The mental trick FIRE gets right
Most people can tell you what something costs in dollars.
Far fewer can tell you what it costs in time.
That is the FIRE (Financial Independence, Retire Early) superpower: it turns spending into a trade between “stuff now” and “freedom sooner”. A popular FIRE framing (Mr. Money Mustache) is that your savings rate is a major driver of how quickly you reach FI, which makes it natural to ask a sharper question than “Can I afford this?”:
“How many months does this push my FI date back?”
This post gives you a simple, adjustable “Opportunity Cost Calculator” you can paste into a notes app, spreadsheet, or budgeting tool. It is designed to be useful without pretending the future is perfectly predictable.
One important tone check before we start: this is not meant to become a guilt machine. The goal is clarity. Sometimes the right answer is still “Buy it”, because the purchase improves your life, health, or earning power.
The two ways to translate a purchase into time
There are two practical ways to convert a purchase into “months to FI”:
Method 1: The fast mental math (savings-rate intuition)
This is the quick check that works best for everyday decisions.
If you invest S per month (after-tax investable surplus: the dollars that would have gone into investments), and you buy something that costs X, then the rough “delay” is:
Delay in months (rough) = X / S
It is intentionally blunt. It ignores investment growth, market swings, and changing income. But it answers the real question most of the time: “How many extra months of investing does this represent?”
This fits the savings-rate intuition: savings rate is a lever you can control, and it tends to dominate the timeline in early-retirement math.
Method 2: The simple compounding model (better for big buys)
For large purchases (cars, renovations, tuition, a down payment), you usually want a slightly more realistic model:
- You have a current invested portfolio
- You add regular monthly contributions
- The portfolio grows over time
- You are aiming for a target FI number
A purchase does one (or both) of these:
- It reduces your portfolio today
- It reduces your future monthly contributions
So you estimate the difference between:
- Time to FI without the purchase
- Time to FI with the purchase
The gap between those two timelines is the “months-to-FI cost” of the purchase.
The Opportunity Cost Calculator (copy and use)
This calculator is meant for comparisons, not certification. It helps you decide if a purchase is “worth it” relative to your FI timeline, using transparent assumptions and a range of outcomes.
Step 1: Define your FI target (with adjustable SWR)
A common FIRE shortcut estimates an FI number as:
FI number (T) = Annual spending / SWR
The popular baseline SWR is 4% (often simplified as about 25x annual spending). That baseline comes from Trinity-study style historical testing and is widely used as a starting point.
Early retirees often stress-test with a lower SWR because their horizon can be longer than 30 years. For this tool, that is simply a second mode:
- Base mode: SWR = 4% (T = 25x annual spending)
- Early retiree mode: SWR = 3.5% or 3% (T = about 28.6x to 33.3x annual spending)
Neutral disclaimer: this is a decision aid. It is not a promise about future returns or withdrawal safety.
Step 2: Define inputs clearly
Quick method inputs:
- X = purchase amount (today dollars)
- S = monthly amount you invest (after all bills and payments)
Compounding method inputs:
- P = current invested portfolio value (today dollars)
- C = monthly amount invested into the portfolio (after all bills and payments)
- r = assumed real return (after inflation), per year
- i = monthly real return = r / 12
- T = FI target number (from Step 1)
- X = purchase amount
Why real returns? It keeps the math in “today purchasing power”, which pairs cleanly with “annual spending in today’s dollars”.
Step 3: Choose the right purchase mechanics (branch rules)
Decide how the purchase is funded:
(a) Pay-from-cash you would have invested:
- Treat it as reducing portfolio growth starting now
- Model: P_with = max(0, P – X)
(b) Pay-from-portfolio:
- Same modeling as (a)
- Model: P_with = max(0, P – X)
(c) Finance/payment (reduces what you invest monthly):
- Model: C_with = C – monthly_payment
- Warning: If C_with <= 0, the model says you are no longer contributing. That is not “bad”, but it changes the problem. Use the quick method, or treat it as a lifestyle change.
(d) Mixed case:
- Do both: reduce P by down payment and reduce C by the monthly payment.
