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I’ve been interested in the financial independence movement, often dubbed FIRE (Financial Independence, Retire Early), for a while. Probably since 2004, when I found an old copy of Vicki Robin and Joe Dominguez’s Your Money or Your Life at the public library. As I’ve written many times before, YMOYL was the book that inspired me to track every penny I earned, spent, and saved—a habit that I’ve kept up for over fifteen years.




And, a couple years ago, I started seriously thinking about retiring early. My freelance earnings were growing year over year, and I had recently relocated to a low-cost-of-living Midwestern city. Why not see how much money I could save, what kind of an investment portfolio I could build, and how quickly I could grow my net worth?


This year, I’ve been learning how quickly my investment portfolio can shrink. I know that stock losses don’t count until you sell, and that the market is likely to rebound at some point, but it’s made me ask myself whether I need to change any aspects of my financial strategy in order to build and maintain financial independence during a bear market—and, potentially, a recession.

So far, the only real question on my mind is whether I should focus on increasing my cash reserve beyond my current six-month emergency fund, or keep my emergency fund as-is and put more of my future earnings into investments. (Suggestions welcomed.)

That said, my core financial independence strategy hasn’t changed. In many ways, it hasn’t changed since 2004. Here’s what I practice, and what I recommend:

Focus on the FI, not the RE

For me, the financial independence aspect of FIRE was always more appealing than the retire early aspect. I don’t think I’m the type of person who will ever stop writing, for example, and I’d like to think I’ll do much of that writing for money. Being financially independent, on the other hand, would allow me to go for longer periods of time without new income (for you grammar nerds out there, my income stream would become continual instead of continuous) and give me the freedom to pursue larger-scale projects.


This puts my FIRE ethos right in line with both Vicki Robin, whom I had the privilege of interviewing for The Billfold in 2018, and Tanja Hester, author of Work Optional: Retire Early the Non-Penny-Pinching Way. Both Robin and Hester want FIRE aspirants to focus more on the independence aspect than the retirement aspect—and to understand that financial independence, as a concept, is distinct from “having enough money in the bank to never have to work another day in your life.”

As Hester recently wrote for MarketWatch:

Fundamentally, those pursuing FIRE seek one thing: to end their reliance on a job. While plenty of people get hung up on whether people who are early retired still earn any kind of income, that’s missing the point. The goal is to not need money from work, not to never do a single thing again that happens to earn a person money. I titled my book Work Optional because it elucidates this point more clearly: it’s about making work something you can choose to do, not something you must do. The idea that a recession with massive layoffs and furloughs, many of which we’re already seeing, will make people want to be more reliant on their job is simply foolish. If anything, we should expect to see more people interested in securing their financial security permanently, most especially workers who are too young to have been scarred by the Great Recession in 2008-2009, an event that certainly pushed a great many of us who’ve already retired or who are pursuing FIRE to take their financial future into their own hands.


Or, as Vicki Robin told Lifehacker’s podcast The Upgrade:

The part of it that was meaningful to Joe, is extremely meaningful to me, is the question of what is freedom for? [...] You’ve achieved a level of freedom where you really need to create meaning for, like, four or five decades without someone else structuring the agenda.


You don’t need to retire early to create a life where you’re the one structuring your own agenda. You just need enough financial security to free yourself from the constant hustle for money.


Keep working the two-step path to financial security

This means the real question is: can you create and/or sustain true financial security during a recession? I’d like to think so. It will be harder (and might take a little longer) if you’re starting your financial independence journey during the recession, instead of coming to the recession with both an investment portfolio and a cash reserve already in place.


But I remember what I did in 2004, when I was working as a telemarketer; I remember what I did in 2008, when I was working as an executive assistant; and I remember what I did in 2019, when I had my first six-figure year as a freelancer. Despite my wildly disparate earnings, my financial independence strategies were identical: T rack every penny I make, track every penny I spend, and see how much money I can save.

And yes, there was that period in 2012 when I put a lot of money into a business that didn’t go anywhere and ended up in debt. But I never stopped tracking, which meant that when it was time to get out of debt and start saving again, I was ready.


So that’s my advice, if you’re worrying about whether you can FIRE during a recession. Keep following the two-step path to financial independence:

Track your net worth Look for ways to increase your net worth


For some of us, that will mean looking for ways to increase our earnings. Others might want to focus on decreasing our spending. You could buy a home, sell a home, sell a second car, or move to a lower cost of living area. You might even want to invest more money while the market is down, in the hopes of reaping the benefits when the market goes back up—though I wouldn’t recommend doing this unless you already have a solid emergency fund in place. (Remember, since stock losses don’t count until you sell, you’ll want to have enough cash reserves to support yourself during a recession without having to sell your stocks.)

There are lots of options—and even if you don’t get your net worth to the point where you can retire early, you’ll be that much closer to the kind of financial security that so many of us are searching for.


Don’t retire too early

It’s time to quote Tanja Hester again. Hester successfully retired with her husband at ages 38 and 41, respectively, and just wrote a blog post about the future of FIRE:

I’ve long worried about people retiring with any number of high-risk elements to their plan: less than a million dollars saved, no contingencies or backup plans, a rock-bottom budget that has no wiggle room to cut spending when conditions get tough (like right now), retiring before they actually hit their goal number, using a “safe” withdrawal rate of 4% or more, assuming historical average or better returns in projections, not maintaining two to three years of expenses in cash savings, no budget for real health insurance (as opposed to health care sharing ministry “coverage,” which is not real health insurance), and on and on. I feel for everyone who’s now in a tough spot after being led down the primrose path by someone spouting overly risky or just straight-up bad advice. I truly hope that most of the people reading this still have time to course correct your plan before making any irreversible decisions.


There are a lot of FIRE calculators—and FIRE bloggers—that suggest it’s all a matter of simple math; once you have a specific net worth and a certain type of investment portfolio, you’ll be able to live off a 4% withdrawal rate for the rest of your life.

The math might not actually be that simple, which is another reason why I advocate focusing on the financial independence half of FIRE rather than the early retirement half—and that kind of financial independence becomes even more important during a recession, when some of us might find ourselves temporarily “retired” whether we want to be or not.


Remember that you control actions, not outcomes

Here’s my last piece of advice: remember that you are only in charge of your own actions. You can’t control whether you get laid off or whether the market crashes, for example—but you can control whether you update your resume this afternoon, or whether you successfully avoid an unnecessary impulse buy.


You can’t control whether you keep your emergency fund intact for the next 30 years or whether you spend it all this year on something truly unexpected, but you can control whether or not you’re adding to your emergency fund every month, and whether you’re building sinking funds for irregular-but-predictable expenses like car repairs. (Yes, I will be that annoying personal finance person who reminds you that even $10 counts.)


I know that there are some months when it is impossible to save anything, and some months when you end up in debt because the math just doesn’t work. That’s when you go back to those two steps I mentioned earlier: know your net worth, and look for ways to increase your net worth. Keep working the plan and focusing on the parts of the plan that you can control.

You may end up finding yourself in a position to FIRE during a recession, and you may not—but since you can’t control that, you might as well keep working towards financial independence.


That’s what I’m going to do, anyway.