Don’t Play With FIRE, You May Just Get Burned | Need for Moderation
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Discovering the FIRE (Financial Independence/Retire Early) movement was one of those transformational events in my life that helped me see the errors of my previous ways and pointed me in the right financial direction.
People who share the same philosophy, or “FIRE walkers” as I like to call them, have eloquently described the rationale for achieving financial independence, with or without the early retirement component:
- By becoming independent financially, you can break free from the dreaded time-money relationship.
- Elements of a job that you may not like can be reduced or even eliminated as you no longer are dependent on revenue from that particular component.
- Certain endeavors you may have wanted to pursue but could not because of previous financial constraints can now be explored when you are financially independent.
It all sounds amazing doesn’t it?
Who wouldn’t want to become financially independent and start breaking free of the 9 to 5 shackles most have been accustomed to with a job that we no longer love or that has lost it’s original appeal?
However this wonderful bright financial path lit by FIRE is not without its own perils.
As with any behavioral pattern, the key is moderation.
“Everything in moderation. Including moderation.” – Oscar Wilde
It is when you start taking things to the extreme that things go awry and the path that was once made of light becomes dark and treacherous.
It seems to be an underlying human behavioral tendency, but we often take good things and turn them bad by pushing it to the extreme.
We all know that exercises is a healthy activity.
It keeps us fit and our cardiovascular system tuned.
However even a healthy activity such as exercise can fall victim to an extremist point of view where an individual is completely overcome by this lifestyle and neglects other vital components.
The “workout warrior” can do more harm to the body than good by employing extreme tactics such as starvation, introduction of chemicals, etc to achieve that Adonis look.
Moderation is key.
We all know that drinking water is healthy for the body.
But did you know that there is a medical danger of drinking too much water?
The medical terminology is called “water intoxication,” which can lead to dangerously low levels of various electrolytes in your body such as sodium (a condition called hyponatremia).
Again we must be cognizant of where we are on the moderate-extreme curve with regards to any activity we do to avoid going into these “dangerous waters.”
Moderation is key.
“That is great Xrayvsn. Thanks for dropping some medical knowledge, but how does this apply to my beloved FIRE philosophy?”
My response to that great question is that there are several traps a potential FIRE walker can literally get burned by if her or she is not too careful.
1st Degree Burn:
A basic principle of FIRE is the concept of delayed gratification.
In order to achieve financial independence means that we have to have some expected sacrifice in the beginning to reap the reward at the end.
If we did not employ some form of delayed gratification, we would never make any financial headway as we would instead enjoy instant gratification (spending everything we make now to satisfy our immediate cravings).
This concept of delayed gratification can be taken to the extreme.
There are countless stories of people who worked hard every day of their lives, expecting to finally enjoy the reward of doing so in their golden years only to see their lives cut tragically short.
My father was one of these people who never got to enjoy the benefits of his hard work as a physician when he passed away at the age of 50.
I too have fallen for this trap early in my career as I denied myself any vacation, stressing money over the chance for relaxation numerous times.
Time is the one thing that none of us are promised.
It is the one variable that we have no control over.
If we take delayed gratification to the extreme, we can be denying pleasure in the present for something that we are not guaranteed of in the future.
Moderation is key.
2nd Degree Burn:
We all know that the main tenet of FIRE is to live below your means and save the rest.
It is a great principle indeed to follow and crucial if you do want to make any financial headway and have your money start working for you rather than the traditional other way around.
However it can be taken to the extreme.
There are emerging groups of individuals it seems that almost try to outdo each other by how much of a minimalistic lifestyle they can subject themselves to.
They take pride that they can live such a frugal lifestyle by denying themselves of many items or activities that we take for granted.
Taken to the very extreme, these individuals may deny themselves basic creature comforts or proper nutrition just to save those few extra dollars.
This is potentially a path that could lead to darkness.
Moderation is key.
3rd Degree Burn:
In order to be financially independent there is obviously the need for one vital component: Money.
As a society we place a high value on money.
It is the reason we go to work and trade our precious time for.
Trading our time for money is how we are able to utilize our abilities to obtains goods and services that we are not capable of producing ourselves.
Money is a tool however and nothing more.
However an extremist FIRE walker may began to view money in a different light.
There are characters that have been spoken of throughout history that shed light on how money and greed can consume a person.
In “A Christmas Carol” by Charles Dickens, Ebenezer Scrooge coveted money so much that relationships were destroyed and only when he was visited by the 3 ghosts of Christmas was he able to see the errors of his ways.
But that was a fictional character! You can’t expect me to agree with you based on a storybook?
Oh, so you want a real life example?
There are so many to choose from, but let’s take one of my favorites, John Paul Getty.
J.P. Getty was asked what would it take for him to feel secure.
Despite being the richest man in the world at the time his one word response was, “More.”
Getty chose money over relationships and this is a danger any extreme FIRE walker can face.
A favorite blogger of mine, Half Life Theory, wrote a wonderful post titled, “If This Should Cost Me My Marriage…” in which he confesses that at one point his priority for money and saving on his path to FIRE put a serious stress on his relationship with his wife.
It can happen to the best of us if we are not careful.
Taken to the extreme, the quest for money can end relationships and actually have the opposite effect, losing half if it results in a divorce.
Moderation is key.
Superpower Take Home Points:
- Moderation is key regarding any basic principals of life.
- Taken to the extreme any beneficial activity can quickly become detrimental
- Recognition of potential pitfalls/traps in the Path To FIRE can help you avoid them
- Extreme delayed gratification may cause you to sacrifice too much early on for a future that is not promised
- Extreme minimalism/frugalism can create a scenario where individuals are trying to outdo each other to claim the title of most extreme.
- Prioritizing money over all else can lead to destroying relationships, which in the case of divorce, results in the loss of the very thing you were trying to gain.
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