What is FIRE? And is retiring early possible for you?

Bright Dickson:

Welcome to "Money and Mindset With Bright and Brian," a podcast that can help you feel better about managing your finances and have a better outlook on life. I'm a positive psychology expert, Bright Dickson, and I'm here with Brian Ford, my number one source for all things financial wellness. How are you, Brian?

Brian Ford:

I'm good. I'm excited we've got a cool guest. But how about you? How are you today, Bright?

Bright Dickson:

I'm good. It's a beautiful day here today. I'm super excited about today's show like you are because we're going to talk about FIRE, which is short for Financial Independence Retire Early. It’s a movement of people dedicated to extreme saving and investing with the goal of retiring extremely early, as soon as their 30s or 40s. I’m emphasizing extreme for a reason. FIRE, in its traditional sense, isn’t for everybody, but there can also be varying degrees when it comes to how you approach something like FIRE.

I'll tell you right now, I'm guessing it's not for me. I'm open to it but I'm just making a hypothesis. I'm super glad-

Brian Ford:

What?

Bright Dickson:

I know. I'm just saying. I'm super glad though that we have a guest today who can help me double-check and, at the very least, figure out what key takeaways from FIRE are and how they might apply to me.

Brian Ford:

Yeah, that's right. We're super stoked to have Ben Appel on the podcast. I know Ben from my time here at Truist, he's the senior vice president of workplace financial wellness, and he's also an expert when it comes to FIRE because he doesn't just know a lot about it, he lives it. He's just as big of a finance nerd as I am, so it probably won't surprise our listeners to learn that Ben and I are also good friends.

Bright Dickson:

You guys are besties from what I understand, Brian.

Brian Ford:

Yeah, Ben's a good dude. I think you're going to vibe with him well too, Bright. So, let's get to it. Bright, are you ready to ignite this conversation about FIRE?

Bright Dickson:

I guess we're starting with the puns already, I love it.

Brian Ford:

You know it. All right, let's do this. Ben Appel is ridiculously passionate about personal finance and has spent his career helping people feel more confident with their money. I will add that Ben is a close family friend, my kids absolutely love him. However, I think they adore his lovely wife, Jenny, even more. Ben and I have hiked all over the U.S. and Canada together and we are even tennis doubles partners. In fact, we won our match last night together.

Ben Appel:

Woohoo.

Brian Ford:

Yeah. So, to have such a good friend and a fellow lover of all things money is an absolute delight for me. Ben, welcome to Money and Mindset.

Ben Appel:

Heck yeah. Excited to be here.

Bright Dickson:

Ben, thanks so much for coming on the show. So, my FIRE exploration, I had just started hearing about it in the past couple years and my guess is that there are probably a lot of misunderstandings out there about what it is, what it means. So, let's just start there. Let's begin at the beginning. How do you explain FIRE? What is FIRE?

Ben Appel:

For sure. And Bright, I know you're a skeptic and so my goal is, by the end of this podcast, I really want to convince you to think about FIRE as an option a little bit more openly, but we'll see how we do.

Bright Dickson:

Yeah, cool.

Ben Appel:

But starting it out really basic, like you said before, FIRE, F-I-R-E, stands for Financial Independence Retire Early. And it's basically this idea that, if you can save and invest more money than maybe the average person, then you can retire sooner than the traditional retirement age of 65 or so. But more specifically, the term financial independence, it's really defined as being in a place where you have enough money saved up so that you can live off the earnings from those savings without even having to dip into that principal. And if that's enough for you to live on, then you never need to work another day in your life.

And I know that's a very quick, simple answer. It's definitely a little bit more complex than that, but hopefully that gives us a good start.

Brian Ford:

Yeah. And Ben, if you could share a little more for our listeners who don't know you as well as I do, what's your background with FIRE? Without getting too personal, what makes you qualified to speak about financial independence?

Ben Appel:

Yeah. No, no worries at all. I always try to be an open book when it comes to this stuff. My FIRE journey first started back in 2012 because I just happened upon an article about the idea of financial independence and early retirements. And what I will say is, when I first read about, it was like an explosion went off in my brain. The math was simple. Philosophically, it just made so much sense and I honestly couldn't believe that I'd never heard of this concept before and that more people weren't talking about it. It felt like this secret that nobody really knew, and it was such an obvious idea in hindsight.

And from that moment, I pretty much got obsessed. I started reading and researching everything about FIRE and personal finance that I could get my hands on. Everything from books to blogs to podcasts. I learned about Roth IRAs and 401(k)s and index funds and this thing we'll talk about called the 4% withdrawal rule, retirement, budgeting, tracking expenses, all that good stuff, and I was hooked. And it was at that time in 2012 that I started saving for the first time, and I was actually just a college student and I had less than $1,000 to my name.