Step 4: The formulas (with spreadsheet-safe formatting)
Quick method:
- Delay_months_rough = X / S
Compounding method (months to reach target):
- n = LN( (C + iT) / (C + iP) ) / LN(1 + i)
Where:
- i = r / 12
Spreadsheet-safe version (Google Sheets / Excel):
- =LN((C + iT) / (C + iP)) / LN(1 + i)
Use LN() for natural log.
Purchase delay (if the purchase reduces P by X):
- n0 = LN((C + iT) / (C + iP)) / LN(1 + i)
- n1 = LN((C + iT) / (C + iP_with)) / LN(1 + i)
- Delay_months = n1 – n0
Step 5: Sanity checks (edge cases)
- If T <= P:
You are already at or above the target. Set n0 = 0.
If the purchase drops you below target (P_with < T), compute n1 using P_with and treat the delay as “time to rebuild above target”. - If i is very small (close to 0):
Set i = 0 and use the no-growth approximation in months (because C is monthly):
n_months = (T – P) / C
If T <= P, set n = 0. - If P_with = 0:
You are modeling “starting from zero invested after purchase”. That is fine, just be aware the delay can look bigger. - If C <= 0:
The model cannot compute time-to-target with contributions. Use the quick method or reframe the decision as a spending-level change.
Step 6: Use ranges, not false precision
Return scenarios are placeholders because nobody knows future returns. The point is sensitivity:
- Conservative: lower real return (example: 3%)
- Base: mid real return (example: 4% to 5%)
- Optimistic: higher real return (example: 6%)
If you have your own assumptions, use them. The calculator is a comparison engine, not a forecast.
A worked example: The $2,000 purchase that costs you 3 months (or 3 weeks)
We will run the same $2,000 purchase two ways:
- Quick method: shows why two people experience wildly different “time costs”
- Compounding method: shows the computed n0, n1, and the delay, plus a range
Assumptions shared across examples:
- Purchase X = 2,000
- Current portfolio P = 80,000
- Annual spending = 40,000
- Base mode SWR = 4% so T = 1,000,000
- Purchase funded from cash/portfolio (reduces P): P_with = P – X = 78,000
- Returns shown as real (after inflation)
Precision note:
- i is shown rounded when displayed, but calculations use full precision (i = r/12).
- n0 and n1 are rounded to 0.1 month; delay is rounded to 0.1 month.
Quick method: two savers, two realities
Saver A invests S = 700 per month:
- Delay = 2,000 / 700 = 2.86 months (about 3 months)
Saver B invests S = 3,000 per month:
- Delay = 2,000 / 3,000 = 0.67 months (about 3 weeks)
Same purchase. Totally different “time price” because their monthly investing rate is different.
Compounding method (base mode, Saver A investing C = 700/month)
Base mode inputs:
- P = 80,000
- C = 700
- T = 1,000,000
- r = 4% so i = 0.04/12 (shown rounded: 0.003333)
Compute months-to-FI without the purchase:
- n0 = LN((C + iT) / (C + iP)) / LN(1 + i)
- n0 ≈ 429.3 months
Compute months-to-FI with the purchase (P_with = 78,000):
- n1 = LN((C + iT) / (C + iP_with)) / LN(1 + i)
- n1 ≈ 431.4 months
Purchase delay:
- n1 – n0 ≈ 2.1 months
Interpretation:
- The quick method said about 2.9 months.
- The compounding model says about 2.1 months because your portfolio is compounding while you save.
Early retiree mode (lower SWR, bigger target)
Early retiree mode example:
- SWR = 3.5% so T = 40,000 / 0.035 = 1,142,857
- Keep the same P, C, and r = 4%
Results:
- n0 ≈ 462.6 months
- n1 ≈ 464.9 months
- Delay ≈ 2.3 months
The delay is slightly larger because the target is larger.
