So, What the Heck is FIRE Anyways?

I don’t remember exactly when my boyfriend, Adam, first told me about the Financial Independence Retire Early (FIRE) movement but I’m pretty sure my eyes glazed over. Ugh, personal finance? Wake me up when you’re done talking…


Now, however, if someone were to bring up personal finance to me I get more excited than when I see a piece of cheesecake (and that’s verrrry excited).


To be honest, I don’t even remember how my mindset changed. Maybe Adam talked about it enough he wore me down. Or, more likely, I saw how pumped and excited he was about it and I started coming around.

You might be saying to yourself, great Celene, but what in the world is FIRE? Or you might be an old pro at the subject, in which case feel free to mention anything I missed below!

Maybe you’re beginning this article like I was when I first heard about personal finance, with eyes glazed over, but hopefully by the end you’ll be comfortable enough to dip your toe into the FIRE movement, or like me now, pumped the eff up about personal finance!!!

Special thanks to Adam for helping me learn about the topics here, and to my sister, Cierra, for helping me organize my thoughts!

Financial Independence

“If you don’t learn to make money while you sleep, you will work until you die” – Warren Buffet

In a nutshell, Financial Independence is having enough income to fund your living expenses without relying on income from traditional employment. This is called passive income.

Active Income, on the other hand, comes on your typical T4/W2 employment. The cost of active income is your time, which you are selling to your employer for money. If all your earnings are going towards your expenses, you are a slave to your paycheque. The goal of financial independence is to break free from wage slavery and take back control of your time.

Passive Income is the money that you earn in a way that requires little to no daily effort to maintain. Sometimes (but not always) passive income will require a small to large time investment up front but once you get going you eventually earn money while you sleep.

Some examples of passive income are:

  • Dividend stocks
  • Rental properties
  • House hacking
  • Ad revenue (e.g. from a website or YouTube channel)
  • Affiliate marketing

Once your passive income is greater to or equal to your expenses you are financially independent and you no longer need to trade your time for money.


Forget the ‘Retire Early’ If You Choose

If you know anything about the FIRE movement, you’ve probably also heard internet trolls say “Yeah but hey those people are still working! They run a blog! They own a business! They work once a week! etc. etc.”

And it’s true. Most people who reach FIRE do not actually retire in the traditional sense. But they work because they want to not because they have to! They often start their own business, or work only part-time when they want to. They don’t need the money but they choose to work.

As the CEO of BiggerPockets, Scott Trench, often says on his podcast ‘Bigger Pockets: Money’: “FIRE is a catchy phrase and the ‘Retire Early’ part is more of a hook to bring people in than a rule”. (I’m paraphrasing)


The FIRE Movement

A lot of people credit Joe Dominguez for beginning the FIRE movement. He retired at age 31 and later co-wrote the book, ‘Your Money or Your Life‘ with Vicki Robin in 1992. They discuss living frugally and living mindfully. Since then, many blogs, websites, and podcasts have popularized the FIRE movement. Notably is Mr. Money Moustache’s blog which began in 2011.


“Spend extravagantly on the things you love, and cut costs mercifully on the things you don’t” – Ramit Sethi (I Will Teach You to Be Rich)

One of the main tenants of FIRE is frugality, or simply living below your means.

Imagine this – you make $61,400 annually (the median Canadian salary according to StatsCan). But you don’t fall for the trap of lifestyle inflation and you spend only $2,500 a month – totally possible if you live frugally. That’s only $30,000 of spending a year! Meaning if you saved the other $30,000 that gives you an ENTIRE YEAR you wouldn’t have to work! And if you were to put that $30,000 into index funds you’re looking at even more money!

Now I’m totally simplifying this, and also completely eliminating good ol’ taxes, but stick with me… The idea is to live frugally and save up as much money as possible, put that money into index funds or other investments (e.g. real estate) so that you don’t have to rely on traditional employment to live!

Frugality doesn’t have to be depriving. In fact, if anything it really makes you think about what you value. Being frugal means consciously spending on things that you value. If you value something that happens to be expensive, then that’s ok! As long as you’re not just spending money out of habit, or to keep up with the Joneses.