And now, if you fast-forward 10 years later to the present day, my wife and I, we've reached a net worth of over a million dollars through nothing other than saving and investing.

Brian Ford:

Yes, let's go, Ben!

Ben Appel:

Yeah. I mean, sure, we have great jobs and it's been a strong bull market for the most part, but I think it's important to point out is we never received an inheritance, never won the lottery, anything like that. Just living well below our means, saving, investing along the way. And technically, we already are financially independent and we have been for a couple years, but we're not quite ready to do the whole "retire early" part of it yet. So, to answer your question, Brian, on what makes me qualified or why I love this stuff, it's because I've lived it and it's been a big part of our life, and I love this stuff.

Bright Dickson:

I've got so many questions, Ben. So, here's the first one. I'm really curious about why different people get interested in FIRE, especially when it sounds like there's a lot of ... I don't know if sacrifice is the right word because that entails a certain scarcity mindset, but it takes a lot, you have to make some decisions. And Brian, I'm interested in your thoughts on this too. So, is FIRE something to aspire towards because you just really don't like working? I too do not dream of labor, but is that why you're doing it?

Brian Ford:

Ben, if it's OK, I'd love to jump in on this because I do chat with a lot of people that are full-on into FIRE, and many of them say they're doing it because they don't enjoy the grind of their full-time job. And while I understand this, I usually challenge this idea, and I've had this conversation with Ben and I've challenged Ben probably over five years ago at this very thing, and we normally end up discussing how to find greater joy in their career right now as opposed to this iron curtain between work and play.

So, Bright, I know this is something we've talked about, really, in our last episode, this notion of finding work-life harmony. But Ben, tell us, for you, how does this work factor into the decision to go all in on FIRE? And really, why are so many people interested in the FIRE movement, from your perspective?

Ben Appel:

For sure. I think both of y'all hit upon some really nice points. And Bright, I'd say the first thing that I'd challenge you on, and I know you know, is that a lot of people think that FIRE has to be this big sacrifice. That you can't have any fun, you can't spend money on anything else and everything's got to be about saving, and that's not what it should be about. It does not have to be about sacrifice. It's all about your goals, your values, your priorities. A way to think about it is, you know how when you really want something really, really bad, whether it's Taylor Swift concert tickets or going on an epic vacation or a new video game console, whatever you're into, when you want something really bad, it's really easy to save for it and cut back in other areas. FIRE works the same way, it's just another goal. It just happens to be a really big one.

And so, the big thing is I don't want people to think that you have to give up everything you love in order to save every possible penny to be able to FIRE, that's not the case at all. It's everything in moderation. And to me, frugality isn't about cutting back every expense possible and being cheap in every aspect of life. What it's really about is finding the things you love and spending as much money on those things as you can while cutting expenses aggressively back in the other areas that you don't, so you can spend even more of that money on the things that you do care about.

A good, I guess, example is, my wife and I, we love traveling, as a lot of people do, and in the last 10 years, we've been to over a dozen countries and 35 national parks. And if you look at my travel budget that we spend annually, you'd think there's no way that we were on the FIRE path. You might even be a little bit concerned that we're living within our means. But if you also knew that we drive used cars that are over 10 years old that Brian likes to make fun of, that we paid for in cash-

Brian Ford:

It's so true. Oh, my gosh, his car, oh, my gosh, yeah. And he never cleans it, it's dirty every time I see it.

Ben Appel:

It gives it character, right? And we live in a modest home for our income and we only go out to eat once per week. When you put all those other things together, that travel budget really starts to make sense how it's possible. And another person, they might love going out to eat and driving a nice car, and that's completely fine, it just means that you might not be able to go on all the vacations that you otherwise would because everything comes at a cost. You can't have everything, but you can have anything, and it's being really targeted with what those goals ’re.

But I also want to address Brian’s question, which is a big one that I definitely get when it comes to this type of stuff, which is why are so many people interested in FIRE? How much of it has to do with their job and not wanting to work and things like that? And Brian, I agree with you, I do think there's a lot of people out there that want to FIRE for what I think are the wrong reasons, but that's everybody's decision to make. But I think a lot of people want to FIRE because they hate their job and they're trying to FIRE away from a bad situation.

I think a lot of people assume that, once they FIRE, they're magically going to be happy and all their problems will go away. And from what I've seen, those are the people who really struggle with their purpose in life once they actually FIRE. There's this little saying in the FIRE community that's really popular, and it's build the life you want, then save for it. And what that means is it's really important to find happiness and joy in your life right now while you're on the path of FIRE because, if you're not happy now while you're on the journey, you're not going to be happy once you get there.

