Project Fat FIRE 37
A big house, luxury cars, eating out in nice restaurants, and a couple of overseas holidays every year.
That, my friend, is living “the good life”.
Many people go into massive debt to afford these luxuries.
They shackle themselves to a 9-5 grind with golden handcuffs to fund their debt lifestyle.
But there is another way…
Fat Financial Independence Retire Early (or Fat FIRE).
In this post, I’m going to share what Fat FIRE is, why it’s the smart way of funding the good life, and my plan for achieving it in the next five years.
Let’s get into it…
What is FAT FIRE?
Fat financial independence is having enough passive income to live a very comfortable life.
Unlike lean financial independence, where your income only covers the necessities, Fat FIRE allows you to spend lavishly.
With your basic needs met, the extra spending is on things that bring improved quality of life and allow you to live your dream lifestyle.
Got a case of the January blues?
Lift your spirits with a holiday in the sun.
Fancy a meal out with friends?
Make the reservation.
Not got anything to wear out?
Go get yourself some new clobber.
Now, you’ve still got to stick to a budget – you would need millions in the bank and complete financial freedom to have no concerns over spending – but your budget allows for the finer things in life.
Fat FIRE is similar to an upper-middle-class lifestyle, but with one big difference… you don’t have to work to sustain it.
Your investment income pays for it all, and you have all the time in the world to enjoy the life you’ve created.
BUT… to achieve Fat FIRE, you’ve got to delay gratification.
You’ve got to prioritise saving over spending, and you’ve got to remain disciplined for 10, 15 or maybe even 20 years!
Choosing To Climb
Everyone would jump at the chance to live their version of the good life and not have to worry about money.
But mention that it takes 10 years of saving hard, and many would flounder.
They would rather live the high life now, ON CREDIT.
But if you can delay gratification, the reward is much sweeter.
Think of it like climbing a mountain.
You could pay for the cable car and be at the top in three hours (the instant-gratification-pay-on-credit approach), or you could spend three days climbing to the summit (the Fat FIRE approach).
Both approaches get you to the same place. They both lead to the same breath-taking view. But I can guarantee the view will be much more satisfying if you choose to climb.
The sense of accomplishment and the skills built during the climb are lasting.
If you run out of money or the cable car breaks down, you no longer get to enjoy the view from the mountain top.
But the climber has built the skills to climb the mountain again. He gets to enjoy the view every day for the rest of his life.
And it’s the same scenario with taking the cable car or climbing to the good life.
You can fund the lifestyle with debt and an endless work-week, or you can prioritise saving and investing and pay for the lifestyle through investment income.
I’d rather climb the mountain.
I’d rather go without now, and inflate my lifestyle once my passive income covers it.
I don’t want the good life if I have to work at a job I hate to afford it – that’s a sure-fire way to end up resenting everything you’ve worked for.
And I don’t want to lose the house, car, and luxuries if I was to suddenly lose my job or become seriously ill.
That’s why FAT FIRE makes sense to me.
I’ve protected the downside and given myself unlimited time to enjoy the upside – who says you can’t have your cake and eat it too?
It may take several years longer to achieve the good life, but once I get it, it’s for keeps.
Am I Greedy? Ungrateful? Materialistic?
I achieved financial independence a couple of years ago. Pursuing FI has been one of the best decisions I’ve made.
I’m grateful for the freedom and choices I now have.
That said, there are still things and experiences I want in my life.
It sounds ungrateful, but the £2,000 per month I make from my investments doesn’t allow for all my desires.
There are many places I still want to visit, experiences I want to have, and things I’d like in my life.
I don’t need these things; no one really does.
But that doesn’t change the fact that I still want them.
Given the choice between living my dream lifestyle or not, I’d choose my dream lifestyle every day of the week.
I’d rather live in my dream home than a house that’s just adequate.
I’d rather drive a Mercedes Benz than my Vauxhall Astra.
And I’d rather wear nice clothes than any old rags.
My choices make me greedy and materialistic in the eyes of some people.
“Why do you want MORE, MORE, MORE when you already have everything you need?”
Well, there are a few reasons, but at the crux of it, it’s because I believe that this is my one and only life.
And I want to make this one life the best one possible for me and my loved ones.
And for me, that means having a few more things and experiences in excess of what I need.
I know more money or more stuff is not going to make me happier. I know I would be forever chasing the end of the rainbow if my happiness was derived from attaining bigger and better stuff.
But Fat FI is more than just nice things and a cushy lifestyle.
It also provides more of the things I value: time with family, freedom, financial security.
These are the true benefits of wealth.
And I’m willing to be patient to have these things in abundance.
