Yep! I get asked that question a lot! And a lot more. Some of them are –

• Were you out of your fucking mind that you agreed to Early Retirement? It just ain’t possible!
• So you mean to say that you will live poorly for next 12 years in order to not work for the rest of the life? Tell me how is that a wise decision?
• What will you guys do if you are not working? How would you sit at home when you have worked all through-out your life?
• Has Ankit (my husband) become too picky in every kind of expense? Does he interfere in every bit?
• What if you had decided not to go with this madness? What would have happened?
• This planning and all is ok but girl tell me – you are not going to buy any jewellery? Seriously??

These are some of the questions I get asked often since the time we started our journey of financial independence. And surprisingly these questions are coming from all quarters – from friends, relatives, immediate family. Practically everyone. So I thought to address them here once for all so that if any female gets asked these questions anywhere she can confidently answer. But before I jump on to shoot down these questions one by one, a little about me first.

Who am I?

I am Prakriti Garg, a young working mother. I live in New Delhi, capital of India. We (me and my husband-Ankit) have set ourselves an audacious goal of early retirement by the time we turn 45 i.e. 12 years from now. Here is our story.

Enough of me now. Let’s go back to irritating questions.

Why did I agree to Early Retirement?

So before I answer this question, do you know there is a term called FIRE?

FIRE stands for Financial Independence Retire Early

So before Early Retirement, there is a thing called Financial Independence. According to Wikipedia, financial independence is a state where you have enough personal wealth to live, without having to work for basic necessities.

Hence first step to Early Retirement is attaining Financial Independence! Tell me who wouldn’t want it? I bet every lady (and gentleman) reading this post would want that.

Therefore my agreement is to the proposition that we (as a couple) reach to that stage ASAP. And then whether to retire early or not (in actuality) can be decided once we are at that point.

Does it make sense now?

Will I live poorly/miserly for the next 12 years?

Hell No!!

In case you are wondering how did the number of 12 years come from, then read this. It will tell the tale of our audacious goal.

So now coming back to the question ladies. Will I live poorly for the next 12 years?

Short crisp answer is NO. I will not and in-fact Ankit (my husband) won’t let me also. Though we are not really those flashy spendthrift types but we are also not big savers. And the testimony to that is that till about 10 months ago, we didn’t use to save much. Our savings rate was paltry 10-15%. But more importantly whatever we were saving was going straight into FDs (fixed deposits).

Since the time we have started our FIRE journey, our savings rate has gone up to 25% -30% and whatever we are saving is basically now going into mutual funds. So what has changed during this time? Have I ever felt that there came a point when I wanted to do an expense but didn’t do it?

No! Absolutely Nothing has changed in my spending pattern!

Then if nothing has changed how come we are saving so much more?

The answer is – By becoming aware of our spends

Yes that’s it! As simple and insane as it may sound, this is the trick behind our increased savings rate. We now track where we are spending. We jot down even a single rupee spent, put that under different categories and then at the end of the month, simply analyse it.

We figured out that there were so many leakages which were not necessarily adding any happiness to our lives. And if we could plug in those leakages we could save a huge amount. For example – movie tickets in South Delhi (locality where I live) are insanely crazy on weekends. They are easily around 20-25% higher than on weekdays. So we asked to ourselves –

What if we start going to movies on weekdays rather than weekends? That would not only save money but also the time (un-necessarily spent navigating the maddening rush).

So we did it! And it has saved us around Rs. 1000-1500 per month. We are movie buff and on an average we watch 2 movies a month. Since we live with our parents, there are a total of 4 members in the family.

There are many such small things which we did and saw that we are saving double of what we were saving earlier. And it all happened because we started tracking our expenses.

So am I living poorly? I guess NO 🙂

What will we do after 45 when we retire?

Though I could list 100 things which I (and Ankit) could (and hopefully would) do once we retire but I will not waste your precious time on it now. 🙂

Early Retirement doesn’t mean “Not Working”. All it means is “Not Working for a living”. Got it?

So in most probability, Ankit would be running this blog. He claims that this would be way bigger than what he is doing in job right now. Let’s see if it happens or not but the beginning looks promising indeed.

By the time I will turn 45, Aarav would have turned 14. Seeing how he is already troubling me, I would tend to think that majority of my time would go in worrying about him. Just kidding!

So I always had a dream of having my own dance academy where I am teaching kids various forms of dances. Since we are not financial independent at the moment, I am trading my time for a monthly salary and believe me it is not a good feeling. Therefore post 45, I intend to live my dream for next 20 years. And oh yes! I also intend to teach Ankit how to cook so that he can cook all the time and I can just relax. 🙂

What would happened if I decided against this madness?

Actually now I believe if I had gone against this decision, then that would have unleashed true madness. I have many friends who are earning decently well but their net worth is zilch! They have a straight line system as far as money is concerned. Money comes and money goes! Nothing gets saved.

Being on this path, what would I have achieved?