But at the same time, I think there's a lot of people that, instead of FIRE-ing away from a bad situation, they actually are FIRE-ing towards something that they really believe in. It might be so that they can be an awesome parent and spend more time with their kids, or take a year off and travel the world, or become an entrepreneur and start that small business they've been dreaming about, or switching careers maybe halfway through into a much more lower paying, more fulfilling job because you don't have to worry about money so much anymore because you've already done a lot of that savings on the front end.

But at the end of the day, FIRE gives you control and freedom over your life. It's about giving yourself choice and options, it's about getting to a place where you can make decisions, not based on how much something costs or how much money you'll make, but by how much happiness that it brings you. And that's a really, really powerful place to be.

Brian Ford:

Yeah, that's good stuff, Ben. I know, with FIRE, we hear the word "extreme" quite a bit when people talk about this subject. Extreme frugality, extreme budgeting, extreme saving and investing. For this to work, you've got to get pretty serious. Most people I know who do FIRE, they're saving and investing around 70% of their income, it's typically pretty hardcore. And like Bright said earlier, it's not a lifestyle that suits everyone. But before we dig into whether FIRE may or may not be right for somebody, is it even possible without making a really large income? So, Ben, if we're crunching the numbers, how does the math behind FIRE actually work?

Ben Appel:

No doubt, it's true the more you save, the faster you're going to FIRE. A 75% savings rate will get you to early retirement faster than a 25% savings rate. That's just math. But it's also not a race. The important thing to know is, even folks who save and invest 20% of their income every year from the time they start working, they likely aren't going to have to work until they're 65. Even if you retire at 55 or 60, that's still years of your life that you're getting back. But the best question you just asked is, is it possible without making a large income? And one of my favorite things about FIRE is that, in some ways, it's more about your expenses than your income. And no doubt, the more that you make, the easier it is to FIRE.

But let me walk you through I think the basic math and I'll try to keep it simple and walk through it a little bit slow. So, the whole-

Brian Ford:

Simple is good. We're not big math fans on the podcast. I will-

Ben Appel:

Oh, boy.

Brian Ford:

I'll tell everybody that Ben is a graduate of Georgia Tech, he happens to be really good at math. So, make it simple for us, Ben.

Ben Appel:

Oh, boy. OK. Well, the whole reason that this whole idea of FIRE is possible, it is central around one idea and it's this rule called the 4% withdrawal rule of retirement. And it's not meant to be a hard and fast ironclad rule, it's more of a rule of thumb to help you estimate your retirement readiness. And what the 4% rule states is that, if you have a certain amount of money saved up and invested in diversified index funds representing the total stock market, then you could withdraw 4% of that investment balance every year and have a very good chance, a 95 plus percent chance and higher, of never ever running out of money. In fact, in most cases, you would never even dip into your original principal and you would die with more money than when you started with as long as you stick to that 4% withdrawal rate.

And the reason that this works and where that 4% comes from is that, if you're familiar with the stock market and long-term averages, over the long term, you can expect an average return of about 7%, and that's even a little bit conservative. But when we're making these type of estimates, we always want to be a little bit on the conservative side. But then also, so you got 7% earnings long term in the stock market, but then, historically, inflation has been around 3%. And so, the reason you get 4% is if you do 7% earnings minus that 3% inflation, that's where you get that 4% safe withdrawal rate as a nice rule of thumb and a starting point.

But it's also important to keep in mind, these are all long-term averages that are proven by data, but we also know that, some years, the stock market, it's going to lose 20% and some years it's going to gain 15 and some years inflation is going to be eight or 9% like it has been a little bit recently. In some years, like it was for many, many years, it's going to hover around one or 2%. But what we do know is that, over the long term, investors can expect about a 7% return and we can expect about 3% inflation. So, that's where that 4% comes from. But now let's talk about why that's important, because what that means is that how much you need to retire is 100% based on your expenses, not your income.

And so, a way to think about it just with an example is let's say that you and your family, maybe you spend $40,000 a year to maintain your lifestyle, to pay your bills and do all the things you want to do to even do the fun stuff, to go on vacation, to buy the clothes, whatever it is. Then based on the 4% rule, you would need $1 million in investments in order to be what we call financially independent, because 4% of $1 million is $40,000 a year and that's what you can withdraw based on that rule of thumb. But what that also means is, hey, if you need $60,000 a year because maybe $40,000 isn't going to quite cut it, then you would need $1.5 million dollars because, $1.5 million, 4% of that is 60,000.

But a nice little easy tip is, if you want to figure out what your personal financial independence, F-I, number is, then all you need to do is figure out how much money you spend in a given year and, more importantly, how much you maybe expect to spend in retirement, and multiply that number by 25. And the reason 25 is the number is because that's mathematically the inverse of 4%. So, hopefully I'm not getting too complicated there, I just wanted to explain where we're getting that number, and that's how much you need to save and invest to be F-I.

