Best Personal Finance Articles of the Month

Best Personal Finance Articles of the Month

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The importance of your Fuck You Money

The importance of your Fuck You Money

J L Collins

What Is Fuck You Money?

In our days we are all, more or less consciously, slaves to someone else.

Each of us, from our childhood, is forced into a hierarchy where we have to ask the people above us for permission to get what we want.

When we were kids they were our parents, then it was the teachers, college admission officers, professors, our company’s staff manager, our bosses.

A life defined by the people who have power over us is extremely demeaning and frustrating: it can create great repressed anger, strong resentment and deep disappointment.

This leads to the “Fuck You fantasy”.

In this fantasy, you imagine yourself saying aloud to your boss he’s an asshole, to your hated colleagues to go to hell… then you go out the door, having the wonderful feeling that your person belongs only and entirely to you for the first time in your life.

Virtually everyone has had this fantasy at least once.

This is why people spend money playing the lottery, hoping to finally change their shitty lives.

F-U Money is simply the amount of money needed to purchase freedom and escape wage slavery.

F-U money is the only tool that can break your invisible, but extremely heavy, chains.

Reaching this number means that you can get away from every bad situation.

You can say to your boss he is a dumb asshole.

You can fire an annoying customer.

You can reject offers that conflict with your ethics.

You can report any evil behavior in your company, instead of being reduced to fear, kept in forced silence, held hostage by a monthly salary.

Nassim Taleb, in his book, Antifragile, describes the F-you Money as “a sum large enough to get most, if not all, of the advantages of wealth … but not its side effects, such as having to attend a black-tie charity event and being forced to listen to a polite exposition of the details of a marble-rich house renovation”.

Fuck You Money is the level of security you need, in order for you to be able to tell anyone to fuck you without it having a direct impact on your earning potential or what you want to do in life.

Ultimate freedom is the ability to wake up every morning and tell the World to f@ck you youre doing what you want that day, and every day thereafter, and theres nothing and noone that can stop you from doing that.

Types and grades of FIRE

There are different grades of FIRE, which are related to the concept of Fuck You Money, the main ones are two.

The minimum to have F-You money is to have a sufficient amount of money to be able to pay daily expenses and bills, but living in an extremely frugal way: no expensive entertainment, no unnecessary expenses, no latest iPhone model. (LEAN FIRE)

A second step is to reach an adequate amount of money to never have to work again, but with a reasonable lifestyle: beautiful home, health care, holidays, enough to send your children to good schools, etc. (FIRE)

How much depends on who you are and where you are.

In Silicon Valley you need about $ 10 million.

In other parts of the United States it could be 1 or 2 million.

In other countries it takes much less, even just 300,000 / 500,000.

This sum of money will not allow you to own and maintain a house with 10 waiters, 5 Ferraris or a private helicopter, but it will be enough to never have to depend on someone else again.

And it is certainly enough that you will never find yourself working in a disgusting place with horrible people, to count the days until you have accumulated enough of your three weeks of vacation to escape from the office for a week, checking your smartphone all the time and fearing your return.

Next: How to calculate your F-U money..

The Power of Compound Interest

The Power of Compound Interest

What is Compounding ?

If you want to reach Financial Freedom , you MUST learn the importance of compound interest.

It is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. 

Example: 1,000$ is deposited into a savings account paying 20% per annum, compounded annually. At the end of one year, 1,000 x 20% = 200$ interest is credited to the account. The account then earns 1,200 x 20% = 240$ in the second year. And so on….

Compound interest is contrasted with simple interest, where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding.

Compound Interest : Friend or Foe?

It is so important because of the very powerful effect it can have on your financial situation over time.

As J. Reuben Clark said Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels . . . it has no love, no sympathy; it is as hard and soulless as a granite cliff.”

When working for you, compounded interest can help you create enormous wealth.

It is because of this extraordinary power of compound interest that it is important to start investing as soon as possible and as much as possible.

Those who start investing when they are young will have an immense advantage compared to those who start investing in old age, as time plays an extremely important role.

So, for example, if you start investing only $ 100 a month for your retirement from the age of 20 and invest that amount for 40 years, with an average annual rate of return of 10%, then you will have the incredible sum of money of $ 588,748!


A compound interest that works against you can have a devastating effect on your finances and your life.

Be very careful: this type of compound interest is often associated with credit card debt.

Quoting once again J. Reuben Clark, he said:Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands nor orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.

If you have a compound interest debt, pay off the debt as soon as possible, whatever it costs. You will not regret.

How can I benefit of compound interest?

Investing is not only a question of how much money you have saved and how much you need to invest, but it is also about the time of your investment plan.

First of all you have to ask yourself: how long do I want to invest?

This is a question of fundamental importance because of the incredible power of compound growth.

Compound interest makes your money grow faster because interest is calculated on the interest accumulated over time and on the initial capital.

Compounding can create a snowball effect, as the original investments plus the revenue earned from these investments grow together. More time, more growth potential.

The following table (source Scwab Moneywise) shows a concrete example of compounding power.

