It Takes Two to FIRE- With Bear Money

Steve Cummings

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Welcome to It Takes Two to FIRE. This interview series has been developed in collaboration with my friend Cristian Ferrier from the Financial Alien.

Both of us are quite excited about this opportunity to learn from FIRE couples and see how their journey has been as they have tried to achieve their FIRE lifestyle.

For this interview, we have Dan and his partner from Southern Alberta, Canada. Dan is Irish and his partner is Canadian. Dan writes for the personal finance blog Bear Money

Learn this couple’s FIRE story, their strategy to achieve FIRE, and how they are upskilling their way to FIRE.

Introduction into the Lives of Bear Money

We are an international couple. One of us is Canadian and the other is Irish. We have been together for the past 2 years and are 30/28. We both contribute to BearMoney but generally speaking the ranting and looney bits are mine (Dan). We live in Southern Alberta, Canada in a two bed apartment with our dog. We don’t have any kids.

What Does a Day in Your Life Look Like?

I (Dan) work in ICT in the education sector although I have worked in Logistics and Law Enforcement in the past. I am currently looking to transition into a newer/better role having ‘paid my due’ as an immigrant working entry level with 7 years experience. Mrs. BearMoney works in advertising as a project manager wrangling the artists and the technical people all day.

A normal day starts off at 6 AM with some form of workout (yoga, stretching, home workouts due to Covid) then a dog walk at 7 AM. Due to the pandemic, we are both working from home (in carefully segregated work areas!) so we will have breakfast together before starting work at 8:30 AM. We’ll usually grab coffee together and lunch throughout the day. I finish a bit earlier so do a bit of work on the blog or any bits and pieces. I will also use this time to play PS4 or just generally veg out.

Once we’re done with the day we will run any errands, walk the dog, and then have dinner. In summer we’ll sit out on our patio and in winter we will hundle inside from the -40 degree temperature.

In non-Covid times we would see friends or do sports in the evenings.

Learning about FIRE

How did you two find out about FIRE?

I think we always had an idea of what it meant in terms of saving, frugality, and early retirement. Certainly the idea of dividend income has been foremost in our minds for some time. In terms of the actual FIRE movement and its derivatives, I would say it was probably late 2019 when we came to learn of it via our friends on Twitter.

Were you two on board with the idea of FIRE from the beginning? Or did it take some convincing on one part?

We were both on board with the idea from the beginning but the long-term structure is something that we haven’t decided or agreed upon yet. At the early stage, we feel it’s only really important to establish consistent savings and investments. We also don’t ever want to truly ‘retire’ as we consider that an express ticket to dying early. So-called ‘Barista FIRE’ is our method of choice. This was the idea we agreed upon easiest:

How long have you been working towards FIRE? (If already FIREd, how long did it take you to FIRE?)

Including our own independent efforts we have been working toward FIRE for about 5 years apiece. However, we also have a broader definition of working toward FIRE than the average enthusiast. For example, we consider upskilling that will increase earning potential to be ‘working toward FIRE’. In that way we have pretty much been working toward it since finishing college.

As a couple our FIRE journey is probably about 2 years in the making.

Which type of FIRE are you aiming for? 

Barista FIRE is the closest type that we are working towards. Ideally, we will run a couple of small hobby businesses rather than take on small corporate or service industry jobs. We consider these to be effectively the same thing.

We are aiming for a FIRE that covers our entire project expenditures at a ‘basic’ level and to use the Barista element to fund everything else (think vacation, cars, treats).

We are aiming for this fire because we know from our parents that retired early after working extremely hard that if you FIRE you get terminally bored. Without some form of productivity or purpose your mental and physical health will suffer. 

Taking from this, we also don’t want to have to work as long or as hard as they did and to leverage the privileges they gave us. So effectively, we want to be free from office jobs but still remain productive.

Our timeline for this is 2045

FIRE Strategy

How are you planning on achieving FIRE? What is your strategy?

We have a three-pronged FIRE strategy that is based on:

A > Maximizing Tax Free Savings

In Canada, we have Tax Free Savings Accounts known as TFSAs that allow you to invest in securities tax-free both in and out. At current deductibles, we will have the capacity to compound to approximately $600,000 combined. This will yield us average tax-free dividends of $27,000 per annum in perpetuity.

