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Wednesday 23 January 2019

It’s all work, work, retire

A group of eccentric alt-financiers are preaching how to give up the daily grind and retire before you hit 40

By Toby Wiseman

Barney Whiter doesn’t much like work; at least, not in the corporate, nine-to-five sense. “Pointless meetings, bureaucracy, political correctness, office politics, power games – there’s so much nonsense going on in the modern workplace,” he says. “Anyone who has seen The Office or read the Dilbert cartoons knows what I’m talking about.” So, frustrated with what he refers to as “the Prison Camp” – the dispiriting sense of being held captive by one’s career, mortgage repayments, car finance, commuter season ticket – he determined to do something about it. He hatched a plan and he dug.

By 32, Whiter had managed to pay off the debt on his house; at 43, having saved half his accountant’s salary over a 20-year period and built up an adequate investment portfolio, he finally freed himself. Whiter quit. Now, five years later, he spends his time at home in Farnham doing “pretty much whatever the hell I want. I write my blog, The Escape Artist; I’ve got into weight training; I volunteer; I have fun with my kids . . . and I watch all the wage slaves trundling towards the station like zombies to work in jobs they don’t like.”

Marketing and Sales Department, publisher, Moscow

Meanwhile, Sam Dogen, a 41-year-old ex-banker from San Francisco, decided that the white-collar world wasn’t for him just four weeks in. “I joined Goldman Sachs in NYC in 1999 and had to get in by 5.30am, staying past 7.30pm every single day,” he says. “I knew after a month that I couldn’t last, so the only way out was to save and invest as aggressively as possible to earn enough income so I wouldn’t have to work.”

By 2012, aged just 34, he fulfilled his goal by retiring early, having negotiated a severance package that paid for five years’ worth of living expenses. Life now consists of playing tennis, looking after his son and offering free economic advice via his blogging alter-ego, Financial Samurai. “It’s not anti-capitalism,” says Dogen. “It’s anti-wasting your life doing something you don’t absolutely love in an age where anything is possible.”

This is FIRE – or Financial Independence Retire Early – the name adopted by a group of thoughtful, smart, occasionally eccentric alt-financiers for whom the prospect of climbing the company ladder and claiming a final-salary pension is as undesirable as it is unrealistic. As the acronym suggests, their goal is pecuniary freedom and voluntary exit from conventional career paths before middle age descends. They are determined, hardy and disciplined; indeed, in many respects millennial FIRE adherents are the inverse of today’s so-called snowflakes. Rather than fret at the lack longevity in the workplace, they choose instead to seek alternative methods of making a living, with the ultimate goal being liberated from what they see as a joyless system.

For many FIRE champions it’s less a question of rejecting free enterprise than of turning their backs on rampant consumerism. For others it’s an environmental issue. But despite proponents’ frequent talk of frugality and subsistence, it is clear that it requires a highly numerate, strategic mind to play with FIRE and win.

Internal Auditor, Mega Asset management, Cambodia.

“Capitalism and consumerism are two very different things,” says Whiter. “We are anti-consumerism. Consumerism encourages greed, it encourages people to become fat, sick and lazy, and it’s also destroying our natural world. So I guess you could say that FIRE is about using capitalism to defeat consumerism. The tools and mindset of FIRE are the most effective ways to build wealth and happiness. It’s essentially a practical philosophy for life.”

The concept of spending less time working and more time relishing is not a new one. In the 1930s, the economist John Maynard Keynes foresaw that higher productivity and living standards would lead to a significant reduction in the average working week – 15 hours was mooted –  but instead of working less, as a culture we started buying more stuff. More recently, in 1992, a self-described social innovator from Oklahoma named Vicki Robin wrote a book called Your Money Or Your Life, at once advocating reduced spending and denouncing consumer fetishisation. Written from more of a soft-boiled, hippyish standpoint, it has nonetheless become a seminal text within the more spreadsheet-focused FIRE movement.

