I Reached My FIRE Target 🔥

I Reached My FIRE Target 🔥

It happened.

Based on the 4% rule, I can freely spend money to satisfy my needs and then some, without having to work a day in my life ever again. And that’s without relying on word-games where “not working” equals “I love my job“. I can literally opt for an idle existence of doing absolutely nothing and never face worries or adverse consequences of financial nature.

In other words: I’m financially independent.

Congratulations to myself.

Needless to say, I won’t confine myself to the death simulation described above. However, I’ll take a short break from posting on MonkWealth so writing here doesn’t influence any decisions through a sneaky commitment bias. I’ll elaborate more on this at the end of this post. Let’s start with something more exciting:

The Road to FIRE

So, being financially free, do I feel different?

Absolutely yes!

As financial independence is not something that happens over night, there wasn’t a specific moment in which I woke up as a different person. Instead, it was a gradual process of mindset shifting that grew stronger the closer I got to my FI target. And although it was more of a continuum rather than a discrete set of points, I can still point to a few milestones that contributed to my liberation of financial worries and key moments of my journey so far:

Starting to invest

As many productive people at a point in their lives, usually around the quarter-life crisis, I was conflicted by the thought of what the hell I was doing. Namely, being a productive person (i.e. earn more than I spend), I quickly figured that one’s earning potential doesn’t scale directly with his efficiency. Actually, I started noticing diminishing returns on my productiveness.

Naturally, my ambitions for a better life didn’t let me settle for “I’m saving X% of my salary anyway, it’s all good“. As many financially disciplined folks experienced, after a certain threshold (usually the emergency fund), you’d be left with an unutilized pile of cash that you see rotting away as the housing, grocery, and consumer convenience prices continue to go up year after year. It actually came to the point where saving made me so anxious that I started asking myself: “why can’t I just spend this money on something“? But unfortunately, no item or experience had has the potential to bring me anyone long-term happiness.

Combine that with constantly seeing the somewhat linear growth of your net-worth, it’s natural to come to the conclusion that saving itself won’t bring your quality of life to a next order of magnitude. Accepting this fact, the next natural step was to look for alternatives…

When I first started investing (the right way), it was a liberation. Feelings such as FOMO and greed stopped affecting me because I’ve figured out a way to grow my wealth that works for me. And nowadays, whenever other productive people ask me for ways to utilize their efficiency and the rewards thereof, I recognize my former self and gladly introduce them to the life-changing journey I’ve been a part of.

Without overthinking, I’d say that learning to invest was one of the most important moments not only of my FIRE journey, but my life in general.

The First €100k

As a software engineer, I learned to dislike magic numbers. However, entering the 6 digit club was a sort of a reminder of how realistic my goals are. Of course, it was not something major or life changing, but a metaphorical pat on the back that I’ve been doing something right.

I’m sure you heard the saying: the first million is the toughest. Well, the first 100k are also the toughest. The first 10k as well. Remember: this growth is not linear. Once the magic of compounding starts kicking in, every next round number is breached easier than the previous one. If you’re properly invested and diversified, it’s a matter of the total value deltas. The impact of a 10% growth in a $600k portfolio is different than the one of 10% growth in a 1337$ portfolio.

And although I had mini celebrations on every new hundred thousand, it almost became normalized, as each happened faster and faster. Especially the last few, fueled by the crypto bull market I’ve been eagerly expecting, as written in my BTC forecast in February 2020 (i.e. written before, and not after, the bull run happened :)).

Consistent Monthly Returns Higher than the Salary

As almost every personal finance enthusiast, I’m keeping a close eye over my net-worth. I was tracking it even before I started investing. Back then, logically, my net-worth grew by the amount I was able to save each month. In other words: by my salary minus my expenses.

After I started my investment journey, the monthly progress started depending more and more on the invested amount rather than my salary.

There were a few key moments that strengthened my confidence in my FIRE journey:

• The first one: What I called “saving 100% of my salary“, i.e. a monthly net-worth growth equal to my monthly salary, but after all expenses have been taken care of. In other words: my portfolio grew for more than I spent.
• The second one: After this started becoming a regular occurrence, there was a moment of: my portfolio grew by double the amount of my net salary. Mind blowing when it happened for the first time. Normalized nowadays.
• The few next ones were breaching round numbers in terms of monthly growth for the first time, and I even wrote a post called I Made $40k in a Month.
• And recently: My net-worth grows for more than $50k every month! 📈

Of course, I also had months such as March 2020 (when the market crashed and saw >30% decline, followed by a swift recovery and the best year ever), but all short-term losses were, are, and will be overshadowed by the long-term gains.

Understanding Economics

I first felt the need to study economics when I started challenging the commonly accepted hypothesis that the market always goes up. Always have been a critical thinker. 💪

First of all, I want to say that Ray Dalio’s How the the Economic Machine Works is amazing. Highly recommended to bookmark it or watch it immediately if you know nothing:

Anyway, after doing tons of research myself and eventually earning some fancy certifications along the way, I got a more-than-general idea about the framework we live in. Not only that I learned concepts that made me understand the economy, but also I learned to apply financial concepts in day to day activities, which made me a better decision maker in general.

All of a sudden, I evaluated the opportunity costs of my daily decisions. I positioned myself properly based on the law of supply and demand. I assessed my affairs based on the current interbank rate and acted accordingly. I understood how the government funding and spending ultimately affects my quality of life, etc., etc., etc.

I don’t want to get hung up on the details in this post, but long story short: I started studying the field in order to understand it better and eventually fall in love with it. And although I acquired the knowledge I was after, it also motivated me to hedge my position in the traditional markets, giving me a totally new understanding of the famous Henry Ford quote:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Ultimately, this journey lead me to see the libertarian perspective and got me exploring alternative asset classes, firmly setting my role in the next big thing, and allocating an adequate portion of my wealth accordingly.

