Alli and Matt Owen quit their jobs and are traveling across the country while blogging about living on $40,000 a year. Photograph by Logan Zillmer.
Shortly after Matt Owen graduated from college, he consulted with his parents' financial planner, who told him he would be lucky to retire at age 50. Matt, now 29, and his wife, Alli, 28, had other plans.
Starting in 2014, the Owens slashed their living expenses. They cut back on dining out and expensive trips. They rented out the spare rooms in their Bakersfield, Calif., home, generating enough income to cover their housing expenses. Each year, they increased their savings rate until they were salting away as much as 70 percent of their $250,000 annual income. In April of 2018, the Owens quit their engineering jobs, hit the road in a 2006 Dodge Sprinter with 395,000 miles on it and now blog—at owenyourfuture.com—about their experiment to live on $40,000 a year.
In their blog, the Owens post their monthly expenses, which so far average just under $2,500—well below their target budget. And they haven't completely quit working. The Owens offer financial coaching to other couples for a fee via video conferences, and plan to launch courses to help people get their financial life in order. They also have a side hustle selling healthy baked goods online. They are still six years from reaching their financial independence number of $1.2 million. "We launched early, knowing that we were going to make more money," Matt says.
A Hot Movement
The Owens are on FIRE. That is, they are part of the Financial Independence, Retire Early movement that has taken off in recent years, mostly among millennials. The goal is to reach financial independence by socking away 50 percent or more of annual income over, say, 10 to 15 years. Some race to achieve FI much earlier. FI is usually defined as achieving savings equal to 25 times annual living expenses—which allows you to follow the 4 percent withdrawal rule for the duration of a decades-long retirement.
The "retire early" part of FIRE often raises eyebrows—and skepticism. Like the Owens, many "FIRE walkers" are refugees from high-paid professional or tech careers, and most have no plans to completely stop working. But FIRE acolytes say they're redefining retirement. "Retire early" for many of them means having the financial freedom to leave the "hamster wheel" for work or pursuits that give them more control over their time.
"I define retirement as never planning to go back to a 9-to-5 job," Alli says. "We plan to work for another 30 years, but on our own terms, creating work that provides value to the world and aligns with our values."
Many FIRE practitioners have an entrepreneurial streak that makes them well suited for a life outside the traditional, corporate mold. One popular source of income is blogging about their path to financial independence. The more-successful bloggers pull in a nice paycheck and may even snag book deals. Perhaps the best-known FIRE blog—and the one that introduced thousands to the movement—is the one by Pete Adeney, also known as Mr. Money Mustache. Adeney, a former software engineer, started the blog in 2011 after he "retired" at age 30, through frugal living and smart investing, to Longmont, Colo. He and his family live on about $34,000 a year. (See A Visit With Mr. Money Mustache.)
Different Flavors
FIRE isn't one size fits all. There is "lean FIRE," which emphasizes a goal of living on less than $40,000 a year in retirement. "Barista FIREs" are those who are nearly financially independent but still need a part-time job to make ends meet. And "fat FIRE" followers aim to accrue enough savings to generate annual retirement income of $100,000 or more.
Leif Dahleen, a 42-year-old anesthesiologist from Brainerd, Minn., counts himself among the last group, and he has been edging toward retirement. Naturally frugal, Dahleen says he started his Physician on FIRE blog a couple of years ago because he didn't see much written for high-income professionals like him. (This year the blog will earn six figures, half of which Dahleen donates to charity.) He cut his hours and his $400,000 salary by about 40 percent a year ago. He expects to quit work next year and spend several years traveling the world with his wife and two sons, ages 8 and 10.
