Overheard at Work

[Squirrel away]

CW: What do you think you need to retire?

Me: Idk, a couple million and many who want to retire early would think that's too much.

CW: WHAT? I'm aiming for like $12M!

$12M! OMG.

[GuitarStv]

CW: What do you think you need to retire?

Me: Idk, a couple million and many who want to retire early would think that's too much.

CW: WHAT? I'm aiming for like $12M!

$12M! OMG.

Hmm . . . safe withdrawal limit of just under 500,000 a year.  I might be able to live on that in retirement.

[LifeAtTheLodgeHouse]

Small thing, grating on me.

In work everyone has reusable cups, awesome idea as it saves the environment and you save 50c every time you buy a coffee (don't worry I squashed that habit upon stumbling onto MMM). Everyone has these cups: www.keepcup.com and I do too, however my sister in law's work got free cups that are in a blue and black and not the "fancy" multicoloured ones and she snagged one for me of THE SAME BRAND, but blue and black.

CW - You need a new cup
Me - Why? It's same brand but my one is dull colours
CW - It's dull, just buy a new cup, you need a new cup
Me - Um, no
CW - They are only $13 NZ (or something like that)
Me - Okay

A week later...

CW - Have you not bought a new cup yet?
Me - No
CW - Buy a new cup, you need a new cup
Me - I'm probably not going to do that

A week later... you get where this is going...

I DO NOT NEED A NEW CUP. My cup is perfectly fine and even if it wasn't, I have other thermal cups. I will NOT be buying a new cup!!!

I feel like the drink and drugs advert - Just say no. Do not give in to peer pressure!!

Just buy the cup man. All your friends have one. One won't hurt, it'll help you relax.
You too good to buy a cup like the rest of us? Cup chicken? Bwok bwok bwok.....

I'm now waiting to be told how all the cool kids are doing it...

Is it wrong that I'm now online "designing my own KeepCup"?  ;-)  (But not buying -- just designing.)

If these thing last more than a couple of years, I could see spending $9 on one.  The ones I buy for $6 seem to break in one way or another after about a year.

Agree. I bought a cool trendy one (back in the day) and it fell to bits. However I still have a Starbucks cup I was gifted 10 years ago that is going strong. So even if this cup dies, I won't be buying another one.

The new thing I am now getting pressured into (because there are 3 of them going) is a circuits group. I went along for the free class (because they booked me in and told me I was going and didn't want to let anyone down) and it is good, but we literally go to a free park and do circuits with no equipment, all body weight. It costs $250 NDZ or $165 USD for 10 classes. Now I enjoy exercising and I don't mind a class but $25 a class is never going to happen, especially when it is just my body weight I am using. If you bulk buy like 30 of them I can get it down to $18 or $16 a class.

I understand why other need to pay someone to make the commitment to go along, but I'm quite self motivated so I'm not paying $25 a class.

[Joggernot]

Small thing, grating on me.

In work everyone has reusable cups, awesome idea as it saves the environment and you save 50c every time you buy a coffee (don't worry I squashed that habit upon stumbling onto MMM). Everyone has these cups: www.keepcup.com and I do too, however my sister in law's work got free cups that are in a blue and black and not the "fancy" multicoloured ones and she snagged one for me of THE SAME BRAND, but blue and black.

CW - You need a new cup
Me - Why? It's same brand but my one is dull colours
CW - It's dull, just buy a new cup, you need a new cup
Me - Um, no
CW - They are only $13 NZ (or something like that)
Me - Okay

A week later...

CW - Have you not bought a new cup yet?
Me - No
CW - Buy a new cup, you need a new cup
Me - I'm probably not going to do that

A week later... you get where this is going...

I DO NOT NEED A NEW CUP. My cup is perfectly fine and even if it wasn't, I have other thermal cups. I will NOT be buying a new cup!!!

I feel like the drink and drugs advert - Just say no. Do not give in to peer pressure!!

Just buy the cup man. All your friends have one. One won't hurt, it'll help you relax.
You too good to buy a cup like the rest of us? Cup chicken? Bwok bwok bwok.....

I'm now waiting to be told how all the cool kids are doing it...

Is it wrong that I'm now online "designing my own KeepCup"?  ;-)  (But not buying -- just designing.)

If these thing last more than a couple of years, I could see spending $9 on one.  The ones I buy for $6 seem to break in one way or another after about a year.

Agree. I bought a cool trendy one (back in the day) and it fell to bits. However I still have a Starbucks cup I was gifted 10 years ago that is going strong. So even if this cup dies, I won't be buying another one.

