The post that considers socialism and financial independence; responding to an article in the Guardian on the FIRE movement.
I sometimes ponder whether you can be a socialist and follow the FIRE movement.
I have a love/hate relationship with the Guardian. Although I continue to read it every day and on the whole I think it’s good, thoughtful journalism, it sure can churn out some sanctimonious twaddle.
This is never more apparent than with the poverty porn that the Guardian loves so much. Now, don’t get me wrong, I don’t want to belittle the struggles of people who have suffered as a result of the government’s austerity measures. But by God the Guardian loves to lay it on with a trowel.
Typically something along the lines of:
“This is Sandra. Sandra lives with her three children and elderly mother in a roofless garage. Sandra is blind and has one leg and an anxiety disorder. Since the introduction of universal credit Sandra and her family have been forced to make their meals from tree bark”.
It’s only a slight parody of what you might actually find in the Guardian and probably doesn’t serve its purpose as well as the Guardian hopes. People who are anti-austerity don’t need any convincing. Those who vote for parties with a pro-austerity manifesto will probably dismiss it as an extreme example and not reflective of wider problems.
How is this relevant to financial independence?
When the Guardian published an article on the FIRE movement in November 2018 you can probably guess its tone. To be honest, the article itself was sceptical but fair. But as for the comments…
sometimes the Guardian comments section is as hysterical and narrow-minded as anything you would find over at the humanity-vacuum at the Daily Mail.
So let’s look at some of the recurring comment themes on the article. They are generally reflective of what some who identifies as socialist might say of the finance independence movement.
FIRE isn’t possible unless you earn a lot of money
Such as this comment from wiretrip “So basically, earn shitloads of money, don’t have children (or go back in time and have them at 16) and live in a shed or a tiny boat…”
I’m very conscious that I earn a good salary. I don’t want to be smugly preaching to people who earn less money about how easy it is to retire early. Even on my salary, I still think I’ll be early-mid 50s until I get to my ultimate goal.
However, that doesn’t mean that people on average salaries can’t use some of the principles of FIRE.
Sure, the likes of Sandra are unlikely to ever be able to retire early unless there is a dramatic change in circumstances. But most people aren’t in such a desperate situation.
Sometimes the Guardian seems to be under the illusion that there are a handful of people in the country earning a staggering salary. Whilst everyone else works the land of their feudal masters for one groat a month.
It would take me X years to save that much money
In a similar vein to the above, there are comments such as this one from jimmybob87:
“I earn just below the national average annual salary, if I saved every single penny of my disposal income it would still take me over 50 years to save a £500k pot. These people are so far removed from the reality of life for the average person it’s staggering”.
Firstly, a lot of these people don’t seem to understand compounding gains. Secondly, even if your salary/outgoings really don’t allow you enough to retire in your 40s, why dismiss the entire exercise as futile?
Let’s break it down…
Assume you are 28 years old and never expecting to earn much beyond the national average. You are planning to retire at 68 where you expect that the state pension plus your workplace pension will allow you to retire. You can save £200 per month and for whatever reason are never able to improve on that throughout your working life.
The Hargreaves Lansdown ISA calculator says that £200 saved into an ISA for 35 years (i.e. until you are 63) gives you just shy of £325,000. Granted that is using the perhaps rather optimistic total returns (i.e. not factoring in inflation) of 8% a year. But it also assumes fees of 1.5%, which if you’re following FIRE you won’t be paying, so on balance it is probably a not-unreasonable estimate.
£325k! Now, £325k won’t go as far in 35 years as it will now. £325k in 35 years is about £135k in today’s money (dependent on inflation). But that’s still more than enough for most people to last them the 5 years until the pension kicks in. 5 more years of retirement is not to be sniffed at.
Buy to Let is Evil
Let’s take this really eloquent comment from raydeeping, aimed at Barney from The Escape Artist:
“Whiter sounds just like some Tory who tells you that you ain’t working hard enough. He rents out houses for fucks sake, he worked in the vastly overpaid Finance Industry for fucks sake and he thinks the low paid spunk their money on beer and fags for fucks sake. Don’t give him free publicity – line him up next to Aaron Banks”.
Poor old Barney. Bet he’s crushed that Ray doesn’t approve of his lifestyle.
Being a regular Guardian reader I have, by osmosis, developed a suspicion of BTL landlords and don’t aspire for residential property investment to form part of my portfolio plans.
Yet I have always been lucky with renting: good landlords, decent properties and fair rent. Not everyone is in a position to buy a property even if they theoretically could afford to do so. They may not have decided where to settle yet. As long as private landlords are behaving fairly and responsibly I don’t see why the only reasonable tenure options are owning or council tenant.
The problem with people who aspire to FIRE is that the sad bastards haven’t found jobs they enjoy
“Interesting that these people simply didn’t enjoy their jobs. From what I can tell, they did them simply for the money, not out of any sense of mission. They the things they were doing sound like very tedious ways to spend your time. But I somehow doubt that in retirement many of them will make any significant contribution to society. I would call what they are doing now ‘pottering’, low-grade hedonism. If that’s how they want to spend their time on earth, then good luck to them. My work doesn’t pay me much but I find it very fulfilling. I would do the same if I was ‘retired’, though I never will retire unless I’m forced to. Perhaps FIRE is the other end of the same candle I’m burning, but I can’t help thinking these people are a little bit lost”.
Thanks for that patronising insight Stupormundi (I didn’t paste the whole comment for space reasons but that’s the bulk of it). I wouldn’t say people who have adopted the FIRE movement are “lost”. On the contrary, you will rarely meet such focussed people.
Saying that you just need to find a job you enjoy enough that you don’t want to retire is all very well, but the fact is that most jobs are a bit crap. If they weren’t then no one would pay you to do them as everyone would volunteer. No one is lining up to pay me to review rollercoasters for a living.
These people aren’t really retired as many of them have continued to earn money
Rebbeach says “Yes. Many of them are also NOT retired, and bring in a lot of money through blogging about the fact that they’re “retired”. It’s a scam”.
Hear that FIRE followers, you are being scammed. Let’s ignore the fact that the likes of The Escape Artist and Mr Money Mustache could never earn another penny from their active pursuits. And still be financially independent.
It goes back to the previous point about just doing a job you enjoy. Some people who are aiming for FIRE (myself included) have opted for a well-paid job that they don’t mind (and sometimes even quite like).
To reach a point where they have the option to continue to do that job or else do something that they find more enjoyable. This might involve earning money or might involve being a feckless layabout.
Whilst I’m inclined to dismiss a lot of the criticisms on the Guardian it always pays to listen to the naysayers and opponents. Including the likes of Suze “you need $10m to retire” Orman.
It’s never healthy to only listen to those that already believe what we believe. I enjoy listening to a good healthy dose of cynicism. So I can decide that, on balance, I’m doing the right thing.