Rules of FIRE

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FIRE can be achieved when income from investments meets our day to day expenses.
So by that rule, we can achieve FIRE today if we have zero expense. Ideally that's not the case. There are expenses for daily needs, wants and luxury. So let's go into rules of FIRE.

1. Prepare a budget:

Rule of thumb " failing to plan is planning to fail". Knowing how much you are making, what you can afford, what you can spend is always a added advantage. Click here to know more about budgeting.

2. Cut down expenses and save more:


Always pay yourself first. What you are earning if it goes to other person's income then you are cheating yourself and your future. 
Example: You got a paycheck, you go to a theme park with family in Ola, have lunch there in restaurant. Now, your income is turned into income of theme park owner, Ola driver, and the restaurant owner.

income-expense = savings is the ordinary formula
income-savings= expenses is the FIRE formula.

3. Make more income:


As mentioned above in starting of this article, there will always be expenses and we can't totally make them zero. So cutting down expenses is the limited part. What's not limited is making more income. You can always make more money than the previous month, previous year etc, you just need to raise bar for yourself and be motivated to make more.

4. Stay away from debt:


You got all three things right, and if you got this wrong, you be ruined financially. Debt is a double edge sword. We have to be more careful while using it. And always remember the saying
Debt only works when everything else works.

Getting into debt will pull you down and make your FIRE journey little longer.

5. Invest:

Please read about investing in detail here.

Knowing the risks of investment is important as going one step forward and coming back one step will not lead us anywhere.

6. Give time for investments to grow:

Albert Einstein once said, "Compound interest is eight wonder, once who understands it earns it. One who don't will pay it."


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