Why there should have been a 25-year gap between its publication and the emergence of a subculture that espouses its values, however, is something that adherents seem to attribute to two factors: first, the bull market in stocks and real estate, which has accelerated the return on investments; second, and perhaps more important, the internet. Indeed, every person consulted when researching this piece cited the inspiring influence of the trailblazing FIRE blog, Mr Money Mustache. Written by a 44-year-old Canadian named Pete Adeney, he worked as a young engineer for just ten years, before he and his wife downed tools and retired at the ripe old age of 30.

But how? Adeney claims that it is relatively easy – as long as you realise that “your current middle-class life is an exploding volcano of wastefulness”. Come to terms with this harsh reality, he says, and it is quite possible to cut your expenses by half, or even two thirds with some discipline. “Wastefulness” is a broad term that can comprise outgoings as varied as TV subscriptions, premium mobile phone contracts, unnecessary grocery purchases, general pampering, even cars. (“Ride a bike,” admonishes Adeney.) Spending duly curtailed, you simply save and invest the money in stock market index funds. “If you can save 50 per cent of your take-home pay starting at the age of 20, you’ll be wealthy enough to retire by 37,” he says. “If you already have some assets, you’re even closer to that. If you can save 75 per cent, your working career amounts to just seven years.”

 

IT Worker, online share brokers, Leeds

Inevitably, the biggest criticism of FIRE is that such strategies are beyond the capabilities of people on low incomes. Equally unsurprising, perhaps, this is a notion that many converts are keen to dismiss. Instead, they underline the importance of restraint and sacrifice. “My number one piece of advice is this: if the amount of money you’re saving each month doesn’t hurt, you’re not saving enough,” says Dogen. (Although one FIRE proponent I spoke to does concede that “the single mother raising three kids while working full time on minimum wage is likely to be far more frugal than FIRE members could ever be, while almost certainly being unable to attain FIRE herself.”)

While not a single working mother, Travis Shakespeare, a 50-year-old film producer from Colorado, was nonetheless struggling when he chanced upon the FIRE movement. “My father passed away ten years ago, at which point I was still carrying over $40k in student loan debt, plus credit cards,” he says. “In addition to the shock of his death, I realised my financial future was in real trouble because I started running retirement calculators and it looked likely I’d be eating cat food in my old age.” Having decided to enlighten himself, Shakespeare came across the writings of Mr Money Mustache, among others. “I realised that this subculture was up to something much more than just getting rich. There was also an absolutely free exchange of information, which is very unusual compared to other conversations I’d had about personal finance.”

Shakespeare decided that the best way he could contribute to this sharing of knowledge was to make a feature documentary about it. Playing With FIRE. At the core of the film is the idea that, while the maths of FIRE is (arguably) relatively simple, it is the psychology of it which is most taxing.

“Fundamentally, all that’s required is to spend less and save/invest more,” says Shakespeare. “But in a society where consumerism is held in such high regard, adopting a more mindful approach around money requires a significant shift in your assumptions about money.” The film’s scene-stealing line comes from a man named Joshua Fields Milburn, one half of the popular blogging and podcasting duo, The Minimalists: “We are spending money we don’t have,” he says, “to buy things we don’t need, to impress people we don’t even know.”

Local Government, finance administration department, Berlin

In the US, 34 per cent of people have no savings; in the UK, one in three adults has no private pension. Part of this is because of a perceived lack of security in the actions of corporations and governments, Shakespeare says, which in turn is why a movement has arisen for people to take care of their own future.

Crucially, despite now being well on the way to achieving his own financial freedom, Shakespeare has no interest in retiring in the conventional sense. “Now I see that money is just one part of the equation, and not even necessarily the most important,” he says. “Because when a person frees him or herself up from mandatory work, a whole new world of questions opens up. Ironically, the closer I get to never needing to work again, the more I have a desire to do meaningful work.”

Snip, snip: what you could save in 15 years

  • Cutting Netflix, Spotify and Amazon Prime subscriptions would save £5,394
  • Ditching a PureGym membership saves £4,110
  • Drinking the recommended allowance of home brewed beer rather than average London pints would save £10,764
  • Cycling over public transport in most UK cities would save £6,843

Photographs from Louis Quail’s long-term project, Desk Job, which examines the tediousness of office culture