Living below my means for a few short years is a small price to pay if I get to enjoy what’s meaningful for a lifetime alongside a few luxuries.
Designing My Fat FIRE Lifestyle
Fat FIRE is living your dream lifestyle without having to slave away at a job or make cutbacks to afford it.
What this lifestyle looks like and the cost of it is different for everyone.
Some people could achieve Fat FIRE on £2,000 a month, whereas others would need £20k.
My number is £5k per month.
How’d I come up with this number?
Well, first I thought about what my dream lifestyle would look like.
This was easy as my dreams and goals have remained the same for years. But to make sure I’m actually pursuing things I want (and to also get my wife on board ), I whipped out a pen and paper and did two exercises:
Firstly, I created a want, be, do list.
I set a timer for 30 minutes and wrote down at least 40 things I wanted to have, 40 things I wanted to do, and 40 things I wanted to be.
I ended up with a brain dump of everything I wanted to accomplish.
Although useful, my answers were scattered and included everything from buying an espresso machine, to doing something philanthropic on an epic scale, like building a school.
To get clarity, I then did the perfect day exercise.
Starting from the moment I woke up to when my head hit the pillow at the end of the day, I wrote down everything I’d like to do to live my perfect day.
This wasn’t a special day where I get to fly first-class or go to the gym with Arnie, but just a regular day where I make a little progress in each area that’s important to me and do things that make me feel good.
I won’t bore you with all the details, but my perfect day included spending time with family, exercising, eating healthy, a little work, meditation, and downtime to read, walk the dog, and watch Netflix.
How Much Money Will I Need?
Now I had the vision, it was time to work out the cost.
I divided the cost of my dream lifestyle into two categories: onetime expenses for larger purchases, and my ongoing cost of living.
My onetime costs came in at a whopping £203k! However, £150k of that will be used to buy assets that will fund my dream lifestyle.
Here’s the rough calculation of how I arrived at the number:
I currently make around £2,000 per month from my portfolio, so I’ll need another £3,000 per month to pay my Fat FIRE living expenses (see table below).
Most of my savings will be invested in property, where I can earn a 30% return on investment.
£150,000 invested at a 30% return will provide an annual income of £45,000, which is a monthly income of £3,750. After allowing for tax at the basic rate, I’m left with £3,000 per month.
Now, this is a very simplified plan, and my investments won’t work out like this – some might offer better returns, and some will be worse – but it gives me a target to aim for.
A couple of points on my ongoing costs:
- I broke them down into fixed costs (orange) and variable costs (yellow). This was mainly for my peace of mind so that I know how much I could reduce my spending if I had to.
- On reflection, spending £5k a month is ridiculous. It’s more than double what I spend now. But if I were to live my dream lifestyle irrespective of the cost, this is everything it would include.
Calculating the cost of my dream lifestyle made one thing clear: I have a monstrous goal ahead of me.
Reaching Fat FIRE requires saving an additional £203,000 and building an investment portfolio that produces £5,153 per month!
These are big goals to reach even if you had a 40-year career ahead of you.
And I’ve decided to turn up the heat…
I’ve set myself the goal of attaining Fat FIRE in just five years. My deadline is 31st December 2025.
I’ll be 37 in five years, which is where “Project Fat FIRE 37” gets its name.
It’s ridiculously ambitious, but I set the five-year deadline for two reasons: 1) I want a stretch goal that I have to work hard to achieve, and 2) I find goals with longer time horizons difficult to focus on.
Achieving Fat FIRE in five years may prove impossible – saving £203k in five years means saving £3,383 per month, which I’m a long way off at the moment.
But even if I fall short, I’ll still be in a better position and closer to my goal than I am now.
That’s not a copout; it’s just keeping it real.
I will, of course, be doing everything I can to reach my goal.
Wrapping It Up
This post is more personal than the stuff I usually write, but I wanted to share what I’m working on.
Sharing my goals publicly makes me slightly anxious, but it also provides extra accountability – I’ve set out my plan, now I need to make it happen.
I’ll be providing updates of my progress and also sharing the challenges I’m facing for anyone that wants to follow along.
Did you enjoy this post? Let me know in the comments.
And if you’re also working towards FIRE, let me know where you’re at on your journey.
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Hi! I'm Jamie
I’m a 30-something money blogger that writes about saving, frugal living, investing and entrepreneurship.
I achieved financial independence at 30 through hard work, saving and learning to invest.
On this blog, I share everything I've learned about money to help you build a life you love, free from money worries.
If you'd like to achieve financial freedom, escape the 9 til 5 and spend your days however you want, then I know you'd love the newsletter.
I’m usually banging on about how to manage your money better. Save hard and invest wisely is my mantra. But today, I’m playing devil’s advocate.
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