Introduction part 8 – My failed introduction to FIRE
This post is part of the introduction series. If not read already, I recommend to start with the Introduction part 1
I’m not inventing anything here, everything I briefly suggested in my previous post exist already for years, many blogs and books document these life styles already. I discovered the FIRE movement some years ago with one of the most famous FIRE blog by Mr. Money Mustache. FIRE is the acronym for Financial Independence, Retire Early, the idea is that you save a large part of your income and then invest the money to retire after 10 to 15 years (or even less) by leaving out of the interests. I was very interested by what was explained on this blog, I was thinking I hold on to something, this person got a point here. But then the more I read and the more I tried to apply in my situation, the more I was thinking, too bad, this is not for me. First he is in America and I’m in Switzerland. Secondly it was about saving a large percentage of your income, like 40 to 60%, I’m barely able to save 5 to 10% of mine when I’m living alone with no kid. Then he mentions that he already owned a home fully paid in his early twenties and then he explained why he bought a Tesla Model 3, wait what?! This guy is total bullshit. Of course if I had my own home without mortgage and a brand new Tesla in my garage I would not need much more and could save more of my earning as the majority of my living cost were for my rent and transportation expenses on top of taxes and insurances. Ok, I don’t need this Tesla, but at least my own house or apartment is mandatory to reach these low level of expenses. Looking at ads for real estate around my work killed all my dreams, if I want to get rid of the car I have to live close enough of my work to only take a few minutes of bus or get there by bike. But housing in the area is totally out of reach, 3 rooms (2 bedrooms, one living room) were at very least 1 millions CHF (swiss francs, more or less the same in USD at the time) and rent was 2500CHF per month (and now it even increased). So if I have to pay high rent like this until I can buy at such high price or even more, I would not be able to save a lot, maybe what, 1000CHF per month, and it would be living in worst condition than when I was a student to be able to save this kind of money. Then you need at least 20% of the house cost as a down payment to get a mortgage, even more if your income is not enough, so in my situation, even coming out of one of the best university in the country, I would need to pay about 40 to 50% down payment on a 1 millions apartment to get a mortgage and then pay something like 1000frs per month to the bank, so great, I would now save about 2000CHF per year, nothing that will get me retire any time soon, even after all these years to get the apartment.
So I moved on and continue to spend my money like there were not tomorrow, thinking: “what the point of bleeding me by putting out the few money I earn on a retirement account that will worth peanuts when I will be retire thanks to inflation. I want to live my life now that I’m young and probably I would make much more money in 5, 10, 15 years as I’m an electrical engineer, one of the most wanted engineer on the market, money will come at me and the cents I would have save during my earliest years would be so insignificant compare to all the money I will do in the last 10-15 years of my career.” From then and as it was from the very beginning of my career, I was spending more or less all my money, almost living paycheck to paycheck some of the worst months, just waiting for the next bonus or just the end of year 13th salary to get my buffer back to a non-critical level. (If non-Swiss are reading, it’s quite common in Switzerland to have your annual salary split in 13 parts instead of 12, and you would get 2 salaries in December. I was thinking that it was to encourage people to save this money, for example to send it to a third pillar account, similar to 410k in US, but in fact this was introduced as a kind of bonus in some state jobs, to attract more people and keep good one in position). I didn’t had the feeling that I was living beyond my means, I never had any debt, at least that was good, and I was not spending my money on anything expensive. I drove a Smart ForTwo second hand, did stay in the cheapest hotel while traveling and didn’t bought any luxury stuff like very expensive clothes or jewellery, just some video games, DVD and (in fact a lot) of electronics gadgets. But all these spending were always reasonable in cost when taken one by one, I was even proud to get good deal on them most of them time.
The FIRE didn’t catch for me. I didn’t know it yet at the time but I needed a change in my life. This change will slowly reshape my vision. To tease you a little, the main change is the “I” become “we”.
The introduction continues and end with part 9.