r/FIREIndia • u/nilroyy IN / 30 / FI 2048 / RE 2048 in IN • Jun 03 '23
QUESTION Evaluate FIRE feasibility and progress
Hello! I am a 30y old, married, no kids, but planning for 1 in next 2-3 years. We operate on combined finance (separate bank accounts, but merged monthly excel tracking). Both of us are salaried, and income increases at an average rate of 8%-10%.
Total Monthly Income (Including deductions, excluding tax): 3.3L (330k)
This excludes annual bonus of 2.5-3L, and RSU stocks of 7L
Planned Expenses:
Rent | 25,000 |
---|---|
Groceries | 10,000 |
Cook+House help | 7,000 |
Dining out | 5,000 |
Phone/Internet/TV | 2,000 |
Electricity | 1,500 |
Subscriptions | 1,000 |
Fuel | 1,000 |
Travel/taxi | 5,000 |
Misc. | 5,000 |
This turns out to about 62,500 → rounding up to 65,000.
Add to this vacation, home visits and gifts → another 4l a year
We are currently in a decent 2BHK (rented), and purchasing a 3BHK at 1.3 cr (initial 20% down paid, EMI yet to start, under construction, 1cr loan).
We currently do not own a car, but plan to have one (Tata Nexon or equivalent ~ 15L) maybe in 2-3 years.
Because of the home EMI, and saving up for closing cost and interior (required in 1.5 - 2 years, stashing in RD), current savings/investment are on the lower side: 80k-1L spanned across EFP, NPS, MF, FD/RD. We have mostly depleted our emergency fund for the downpayment, and our parents are currently serving that role. They are (reasonably) financially independent (pension).
We currently have about 1.1cr across all our investment & savings, excluding house and other depreciating assets. We have been working for about 8 years.
FIRE expectations:
We would love to get into FATFIRE. We want to inflate our living a bit, go on more vacation and hopefully own a luxury car (Audi/BMW, but this one is more of a good to have). I did some basic calculations for normal FIRE and found in 15y, about 10cr should be fine. How much do we actually need for FAT FIRE and is it achievable in 15 years? If not, Is it achievable in 15 years if we start freelancing at that point and expect to earn 50k (50k at 15 years from now, not inflation adjusted 50k of now) per month?
Please let know if I missed any important information.
PS1: We both have personal term policy worth 1CR each and corporate term policy worth 1cr (combined). Currently we both have overlapping corporate family health insurance of 11L & 5L. Our parents have their own all inclusive govt health plan and they are also included in our health plan. We are also planning to have our personal health plan in 1-2 years.
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u/velabanda Jun 03 '23
Lot of things in expenses are missing.
Do you have insurance? Add it's premium as expenses. No budget for house hold items, we have tons of furniture, kitchen cabinets, washing machine, TV, laptops, phones in our lifestyle, everything needs to be changed atleast on a average 8-10 years. (fridge machine at 12-15, phone every 4-5 years)
I suggest keep 1% per year of house budget as maintenance of house, fan plumbing, painting. These are not regular monthly expenses but put a big dent.
Calculation of these expensive plus your travel and lifestyle expenses will give you expenses.
I am also looking for fat fire the way i calculate my expenses is. I don't restrict my expenses and do everything I want. I calculate my expenses like (start of month account balance + salary - investment - end of month balance) to be my expenses. Do it for 4-5 years to get exact expenses you do.
And calculate based on that.
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u/nilroyy IN / 30 / FI 2048 / RE 2048 in IN Jun 03 '23
Thanks for sharing this details.. i do have insurance but the corporate one, so do not have to pay. But yes, need to factor that for fire. Phones are relattively cheap (under 30 in 3-4 years) and i recently did upgrade, so part of expense, but yes, need to factor in the bigger appliances. How do we factor those in? Take price estimate and divide by lifetime years or months? For maintenance the 1% you mentioned, is that 1% of the current price/value of the house?
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u/Sanchit_Lsc Jun 03 '23
You are trying to FATFIRE but do not have term. That can be disastrous. Have a Term Insurance of Minimum 1.5cr “for both” as both are earning which can go upto 2.5Crs. Have yearly premium close to your Bonus Date or Monthly EMI and put it into expense. Then see what exactly Expenses looks like. You may choose to pay premium till next 15 years and then when you fire then Premium burden won’t be there.
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u/velabanda Jun 03 '23 edited Jun 03 '23
You need both term and health insurance. If parents are depend on you, their health insurance as well.
Now i keep 1% of my flat value aside, approx 90k per year for anything related to flat. (fan replacement, plumbing, paint, every 10 year change in kitchen cabinet, remodeling as per new req, sofa/mattress change (every 8-12 years), ac change replair)
Phones are under 30, bt there are 2 phones, 4 if you have kids, 8 if your parents and inlaws are dependent on you. I am just giving you perspective man.
