This past month Suze Orman appeared on a couple prominent FI podcasts.
“I hate it, I hate it, hate it, I hate it,” Suze said of the FIRE movement while talking to host Paula Pant on the popular podcast called Afford Anything.
I watched as the comments from the FI community blew up in all the forums. Even Market Watch featured an article by Mr. Money Mustache who detailed why she was wrong about the FIRE movement.
What is FIRE?
Let’s start with the first part, FI, which stands for Financial Independence. The FI community is a loose organization of individuals who are working towards or are already financially independent. Financial independence is reached when someone has enough money saved up to pay for all their basic needs without needing to work again.
The primary idea behind it is freedom, freedom from debt, freedom to live a life that is meaningful to that individual. This is not to say that a meaningful life is not possible without FI. There are a ton of people that may never reach FI that have extremely meaningful lives. FI, however, gives people more options to make changes if they need to and not be stuck because of debt.
Freedom to Choose
There are many who have achieved FI that still continues working because they love what they do. There are others who call their savings FU money because they can finally say goodbye to a horrible boss or a terrible job – nicely, of course.
Others, after reaching FI, make a career change that is more meaningful for them even if it doesn’t pay much. At times they find that they end up earning, even more, doing what they love.
Lastly, some who reach FI choose to “simply” retire. This is the second part of the FIRE acronym: RE, Retire Early. Of course, I’ve not read about anyone in these groups who once they are retired sit around and do nothing. This is why I have quotes around the word “simply”. My husband and I are in this group. We are very busy exploring the world and blogging about it.
Note for the RE police
The RE part of this acronym is often debated in the FI community.
“Are you really retired if you are blogging?” an RE police asked me. The RE Police are like the incestuous cousins of Grammar Nazis…
“Yes, I consider myself retired. I could stop right now and not make a bit of difference in my financial life. Proceeds from the blog don’t come to me anyway, they are donated. I’m doing something I really enjoy and not earning a paycheck from it,” I responded.
“Oh, that’s OK. Then you can say you are retired.”
Thanks, but no thanks, for the approval.
So if two people spend the same amount of time blogging because they love it, and the first earns money off the work and the other doesn’t, then only the second is retired?
There’s a bit if a logical gap in that thinking. I’m living free from the need to do what a boss tells me, and free from the need to reach a certain number with the blog to survive. I’ve never quite fit into any box. I’m OK with that.
Maybe the acronym of FIRO, Financially Independent Retirement Optional, or the FILL, Financially Independent Loving Life, is better. Or how about I make up my own: Financially Apt, Retired Truly – there’s an acronym for ya! (Trin, the editor, added that one).
Call it what you want but Suze still doesn’t like that I left a lucrative job early because what happens if disaster strikes and I don’t have $20M as she does?
What Suze Orman Hates
After Suze made it crystal clear that she does not like the FIRE movement she explained why.
“When you no longer have a paycheck…if a catastrophe happens if something goes wrong, what are you going to do, you are going to burn,” she told Paula.
Suze then listed all kinds of catastrophic events and spoke about a cousin who committed suicide because he lost his money. On and on she went with all the possible bad things that could happen. Basically, it all boiled down to fear of the unknown.
What happens if we lose it all?
Before Trin and I quit our corporate jobs to travel the world, we thought about risk. What happens if/when the markets fall? What if we lose everything we have saved?
First, we have diversified investments that include rentals in different markets along with stocks and cash investments. We are diversified against risk, but risk will always exist. We know anything can happen no matter how good a plan is. And guess what, we are ok with that.
Second, losing everything is still a positive net worth because we have no debt. Do you know your net worth? If not, add up all your savings and assets (like a home, but not a car) subtract all your debt. That is your net financial worth.
Finally, if all else fails, we could go back to work. But here’s the thing: technically we could lose it all even if we stayed in our jobs. The difference between the two options would be that we had a blast traveling for a few years. Sounds like a good risk to me.
What if we can’t get the same job? What happens if we become less marketable because of the gap in employment?
Quite frankly we don’t want the same jobs. One of the reasons we took the leap was we were ready for a change. We wouldn’t even need the same level of pay. We lived off 25% or less of our pay before we retired. I’m sure we would be just fine with jobs that pay half or even less of what we earned before.
We don’t plan to have to go back to work. If opportunities come up and it is something that either of us wants to do because it is meaningful to us, we won’t be averse to taking them – some might even pay us for doing it. The pay, however, won’t be our deciding factor.
We know that anything can happen and we are ready to roll with whatever is required. Part of what gives me confidence in the face of disaster is that I’ve faced it before and have found a way out. I know my personal worth is not based on my net financial worth.
Why does Suze hate FIRE?
I am part of this movement that she despises. I don’t really take it personally, I don’t feel like she has a personal hatred for me. She doesn’t even know who I am. I think she is truly afraid of worst-case scenario happening to us (people who have retired early). So I can’t really even take offense to it. She trusts in her millions of dollars. That is not where my trust rests.
Many people reported that they did not even finish listening to the podcast because of her approach. She showed throughout the show that she really didn’t understand the people who FIRE and our approach to money so she lost all credibility within the community because she clearly knew nothing about the people in it.
The best part of the show was Paula’s wrap up at the end. If you can’t listen to the whole thing at least listen to Paula at the end.
I truly think that every side of an argument has something from which we can learn. Suze did have a few valid points that I’ll get into.
Suze appeared on a number of FI podcasts. To me, she did slightly better on her interview with Joe Saul-Sehy on the Stacking Benjamins show. However, alluding that he was a nobody and she was a somebody stooping down to be on his show when she first came on, struck me as condescending. I love listening to Joe and that other guy, OG. They make me laugh like I did when I listened to Car Talk.
