So we have seen FIRE works in these posts. Right then. But who does it work best for and why? Let’s find out.
I have three occupations here: A moderately paid teacher, a mid earning finance guy and a tech worker.
See the example below. All are trying to save as much as possible.
As you can see FIRE works best for moderate and high earners. Why is that Mr. Cash Hoarder?
The principle of leverage
Discretionary costs and luxuries are relatively easy to cut
- Dining out
- Coffee out
- Cable TV
- Shopping for clothes and fun stuff
- Car payments
Fixed costs are harder to cut
- Mortgage and rent: You have to live somewhere
- Student loan payments: Not negotiable
- Insurance: Hard to cut
- Utilities: hard to cut
- Property taxes and taxes: it is what is is
A higher base will result in higher savings so the wealthier will have an easier time saving more money as they make more to start with.
So what can do the lower earner do?
Well since costs have been cut the obvious answer is to earn more money! I don’t mean switch jobs I mean bring in more money when you can and save it.
Teachers have the summer off. Continue to teach in the summer at summer school, tutor kids at a learning center, do test prep classes, work at a summer camp for kids, work at a weekend cram school, put those teaching skills to work! Save all the extra money you make in the summer and on weekends.
This type of teaching work will give you a higher bill rate than doing manual labor so try to get this type of work on the weekends too.
Consider a weekend job one day per week like at a coffee shop, bakery, grocery store etc. Again these jobs will pay less than ones that utilize your skill set.
Do gig jobs from time to time on weekends. Again you can make way more tutoring rich kids than driving an Uber. Plus you will likely find it more rewarding too.