personal care providers: If you regularly visit a personal trainer, hairstylist, barber, nail technician, massage therapist or other one-on-one specialist, you should tip the value of one extra session.

Dry cleaners: “Here is where a gift card or homemade goods feels more thoughtful,” Wiese-Alexander said. Many are business owners, which are traditionally not tipped, so cash can seem impersonal.

Assistant: If you work with an assistant who’s gone above and beyond their day-to-day duties ― and they’re not already receiving a bonus ― a holiday tip of $50 minimum or up to a week’s pay is much appreciated.

Child care providers: “A personal gratitude moment here means the world to most people caring for your little ones,” Wiese-Alexander said. A tip of $50 to $75 per person is great. An added note of appreciation is even better.

Pet care: “Yes, they are children, too, but they usually don’t carry the same attitude or maintenance (unless they do—you know who you are),” Wiese-Alexander said. A $20 holiday tip is nice, while $50 is lovely.

Mail and package carriers: There are rules around what mail carriers can and can’t accept. Generally, they’re not allowed to accept cash tips or gifts worth more than $20. “Hand-written notes and goodies are perfect here … think warmth: maybe a hat, gloves, scarf or something thoughtful you baked,” Wiese-Alexander said.

Who Should Not Receive A Holiday Tip?

Before you get too generous, know that it’s inappropriate ― sometimes even illegal ― to tip certain people. Salaried professionals such as doctors, therapists, dentists and other medical care providers should not receive any cash. If you really want to show your appreciation, “edible goodies for the medical field are usually welcome. Notes are always appreciated,” Wiese-Alexander said.

The same goes for your your boss or supervisors. You should really avoid gifts of any kind. “Appreciation in the form of a hand-written note is most appropriate,” Wiese-Alexander said. “If you know of a thoughtful small token, feel free to give, but anything more can be perceived as sucking up.”

Tips Are Appreciated, But Not Expected

Admittedly, the difficulty in these types of general guidelines is that it’s hard to adjust for different financial situations. At the end of the day, you should tip relative to where you fall on the lifestyle meter, according to Wiese-Alexander. “It may be tougher on your mind, but it’s much easier on your wallet.”

Giving tips during the holidays isn’t about the money. It’s about showing appreciation for the people who provide you invaluable services throughout the year. Tips are appreciated, of course, but if you don’t want to spend a lot on holiday tips, “the simple gesture of writing a heartfelt note with a couple of genuinely personal references is pure gold,” she said.



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