As you can see, investor 1, who started at the age of 18 but invested for 10 years only, accumulated more at investor 2’s pension, who invested for 25 years. However, investor 3, who invested 18 to 67 years, has accumulated significantly more of both.

so don’t underestimate the combined power of time and compound interest.

Instead, master its beautiful mechanism and learn how to use it to your advantage.

What is Financial Freedom and why it is so important.

What is Financial Freedom and why it is so important.

What exactly means Financial Freedom?

Financial freedom means liberation from Wage slavery , a situation in which a person’s livelihood depends on wages or a salary, especially when the dependence is total and immediate.

In other words, Financial Freedom ( aka Financial Independence), is a condition that you reach when you have enough money and investments to afford the kind of life you want for yourself and your families.

To reach this condition you must have a constant increase of your savings and investments that allow you to retire if and when you want, or do a job you really desire to do.

When you reach Financial freedom you can stop to work to make money, because your money is working hard for you.

When your money makes even more money, you are on the highway to financial freedom!

When I can reach Financial Freedom?

Reaching Financial Freedom is a matter of Shockingly Simple Math.

To reach Financial Freedom you have to reach a number: this number is your passport to Freedom.

How to calculate this number?

To make it simple, calculate your total annual expenses and multiply that number by 25.

This is the amount of money needed to achieve financial freedom.

If your annual expenses are $40,000, multiply that by 25 to see you financial freedom number. In this case It is $1,000,000.

Here some great calculators:

Early Retirement Calculator – Networthify.com

What if your Financial Freedom number is too high?

It simply means that there is something really wrong with your life, that you should seriously ask yourself some questions, and that the problem is urgent and cannot be further postponed.

The problem can be posed in these terms: you are spending too much or you are wasting your time and your vital energy for a job that gives you a very low income.

There are only two options.

1) reduce your expenses.

2) increase your income.

This is up to you and your intelligence.

Consider this simple principle that underlies any planning for your future financial freedom and repeat it as a mantra: “Earn more than you spend. Invest the surplus. Avoid debt”

The journey to financial freedom is not an unbridled race to get rich quickly, but a slow journey where you can enjoy the view, being careful of the holes and obstacles you will encounter.

Financial freedom does not mean that you are “free” from your responsibilities to manage your money well.

Totally the opposite.

Having complete control over your finances requires sacrifices, suffering, time and hard work.

But don’t worry, one day you will be amply rewarded for all this.

What you need to do, first of all, is to establish life goals, both large and small, monetary and lifestyle

Next you need to create a plan for achieving these goals.

The achievement of your goals must necessarily take into account the principles I said before: “earn more than you spend, invest the surplus, avoid the debt”

Add two more principles to scrupulously follow and your path to financial independence will be smoothed out: “Live below your means; be frugal”.

How to escape the Rat Race: Financial Independence

How to escape the Rat Race: Financial Independence

Happiness by Steve Cutts

What exactly means the term “Rat Race”? What is Financial Independence?

We need to deepen the meaning of these two concepts.

A rat race is an endless, self-defeating, pointless pursuit.

The phrase equates humans to rats attempting to earn a reward such as cheese, in vain.

Today the Rat Race is basically our competitive struggle to work and get ahead financially, to buy stuff we don’t use, to impress people we don’t like.

Citizens are rats in a maze, expending their life energy running pointlessly, achieving nothing meaningful.

For many people work is an endless pursuit of an impossible happiness with little reward or purpose.

For many of these, the reward is the “right to buy stuff”.

The price of this “right” is an absurd cyclical commute between home and work, which steals your time and your life, and which makes you feel like a mouse running in a circle or in a hamster wheel.

Do you have a job and a decent income, but you’re still living paycheck to paycheck?

Are you buying a lot of stuff you barely use?

Are you jealous of your neighbor when he drives home in a shiny new car?

Good job! You are running the rat race.

ok. Now that you know you’re in the rat race, you have to learn how to get out of it and pursue the Financial Independence.

There are a few options to quit the rat race:

  1. Marry a rich guy/girl.
  2. Inherit a large sum of money.
  3. Create a secondary income.
  4. Become an entrepreneur. Find something that generates wealth..
  5. Spend less than you earn, invest the difference.

Among all these options, n. 5 is the simplest to reach the Financial Independence.

Let’s focus on “spending less”:

  • Insurance – See the best offers
  • Student Loans – Pay it off as soon as possible. Alternatively, refinance it if you can.
  • Cable / Internet: cut the cable, keep the Internet.
  • Subscriptions – cut them all. Yes, Netflix too.
  • Food: eating out costs a lot. Cook food in your home. Use the recipes you find on YouTube!
  • Rent – Do not buy a house. Don’t make debts that you can’t pay in the short term. If you are young and really ca not afford to live by your means , have no shame in returning with mom and dad.

In addition to cutting the unnecessary expenses, you need an emergency fund where you can keep some money for sudden expenses and difficult days.

Keep at least 3 months of savings aside.

Did you do everything I told you?

Congratulations, you are now on track to escape the rat race and achieve financial independence.