How to FIRE? Learn to calculate and which one is the best for you.

What is it?

So, I decided to recalculate my FI or FIRE number. This number is the net worth needed to reach ‘Financial Independence,’ to be free of the shackles that hold you to the job you hate, or whatever your motivations.  Now, it would be considered Lean FIRE as it is a small number. 

There are four types:

  1. FatFIRE- Someone who lives a traditional lifestyle. An example is someone who has saved the equivalent of median annual salary times 25. So, 1 million and up.
  2. LeanFIRE- this one is for someone who lives a minimalist lifestyle and a more restrictive lifestyle.
  3. BaristaFIRE- Someone who quit their ‘9-5’ but they still have a part-time job to cover current expenses that might negatively affect their savings.
  4. CoastalFIRE- Someone who has a part-time job but for different reasons than the Barista, it is essential to have something to do but they have enough to cover their expenses.

How do I calculate it?

Your FI number is 25 times your yearly expenses, so you can keep a similar lifestyle in retirement. This is how the RE (retire early) part works out. If you have everything invested and only withdraw 4% a year then you should be able to keep that nest egg afloat.

This is based on this year’s data. The main thing that has happened this year is that I moved into a significantly cheaper place and I decided to reflect that in my FI number. The FI number is calculated by adding up all of your yearly expenses and figuring out what you spent that year.

I have included my student loan debt in this, just in case. I assume I will have it paid off by the time I can retire but if I do not, I have it included.

To note, I am not focused on the RE part but I am focused on the FI. I want to make sure that I am financially independent enough to be able to do anything I want: change careers, move away, whatever it may be.

Total Year Expenses – 2019
 MonthlyYearlyExchange into USD
Rent SEK   3,103.33 SEK      37,240.00 
Grocery SEK       947.65 SEK      11,371.80 
Eating out SEK   1,487.00 SEK      17,844.03 
Clothes/ Misc SEK       400.00 SEK        4,800.00 
Saving SEK   4,000.00 SEK      24,000.00 
Debt SEK   5,000.00 SEK      60,000.00 
Total  SEK   131,255.83 $                13,788.02
My FI # $             344,700.50
Is it a goal that should be updated every so often?

As you can see I have divided up what I budget for each of the main categories. Not necessarily what I spent, as I only spent approximately $8000k this year, $14k would give a little wiggle room, so I would theoretically need that number times 25 to keep my lifestyle. However, my rent is very cheap, if I lived in an apartment that equated to the average of Stockholm, I would have to save significantly more. When I finish my Ph.D. I will update these numbers as my income will change since I most likely will move elsewhere with different levels of expenditures.

So, comment below if you have calculated your FIRE number

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