Be careful of the FIRE in your belly

SARAH WRITES: What are your thoughts on the financial independence, retire early (FIRE) movement that is becoming popular? What negatives or positives do you see with following this idea?

BAREFOOT REPLIES: So FIRE stands for financial independence, retire early.

Basically, you work hard, save and invest your money, so you can retire early and live off the dividends. There are three things to keep in mind when playing with FIRE.

First, you need to make sure that FIRE isn’t simply a decoy for just hating your job. (And if you’re miserable at your job, don’t do it just for the money. That’s like saving up sex for your old age.)

Second, the FIRE movement’s origins are from the United States, where a lot of highly-paid but unhappy tech workers (see above) are saving their huge salaries to get their retirement number.

Aussies’ FIRE number will likely blow out because we have higher house prices and because kids are notorious but glorious money pits.

Finally, it’s said that the two most dangerous years of your life are the year you are born and the year you retire.

Personally, I’ve followed the FIRE plan in my life: I’ve worked hard, saved, and now have passive income from dividends. However, I haven’t retired, and I doubt I ever will.

DELIA WRITES: For the last 16 years with my partner I have been the higher earner and he has at times been unemployed. We have always pulled through together but I have mostly carried the financial burden.

This year he has nailed a great contract and will earn 50 per cent more than me.

I don’t know how to begin a conversation about where that money is going to go.

I don’t want to sound like I am holding a grudge, but I also don’t want him building a tidy nest egg while I have little to show for the sacrifices I have made. What do I say?

BAREFOOT REPLIES:

Step 2: Announce “I’m reading this book and it says we need to go on a date night to discuss our finances.”

Step 3: With a beverage in hand, say something like “For 16 years we’ve been a team — we’ve looked after each other financially — but for the first time in our relationship I feel financially vulnerable”.

Step 4: ‘The book says one way couples in a long-term committed relationship can work through this is to open a joint transaction account, with a no-questions-asked preagreed spending limit.”

Step 5: Then stop talking. Listen to what he says.