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Barista FIRE – Financial Independence Retire Early financial independence retire early

by SDghjggvnlijkjh



Barista Financial Independence is a type of FIRE 🔥

Yes, in case you didn’t know, there are many different ways to join the FIRE movement, and this is just my latest installment in the series of roads to join the FIRE or the financial independence movement.

Those that join the FIRE community want to achieve financial independence at a young age. How young, well that all depends on how aggressively you save, invest and adapt yourself to a frugal lifestyle.

Because yes, living the FIRE lifestyle means that you are going to be making a lot, saving a lot and cutting back, a lot. That’s just what you have to do if you are going to be saving 50-90% of your income. But the reward is that you get to retire early, sometimes decades earlier than most.

Your fully funded investment accounts will generate enough passive income for you to live out your dream live – that’s what FIRE is all about.

But there are more ways to FIRE than just the traditional image that your mind conjures up. Barista FIRE is sort of like semi-retirement or semi-financial independence.

It’s where you save up enough to cover most, but not all of your expenses. And as such, you need to take on some part-time work or have some sort of side hustle in order to bridge that gap between your passive investment income and your regular expenses.

Many who fall into the Barista FIRE group don’t actually need the extra income to supplement their passive income, instead they take on a part-time job in order to help get medical coverage, so they don’t have to pay for that out of pocket…because let’s face it, medical premiums are incredibly high. And no matter who you are, it’s very likely that medical care coverage is going to be a significant part of your budget, especially as you age.

So while Barista FIRE isn’t true financial independence, it is a step in that direction. You get to retire and step away from long hours and high stress positions, and into more flexible jobs that offer you either greater happiness or more freedom.

But because no paths are perfect, Barista FIRE still has it’s share of downfalls. Chief among them is that you really aren’t independent after all…you are still tied to some part-time work or a side hustle. And as long as you NEED this extra income or this health care coverage, you will never really be living the financially independent lifestyle.

Also, it’s very likely that these part-time positions are likely to pay far less than you are used to – and no-one likes a pay cut!

However, if you find that your job is very overwhelmingly stressful and you just cannot wait until the day you get to say “I QUIT!” Barista FIRE just may be a good fit for you.

What are your thoughts on financial independence? Have you ever heard about barista FIRE before? If so, what do you think about it?

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33 comments

BackwardsMoon 24/09/2021 - 2:51 Sáng

I like the social aspect of work, since in America it’s also the culture.

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Nevada Smith 24/09/2021 - 2:51 Sáng

Barista FIRE sounds like a gut wrenching nightmare. Starbucks? Stress free? I doubt it.

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The MGTOW 24/09/2021 - 2:51 Sáng

Congratulations on the move. Missouri is a far superior place to live in comparison to Oregon.

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Cris 24/09/2021 - 2:51 Sáng

Interesting !

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Buy&Hold 24/09/2021 - 2:51 Sáng

Erin:
If you took part of FIRE just think of all that $ you wouldn’t be able to save anymore!
Even worse, you would have to SPEND your Savings!
I too like to save so much I can’t watch anymore of this!

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WanderingDoc 24/09/2021 - 2:51 Sáng

IMHO 25X annual income is rather meaningless. So is NW. It's all about income. Cash flow. Both $500K or $3MM in real estate equity can produce $100K/yr. in passive income.

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Melissa H 24/09/2021 - 2:51 Sáng

Have a colleague who is doing this now!

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TrackMonkey327 24/09/2021 - 2:51 Sáng

Isn't the "rule of thumb" target savings for FIRE 25x annual expenses (and not annual income)?

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Joanna L 24/09/2021 - 2:51 Sáng

I think Barista FIRE would only make sense for someone who wants to pursue their passion and become self-employed, so they can leave their dreadful 9-5 job. It would be pretty redundant if you continue to be an employee, especially with a lower income and you still have to save to reach your FI number. It could slow down their journey towards hitting FIRE. I think I personally would stick to the traditional FIRE, or possibly slow FI 🙂

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CheapoBunny 24/09/2021 - 2:51 Sáng

my question is where are all these companies going to find workers willing to work like we have all our lives? Where I work we cannot get help to fill an empty position. It is a high stress job, with a high degree of education and pay. Not a lot are qualified. And those that are do not want to work full time. It's a question I have been wondering about since watching so many of these videos and seeing the reality of it after several coworkers left for part time jobs.

