Those seeking to attain FIRE intentionally maximize their savings rate by finding ways to increase income and/or decrease expenses. The more you save and invest, the faster you reach the needed portfolio. Taking a 450k€ portfolio as an example (and ignoring inflation for now):

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• If you can save 10k€ each year: you will need to save 45 year to have a portfolio of 450k€

• If you can save 20k€ each year: you will need to save 22,5 year to have a portfolio of 450k€

• If you can save 45k€ each year: you will need to save 10 year to have a portfolio of 450k€

• If you can save 100k€ each year: you will need to save 4,5 year to have a portfolio of 450k€

• If you can save 150k€ each year: you will need to save 3 year to have a portfolio of 450k€

• If you can save 450k€ each year: you will need to save 1 year to have a portfolio of 450k€

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Your savings rate is: (what you can save) / (what you earn) = (earnings - spending) / (what you earn). As you can see, there are only two components which influence your savings rate:

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• How much you earn

• How much you spend (living standard)

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Reaching FIRE by earning more:

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There are a couple of ways to increase your income. Some may be feasible for your situation, some may not.

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• Get a degree in one of the high paying fields of work. Although most people who are into FIRE have already finished their education, it’s never too late to get educated. 

• Invest in yourself. Study, learn, gain experience. Be open for new things. If you don’t know, investigate. Instead of asking people for a solution, go find it yourself.

• Get out of your comfort zone. There might not be a direct reward or increase in your income. But you will grow as a person. You will be capable of more. And then results will follow.

• Know what you are worth: use online comparison tools. Check with colleagues. Ask old class mates what they earn for similar positions. Don’t be afraid to ask for a raise when appropriate.

• Find a side hustle to earn extra income.

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Reaching FIRE by spending less:

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• Make a budget. Be aware where your money is going. You would be surprised how much you spend on the big three: house, car, food.

• Read about frugal living

• When buying housing: Invest time in finding a mortgage. Visit multiple banks. Visit the same bank in different cities. My girlfriend's local bank gave us much better conditions then my own local bank. They are the same bank but located in different cities (10km between them). You can save thousands of euros by just spending some time. Refinance your loans. Check online with Keytrade Home what their best rate is. Check if it’s cheaper or not than your current mortgage. Use this to pressure your own bank to give better rates (remark: they will usually be higher then your current rates as the banks know you have to pay additional notary costs if you switch banks).

• Cars are expensive. They (usually) lose value, you have to pay taxes, you have to pay insurance, you have to pay for gasoline. Do you need a two cars? Can you manage with one? Can you manage with one + a motorbike + a bike? Do you need a car at all? Do you live in a big city? You can buy a bus subscription for a year, a bike, and rent a car twice a year and still be a lot cheaper than owning a car.

• Yearly check if your providers are still the cheapest ones for your needs:

  • Electricity https://vtest.vreg.be/

  • Gas https://vtest.vreg.be/

  • Internet http://www.bestetarief.be/

  • Mobile Provider http://www.bestetarief.be/

• If you love streaming services and have multiple subscriptions: you can change between streaming provider every month. So you can switch between Netflix & Amazon prime (or others) and only pay one subscription each month (instead of both).

• Before buying something non essential: think twice about it. Wait at least one month. Research about it. In most cases, you need is already gone. For example: I was interested in buying a Prusa 3D printer of 700 euro. I read 3D printer reviews, I looked at YouTube video’s for a month, I read “Ten things you should know before your first print”. And my need was gone. I realized it was just an expensive toy for me. It would be fun to print figurines and maybe once a year I would be able to print something useful for my house/work. If the need is still there after all of this, go ahead and buy it.

• Tiny house living: not for everyone but perhaps a way to save money while you are young.

• Use the “King for one day method”: https://www.mrmoneymustache.com/2012/06/28/king-for-just-one-day/

• Take a good look at your grocery bill. You will be surprised how much soda is costing you compared to water. You would be surprised how much candy and sweets are costing you.

• Geo-arbitrage: you can take advantage of the difference in taxes, pay and cost of living by doing geo-arbitrage. For example, one can go and live close to the border and live in a medium cost country while working in a high income country.

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Save as much as possible and invest

 

After earning more and spending less, the next step is to save and invest your money. This will be covered in the other chapters.