### My FIRE Number to Reach for Financial Independence

 My FIRE Number

It was about a year ago that I learned about FIRE (Financial Independence, Retire Early) and that's when I realized I don't need a million dollars (or more) to retire. Although my intention is not about retiring early, but the idea of financially independence always intrigued me.

Soon I came across a simple formula for calculating how much money I would need to retire or, in my case, not to worry about money. This is commonly known as the FIRE number, and the formula is 25 times the annual expense:

FIRE Number = 25 X Annual Expense

Plugging in this formula with my current annual expense of \$22,368, the result is \$559,200. This is my FIRE number if I were to live with my current lifestyle with my current expenses not changing. However, I feel like I can do better.

Since the majority of my expenses is rent, with 66% of my expenses going toward my rent of \$1,224 per month, if I can cut down or eliminate it then my annual expense would decrease to \$7,680. Consequently, my FIRE number would be \$192,000. This is a massive reduction in the amount of money I need to save.

So my goal is two folds: 1) Find a way to eliminate my rent, which is my biggest expense, and 2) Save around \$200,000 in the shortest time possible.

Now you might be asking "Why does this simple FIRE formula work?" It works if you invest the savings in something that will return at least 4% per year. That way, if you spend 4% of your savings each year then your principle stays the same. In my example, 4% of \$192,000 is \$7,680, which is my annual expense if I eliminate my rent.

One investment vehicle is the stock market. The stock market, on average, returns 7 to 8% per year with inflation accounted. So if I invest all my savings into a stock market index, like the S&P 500, then I would get a return of around 7% annually. With a 4% withdraw rate, I'm still gaining about 3% on my savings each year. This 3% is a good cushion in case the stock market drops, which it does once in a while.

So it's that simple: save 25 times your annual expense and invest your savings in a stock market index fund.

One caveat is that all this assumes that my lifestyle doesn't change all that much so that my annual expense stays relatively the same. It means I won't be making big purchases, such as buying a new car every few years or buying a house, both are fine with me.

\$200K is what I aim for right now. With my current employment, I can certainly reach that goal in three to four years, that is if I can eliminate my rent completely. Realistically, I should save more than \$200K in case of emergencies. The more I can save and sooner I can invest the better.

So there you have it. \$200K is my FIRE number and is the minimum threshold for my financial independence. What is your FIRE number and how would you reduce your expenses to make it more attractive?