Badass vs Dumbass
Master your Financial Kung Fu to be one and not the other.
Go to Sifu’s Notebook for The 4 Different Flavors of FIRE
Primer: Who are Sifu & Ronin
Episode 14: FAT Ronin
Ronin: Sifu, I’m drowning in FIRE options here. It’s like trying to pick a brand of hot chili oil, which we know is a ridiculous task cuz I love them all! I’m getting heartburn just thinking about it. I need a cheat sheet, bro!
Sifu: Ah, Ronin. Choosing the FIRE path that works best for you is akin to choosing which striking method you wish to employ to defeat your opponent. In Kung Fu, each move has unique characteristics and as a fighter knowing his rival, you must use the technique best suited to bring him down.
Ronin: So, it’s like choosing between kicking ass with a roundhouse versus a flying sidekick? Same goal, different flavor?
Sifu: Precisely, #1. With FIRE, choosing which will be dependent mostly on you. Know yourself, and you will find the way forward.
Ronin: Hey! I know me pretty well – like the back of my hand, LOL! Let’s do this!
1. Lean FIRE: The Frugal Path
Sifu: Ha. Let’s start with Lean FIRE. It’s the path of frugality, for those who find strength in simplicity. This is for the minimalist warrior who thrives on less, lives below their means, and saves with the fervor of a dragon guarding its den of gold.
Ronin: Oh boy, the “monk in a cave” approach. Living on rice and beans, no quarterly vacations, and definitely no phone upgrades every six months. I guess the upside is you reach FIRE status faster, but the downside is you have to dodge every luxury like it’s a kick to the family jewels.
Sifu: Haha, I would highly recommend you avoid those as you would the chick with the really long nose hairs. Listen to me now, believe me later – the feeling of crushed cajones must be like rubbing wasabi into your eyeballs. I wouldn’t personally know. As you’re aware, Sifu is impossible to strike like that!
Ronin: You are a seriously wise guy, boss. LOL.
Sifu: Lean FIRE requires sacrifice. But for those who are content with a minimalist lifestyle, it offers a quicker path to financial freedom. It’s really not about deprivation, Padawan. It’s about focusing on what truly matters and shedding the excess.
Ronin: Yeah, who really needs to enjoy those long-ass vacations with your honey and best buds on those sweet beach resorts every spring break, when I could rest in my cheapo apartment instead? Wait … that’s exactly me! Sheeeit! OK, maybe I can do without … or maybe not. Who am I kidding – I’m feeling weak already, boss. This one sounds tough! Let’s hear the other options…
2. Fat FIRE: The Luxurious Retirement
Sifu: Ha! If simplicity isn’t your style, there’s always Fat FIRE—the path of luxury and abundance. This is for those who wish to retire early but maintain or even enhance their current lifestyle. It’s a path that demands a larger savings cushion, but it allows for indulgences, travel, and the finer things in life.
Ronin: Yessir! Now we’re talking! So, I can retire early and still enjoy my 5 course dinners at the izakaya hotspot. spontaneous trips to Monaco, and throw in a tricked out penthouse with an ocean view? There must be a big-ass catch…
Sifu: You’re no dummy, Ronin. The catch is that it takes longer to achieve. You must build a substantial income and savings to sustain such a lifestyle in retirement. Fat FIRE requires patience, discipline, and usually, higher investment returns.
Ronin: So, way more work, but way more rewards! Gotcha. No moxie, no medals. I wonder if it’s worth the heavy grind …
3. Barista FIRE: The Hybrid Retirement Plan
Sifu: Indeed, it’s a longer and perhaps more difficult journey, but for those who value comfort and security, it’s worth the added effort. Now, if neither extreme appeals to you, there’s Barista FIRE—the middle path. It’s about saving enough to quit your full-time job but continuing to work part-time, often in a less stressful role, to cover certain expenses like health insurance.
Ronin: Hmmm. The “half-ass retirement” plan. So, I can leave my real career, work a chill job—maybe making lattes or teaching DJ’ing to teenagers—and still have enough cash to enjoy life without the full grind? Kinda like “quit the rat race and join the tortoise race”?
Sifu: Exactly … kinda, LOL! Barista FIRE offers more free time than full-time work, with the bonus of ongoing income. It’s for those who want to reduce stress but aren’t quite ready to retire completely. It’s ideal for pursuing passion projects or simply enjoying a more relaxed pace.
Ronin: Interesting, Cap. So, I get to keep my social life, have more time for hobbies, and still make some cheddar? Sounds like the best of both worlds. But I guess the downside is I’m still tied to a J.O.B., even if it’s a chill one.
4. Coast FIRE: The Glide Path to Retirement
Sifu: Fact. You still rely on part-time income, and you may need to budget carefully. But for many, the balance of work and leisure is worth it. Finally, there’s Coast FIRE—the path where you coast to retirement. This is for those who’ve saved enough early on that their investments can grow independently without additional contributions. You continue working, often in a less demanding role, until your portfolio is ready to support your retirement fully.
Ronin: Coasting to retirement – sounds pretty cool! No need to save like crazy pants anymore; just let the investments do their thing while you enjoy a lighter workload.
Sifu: Exactly, #1. Coast FIRE is for those who want to ease up on aggressive saving after reaching significant milestones but aren’t quite ready to retire fully. It allows you to focus on your career or passions without the pressure of saving aggressively.
Ronin: I like that I could still kick back, work on my passion projects like my music, and not stress about the 401(k) every day. But, I guess the downside is I’m still working until later, yes?
Sifu: Yessir. You will still need to work until your investments are fully mature, and it requires a strong early start with savings. But the flexibility and reduced pressure can be liberating for many.
