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Avoid lean F.I.R.E. and struggling with higher costs.

Monday, April 10, 2023

A few months ago, I blogged about F.I.R.E.

More specifically, I blogged about lean F.I.R.E.

I said that some people would retire early once their passive income is able to cover their basic necessities in life, leaving very little or no room for error.

I cautioned against lean F.I.R.E. as I thought it was pretty shaky.

Of course, regular long time readers know that I like having buffers partly because I am mental but mostly because I think having a crisis mentality is not a bad thing.

I used an example of how I got pretty worried during the COVID-19 pandemic when both interest income and dividend income took a hit.

If I did not have sufficient buffers, I would probably have had to look for a job.

It would have been very difficult in a very challenging environment.

It would probably also have been very difficult because I was much older and have been out of the workforce for many years.

Why am I blogging about this now?

The catalyst for this blog was something I read this morning.

A F.I.R.E. movement pioneer who retired early 10 years ago at age 34 now says he must return to work.


He cannot afford his children's college education now.

I always say that kids are very expensive to bring up in Singapore. 

An estimate which I did almost 20 years ago showed me that it would cost some $250,000 per child from birth to graduation day at a local university. 

I am sure that the figure is much higher today.

It is so important to think ahead when we plan for F.I.R.E. or anything in life, really.

Think what could go wrong and what happens if we should have an accident or a few along the way.

Maybe, we planned to have two children but got lucky and were blessed with triplets or quadruplets.

It sounds a bit amusing when I say this and we might laugh at it, but it could throw a spanner in the works, especially if we are on lean F.I.R.E.

After being retired for 10 years, it would probably be a challenge to return to the workforce.

Our skills or knowledge might have become obsolete or our old position might no longer exist.

Structural unemployment is very real.

Even if we are not obsolete, we would probably have to compete with younger and probably more energetic people for the same job.

They would probably be able to settle for lower salaries too.

Costs are rising and people on lean F.I.R.E. might be able to cope if they rise slowly but if they should rise rapidly like what has happened in the last one year, it could become difficult or even impossible.

I would avoid the various forms of F.I.R.E. which are along the line of lean F.I.R.E.

I don't like to live life with little or no room for error.

This is why people who follow the Y.O.L.O movement, believing that they should live life to the fullest, can ill afford mistakes.

Things do go wrong like they sometimes do.

I always demand a greater margin of safety for peace of mind.

What about you?

Related post:
F.I.R.E. lean or shaky.

Comments section of the blog
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garudadri said...

Dear AK
A timely reminder to all out there who set a lower bar for themselves when it comes to FIRE
To be honest, most FIRE models that work on even the traditional 4% withdrawal rate are vulnerable
Any unanticipated event can throw a spanned into the works and upset expected outcomes
I will go as far as to say that as long as you can downsize your workload and you don’t mind doing some job, if you can tolerate it, better to not quit until you are confident that the savings you created are robust
One more thing- this is my personal view though, is that some part of the portfolio should be in growth albeit risky. Studies have shown that this blend will be beneficial in your working years when you have the cushion of earned income. Total returns with a reasonable mix of dividend and growth shares to start, followed by a gradual shift towards dividend investing with safety and fixed income plus rental income from property is ideal to withstand shocks
Of course, this demands discipline and conviction. Rome was not built in a day, as the saying goes
This is why I cannot but feel skeptical about lean fire, bill fire, barista fire etc etc ! These are basically far from ideal.
It will be hard work and a long slog but FIRE strategies need to be robust and reasonably shock proof
This is where 12-24 months emergency expenses, property rentals etc come in. They cushion the impact of black swan events that disproportionately affect your equity allocation

zhenling said...

it's really tempting to just make the jump once u reach some financial milestones. while having buffers can buy a peace of mind, one can drop dead any day. watching my parents age has me questioning the traditional "work until 60+ and enjoy golden years after" framework. While they take good care of themselves, age still catches up. I find that they have had to dial back on hobbies anyway due to age. some things you can only do when u are young unfortunately.

and after saying so much, I don't really have an answer myself. have been trying to cover my expenses with out cashflow coming from dividends. and i've been falling short. looks like I will fall short again this year with unexpected expenses. -sigh- guess I have to grind at this FIRE a while more :(

AK71 said...

