When a single mother of two learned about a retirement savings concept called FIRE, she was able to retire with more than $900,000 in investments.
Lakisha Simmons, who lives in Tennessee, retired at the age of 41 last May using FIRE. This is the first time she has not worked since she was 14.
Most recently Simmons was an associate professor of business at Nashville’s Belmont University. In 2020, she earned $150,000 between her salary and side hustles. In 2017, she made the decision to retire early and started on her goal.
FIRE stands for Financial Independence, Retire Early. It is a movement of people devoted to extreme savings and investment so that they can retire far earlier than a traditional retirement plan would allow. The formula was inspired by the 1992 best-selling book “Your Money or Your Life” by financial gurus Vicki Robin and Joe Dominguez. FIRE is derived from the main point of the book: People should view every expense in terms of the number of working hours it takes to pay for it.
Under FIRE, people also save up to 70 percent of their annual income, and live off of 30 percent.
This is what Simmons did.
“When I learned about FIRE, it completely changed my perspective,” she told CNBC. “I was exposed to this idea that [if you] save and invest more than the status quo, then you can have all the time in the world to enjoy and pursue your passions because you don’t have to work for someone else.”
First, Simmons cut her expenses. She sold her house so she would not have the financial burden of the $2,400 monthly mortgage on her five-bedroom, four-bathroom house. She and her kids moved into a two-bedroom apartment.
″[The house] was absolutely gorgeous and beautiful, but it sucked me dry monetarily,” she said. “As a single mom in that huge house, I just felt swallowed.”
Simmons also began using a prepaid cellphone, cut the cable cord, and made more home-cooked meals.
Expense cutting was a process of fine-tuning. “I always tell people, even if you cut something out of your budget, it’s not as if you can’t ever put it back,” she says. “If you realize that you really miss something, then add it back for sure.”
During her first year of saving, Simmons stashed $100,000 for her investment accounts. Her money soon grew quickly.
“It wasn’t just doubling; it was almost tripling every year. I couldn’t believe it,” she said. “That made me inspired to keep investing more.”
Fifty percent of her investment portfolio is in an S&P 500 index fund; around 25 percent is in a total stock market index, and the rest in a mix of bonds and “some individual stocks in companies like Apple and Amazon,” she shared.
Initially, Simmons planned to retire when her saving hit a million, but she decided to leave her job at the end of the 2021 spring semester.
“My investments have grown even though I haven’t contributed anything since I left my job on May 31, 2021,” she says. “Now I have around $910,000.”
Though she’s no longer working for someone else, Simmons has kept her side hustles — a financial coaching service called BRAVE Consulting and an Etsy shop. The two hustles bring in between $1,000 and $3,000, depending on the month.
“I’ve always been a master of my money, figuring out my goals, and doing the research to make those goals happen,” she says. “But just recently I started helping others because I realized what good is it if I’m getting ahead financially and building wealth, but my own family and friends cannot build wealth too?”