Ronin: So, let me see if I have this right. Lean FIRE is daily plain tofu. Fat FIRE is living lux – yeah baby! Barista FIRE is “half-ass”. And Coast FIRE is kick back after a while.
Sifu: Ha. You’ve grasped the essence, Ronin. Each path offers its own rewards and challenges. Which aligns with your values and goals? Remember, regardless of path, the ultimate goal of FIRE is the same: to gain control over your time and live life on your own terms.
Ronin: Right, boss. Which path are you on, Sifu? I bet it’s something crazy like Ninja FIRE – where you stealthily retire without anyone noticing.
Sifu: Hahaha. I can tell you but I’d have to kill you, my man. Sifu’s path is his own, just as yours will be. The important thing is to walk it with purpose, mindfulness, and of course, a sick sense of humor. It’s a crazy life – you’re going to need it.
Ronin: Alright, Sifu. For now, maybe I’ll start with Lean FIRE and see if I can upgrade to Fat FIRE. Just need to figure out how to resist the temptation of them cool tech upgrades. FML.
Sifu: Great, #1. That’s a solid approach. Because you’ve come so far already, Junior Jedi, why don’t we hit up that izakaya spot you’re going on about. On Sifu, of course.
Ronin: YESSSSSSSSSSS! O captain, my captain! You are a gentleman and a scholar, no matter what anyone else says…
Sifu: Oh, is that right, #1. What unflattering shite do they say exactly about Sifu?
Ronin: Absofrickinglutely nothing, my man. Just joking with you, as usual. Hahaha. Do you really think anyone with more than one brain cell has balls to say shite?
Sifu: Oh sure, if they really, really want some dark blue balls, I say bring it.
Ronin: Doh!
Sifu’s Notebook
The 4 Different Flavors of FIRE
The FIRE movement isn’t a one-size-fits-all strategy. It has evolved into various approaches, each suited to different lifestyles, financial objectives, and risk tolerances. Recognizing these different flavors can help you determine which path best aligns with your values and goals.
1. Lean FIRE: The Frugal Path
Lean FIRE is for those who thrive on a minimalist lifestyle, both while working and after retirement. Achieving Lean FIRE usually involves hardcore saving and living far below your means. This could mean ditching luxuries, downsizing your home, and adhering to a tight budget.
Who is it for? Lean FIRE is ideal for those who are content living frugally and are eager to reach financial independence as fast as possible. It’s perfect for minimalists who can comfortably get by on a modest income, often below $40,000 a year.
Pros:
- Quicker route to financial independence.
- Lower savings target.
- Encourages simplicity and minimalism.
Cons:
- Requires significant lifestyle sacrifices.
- Leaves little room for unexpected expenses or splurges.
2. Fat FIRE: The Luxurious Retirement
At the other end of the spectrum is Fat FIRE, where the aim is to retire early while maintaining or even upgrading your current lifestyle. Fat FIRE demands a much larger savings cushion, typically because it accounts for higher living expenses in retirement.
Who is it for? Fat FIRE is perfect for those who want financial independence without giving up the comforts they enjoy. It’s ideal for individuals who want to continue indulging in luxuries, travel, and dining out even after they’ve left the workforce.
Pros:
- Maintains a high standard of living in retirement.
- Provides greater financial security and flexibility.
- Allows for splurges and higher living expenses.
Cons:
- Takes longer to achieve due to higher savings targets.
- Requires substantial income and/or investment returns.
3. Barista FIRE: The Hybrid Retirement Plan
Barista FIRE is a balanced approach between traditional retirement and full FIRE. It involves saving enough to quit your full-time job but continuing to work part-time to cover certain expenses, often for health insurance or other benefits. The term “Barista” reflects the idea of taking on a low-stress job, like working at a coffee shop, to stay active and handle minor costs.
Who is it for? Barista FIRE is for those looking to reduce work stress and gain more free time without fully retiring. It’s perfect for people who enjoy working in a relaxed environment or want to pursue passion projects without financial pressure.
Pros:
- More free time compared to full-time work.
- Partial financial independence with ongoing income.
- Requires less savings than full FIRE.
Cons:
- Still reliant on part-time income.
- Less freedom than full FIRE.
- May still require careful budgeting.
4. Coast FIRE: The Glide Path to Retirement
Coast FIRE is about reaching a stage where your investments can grow independently without needing additional contributions. You’ve saved enough early on that your portfolio will eventually support your retirement, but you continue working, often in a less demanding role, until then.
Who is it for? Coast FIRE is ideal for those who want to ease up on aggressive saving after reaching significant financial milestones but aren’t quite ready to retire fully. It’s perfect for individuals who want to focus on their careers without the pressure of saving aggressively or for those who enjoy their work and prefer not to quit entirely.
Pros:
- Reduces the pressure to save aggressively after hitting the Coast FIRE milestone.
- Offers greater flexibility in job choice and lifestyle.
- Allows work to be more about enjoyment than financial necessity.
Cons:
- Still involves working until a later retirement age.
- Requires a strong early start with savings and investments.
Choosing Your FIRE Flavor
The great thing about FIRE is that it can be tailored to fit your lifestyle, goals, and values. Whether you’re drawn to the simplicity of Lean FIRE, the luxury of Fat FIRE, the balanced approach of Barista FIRE, or the gradual ease of Coast FIRE, there’s a path that aligns with your needs. The key is to be honest about your financial objectives and the sacrifices you’re willing to make to achieve them. No matter which version of FIRE you choose, the ultimate aim is the same: to take control of your time and live life on your own terms.
