Dave Ramsey: ‘The FIRE Movement Burned Down’

The Ramsey Show caller knew he was burning himself out. He had been working three jobs, 12 hours a day, to build his financial portfolio. He had four houses, including three investment properties, and had amassed about $1.65 million in equity plus savings. He was comfortable, yet afraid to quit two of his three jobs.

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Dave Ramsey and his co-host asked the caller why he felt so worried. The caller said he’d been part of the FIRE movement — “financial independence, retire early.”

Here’s what Ramsey had to say about the FIRE movement.

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What Is FIRE?

Living the FIRE lifestyle means earning high and saving up to 75% of your income so you can retire early, usually in your 30s or 40s. This ambitious goal requires participants to live lean and earn as much as possible.

For people like Ramsey’s caller, that means working multiple jobs.

The idea is to buckle down and sacrifice comfort as a young adult, then enjoy the benefits down the road. It seems like a nice life if you can get it, but Ramsey and other experts believe the movement is dying.

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Ramsey on FIRE

Dave Ramsey is one of the biggest financial household names in the world. You might expect him to praise a lifestyle that involves earning and saving as much as possible.

But, according to Ramsey, FIRE doesn’t work. As he said to his overworked caller, “The fire movement burned down, did you notice? It burned around people’s ears because they were trying to do something that wasn’t sustainable.”

He explains that FIRE is about building a portfolio, not a life. And although FIRE devotees think they’re working toward an achievable goal, the finish line keeps moving.

Ramsey explains that there’s always a reason to keep hustling. Sometimes, it’s a fear of scaling back. You might be able to live on interest from your investments, but you’ve become used to a more comfortable lifestyle. Living on less feels like living in poverty.

The other driver is a desire for a more decadent lifestyle. You’ve always wanted some marker of financial success, and you feel like you have to keep working to get it.

“Once you get on that treadmill, ” Ramsey said, “you can’t catch that carrot.”

Why FIRE Is Burning Out

Ramsey is one of many seeing these problems with FIRE. Another is Sam Dogen, also known as the Financial Samurai.

Dogen believes that the drive for work flexibility is making FIRE obsolete . He began exploring and promoting FIRE because of work burnout. He achieved early retirement at 34 and became “one of the pioneers of the modern-day FIRE movement.”

Now, he believes FIRE’s time has passed.

Flexibility Outside Retirement

Thanks to remote and hybrid work schedules and the ability to work from anywhere, earners no longer have to retire early to live their desired lives. They can earn longer, build more wealth and still have the time to travel and spend time with their families.

Money expert Tim Denning agrees, calling FIRE “the dumbest money trend in history.” He believes FIRE relies too much on a scarcity mindset, which makes life less enjoyable. He urges potential FIRE devotees to leave that mindset behind and focus on earning. In the internet age, he says, earning is easier than ever.

Financial Inaccessibility

For most people, FIRE is psychologically and financially unfeasible. As finance writer Michelle Jackson explained to Business Insider , FIRE depends on a high salary and no debt.

Most Americans don’t have that kind of freedom. The median salary nationwide is $70,300, which means half of Americans earn less. Debt is a problem for more than three-quarters of American households, with half of those households owing more than $80,200.

Then, there’s inflation. Even if you can save or invest half of your income and reach a point where you can live off the interest, retiring early leaves you with many years of living to fund.

And even if you save enough by your 30s or 40s to support yourself without working, there’s no guarantee you’ll be able to keep doing so.

Inflation is currently at 3.4%, ranging from 1.2% to 6.6% over the past 10 years. There’s no way to predict if and when it will spike in the future, leaving your savings unable to keep up.

Can Anyone Catch FIRE?

Unless you’re already close to financial independence, FIRE may not be a feasible goal. It requires extreme frugality, often to a degree that limits your enjoyment of life. Self-denial is a difficult way to spend your 20s and 30s.

FIRE also requires you to earn high. According to Brian Preston, AKA the Money Guy, someone earning $100,000 a year needs to save 35% to 40% of their income to achieve FIRE.

Even then, you’ll only be replacing up to 50% of your pre-retirement income — approximately $53,000. If you want to live more comfortably, you’ll need to earn even more or cut back further.

Learning From FIRE

The FIRE movement may not work as a roadmap for living, but Ramsey believes it’s still worth learning from. For example:

• Track your spending. Create a budget and set a savings goal based on your goals. Consider cutting unnecessary expenses to reach your goals faster.
• Add income sources. You don’t need to work 12-hour days like the caller on Ramsey’s show, but making extra now can go a long way later if you invest smartly.
• Eliminate debt. Debts drain your retirement savings, so Ramsey recommends paying them off before you retire.
• Prioritize saving and investing. Ramsey recommends putting 15% of your income into a retirement account like a 401(k) or IRA.

As Ramsey often says, retirement planning looks different for everyone. Ask yourself when you want to retire, how much you’ll need, and how to structure your investments during your working years.

It’s important to set goals that will work for you, considering your current income and desired retirement lifestyle. Some people can live on $50,000 a year for the rest of their lives; others feel safer with more.

Use a retirement calculator to find your “magic number” — the amount you need to save to reach your retirement goals. From there, you can develop a customized savings plan.

This article originally appeared on GOBankingRates.com : Dave Ramsey: ‘The FIRE Movement Burned Down’