I'm using a used Starbucks cup that I bought for $1 at a garage sale last year.  Best buy I've made in a long time.

[shanghaiMMM]

I have one that's a little sad.

A couple at work, both have decent paying positions. He has a degree in finance and seems savvy towards investing and the like. He once mentioned he bought $30,000 of gold and it went up to 4x that amount (not an indicator of much at all, I know, but still, he's into investing which is more than many). I've broached the topic of retirement with him before, as he seemed the only one at work who might get it. This time we talked and it went something like this:

Me: You wear that same tie every day?

Him: Yep! I have a row of ties in my cupboard and use one each year. I then cut it up and it's my count down to retirement!

Me: Huh, interesting! How many ties do you have left?? (Note - The guy is about 38)

Him: About 20. That should do it. We want over $2m for retirement.

Me: But... but... that's ages away! That's going to give you about $80,000 a year, what can you even spend that on?!

Him: Oh we have our eye on this relaxing retirement place with a lake and nice garden.


I mean, he's doing better than most and seems fairly financially savvy but ffs. Retire at 58 to grow fat and old in a quasi-retirement home?! Damn.

I'm not sure what's wrong with this.  He's doing better than a real big majority out there and has his head on right.  If he can live w/in his means, he can live w/in his means.  If MMM had a lot of money, I'm sure he'd up his lifestyle a bit to adjust.

Plus 58 is a good age to retire for nonMMM. I wouldn't classify the guy as anti-Mustachian.

I concur, not everyone wants to retire as early as we do. Other people have other priorities.

Yeah fair enough, I thought I had hinted I thought he was still doing quite well in comparison to many people, perhaps I wasn't clear enough.

And I definitely like the tie idea too!

[DutchGirl]

Colleague of mine, in July:

"Yes, I invested some money. I don't know where exactly, I don't know what I invested in, and I don't know the current value. But I will just ignore it and then in the future it will turn out to have grown wildly!"

Same colleague, last week:
"Oh, dear, I can't remember whether or not I've left the gas on at home. And I can't go back home now that I'm at work. I realized when I was driving here, and I thought about what I would miss if my house exploded. Well, replacing the furniture would cost a few bucks. No, I don't have renter's insurance. I cancelled it a while back when cutting costs."

(She ended up phoning her neighbor who could go and check on her gas; it was off, luckily, so she still has a house).

[MgoSam]

Colleague of mine, in July:

"Yes, I invested some money. I don't know where exactly, I don't know what I invested in, and I don't know the current value. But I will just ignore it and then in the future it will turn out to have grown wildly!"

Step 1. Invest
Step 2. Forget about what you invested
Step 3. ???????
Step 4 .PROFIT!

[edmundblackadder]

That's ....kind of my strategy?

1. Dump money into Vanguard index funds.
2. Ignore news about the stock market for ten-fifteen years so I don't panic.
3. Profit!

[arebelspy]

Yeah, but you know where it is and what it's invested in. :)

Your plan is much more solid.

[DutchGirl]

@Mr. Blackadder: given her other financial choices, I'm very, very afraid that she heard something about "investing is the thing to do!", then talked to someone willing to relieve her of her money, who had her channel a few thousand euros into some kind of high-fee very risky investment or real scam, and she's out of that money already but doesn't even know it yet.

[With This Herring]

I've finally made it through the thread!  Now I can finally participate, once something comes up.

[Metta]

There are a lot of unhappy people in my office lately, and for good reason. We are engaged in a project that will end the need for most programmers in our department within one to two years. (That's about 40 very senior programmers in both the mainframe and Java environments who will either lose their jobs or will have to do something other than code for a living.) Management has been brutally frank that people need to take responsibility for their own "re-tooling" and that nothing is guaranteed moving into the future. Because of the aggressive deadline management has chosen, it is going to require very long hours for the next 18 months. (I think a plan presented to workers as "You need to work very hard for the next two years and then we will fire you" is crazy. But no one asked me my opinion.)

People are, of course, pretty upset and they've been venting to me. I've told each person that they have a year or two to get together FU money, which will make everything feel better and less scary and that I can show them how I've saved money. Most have told me that it is impossible.

One person told me that she is extremely frugal and thinks my idea has merit, so we talked about her expenses and what she can cut. (My guess is that she makes somewhere between 100K and 150K in a LCOL city, so she doesn't have a cash inflow problem.) She's apparently paying for three cable hook-ups just for her and all possible channels. I told her how we had cut cable television (but still use cable for Internet access) and suggested she should do the same since it would save her somewhere north of $150 a month. (Also, if she's going to be working 80 hour weeks, she won't have time to watch much tv.) I also recommended Ting and a couple of other painless strategies for saving money. At the end she thanked me and then said, "I'm going to do it!"