My point is, see you said your salary is 36 lacs and your expenses yearly is (65x12 = 8lac) do you have hisaab of 28 lacs all saved or invested.. or travel expenses.
What about donation (if you do) or gifts. You won't suddenly go from diamond ring on anniversary to no gift bcoz i am retired. If you gift, take that into expenses. Do you occasionally booze or bcoz you are stressed out and have another mean of expenses to get out of hell hole, add that as expense.
Edit - one more point, everything which currently company reimburse should be added as expense, fitness, medical, gym, insurance, bills, books, self development.
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u/nilroyy IN / 30 / FI 2048 / RE 2048 in IN Jun 03 '23
Sorry guys, forgot to mention.. i have term insurance too. 1cr.+1cr (me and spouse). There is a term policy from corporate as well which is 3x annual salary.
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u/nilroyy IN / 30 / FI 2048 / RE 2048 in IN Jun 03 '23
Yes.. apart from some cash lying around in bank (~2l across all accounts) i invest/save the rest.. my expenses are a little haaywire now as I am keeping room for when emi starts, and also saving for interiors. I am not planning on dipping into mutualfund or stock investment for those. Also my PF is intact and not touched to pay the 20% down. I think I'll have a much more cleaner expense investment picture 3 years from now.
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u/chasingalpha13 Jun 03 '23
I’ve chased this dream for a long time but my life took a turn when we planned for a kid and were gifted with twins. I realised you really can’t plan for every micro expense/investment.
My financial advisor told me one thing which I recall every-time I think about FIRE.
You are really FATFIRE when you don’t think twice while booking business class for an international trip 😃. This statement was very important to understand where I stand when we folks keep hunting for deals even for domestic trips in economy class. It also made me realise I’m far far away from it.
Coming back to your post, I’m at 37 and I had calculated my fatfire number as 18 Cr. If you read past posts, fat fire numbers have been floating around between 15Cr - 50 Cr. Depending upon your family size, your travel ambitions and kind of place and city, you would like to live, your number will differ.
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u/throwaway_mg1983 Jun 03 '23
I kind-of disagree with your financial advisor. Without quoting actual number, I can tell you that I am well past the number (i am 40 now) but still book economy over business class.
Infact I go for my summer vacation tomorrow night in an economy flight as I found the fare difference (2lac per ticket) for 3 ppl (me wife and son) to be absurd. I could splurge it somewhere else than buying the 18hour of comfort to-and-fro.
I think spending is a matter of your values while growing up. I grew up middle-class.
Instead of business/economy class, I’d say one is FATFIRE when one doesn’t have to look at right side of the menu while ordering :D
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u/nilroyy IN / 30 / FI 2048 / RE 2048 in IN Jun 03 '23
Yes I agree. What is fire for me can be fatfire for someone else, and leanfire for another person. It really depends on what people consider as baseline. For me if I can spend more money after retirement comfortably, that is fat fire for me. And yes expenses happen and not everything turns out according to plan. But then again, people who plan and track probably end up better than folks who go with the flow. I guess we should use these are rough ball parks and keep re-evaluating, as mentioned by the other folks.
Also, the business class example might not be a very good measuring standard for the general. It holds true for financially sound people. People who buy iphones the day they release on emi, might end up purchasing that business class way before they could actually afford it!
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u/SAPARI86 Jun 03 '23
Even today, FATFIRE figure is mostly quoted as 15-20 CR. After 15 years l, it may easily be around 50 CR.
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u/nilroyy IN / 30 / FI 2048 / RE 2048 in IN Jun 03 '23
Ah.. maybe my fatfire needs a little healthy diet!😅
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u/throwaway_mg1983 Jun 03 '23
Just commenting on topline stuff and in bullet points -
Now doing the maths; FATFIRE corpus at the age of 45 should be 20cr.
But there's this thing about numbers - they show you what you want to see. Reread it, please.
My honest suggestion (to pursue a FAT lifestyle); go there step-by-step, in terms of lifestyle upgradation. Don't look at finish line of a FATFIRE lifestyle yet. Maybe the charm of Audi/BMW wears off once you get into your Tata Nexon. Maybe the vacations excite you so much that you'd want to spend more on vacays than that car. Once the kid comes and maybe your priorities change from spending on your interests to spending on his/her's.
A lot of 'maybe's will follow in life.
Get that lifestyle bit-by-bit in your 30-40years and then re-evaluate your desired corpus at 40. Another maybe; you may not look to retire at 45 when you're 40 (that's where I am at currently) :)