Conservative vs optimistic return scenarios (range)
Same setup (Saver A: P=80,000, P_with=78,000, C=700, T=1,000,000), but vary real returns:
| Scenario | Real return r | n0 (months) | n1 (months) | Delay (months) |
|---|---|---|---|---|
| Conservative | 3% | 507.9 | 510.2 | 2.3 |
| Base | 4% | 429.3 | 431.4 | 2.1 |
| Optimistic | 6% | 329.8 | 331.7 | 1.9 |
One nuance: delay can move non-linearly with returns because both the baseline path and the post-purchase path compound. If you model the purchase as reducing monthly contributions (C) instead of reducing P, the sensitivity to returns can look different.
Takeaway:
- For this purchase and saver profile, the honest answer is about 2 to 3 months, depending on assumptions.
- For someone saving faster (Saver B), the same purchase can genuinely feel like “3 weeks” instead of “3 months”.
Upgrade it: the Quality-of-Life ROI check
Opportunity cost is not only financial.
Some purchases buy you:
- Health (better sleep setup, safer commute, medical care, fitness tools you will actually use)
- Time (a tool that saves hours every week)
- Skills (courses that materially improve earning power)
- Stability (reducing stress and burnout so you can keep investing)
So add a second lens right next to the FI-delay number.
The Quality-of-Life ROI checklist
Give the purchase 1 point for each “yes” (adjust thresholds to your context, the point is measurable impact and consistency):
- Does it save me at least 2 hours per week consistently?
- Does it reduce a recurring pain point that affects my health or school/work performance?
- Does it increase my earning power within 12 months?
- Does it reduce risk (safety, reliability, avoiding costly emergencies)?
- Would I still be happy I bought it one year from now?
Interpretation:
- 0 to 1 yes: treat it like a pure consumption tradeoff, use the FI-delay as your primary guide
- 2 to 3 yes: it is a maybe, look for a cheaper version or a used option
- 4 to 5 yes: it is probably high-ROI, and the FI delay might be worth it
Guardrails and caveats (so you do not misuse the number)
The 4% rule is a baseline, not a guarantee
The Trinity-study lineage is often summarized as finding historically strong outcomes for withdrawals around 3% to 4% over a 30-year period depending on portfolio allocation, which is why the 4% baseline became popular.
But it is not a law of physics.
Researchers including Scott, Sharpe, and Watson have noted that the 4% rule is widely used advice, while also critiquing rigid application and highlighting tradeoffs. Pfau has also discussed limitations of relying on historical backtests alone.
What this means for your calculator:
- SWR is a knob, not a constant
- Stress-test with an early-retiree mode
Longer horizons change the game
Early retirees may need 40 to 60+ years of withdrawals, not 30. Vanguard has discussed FIRE-specific considerations for updating rule-of-thumb thinking, including longer horizons and regime sensitivity.
That is why this post uses ranges and an early-retiree mode.
Sequence-of-returns risk is real
Even if average returns look fine, the order of returns can matter a lot, especially near the start of retirement. This is one reason to prefer a range and conservative stress tests over a single confident number.
How to use the result
Use the “months to FI” output like a decision label:
- Under 1 month: probably not worth overthinking, focus on habits
- 1 to 3 months: pause and compare alternatives (used, smaller, delay purchase)
- 3+ months: treat as a major decision, run scenarios, consider quality-of-life ROI, and ask what you are trading away
The point is not to never spend.
The point is to spend on purpose.
Sources
- Mr. Money Mustache (blog, 2012), “The Shockingly Simple Math Behind Early Retirement” – Popular FIRE framing that savings rate drives time-to-FI.
- Cooley, Hubbard, Walz (Trinity study lineage, widely circulated as a retirement withdrawal backtest) – Historical testing that helped popularize 3% to 4% withdrawal baselines (descriptive, not guarantees).
- Scott, Sharpe, Watson (Stanford University paper PDF), “The 4% Rule – At What Price?” – Explains why a rigid 4% rule can hide tradeoffs even though it remains widely cited guidance.
- Vanguard (research paper), “Fuel for the F.I.R.E.: Updating the 4% rule for early retirees” – Discusses FIRE-specific issues like longer horizons and regime sensitivity.
- Wade Pfau (MPRA working paper), “Retirement Withdrawal Rates and Portfolio Success Rates” – Summarizes limitations and cautions around using historical backtests as a forecast.
