The pandemic forced many of us to rethink how we live our lives. We contemplated what we value and the role our jobs play in our happiness. Many of us realized we don’t want to be restricted to a few weeks of vacation. We don’t want to work purely to pay down debt and a mortgage. We want our work to have meaning beyond climbing the corporate ladder.
Most importantly, many of us realized we want a better work-life balance. The extended time we spent working from home and the shift in how we lived gave us new insight into how we prefer to live our lives. We started reimagining how we want to spend our limited time on this planet.
Well before the pandemic, the FIRE movement (financially independent retire early) was already gaining traction. FIRE is a lifestyle and financial philosophy in which you live frugally, save money aggressively, and invest that money in order achieve a FIRE number. Your goal FIRE number is a nest egg sufficient to provide an income through investment dividends and capital gains so you never have to work again.
In this article I will show you why location-independent remote work and digital nomadism are superior alternatives to traditional FIRE.
Location-independent remote work allows workers to craft their ideal lifestyles today rather than put off the ideal lifestyle until sometime in the future. This type of work arrangement can also be a way to reach FIRE sooner through geographic arbitrage. Furthermore, location-independent remote work can also act as a bridge to the FIRE lifestyle for those who are risk-averse or nervous about taking the leap to retirement too soon.
Disclaimer: This article is provided for general information purposes only and is not intended to constitute legal, tax, or other professional advice. You should obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. Deskless Nomad makes no representations, warranties, or guarantees, whether express or implied, that the content in the publication is accurate, complete, or up to date. Please see the full Deskless Nomad Disclaimer.
What is FIRE and why do people choose it?
The path to FIRE (financially independent retire early) involves the short-term sacrifice of living frugally and maintaining a high savings rate in order to achieve financial freedom and retire earlier than is typical.
While the standard recommended savings rate is between 10-15%, with FIRE it is ideally at or above 50%. The end goal is to accumulate enough assets within a short time frame (roughly 10 years but often less) so you can live off of the income those investments generate for the rest of your life. The assets may include investments like stock market index funds or ETFs, rental properties, or other sources of passive income.
The FIRE movement is a lifestyle and financial philosophy that was first popularized by the Mr. Money Mustache Blog in 2011. If FIRE is a new concept to you and you want to learn more about the history, the first Mr. Money Mustache blog post in April 2011 is a good place to start reading.
In reality, the FIRE movement is more about having the financial freedom to spend your time as you wish rather than about retiring at an extreme early age.
The goal is to generate enough passive income so you can choose to spend your time how you want rather than being tied to a job. This financial freedom means you can work on your passion projects, start a small business, volunteer, or whatever makes you happy without having to worry about earning enough money to cover your bills.
For many, financial freedom means traveling more and living a life full of adventure. On the path to FIRE you learn to spend your money wisely on things or experiences that actually make you happy.
If it is important to you to tick off a travel bucket list, it makes sense to do so while you are young and capable rather than waiting until you are older and may be physically unable to do so. Life is unpredictable. Illness and injury happen, sometimes when we least expect. Waiting until you are financially independent to hike to Macchu Picchu, Mount Everest base camp, or Mount Kilimanjaro may mean you never get to achieve those goals.
It is also important to understand there are multiple variations of FIRE. Listed below are the most commonly discussed variations but there are countless others including Baby FIRE, flamingo FIRE, Hybrid FIRE, Obese FIRE, slow FIRE, etc.
- In lean fire you live frugally on the path to FIRE and continue your frugal lifestyle indefinitely in retirement.
- In fat FIRE you spend longer accumulating a larger net worth that permits a more luxurious lifestyle during retirement.
- In coast FIRE, you save aggressively only until you have enough in your retirement accounts so that without adding any more, your net work will grow sufficiently until your desired retirement age. Once you reach that initial amount, you can earn just enough to cover your expenses, spend your income as you wish, and you don’t have to worry about saving for retirement anymore.
- In barista FIRE, you save enough until the returns from your invested assets cover the majority of your basic living expenses, allowing you to do work that you find more enjoyable for less income (i.e. a low stress job like being a barista).
