Last Updated on March 19, 2024 by Arurhose
We all know what FIRE is – Financial Independence Retire Early. This blog is focused solely on Financial Independence, which is the ability to live off your resources through income you can self-create. How you want to live is a significant component of determining if you are financially independent; for some, tiny, and for others, giant, which is FAT FIRE.
FAT FIRE is the ability to be Financially Independent, Retire Early, and live the life you want without holding back on anything significant, being too frugal, and cutting back on expenses.
I drove down the road a few years ago, dropping off my sister-in-law. We got into a conversation where she mentioned I was rich, to which I denied it and told her what it meant to be rich for me. I realized that from one person’s perspective, you represent something different from your reality. FAT FIRE is the ability to look after myself and my family, providing a lifestyle consistent with what we now have as a minimum. I also want a few luxuries before and after they finish university. Some examples are travel, restaurants, hotels, and the ability to support those around me.
What Is Fat Fire For You?
The factual aspects of FIRE depend on where you live and your circumstances, such as your family. Suppose you’re married with children or no children, single, living in a big city. For example, in Lagos, Accra, London, Nairobi, New York, Amsterdam, Brussels, etc., vs. living in the countryside, your FAT FI number depends significantly on such aspects. What does that mean? Depending on your circumstances, your FAT FIRE number may be good enough, must increase, or your present/future circumstances decrease.
FAT FIRE is not a constant; your cost of living can and will fluctuate up and down throughout your life. I only recently found out my FAT FI number is only for a peak period of about five years – when both my sons finish university; before that, my number was much lower, and after that (schooling), my FAT FI number dropped even lower. My Financial Independence calculation was based on my peak number, which needed to be corrected. There are no constants; this is why the context is critical. Context mapped throughout your life. Now, with further self-examination, my actual FAT FI number is much lower. So, looking at your future peaks and troughs, you can examine and remove anomalies, leaving a more accurate FAT FI number.
Side note: I am still determining what the future holds. Education, especially university and employment (with the enhancement of AI), might mean my children will skip university altogether, and I’ll reach my FAT FI earlier. FAT FI will allow you to live freely and broadly, with the benefit of achieving LEAN, BARISTA, and COAST FI well in advance. Aim for the stars and land on the moon concept.
FAT FIRE – Unconventional Points
Financial Independence primarily surrounds psychological factors and mindsets. We all work towards an FI number; check the Reddit groups if you don’t believe it. There is no sum without the psychological and mental work behind any FI number. All FI numbers represent what we want to be because money is quantifiable. More profound, the FI/FIRE acronym points towards freedom, which is not a goal. You must answer and ask: freedom to do what? Independence and ability to choose what?
FI and FIRE are support structures to Choice. What do you want to FI/FIRE towards? It would help if you had a good plan for retirement and employment-independence.
When do you wish to FAT FI? Being too old might not be worth it; there is very little to enjoy then. Too young and, ironically, can ruin a person. Depending on the ranges, giving too much to reach a FAT Financial Independence goal can come at too heavy a price on relationships, which life is all about, such as friends, extended family, your spouse, husband, wife, children, brother, sister, parents, etc.
The journey will change you along the way, especially true for FAT FIRE; it is the most challenging type of Financial Independence to attain. Similar to going to the gym and losing fat, coming down three or two dress sizes, or putting on muscle through weights. How you look at food, how you treat your body, nutrition, sleep routine, discipline, and your view on aspects of health will evolve. At the end and during the journey, the person who started is partially gone; things that were hard to do become easier, i.e., going for a run or making money. Similarly, our financial independence journey, especially FAT FI, will evolve your views on your future and the people you spend time with or want to spend time with. The version of you on the journey and at the end will be someone new – YouonFI.
No Doubt, You Will Be Working
Except for Kings, no one stops working and lives a passive life. Even Kings have kingship duties, so no, you will be working. However, you can choose what kind of work you want.
As you might already know, this blog focuses on Financial Independence without Retiring Early. However, suppose you choose to ‘Retire’ early. That’s a real option after you become financially free, but you’ll still be working.
What kind of work do I mean? Running a blog, having a diverse portfolio of stocks/shares, managing multiple properties you own – checking the maintenance of these buildings (plumbing, gas, tax) and your tenants etc. None of this is passive. If anyone believes they are (passive), they could try to ignore the work for six to eight months and see what happens. So nobody ‘retires’, but remaining an employee is also an option. Being free and independent to quit when you want, reduce hours or work without fear of employment is satisfying.
I firmly believe that humans are designed and need to work, that it is counterintuitive not to. Without work/working towards something, we lose meaning and purpose. We become shells.
Who Is Fat Fire For?
FAT FIRE isn’t for everyone for two reasons – it’s the most difficult form of Financial Independence (and unrealistic for some). Secondly, it’s not needed (FAT FI is a bonus).
Touched on earlier, FAT FI has a high price; anyone aiming for it may be paying more than it’s worth. Remember, Financial Independence is present long before attaining FAT FI (such as LEAN, COAST, etc).
It is not pleasant to keep thinking about money, I get it, but the other forms of Financial Independence are more accessible to attain with less psychological, lifestyle and mental pressures that must change to succeed.
Good questions are: Does the life I want to live need to be fully covered by FI? Am I taking on too much? How much of all this is me vs how much is conditioning and keeping up (consumerism of clothes, cars, houses)? What makes me content – am I (and my spouse if present) a more straightforward person (people)? Soul-searching questions.
I want to FAT FI. My FI number is much smaller than others due to who I am; I mean my wife and me. For us 6,000 a month is FAT FIRE. This amount excludes our debts and comes after our children finish their education. I keep asking the soul-searching questions; it’s a continuous process. My wife and I will be excellent at that number (6000). However, I noticed we are on track to surpass it with compounding, etc.
Small secret: most people will get their FI Number wrong, too high, too low, not considering compounding interest, life events, etc. Your FI Number is to get you on track; it’s like this: waking up and getting ready for a flight or work, you know what time you want to be there, nine or eight o’clock, and then you leave. You don’t know what will happen along the way ( heavy traffic, an accident, transport moving faster, a public holiday, etc). In the end, you might be late or early, but one thing’s for sure: you get there. You see, it’s less about the time you get into work because you eventually do and get paid. Without the mindset, plan, preparation and action, getting to work is a dream that never happens.
Circling back, any FI number will be inaccurate and change over time. I plan for 95% of my target FAT FI number to come from entrepreneurship instead of a drawdown. I’ll explain more about this in the future.
Conclusion And Things To Consider
You can FAT Fire by changing your contextual options, such as where you choose to live. I live in a town of between 30k and 40k people. The life I have here is drastically different, and it means it’s a lot easier for me to achieve my FAT FI goal. If you are young, start investing yesterday. I once heard – that the best time to plant a tree is yesterday, and the second is today. So invest now and align your goals.
In conclusion, we need to continuously go through the psychology of what we want, why we want to want it, when we want it, and merge the 3. If we are happy with the result, we can make life choices and actions that align with our FAT FI/FIRE mission.
Interesting Reads: FAT FIRE, What Is Fat FIRE? The Best Early Retirement Lifestyle
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