Playing with FIRE book: Financial Independence, Retire Early
Whenever I have free time, I tend to read. Books about personal development, entrepreneurship, or a variety of other topics. One which I recently finished, is the Playing with FIRE book by Scott Rieckens.
I had heard about FIRE before, and although I found it interesting, it never really stuck with me. Now that I read the book however, I have a new-found interest in FIRE, and want to share some of my thoughts.
What is FIRE?
Before going into what the book is about, let’s discuss FIRE. FIRE, or Financial Independence, Retire Early, is a global movement, community and/or world view.
The concept is simple. People who are trying to achieve Financial Independence (or ‘FI’) are working and saving money in order to be financially independent — or in other words, not be dependent on a monthly salary.
And when you’re finally financially independent, you can retire early. After all, you now have enough money to live from, and do not need to work to pay your bills.
It may sound incredible, but depending on your level of commitment, reaching a state of FIRE is entirely possible.
“How?!”, you may ask. Well, a lot (trust me: a LOT*) has been written about FIRE, by people that know its ins and outs better than I do. By risking over-simplifying the concept, the steps you have to take are as follows:
- Take stock of your current assets and liabilities (i.e. everything you own and all your debts),
- Look at how much you earn, and how much you spend on a yearly basis,
- Calculate when you could achieve financial independence.
- Now (drastically) cut your spending, and
- Invest your savings.
Depending on a variety of factors, such as how far you can cut spending and how well your investments work out, you may be able to retire as early as in your 30s (!).
To many and me included, that almost sounds like a dream come true. But it’s not as easy as it sounds. And the Playing with FIRE book illustrates quite well how difficult it may be.
* If you want to read more about FIRE, I suggest these articles and blogs:
Scott Rieckens’ auto-biographical account of FIRE
So, with that brief explanation of FIRE out of the way, let’s now turn to the Playing with FIRE book*. The book is an account of the first year in which the author started ‘practicing’ FIRE; in other words, the first year in which he and his family living in a way with the goal of achieving financial independence.
As I also stated on Twitter, the book is really easy to read, and you’ll finish it in just a couple of days. It’s a good introduction to FIRE and how anyone potentially could achieve financial independence. However, what really stands out for me is his (family’s) view on FIRE, and the way their lifestyle choices change over time.
At the start of the book, the family lives in California at the beach. With a beautiful house, a boat club membership, two fancy cars and much more, they seem to have it all.
But as you’d expect, this is not a lifestyle that fits with saving up to be financially independent. And this is what makes the book so interesting. Because the more they become convinced of the FIRE mindset, the more they become convinced they need to change their spending habits.
For them, this is not so easy. For instance, the cars they have are not just a luxury, but they signify the fruits of their labor. They work hard every day, and for that they are rewarded — in this case with a BMW.
In theory, getting rid of that car means that they lower their monthly (and annual) spend, which in turn means that their ‘FI date’ (i.e. when they’re financially independent) comes more than a year sooner. In practice, it means that they choose to forego this reward, which will only be reaped (in the form of FI) in more than ten year’s time.
*Note that I keep saying the ‘book’, because the author (Scott Rieckens) has also created a documentary with the same name. At the time of writing, I have not yet seen the documentary.
Retiring Early vs. an All-Wheel Drive BMW
And as you might expect, that is not an easy decision to make. Would you decide to not buy a particular car or house, if that means you can bring your retirement closer?
For many people in their 20s, 30s and 40s, retirement is (many) decades away. It’s a vague concept, something we don’t think about. And even if you do think about it, the choice is not so clear — wouldn’t you rather have something now than in 10 or 20 year’s time?
But the turning point for the author and his family is when they start thinking about what really matters to them. And surprise, surprise, it turns out that fancy cars don’t matter as much as you’d think. Instead, they care about spending time with friends, family, and their little daughter.
In this way, they find out that reaching financial independence sooner is actually more important than a fancy all-wheel drive BMW, or other material things. After all, that means that they can spend more time with their family, doing things they really love and care about. And eventually, this thought process results in a thought-provoking question…
Does Your Spending Reflect Your Values?
