FIRE & Hustle
Chasing Passion And Profits
How I’m Using a Side Business to Pursue My dreams
A common myth about the Financial Independence Retire Early (FIRE) movement is that it’s about getting rich. While accumulating wealth is an essential component of FIRE, it is not the end goal but rather a means to an end. The end goal for anyone pursuing FIRE is to live life on their own terms and not restrict their life to what their paycheck will allow them to do. It just so happens to do so; you need enough money to be financially independent of your paycheck.
Side Hustles & Side Businesses
As I’ve covered in the past, there are two levers we can pull to reach Financial Independence:
- The Income Lever
- The Saving Lever.
You’ve reached Financial Independence when you have enough passive income from investments to pay for the lifestyle you want to live. The more of your take-home pay you save and invest, the faster you reach Financial Independence.
You can increase your savings rate by being frugal and saving more of your take-home pay (the saving lever) and by increasing the amount of money you make (the income lever). If you can make more money without spending more money, you are pulling both levers and on the fast track to Financial Independence.
That is where side hustles come into the picture. A side hustle is a second job you do in your spare time, like driving for Uber or Lyft. This isn’t something you enjoy and is strictly a transactional process. By taking on a side hustle you are pulling the income lever and accelerating your time frame to reach Financial Independence.
Whether a side hustle is worth it to you comes down to opportunity cost. Is it worth it to you, to trade in your time today to reach Financial Independence sooner?
Personally, I don’t engage in a side hustle. I value my time too much to give more of it up for more “work”. I define “work” as something I do strictly for the paycheck. Once I reach Financial Independence, I won’t do any “work” again. Instead, I will pursue projects that interest me and give me energy.
So, If I am not working any side-hustles how am I pulling the income lever beyond the paycheck I get from my 9–5? I am building a side business. This leads to an obvious question.
What’s the difference between a side hustle and a side business?
Here are the characteristics of a side hustle:
- Predictability. With a side hustle, it is very clear how many hours you will work and how much money you will receive.
- Transactional. A side hustle is strictly transactional. Once you clock out, you shouldn’t have to think about your side hustle until you clock back in.
- Capped. With side hustles the amount of money you can make is capped by the number of hours you work.
Here are the characteristics of a side business
- Unpredictable earnings. With any business whether it be your full-time occupation or a side project, you are not guaranteed to make a dime. You could dedicate thousands of hours and not make any money, if there is no demand for your product or service.
- Exciting. Why would someone dedicate so much of their time without the guarantee of making any money? Because the product or service they are offering excites them. The entrepreneur building a business is obsessed with their business.
- Scalable. While a business owner is not guaranteed to make any money, their income potential is often unlimited. That is why owning a business is one of the most direct paths to creating wealth.
While a side-hustle is a great way to add a predictable stream of income and increase your savings rate, a side-business that excites you is more aligned with the intentions of the FIRE movement.
How I started a side business built around my passion
I was 19 when my parents declared bankruptcy following the 2009 financial crash. What followed was five difficult years in which the house I grew up in was foreclosed upon and I had to dig into my student line of credit multiple times to help my parents pay their rent. We were hanging on by a thread for years which has left me with financial anxiety that I still struggle with today.
I decided I wanted to learn everything there is to know about money so that I would never find myself in that kind of situation again. Even as my personal life remained chaotic, I completed my Bachelor’s and then my Master’s degrees in economics.
Upon graduating from my Master's program I got a job in public policy and began paying off debt and acquiring assets. In 2013, I was 25 years old and had a negative $50,000 net worth. In 2019, I am 31 years old and my wife and I have a combined net worth closing in on $500,000.
I am no millionaire, but I have learned a lot about money on my journey. Some of this knowledge has come through formal education but most of what I know about personal finance has been learned in the school of hard knocks AKA real life.
A year ago, I decided to take my story and my passion and turn it into a side business helping people understand money and personal finance for the past year. The first iteration of the business has been in the form of writing. Both publishing personal finance stories here on Medium and through freelance work.
The next iteration of the business will be helping people directly through a live online course launching this fall. The course will be open to everyone, but my aim is to help people who are in a similar situation to the one I was in. People struggling with debt, who feel “stuck” and are willing to do whatever it takes to turn their situation around.
Millions of people are struggling with their finances and desperately need a hand. The problem is that most financial “advisors” are not really advisors but salespeople who want to push their companies’ mutual funds and insurance.
There are “fee-only” advisors, but they often charge upwards of $5,000 to build a financial plan. This is out of the price range of the people who most desperately need help with their finances. The promise of my course will be to help these people change their “money mindset” and give them the tools they need to take control of their finance and their lives at a fraction of the cost of a financial advisor.
My business’s mission statement is to “help enough people achieve their dreams so that one day I can achieve mine”. If I can continue to scale my business in different areas, I will be able to accelerate my path to Financial Independence and turn my side business into my post FIRE project. One year in and it’s been a great ride and I’m excited to see where it goes next.
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.