FIRE (Financial Independence, Retire Early)

The FIRE (Financial Independence, Retire Early) movement encompasses several strategies, each tailored to different financial goals, lifestyles, and timelines. 

Watch The Fifth Person: Which FIRE is Best For You?

Traditional FIRE (Missed the Boat)

• Goal: Save enough to fully retire early, living entirely off investment income or withdrawals.
• Approach: Aggressively save 50–70% of income, invest in assets (e.g., stocks, real estate), and aim for a nest egg 25–30x annual expenses (based on the 4% safe withdrawal rule).
• Lifestyle: Complete retirement from work, with no need for earned income.
• Example: Save $1.25 million to cover $50,000 annual expenses and retire at 40.
  
  

Lean FIRE (Possible but don't want to to sacrifice lifestyle)

• Goal: Achieve financial independence with a minimalist lifestyle, focusing on low expenses.
• Approach: Save enough to cover basic needs, often requiring a smaller nest egg than Traditional FIRE.
• Lifestyle: Frugal living, prioritizing essentials over luxuries, with little financial cushion.
• Example: Save $500,000 to support $20,000 annual expenses.
  
  

Fat FIRE (Impossible)

• Goal: Retire early with a comfortable or luxurious lifestyle, supported by a larger nest egg.
• Approach: Save significantly more than Traditional FIRE to fund higher expenses, travel, or hobbies.
• Lifestyle: Financial freedom with room for discretionary spending and flexibility.
• Example: Save $2.5 million for $100,000 annual expenses.
  
  

Barista FIRE (My Pursuit)

• Goal: Achieve partial financial independence, supplementing investment income with part-time work.
• Approach: Save enough to cover part of expenses, then work a low-stress job (e.g., barista) to bridge the gap.
• Lifestyle: Semi-retirement with a balance of leisure and light work, often with benefits like health insurance.
• Example: Save $500,000 to generate $20,000/year, then earn $20,000 from part-time work to cover $40,000 expenses.

Coast FIRE (Missed the Boat)

• Goal: Save enough early so investments grow to fund retirement later without further contributions.
• Approach: Reach a “Coast number” where compound growth over time meets retirement needs, then work only to cover current expenses.
• Lifestyle: Less savings pressure, with work continuing but not for retirement savings.
• Example: Invest $250,000 at 30, which grows to $1 million by 65, while working to cover living costs.
  
  

Geo-Arbitrage FIRE (Something to consider when older)

• Goal: Achieve FIRE by relocating to a lower-cost-of-living area or country to stretch savings further.
• Approach: Save for FIRE, then move to a place where expenses are significantly lower.
• Lifestyle: Maintains a comfortable lifestyle with less savings due to reduced costs.
• Example: Save $800,000 and move to a country where $32,000/year supports a high quality of life.
  
  

I am more inclined to Barista FIRE Lifestyle as it allows me to use the extra time from part-time work to pursue passions, hobbies, or side projects that bring fulfillment, whether it’s travel, volunteering, or learning new skills.

I can achieve partial financial independence by saving enough to cover a portion of expenses, then work a low-stress, part-time job to supplement income.

The goal is to enjoy a semi-retired lifestyle earlier balancing work and leisure while relying on investments for some financial support.

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Kakeibo: The Japanese Art of Saving Money

Kakeibo: The Japanese Art of Saving Money by Fumiko Chiba is a guide to a century-old Japanese budgeting method called Kakeibo, which means "household financial ledger." Introduced in 1904 by Hani Motoko, Japan’s first female journalist, it’s a pen-and-paper journaling system designed to promote mindful spending and saving without relying on apps or spreadsheets. Key Concepts of Kakeibo The Kakeibo method focuses on intentional financial planning and reflection to achieve savings goals and spend wisely. It emphasizes handwriting to foster mindfulness, encouraging users to slow down and consider their spending habits.