Does your spending reflect your values? In my case, I’m not sure yet what the answer is. We all spend money on things that don’t matter as much as we think we do. In my case, I’m saving up for a beamer and PlayStation 4.
Does this align with certain values I hold? Do I value playing videogames? Do I value playing videogames on a large screen? To some extent I do, but I can’t say I’m a big beamer or game-fanatic. For me, it’s simply a way to relax. I can also relax in different ways; I don’t necessarily need videogames to do so.
So to come back to the playing with FIRE book, whether or not you (and in this case, I) actually will pursue FIRE after reading it does not matter so much. It’s a great introduction to the concept, and it definitely makes me think about whether or not retiring early is something for me (and whether it is, is something for another blog post — subscribe to be the first to read it!).
But more importantly, Rieckens shows that thinking about personal finance and your (financial) future has everything to do with what you find important in life. And that the choices you’re currently making — or the ones I’m making considering that PS4 — may not actually fit with what you really value.
Why I love Side Projects and Indie Hackers
The internet made so many things possible. From the words you’re reading on this screen to Google Maps, smart phones, and even smart coffee makers*, the internet offers endless possibilities.
But there’s one thing — one thing in particular which I find incredibly fascinating. And that’s the new kinds of businesses that have sparked all these products, services and connected machinery.
The idea that you can build a business independently, from the comfort of your own home, is simply amazing. All you need is an internet connection, and your imagination.
* Yes, these things exist. And in contrast to what this article tells you, no, you don’t need one.
Independent Hacking & Side Projects
There are a variety of words that are used to describe these kind of internet business. Some call them ‘Indie Hackers‘, which is actually an online community of ‘independent hackers’. In other words, indie hackers are those that ‘hack’ or ‘create’ an online product or service by themselves, often without external funding.
Similarly, you often hear the word ‘side projects‘. Because there’s a very low threshold to start, many coders, designers and entrepreneurs start their business ‘on the side’. They have a normal job, and simply start coding a website or building an online community in the evenings, weekends and nights.
But whatever you call it, it all comes down to more or less the same thing. It’s about setting up a (small) business that runs almost entirely on the internet — and needs little in terms of financial or human capital to get started.
Why is this so great?
The fact that you need so little to start an indie hacker project is what makes them so interesting. As an example, one of the projects I worked on in the past was a home goods company called Lowland Living.
Lowland Living offered one product: gummy bear molds. Don’t be put off by the weirdness of the product — to me, this was a revelation. As a Dutchman, I was able to sell Chinese-made products to consumers in the United States, while never setting a foot in either of those countries! The story of how I did that will be the topic of another blog post, but it’s a perfect example of what the internet has made possible, and how easy it was to start this.
A similarly interesting and personal example was an affiliate website I build in 2017, called All About Chairs. I’m not some strange chair fanatic, but on this site, I reviewed a variety of (office) chairs, rating them on how comfortable they were, their quality, etc. Throughout the website, I placed affiliate links — linking to Amazon where people could buy the chair in question. If they bought the chair, I received a small commission.
Just like Lowland Living, this project wasn’t a great success. And just like Lowland Living, how I built the company will also be the topic of another blog post. But again, these examples show the power of the internet, and how weird and amazing some internet businesses are. Plus, they really demonstrate what’s possible, as long as you’re keen to learn, are internet-savvy, and somewhat determined.
Some Examples of Fascinating Indie Hacker Projects
Now that I mentioned some of my side projects, let’s turn to what I find highly interesting projects by others.
Perhaps some of my favorites are projects I’d like to call ‘mail someone a thing’. Take for instance Ship Your Enemies Glitter. As the name says, this webshop allows you to ship your enemies very fine glitter. Which sticks. Everywhere.
Or alternatively, why not mail someone a potato? In 2018, this webshop was making more than $100,000 per year by shipping message-potatoes to people all over the world. A weird idea plus the internet equals profit!
