My name is Jonah, and I’m an accountant turned artist. In this website, I share my cyanotype photographs and what I’m learning in the artist’s journey. I quit my day job in October 2019. What door will open? Join me. Subscribe to updates.

Coronavirus vs FIRE

Mar 30, 2020 / Finance / financial independence retire early (FIRE)

man holding up poster of sky against background with sun
Holding Sky, 2011Toned Cyanotype Print

Celebrated playwright Horton Foote once said that to make art you have to know the history of your medium, you have to be a product of your own time and write about your own generation, and finally, you have to belong to a place. Paraphrased from a story told by photographer Keith Carter in his book A Certain Alchemy.

I always believed the above to be true. Although this is an artist journal and not a news blog, we’re in an unprecedented time. The health and financial devastation of this pandemic will be a defining event of this generation. I need to write about it.

The FIRE approach

As most of you know, I quit my job just last year, on October 31, 2019. I was following the Financial Independence Retire Early (FIRE) movement so that I could focus on art.

The FIRE movement is based on the idea of accumulating an investment nest egg as fast as possible so that one could stop working and live off of the passive income and capital drawdown. FIRE offers the freedom to focus on what you want to do. Some people travel the world, build a business, or focus on their families (or all three and more). As for me, I wanted to be a full-time artist to see where that would lead.

The goal is to not run out of money before you die.

Because the investment nest egg has to sustain someone for a very long period of time, it is usually invested in the stock market. You wouldn’t, for example, put your investment nest egg in a savings account because the rate of return would be nothing. It wouldn’t even cover inflation. Thus, the most logical place is to put it in the stock market.

Coronavirus Tests the FIRE Approach

In just two weeks, the value of my investment nest egg dropped by almost 30%. We’re not done yet. There is more to come.

I saved diligently and obediently for over 25 years of my accountant life. To have a large portion disappear is frightening.

The important thing to remember is that this loss is unrealized (“paper loss”). It’s temporary. Eventually, the stock market will bounce back. That might take a very long time, but eventually, it will recover. The worst thing we can do right now (if you’re in the same situation) is to sell. That’s when you get hurt for real since it will now be a realized loss. The money is gone forever. The best course is to do nothing and just wait.

One of my art goals this year was to start generating income from my art and through this website using ads and affiliate links. That’s now unlikely.

FIRE Requires Thorough Planning

Before I quit my job, I did a lot of number crunching as to what would happen if there was a huge market crash. The 1918 pandemic and the Great Depression were so far away in history, I never thought I would experience such cataclysmic events.

Financially speaking, for now, I’m not worried. I have faith in my what-if and scenario analyses. However, I’m worried about other people who were in the same path as me who were planning to quit their jobs to follow their bliss. That notion seems so naive now. The unemployment rate just spiked last week. I’m reading about office workers like accountants simply getting laid off. I think about people who used credit to finance their lives or who live from paycheque to paycheque. I am very scared of what might happen in Africa and lower-income countries. The financial fallout will be severe.

Emotionally speaking, I’m going through what everyone is going through. My partner works in the hospital. We have aging parents on both sides of the family. No one is immune to this virus. Anyone could get infected and die. Most people who get it turn out fine, but it’s like Russian roulette. You don’t know how your body will react. All I can do is stay home and not be part of the problem.

Will Coronavirus kill the FIRE movement?

Even in the best of times, it was a tough sell to tell people to save money to build up that investment nest egg as fast as possible. How can you do that when you have to pay rent and buy food? The coronavirus and the imminent recession (or depression) exacerbate this inability to save.

I predict there will be a cooling-off of the FIRE movement. It was buoyed by the seemingly endless bull market for the past 11 years. It’s so easy to forget the 2008 market crash or even the 1987 crash.

The Time to embrace FIRE is Now

While the public will get turned off by FIRE, for career switchers and early retirees who want to become artists/entrepreneurs at some point in the future, now is the perfect time to embrace FIRE. Like the sun rising up the next day, the stock market will rise too. Since we’re in the bottom (or will be there soon), the only way is up. Once there is a vaccine, which may be at least 18 months away, the economy will skyrocket. There will be gyrations and corrections in the market for sure, but the overall trend will be up. When that happens, you’d better have been putting money, no matter how small, during the crash.

Further FIRE Readings

Please note that despite the bombastic attention-grabbing titles below, there is a wealth of information here. Don’t get turned off by the words like millionaire or rich. FIRE people know that in order for their investment nest egg to last, they have to be very frugal and reduce expenses as much as possible.

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