What is the difference between remote worker, digital nomad, and location independence?
The pandemic accelerated the shift of new work arrangements to the mainstream. While “remote work” and “digital nomad” are now more common terms, there is still some confusion about what each of the terms implies. Let’s explore the important distinctions between being a remote worker, location independent, and digital nomad.
With location independence, your job does not restrict you to a particular location. You live where you want to live and work from anywhere with an internet connection. You can live in Florida but work for a company in Wisconsin. You can live in Spain but work for a company in California. Travel is optional. Location independence does not necessarily mean that you are a digital nomad since you may choose to settle in one place rather than constantly travel.
A remote worker is someone who conducts their work away from an office, either full time or in a hybrid arrangement where they return to the office one or more days a week for in-person meetings. You can be a remote worker and location independent. You can be a remote worker and a digital nomad. Or you may simply work remotely from your home part of the week and go to the office one or more days to meet with colleagues.
Digital nomads work remotely, most often from a place with internet access. They are not tied to a particular location and often regularly travel. They may or may not have a home base to return to. Digital nomads may work remotely for a company, work as freelancers, or run their own businesses. Here are some of the many variations of the digital nomad lifestyle:
- Maintain a home base and traveling regularly for weeks or months at a time
- Maintain a home base and rent it out (or Airbnb) for income while traveling during longer periods
- Own a property but convert it to a full time passive income generator while traveling
- Put belongings in storage while being a digital nomad for an extended period with the intent to settle again at a future date (this may take the form of a sabbatical or gap year)
- Sell all belongings, live out of a suitcase, and plan to travel indefinitely
- Live out of a van or RV while traveling, with or without a home base
- Do freelance or contract work remotely while intermittently supplementing living expenses through work exchange or housesitting for free housing and food
Why should you choose location independent remote work over FIRE?
Many of the advantages of FIRE, like time and location flexibility, can actually be achieved with location-independent remote work.
As a digital nomad or location-independent remote worker, you can start the life of travel and flexibility you are dreaming of today. At the same time you maintain your skills and network in case you need to reenter the work force. Working in some form can give your daily life structure and purpose. Many retirees return to work at least part-time for this very reason. Having purpose, structure, and mental stimulation all help to delay cognitive decline and prevent depression.
Jump start your ideal lifestyle today rather than waiting
What if you could jump-start your ideal life style now rather than waiting for 5 to 10 years? With the pandemic and transition to remote work, life in the office is no longer necessary for many. There are an increasing number of remote work opportunities in many fields. It is also possible to approach your current boss to ask about going remote indefinitely.
The location independence that is inherent in remote work was one of the great advantages of FIRE which can now be achieved without having to stop working. Many people were on the path to FIRE because they wanted to be able to travel more often. Now that there are so many more opportunities for location-independent remote work, location flexibility is no longer limited to FIRE.
For many people on the path the FIRE, they were looking forward to spending more time in retirement on what made them happy. Whether they wanted to spend with family, to travel, or work on passion projects, being financial independent provides many choices for how to spend your days. But as a digital nomad or location independent worker, there is also more freedom to set your own work schedule, especially if you are a freelancer or entrepreneur.
Inflation and market volatility
With the recent rise in inflation and market volatility, many people on the path to FIRE have considered shifting their FIRE number, decreasing their withdrawal rate in retirement, or a combination of the two. The idea of a constantly shifting goal post depending on economic and political factors can be stressful and disappointing. You can get stuck in the “next year syndrome,” putting off retirement for yet one more year because of fears of a market downturn or spiking inflation. This ultimately prolongs the time required to achieve FIRE, delaying happiness and gratification.
Qualifying for digital nomad visas
In order to qualify for most digital nomad visas that allow you to stay in certain countries longer than typical tourist visas, you will need to provide proof of earned income. Every country sets their own eligibility requirements but most countries require that you have a minimum amount of earned income in order to apply for a digital nomad visa.
Having earned income from remote work gives you the flexibility to apply for a digital nomad visa in a country of your choice and stay for a year or more. These visas are much easier to obtain than Golden Visas or residency visas. Several countries offer special tax breaks through their digital nomad visas as well. You can find a list of the countries offering digital nomad visas in our Index of Digital Nomad Visas Around the World.
