The Sprint to FI

Making Incremental Changes

In order to pursue FIRE, we have to make changes to our lives. There is always a pressure from within to make those changes all at once. However it is better to make incremental changes rather than big changes, as incremental changes tend to stay with you. Making a lot of changes at the same time is often a recipe for failure.

Let Me Explain

I used to have terrible eating habits; I would overeat, eat junk, eat too many sweets etc. I also had a thing for lemonade although I never did get into soda except as the occasional treat. Several times I tried to change this as it was affecting my health, but I would always fail.

So one day I just focused on not having lemonade. I didn’t try to change the other habits, rather just cut out the lemonade. It worked. After a while I was drinking water almost exclusively. That on its own did not resolve the overall problem, but it did help cut my sugar consumption.

The next incremental change was to eliminate the junk food. I focused on this for a while and was able to eliminate the burgers and other junk and instead replaced this with better quality food. This again worked. I was still overeating and it was costing me more, but I no longer had cravings for McDonald’s, rather I would eat better quality food (quality is subjective!)

Over time I had eliminated sugary drinks and moved to drinking water. I had also eliminated junk food. The changes were incremental, I did not try to do all of this in one go. In fact this was a process that took several years. I still had problems with portion sizes and ingredients, but I could focus on them one at a time and knock them down.

How this relates to FIRE

I am at a point now where I have my eating and ingredients (mostly) under control. I am healthier for it and that is great but that is not related to FIRE. There are two lessons here however. The first is that by focusing in on one aspect of the change you need, and not worrying about other changes, you can make changes successfully. After a while those changes stick and become your new habits. This is the case with me and my eating habits.

The second aspect is a little more complex. We have to decide what changes to make and in what order. There are several ways to do this and I can illustrate this as follows.  In this imagined scenario, we have three debts; small, medium and large debt. We wish to pay them all off, but which one do we start with?

We can consider the Dave Ramsey debt snowball method and tackle the small one first, then the medium and then finally the large. It is a valid path to take and there are advantages to it. After all, knocking down the first debt early on gives us a feeling of accomplishment. But there is also a school of thought that says maybe the larger debt should be taken care of first as it makes the biggest change early on.

The Pareto Principle

The Pareto Principle has been around for a while. It is essentially a formal declaration of the 80/20 rule. How this relates to FIRE is simple. In order to make changes to savings rate and spending reduction, focus on the one change that is most likely to make the most difference. Tackle that change first before moving on to the next one. For changes in spending, this is most likely rent, followed by groceries. This is where your initial focus should be. Other changes like your ISP or phone carrier etc. make a difference, but not where near as much as halving your rent!

Everyone’s circumstances are different. In my case I could argue that my DoorDash habit is a higher priority to change than my grocery bills. Your case may be completely different. Check out Pareto Graphs too. I used to use these for quantifying QA defects and other engineering issues. They are another tool we can add to the FIRE toolbox.


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