FIRE stands for ‘financial independence, retire early’ and helps people live off the income they create from savings and investing.
Jennifer Graudenz has been strictly following her plan in hopes of retiring in four years.
The 34-year-old documents her journey through her blog mymoneyyard in hopes of inspiring others to join the journey and show people it is possible to retire early.
Her goal is to retire with £350,000 by the time she is 38-years-old. She explained she wants the freedom to do what she wants to.
She explained on her blog that the first step for anyone who wants to start their FIRE journey is to work out their FIRE number.
Ms Graudenz multiplied her annual expenses by 25. This calculated the minimum amount of money she needed to survive.
She needs £1,000 to survive each month so £12,000 each year. Once she multiplied this, she found her FIRE number was £300,000 however this is her minimum rather than her target.
She told Express.co.uk: “I plan to be financially independent by age 38 and retire by age 40. If I’m working, I want to work because I want to, not because I need the money.
“Although I might choose to work longer if I want to. My target amount for my index fund is £350,000. I’m also planning to have a cash reserve of at least £24,000. But note that this does not include my business and property.
“I am keeping my expenses low and am working to increase my income. Currently, I save around two-thirds of my income every month. As my income increases, this savings rate will also increase.
“I’m all in index tracker and am using ISA and SIPP accounts. This year, I’ll probably also need to open a GIA.”
Once Ms Graudenz retires, she plans to follow the four percent rule – limiting herself to withdrawing four percent from her savings each year to ensure she doesn’t run out of money.
By withdrawing four percent of the £350,000 saved, she will be able to withdraw £14,000 a year, meaning she can pay herself £1,000 to £1,200 a month.
She explained that her expenditure is very low so she knows she can live off that money. If she sticks to the four percent rule, she believes she will “never run out of money.” The blogger has been able to save so much because of switching jobs as often as possible.
Every time she has changed employers, she has been able to increase her salary. She also makes use of the best money-saving apps and cashback sites.
She continued: “I save at least two-thirds of my income and spend less than a third. Public transport is very good in London, so I don’t own a car. After rent (£850 a month), my biggest cost is food at around £250 a month.
“My plan is to build up a cash fund closer to retirement so I won’t have to worry about stock market performance just as I’m about to stop work.”
Ms Graudenz aims to have 75 percent of her fund in easily accessible accounts such as an ISA and 25 percent in her pension.
Once she retires, Jenny plans to keep busy by doing volunteer work and continuing with her blog.
To read more about Jen’s story, Britons can visit her blog.
