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In keeping with the spirit of financial independence, I enjoy discussing the various types of FIRE. And there are so many! We’ve gone over Coast Fire, Barista Fire, and my personal favorite, Passion Fire (which I coined myself!). One thing we haven’t covered yet, except briefly in a post about the different types of fire, is lean fire. So what is lean fire?
What is Lean Fire?
So what is lean fire? The most common definition is retiring early on forty thousand dollars per year or less. People who achieved lean fire are living off of their savings and investments, but doing so with a lower balance than you would traditionally expect of someone who is financially independent.
Why Lean Fire?
Forty thousand dollars per year is not that much, especially when inflation eats into more and more of it every year. (side note – I wonder if the definition of lean fire will change with inflation? In ten years, will the answer to “what is lean fire” be retiring on fifty thousand per year? It’s interesting to consider these possibilities). So why are so many people intrigued by it?
I can’t answer for everyone who is working towards (or has achieved) lean fire, but I know why I’ve considered it. Our work culture sucks, our wages are stagnant, and we don’t have enough time left over after work to pursue our passions. Finding a way to opt out – any way – even if it means living a little more frugally than you originally intended – starts to sound like an amazing idea. And lean fire isn’t actually all that far off from the average US salary of 56K per year. If you don’t have to pay income taxes, commuting costs, and other job-related expenses, that 40K can stretch even further.
How Much Do You Need for Lean Fire?
We’ve already established that Lean Fire is living on forty thousand dollars per year, but how much money do you need invested to be able to safely withdraw that every year? The great thing about this is that you don’t need to start with a huge amount. You can fund sixty years of retirement with less than a million dollars invested, assuming 6% growth per year and a 2% inflation rate. Using this handy calculator, you can see that you would only need $927000 for that lean fire goal. You can change the variables to fit your situation and see how much you would need as well.
Now I know that nine hundred thousand dollars is an immense amount of money, but saving that much isn’t impossible. Imagine that you start saving when you are 20, and save religiously until you are forty. Do you think you could hit that nine hundred-thousand-dollar mark?
You would need to save about 2000 a month for those twenty years to get there – difficult, but not impossible if you are able to score a high paying job (and yes, I’m aware of how big of an “if” that is). Its probably more reasonable if you live in a low cost of living area, have a partner who is willing to save with you, or are willing to work a few more years.
Achieving lean fire it may be difficult, but it’s actually doable for a lot of people. And it’s a great option if you really hate work.
How to Live a Lean Lifestyle
I really admire the folks who are living a lean fire lifestyle. Some of the embrace extreme frugality, while others are happy living a minimalist lifestyle. My sister is working on a similar lifestyle, she wants to raise chickens, grow a garden, and live off the fat of the land.
Living off of forty thousand dollars a year doesn’t have to be that extreme though. There are plenty of towns and cities in the United States where that would be more than enough for a comfortable lifestyle. And, you can live like a freaking rock star in some countries if you are interested in international geoarbitrage.
Why I Decided Against It
Although Lean Fire is a wonderful option for many people, I’ve decided that it isn’t exactly right for me. The main reason is my lust for adventure. Although I could probably live off of forty thousand dollars per year, I wouldn’t be able to travel frequently on it. One of my main reasons for pursuing any type of financial independence is so that I can live my dream life, travel the world, and have all sorts of crazy adventures. I think a lean fire lifestyle could limit that, even if I did make my home base in a low cost of living country.
I also don’t want to scrimp and save for the next ten or so years to get to that coveted nine hundred thousand dollars. Sacrificing that much now is worth it for some people, but it’s not for me. I might quit my job before even reaching the security of having so much money saved up, just because I’d rather have the opportunity to pursue these passions of mine while I’m young enough to still enjoy them!
Is Lean Fire Right for you?
Just because Lean Fire isn’t the answer for me, that doesn’t mean it’s not right for you. You might think that working hard and budgeting harder in exchange for extended years of freedom is a great trade-off. Or you may enjoy simple pleasures, and not need more than forty thousand dollars per year. If any of that sounds appealing to you, pursuing lean fire might be the answer.
Melanie launched Partners in Fire in 2017 to document her quest for financial independence with a mix of finance, fun, and solving the world’s problems. She’s self educated in personal finance and passionate about fighting systematic problems that prevent others from achieving their own financial goals. She also loves travel, anthropology, gaming and her cats.