Aussie HIFIRE

The current situation with the COVID-19 pandemic has affected different people in different ways, but almost everyone has taken a hit in one form or another.  In some cases that’s been to their income or their net worth or mentally or to their health, or any combination of the above plus a bunch of others.

And at the risk of being the millionth blogger to quote Mike Tyson on this, “everyone has a plan until they get punched in the mouth”.    There isn’t much we could have done to prevent this particular punch in the mouth.  But there are things that we can and could have done to build up our resilience and reduce the impact so that we can bounce back from this and future crisis situations.

Resilience is the capacity to recover quickly from difficulties, or even better not have them affect you much if at all in the first place.  So how does pursuing FIRE help with being resilient?

Unlike my usual posts which deal with a specific topic (in theory at least!) this is a collection of my random thoughts on the current Coronavirus situation and what to do about it as well as how it will impact on FIRE and people’s finances in general. 

Obviously all of this depends on how long this situation goes on for.  It if turns around in a month or two, well some of what I write will turn out to be irrelevant and I may look silly.  Given I’ve already written a couple of posts about things that didn’t end up happening (the proposed removal of cash refunds on excess franking credits) this won’t be my first time and I won’t lose any sleep over it.

One of the narratives about FIRE that seems to constantly get pushed by naysayers (and even some advocates!) is that it requires huge sacrifices.  No luxuries, no nice stuff, a pretty bare bones existence with no room for fun.  So no coffees on the way to work, never eating out for lunch or dinner, no new clothes and shoes, say sayonara to holidays and all the rest of it.

To which I say rubbish.  Obviously it’s going to depend on your level of income, and certainly if you give up all those things it may make your FIRE journey a little quicker, but then again it may prove too extreme and you give up on it all.  The key with these sort of small but regular expenditures is to keep them under control rather than eliminating them entirely. 

The more important thing though is to get your spending on big ticket items right.  So what are they, and why are they more important?