"Great!" I said.

"But not yet."

"Why not? What are you waiting for?"

"I have to get current with the cable company first."

I was dumbfounded. Here was an intelligent, well-paid, well-educated, middle-aged woman who had let her finances spiral so far out of control that not only did she have no savings and no FU money, she was behind on her cable bill. What can one say to that?

[RWD]

"I have to get current with the cable company first."

Can't you cancel even if you aren't current? I don't know, I've never had a TV subscription, but I don't see how they could force you to keep a service just because you aren't current on your bill...

[Metta]

"I have to get current with the cable company first."

Can't you cancel even if you aren't current? I don't know, I've never had a TV subscription, but I don't see how they could force you to keep a service just because you aren't current on your bill...

I don't know. I've never really had to deal with that. I should ask her. I was so startled that it drove all sensible thoughts from my mind.

[mairuiming]

Hi, this is my first post in this forum.
I started reading about FI few weeks ago and was talking about MMM forum with one of my office colleague (CW1).

CW1: So when do you plan to retire ?
Me: I haven't done all the calculations yet, but I would target to be FI by age 45 (I know few mustachian may think 45 is too late).
CW1: What are you going to do with your time when you retire so early ?
Me: I will devote more time practice music instruments (I play flute)

CW2 jumps in the conversation and reasons retiring early is a bad idea.

CW2: When you grow older you 'have' to buy a larger car and a bigger house.
Me: Why ?
CW2: Because this is what we should do. My father just bought a new car (his father used to drive a Audi 2012 model)

I tried to run away from the conversation and not get influenced by anti-mustachians

[mm1970]

There are a lot of unhappy people in my office lately, and for good reason. We are engaged in a project that will end the need for most programmers in our department within one to two years. (That's about 40 very senior programmers in both the mainframe and Java environments who will either lose their jobs or will have to do something other than code for a living.) Management has been brutally frank that people need to take responsibility for their own "re-tooling" and that nothing is guaranteed moving into the future. Because of the aggressive deadline management has chosen, it is going to require very long hours for the next 18 months. (I think a plan presented to workers as "You need to work very hard for the next two years and then we will fire you" is crazy. But no one asked me my opinion.)

People are, of course, pretty upset and they've been venting to me. I've told each person that they have a year or two to get together FU money, which will make everything feel better and less scary and that I can show them how I've saved money. Most have told me that it is impossible.

One person told me that she is extremely frugal and thinks my idea has merit, so we talked about her expenses and what she can cut. (My guess is that she makes somewhere between 100K and 150K in a LCOL city, so she doesn't have a cash inflow problem.) She's apparently paying for three cable hook-ups just for her and all possible channels. I told her how we had cut cable television (but still use cable for Internet access) and suggested she should do the same since it would save her somewhere north of $150 a month. (Also, if she's going to be working 80 hour weeks, she won't have time to watch much tv.) I also recommended Ting and a couple of other painless strategies for saving money. At the end she thanked me and then said, "I'm going to do it!"

"Great!" I said.

"But not yet."

"Why not? What are you waiting for?"

"I have to get current with the cable company first."

I was dumbfounded. Here was an intelligent, well-paid, well-educated, middle-aged woman who had let her finances spiral so far out of control that not only did she have no savings and no FU money, she was behind on her cable bill. What can one say to that?

I understand being unhappy...I mean, I work for a company that has been downsizing and all (so many people are quitting).

Why don't they just look for another job?  80 hours a week for 18 months then out of a job?  I'd be hitting the pavement pretty hard, unless there is overtime. No, I'd still be looking.

[mlejw6]

So, my husband has been telling me about his CW. CW's car died: the engine timing belt broke and took other parts of the engine with it. This made the repair more expensive than the value of the car. Here's the kicker:

 - It's a 2009 VW SUV that cost ~$40k
 - He still owes $7000 (wtf?) on this 6 year old car
 - He decided to replace it with the same exact car in the 2015 model
 - But - guess what - the dealer magnanimously took off $3500 of what they owe on the old car! What a great deal!

I just shook my head. I guess he's the type of person who thinks he will always have a car payment, so it doesn't matter how much car he gets as long as he can make the payments.

[MgoSam]

I just shook my head. I guess he's the type of person who thinks he will always have a car payment, so it doesn't matter how much car he gets as long as he can make the payments.

Sounds like he's the dealer's best friend. If they continue to please him he'll come by every few years to trade it in.

