Hi everyone. Like most of you, our family is increasingly forced to minimise venturing outside our property. Current limits are maximum gathering of 2 people. Out only shopping for essentials, medical trips, exercise, work (essential). Lots of people are worried, economists have no idea what will happen to economies which are put on hold. It has never happened before. Scientists worry about the virus, which seems to be unstoppable and for large number of people deadly. For now we cannot see the light at the end of the tunnel. We are just believing it must be soon coming. Countries like Italy, Spain and USA are where the main battles are at the moment. This might change in coming weeks.

So what about the FIRE movement? Was it stupid idea to try to be financially independent? Was it nonsense to drop a good paying job, buy back my time and attempt to live off the investments (as we have done last 2.5 years)? Will we be worse off for all that risks we have taken? I wanted to write what I think about this current crisis and our FIRE movement.

Firstly. Let’s be grateful. Most of us are doing very well. Retired or on the way to FIRE. We HAVE savings, we HAVE investments. Yes some of the investments will go 50% and more down in value, but we knew that can happen when we have started investing. It is always better to have 50% of something than 100% of nothing. Of course one thing is to know about risks and different thing is to live through them. To watch hard earn savings to halve or more is sad. But hey nobody was crying when they went up! And there will be a recovery! It might take some time to get there and it might be slow, but there will be one and the investments will start growing again!

For now I think it is good to pause investing and just keep stashing cash in some saving account (government insured if possible). So you have some dried gun powder for investing when there is some sign of life in the economy. So yes I would pause investing, but once you start again it should be similar assets like before. Keep it simple. Few exchange traded funds, don’t chase extra profits. Index is fine. Chuck in some residential property if you dare.

So no. It was not stupid idea “don’t spend, save, invest, live off investment income later”. We got hit hard now and our investments are down, but how about the ones who just earn and spend all and wait for pension check at 67 with not much savings on the way there? Well it is unpleasantly probable that few of them will lose their job and will have to make huge adjustments trying to live on government handouts. Debt? We know that FIRE movement despise debt. In my view the only acceptable one is for property purchase and even that should be as less as possible. And never as much as you can afford. I do not recommend personally margin accounts for share investments. Equities are too volatile and I would not like to have the stress to top up the margin on some day when index dropped 10+%. Credit cards? Personal loans? Car loans? Day lending? These all should be highly regulated or banned (sure ban at least the day lending money sharks – zero benefit to society). All these make people poorer, not richer.

So hopefully FIRE guys will not have much debt, some (or large) savings, low living costs while living way below their means and at least some other income streams than job. Is not this textbook case how to prepare for crisis? Not that we had any idea of the crisis is coming. Or wanted to prepare for crisis anyway. But the FIRE philosophy being financially conservative is a great skill in normal life and life saver at the time of crisis. At the time of abundance people might look at us as some crazy creatures who don’t like the life and squirrel money away for some doubtful time in the future. But we all know that times of abundance ALWAYS end (usually in tears). Nobody can predict when or why. Timing and triggers varies but it seems that every decade or so there is always SOME reason to have crisis. Just this current one seems really like a global war and the impact will be significant on everyone.

Rich and well off WILL get poorer. Poor are the ones who will struggle. There are so many poor people who have financial problems for not their fault. Health physical and mental, family issues, education issues, homelessness, dependences, violence, discrimination and similar. Hopefully government will have enough resources to help these people.

Then there are many people on average and above average incomes who always lived like there is no tomorrow. Like that job will be always there to support couple of newish European cars (on finance usually), newish residence in expensive suburb (with huge mortgage), furnished in boutique furniture shops (credit card), business class and 4 star hotel holidays and regular meals in famous restaurants. Well if the job or the jobs are gone how this family’s profit and loss statement will perform?

Why these people should be helped by government which struggles to help the ones who couldn’t help themselves? These guys could (and should) get ready for many kinds of problems. Everyone needs savings. Why these people do not have one? Lifestyle? There is no way, if you want to be secure, that you can spend what you earn. Savings is crucial for survival. We will probably get lots of help as our government is reasonably rich but not all countries are this lucky. I acknowledge that there are some people who could not for some reason build up their savings, but majority could. Just had better things to do with their money.

So anyway. Most of the FIRE people WILL get poorer, but should do much better than majority. Philosophy of FIRE don’t spend, save, invest the difference WILL pass this test. That’s how all of us should accept it. As a test. Hopefully soon it will be over and all of us can get on with our lives. And hopefully our societies will get better with money, and with bit of luck they will become more financially conservative.

Good luck to all of us