A really easy example, just to keep the numbers really simple and easy, using that 25 example is, if you need $100,000 a year to live on and to live the life you want to live-

Brian Ford:

2.5 million.

Ben Appel:

2.5 million, boom, done. But at the end of day-

Brian Ford:

Yes.

Ben Appel:

Right. We want to keep in mind, 4% rule, it's not designed to be that end-all be-all, it's more of a starting point to give you a quick estimate. And obviously, you always want to make sure you're talking with your financial advisor about your specific situation, but it's a really great starting place for you. So, hopefully I didn't get too deep in the weeds in the math, hopefully that wasn't too hard to follow.

Bright Dickson:

No, it wasn't. That's really helpful. And I was thinking, beyond the financial challenges of this financial choice, I'm thinking how it could potentially complicate your relationships with friends and family. So, if you're living with such an extremely frugal budget, do you have to give up on things like attending out-of-town weddings or giving gifts at baby showers, that kind of thing, or even just going to the movies and grabbing drinks or dinner with friends? It seems to me that, even if FIRE might work for you financially, it's a whole different question of whether it'll work for you emotionally.

Brian Ford:

Yeah. Bright, that makes me think of my own financial outlook and how it's changed over the years. I was never hardcore into FIRE, but I definitely wanted to make a lot of money and save and invest a lot, probably more than the average person. But when I started having children, my mindset shifted. I was like, "Oh, my gosh, I really want to do stuff with my kids." I also wanted my children to have really cool experiences and get a great education. So, we started paying for tutors, we got dance lessons, tennis lessons, all those things. And I'll admit that I fell off the super frugality bandwagon just a little bit when I had kids because my values changed.

So, Ben, I think both Bright and I are really interested in hearing your take on all this. Has your outlook changed over the years, and what kind of conversations are you having with your family about your financial goals and how they might work with a FIRE lifestyle?

Ben Appel:

Oh, boy. Yeah, we're getting into the good stuff now because this is really what FIRE is about. And in my opinion, it's some of the hardest parts of FIRE, especially, Bright, some of the things that you mentioned in general. I like to say that the financial side of personal finances, it's very logical and it's easy to calculate. It's just math, but it's the personal side that's much more difficult, because we're human beings and we're emotional creatures and we make mistakes and all those things. But it's easy for me to say some of these things, but it's harder to do them.

Obviously, we know that you really shouldn't let something like FIRE keep you from doing the things you love. I can say I've never not attended a wedding or not given gifts or gone out with friends because of money, because those things are my values. Those social occasions are one of the biggest values that my wife and I share. And if I'm thinking about it with my mathematical brain, that's probably some of the best dollar-to-joy-ratio type of fun that I can get out there, but it's definitely something that I've seen folks struggle with. And when you find yourself in that kind of dilemma, I think it's important to remind yourself your why behind the things that you do and why you're interested in this thing in the first place.

Because for me, it's about freedom and it's about happiness and if something brings me those two things, then I need to go for it. But Brian, the other thing that you mentioned is, man, obviously, when I first learned about FIRE 10 years ago, I'm a completely different person. Even when we first met, man, seven years ago, and maybe I talked about some of these things after we got to know each other a little bit better, my perspective has certainly changed and a lot of it is because of exactly what you alluded to.

For me, one of the biggest ways that my perspective on FIRE has changed over the years is it's become more about family. One of the things that drives me and my wife on our FIRE goal is to have the ability to be an awesome dad and a husband, and the same thing for my wife, I want to be there for my wife and kids. Those are years and moments and memories that you can't ever get back, and I want to be in a place where I can, if I choose to, step back from my career and focus more on my family. And obviously, that's changed over time and I'd reserve the right for that to change. And Brian, you mentioned those things happen and sometimes you might feel you fall off that super-frugality bandwagon and, certainly, all those things, you make those decisions because it's right for you and your family, and I think that's something all of us go through.

But if I'm being honest, I think we are a lot further along when it comes to FIRE and our finances than I ever thought we would be at our age. Man, we're five to 10 years ahead of even our most ambitious projections that we made when we first started this FIRE journey over 10 years ago. And our incomes have grown faster than we expected, so have our savings and investments. I was really, really interested in FIRE and personal finance early on. Some might say obsessed. And I said I read every book and blog out there but, over time, I've realized that I've already learned the basics and everything there is to know at a high level and now I just need to go out and live my life.

And so, I've mellowed out a lot as I've gotten older and I'm sure that'll only continue to happen. Brian, you might have seen some of that happen before your eyes over the last seven or eight years since we've known each other. But I've noticed that, as our net worth has really increased and gotten up there, I'm definitely less concerned with saving a few extra dollars here and there. I've realized that FIRE's not a race, it's a marathon, and I really want to make sure that we're enjoying it with every step along the way.

