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The FIRE Movement Promised Financial Freedom. Then COVID Struck.

The inability to work — let alone hustle and grind — has placed added stress on even the most frugal savers

Nineteen-year-old Ben has only one dream: to retire early to a Spanish villa, preferably somewhere near a beach. His motivations are personal. When he was a kid, his parents divorced after his dad blew what little savings his family had via “reckless gambling,” which forced him and his mom to move to a cramped, government-subsidized apartment. His mom worked multiple low-wage jobs to keep them fed and clothed. Paramount to their survival were two things: not getting into debt, and saving as much money as possible.

Those lessons quickly became life mantras. At 17, Ben didn’t go to college, choosing to train as an electrician instead. Last year, he got his first job at one of the U.K.’s biggest telecom companies, earning a healthy five-figure wage — most of which he stashed away into various savings accounts — while living as frugally as possible. With no “excess expenses” like vacations, streaming services or a car, it seemed as though Ben was well on his way to achieving his dream.

Until, at the beginning of April, he got furloughed.

On the surface, Ben’s situation is like the millions of others around the world suddenly out of work as a result of the coronavirus. But Ben sees his stakes as far higher. He can’t deposit the allocated 60 percent of his income into his savings accounts (one for buying a house, the other to accumulate interest). It also makes it harder to allocate 10 percent into a separate account for when he plans to start his own business in a few years. In order to retire at 40, he insists this formula of distributing his income has to be precise. One alteration, and the whole savings equation can go haywire.

Ben is part of an online movement called FIRE, or Financial Independence/Retire Early. The mostly online movement, which grew in the mid-2000s following the dot-com boom, advocates a frugal, minimal-spend lifestyle throughout your late teens and early 20s in order to accumulate wealth through investments in stocks, bonds and assets, until the point where these extra income streams generate enough revenue to sustain your lifestyle by themselves, at which point, any other income becomes an added bonus. As my colleague Madeleine Holden notes, the emphasis on frugality often means that FIRE folk end up forgoing most social events, experiences and even the most minor of luxuries (again, no Netflix) in pursuit of their goal to outrun the endless cycle of capitalism.

But since the start of the pandemic, more and more FIRE devotees have found themselves in a similar position to Ben, where the inability to work, let alone hustle and grind, has meant that their FIRE plans have been put on hold. And as Business Insider reports, even those who have reached the top of the FIRE mountain (i.e., those who retired early) have seen the value of their investments in property and commodities be all but wiped out. In fact, FIRE pioneers like Sam Dogen of the blog Financial Samurai, who successfully retired at 34, believes that many early retirees will likely have to go back to work once the global lockdown is over, while aspirational FIRE guys will need to add at least five years onto their retirement schedule.

Which, of course, begs a highly existential question: Has COVID-19 killed the movement for good?

“Things are definitely more difficult now, because of the pandemic, but that won’t kill off the mainstream FIRE movement,” says Alan Donegan, co-founder of the PopUp Business School, which trains people how to set up businesses with limited financial resources. After all, he adds, “For the vast majority of people, they’re saving money by spending and traveling less, and if furloughed, they’re still getting the majority of their pay.” Furthermore, he explains, “The point of FIRE isn’t to stick to a rigid system, because you have to factor in things going wrong, or basically, life happening.” 

To that end, Donegan advises aspiring FIRE guys to think of saving not as “giving away 20 years to get 20 years back,” but rather, to “think of your money as something to take care of. Sometimes that means adjusting your lifestyle depending on the circumstances. Other times it might mean investing in a wider [array] of stocks.” One such investment he encourages FIRE newbies to pursue is low-cost index funds, which follow the “performance of the global economy. So you aren’t betting on one industry to bounce back; you’re effectively placing your hope in the world.” 

The thing he neglects to mention, though, is that those who tend to be able to retire in their 30s and 40s, more often than not, have access to some degree of wealth (e.g., high-paying jobs or their own businesses) to begin with, meaning that rather than retiring via raw frugality, many FIRE guys start out with clear advantages. And so, there are relatively few guys like Ben in the movement — that is, guys who have just entered the workforce and now find themselves facing an uncertain future.

It’s not just coronavirus either, especially with a looming climate crisis on the horizon. “Global natural systems are undergoing destabilization at an unprecedented rate,” explains Antonia Jennings, an economist and program lead at the Economic Change Unit, an organization that promotes efforts to achieve a “more sustainable, just and resilient global economy.” “This destabilization is reflected in the savings market, which still has huge assets tied up in dirty energy, while pension funds and other historic savings avenues have been too slow to shift their assets into sustainable investments of the future.” 

“The FIRE movement represents a by-product of this, [where] young people, who already expect an uncertain future of interrelated environmental, inequality and injustice crises set to grow exponentially, have taken saving matters into their own hands,” she continues. “But we don’t know if that will pay off in the long-term.”

She adds that the growing number of young people attracted to FIRE also represents a larger “systemic economic failure” where millennials and Gen Z are forced to extreme lengths to attain a decent life — something that, as the global wealth inequality only widens further, will just make things worse. “FIRE, as a choice, is only accessible to those with relatively high levels of wealth and/or income,” she explains. “But many people are living lifestyles akin to the FIRE movement now, simply because their wealth and/or income is incredibly low, and they don’t have the ability to save.”

When I ask Ben how he’s viewing lockdown and his plans for the future, he, like many other FIRE guys on the community’s subreddits and forums, responds that he thinks things will eventually get back on track and that he’s willing to add an extra year or two of work if it still means early retirement. 

In the meantime, he tells me, he’s biding his time watching YouTube videos about how to trade cryptocurrency and other online money-making ventures like drop shipping. Regardless, his goal remains the same: to get that sunny villa in Spain.