How to Retire Ridiculously Early

The FIRE movement attracts extreme savers aiming for financial independence and/or early retirement.

Bianca DiValerio was nearly broke five years ago, after going through a divorce and selling several rental properties at a loss when the housing market crashed. Instead of wallowing in debt and regret, however, the Chicago flight attendant decided to turn her financial life around. Now 39, DiValerio estimates she's a year away from full financial independence. She'll never have to work again if she doesn't want to.

How did she do it? By saving 75 percent of each paycheck and living on the cheap, according to

Such frugality may sound extreme or exceedingly rare, but DiValerio, who earns $75,000 a year, is part of the growing FIRE movement (which stands for Financial Independence/Retire Early). By trading tips on Reddit and blogs, these savvy savers aim to live their dreams sooner rather than later, free from economic worry.

FIREd up

Maybe you've imagined ditching the rat race and retiring early, but quickly chucked the idea as impossible. Not so for supersavers in the FIRE movement. Their ideal goal is full financial autonomy (living entirely on income from investments) before age 40, achieved by saving up to 80 percent of what they earn and living on less.

Far, far less.

pinching pennies for financial freedom
Pinching every penny can offer financial freedom well before traditional retirement age. Investment Zen/Flickr

DiValerio got the FIRE bug after discovering a prominent blog called Mr. Money Mustache, written by Pete Adeney, a Canadian software engineer who retired at age 30 in 2005. In fact, his classic 2012 entry titled "The Shockingly Simple Math Behind Early Retirement" is still a go-to guide for FIRE devotees.

His advice? Only one thing determines when you can retire: "Your savings rate, as a percentage of your take-home pay." And what to do with all those extra bucks you save? He (along with many professional financial advisors) recommend parking it in low-fee index funds, letting compound interest do its magic over time.

DiValerio took these teachings to heart, and even began blogging in 2016 with her own financial advice at Miss Mazuma.

Early retirement vs. flexibility

For many FIRE fans, the main goal isn't necessarily retiring before wrinkles and gray hair set in; it's having a slew of life options that financial independence can buy.

Most of us need a direction and goals to feel fulfilled in life, something we're passionate about doing. With FIRE, you can save, save, save and still continue working. If you like your job, financial independence gives you more freedom to choose shifts or projects. If you hate your current employer, it allows you space to find a non-soul-sapping gig you love or even train for a new profession.

Of course, if you're ready to ditch 9-to-5 employment to raise organic sheep, teach yoga on the beach or rescue orphaned orangutans, you can also do that with little or no economic worry. Ample cash in the bank helps lighten the stress of following your bliss, no matter what that looks like.

early retirement
FIRE is about being free from money worries so you can pursue your passions, whether that means finding your dream job or retiring early for a life of leisure. Ada Be/Flickr

Extreme frugality

How much money do you need to be considered financially independent? A general rule of thumb is to have a net worth that's 25 times your annual expenses. In other words, you'd need $1 million if your yearly expenses are $40,000.

Is this realistic, say, if you earn $50,000 a year and have zero saved? According to CNN Money, it would be tough, but you could manage financial independence in five years if you sock away 82 percent of your after-tax income in funds that average a 5 percent rate of return. That means living on $9,000 a year.

That's probably unworkable for most people, but if you're willing to stretch things to 10 years, you only need to save 66.5 percent of your income, meaning you have about $16,750 per year to cover living expenses. Push it to 20 years and that rises to a more manageable $28,500 annually.

Still sound impossible? Here are some tips from successful FIRE followers:

Live (well) below your means. List all your expenses and try to find low-cost alternatives or do without. That includes buying a smaller house or renting an apartment, driving a used car or riding a bike, cutting out cable TV, giving up lattes and dinners out, using a no-frills phone plan, purchasing secondhand clothes and furniture, drinking boxed wines, and cutting grocery bills by clipping coupons, buying generic brands and making as much food as possible from scratch (think bread, yogurt and granola bars).

Another option is to halt all shopping sprees. Read how 32-year-old Cait Flanders banned herself from buying all unnecessary items for two years, and was able to quit her job and write a book about it.

Develop multiple income streams. This may include selling unwanted stuff on Craigslist, freelancing, pet sitting, selling artwork and crafts on Etsy, buying an investment property to rent out, or listing a room in your home on Airbnb. By socking away all additional income, you'll achieve your savings goals even faster.

Pursue free or cheap hobbies. Think hiking, running, writing, volunteering, bird-watching, playing an instrument, geocaching, reading, furniture restoration, learning a language, meditation, home brewing and much more.

Take thrifty vacations. Ideas include camping instead of staying in an expensive hotel, planning a staycation, booking a low-cost volunteer vacation or taking a road trip. DiValerio recently drove across the U.S. with her Lab/border collie mix, Bubba, in a 2001 Honda CR-V with 150,000 miles on it. She retrofitted it to carry everything she needed for her month-long jaunt, including dishes, food, clothing and a bed.

Learn more about her approach to the trip in this video:

Don't scrimp too much. Just as some diet plans encourage an occasional treat to reward your efforts and dampen the urge to obey bigger temptations, you don't want to overdo it with minimalism. If you bank so much cash that there's no room for fun or small luxuries, you may feel pinched and miserable. Decide what you can live without, but allow yourself an occasional frill or extravagance to keep life satisfying and fresh.