Bright Dickson:

Ben, you said something in that, the dollar-to-joy ratio, which really struck me. I just jotted it down. What's the dollar-to-joy ratio?

Ben Appel:

I honestly just made that up on the spot.

Bright Dickson:

I love it.

Ben Appel:

I'd love to say that's something-

Bright Dickson:

Trademark, copyright.

Ben Appel:

I know. I'd love to say that's something I gave a lot of thought but it just came out.

Bright Dickson:

I love that. So, we're going to talk in just a minute about what financial and mindset lessons you can learn from the FIRE movement even if you're not interested in going to the extreme. But first, let's take a look at some listener questions.

Brian Ford:

One common area that we hear from our listeners is how to deal with stress and anxiety. Whether it's about money or something else going on in their lives, it's something we've talked about on the show before and it's definitely something we'll tackle on future episodes. But Bright, what would you say to our listeners that are concerned with stress and anxiety?

Bright Dickson:

Yeah, it's a process. Stress is a part of life, we don't escape it; we don't achieve peace of mind and then we just float on the peace-of-mind cloud for the rest of our lives. It's something that we're working towards, we're managing it, and the peace of mind really comes from the ability to manage stress. So, there's lots of ways that you can calm your mind, learn how to self-regulate your emotions. You can talk with someone you trust, social connection is huge. We actually regulate through other people more than we regulate just by ourselves.

Going outside and enjoying nature, connecting to the real world, curling up with a book, finding a hobby that brings you joy, there are all sorts of things that are practices that help you manage yourself. We all know about the meditation apps, the books, all of that stuff, but another thing, and, Brian, I know you do this too, is breathing. Regulating how you breathe can help you manage stress and anxiety in the moment.

Brian Ford:

Yeah, for sure. So, Bright, is there a particular breathing technique folks could use or try out today?

Bright Dickson:

Yeah, there are lots of really complicated ones, but the most simple one is called box breathing, and I use this a lot. It was actually taught to me by a friend of mine who was in special forces and they use this a lot. So, box breathing is just breathing in a box formation. So, if you take your finger and draw on the table, just draw a square, you're going to be breathing in alignment with that square. So, what that means basically is that you do an inhale, a hold, an exhale, a hold. An inhale, hold, exhale, hold, and you're doing each of those for the same amount of time so the sides of the box are the same length.

So, we can try it together real fast and what you're going to do is inhale and, let's say, for a count of four. So, ready, inhale, two, three, four, hold, two, three, four, exhale, two, three, four, hold, two, three, four, inhale, two, three, four. So, you're holding for a count of four, exhale for a count of four and you're just repeating that flow until you feel, you literally, in your body, feel yourself relax. So, at some point, your body unlocks and relaxes a little bit, you're just going to keep doing that until you have that and then you can move on to whatever it is that you need to do.

It's a breathing technique, it's a mindfulness technique because you've got to focus your mind on the counts and the breath and you use your brain power and attention to do that. It does a couple things. So, box breathing regulates your breath, which helps you regulate your stress hormones, it also teaches your brain to focus and to have some patience, and it calms your body. So, the longer you count, so we counted for four, you can count for five, six, whatever, the longer you count, the more effort it takes and you can build that up as you want to. So, many people use box breathing or other breathing techniques. We used it when I was working with the military, we did a ton of box breathing. Athletes do it, speakers do it, lots and lots of people have this breathing technique. It helps us focus the mind, teaches us to be calm.

So, I really recommend box breathing. It's also great to teach to others because it's super easy. I was box breathing with my three-year-old nephew a couple weeks ago. So, it really helped him calm down in the moment and then we got to do what we wanted to do together. So, Ben, I'm going to put you on the spot since you're on the show with us today. How would you respond to this question? What's something you do when you're feeling stressed or overwhelmed?

Ben Appel:

Oh, boy. I'd say, if I'm being honest, I'm probably not leading by example in that area. But I'd say, when I feel really stuck and in a rut, it's normally because I have a lot of stuff to do that I really, really, really don't feel like doing. And so, what tends to help me is to break up that task into smaller pieces and list out the individual actions. I like lists, I'm a logical person, so I'll make a list of everything I need to do and start with the easiest thing first. And it feels good to get that quick win, cross something off the list, just the personal satisfaction of crossing something off that list.

I'll write something down immediately and then just cross it off just because it makes me feel like I actually accomplished something, because starting is the hardest part for me and so anything I can do to make starting easier is going to be key.

Bright Dickson:

Mm-hmm.

Brian Ford:

Yeah, good stuff. I will say, Bright, I am totally a fan of box breathing. I use it all the time, I've taught it to my four children, it's good stuff. Listeners, we'd love to hear more from you. Did these tips help you ease yourself when you were stressed, and what other questions do you have for us? Whether it's about your money or finding more peace of mind, be sure to email us, that email address is AskBrightAndBrian@truist.com.

