We’re joining the “chain-gang”! No, not that chain gang… this one is on the right side of the law. We are joining the FIRE Prowess Chain Gang that has been sweeping the personal finance blogosphere this week.
FIRE Prowess Gauge
It all started when JW over at The Green Swan (great blog BTW!) wrote a post titled “The Swan’s Prowess Gauge // Savings Rates be Damned”. In this post, JW outlines a new way to measure one’s FIRE (financial independence/retire early) progress by dividing the change in one’s net worth by their total gross income.
FIRE Prowess Gauge = Change in Net Worth / Total Gross Income
Essentially, this gauge allows you to calculate how well you are keeping your lifestyle in check with an increase (or decrease…) in gross income.
FIRE Prowess Gauge “Grading Scale”
Once you calculate your FIRE Prowess Score, The Green Swan has provided the handy scorecard below (taken verbatim from his post here) for you to measure your score against.
If over the last 5 years your FIRE Prowess is:
• Negative or 0.0x – Not even on the path toward retirement, let alone FIRE. If you aren’t saving and investing any money and your net worth isn’t growing then it is time to make some changes and develop positive financial habits. It may be a change to a frugal lifestyle or getting an advance degree to take the next step in your career.
• 0.0x to 0.25x – You’re conscious of your retirement and know you should plan for it, but early retirement may not be on your radar at this point.
• 0.25x to 0.50x – You’ve got the ball rolling and you’re certainly trying! Keep investing wisely, perhaps add a side-hustle or few lifestyle tweaks to lower expenses and FIRE can be within your grasp.
• 0.50x to 0.75x – You’re working hard toward your retirement goals! Early retirement is definitely possible. Keep working hard and that investment snowball will be rolling (compounding) in no time!
• 0.75x to 1.0x – FIRE is on your mind and you are performing in overdrive right now!
• 1.0x and over – You are killing it! Don’t make any stupid mistakes and FIRE will be within your grasp in no time. In this scenario, your net worth is more than your lifetime earnings which Joe at Retire By 40 recently wrote about. This is certainly a tough milestone to reach, but maybe one day I can make this claim!
So, how does the Adventure Rich family stack up? Let’s find out!
The Adventure Rich FIRE Prowess Calculation Notes
I have been keeping track of the Adventure Rich family’s Net Worth for the past 2.5 years (starting in January 2015). With this data, I calculated the true FIRE Prowess score for 2015 and 2016, as well as a 2017 YTD score.
After I determined our score for 2015-present, I went back and did some extrapolations/guesstimates to generate a ballpark score 2014. This allows me to show the Adventure Rich FIRE Prowess Score for the majority of our marriage (we were married in October 2013).
I am calculating this score as a combined score, factoring Mr. Adventure Rich Income + Mrs. Adventure Rich Income, resulting in our “family score”.
The Adventure Rich FIRE Prowess Score
And for a 4 year “Lifetime Score”…
Adventure Rich FIRE Prowess Analysis
First off, I’m really happy to see that we have steadily increased our score (higher the better because it means you are creating wealth faster that you are increasing income!). I had an inkling that this was the case, but I had to run the numbers to be sure.
Second, the scores make sense to me. Its been a big 4 years:
2014- Newlyweds paying down nearly $50K in Student, Car and Credit Card debt while building both emergency and down payment funds and investing in our 401(k)/403(b)
2015- Debt paid off, increasing retirement income and welcoming AR Jr (=lower maternity leave pay + increased expenses)
2016- Max out Mrs. Adventure Rich’s 401(k), Mr. Adventure Rich gets a new job, and the AR family moves across the country + buys a house.
The FIRE Prowess Chain Gang
As I mentioned earlier, we are not the only bloggers to be jumping on the Green Swan bandwagon to calculate our FIRE Prowess score. Below is a list of the recent FIRE Prowess Score posts from various bloggers (I will continue to update as more join in!).
Anchor: The Green Swan – The Swan’s FIRE Prowess Gauge
Link 1: The Retirement Manifesto – Is Your Wealth Building On Track?
Link 2: OthalaFehu – My Swan FIRE Prowess Numbers
Link 3: Budget On A Stick – My FIRE Prowess Score
Link 4: Shnugi – Calculating My Savings Rate
Link 5: Dads Dollars Debt – DDD’s FIRE Prowess
Link 6: Debts To Riches – My FIRE Prowess Report Card
Link 7: Adventure Rich – The Adventure Rich FIRE Prowess Score
Link 8: Freedom Is Groovy – The Groovies FIRE Prowess Score
Link 9: Working Optional – Calculate Your Progress To Financial Freedom
Link 10: Budgets Are Sexy – My Total Lifetime Wealth Ratio:
Link 11: Life Zemplified – FIRE Prowess Score for Life Zemplified
Link 12: Physician’s Wealth Services – Physician Wealth’s FIRE Prowess
Link 13: Married And Harried – Married And Harried FIRE Prowess Score
Link 14: Ms. Liz Money Matters – Introducing the FIRE Prowess Score
Link 15: Actuary On Fire: The Swan’s FIRE Prowess Gauge
Link 16: Trail to FI: FIRE Prowess Score, Trail to FI Edition
Link 17: Maximum Cents: Maximum Cents’ FIRE Prowess Score
Link 18: Retiring On My Terms: ROMT’s FIRE Prowess
Link 19: Minafi: The Minafi FIRE Prowess Score
Link 20: Military Dollar: FIRE Prowess Scores and How to Correct for Military Paychecks
Link 21: Finance Yo Self: FIRE Prowess Score for Finance Yo Self
Link 22: The 7 Circles: FIRE Prowess Gauge
Link 23: Money Metagame: The Good, Bad & Ugly of the New FIRE Prowess Gauge
Link 24: Summit Of Coin: Savings Rate or FIRE Prowess Score?
Want to Join the FIRE Prowess Chain Gang?
Check out the Retirement Manifesto’s FIRE Prowess post for instructions on how to join/post!
Anyone else calculating their FIRE Prowess score? If so, where did you land? Does the number make sense to you?
Always an Adventure,
Mrs. Adventure Rich