But that doesn’t mean that an internet side project has to be meaningless or weird. At the Enter Network meetups that I run, we’ve had someone talk about a website that shows the ideal sizes of cabin baggage for specific airlines. Or consider NomadList, a community created for ‘digital nomads’, that brings in more than $300,000 per year, and was founded by just one person!
I can go on and on about these kinds of businesses. But the bottom line is, the internet is amazing. And there’s much more possible than you would think. Would you like to hear more about these possibilities and my own experience building indie hacker projects? Read more about this blog, subscribe and I’ll keep you posted.
Freelance Pricing: Differences in Client Valuation
The very first job I had as a freelancer was article editing. The article in question had been translated from English to Dutch, and it was my job to edit it and make sure the article had a good flow. The job earned me a solid 10 dollars and was my initiation to freelance pricing.
That, apparently, was good value for money — at least in the eyes of the client. In my eyes, it was a good start. It wasn’t a whole lot, but it was more than nothing, and it was money that I earned myself. Without anyone’s help or through anyone’s recommendation. It only had myself to thank for those 10 dollars.
After that first job, I took on a variety of other contracts, mostly through an online freelancing platform. From ‘Online market research for the auto industry’ to ‘Dutch Internet Marketing & E-Commerce Themed Articles’. Or from ‘ICO advisor’ to ‘Crowdfunding / Fundraising consultant’.
Over the course of my freelance career, I’ve done a wide variety of jobs, with an accordingly wide variety of pay. I’ve sold my time for $10 per hour and for $120 per hour. I’ve charged fixed prices for projects and negotiated retainer contracts. In some cases, I agreed to a success fee. In short, I’ve seen it (almost) all.
Pricing Your Freelance Hours
But regardless of model, pricing is not an easy thing to do. If you follow business school logic, there are a couple of ways to price a product or service. Cost-based, demand-based or competition-based pricing. As a freelancer, I generally used a combination of the three. I would look at the pricing of competing freelancers; analyze the need of the client; and also try to factor in my own living costs.
To set a truly competing price that also fits with what you would like to earn is not an easy thing to do. And often, it’s the product of trial and error. And while it’s relatively easy to price your hours on a cost-based or competition-based model, I’ve always found the demand-based model the hardest.
This really comes down to the difference between how you price your own hours, and how a client values those hours. And in the last couple of years, I realized that clients have widely different views on what your hours are worth, and how much they’re willing to pay.
Differences in client valuations
There are a few ways in which these differences are particularly striking. Take for instance the ‘source’ of the assignment: where it has been posted or advertised. Clients on international freelance job boards such as Upwork or Freelance.com may want to hire a freelance project manager for (as little as) $20 or $30 per hour. In contrast, companies that make use of national job boards (such as freelance.nl in the Netherlands) often offer rates that are more in line with local living standards; up to €80 per hour for a project manager with solid experience.
Similarly, the size of the company plays a part. For some multinationals I worked for, it didn’t matter at all what my pricing was, or how much I worked. We didn’t get into a negotiation regarding my hourly rate. Nor did it matter to them whether I worked 20 or 40 hours per week; as long as the job gets done.
In contrast, I’ve had to go back and forth with some startup clients to negotiate my final fee. Plus, some have asked me to justify almost every single hour of work. That’s not always easy, but for a small company with small budgets, it is understandable.
Filtering for the right clients
These examples demonstrate that the way in which a client values your hours and determines what he or she is ready to pay, differs widely. And while on the one hand that can be difficult as a freelancer, it can also offer you a good filter to find the right clients.
Simply put, if you’re looking to earn more and have fewer discussions about what you spent your hours on, go for larger companies. Pick out those local job boards or find an intermediary that works with multinationals.
Go for non-remote jobs, so that you’re not competing with freelancers with different living standards. And find those clients that have hired freelancers before — so that they’re familiar with standard freelance rates and working with independent contractors.
In my experience, finding these filters works best. And while pricing will never be an easy thing to do, these filters make finding a freelance job that fits with your expectations much easier.
