Hop on the FIRE train! Station No. 1 - BaristaFIRE
Or how you can minimise your work and "retire" early
This post comes in a week late because I was sick last week. This week you’ll get two issues to make up for it. Happy reading!
Hi!
When we talk about financial independence, the main criterion is that we don’t need to actively generate income to pay for our lifestyle. But what if you want to hop on the FIRE train early, and don’t have the required corpus to pull the plug on your job?
While researching more on FIRE, I came across different flavours which aren’t “pure” FIRE but they give you some of the freedom that it promises. Building on the train analogy, I’ll categorise these “train stations” in increasing order of corpus size:
BaristaFIRE
CoastFIRE
LeanFIRE
“Regular” FIRE
FatFIRE
If they seem confusing now, don’t worry. I’ll explain each of them in a separate post. Stay tuned!
Of course these aren’t exhaustive - I see terms like “AvocadoFIRE” and “ChubbyFIRE” which might fit in between one of these stops. But our newsletter train won’t stop on those stations - at least for now. Maybe later.
Let’s begin!
Station 1 - BaristaFIRE
Don’t you sometimes feel your job is too hectic? Don’t you want to take up a chill part-time job, spend the rest of your time chilling on the beach and live the retired life? Here’s one offering for you: the BaristaFIRE life.
BaristaFIRE is unconventional - you aren’t fully retired, but you’re not full time employed as well. You’re in this in-between state where you are withdrawing from your corpus as if you’re retired, but that isn’t enough for all your expenses. So you take up a part-time job which provides just enough income to make up for the rest. Usually the part-time job is a low-stress, low-paying job which leaves enough time to enjoy the rest of your day.
I’ve done the math for you - let’s dive into it.
Running the numbers
Here’s the Google Sheets link. It’s view only, so you can make a copy and then play around.
I have a sample scenario in the sheet. Let’s say you’re 30 today, and you want to BaristaFIRE when you’re 35. You estimate you’ll spend Rs 6L in retirement (in today’s money) and you’ve saved up Rs 78L (13 times your expenses). You can invest Rs 16L every year till you’re 35.
To survive till 95, you will need to pick up a job which can pay you Rs 1.5L a year (12.5k a month) in today’s money. It will also need to grow at 8% annually.
I have put in a relatively conservative number for corpus growth in today’s standards at 9% because this needs to work for another 60 years. You can’t expect double digit growth when India crosses its demographic dividend and becomes a country of old people.
What kind of jobs can you pick up?
The whole purpose of BaristaFIRE is to look for jobs which are:
Part-time: What’s the use of “FIRE” if you’re still working a full-time job?
Flexible Schedule: We can choose our work according to our convenience.
Low stress & effort: We want to get away from our high-stress jobs. Not fall back into them.
No prep work: The job shouldn’t need a lot of extra preparation outside of work hours. We don’t want it eating up more time than necessary.
If you have some expertise, talent or passion for something, that might be a good way to make some money for BaristaFIRE!
Take video editing for example. If you’re good at it, you can make some cash taking up projects from influencers who need help in making their videos. You don’t need to spend a full-time job’s worth of time or effort for it, and you can do it on your own time (within the deadline of course!). The best part is you are free to chose your projects.
It’s not just with work on the computer. If you’re passionate about fitness and know a bit about working out, you could take up work as a personal trainer. For a few hours of work a day, you could do something you like and make money. You have the flexibility to pick your clients. It’s similar with jobs like tutoring. If you know your subject, you can tutor kids in your neighbourhood or online.
If you’re an expert in your field, becoming a consultant is a great route. You can set your hours and pick your clients. It’s not a full-time gig and you can make a decent amount of money.
There are many more ways to make money, and if you feel you don’t have skills you could just work a part time job like a barista, or do something mundane like pizza delivery. It might not be sexy work, but it will pay the bills.
If you choose well, you might just need to spend a few hours a day, and enjoy the rest of your time.
But what’s the catch?
This looks very rosy on paper, but there are a few things to consider before committing to it.
If you choose to work the absolute bare minimum, you will need to work for the rest of your life. That might be easy to say when you’re 30, but think about your grandparents. If you’re their age, will you be able to do the work you’re doing today? Most probably not. And definitely not if you fall sick or have hurt yourself.
Which brings me to another challenge - you will need to keep expenses ridiculously low. Things might look simple on a Google Sheet when you put inflation as 7%, but there will be increased expenses as you grow older. Things will get expensive, and you’ll need to ensure your budget doesn’t go out of hand. And then there are medical expenses. Lifestyle diseases like diabetes are not light on your pocket, and medical expenses grow at a rate of 10-15% a year. Even if you commit to a healthy and fit lifestyle, what if you are diagnosed with Cancer? It’s wise to keep a good health insurance and a decent chunk of money as a medical fund.
Finding the job you like is also difficult. Low stress part-time jobs are hard to come by. If they were easy to find, everyone would be doing it. Somewhere down the line if you think you’ll need more income, that means you’ll need to find a job that ventures into the full-time category. Remember India is not a place with high incomes. A full-time job in one of the IT giants pays only Rs. 25k a month. Also don’t fool yourself thinking you’ll pick up a low skill job. A low skill job does not mean low stress job - it’s usually the opposite. These jobs are usually require manual labor, and they get physically exhausting.
Some advice
If you’re seriously considering BaristaFIRE, you will need to get your affairs in order.
Start off with a decent sized emergency fund - about 2 years of expenses worth. You’ll never know when you need it, and you’ll be thankful to your past self when you actually do.
Ensure you have a future-proof health insurance. Get a private health insurance before thinking of leaving your current job. Or if you don’t hate your job, maybe talk to your existing employer to check if they can reduce your hours. You will keep working at a job you’re good at, and you’ll retain your employment benefits.
Don’t do a one-time evaluation and leave it as is. Keep revisiting your numbers at least once a year to see if you’re still on track. You can’t predict the future on an excel sheet. Always re-evaluate.
And finally - well, it’s a personal preference - work a little more and graduate to CoastFIRE or regular FIRE. BaristaFIRE might sound good on paper, but it’s like dancing on a knife’s edge (yes I made it up). You never know which way you’ll fall if you trip, if the knife hasn’t maimed you already.
Wrapping up
This was a surface level introduction to BaristaFIRE. If I have missed something you want me to cover on BaristaFIRE, please let me know in the comments. I’ll take up the other stations of our FIRE train in upcoming posts.
Do try out the Google sheet and let me know your thoughts!
Until next time!
You know you want that avocado life :).
Looking forward to the rest of the series!