[JordanOfGilead]

So, my husband has been telling me about his CW. CW's car died: the engine timing belt broke and took other parts of the engine with it. This made the repair more expensive than the value of the car. Here's the kicker:

 - It's a 2009 VW SUV that cost ~$40k
 - He still owes $7000 (wtf?) on this 6 year old car
 - He decided to replace it with the same exact car in the 2015 model
 - But - guess what - the dealer magnanimously took off $3500 of what they owe on the old car! What a great deal!

I just shook my head. I guess he's the type of person who thinks he will always have a car payment, so it doesn't matter how much car he gets as long as he can make the payments.

If he's the type of person that doesn't pay enough attention to the preventative maintenance schedule of a vehicle that his life LITERALLY depends on functioning properly, why would he pay enough attention to the numbers to realize that car payments are bad?

[Making Cookies]

Married couple, friends of mine and former work colleagues, used to commute separately by car ~35 miles each way to work here. Same company, same office, different department, so they didn't see each other during the day anyway. That's anywhere between 45 and 90 minutes drive, depending on traffic. They grew vegetables on their allotment, though, because it would save money and be good for the environment.

Pennywise, pound-foolish. Even one person driving that much for a job is insane in my world.

I have married friends who up until recently worked in different departments at the same large university and commuted at least 30 miles there. They'd frequently work different shifts (by 2 hours or so; he might work 8-4 and she was 8-6 because she worked four 10s) so they would drive separately. (I would totally sit and read a book, catch up on my Internet, etc. for two hours to save 60 miles worth of gas a couple times a week.) Then they had a baby, so needed to make some cutbacks, and therefore started "carpooling" sometimes.

Depends on what you drive. 99% of the time my wife and I carpool. Sometimes though (like this week) when the overlap is too great we drive separately (7 miles each way). We're talking several hours.

60 miles savings in a 30 mpg car at $1.85/gal gas. $4? Depends on how tight the rest of your schedule. If I needed to get home and clean or rake leaves then it might be worthwhile to drive separately when you need to. Just offset the expense by eating simple that week.

[GoldenNeko]

This person if one of our big managers. Been having big salary and responsibilities for almost ten years now. We had a conversation that went like this:

Co-worker (after me saying I had almost finished paying my student debts in a conversation about them and money in general): but, you're young, how can you have almost finished paying your student debts? Between my own home payments, my student debts and all the costs of life, I can only try to refinance my rate. I need a raise. I've talked about it with (big boss).
Me : *O_O then putting the 'I understand" mask while screaming inside* uh yeah! Banks are so difficult...."

This person is single, has no children, and frequently brings family members to vacations and is shopping addict. And makes twice my salary at least. Yeah, and eats out on a daily basis (to me sounds more like spending problem than an income problem). This person got the raise.
And the circle goes on.

Can I also ask for a raise, because, you know, life is hard?
 

[MoonShadow]

Can I also ask for a raise, because, you know, life is hard?

Yes.

[jorjor]

So I am an external auditor working for one of the Big 4. As an incentive, if you get your CPA in the first year of working there you get a $5k bonus. So I was talking to one of our first year staff the other day, and she was telling me that several of her friends (also first years) were giving advice about the bonus. Specifically, they were saying how important it is to make sure you drop your 401k contribution to 0% for that paycheck and then immediately put it back to normal for the next paycheck so that you get as much of your bonus as possible. I just laughed and told her that if anything, she should increase her contribution percentage for that paycheck since you don't actually need any of it. Fortunately, she seemed to think her friends were being ridiculous, too...

Both places I've worked, the bonus was a separate "special" check and no 401k contributions came out of it (or any other elective contributions for that matter...just taxes). Weird.

[nobodyspecial]

Can I also ask for a raise, because, you know, life is hard?

Yes.

You can ask ....

[mairuiming]

Today at lunch.

CW: do you know person ABC in office earns so much and is saving more than 75% salary. I wonder what will he do with so much money
Me: May be he wants to retire early
CW: (silence)

I am happy someone in office is planning for FIRE

[cerat0n1a]

Today at lunch.

CW: do you know person ABC in office earns so much and is saving more than 75% salary. I wonder what will he do with so much money
Me: May be he wants to retire early
CW: (silence)

I am happy someone in office is planning for FIRE

Over the last 10-15 years, I've had quite a few co-workers from India, often here in Britain on short-term 1-2yr assignments. Many of them have been earning UK-sized salaries while here, but tried to keep expenses super low (often by having big group of people sharing a small apartment) with the express aim of going back home with enough money to buy a house/have a lavish wedding/retire early. So I'm kind of surprised that the concept isn't better known in India.

