Exploring Lean Fire - The Frugal Path to Financial Freedom

A woman enjoying the sunrise in the country. She's living a simple life to represent lean fire.Photo byBlurryMe via Shutterstock

You want financial independence, and you want it now!

If you’re willing to embrace minimalism, frugality, self-sufficiency, and cheap living in your quest to exit the rat race, you might want to explore lean fire.

What is Lean Fire?

Lean fire is financial independence taken to the cheapest extreme. It’s about living a work-free life on less than $40,000 per year.

Those seeking lean fire plan to live off their savings and investments, like other fire seekers. However, they embrace frugality, both while working and after they achieve financial freedom.

While in the building phase, they scrimp and save as much as they can. They say sacrifice going out and taking vacations to funnel as much as possible into their nest egg, which helps them build their savings quickly and get used to living cheaply.

After retirement, they continue their frugal lifestyle but have time to enjoy life’s simple pleasures, like home-baked bread, relaxing in a park, and watching the sunrise.

Lean fire lets you opt out of the workforce by sacrificing life’s modern luxuries. It’s a worthwhile tradeoff for lots of fire seekers.

Why Lean Fire?

Forty thousand dollars per year is not that much, especially when inflation eats into more and more each year.

But it holds a lot of appeal.

I’ve considered lean fire because America’s messed up work culture siphons away all our free time, preventing us from pursuing our passions. Opting out by any means necessary seems worthwhile.

Living on a Lean Fire Budget

Forty thousand dollars doesn’t seem like a lot of money, but most Americans make do with similar salaries.

The average US salary hovers around $60,000 per year, which amounts to about $48,000 after taxes. Millions of Americans survive on far less.

But when you’re financially independent, you’re no longer paying payroll taxes, meaning your tax burden will be far less. You also don’t have to pay for commuting costs, work clothes, lunches, and other random expenses that arise from working. In addition, you have more free time to cook healthy meals at home, which helps you stretch those dollars even further.

Lean Fire and the Homestead

Though it’s not a requirement, many lean fire adherents thrive on a homestead. They grow vegetables, raise food animals, make their soaps, and strive for self-sufficiency in nearly everything they do.

They don’t need to spend a lot of money because they care for most of their own needs. They’ve traded work in the office for work on the farm and couldn’t be happier.

Others don’t want to work on a farm, and they live a comfortable lean fire life in small towns across the US.

How Much Do You Need for Lean Fire?

Lean fire means living on less than $40,000 per year.

How much money do you need to invest to safely withdraw that amount?

The good news is it’s far less than the traditional fire number, but the bad news is that it’s still a hefty sum. Assuming a 6% growth and 2% inflation rate, you’d need approximately $960,000 to survive a 60-year retirement while withdrawing $40,000 annually.

Use this handy calculator to change the variables to fit your situation and see how much you need.

How To Save $960,000

Saving enough money for a lean-fire lifestyle seems like an insurmountable goal. However, it’s easier than it first appears.

To achieve the goal, you would need to save approximately $2000 per month from age 20 to age 40. That’s difficult, but it's not impossible if you have a high-paying job and live a frugal lifestyle.

You can retire even less if you put your lean fire goals off for just a few more years or learn to live on less than $40,000.

No quest for financial independence is easy, but lean fire might be easier to reach for many people.

How to Live a Lean Lifestyle

Many people already live off less than $40,000 per year. Some have no choice, while others embrace extreme frugality or live a minimalist lifestyle.

But you don’t have to go to extremes to live well at this income level. There are hundreds of small towns throughout the US where you could live comfortably on $40,000 per year.

If you want to live in luxury for less than $40,000, consider relocating to a lower-cost country. You wouldn't feel like you’re missing anything if you moved to an affordable region of South America or Asia.

Is Lean Fire Right For You?

You have many options about how to live your life. Some people want to stop working and enjoy their time here as soon as possible, while others find purpose in their work.

To decide if lean fire is right for you, examine your goals.

What do you want to do in retirement? What type of lifestyle do you envision? How much are you willing to sacrifice never to have to work for someone else again?

When you can answer these questions, you can estimate how much your life in retirement will cost. Once you have that number, you can decide if lean fire is the right fit.

This article was produced and syndicated by Partners in Fire.