Issues with Personal Development
A while ago, I finished reading The Slight Edge by Jeff Olson. The Slight Edge is a typical personal development book, providing the reader with the (so-called ‘simple’) key to success, well-being and happiness. While these books aren’t for everyone, I quite like them and generally get some value out of reading about (and pursuing) personal development.
That also applies to The Slight Edge. It’s a good read, and the author makes a fair point on how you can (try to) be more successful in certain aspects of your life. Specifically, he says you should 1) implement daily habits, such as ‘read 10 pages of a good book every day’; and 2) consistently take the ‘right’ choices (and resulting actions), such as opting for a salad instead of a hamburger or going for a run versus sitting on the couch. This is evidently an oversimplification, so if you want a more thorough summary if this book, take a look here.
The point of this article, however, is that though The Slight Edge provides good advice, when I closed the book, I was left with a bitter aftertaste. Interestingly, I noticed I had this experience before after reading several different books in the self-help/personal development category. And that’s when I realized that there are issues with personal development books, that I hadn’t seen before.
The Problem with Self-Help
If we line up The Slight Edge with other self-help books such as the 4-Hour Work Week (Tim Ferriss) or the Miracle Morning (Hal Elrod), it becomes apparent they have one thing in common. Consider these examples:
“Your entire life changes the day that you decide you will no longer accept mediocrity for yourself.” (Miracle Morning, Hal Elrod)
“But you are the average of the five people you associate with most, so do not underestimate the effects of your pessimistic, unambitious, or disorganized friends. If someone isn’t making you stronger, they’re making you weaker.” (4-Hour Work Week, Tim Ferriss)
“You are either going for your dreams or giving up your dreams. Stretching for what you could be, or settling for what you are.” (The Slight Edge, Jeff Olson)
“As long as you’re working for someone else you will never be living entirely true to yourself and your passion.” (Crush It!: Why Now Is the Time to Cash In on Your Passion, Gary Vaynerchuk)
Looking at these quotes, what do you see? What I see is an all-or-nothing story; a story that’s incredibly black and white. This becomes even more apparent when you simplify these quotes. Doing so leaves us with the following statements that, according to the relative author, apply to your life:
- You’re either accepting or rejecting mediocrity,
- Your friends make you stronger or weaker,
- You’re going for your dreams or giving them up, and
- You’ll live true to yourself or not.
In other words, if we put our faith in these books and authors, and believe in what they’re saying, then there’s no grey area in life. There is no in-between. It’s either: follow these steps and live the life of your dreams. Or: reject them, and be doomed forever.
Evidently, I’m simplifying things here, and picking specific quotes out of specific books. But I do think these quotes and books are representative of a wider phenomenon in the self-help world. And that is the issue of a majority of these books. They offer a picture that is incredibly black and white. However, as I’m sure you agree, life is not black and white. There is an in-between; better yet, life is full of grey areas and isn’t a story of ‘all or nothing’.
Black or white is impossible
It isn’t a story of all or nothing because when it comes to our lives and the decisions we make, ‘all or nothing’, or ‘black or white’, is impossible. Your life is such a big culmination of thoughts, actions, dreams, relations and so much more, that choices or results like ‘rejecting or accepting mediocrity’ cannot exist.
That’s because for every choice you make in life, there’s an opportunity cost. If you choose to go to football practice, you can’t go to dinner with friends. If you choose to travel the world, you can’t be a stay-at-home mom. If you choose to write a blog article, you can’t read a new self-help book. Whatever the subject, making a choice means not choosing for a broad spectrum of other things. And considering that you can hope, want or dream two things at the same time (e.g. traveling the world and be a stay-at-home mom), it’s never a choice between following your dreams and not doing so. Or between accepting or rejecting mediocrity.
The overarching choice of ‘accepting or rejecting mediocrity’ in our entire lives, then, does not exist. And if the choice doesn’t exist, how could we ever make it?
A call for accepting mediocrity
But even if we accept that a choice for ‘all or nothing’ is inherently impossible, it’s not a choice that anyone should want to make. Such self-help books are written in a way that the status quo, or the situation of ‘not acting’ has a largely negative connotation. According to these books, the status quo of the reader’s life equals ‘rejecting mediocrity’, or ‘giving up their dreams’.
