It’s not a surprise that like most financial bloggers, I am aware of the FIRE (financial independence/retire early) movement. What may be a surprise is how incredibly obsessed I am with FIRE since it’s not something I’ve ever mentioned before.

My focus has always been on eliminating my student loans and increasing my net worth. But that is all part of the greater plan of FIRE and quitting my job in the future.

At the center of FIRE is the FIRE number, the amount of money you need to have a 95% success rate of never running out of money in retirement once you quit your job.

What I found to be the most intriguing in calculating the FIRE number is that income is completely irrelevant to the equation. It relies only upon your yearly spending.

Expected yearly spending x 25 = FIRE number

For years since I discovered FIRE, I tried various scenarios but held back on seriously looking into my FIRE number because I was fresh out of graduate school with a lot of debt.

I didn’t quite know what my spending level would be as a professional rather than a student so I figured any spending data I used wouldn’t be accurate. I was also aggressively paying my $200k student loans which I didn’t want to calculate into my yearly spending once I retired so I was waiting for that to be eliminated.

Well, some things have changed, some have not. The uncertainty is still there.

FIRE Number

I have now relinquished my full-time student status and become a full fledged professional for over 3 years. What hasn’t changed is that I am still in debt. 

Fortunately, I’ve gotten my student debt down to the ~$40k’s range. I don’t plan on paying that off early since I’ve refinanced to a low 2.2% interest rate. However, I did pick a 5 year repayment plan so I know that it’ll be paid off before I FIRE.

With that said, I couldn’t wait any longer and decided to finally calculate my FIRE number.

Luckily for me, my OCD level tracking allows me to review some data for the past 3 years:

2018 Spending: $21,686

2019 Spending: $27,950

2020 Spending: $23,553

*Note: these spending amounts do not include student loan repayment. I plan to have my student loan paid off before FIRE hence why it is not included in the calculation.

Unfortunately, I don’t know if these numbers are reflective of a “normal” year, whatever “normal” is.

In 2018, I was laser focused on paying down my debt so I barely had any social life and did not do any travel. Plus 2018 was the year I got laid off from my job. So for a period of time I was unemployed hence the low spending amount.

In 2019, to make up for my drought year, I went on an over-budget international trip and splurged on many high ticket items I held back for the past 2 years. So this year’s spending might be uncharacteristically high.

2020 was the year of the pandemic so I didn’t go on any international travel and limited many dining out/entertainment spending so my spending was likely skewed.

Honestly, I don’t know how my 2021 spending will be, let alone what my retirement spending will be. So needless to say, this FIRE number is pure estimation. Regardless, it will be nice to have a goal to work towards.

While I’m not sure if any specific year is indicative of my future spending, I took an average yearly spending for the last three years which is $24,396. I will round it up to $25K expected yearly spending.

My FIRE number = $25,000 x 25 = $625,000

The Future

So there you go! I am currently only 18% of the way there but the Playing with Fire calculator says I may just be able to do it in 5 years! That means, it is projecting that my net worth will increase by an average of $100K each year. It sounds a bit crazy, but I’m definitely not complaining.

How realistic will that be? Not sure. There are quite a bit of flaws I can think of with my spending number right off the bat. For one I am calculating based on my very low rent that I pay living at home.

My goal of home ownership will throw a wrench into this but reading about Thriftygal who retired early to live a nomadic lifestyle, but now wants to buy a home really resonates with me.

She may now face some trouble securing a mortgage without a W2 from a job. This makes me apprehensive about focusing all my efforts only on FIRE. Quitting too soon rather than buying a home may cost me more time and money now but I will get to enjoy it later.

Can’t lie though, the idea of not having to work in 5 year sure sounds great to me right now.