More misery! More Daily Stand-ups in the office where we are paraded like monkeys to get more business!

I wanted a way out and I am glad that sanity prevailed and we took this route.

Closing Words: I am not sure how far we will go on this route or how successful we will be in our audacious goal but one thing which I am extremely sure of is

It appeared to be the most sane and logical path to get out of the rat race & live the life I want to live; on my own terms; and with my own free will!

There are a lot of kids in my neighbourhood. One day I found a bunch of kids (some 10-14 years) talking about all the places they had been during their vacation break. They talked about what they shopped, the video games they bought, the different cuisines they ate. It seemed to me that there was a competition among children on “Who went to the most exotic location and who had bought the most expensive video game?” Though the incidence ruffled me a bit but I totally forgot about it until yesterday when I met a old friend of mine.

So I was meeting this friend after a long time. I have known him for last 12 years now and we had done our graduation together. I carry a not so expensive Android Phone (under Rs. 10K) and he was carrying Apple iPhone 7. He asked me about the reason why I am carrying such a phone and then immediately opined that it (such a phone) doesn’t look nice. But when I asked him about why doesn’t it look nice, he had one simple answer –

“dude you are earning well; you need to have a better phone“

And then it struck me. It is not the kids who are suffering from financial peer pressure but us. And worse we are passing on to our insecurities to our children. We are passing on-to them our maddening and constant rat-race to cope up with others financially.

Though disposable salaries are increasing but still chances are pretty high that so called such exotic lifestyles are running on huge EMIs. And such people are in huge debt.

“Consumption of Financial Leverage is very addictive. Though it gives you momentary dopamine but puts you in further debt”

So how can we as adults learn to cope up with financial peer pressure? If we will learn to do it, we will surely inculcate these values in our children. Here are 4 actionable tips to fight financial peer pressure –

1. Social Media is Sham: Yes, Social Media is a sham! Social Media has now become just a channel to show off. And with everyone putting their only the best things (vacations, shopping items etc) on social media, it becomes difficult to maintain the right perspective. It happened with me around 10 months back. Every time I used to open my Facebook Feed, I used to find some friend or the other travelling to exotic locations. I felt as if I am not travelling at all. But then sanity prevailed. I calculated the trips I did during the last year and found equal vacationing time. (Yes I actually did that 😛 )
2. Focus on Creating Memories: I am sure this is the most cliched thing you have read today but it is indeed true. Efforts should go in creating long lasting memories rather than momentary happiness. For example – I, no longer give expensive wedding anniversary gifts to my wife but gift both of us long road trips. We have covered entire Rajasthan (travelled 2500 KMs), Amritsar+Dalhousie (1500 Km), Gujarat (around 2000Kms), Chandigarh(500 Kms) and will soon be travelling to Dharmshala+Mcleodganj (estimated 1200 Kms). Not only we have gotten out of the competition (of what gift did you get?) but also have created tons of memories which we will cherish throughout our lives.
3. Pay Yourself First: Pay Yourself First means saving and investing a specified portion of your salary before you start paying to banks (for EMIs), vendors, E-commerce companies or Credit Card Companies. This will inculcate financial discipline within you. The right way to go about it is –
   • Fix up your financial objectives
   • Work with a financial planner to work backwards to calculate how much you need to save every month to achieve those objectives
   • Invest that amount as per planner’s suggestion
   • For Example – I planned my early retirement using this sheet. I worked backwards to figure out how much do I need to save. And now I invest that amount through Mutual Funds SIPs. Since they are automatically deducted from the account, now I plan my expenses accordingly. In-fact I have started to believe that my salary is the left-over amount.
4. Learn to Say No: We humans exhibit a very strong mental model called Consistency Bias. According to this bias, we want our present behaviour to be seen consistent with the past ones. Therefore if will stretch ourselves beyond our financial means today, chances are pretty high that we will do the same tomorrow as well. On the other hand, if we learn to say No whenever we are out of budget, chances are we will stay true to this behaviour every-time we face such a situation. Hence fix up a budget and stay loyal to that budget. If things go out of that budget, then don’t hesitate to say NO.

I am sure all of us would have surely made some or the other financially unwise decisions purely out of peer pressure but the trick lies in opting out of this competition. And the sooner we do that, the longer will our happiness remain.

Early Retirement is a mindset!

Yep! That’s correct. And it is not an over statement. Planning for Early Retirement requires a change in the mindset. In-fact one needs to live this mindset right from the moment when one decides to think about early retirement.

However when people think about lifestyle changes that will bring them closer to financial independence and early retirement, they usually come up with the S-Word. Though it has positive connotation in other walks of life but carries super negativity when it comes to lifestyle.

And the word is Sacrifice.

Our mind and ego (through feedback loop from society) trick us into thinking that whatever changes we are doing in our lifestyle are actually the sacrifices. And since it is a sacrifice, we tend to feel deprived and hence become sad. We feel burdened and therefore our motivation drops. We ask ourselves – “what’s the point of Sacrificing Today for Having Something Tomorrow“?