Bright Dickson:

Yup, please keep those questions, messages coming. Again, the email address is AskBrightAndBrian@truist.com. OK, Brian, I've been waiting very patiently for my turn to make a fire pun. So, are we ready to rekindle the conversation about the FIRE movement?

Brian Ford:

Oh, my goodness. Yes, let's do it.

So, I think we've established that the FIRE movement, in its traditional sense, it isn't for everyone, but there are a few things about it that I really like just for about anybody. One is that, if people are interested in FIRE, they're interested in their finances, which is always a good thing. I think, if we're getting into FIRE, we're reading more, we're starting to listen to a podcast about it and having more conversations about money with others and I'm confident that this will lead to better money management overall.

And even if you don't go to the most extreme level and achieve a secure and comfortable retirement, say, in your 30s or 40s, oh, my goodness, you're going to be so much further than you would have been otherwise and you're going to set your future self up with a more comfortable and flexible lifestyle.

Bright Dickson:

Yeah. And I also really like this idea that, in many ways, your life can be better when you're consuming less, so the management expense piece. And I think that speaks to that dollar-to-joy ratio, Ben, that you were talking about and less stuff might likely mean more time, more room, more space for the people and things that make you really happy which, as we all know, aren't usually about money.

Brian Ford:

For sure. That "use less, spend less" side of it, super cool. We all know people who go maximalist, they spend, spend, spend whatever they have and that's not a good thing. Although money can be a factor when it comes to your overall happiness, you can't spend your way to happiness. Side note for our listeners, you can check out an earlier episode titled "Money" ... Oh, wait, what was it called again? I think it was called "Can money buy you happiness," that's right. So, if you want to hear us talk more about that subject, tune in to that particular episode.

Bright Dickson:

But on the flip side of the spending spectrum, we also know that some people just save, save, save until they're basically Scrooge from the Christmas Carol, and nobody wants to be Scrooge or at least perceived by others to be Scrooge. So, I normally tell people, find a balance, there's a happy medium somewhere for you that's going to be unique to you, that makes sense for you and aligns with what you value most. For some, it might be retiring by 35 but, for most, it's probably about spending on experiences in your 20s and 30s. So, Ben, what do you think? Are there different degrees of FIRE or at least some of its principles that might work for different people?

Ben Appel:

For sure. And I also don't want you to think that it has to be one or the other. You can still have really great experiences in your 20s and 30s and still be on that FIRE path regardless of what it is. But there's definitely different degrees to FIRE, every person can adapt these financial principles to your lifestyle and go at whatever pace suits you best. Some folks are going to retire at 35 by saving 70% of their income while others are going to retire at 55 by saving 20% and some are going to keep on working even though they don't need to. But the best part of that is that they're working because they want to, not because they need to, and that's really what it's all about.

Speaking of different degrees of FIRE, one of my favorite concepts in the FIRE community is this idea of something called Coast F-I, it's also sometimes called Barista F-I. And it's basically the idea that, if you do a good job of saving while you're younger, you can probably build a pretty decent nest egg that might not be big enough for you to retire early or even be financially independent. But now that you have this big chunk of money saved up and it's invested and earning money over time, you now can switch to a lower-paying, less stressful job and simply stop saving anything more.

In that new job, you can just spend whatever you make and make sure you don't go into any debt, but you don't have to continue to save for retirement, and just let that original investment nest egg grow without any additional contributions, but you also want to make sure you're not withdrawing anything from it and just let that grow, let it sit. And then, maybe 15, 20, 25 years later, that original nest egg could be significantly larger and now you can retire even though you haven't saved for retirement in 20 years.

And so, that's just one way to do it that I see a lot of folks talk about. There's no right way, there's no one way, it's going to be different for each person based on their goals and where they are in life and the things that life throws at you along the way.

Bright Dickson:

Ben, how do the ideas behind FIRE help build and sustain a healthy mental outlook? To me, I'm hearing a lot of really healthy ideas in here that can go wayward like anything but there's some great ideas. So, I'm curious, how has FIRE changed the way you view the world and what are some of the challenges you've come across within your FIRE journey?

Ben Appel:

Yeah, I think it causes you to think really philosophically about a lot of things in life, I think that's a good thing. Because to me, there's a big overlap in certain qualities that I think are central to the overall philosophy of FIRE but also things that improve my happiness and overall mental outlook. And I think one of those things that I talk about a lot, I think about it a lot, is the idea of gratitude, and it's really just about being happy with what you have. We live in a society that wants us to always want more, more, more and one of the most powerful places to be is when you feel like you have enough, and that feeling of enough is something that's pretty special. But unfortunately, I think a lot of people go their entire lives maybe without really feeling that feeling.

