Or, what we can learn from the FIRE community.
The FIRE movement, or Financially Independent, Retired Early, is swiftly emerging from years underground. Some very well known blogs, such as Mr. Money Moustache, Millennial Money, and The Money Habit, are FIRE blogs. The idea is to create a debt management and investment plan early, invest a lot of your income, and build up a nest egg that will generate enough money passively for you to live off of. It’s an intriguing concept–many people who found out about FIRE early on have retired as early as 28, and spend their days traveling, working out, volunteering, and helping others along the same path.
The keys, of course, are staying out of early debt, making more than you need, and saving overzeaolusly. The average American saves 3.5% of their paycheck. Common recommendations range from 10-15% of earnings for most people, and physicians and other professionals need to save 20% + because of the duration and cost of our training. There are people in the FIRE community who regularly save 40-70% of their earnings; and these are people who are earning middle class wages. They do it either by penny pinching (a la Mr. Money Moustache), living off of side hustles and investing their entire salaries, or by controlling their major expenses (top 3: housing, car, food, which usually account for 70% of our expenditures).
Healthcare careers are not popular with the FIRE crowd, for obvious reasons: extremely high debt burden and little or no income in the prime saving years (20s and early 30s, when anything you invest will compound over time, doubling every 10-15 years according to the Rule of 72). People who want to retire in their 30s or earlier also aren’t inclined to spend hours trying to get admitted to professional school only to spend even more hours training in school or residency.
For different reasons, people in healthcare are not especially likely to enjoy living off of $30-50,000 a year, or to retire so they can lay back and relax at any point, so the FIRE ideals aren’t particularly popular with us, either. Even when we don’t actually have any money, we like to maintain certain standards. A lot of us have difficulty living on what the government is willing to lend us at exorbitant interest rates, even when we don’t have any other income.
That doesn’t mean that we can’t learn from these people on FIRE, or that their techniques can’t be of tremendous benefit to us. Sure, I probably won’t ever choose to live off of $30,000 a year again. But the things we could accomplish with the benefit of financial independence? That’s a different story, and one of the main focuses of this blog. If you could live off interest, and any money you made at work could go towards a better lifestyle, or spent as you make it, how would that affect your worklife? Travel, fitness, family life, and work would all be easier. You would probably cut back your hours or modify your practice to the patients you feel the most fulfillment in treating, or that your community particularly needs. Physician burnout would be an afterthought instead of an epidemic. I ruminate on this subject enough on the blog and don’t need to reiterate it here. Financial independence at an early age sounds great. Now what?
The people who dreamt this up created all kinds of tools to figure out how much you need to save, how to invest it, how much you can take out to live off of, and how long it will take you to get there. My favorites are the resources at Physician on FIRE and The Money Habit (and of course I’ll continue to update MiM with pertinent information in its highest impact, most digestible form). But in this post, I want to highlight the one thing that these people on fire do that I seldom see on our side: they make a realistic plan early on and they stick with it. They use those calculators to figure out how much they need to save, and then they figure out how to do it on their own.
In the spirit of all goals with a high chance of success, they break their dreams down into discrete, measurable, attainable steps, and then they track their progress. Like the Small Wins mentioned in The Power of Habit, crafting attainable goals and being successful generates tremendous momentum. I’ve found, and heard many others say, that meeting even small goals inspires some innate competitive desire to perpetually increase that margin of victory. A great example is Grant Sabatier at Millennial Money, who made a plan to save $1.25 million by investing $5 a day, which eventually increased to $50 a day–and he achieved his goal at the age of 30. Now he blogs about that process and has probably made significantly more than that.
Well, none of us is going to complete professional school, pay for it, and make $1.25 million by 30. If you do, please share–you’re more qualified to write about this than I am. But the ideal of financial independence inspired me to write a plan (and I think that you should, too). One of the unforeseen benefits of this exercise is attaining some semblance of control over the direction of your life, however tenuous. In a climate where many of us will go to school wherever we get in, and then turn our lives over to a computer match system, we have even less control over where we live than other people do. Making a plan that you can stick with wherever your career takes you, with the freedom of autonomy at the end of a shorter-than-you-thought-it-was tunnel, is enlightening.
For an example plan, one that is ambitious but, in my opinion, realistic, see the tale of Sonya the Millennial Gastroenterologist. I also have a detailed plan to achieve positive net worth by the end of residency. It includes some of my financial particulars, which is why I don’t publish it outright, but it will be featured in future guides for subscribers.
Future content will aim to help you reduce your student loan amount while living well, control costs without tedious budgets or eating nothing but Ramen, use entrepreneurial tools to create time for exercise/hobbies/travel/life, find side hustles that leverage your level of training, and continue your path to a successful career that enables the life you want. We can learn a lot from the early retirement community without necessarily setting ourselves on fire. I’m interested to hear what your goals are and how you can break them down into a plan!