Financial Independence is like a superpower. FI will enable you to do all kinds of things that you couldn’t before. You can find work you like better even if it pays less. You can negotiate to work part-time or ask for a pay raise. FI gives you the power to stand up to your employer. When money isn’t the primary consideration, you have a lot more options. For me, I retired early from my engineering career to become a SAHD/blogger. RE is even more amazing. The last 8 years have been fantastic, a dream come true. I can take care of my family, work whenever I want, and live a low-stress lifestyle. In my opinion, FIRE is one of the best things in life. However, there are some critics out there. They say FIRE is not the right goal. To them, FIRE means living in deprivation. Are those people right?
Recently, I saw something on twitter. One guy said something like this.
FIRE = live in deprivation for 15 years so you can retire to deprivation for 40 years.
I didn’t interact with the tweet so I don’t have the exact quote. At first glance, he has a point. Why save 50% of your income when you can enjoy life to the fullest now? Spend 90% to 110% like everyone else and live it up. Nobody wants to live in deprivation all their life, right? Why worry about the future?
What is deprivation?
First of all, this dude doesn’t know what he’s talking about. It’s like trying to put down Coca Cola if you never tasted it. He only heard about the FIRE lifestyle and he doesn’t understand it. He enjoys his life the way it is and can’t imagine an alternative. To him, FIRE means depriving yourself and your family. Deprivation sounds bad, but what does it really mean?
News flash, we’re all living in some form of deprivation compared to someone else. There is always somebody who lives a more luxurious lifestyle than you. Your lifestyle is downright torturous to the Kardashians and P. Diddy. If you compare your lifestyle to those celebrities, you’ll never win. They make their living by showing off.
On the other hand, most regular millionaires are quite frugal. The most famous is probably Warren Buffett, one of the richest men in the world. He lives in a $31,500 house (purchased in 1957), drives a 2006 Cadillac, and eats at McDonald’s almost every day. I’m sure that’s living in deprivation according to the not-billionaire Twitter dude.
Am I living in deprivation?
I don’t think I’m living in deprivation. Life could be more luxurious, but I’m already very happy with our lifestyle. Have I been living in deprivation for all these years? Let me share a bit of my lifestyle and you be the judge.
- Home – We live in a small house that was converted into a duplex. One unit is rented out. Our unit is about 1,000 sq ft, which is relatively small for 2 adults and 1 kid. A more modern house would be spacious and have a nicer kitchen. The biggest problem is we only have 1 bathroom. It’s a source of conflict occasionally. However, our home is located in an awesome walkable neighborhood. There are shops, restaurants, and a lot of life in the area. The house next door is much nicer/bigger and cost over $1,000,000.
- Car – We share one car, a 2010 Mazda 5. I think I paid about $18,000 for it. It works flawlessly for 10 years now. Our previous car was a BMW convertible. It was a lot cooler, but maintenance cost a ridiculous amount every year. We don’t drive that much anyway so we don’t need a fancy car. Mrs. RB40 takes the streetcar or bus for moderate distances (like when she went to work pre-covid).
- Food – We eat out (takeout these days) a few times per month. However, we eat very well. I cook all kinds of Asian dishes and they are awesome. (Check out our cooking videos on YouTube.) Mrs. RB40 is a good cook, too. Her food wasn’t that great when we met in 1993, but she improved a ton over the years and her meals are delicious now. I don’t think we are depriving ourselves at all. A lot of times, our home cooking is better than restaurant food.
- Travel – This one we don’t skimp on. We travel internationally at least once per year. Well, I try to keep the hotel cost around $100/night, but that can be luxurious or downright motel-like depending on the location. Over the last few years, we’ve been to Iceland, Cancun, Thailand, Costa Rica, and more. 2020 is another story because of you-know-what.
- Clothes – Okay, I admit I’m pretty bad with this one. These days, I only wear t-shirts and shorts/workout pants. And they are all falling apart. I really need to buy some new clothes. In my defense, I never liked fancy clothes. They are always uncomfortable. I don’t see the point of spending a lot of money on them.
Those are our biggest expenses. It might look like deprivation to Twitter dude, but this is a lot better than most people on Earth. Sure, I’m a little envious when I visit my friends’ big fancy house, but I’m a lot less stressed out than they are. I have a lot more time than they do. It’s a tradeoff.
I’m already pretty happy with our life. The only really big issue is the 1 bathroom for 3 people, but it’s a low usage room. For 99% of the time, it works just fine. I am planning to refinish our basement at some point and add a bathroom. That would help a ton. So what do you think? Am I living in deprivation? I don’t think so. My son’s living conditions are a lot better than mine when I was his age.
FIRE isn’t deprivation
Anyway, FIRE isn’t about deprivation. It’s about having the freedom to do what you want. I will never work for someone else again as long as we can maintain our modest lifestyle. No matter how luxurious Twitter dude lives, he is still at his boss’ beck and call. Luxury is just a trap unless you can pay for it with passive income like Warren Buffett. Conspicuous consumption is not worth it to me. I value autonomy much more than luxury. It’s not even close.
Alright, what do you think? Does FIRE mean a lifetime of deprivation? Which do you prefer – a modest lifestyle with more autonomy or a luxurious lifestyle with a boss?
Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.
Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.