And I guess another thing that I think of is I think a lot of us tend to tie our entire identity and a lot of our self-worth to our careers and what we do for a living. We live in a society that constantly reinforces this because you look at news articles and media and things and we're always celebrating the business leaders and the entrepreneurs and the movie stars and the athletes, these people with really awesome careers, but we don't really openly celebrate the best fathers and husbands and friends in the same way. I don't know, the 35-year-old guy who's just a cool dude that's just a good person to the people he cares about.

And so, that's obviously a very nebulous surface-level example, but I say all that because FIRE has helped me view my world from a less career-oriented point of view towards a more holistic mindset, focused on really maximizing my own happiness. And I think, just like anything worth pursuing, there's always going to be challenges along the way. And Bright, you mentioned this earlier, it really is, I think, one of the biggest challenges around FIRE is getting their significant other on board because that's not going to happen overnight. It did not happen with my wife and I overnight and it can't be forced. And just like anything in a relationship, it takes a lot of time, communication, empathy to talk through what you want out of life together.

Brian Ford:

Yeah, that's good stuff, Ben. I'm just going to remind our listeners, Ben is ... What are you, 30, man?

Ben Appel:

I'm 30.

Brian Ford:

Dude, you're talking like a wise old 60-year-old, but I think that's why we get along. I always say Ben is like an old soul. This is good stuff.

Ben Appel:

I'm an old soul.

Brian Ford:

All right, Ben, for our listeners out there who are really interested in giving FIRE a go, what are your most important tips to help them go after their early retirement goals?

Ben Appel:

Yeah. I'd say nothing too fancy. Very simply, it boils down to a simple concept, which is live below your means and save and invest the difference, that's really it in a nutshell. But the biggest part is, the more that you do that, the faster you're going to get there, and it really is as simple as that. But if I were to get a little bit more specific, I guess, let me just talk about what I've done to get to where I am and some of the key things that I think about.

Number one is saving first and automatic in my 401(k) and in my IRA, which are tax advantaged investment retirement accounts. But probably more importantly is investing regularly regardless of what the market is doing and making sure I don't get too worried and caught up about the short-term fluctuations and the stock market and the headlines but making sure I have that buy-and-hold mentality and staying the course for the long term, that's really helped me out.

I'd say number two is, this is where I'm going to lose a lot of people, I know, but I love this one, is tracking every single dollar I spend to make sure it's aligned with my values and my goals and the things that we're trying to accomplish. I love data, but doing it in a way that it's automatic so I don't have to manually track it, but I love being able to go back and look at where my spending is going, how we did based on our budget, looking at it on an annual basis.

Number three, this one, I wouldn't have said this 10 years ago, but I've really realized that, honestly, just in the last couple years, is I've done a pretty good job in focusing on growing my career by doing well in my job and that has really allowed me to grow my income faster than I would've expected, and that's really accelerated my path to FIRE. And most importantly, I'd say making sure I'm always bringing everything back to my why. Why am I even interested in FIRE, what is my true purpose in life, because that's the only thing that will keep me going when the going gets tough.

So, I guess those are some of my main takeaways that I would say. But what about you, Brian? What tips would you add onto that for someone who is going down this path and wants to have the option to maybe pursue FIRE?

Brian Ford:

Well, my goodness, that was a great list. I think, for our listeners, if they are ready to jump in, I personally would hit the back button a couple of times and re-listen to that, take notes, create an action plan that really works for your lifestyle. Well said, Ben, I like that. I would simply add that you can use this episode as a jumping-off point. If you are inspired by Ben's story, continue to dig into the subject, read, keep learning and start to apply what you're learning about.

Bright Dickson:

I agree. And I've got one more question for you finance bros since I've got you on the line.

Brian Ford:

Did you call us finance bros?

Bright Dickson:

Yeah.

Brian Ford:

Yes, I like that.

Bright Dickson:

And I'm going to say I think you're in a financial bromance. There's nothing wrong with it, I think it's a beautiful thing. I love being able to witness it.

Brian Ford:

I'm not even going to deny that.

Bright Dickson:

OK, so last question. If we've acknowledged here that, if FIRE is your goal, you want financial independence, retire early, that's what you want to do, sticking to that plan clearly requires a lot of self-discipline, willpower. But also, one thing I'm hearing you say, Ben, is that you're moving towards something, that there's positive emotion involved in it, rather than just away, right?

Ben Appel:

Yes.

Bright Dickson:

But Brian and I talk a lot about "control what you can control," so FIRE is all about that, clearly, but there are going to be things that you can't control. So, things like inflation, job layoff, major medical challenge, all of that stuff. How do people in the FIRE movement think about that, set themselves up to be able to respond and stick to the overall philosophy?