Financial incentives for remote workers
Many cities and towns around the world are looking to attract remote workers and digital nomads to boost their local populations and economies. Some have even gone so far as to offer cash to get remote workers to move. There are several places in the U.S. paying remote workers to move there.
Remote workers can take advantage of the incentives that include thousands of dollars in cash, free gifts like outdoor gear, free membership to co-working spaces, cash for buying a house, cash for student loan payments, cash for rent payments, free high-speed internet, tax credits, and more.
Several countries are offering digital nomad visas with amazing tax benefits (like no income tax!) but you have to prove you have earned income in order to apply.
What makes digital nomadism a good way to get to FIRE sooner?
Learning to carefully budget, living frugally, and spending wisely in order to maximize savings are important concepts in FIRE. They are also important principles for digital nomads.
Digital nomads generally choose to work remotely in lower-cost countries to keep expenses down. This increases the opportunity for saving money. Known as geographic arbitrage, this concept allows digital nomads to take advantage of a lower cost of living in a specific region while maintaining their higher income. They spend less but make their money go further. They can then invest the savings of their cheaper lifestyle in an IRA, 401k, HSA, brokerage account, cryptocurrency, real estate, or another form of passive income.
Long-term travel also requires careful budgeting. Digital nomads often cut out unneeded expenses and minimize their belongings since they are essentially living out of their suitcases. It is an inherently frugal lifestyle where you spend money on experiences rather than things because there is only so much that will fit in your luggage.
Why is location independent remote work or being a digital nomad a good bridge to transition to FIRE?
Recent world events and changes in the US economy make the safety of a continued income particularly appealing. A looming recession, increasing inflation, rising housing costs, the potential emergence of new covid variants, all make the future seem more uncertain. For those who worry if they have saved enough to weather these variables and are fearful of taking the leap too soon, digital nomadism is a safer transition.
With digital nomadism, you can get to your ideal lifestyle sooner and with the additional security of ongoing income and knowing your money is less likely to run out. You can continue to contribute to your retirement accounts so they keep growing.
Alternatively, you can plan to save enough to retire in a lower-cost country and then continue working remotely for the added financial security. You stop the grind quicker, have more flexibility and financial security, get to the part of FIRE that you are looking forward to – the travel and adventures. In essence, these are alternative FIRE forms similar to Coast FIRE or Barista FIRE discussed above.
In addition to the added financial security, using digital nomadism to bridge to FIRE keeps your brain active. Work gives you a routine and stability, prevents boredom and depression, and even slows cognitive decline. While living a life on the beach sounds nice in theory, you may get bored eventually and need something to stimulate your brain. This is the reason a lot of retirees return to work, even if part-time.
Remote work in itself can open up doors to different job types not available in fixed geographic areas. Continuing to work, even part-time, helps you to maintain your skills and network. If you ever do need to return to work for financial reasons, you will be well-positioned.
There are also those who actually enjoy their jobs. They may enjoy growing a legacy, contributing to society or a worthwhile project, or being a part of something larger than themselves.
Design your location independent lifestyle NOW rather than waiting to reach FIRE
I hope I’ve convinced you that it is both possible and preferable to design your location independent lifestyle now instead of waiting to reach your FIRE number. You can approach your current boss about going remote. Alternatively you can find a new remote job. You can choose to go remote full time or try seasonal or contract work. You can decide to become a freelancer, consultant, or start your own business that you run online.
This is not an argument about whether or not early retirement is a goal worth pursuing. You can continue the principles of FIRE while becoming a digital nomad today. The principles of FIRE will actually help you to become a successful digital nomad. The digital nomad lifestyle can also accelerate your path to FIRE.
The future is promised to no one. Start living your ideal life today rather than delaying happiness and gratification. Stop the “one more year syndrome” and take the leap (or walk on that safe and comfortable financial bridge). You will be happier for it.
Still not sure if you want to become a digital nomad but want more information? Try attending a digital nomad conference where you can meet and talk to other digital nomads. Or read my article on why you should become a digital nomad.