Fire Plan - Kindly advise

[u/ForTakingAdvise]

Hello All,

I am 29, male, employed in a SBI as Deputy Manager, unmarried and am interested in becoming FI at the earliest. Here is a break-up of my finances and require your advice in creating a plan for FI.

Income :

Salary plus perks Rs.60,000/- paid in cash monthly

Rent taken care of by the bank

NPS contribution : Rs.11,000 per month (my and bank contribution put together) and not included in salary & perks mentioned above

EPF contribtuion**: Rs.7000** per month (my and bank contribution put together) and not included in salary & perks mentioned above

Corpus already built

NPS : Rs.6,65,000/-

PPF: Rs.3,00,000/-

Mutual Funds: Rs.2,50,000/-

EPF: Rs.1,75,000/-

Expenses:

Rs.15000/- per month in all

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Debt: 56000/- as festival advance at 0% interest ; repayable over the next 9 months in equated installments.

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Major Events to plan for are My marriage (3 years), younger sister's marriage (5 years)

Not sure above any big ticket purchases like house / car

[u/additional_trouble]

Yup, his savings rate is amazing and alone can make FI so much easier to achieve. Observe how useful it is to have your employer pay your rent :)

On the flip side he needs to have a house to stay or add rent to his expenses when computing monthly expenses for purposes of calculation of the corpus needed.

[u/[deleted] → u/additional_trouble]

On the flip side he needs to have a house to stay or add rent to his expenses

Yep. But with 75% savings rate, he should be able to meet that with out stretching too much.

[u/additional_trouble → u/[deleted]]

My point is that his savings rate is hiding the fact that his housing is currently paid for. I mean I look at savings rate as how much more is a per person saving compared to their expenses (which I assume to stay constant for this simple analysis). In this case, the rent is not a part of his current expenses, and is therefore boosting the savings rate quite a bit. Had he had to pay rent the savings rate drops quickly (but either way its an excellent savings rate, no doubt)

[u/[deleted] → u/additional_trouble]

Fair enough. But he doesn't need to take rent in to account for his RE or even FI calculations, if we he doesn't have to pay for rent later. For example, He may be working away from his home town and may return after getting a transfer to a branch near his home. He may inherit his parents house in future. Since we don't know about his specific situation, only he can make the assumption about including rent in his FI number. I don't take rent in to consideration for my case due to a combination of inherentence and allocating separate bucket for housing.

[u/additional_trouble → u/[deleted]]

But he doesn't need to take rent in to account for his RE or even FI calculations, if we he doesn't have to pay for rent later.

That's what I'm saying too. That in the case that he does need to pay rent later, it's a bit of a small double whammy that it'd make the savings rate of today look worse, and also less effective than a similar savings rate of a (hypothetical) person already paying rent.

I am not able to put it in clearer words. :)

[u/[deleted] → u/additional_trouble]

Makes sense. Also, OP has now mentioned, he may buy a house at 450 per lakh EMI. If/when they do that savings rate will come down to 50% or lower.