Weekly thoughts #18
The FIRE industry.
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Financial Independence, Retire Early (FIRE) is a movement of people devoted to a program of extreme savings and investment with the goal of retiring far earlier than traditional budgets and retirement plans would permit.
If you have read any of my articles on the matter, you will see that I am not exactly a fan of these theories because they are not realistic and in many cases they cause more suffering than benefit.
My article about living off stocks 👇
Can I make a living off stocks?
The Financial Independence Industry
The FIRE movement prioritizes extreme frugality, which in many cases could lead to accepting poverty. A veritable industry of book authors, speakers, and course sellers has been created around the movement. In most cases, snake oil or magic hair grower. Without wishing to be categorical, and except for some honest professionals, I am sure that this extreme frugality is not practiced by themselves. In other words, it is difficult for me to think of a guru of financial independence driving a modest car or buying bargain clothes. Behind the FIRE movement there is an industry, a business, and the “victims” are the users who allow themselves to be carried away by unrealistic and absurd methods of generating wealth.
“The idea of financial freedom is no conspiracy to deceive the masses; but it sure has sold unimaginable amounts of financial products and services! “. Barry Ritholtzchief, investment officer of Ritholtz Wealth Management LLC
“I am too poor to buy cheap things”
This would be a quote that would fit me perfectly. Don't fool yourself, you are not going to get rich by clipping supermarket coupons or avoiding having your second coffee of the day. But what I am sure of is that only the very rich can afford to dress and eat like true poor people. And why? Because:
They can quit whenever they want and return to their very expensive consumption habits.
They are so rich that their personal image does not deteriorate.
They can afford to spend money on things that do not last long.
Many super-rich men are snobs. And in the era in which the most humble classes have greater access to luxuries, one way to be different is to give up luxury to be different.
I grew up in a working class neighborhood, and believe me when I tell you that the aspiration of children was not to appear like that 👇in front of people.
The idea was to go to university, find a good job, dress well, buy a good car and a good house. Simple, right?
Martin Frohm: [during the interview room, with Twistle, Frakesh, and Frohm present] What would you say if a man walked in here with no shirt, and I hired him? What would you say?
Christopher Gardner: He must have had on some really nice pants.
The Pursuit of Happyness.
This does not mean that we do not embrace frugality as a way to master ourselves and a better way of living. Money is not the only most important thing in life. But in general, well-understood frugality leads us to buy goods and services that last over time and that we enjoy. It is just the opposite of the prevailing consumerism and in contrast to minimalism (which is a modern way of inviting poverty), frugality is only the mirror of the values of our grandparents: “Buy what you need, but buy once. If you want to treat yourself to a luxury, go ahead, but in an extraordinary way”.
I prefer an extraordinary Oxford shoes to hundreds of pairs made of cheap plastic. I prefer just one pure wool suit to dozens of polyester models in the closet. Frugal living is not about spending little; it is about spending well. I assure you, expensive things save a lot of money.
Then, how to become rich?
In my opinion, there are only four ways to get rich.
Inheritances.
Lottery.
A good job combined with an adequate savings and investment plan.
Business success.
Everything else is snake oil.
Believe me. You are not going to achieve the myth of financial independence by buying cheap clothes or skimping on things that are necessary and that make us live better. Be frugal but not miserable.
But above all… subscribe to Eloy Fernández Deep Research!
Greetings and have a good week.
Eloy.
