After Reading "FIRE to Get Rich," I Learned 3 Secrets to Accelerate Retirement by 10 Years

Lazy to Get Rich (懶得變有錢) Quick Summary

summary: “Want to retire early? This book review of “FIRE to Get Rich” breaks down the seven stages to financial freedom. This article will share the core principles of savings rates, minimalist finance, and successful investing from the book, helping you build your own FIRE plan step by step.”

Stage-by-Stage Financial Freedom

The Seven Processes to Financial Freedom

1. First, Reset to Zero. Resetting to zero means bringing your assets back to a state of zero. This zero state refers to paying off the debts you can, specifically non-asset liabilities. You can listen to this episode of the Podcast for more on debt issues, where I’ll discuss the classification of debts.
2. Sufficient Emergency Fund. Saving an emergency fund is a very important financial planning process. This will determine how much financial confidence you have and have a very important impact on your financial decisions. You can listen to this episode of the Podcast about emergency funds, where I spent quite a bit of time talking about how important this is.
3. Achieve a NT$3 Million Investment Portfolio (approximately USD $93,750). I think this is much more difficult than the above two things. NT$3 million is not a number that can be saved in a few months, but is it possible to save it? It is possible, but you need to have a goal and a plan to execute it. This money gives you a lot of financial buffer.
4. Achieve Half of Financial Freedom. According to the 4% rule, your assets should be at least 200% of your annual expenses! However, achieving 50% of your annual expenses is also a good start.
5. Almost There. When the total investment amount reaches 250% of annual expenses, you are close to financial freedom, with more than enough to cover basic expenses.
6. Financial Freedom. When annual expenses reach 250%, according to the 4% rule, you are financially free.
7. Financial Freedom with Sufficient Financial Buffer. Nothing much to add.

Summary: A bit too theoretical, like 7 processes just to pad the word count and paragraphs. Of course, if these numbers can be achieved, I also believe that controlling expenses can lead to freedom. But it feels more like padding…

Find Your Why

Action Steps

1. Write down 5 to 10 things that make you happy in your daily life.
2. Write down why these 5 to 10 things make you happy.
3. Write down your mission statement, how much time and work you are willing to put in for these happy things.

The Mindset to Get Rich

People who can successfully get rich usually have a growth mindset, rather than unchangingly expecting changes in the external environment. Because what you can control is often only what you can control. There’s never a “should have known.”

Action Steps

1. Spend some time every day reading or listening to meaningful information for at least 30 minutes. Don’t spend time on entertainment news (usually entertainment news is about other people’s business and has nothing to do with you).
2. List 5 to 10 skills or expertise that you would like to have or cultivate. These skills or expertise can be exchanged for money.

Become a Value-Oriented Person

Savings Rate

Savings Rate = Savings / Income

Healthy Savings Rate

• At least 10% to 15%: I personally suggest that after having income, you should save at least 10% to 15% of your income. This includes saving for retirement and other long-term goals such as buying a house, education funds, etc.
• Higher Percentage: For those who want to retire early or have larger financial goals, they may need to save a higher percentage, such as 25% or even more.
• Don’t worry about saving too much money, because the more principal, the more amazing the compound interest effect.

Dangerous Savings Rate

• Less than 10%: If the savings rate is consistently below 10%, you may not be able to adequately prepare for retirement or other important long-term goals.
• No Savings: If there are no savings at all, this may be a warning sign that your financial situation may not be able to cope with emergencies or future needs.

Factors Affecting Savings Rate

1. Income Level: People with higher incomes may be able to save a higher percentage of their income.
2. Life Stage: Young people may find it difficult to save a higher percentage of their income due to lower incomes or just starting work; older people may have a higher ability to save.
3. Debt Situation: High debt (such as student loans, credit card debt) may limit the ability to save.
4. Cost of Living: High cost of living areas may make saving more difficult.

Action Steps

1. You should try to develop your own financial statements.
2. You should know where your money is going.
3. Saving money is not being frugal. If there are necessities, you should buy them (buy new underwear if it’s torn).

Minimalist Finance Philosophy

If you are starting to consider how to enter the world of financial freedom, then your choices in income and expenses are extremely important. You can choose to increase income, or you can choose to reduce expenses.

• Housing Costs
• Transportation Costs
• Food Costs

Usually these are the largest unavoidable costs. You can consciously choose to adjust their costs, because most other living costs are related to consumption. There is more room for control.

Insurance is the Only Solution to Prevent Risk

Before you have enough money, insurance is one of the key points to protect your property. Although insurance is indeed an important way to prevent and manage specific risks, it is not the only solution.

Risk management involves a variety of strategies and tools, and insurance is just one of them. Here are some of the main risk management methods:

1. Insurance: This is financial protection against various risks (such as health, property loss, accidents, etc.). By paying premiums, the insurance company assumes specific risks and provides compensation in the event of a loss.
2. Risk Avoidance: In some cases, the best risk management strategy is to completely avoid the risk. For example, not engaging in dangerous activities or not investing in high-risk assets.
3. Risk Reduction: By taking measures to reduce the likelihood or impact of a risk. For example, installing an anti-theft system can reduce the risk of theft, and a healthy lifestyle can reduce the risk of disease.
4. Risk Retention: Sometimes individuals or businesses may choose to bear certain risks themselves, especially when the risk is relatively low or the cost of insurance is too high. This may involve establishing an emergency fund or savings to cope with potential losses.
5. Risk Diversification: Especially in investment, reducing the risk of a single investment or market fluctuations by diversifying asset allocation.

Save What You Can, But Don’t Be Greatly Affected

Remember when I moved last November, I canceled my long-term Chunghwa Telecom internet (100m/100m costs more than NT$1,000 per month), and switched to Taiwan Fixed Network (300m/30m costs only NT$250 per month), and also canceled the 4G unlimited data plan and switched to Ubox Mobile 466 unlimited data plan, which is still Chunghwa Telecom network.

But my life has not been greatly affected. These two things alone save me NT$1,000 per month.

Action Steps

1. Calculate your housing costs
2. Calculate your transportation costs
3. Calculate your food costs
4. Check your insurance costs
5. Check your subscription costs
6. Calculate how much money you can save from the above 5 and invest in ETFs

Principles of Successful Investing

Invest in ETFs and patiently wait for them to grow.

Further Reading

Lazy (懶大)’s Conclusion

懶大

金融科技新創 CEO | 獨立財務顧問

This book is more suitable for Americans. The tools, websites, and principles mentioned in the book are mostly based on the American financial environment. This is a common scenario for translated books, and it is usually the reason why the book doesn’t sell well. In addition, I think the content of this book is more straightforward (could it be the translator’s problem? I haven’t read the original book, so I’ll put a question mark). Some translated books still have an exciting feeling when reading them, like “The Soul of Money” and “Your Money or Your Life,” which are both highly recommended books.

From my point of view, I think this book is quite disappointing. So I won’t recommend everyone to buy this book (I’m a very honest book reviewer, not every book is good). The financial principles and methods mentioned in the book I think have a chance to be implemented, but unfortunately, too much content is limited to the American way, such as the 401k retirement account. This method is basically not applicable in Taiwan, and no one in Taiwan wants to put money into self-contribution of 6% (although it saves taxes), everyone still likes the “feeling” of getting it first.

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