When Christy Shen first heard about the Financial Freedom, Retire Early (FIRE) movement, she thought it sounded like a scam.
In the early 2010s, when the FIRE community was still small, bloggers like Mr. Money Mustache and JL Collins led the conversation around the 4% rule and the idea that saving 25 times your annual expenses could lead to financial freedom.
“Since I grew up in poverty in China, my thinking was, ‘The stock market is scary,'” said Shen, whose family moved to Canada when he was eight.
Her understanding of money was largely shaped by her parents’ advice to buy a house and stay away from the market. Meanwhile, FIRE bloggers were claiming you could retire at 30 using index fund investing. “I really didn’t believe it,” she said.
At the time, Shen and her husband, Bryce Leung, were focusing on saving for a home. The couple, who met while studying computer engineering, were both working in the technical field and earning good salaries. But home ownership in Toronto still felt out of reach.
“Housing prices are just going to go up,” Shen said.
His frustration with the housing market led him to consider other options and ultimately led him to the FIRE community.
Shen and Leung spent several years traveling the world on $40,000 CAD per year. Christy Shen Courtesy of Bryce Leung
Their FIRE numbers are being calculated
Early retirement seemed attractive, but it was economic uncertainty that prompted them to come up with a backup plan, Leung said: “Fire seems to be a way for us to protect ourselves from the threats to job stability that outsourcing was at the time.”
The couple used the 4% rule, a common FIRE guideline that says you can withdraw about 4% of your portfolio each year in retirement. This means you will have to invest approximately 25 times your annual expenditure. They were spending about $40,000 CAD per year, putting their FIRE number at $1 million CAD (25 times $40,000).
He expected it would take five to 10 years to reach the figure of seven. Instead, they arrived there in small numbers. They got a significant head start: By 2012, when they first discovered the online FIRE community, the couple said they had already saved about $500,000 CAD for a down payment. They simply changed the target for that money. Instead of using it to buy a house, they redirected the money into a low-cost index fund.
How they saved up to 70% of their income
Before getting serious about FIRE, the couple said they were saving about 30% to 50% of their income, which combined came to about $160,000 CAD. Eventually, he increased his savings rate to 70%.
A large part of this came from avoiding lifestyle deficiencies. The couple lived in a simple one-bedroom apartment and their rent remained about the same for a decade.
“Despite getting many promotions, we didn’t see any improvement in our lifestyle,” Shen said. “The only thing we really spent on, and we were happily spending, was travel.”
He estimates he spends $5,000 to $10,000 a year on travel, which he calls “irreplaceable.”
Shen and Leung refuse to give up their travel budget while chasing Fire. Courtesy of Christy Shen and Bryce Leung
The key to saving aggressively and consistently isn’t to completely deprive yourself, Leung said, comparing spending cuts to dieting: “You can do it for a while, but eventually, you relapse, and you end up eating the entire birthday cake.”
Instead, FIRE is about putting money toward what matters to you.
It also helped keep the “big three” expenses – housing, transportation and food – under control, which he did by renting a modest apartment, avoiding car ownership, and cooking at home. This freed up space for them to spend on the thing they cared about most, travel, while still meeting their savings goals.
A common misconception about the FIRE movement is that it requires scarcity, said Shen: “No, it’s about optimization, not minimization.” Tracking expenses helped them do this. Once they started looking closely at where their money was going, it became easier to identify what added value and what didn’t.
“You don’t realize how much money you’re actually wasting on things you barely use,” he said.
They are investing up to $1 million
Their savings were originally deposited in a bank account when they were planning to buy a house. Once they committed to FIRE, they moved their money into a diversified portfolio of low-cost index funds including VTI, IEFA, and ZCN.
They also took full advantage of tax-advantaged accounts.
“Anytime you get an opportunity to get free money or tax-advantaged money, you definitely want to take advantage of it,” Leung said, pointing to accounts like 401(k)s, Roth IRAs, HSAs and 529 plans. “The less money you give to the government, the more money you have for yourself.”
After achieving their FIRE number in 2015, Shen and Leung quit their jobs at the ages of 31 and 32 and started traveling the world. Since then he has been staying away from his portfolio. He has earned some income from his two best-selling books, “quit like a millionaire” And “Parent Like a Millionaire (Without Being a Millionaire),” but he said they don’t depend on that income to maintain their lifestyle.
His net worth has more than doubled since he retired, according to screenshots of his investment portfolio reviewed by BI.
For the couple, FIRE ultimately became less about early retirement and more about flexibility.
“The fire thing is really cool, but what’s really important is why you’re reaching that number in the first place,” Shane said. This became especially evident during a family emergency, when they returned to help care for Leung’s father after he was diagnosed with brain cancer. “We realized, OK, that’s what FI is for. You buy your time back so you can be there for the people you love.”
She said financial independence also gave them more freedom as parents: “You can really be present, spend time with them, and not miss any of their milestones.”
Reaching FI was never about stepping away from work.
“It’s not about deprivation. It’s not about quitting your job,” he said. “It’s really about giving you options.”