FIRE in a time of crisis

Young Americans have blithely lived in a financial and economic world that we never thought would come crashing down around our ears with almost no warning. We were in college in the real estate crash in 2008 and didn’t feel the loss personally. Everything has been smooth sailing.

Debt-lifestyle

For some young adults, this means student loans, credit card debt, new cars, and lifestyles that we think we can maintain—jobs seem secure, who cares if we live month to month or only have enough to make minimum payments on all the variety of loans we have each month? We feel indestructible.

FIRE lifestyle

Alternately, within our generation is also a growing number of people with a goal of FIRE—we’ve broken away from the materialism and consumerism that rationalizes debt-ridden lifestyles, but we too are guilty of thinking our country’s economic prosperity and economic potential is unshakable.

The crash: the tide goes out

Maybe some of us have been swimming naked, a la Warren Buffet.

This is it: the tide is going out. Where will the FIRE movement be now?

A few times, we’ve invested all our cash as we renovated a property and then slowly built cash back up once the property was rented. Fortunately, our margins have always had cushion even when extra expenses came up during the renovation process. I’ll detail our priorities and non-negotiable when selecting an investment property soon.

For now, what is FIRE going to look like for us? For others on the FIRE path like us?

Short answer: we just don’t know.

Even for the financially savvy, people passionate about financial independence, none of us saw a crash like this coming.

Hopefully, like us, many FIRE millennials have emergency funds to get us through. Or maybe, also like us, we’ll be using money that was earmarked for investment.

Our future FIRE

There’s a couple outcomes I could see:

  1. Best case scenario: we don’t use too much of our cash or emergency fund, our tenants don’t leave and keep paying rent, and we’re able to invest heavily in real estate when prices and mortgage rates are at a new low. This could actually speed up our FIRE journey.
  2. Worst case: Perhaps we use up our cash. Our tenants lose their jobs and can’t make payments, and we have to drastically lower rent to find new tenants. Right now, at least Joseph’s full time job seems secure, so income loss isn’t too much on the table beyond part time loss for Danielle who works in the arts.

Ultimately, we have a very simple lifestyle. If we lose income and even investments, we can scrape by as much as it would hurt to stop our rapid rate of savings and investments.

Right now:

We’re counting our blessings:

  • All of us are quarantined together, working from home, and healthy.
  • We have food (and TP)
  • We have cash reserves for emergency funds.
  • We’re offering discounted rent to tenants in financial need. Being in a position to be generous even if it hurts us is a blessing to us as well as them.

How do you think FIRE will change for you in the future?

One comment

  1. Great perspective on what is happening. It’s good to be grateful and count your blessings no matter the situation. I hope everything works out as far as your cash reserves and rental units. I think FIRE could change for some in a few different ways: longer time frames for FI, more frugality, and just being more careful altogether. Also, I love that quote by Warren Buffett.

    Liked by 1 person

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