W2 Independence, A New More Inclusive Umbrella for the FIRE Community
We have antiquated definitions for work. Antiquated for retirement. We describe the FIRE community but I think we do it injustice. Many are not retired at all, they are writing their blogs, doing their side hustles, managing their investments. Making money.
I think we need to break things down a bit. Undoubtedly our main goal in life is freedom and security. We strive for such things by accumulating wealth. Wealth accumulates by a process we mostly refer to as work. Who or what does that work, how enjoyable it is, and whether we call ourselves retired or not is somewhat arbitrary. I like to think in terms of asset classes.
I generally refer to four asset classes: stocks, bonds, real estate, and human capital.
Stocks and bonds are paper assets and one needs principal to create wealth. Once that principal is present, the work is mostly done by the paper itself. Sure the investor has to exert energy learning how to diversify and monitor those investments, but mostly things run on auto pilot.
Real estate similarly requires principal. A property is bought and then either flipped or rented. The work is split between the asset itself and the manager of that asset. The remodel or rental requires sweat equity and an allotment of human time. Work.
Now human capital is an asset we often forget to talk about. I would further separate this category into the business asset class, and the W2 asset class. The business asset class consists of self-made revenue generating activities in which one pays oneself. This is certainly work, but it’s work for one’s own gain. No other hands in the till. We are our own boss. The W2 asset class consists of working for someone else. We get paid a salary and generally take orders from the man. And working for the man sucks.
In fact, the unifying principle of the FIRE community is not that we don’t like to work, it’s that we loathe the W2 asset class.
In other words, we want to stick it to the man.
I prefer to call them W2 independent.
What do you think?