Frankfurt. Who doesn't dream of retiring earlier? Being independent of employment because you make a living out of your own pocket and live off your own assets, dividends, interest, rental income and passive income.
This is the goal of the so-called FIRE movement. The abbreviation stands for “Financial Independence, Retire Early”, translated as “early retirement through financial independence”. The trend comes from the USA and became popular around 2010 through online forums and blogs such as "Mr. Money Mustache" by financial blogger Pete Adeney, who quit his job as a software engineer at Cisco at the age of 30 and retired.
One person who achieved financial independence much earlier is US author Vicki Robin, 81. She is considered an intellectual pioneer of the movement because as early as the 1980s, thanks to low expenses and high interest rates on US government bonds, she lived solely on her reserves. How does the star author view her path and the philosophy behind it today?
In the Handelsblatt interview, Robin reveals what she has invested in to build wealth, why “FIRE” is often misunderstood and why she is critical of the hardcore savers scene today.
Ms. Robin, with your bestseller “Your Money or Your Life” you are considered an intellectual pioneer of the FIRE movement. First published in 1992, the book has since sold almost two million copies. Was that planned?
In any case! Joe and I really wanted to change the way Americans think about money. We wanted to change how they earn, spend and save money so that they live more sustainably and consume more consciously.
Her co-author Joe Dominguez was an ex-financial analyst who became financially independent in 1969 at just 30 years old. He quit his job on Wall Street, retired and covered his monthly needs from interest income.
Joe's goal was always to quit by the time he was 30. He succeeded. Shortly after he became financially independent, we met by chance and became friends.
In the 1980s you gave seminars together in New York and California on money, consumption, meaning in life and financial independence. The demand was huge: in 1986 they recorded the seminars on cassette. Your book was published in 1992.
Our seminars had an impact: those who attended them and then implemented the nine-step method were able to reduce their own consumption by 20 percent within six months. So we wanted to make our program available to as many people as possible and wrote the book.
“Your Money or Your Life” is not a stock market guide, but a kind of lifestyle manifesto: It’s all about finding out how much is enough.
If you keep your standard of living low and spend little money, you need a lot less of it than you think. I advise everyone to ask themselves before every purchase: Will this make me happy? Does the output align with my values and get me where I want to go in life? Would I buy this thing even if I didn't work and earn money for it? The goal is “enough is enough” rather than consumerism’s mantra of “more is better.”
This concept of frugalism is central to the FIRE movement: conscious avoidance of consumption, low spending, a high savings rate in order to become financially independent as early as possible. Anyone who lives frugally and consumes consciously buys freedom. Because if I manage to cover my standard of living solely through my savings, I will be independent of gainful employment. My boss no longer dictates my everyday life, but I can decide for myself how I live my life. I can learn, be creative, discover the world, spend time with my loved ones, do everything that makes life worth living. That is a great privilege.
No. Frugalism does not mean asceticism, but conscious consumption. The most important principle is: money equals life energy. Every dollar I spend I had to earn beforehand, using up my time and energy through work. So before every purchase I should ask myself: Is this really worth so much life energy to me? Especially since my real hourly wage is much lower than I thought.
It does not correspond to the annual salary, but rather my net income minus the job-related costs, for example for the commute, clothing, stress relief and exhaustion, divided by the working hours. Workers exchange their life energy not for twenty dollars an hour, but for seven or nine dollars. If you see money this way, it's easier to do without: If a large coffee at Starbucks eats up half an hour of my life, is it worth it to me? Or do I prefer time when time is the most important commodity?
If the coffee would make you so happy at that moment, buy it. Many FIRE disciples obsessively want to cut spending. But that is the wrong way. We want to understand which purchases provide real value - and then eliminate those that don't add value. Some needs can also be satisfied in non-monetary ways. It's not about extreme thrift, but rather an awareness of what makes our lives worth living. Anyone who develops this value-based relationship with time and money will automatically reduce their spending.
The most important thing is to track all monthly expenses and assign them to categories. This way you can see what you spend your money on and how much it costs translated into hours of life. You then check this in relation to happiness, meaning and freedom from the work cycle. Evaluate where money is going nowhere – and then stop doing it. Financial independence is then the byproduct of this process. In any case, it should never be the only goal, but only the means to the end for a free life.
I don't want to judge that. It used to be easier for me: I invested for a long time in government bonds from the Canadian province of Ontario denominated in US dollars. Despite the low risk, they carried an interest rate of nine percent. In the wake of the global recession in 1982, government bonds even yielded returns of twelve to 15 percent. The economic situation was that bad back then! I stocked up on lots of bonds.
Joe Dominguez also invested exclusively in US government bonds because stocks were too risky for him. In any case, this strategy would no longer work today.
Not at all. To be honest, I didn't even know the movement. It wasn't until I updated Your Money or Your Life in 2017 that I came across FIRE while researching.
The movement is very large and includes millions of people. Many people see FIRE mechanically and simply save very strictly. Others want to accumulate as much money as possible - more and more to buy more and more freedom. But there is a lack of feeling for sufficiency and the right balance. Then nothing is enough for them.
Yes. For me, financial independence has always been a values-based community project. I lived in “intentional communities” and helped local business people with loans. Two apartments rented below market value so that poorer people can also afford them. Life is about relationships, not money.
I don't know what's going on in their heads either. When my book was relaunched in 2018 and I became something of a FIRE representative, it really surprised me. I am not a good example because I have completely different social and environmental values.
I don't want to lump two million people together. Because FIRE is not just FIRE. Some movements are also very critical of consumerism, such as the Facebook group “Socially Conscious FIRE”. They live frugally, with a focus on community, quality, sufficiency and values. These are my soulmates.
Very. Everyone wants to become financially independent, but what else? “Lean FIRE” minimalists get by on very little money. “Fat FIRE” disciples, on the other hand, strive for a very comfortable, luxurious life. “Coast FIRE” supporters only continue to work in their jobs for now because their retirement provision is secure. And “Barista FIRE” earns some extra money with part-time or side jobs.
As long as people use FIRE more sensibly with their finances, that's great. Not everyone has to share my values. Just being aware of money as life energy changes a lot. Those who get out of the consumption cycle gain so much freedom. The fewer people involved in this cycle of work, consumption and debt, the better for all of us.
Anyone who becomes financially independent often finds themselves in an existential crisis. This raises the question of what I'm going to do with my life now. Many then go back to work in their job - only part-time and with less pressure. Or they take a completely different path and become an author, antiquarian or bookseller.
I haven't had to work for money in decades. During this time, I have always used my life energy creatively to make the world a better place: written two books, started a dialogue project (Conversation Café), produced a podcast, and ran a blog. Today, at 81, I write a lot about getting older.