The Stock Market & Index Funds

“Don’t look for the needle in the haystack. Buy the whole haystack” – John Bogle


Ahhh stocks… another thing that used to make my eyes glaze over. And if I’m being completely honest, sometimes still does. I am still learning about the stock market and index funds myself.

When most people think of stocks they might think of buying shares in an individual company, such as Apple, or Amazon, or whatever the next big tech company is. This is called individual stock picking with the hopes of picking a winner that will rise in value. This sounds great, but it’s really more like gambling.

Most FIRE enthusiasts don’t pick individual stocks. They invest in index funds. Investing in index funds is investing in all publicly traded companies. Put simply, if you buy a total stock market index fund you are buying ALL the stocks in the stock market! The basic idea is when you buy index funds you’re not buying one share of X company, you’re buying shares from a bunch of successful companies (X, Y, Z, A, B, C, and more!).

You might be thinking ‘what about mutual funds?’ Mutual funds are often recommended by financial advisors. Fund managers are paid to pick stocks with the goal of beating the index. They speculate. They require high fees and take a large portion of YOUR returns. You’re basically paying for someone to individually pick your stocks. Mutual funds have high fees and lower returns compared to index funds. Actively managed mutual funds only beat index funds 20% of the time for a much higher fee.

There is plenty of great resources out there by people with a lot more experience and know how on this subject so seek out those for more information. One of my favourite books explaining index funds is the Simple Path to Wealth by JL Collins or check out his website.

The information from the Simple Path to Wealth is great, but is American. Another great book is The Millionaire Teacher by Andrew Hallam is a Canadian based book that discusses index funds.

The 4% Rule (Safe Withdrawal Rate) and The Rule of 25

“At a 4% initial withdrawal rate the odds of nearly depleting the portfolio are equal to growing it by more than 800%” – Michael Kitces

The safe withdrawal rate (or the 4% rule) is a rule of thumb for how much you can safely take from your investment account each year.

The 4% safe withdrawal rate is based on the results of the Trinity Study – a retirement study published in 1998 by three professors from Trinity University in Texas. This study analyzed how various retirement portfolios held up over every 30-year period from 1926-1995. What they found was that if you withdrawal 4% of your investment portfolio your portfolio is safe 95% of the time, also taking into account inflation.

So – if you take out 4% from your investment portfolio every year you have a 95% chance of keeping your portfolio the same or even increasing the amount of money you have, without adding any funds!

The Rule of 25 is a rule for how much money you need to save based on your annual expenses.

Your annual expenses x 25 years = The amount ($) required to live

So if you’re spending $30,000 annually ($2,500/month) you would need to save $750,000 to live off 4% of your investment portfolio for the rest of your life successfully 95% of the time.

Remember that this takes into account stock market crashes, for example The Great Depression. So if you’re worried about the stock market now (during the crash with Covid-19) you will still be succesful 95% of the time! Sounds like good odds to me!

Find Your Why

“The only real asset you have is your time. This is known as your life energy.” – Vicki Robin (Your Money or Your Life)


You might love your job, and that’s great! But who’s to say you’re going to love it forever? Even if you do want to work for the next 30+ years wouldn’t it be nice to have the freedom to be CHOOSING to do that, rather than because you HAVE to?

You might have passions that you wish you had more time for. You might wish you could spend time with your family instead of always being at the office.

The important thing about FIRE is to determine your why, and then living frugally and saving money will come easier. Not easy! It’s certainly not always easy, but definitely easier when you have a goal in mind.

For us, we have a dream to sail the world which motivates us to hunker down and save money, live frugally, and invest.

Are You Getting Excited Yet?!


So there you have it, a simple introduction to what FIRE is. If this is your first time hearing about it I encourage you to find some books, blogs, and podcasts about it! There’s plenty of great ones. Check out our favourites here.

Where are you in your FIRE journey? Is this your first time hearing about it, or are you well on your way to ‘retirement’? Let us know in the comments. 🙂