The process involves:

• Monthly Planning: At the start of each month, you calculate your income (after taxes), set a savings goal, and plan how to allocate remaining funds. You write down fixed expenses (e.g., rent, utilities) and determine how much to spend on variable expenses.
  
  
• Categorizing Expenses: Spending is divided into four categories (customisable, but typically):
  • Survival: Essentials like food, transport, and housing.
  • Optional: Non-essential wants, like dining out or entertainment.
  • Culture: Activities like books, museum visits, or concerts.
  • Extras: Unexpected costs, like repairs or gifts.
    
    
• Daily Tracking: Record each expense by hand, noting its category and cost, to stay aware of spending patterns.
  
  
• Weekly and Monthly Reflection: At the end of each week and month, tally expenses, compare them to your plan, and reflect on questions like:
  • How much money do you have?
  • How much do you want to save?
  • How much are you spending?
  • How can you improve next month? This reflection helps identify overspending and adjust habits.
    
    
• Mindful Spending: Before non-essential purchases, consider questions like: Can I live without this? Am I in the right emotional state to buy? How long will this purchase make me happy? This reduces impulsive spending.
  
  

Kakeibo aligns with Japanese principles of simplicity and mindfulness, similar to Marie Kondo’s decluttering method. It encourages users to "spend well to save well," focusing on intentional purchases that align with personal values, like saving for travel or big projects.

While I admire its minimalist approach, I’ve tried it, and frankly, it’s not for me. Here’s why I’ve ditched Kakeibo and adopted a more practical, modern budgeting strategy that aligns with my lifestyle.

The Tediousness of Manual Tracking Let’s be real—manually writing down every single expense is exhausting. I gave Kakeibo a fair shot, diligently jotting down my daily spending in a notebook years ago. But the process felt like a chore, especially when it came to doing the math by hand. Adding up every coffee, grocery run, or transport fare was time-consuming and prone to errors. In 1904, pen and paper were the only tools available, but today, we have better options. I’ve switched to using budgeting apps and Excel spreadsheets, which do the calculations for me instantly. These tools save time, reduce mistakes, and let me focus on analysing my spending rather than wrestling with numbers. Tracking What Matters Most: Food Kakeibo advocates for tracking every single expense daily, but I find that overwhelming. Instead, I focus on the one category that fluctuates the most: food. Food spending is my biggest budgeting challenge because it varies daily and can easily spiral out of control. By tracking my food expenses, I get a clear picture of how much I’ve spent and how much I have left in my budget. This helps me make conscious choices—like opting for a $2.50 Yakun coffee instead of a $7 Starbucks latte when funds are tight. Other expenses, like MRT fares, utilities, pet food, insurance, Netflix, and my part-time helper, are fixed costs. These are predictable and easy to manage monthly, so I don’t waste energy micromanaging them. Spending on Joy Without Guilt One of Kakeibo’s principles is cutting back to save money, but I don’t believe in slashing everything that brings happiness just to pad my savings account. As personal finance guru Ramit Sethi says, “Find ways to earn more money and not live miserably.” I wholeheartedly agree. Budgeting shouldn’t mean depriving yourself of joy—it’s about finding balance. For example, I’ve made compromises that save money without sacrificing my lifestyle. Instead of paying for an expensive personal trainer, I now go to a climbing gym with a friend, cutting my fitness costs by 50% while still having fun. Similarly, I swapped pricey mall manicures for more affordable options in my neighborhood or during trips to Batam or Johor Bahru. These small tweaks keep my budget in check while allowing me to enjoy the things I love. A Budget That Works for Me While Kakeibo’s mindful approach resonates with many, it’s too rigid and time-intensive for my taste. I prefer a streamlined system that leverages technology, focuses on variable expenses like food, and allows room for joy. Budgeting doesn’t have to be a grind—it’s about making intentional choices that align with your values and goals. By tracking what matters, embracing affordable alternatives, and prioritising happiness, I’ve found a way to manage my money without feeling like I’m stuck in 1904.

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