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carlos Mendez 24/09/2021 - 2:51 Sáng

I have four years left in my current job until I can go Barista FIRE. I plan to move to Detroit and get a part time job there while taking advantage of the affordable housing. I'll be 34 years old so I have the best years ahead of me! I've sacrificed a lot since I was 25 to reach this point and I cannot wait.

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creeper 205 24/09/2021 - 2:51 Sáng

I also recommend looking into health share plans. That way you can work at any part time job and have the freedom that those of us in the FIRE movement seek.

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Killroy 24/09/2021 - 2:51 Sáng

If you are healthy and don't go to the doctor, a high deductible plan with a HSA (health savings account) is a good way to lower your taxes and you can use a HSA tax tree in retirement for non medical expenses.

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Killroy 24/09/2021 - 2:51 Sáng

Why still a employee? My not be your own boss and own your own business?

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priceandpride 24/09/2021 - 2:51 Sáng

Please no trumpisms

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T Minus 1 24/09/2021 - 2:51 Sáng

Hey I'm more coasting FI.
I still work consulting gigs and only work six to three months a year. I consider myself semi -retired. For me, this is the optimal work/life balance. I am in IT and can usually find consulting jobs that are short term and have a high hourly rate. I typically do server migrations and workstation upgrades for companies upgrading their OS and that's it……..low stress for IT but still a high hourly wage. Working six months can usually pay my expenses for the year. In additional to my consulting work, I also have rental income as well. I love it. I can chose to work or not work. NO matter if you are barrista, coasting, lean or fat FIREjust gives you so many options on how to live your life and that's all FIRE is to me. My life is now amazing with so much freedom and flexibility………and it's the apocalype……lol

I am debt free including mortgage so my expenses are fairly low. FIRE has changed my life and I suspect once this reaches a wider audience, life as we know it and how we work will change forever once people figure out they don't have to work until they drop dead. They just have to be willing to make different financial decisions.

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H. Junior 24/09/2021 - 2:51 Sáng

good point! thats why i dont like barista fire, because those jobs pays low wages…and if i have to stay 8h working somewhere, in the end, work is work, i really hate my job but at least it pays well…

my idea of barista fire >
i was thinking about becoming a dog walker, because i like dogs, but i dont want to clean their poop hahahaha

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H. Junior 24/09/2021 - 2:51 Sáng

i dont think its only 85%, i think its like 99% of people hate theirr jobs… work is the worst thing of the world haha

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Brandon Smith 24/09/2021 - 2:51 Sáng

Since learning about this concept, I'm all about Barista FI. I recently figured out that I'll be Barista FI at the end of 2020, which has been a nice interim win on the path to full FI. I also realized that Barista FI is a nice platform to kickstart my own business and not worry about it being as successful as my full-time job, at least for the first few years. Loving Barista FI!

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Jacob Johnson 24/09/2021 - 2:51 Sáng

It's important to keep in mind that there is in fact low-income high-stress jobs.

I would even go farther to say that people in low-income jobs are in survival-mode and that mindset translates towards a more toxic work environment.

I've actually enjoyed work more as I've climbed the ladder and experienced less stress.

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Mandar Ambre 24/09/2021 - 2:51 Sáng

Recently joined FIRE community. Working towards my goals. Like your videos. Keep up the good work!

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vanguard valuist 24/09/2021 - 2:51 Sáng

If you are in a state with expanded Medicare the ACA is a great option. In most cases you will get better insurance coverage than you get through your corporate job. Pay attention to the earned income limits & stay in the "sweet spot" to maximize subsidies. Also be mindful of what any plan actually covers. Remember insurance is the business of denying claims so if you need an expensive drug, procedures etc….know what your plan will specifically cover for your needs.