But that’s one of the issues with personal development; I would argue that you can be very content in being mediocre or average. You can be content having average friends, an average relationship or average success in your career. While mediocrity or ‘average-ness’ doesn’t sound great (after all, this implies we’re not unique or any better or more successful than the next guy), depending on what mediocrity entails, it’s not necessarily a bad thing.
So in that vein, I would say, let’s accept mediocrity. Let’s accept that we’re happy with being in the place we are in now, living the lives we’re currently living. Sure, if you’re actually discontent, then do something about it. But if you’re not, even though you’re not incredibly successful in a specific area of your life (career, romance, finances, friends, etc.), then why not accept the way things are?
Taking personal development with a grain of salt
Now I won’t advise you to cross off all self-help books on your list, and I won’t either, simply because I do think there’s still value to be had from such books. However, let me make the following suggestion, both to myself and others: Let’s should take personal development with a grain of salt.
Yes, personal development books may help you to improve specific areas of your life. Yes, they may help you to eat healthier, be a better partner, grow in your career or be a better friend. But this doesn’t mean that we cannot be content with the way things are now. And it doesn’t mean we shouldn’t be content with the way things are now.
That’s what I’d say. But let’s ‘go meta’ and take this grain of salt with a grain of salt. After all, maybe this whole post is just a defence mechanism, rather than an actual conviction, and I’m simply legitimising my mediocrity. Let’s hope it isn’t, but who knows — it might just be. ?
Just Start Writing
For this particular podcast, Courtland was talking to Tobias van Schneider, a very interesting person who is the founder of Semplice and has worked at Spotify (as the Lead Design guy) in the past. It’s an interesting podcast in any case, but one thing that struck me was their advice on consistency. Whether you want to ensure more Twitter followers, start a podcast, grow a newsletter, or, such as in this case, build your blog, the one thing you need is consistency.
With that, they mean that you need to publish your blog articles (or podcast, or tweets, or whatever) consistently. Even if you have an off-week and your writing is horrible, still try and publish the latest article on your blog on the same day every week. Consistency is key — and it allows you to properly build an audience.
So with that in mind, here’s my first blog article in a long time. My first blog was set up at the start of 2017, to take part in the blogging-money-making-craze that is espoused by people like Neil Patel or Ramit Sethi. Now I’m not saying that this is necessarily a bad thing — making money with a blog is awesome, and there’s plenty of good examples out there (take ShoutMeLoud as an example).
But… considering I waited a few years with posting this, I don’t think it’s something that’s really meant for me. Or for many others, for that matter. I believe that if you want to set up a blog and work at it consistently (like Tobias and Courtland advise), it has to be something that is relatively close to your heart. It has to be about you, yourself and your passions.
So in that line of thought, I’m aiming to revive my blog and the accompanying newsletter, and I want to ‘just start writing’. Here, I’ll write about anything that I find interesting. Me, personally. If that’s something that you like reading, then all the better. And if this blog will be quickly forgotten, lost in the ages, part of ‘internet dust’, then… I guess I should be fine with that too. But before going further into my thoughts, inspirations, musings and insights, let me first explain who I am and what this blog will cover.
A Blog About… What?
So, what will this blog be about? As indicated, all articles that will appear on this blog, will somehow be related to things that I find interesting. And at this moment, things I find most interesting are:
- Blockchain and decentralized projects
- Entrepreneurship, side-projects and online businesses
- Happiness
- Personal development (and its issues)
- Books
So that’s what I’ll write about. From my experiences founding Infloat (a blockchain consultancy) to an online business (or business opportunity) that I’m engaged in, I’ll give you anything that’s interesting, and, hopefully, fun to read.
For now, I won’t go into details about exactly who I am, how you can contact me or what I like doing in my spare time. I’ll leave that for my about page. But if you’re interested in following my blog, I’d feel honoured — please sign up to my newsletter or follow me on Twitter. See you on the other side.