Ah Reddit, the frontpage of the internet.
A constant source of information where you can easily spend hours diving deep into comment sections and threads or jumping back and forward between subreddits and various posts.
And also, a hub for followers of the FIRE (Financial Independence / Retire Early) movement. FIRE followers often share their favourite tips and tricks on this online forum, making it a sort of online information marketplace. To say it's teeming with ideas would be an understatement.
But if you don’t have the time to check it out, you’re in luck. We’ve trawled through some of the better FIRE subreddits out there and rounded up the top 10 FIRE ideas we found.
1. Get a push bike
According to RACQ, as at July 2018, the annual cost of owning a ‘micro’ class vehicle that covers 15,000 km per year in an Australian capital city is approximately $6,000 (or just more than $115 per week).
For those with long commutes, riding a bike to work may be completely out of the question. But if you happen to live close enough to uni, work or even a bus/train stop, riding a bike to/from can end up saving you serious cash over the long term.
Obviously you’ll have some maintenance costs and possibly some new tyres along the way, but these are far more palatable to your hip pocket versus replacing a car. Plus, you’ll be feeling a million bucks after all that exercise!
2. Spend the same (while earning more)
One of the easiest traps to fall for when working your way into higher wage brackets is lifestyle creep. While you might be earning more, this doesn’t mean you have to spend more.
If you happen to be on the receiving end of a bonus or a pay rise, you don’t need to save it all. But ensuring you are able to save more can make a massive difference when it comes to saving for early retirement.
3. Slow and steady investing
With global markets rising and falling, would timing the market make a big difference to overall returns?
As has been Warren Buffet’s mantra across his investing life, passive investing into an index or ETF (rather than trying to time the ups and downs) will generally outperform a managed fund over the long term. Remember, investing isn’t just about timing the market, time in the market is also important.
It’s also important to keep in mind that past performance isn’t a guarantee of future returns. So, whether you’re investing a large sum of money or just starting out, always consider your options carefully and make sure to get financial advice before entering the market.
4. Live at home
Younger generations of Australians are living at home longer than ever. (In fact, in 2016 43 per cent of 20-24 year olds were still living with their parents.)
While living with your parents (rent free) isn’t the worst, it can certainly put a strain on your relationship. But if it’s still an option, it can be one of the cheapest alternatives.
While living at home, use this as an opportunity to fast-track your savings instead of a chance to spend your dollars elsewhere.
5. Find a cheap social activity
Want to spend time with some friends but don’t want to flush it down the drain buying rounds of drinks at the bar? An alternative could be to have a cheaper alternative such as a pizza night or cooking a meal and eating in.
Even if you take it in turns to shout the price of a few pizzas once every few weeks, $30 a month for pizzas and Netflix is usually cheaper than a few rounds of drinks every Friday or Saturday night. Like everything in life, balance is key (but go crazy with the toppings).
6. Find a hobby/volunteer
After reading multiple comments and posts about how to achieve FIRE, what happens after? While retiring at 65 might get you 20(ish) years in retirement, FIRE followers aspire to retire anywhere between 30 and 55, potentially meaning half a century of ‘retirement.’
Finding meaning is important to anyone, so before thinking of retiring early, get involved in some local communities and network with like-minded people.
7. Go minimalist
Minimalism and the FIRE movement (as a whole) share a number of similarities, so it’s no surprise that this suggestion makes the cut. With the Marie Kondo movement sweeping across households in 2018, owning only essentials and owning less “stuff” can allow you to sell things that might otherwise be lurking in your cupboards or sitting under the stairs for months to come.
Once you have decluttered and sold your unwanted items, any extra cash you made can be put toward your savings goals rather than filling up the spaces you’ve made around your home.
8. FIRE-friendly pets
Ever thought about having a pet, only to realise that all that cuddly goodness is actually really expensive to maintain? The best of both worlds could be raising a guide dog.
With collars, leashes, grooming equipment and food all provided (in addition to medicine and vet bills), raising a guide dog could be a FIRE-friendly pet. Just make sure you have plenty of time to spend with the new pup!
9. Pay down debt or invest?
We’ve previously covered paying off debt vs saving money here. Put simply, if you have debts that are racking up interest that’s higher than what you could make if you put the money away in savings or investments, you generally would be better off paying the debt first. Whether you snowball it (getting rid of the smallest outstanding debt) or use the avalanche method (paying off the highest % debt first), debt is better off gone rather than keeping it around.
Of course, building up a rainy-day fund is equally as important and at the end of the day you need to prioritise what’s more important to you.
10. Reboot
FIRE followers are constantly looking to save some extra bucks here or there, with some going to extreme lengths to achieve this. LCOL (low cost of living) areas are spoken about in FIRE threads, with the caveat for being able to move to such a location often being ensuring there are actually job opportunities.
While moving to another part of the country or potentially the world might seem super daunting, even moving to a slightly cheaper suburb can be a more realistic option that can start boosting savings almost immediately.
Remember, while the FIRE movement can be diehard at the best of times, these 10 ideas are merely a guide to inspire you. Who knows, with the right amount of budget-tinkering you could start off on a journey to financial independence.
