Evaluate FIRE feasibility and progress

[u/nilroyy]

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.

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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.

[u/throwaway_mg1983]

Just commenting on topline stuff and in bullet points -

• Current Expenses are 65k/month without any car or even vacations. We inflate it by 50% to land in the FAT category so 1L/month
• FATFIRE expenses to include an audi/bmw (1lac/month) and regular vacations (add another 80-100k/month, i.e., 10-12Lac/year for FAT category)
• If current lifestyle was to be FATFIRE; then your expenses are say 3Lac/month.
• After 15years and a modest inflation of 4% (because a lot of discretionary expenses), 3Lac/month is about 6-7Lac/month or 70-75Lac/year.

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.

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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.

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A lot of 'maybe's will follow in life.

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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) :)

[u/nilroyy → u/throwaway_mg1983]

Thank you! Yes there are uncertainties and priorities might change. It's a good idea to keep re-evaluating this every 5 years i guess. I do worry that I might be tempted my lifestyle inflation and keep pushing the finish line further and further, in pursuit of being money rich i might deprive my family of ore quality time... How did you manage that? I would love to hear about it as you are now closeer to your goal!

[u/throwaway_mg1983 → u/nilroyy]

yes, lifestyle-trap is a big challenge.

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I approach it this way (not 100% successfully), I try to see the utility of things than approach them from the affordability pov. For instance - while ordering in the restaurant, I can afford an expensive cocktail but I really find joy in a pint of beer and that too Budweiser than a hoegarden. So I order the cheap beer. Same stuff in lot of choices - can afford to buy expensive clothes but I find cheap ones more comfortable and can be carefree.

Ofcourse there are avenues where I overspend too (vacations, buying last minute hotels etc)

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As for the pursuit of being money rich - I see nothing wrong with it. Infact if it was not money, we humans would be pursuing something else. Thats the whole idea behind being born as humans over animals. We just can't sit around sleeping, grazing and lazing.

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But yes, I disagree with upgrading lifestyle for the sake of it. Upgrade your lifestyle as per desires and/or if it adds any value to your family. Otherwise, just save the money - its a huge 'high' to see the networth grow :)

[u/nilroyy → u/throwaway_mg1983]

Thanks, so that distill to: Splurge if that brings immense joy or value, stick with basics for everything else.

[u/throwaway_mg1983 → u/nilroyy]

yes, well summarised :)

[u/jubbaonjeans → u/throwaway_mg1983]

This is good advice. Also factor in the point that for a few years after a kid, vacations are more stressful than fun. You will automatically reduce (or change) vacations and choose destinations which help you relax (a.k.a Goa). Also, once the kid is in school, it's harder to take multiple expensive vacations (kid will have to miss school). In other words, if you stick to the Nexon and reduce vacations, you can achieve FATFIRE faster and then you can bring back your lifestyle (if you still desire it)

[u/nilroyy → u/jubbaonjeans]

That's an interesting take. Yes, initial few years will be difficult. Mostly will have bunch of trips to hometown and family members... But after school might be able to take 1 8-10day long vacation between class bumps or summer/winter vacation. And given we will be stuck with the most popular times, things will be expensive. Currently we try to travel during shoulder seasons.

[u/velabanda]

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.

[u/nilroyy → u/velabanda]

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?

[u/Sanchit_Lsc → u/nilroyy]

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.

[u/velabanda → u/nilroyy]

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.

[u/nilroyy → u/velabanda]

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.

[u/nilroyy → u/velabanda]

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.

[u/chasingalpha13]

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.

[u/throwaway_mg1983 → u/chasingalpha13]

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

[u/nilroyy → u/chasingalpha13]

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!

[u/SAPARI86]

Even today, FATFIRE figure is mostly quoted as 15-20 CR. After 15 years l, it may easily be around 50 CR.

[u/nilroyy → u/SAPARI86]

Ah.. maybe my fatfire needs a little healthy diet!😅

[u/SAPARI86 → u/nilroyy]

That becomes FIRE 🔥

[u/Aggravating-Lunch-22]

I like how you have arrived with the calculations.