The idea of FIRE, meaning financial freedom and retiring early, is getting a lot of attention.
People who follow this idea try to save a lot of their money in investments. They save a lot to reach their FIRE goal – the money they need to keep taking out and cover what they would earn from a regular job.
Jessica Fick and her husband, Corey, who run The Fioneers, a site about financial freedom, say this plan isn’t easy for everyone. Jessica points out, “Not everyone makes big money or can live on $30,000 a year.”
The Ficks, both 36, have made up five stages of financial freedom. Right now, they’re in the third stage, “Coast FI,” where they’ve saved enough for retirement later (in their 50s) and use their current income for daily life.
Here’s a look at the five stages of money freedom:
- Debt Freedom
Getting rid of debt is the first step to financial independence. The Ficks think smartly about debt; they believe a mortgage can be a good financial move.
But, getting rid of high-interest debts, like credit card bills, is key to having more money for retirement savings.
“Being debt-free lowers your bills,” Corey says. “With no debt, you can save more or work less.”
- ‘F You’ Money
This level of wealth isn’t just about a number, according to the Ficks.
“It’s feeling secure,” says Jessica. “It means having enough to leave a bad situation or grab a chance, like quitting a bad job or starting a business.”
How much you need depends on things like having kids or how easy it is to change jobs. It can involve investments, but you should be ready to use this money.
Jessica adds, “But it’s not really ‘F You’ money if you’re scared to spend it.”
