There are a few buzzwords or rather, acronyms youll hear in the financial blogosphere FI, RE, and FIRE. What do they mean and why do folks keep talking about them?

FI =Financial Independence

FI is pretty much everyones goal (I would think!). FI means that you donthave to work for money. Traditionally, FI was equivalent to retirement. Retirement meaning you stopped working all together usually around the age of 65 or so. Think days at the golf course, river cruises in Europe, and a drink with a little umbrella in hand. Now, the definition of retirement is evolving and FI seems more fitting now since it includes the traditional definition and more.

Youve arrived.

RE = Retire Early

RE is pretty self-explanatory. Whatcounts as RE depends. In the non-physician world the famous RE folks are in their early 30s:

Early 30s would be exceedingly difficult for a traditional physician who begins attending life at age 30. I guess youd have to be a Dr. Doogie Howser to do that. Physician on Fire is almost there as he recently announced thathe is going part-timeat the age of 41. I think a physician who can retire at age 45-50 is considered RE.

FIRE =Financial Independence,Retire Early

FIRE is a special club. Youve officially arrived if youre a member. Not only can younot work for money if you dont want to but youve attained this at an age much earlier than anyone else. This is a popular goal to strive for.

FF = Financial Freedom

Isnt FF and FI the same thing? Maybe. If youre a splitter (vs. a lumper) then FF is one step beyond FI. Its FI + generous wiggle room. Its a bit naive to think you know and can predict your expenses 20 or even 30 years into the future. Things may go as planned, but often, they do not. Your wants will most certainly change. Health care costs are nebulous and completely unpredictable. A health crisis can easily eat up several 100s of thousands of dollars for things like home health care or a long-term care facility. A family member may need help and maybe youd like to be in a position to help them andnotderail your goals either.

Stay tuned for the second part of this post how to determine your FI or FF number and more!

Whats your FI number? Are you FI, RE, FF, or FIRE? Comment below!

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