Saving for FIRE is the last thing on the minds of most people.  Although almost everyone dreams of being financially independent and retiring early, very few are doing anything about it.  Americans saved just 4.4% of their income in 2014, according to the latest figures from a report from the U.S. Bureau of Economic Analysis.  I’m guessing that is much too low to reach the kind of retirement they would like, let alone live a FIRE lifestyle.

Our saving for FIRE began when my wife & I first got married.  We weren’t making much at all, but my older brother said “if you live on your income and completely bank your wife’s, you could probably retire in your forties.”  The math made sense, because even though her annual salary was only about $20,000 (a good start back then), with 4% annual merit increases and 7% appreciation, we could have amassed $1.3MM in 20 years.  That’s an amazing amount of money when you are starting with just $20,000.

It would be great to say that we took his advice, but the fact was that we were deep in college debt (student loans & credit cards) and needed every dollar we had to keep up with our monthly minimum payments.

To find our way toward FIRE, we got out of debt very quickly.  We lived frugally in a $24,000 condo (adjusted for inflation would be $41,000 now) and made a list of what credit cards and loans we were going to pay off in what order.  While we paid down debt, I took the bus downtown to work and my wife worked at the nearby bank and drove her 12 year old Ford Fairmont, even though most of our friends were getting shiny new cars (and loan books).  We were out of debt in a couple of years (“debt free in 1993” was our mantra) and we were then able to buy a nicer used car & move up into a nicer house.  Still though, we kept our spending in check.

Our savings key was being happy with what we had and trying to bank any raises or bonuses that came our way.  If you are only saving 4% of your income a year, you can quickly bump that up to 8%, then 12%, then 16%, and more by not changing our spending when you get a 4% “merit increase” each year at work.

For us, the income from our careers went up much faster than 4% annually as we got promoted to bigger roles by working hard.  For a seven year span in our twenties, our household income doubled (despite my wife staying home with our newborn son), but we really didn’t change our lifestyle in a significant way.  We stayed in the same modest but nice house, we still owned one car (a Honda Accord), I went to school at night to get a graduate degree and we didn’t take extravagant vacations.  The key was that we never got used to SPENDING the amount of money we were MAKING.  For many people, the opposite is true.  They get used to spending more than they are making and go deep in debt or are never able to put money aside.

By keeping spending in check as more money came our way, our nest egg for a FIRE lifestyle grew exponentially.  Even before we were thirty years old we had a veteran financial advisor tell us that we were probably saving at a higher rate than 99% of all households.  In fact, it wasn’t much longer long when we were able to start saving more than +50% of our annual income, finally fulfilling the wisdom of my brother’s early advice.

Our investments in our 401k plan and company stock went up, down, and up again over the last 20 years, but it is incredible to see how much we have saved.  How much are you saving?  Are you able to freeze your spending and bank your raises & promotions?  It worked for us, and it can work for you!