This was one of the biggest contributors to reaching my FIRE target this fast.

I’ll end with the quote from my I Didn’t Get Lucky post (highly recommended read, by the way):

Before I was into finance, I heard about these benefits of crypto but just shrugged them off. I didn’t know which risks I’m assuming by having my wealth:

• In a bank account owned by a private institution – one that doesn’t even have the cash reserves to fulfill withdrawals (not a conspiracy, a fact).

• In a currency created by a government – a valueless number I can’t convert into anything outside the borders of a country or economic union, unless paying fees to other private institutions to convert it to another made up store of value.

• In an economy controlled by a central bank – one that freely adjusts the interest rates and the money supply, thus determining the value of everything I “own”.

Disregarding the Earning Potential of Hobbies

When I was more than 50% away from my FIRE target, I still evaluated my activities based on their potential monetary value or returns.

For example, if I was thinking about public expression of a skill I’m good at, I thought about it through the lens of building a brand, monetizing it, and making it worthwhile. When I thought about learning something new, I evaluated its fitness based on the potential for realizing profits.

But don’t get me wrong, I don’t regret it and I don’t think that this is wrong. With my net-worth at the levels that it was, evaluating my hobbies like this was the absolutely right move. I’d actually recommend anyone who doesn’t have a financial safety net to consider the same approach. Joy should be deserved – it’s a privilege, not a right.

And although I think it’s the right move, after my net-worth exceeded a certain threshold, my instincts stopped driving me in that direction. I guess my subconscious understood that there won’t ever be a deficiency of roof, safety, comfort, and sufficient calorie intake or oxytocin, serotonin, and dopamine rushes.

Now, I feel free to do things that have no financial returns. That doesn’t mean that I exclusively will, because over time, I figured out that the things that actually bring joy are the ones that offer rewards or improve one’s life in some way. However, think of it this way: when one’s net-worth approaches half million, the motivation to earn an extra 100-200€ per month is almost non-existent. It’s basically less than the daily fluctuations of the portfolio. I call it: the liberation from the ambition of making more money.

This also affected how I evaluate ongoing job offers or potential promotions. When you know that your investments can consistently cover more than your monthly expenses, the incentive to exchange a part of my limited amount of time for a part of the unlimited supply of money becomes smaller and smaller. I call this: the insignificance of a salary.

My mind is clear and my soul is calm.

Focus on Greater Things than “Money”

On the MonkWealth homepage, you can see that I describe myself as:

A capitalist embodiment of a Monk on a quest for absolute liberty.

Notice that it’s a quest for “absolute liberty” and not just “FIRE“. This distinction may be invisible for the the average FIRE newbie feeling suffocated by the need to trade life for money.

Unfortunately, while still being inside that bubble, it’s hard to see that your employer, or working in general, is not the actual oppressor.

As my goals shifted from financial independence to actual freedom, or total independence, you may’ve noticed the gradual increase in pro-libertarian, pro-free market, pro-capitalism sentiment on MonkWealth – supporting concepts without which we wouldn’t be able to pursue any type of freedom. Maybe this post is not the right place and this moment is not the right time to elaborate further on this topic, but I’d highly recommend to read the following post so you can get an understanding about the layers of oppression that are invisible to many:

100 Reasons You Need Financial Independence

Again, it’s a highly recommended read. Go read it if you still haven’t.

Just do it.

Next Steps?

First thing first:

I’ll take a short break from posting on MonkWealth

Yes, this is going to happen, unfortunately. Having a fixed schedule made it feel more of an obligation recently, so I need to reconsider a few things. And as I said at the beginning, finding myself at an interesting time in my life and without a specific plan for the near future, I don’t want to commit to something influenced by my writing.

There are a few more reasons supporting this decision, but I’ll share the ones that are relevant for you as a reader.

The halving of posting frequency from weekly to twice-per-month aside, I feel there’s also a slight downgrade in quality. Not sure if it’s real or it’s just me putting “less heart” into writing these posts lately, but I want to not have the obligation of posting for a while, just to see which topics “deserve” to be published on MonkWealth.

There’s a continuous conflict of what my target audience is and should be: do I write for the long-term stock market investors, finance enthusiasts, cryptocurrency fans, personal finance fanatics, or FIRE seekers? Or should I make it more about my journey and put the accent on my experience? But then, some people that came to learn about stock market investing might get bored reading about mortgages or buy vs rent considerations… Plenty of questions to be answered here.

At the end though, the multi-dimensional nature of reaching absolute freedom, which I’m pursuing, dictates that this isn’t the typical “earn more than you spend, invest the difference, live happily ever after” type of FIRE blog. I’ll have to make the decision of either narrowing the range of topics that will be available on MonkWealth or narrowing the audience I’ll write for. Or make a slight pivot into a more personal, but still FIRE blog.

I’m just rambling now, but there are some open questions regarding the direction of this blog. And I won’t over-rationalize it. It’ll be the case of: what will I have the urge to write about once there is no schedule to be met? And I’ll figure it out from there.

Basically, I’ll wait for insert-deity-of-choice to let me know how to proceed.

Using a similar method, I’ll evaluate my life situation and decide my next steps. I don’t want to mention anything right away because of the reasons shared above. In times like these, one has to remember that FIRE is more than just a number. There is no need rush big decisions as there are other, non-financial, factors that need to be taken care of before making any commitments.

I’ll save the rest for when I’m back. Hope you enjoyed this post and MonkWealth’s content so far.

See you in a month or 4! 🥂