B > Matching with Taxable Savings

We also want to mirror our TFSA savings strategy with a less moderate risk taxable portfolio. Depending on what strategy we employ this will deliver between $24,000-29,000 per annum after tax

C > Compartmentalizing Large Expenses

With A & B we operate under the assumptions that neither our earning power nor major life expenses will change. This is of course false but it is erring on the side of caution rather than being risky. According to labor and pay statistics we are likely to increase our net earning potential by approximately $40,000 per annum within the next 5 years.

The core part of our strategy however is to plan as if this won’t happen and to use any windfall to first pay for life goals. For example, should we decide to have children, this extra money should easily cover their upbringing outside of our established plan. This is the way our plans can sit comfortably inside our brains without worrying too much about the future.

Overall in our current hometown we could have a net income of $50,000 per annum backed up with a pair of $10-15,000 per annum part time gigs. This is our FIRE as is. We can live on that very nicely, but we’d certainly accept more!

Note: Canadian readers might be wondering why retirement savings plans aren’t mentioned here. This is because the RRSPs have prohibitive taxes for early withdrawal and we aren’t yet sure if the tax makes it worth it.

What has your savings rate been through the time you have been working towards FIRE?

Our net savings rate has been approximately 35%. For our FIRE plan we need to average a net savings rate of 28%. Covid has helped us with the extra 7% 🤫

What changes have you made to improve your savings rate and achieve FIRE faster?

The main change we have made is to compartmentalize and medium terms our expenses. We think about cars in terms of life cycle, food, clothing, and beers in terms of the calendar year. We then divide it down and track monthly and annual targets.

This has allowed us to have money put aside for auto repairs, extra money to take friends out when they visit town, etc.

Honorable mention goes to sticking rigidly to the grocery list. This alone saves us about $150 a month in random purchases.

We are also looking to increase our net income by 10% in the next year. That would pad our savings out by another $10-12,000 or allow for significant expenditures elsewhere.

What are your investments like?

We have actually outlined our strategy here . The short version is that it consists of a few speculative stocks, a few solid stocks, and then the rest are ETFs and Index Funds. Long term this strategy will not shift until we get to the point where dividend income and consistent growth are a priority.

We are hoping to invest in a Crypto ETF soon but aside from some joke investments in so-called ‘shitcoins’  we don’t invest in crypto. Ideologically we also never want to invest in real estate on an individual level. 

Our investment strategy breakdown at present is as follows:

5% Cash for dips/bargains

5% in nonsense (random crypto and penny stocks)

10% in individual stocks (Green Tech and Natural Resources)

80% in ETFs (Index, Banking, Cannabis, REITs, Staples)

When do you plan to reach FIRE?

Our goal is 2045 as of today our net worth calculator estimates we can reach the goal by Q3 2044. In reality, we would like to reach our 2045 goal by 2040 and compound a few more years to get more income.

Life after FIRE

Life after FIRE is different for each person. Some like quitting work to never touch it again. Others may work on side projects. Life is different for all.

What do you plan to do once you reach FIRE?

We plan to work part-time either in the NGO/Charity sector or running small businesses. I would love to still be running BearMoney in 2045 so let’s see if that can be my supplemental income!

Closing Arguments

What has FIRE taught you?

Wealth is attainable for everybody. You just have to be persistent and disciplined. It has also taught me that building your own retirement fund is the smartest move possible, pensions aren’t going to exist by 2045.

Knowing what you know now, would you do anything differently if you had the chance?

I wouldn’t change a thing.

What would you say to a young couple just learning about FIRE?

I think the most important thing is to establish the worth you place on different expenses and the idea of FIRE. There are many different ways to view things such as renting/owning, electronics, food expenses etc. It’s important to understand each other long before you ever plan, let alone start, a joint FIRE journey.

Any final words?

If you are interested in FIRE, share your plan with the world. This is a race that we all can win together.

Some Last Thoughts

Dan is making some progress with his goals. He and his partner are a great example of people coming together on similar goals. As we plan for our FIRE lifestyle you need to remember that these goals and plans need to be communicated with your partner.

As they continue to grow and go for their goals one great quote I can take from Dan is

Wealth is attainable for everybody. You just have to be persistent and disciplined.”

It is amazing to think about these terms. There are times when we may think that wealth is not attainable, but if you can be persistent and disciplined anything can happen. You can attain wealth. 

Now go and follow Dan on BearMoney. He has some great advice for Canadians.

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