Hi Garudadri,

Thank you for the very thoughtful comment, as usual. :D

I like the following statement you made.

"I will go as far as to say that as long as you can downsize your workload and you don’t mind doing some job, if you can tolerate it, better to not quit until you are confident that the savings you created are robust."

Personally, I could have retired earlier but I wasn't sure and wanted a bit more of a buffer.

Looking back, it was a good decision.

I said the following in a blog published in April 2015:

"...if we wish to retire very early and retiring in our 40s is considered very early by most people, I feel that we need a bigger buffer unless we are willing to consider the option of re-joining the workforce if things should go wrong."
From: Can we retire at age 40 with peace of mind?

I agree fully that Rome was definitely not built in a day and swans are not all white in color. :)

AK71 said...

Hi zhenling,

You know what they say.

If something is worth doing, it is worth doing well.

Soldier on and I am sure F.I.R.E. is on the horizon. :)

I agree that there must come a point when we must say, "Enough!"

Eventually, when we are financially secure, enjoy life a little more. :)

I don't know how long you have been following my blog but I published this in 2014:
Journey to financial freedom is not a race.

Gambatte! :D

C said...

Dear AK

I also read about the fire movement pioneer who retired 10 years ago and now have to return to work. Personally I felt he is a bit too optimistic when he decided to quit , especially he & family stays in San Francisco. This could be a lesson for us, seriously. We could be just painting a overly nice future to justify our own numbers. Better be 居安思危.

Well, I be thankful if I can stop work around 58-59y old. "Eating crusty bread with ink slowly".. I didn't bother to tell wife what it means. The result of reading your blog for a decade.. haha. See you on the 10 May, just to say thank you in person. Cheers

AK71 said...

Hi C,

Yes, some places are very desirable but more expensive to retire in.

Of course, being in Singapore, we can appreciate this.

I had a good laugh when you said you told your wife to eat crusty bread with ink slowly but didn't bother to explain to her what it meant.

Be careful as you could find it on your plate during dinner. LOL. ;p

Ah, thanks for the reminder. 10 May is only 1 month away. See you. :D

evayxy said...

If you're talking about Financial Samurai, that was an April Fool's joke....

Unknown said...

Actually during covid it'd be really easy to get jobs as long u r not looking for career e.g. safe distancing ambassadors, trace together checkers, mall entry checkers, worker dormitory inspectors, vax centre ushers. And can remain anonymous wearing double masks heheh.

FIRE'ers actually got it real easy during covid thanks to fiscal & monetary gushing policies. They were given a long breathing room in 2020-2021 to anti-fragile their FIRE portfolio & processes.

AK71 said...

Hi evayxy,

If it was a joke, it was in pretty bad taste.

It would then seem to me like the person was just flexing his achievement and trying to get more attention. -.-

Perhaps the most pressing, though, is because he just can't make the math work on paying for his young children's college education with his current financial situation. When Dogen retired, he and his wife weren't sure they would even have kids. Now they have two, and are raising them in San Francisco. It's expensive, even when you're earning hundreds of thousands of dollars in passive income.

Though his and his family's day-to-day expenses are still covered by passive income, including from real estate holdings and his blog, he says there's no getting around the insanely high costs of higher education in the United States. He estimates it could cost as much as $1.5 million to send both of his children—currently aged 6 and 3—to college.

Source: Yahoo Finance.

To be honest, it didn't read like a joke to me. O_o

AK71 said...

Hi Unknown,

Hehe. I like the bit about being able to stay in disguise while working. ;p

Yes, financial assistance was given out during the pandemic but it was grossly insufficient to replace the lost interest income and dividends from stocks in my case.