All these emotions come into play because We think We are Sacrificing!

So how do you tackle this situation? How do you tell your mind that is is really not a sacrifice but path to freedom. I am following these basic and practical pointers which are serving me well till now.

Clear Communication with the Partner

If you are married (or living with a partner), then it is impossible to make changes in your lifestyle until and unless your partner is totally in sync with you. Early Retirement is not your individual goal but the family goal. Therefore it becomes super crucial to explain these changes to your partner and get his/her nod on each one of them.

If there comes a situation where you and your partner have a disagreement on any of the lifestyle change then try to reason out objectively. But if the disagreement still exists then it would be wiser to not incorporate that change. Road to Financial Independence and Early Retirement is a long one and you don’t want any kind of friction along the way.

It would also help to go over your FIRE progress metrics together. This will keep both of you truly involved in the entire journey so that if one of you feels low at any point in time then the other person can lift him/her up.

I am lucky that my conversation with my wife (on this) went smooth like butter. Both of us were in sync since the time I floated the idea of early retirement. In-fact she was more enthusiastic about it than me which gave me the confidence to embark on this journey. Since then we as a family have taken many decisions which we wouldn’t and couldn’t have taken if both of us were not in sync like selling of our second car.

What Happiness Means to you and your family

So I could have included this point above but it is so important that it needed a separate section in itself. I believe there would be no second thoughts about the fact that ultimate goal in life is happiness. You are planning to retire early because you feel you would be able to do stuff which makes you happy. Therefore it is very very important to lay down the definition of true happiness when you are thinking about lifestyle changes.

Hence you need to think whether going to an expensive bar  makes you happy or drinking at friend’s place brings joy. You need to think whether gifting an expensive luxury watch to your wife (on your wedding anniversary) makes both of you happy or going out on a road trip?

The answer to the question – “Where lies in my true happiness?”  is damn difficult and it is ok to hip-hop from one answer to another. Don’t pressurise yourself to come up with the perfect answer in one go. I would rather suggest you to do the activity which you believe would bring in happiness; and then see the result yourself. Don’t hesitate to do A/B testing in life. It would be fun and you would be able to accept or reject happiness hypothesis yourself.

For me (and my family), this is what happiness means –

We have come to this definition of happiness after doing a lot of A/B testing in our life. Having said this still might change as we still have lot of experiments to be done in life.

So the moot point is that whatever changes you plan to do in your lifestyle for early retirement, it should not decrease your happiness quotient. If it does, then it will start to feel like a sacrifice.

Being Objective about Financial Decisions

Though it shouldn’t be said that one needs to be objective about financial decisions but more often than not, man behaves like a dumb person when it comes to money matters. We lose our objectivity and often do decisions based on our prejudices and personal experiences.

It is important that every financial decision is laid out in mathematical terms for people to take objective decisions. Trust should be placed only in numbers and they should be your guiding light. Therefore if you are planning to buy a car vis-a-vis an old one, create a mathematical model. Let the numbers guide you on the decision to be made and not the society.

Are you planning to buy a house or rent? Again build a mathematical model for the same and let the numbers do the talking. I know what you are thinking here. What would Sharmaji (or Kapoor Sahab) think if I buy the old car instead of a new one? Will I still rent when my peers are on house buying spree? Answer is – let the numbers decide objectively.

For me the hardest financial decision in this journey of FIRE has been selling of my second car. I had bought it as a birthday gift for myself and hence was more than just a car to me. But when I laid out the mathematical model to decide whether I should keep the car or sell it off, numbers told me to sell. And Hence I did. Read about Why did I decide to sell my new car? – Case Study in Personal Finance

Think Long Term

Generally we have a habit of looking at everything in short term. Though it might be helpful in some cases but when it comes to money, long term thinking almost always prevails over short term. Analysing everything (related with money) from long term perspective has helped me at 2 different levels –

First: I have become much more mindful of saving small expenses now than I was earlier. This change has come after I started taking a long term view on those savings. For example Rs. 5000 saved (from various small measures) in the entire year will grow to Rs. 20,000 by the time I plan to retire (next 12 years). This has caused a great shift in my spending and saving pattern. Earlier I didn’t use to plug these small leakages in spending thinking of them to be too small to warrant my time. But now I always think of long term and see how much of today’s savings will grow into next 12 years.

Second: I also look at my investments from long term perspectives hence I don’t lose my sleep when stock market tanks by a percent or two. Similarly financial planning has become easier since long term perspective smoothen out lot of wrinkles which appear in short term.

I am living this mindset for last 6 months (2-3 months after I decided to embark on this path) and it has served me well so far. I am saving, investing enough to reach to my goal of retirement by 45. And above all I didn’t feel (for a moment) that I am sacrificing something today to achieve something else tomorrow.