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Astillion 24/09/2021 - 2:51 Sáng

Barista FIRE is my plan B. I will regular FIRE next year, but in case it doesn't work out, meaning I see my nest-egg not keeping up with my expenses, or I just get bored from not working, then I will find some kind of work. But never again full time. Might be full time for a shorter period though, like 1-3 months, or work part time for a longer part of the year.

I think I can cover my expenses with what I'll have saved up, but if I can't, then I wont be short by much. As things are right now, I could cover my expenses by working just 30-40%, without my passive income. Full time work just isn't for me. There's so much more to life than working.

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Bigboss304323 24/09/2021 - 2:51 Sáng

You are cute. I hope i meet someone as smart a pie as you.

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Wine n' Chill 24/09/2021 - 2:51 Sáng

Great breakdown of Barista FI/RE! I think the pandemic has a lot more people considering this version of FI.

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Sharon Helleman 24/09/2021 - 2:51 Sáng

I'm doing this right now. A bit earlier than planned (due to Covid). I've had to take a medical leave from my work. I'm about 2/3rds to FIRE, but am planning to not return to my regular work, and try to make my art business fill in the gaps. The plan is to try to see if my art can cover everything starting next year, but I will have several other "buckets" to rely on. I have just over a year in cash, and have dividends from my margin account that can cover all my basic expenses if needed. On top of that I have tax protected accounts that I will save until I reach full retirement. So feeling fairly confidant. Excited to ba able to focus full time on my art career!

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Putseller100 24/09/2021 - 2:51 Sáng

I just did this recently. I left a stable union job at the airport to trade the market full time. However I took a part time cleaning job in the evenings 15 hours a week just for a small check so I don't have to completely rely on my trading income. A couple things I have to say about all this first I am not fond of the FIRE formula of needing 25x income. That is not reflecting much credit on people, with a bit of creativity people should need a lot less money.  

For instance the magic number is 1 million dollars, then take out 3-4% a year to live on and you are free. 1 million takes A LONG time to accumulate, then those returns are OK at best in index funds. Personally i learned to trade and mostly sell premium in the market. I only need 250,000 to create a full income to be independent. Now how long does it take to get 250k vs 1 million? That saved me many many years towards my goal. So the point is learn something so that you don't need 25x income, that takes way too long.

Like I said I took a very low status cleaning job in the evenings when the markets are closed. Yes we need part time to make this work but the huge benefit is there are a ton of part time jobs vs good full time jobs that can provide a living. We are in a financial position to take ONLY what we want and not need. If we don't like this job we can quit immediately and go to the next one, while full time career people can't do that easily. You spoke of still having to answer to a boss, well, being barista/coasting fire we can choose what we want. I never even met my boss, I work completely alone and have flexible hours and tons of freedom. This can hardly be done with a full time job, so going part time is a HUGE step in the right direction

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Steve Galat 24/09/2021 - 2:51 Sáng

Wow, I’ve never heard of Barista FIRE. Always learning new amazing aspects of finance on this channel!!!

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Chelsea Glantz 24/09/2021 - 2:51 Sáng

Great info!

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moneybee 24/09/2021 - 2:51 Sáng

Erin! Great video! It's always fun learning about the different kinds of FIRE strategies, and Barista is certainly an interesting one. Always great hearing from fellow people motivated by personal finance and the FIRE movement, it's such a welcoming community! Just subscribed! Keep it up!

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Trading With CJ 24/09/2021 - 2:51 Sáng

Lots of great advice & tips in here!! Keep growing! So important to have goals!

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Inea - FI Journey 24/09/2021 - 2:51 Sáng

Great content no matter the background! … Im an accountant and enjoy helping small business get their numbers in line, so I plan to do Barista FIRE but instead of working part time for someone, my plan is to have my own couple of clients, that I could just work average 20 hrs a week.

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Zach Ginn 24/09/2021 - 2:51 Sáng

I love passive income – dividend investing is one of the best forms of passive income with very low barriers to entry.

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