Still, you made a good point as many bankruptcies were averted during the pandemic because of government handouts.

Since then, bankruptcies have been on the rise and I produced a YouTube video on this.
Many will be bankrupt in 2023.

evayxy said...

from the actual blog post @

"In A Different Life, Perhaps

OK, this is my belated April Fool’s Day post because I forgot to write one on Saturday! My mind is mostly focused on the kids during the weekends."

AK71 said...

Hi evayxy,

This blogger is a master at getting attention! LOL :D

Maybe, I should do something like that too. ;p

Newbie Investor said...

So true, so true... No room for error in lean fire...but macro factors like high inflation and rising costs do throw us off our course... Definitely need to learn from AK to have a buffer!

AK71 said...

Hi Newbie Investor,

Alamak. Now, got Barista F.I.R.E. too? O_o

I cannot keep up with so many variants. LOL. ;p

Remember to have an emergency fund and remember not to be over leveraged.

Will go a long way in helping people who achieved F.I.R.E. to stay retired. :)

Survivability and opportunity in times of distress.

Henry said...

Hi AK.
A good piece from you about Lean Fire.
Like you, I have a crisis mentality and always worried about money not enough after FIRE in my 40s. To the extent that I would review my savings versus expenses every month. Then I figured out I should use a withdrawal rate of maximum 2% and factor in a 2.5% annual inflation into my calculation. This relieved the situation a lot and i only look at the number once a year. Then C19 induced high inflation struck. Haha, had to rework those numbers again every few months. Glad that I'm still alive and just returned from a Europe holiday. Your blog is so goood. I learnt a lot since 2014, the year that I FIRE. Thanks again.

AK71 said...

Hi Henry,

You retired younger and a couple of years earlier than I did.

So, I am sure there is more I can learn from you than you from me. :D

Having a crisis mentality is not a bad thing apart from possibly developing anxiety issues and maybe having more white hair. ;p

Good to know I am not the only mental one around.

Yes, the COVID-19 pandemic was a shocker to me.

I know I was not alone in feeling worried as even Warren Buffett was feeling down especially with regards to his out of character investments in the airlines. -.-

A 2% withdrawal rate sounds very safe to me although I hope I never have to draw upon my savings to fund my retirement.

Welcome back from Europe to Singapore. :D

Suresh said...

I prefer F.I.N.E to F.I.R.E., meaning you still pursue Financial Independence but to be Not Entangled with the financial pressures. And once you reach your goal you can choose to pursue a 2nd career that is aligned more to your natural interest, take care of your family, spend more time with your children, start a blog, travel the world, conquer the digital realms etc. Retirement often seems to denote you have entirely clocked out but to each his own ...

AK71 said...

Hi Suresh,

I like the sound of that.

F.I.N.E. sounds safer than F.I.R.E.

No chance of being burnt. Sorry, couldn't resist. ;p

For sure, retirement isn't just not working and doing nothing. :)

Thoughts on preparing for early retirement.

Henry said...

Alamak AK. Cannot compare my Lean FIRE with your Abundant FIRE lah. 🔥 Even go holiday also must go when there's promo and low period to save costs. Now back to the reality of "poverty" living. Lol.
Your blog had helped many over the years. Sifu and role model. Keep it up.

AK71 said...

Hi Henry,

I have decided to publish my response to your comment as a blog because I believe it should have a wider audience.

Thanks for the inspiration! :D
Lean F.I.R.E. 2014 till now! Still going strong! AK is wrong!

Yv said...


I like the FINE approach and am working towards my "2nd career". To work not because I need it, but because I like it.

AK71 said...

Hi Yv,

F.I.N.E. sounds so Singaporean too. ;p

Yes, if we work, ideally, it should be because we want to and not because we have to.

The money made should be something that is nice to have and not something that is essential to our lifestyle. :)

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