Brian Ford:

That is a great question, Bright. Yes, I do think that the people who are all about FIRE, they view these things differently, they view these outside influences differently. First, relative to the stock market going up and down, they know that this is normal and they don't panic. I think you've heard that from Ben today. They continue to dollar-cost average into the market and invest for the long term.

Second, they don't get caught up in the drama of the headlines. They know that because of our bias towards the negative, that the news outlets, they love to focus on the bad stuff that's going on. Drama sells commercials, it grabs eyeballs, they get good at tuning this information out. They don't ignore it but rather they look at the data and figure out exactly what it means for them and their plan. They work out the numbers, just like Ben talked about, and then they adjust accordingly.

Speaking of the need to adjust, this reminds me of when my son, he was just a little guy, maybe five years old, and I literally was standing there watching this happen, it was awesome. So, he walked over to his older sister on the couch and he asked, he was like, "Asia," it's my oldest daughter's name, "Asia, what does the word adjust mean?" And his sister said, "Well, bud, it means, when things don't go as planned, you change things up a bit so you're still OK." And my little guy, he sat there with a very pensive look, he nodded his head like he understood and approved of that definition.

Well, about five minutes later, he came back into the room and he yanked the blanket right off of his sister's lap. And she quickly was like, "Hey, bud, that's my blanket," and he quickly responded with, "You need to adjust." We love that story in our household. So, I think a lot of hardcore followers of FIRE understand that some things are out of their control so they expect some of these setbacks and they prepare for them. So, in other words, they've got a plan B such as a fully funded emergency savings account and they're properly insured, et cetera. But anything you'd add to that, Ben?

Ben Appel:

The other thing I'd say is you can't prepare for those really big what ifs and you don't really know when they're going to happen. But if you're on the FIRE path, you have a lot of financial security in your back pocket if anything does happen. I think you have a lot more flexibility. One thing I love about FIRE is, man, I don't know what the next step of life is going to take, I don't know if maybe, man, one of my parents were going to need me to ... Maybe they get sick and I need to go take six months off work to go care for them or something like that. But because we've done such a good job saving and are on this FIRE path, I don't have to worry about the money. I can really be flexible and say, "Yeah, that's really important to me. I need to go take care of that right now and put these other things on hold." Most people don't have that choice.

And so, what I love about FIRE is it just gives you choice and freedom over your time and over those things that might happen that we can't quite plan for and see coming around the next corner.

Bright Dickson:

Such good stuff. Sadly, we are running out of time. But before we split, I do want to hear takeaways. I've got a number from this but I want to hear y'all's biggest takeaways from this conversation. So, Brian, kick us off. What's your biggest takeaway?

Brian Ford:

Sure. As I've listened to Ben today, a thought keeps coming back to me. We spend a lot of time and energy trying to grasp the importance of spending just a little less and saving just a little more, maybe trying to go from saving 10% to maybe 15%, for example. It excites me that people like Ben and others are saving over 50% of their income, it's doable. It inspires me to do just a little bit more. And then also, I love that Ben and his wife are living life on their terms with a high degree of intention. Those are my biggest takeaways. Ben, what about you, any last minute takeaways?

Ben Appel:

Well, I hope one of my takeaways is that I've made Bright a little bit more of a believer in FIRE. Even if she's not fully on board, she's like, "Oh, wow, OK, there's something there, I kind of like that, I understand it." But similar to that, I'd say, even if FIRE … or you think FIRE isn't for you, I still think there's some really good lessons that all of us can pull from to make our lives better and, at the end of the day, that's what this stuff is all about.

Bright Dickson:

Yeah, I agree and I'm definitely curious. So, I've moved from skeptic to curious. So, that's a healthy change, I love that. But I think one of the things I'm going to be thinking about, Ben, is you said part of this is you can have anything but you can't have everything, and I really love that as just a way to think about the world. And I'm going to keep thinking about that dollar-to-joy ratio because I think that's such a cool way to think about how you're spending and what you're spending on.

All right, that's going to do it for this episode of "Money and Mindset With Bright and Brian." Thanks as always to everyone out there listening and extra thanks to our third B here, Ben Appel, for coming on the show to school us on FIRE. You really brought the heat, Ben.

Ben Appel:

Yeah, it was my pleasure. Thank you.

Brian Ford:

Yes, thank you, Ben. We appreciate you, man. And a reminder to our listeners that you can always drop us a line at our email, AskBrightAndBrian@truist.com. If you enjoyed the show, please consider subscribing, sharing it with a friend or giving us a rating on your favorite podcast platform. Thanks and we'll see you next time.

Speaker 4:

This episode of "Money and Mindset With Bright and Brian" is brought to you by Truist.