She did not get as much backlash from the FI community for this interview, maybe because she seemed to leave some of her hate out of the speech.
What Does Suze Teach?
Still, I wanted to understand her philosophy about money. so I went and got her book “Financial Freedom”(which is to say I used my thumb on the iPhone to download it free from the library).
She starts the book discussing our attitude towards money and stressed to her audience that “you are more than your money…remember who you really are” which is a rather excellent point, but I wonder if she really believes it. When Suze lost her money she describes in her book how she was afraid to tell anyone. This seems to run counter to the above statement. Or perhaps this was the incident that led her to that statement.
She tells her audience to remember the amount of money we have doesn’t change who we are nor should we let it change how we see ourselves. I am in total agreement with this. Money doesn’t make one person more important or smarter than anyone else.
Then it veers off into something like, you can have everything you want if you believe it. While I agree that our mindset about money has a great deal to do with how we manage, keep and grow what we earn, just quoting a mantra that “I am rich” is not going to make money magically appear. She devotes a large portion of the book to this.
She also discusses insurance and all the different kinds that everyone needs. I think insurance is important but I also think that people can be insurance poor (over-insured) by spending too much on insurance. Fear of disaster seems to be huge on Suze’s mind. I worked for an insurance company for a number of years. I sold policies and heard so many disaster stories of people who met financial disaster because they were uninsured. I get it, but things can be taken to an extreme.
A word of caution. It is possible to buy too much insurance. It is also possible to buy too little. I read recently of someone forgoing homeowners insurance to save money. I personally would not take that kind of risk. We also have health insurance. At this point in our lives, it would be too great a risk not to have it.
But what I wouldn’t get insurance for are things like my iPhone. While I was in Nicaragua, my phone hit the pavement and the screen shattered, but it still worked. In fact, it worked for a good six months after that. Then the iPhone 8 came out and I upgraded to a 7. That kind of risk I easily take.
Review your own portfolio and build in some risk. It might be a little different for everyone.
Live below your means
Suze is spot on when she encourages the audience in her Financial Freedom book to track their spending and know exactly how much they spend every year, then compare that to what is being earned.
“If the spend is more than earned you need to earn more or cut something out of your spending, like right now,” she says.
Even though she has a number of things in the book that I disagree with she also has some great points. Some things in her book could really spur people to pay off their debts.
“Fear the disaster and the unknown,” she seems to say over and over in the podcasts and in her book. I listened to her and I choose to hear, research and be aware of the risk. I choose to do the math, hedge against risk where I can and enjoy life anyway.
Approach is important
Many of her points were lost because of her approach, especially with Paula Pant.
The FI community was all fired up about these interviews and the talk swirled around.
Mindy Jensen on her Bigger Pickets Money podcast invited Joe Saul-Sehy on her show and asked him why he hated the FIRE movement, a parody of the current hot topics.
“I don’t hate it!” he laughed as they continued their banter and discussions about the pitfalls to be aware of if someone retires early. Caution: if you listen to this episode don’t do so on your earphones on a public bus as I did. You may get strange looks when you burst out laughing at their stupid jokes.
Joe suggested that if you want to retire early sit down and work out the numbers for every year and know what you are getting into. They discussed a number of great points that anyone considering early retirement should be aware of.
Then he concluded with my favorite quote from all these discussions: “Feel the fear and just do it anyway.” He encouraged knowing the numbers and having a plan. There is always some unknown factors with any major change in life but don’t let it stop you.
Begin with caution
My husband and I started our early retirement with caution. In our first two years of retirement, we still increased our net worth. It was almost a game to us to see how inexpensively we could travel. It only cost a little under $5K each for year one. Year two was a bit more because we added in a Galapagos cruise, and flights all over Brazil including a trip to an enchanted cave. Both years were still under our net rental incomes.
We know when we get to other continents travel will cost more. We also know that when we are older we will want a few more luxuries than we are living with now. The increases are planned.
I love FIRE
Point taken, Suze, and I appreciate your concern and your desire to empower women, but I love being FIRE and I choose not to live in fear of disasters that I cannot prevent no matter what I do.
The biggest lesson I learned from all the ruckus in the FI community this past month is that dogma hides your truths. The way you say something can cause people not to hear you, sometimes the very people you want to help.
Suze has some very valid points that we could all learn from but they might not be heard by many because she started with hate and continued with a complete misunderstanding of the FIRE group. It’s as if she only read social media comments from those looking skeptically in from the outside instead of reading even one FIRE blog.
But that is the American culture right now. The hatred polarizes us and weakens us as we move farther and farther apart.
How can we be different? Start with listening to people whom you completely disagree with and seek to hear past their frustrations. Ignore the hate and try to find their truths. We can all learn something.
Dogma turns everyone off. Always keep in mind that you rarely have the full story and there could be something that you don’t know yet that could change your mind. You can be strong in your beliefs but still be open to learning. State your stance with grace to others.
I leave you with two challenges this week for your journey towards more freedom.
- Who will you seek to understand this week? Maybe a spouse, someone at work or a public figure?
- What debt will you pay off ahead of schedule? Start with just prioritizing your debt and focus on putting all extra earnings towards one debt at a time to get rid of it (you still have to pay the minimum on the rest). Some suggest picking the debt with the highest interest rate, others say pick the smallest balance first so you feel you are getting ahead faster. Either way works.
Both are part of the path to more freedom. That’s really what this movement is all about and based on what I’ve read from Suze I don’t think she disagrees.
If you want to know more about the FIRE movement or want to start your own journey to freedom feel free to contact me at email@example.com. I’d be happy to get you started on some great free resources.