[Merrie]

Coworker: I wonder when we'll have a 25% employee discount day again.
Me: They always seem to announce them just a day or two ahead of time.
Coworker: Yeah. And they're never on pay week! They should be on pay week. I can't afford to buy anything otherwise.
Me: ... yes, I bet that's frustrating for a lot of people.

[Ceridwen]

Coworker: I wonder when we'll have a 25% employee discount day again.
Me: They always seem to announce them just a day or two ahead of time.
Coworker: Yeah. And they're never on pay week! They should be on pay week. I can't afford to buy anything otherwise.
Me: ... yes, I bet that's frustrating for a lot of people.

Ugh, sad.  I get a lot of that in my office too.  "I can't go out for lunch today, but tomorrow's pay day so let's go then!".

[nobodyspecial]

Coworker: I wonder when we'll have a 25% employee discount day again.
Me: They always seem to announce them just a day or two ahead of time.
Coworker: Yeah. And they're never on pay week! They should be on pay week. I can't afford to buy anything otherwise.
Me: ... yes, I bet that's frustrating for a lot of people.

Ugh, sad.  I get a lot of that in my office too.  "I can't go out for lunch today, but tomorrow's pay day so let's go then!".

That's ridiculous - haven't these people heard of overdrafts?

[Le Barbu]

Coworker: I wonder when we'll have a 25% employee discount day again.
Me: They always seem to announce them just a day or two ahead of time.
Coworker: Yeah. And they're never on pay week! They should be on pay week. I can't afford to buy anything otherwise.
Me: ... yes, I bet that's frustrating for a lot of people.

Ugh, sad.  I get a lot of that in my office too.  "I can't go out for lunch today, but tomorrow's pay day so let's go then!".

That's ridiculous - haven't these people heard of overdrafts?

payday loan, loan sharking, there is plenty of possibility!

[SwordGuy]

Colleague of mine, in July:

"Yes, I invested some money. I don't know where exactly, I don't know what I invested in, and I don't know the current value. But I will just ignore it and then in the future it will turn out to have grown wildly!"

Step 1. Invest
Step 2. Forget about what you invested
Step 3. ???????
Step 4 .PROFIT!

One of the major investment houses did a study to find out the demographics of their most successful investors:

1st place:  Dead people.
2nd place: People who invested and forgot they had done so.

Why?  Because neither group panics and sells low when the market drops.  And they don't pull out their investments to buy stupid stuff.

[dude]

Co-worker is an exec assistant making @$65k.  Just bought her "dream car," a Volvo SUV with ALL the bells and whistles (cameras, warning buzzers, navigation, etc., etc., etc.).  To her credit, she bought it used, but it was still like $26k.  I looked it up and it's one of Consumer Reports' most-expensive cars to own.  Just the other day, she said she was talking to one of the executives here about the car; he bought his wife one. He asked her, "Have you had the oil changed on it yet?"  She replied, "No, why?"  He said, "When we took my wife's in, it was $180 for an oil change."  Oh shit.  Apparently the thing takes like 7 quarts of oil, it has to be premium oil, and it's got to be done by the dealer to maintain the warranty?  The other thing about this co-worker is she is hell on cars -- never fails to find ways to run over curbs, find the largest potholes in the state, or run into things.  I cringed at the thought of how much this "dream car" might cost her over the next few years.

[dragoncar]

Co-worker is an exec assistant making @$65k.  Just bought her "dream car," a Volvo SUV with ALL the bells and whistles (cameras, warning buzzers, navigation, etc., etc., etc.).  To her credit, she bought it used, but it was still like $26k.  I looked it up and it's one of Consumer Reports' most-expensive cars to own.  Just the other day, she said she was talking to one of the executives here about the car; he bought his wife one. He asked her, "Have you had the oil changed on it yet?"  She replied, "No, why?"  He said, "When we took my wife's in, it was $180 for an oil change."  Oh shit.  Apparently the thing takes like 7 quarts of oil, it has to be premium oil, and it's got to be done by the dealer to maintain the warranty?  The other thing about this co-worker is she is hell on cars -- never fails to find ways to run over curbs, find the largest potholes in the state, or run into things.  I cringed at the thought of how much this "dream car" might cost her over the next few years.

$26k car making $65k actually sounds pretty spot on for 90% of the population

Let her know she doesn't have to take it to the dealer to keep the warranty (is it even still under warranty?)  That's illegal.  http://www.smart-service.com/blog/2013/05/warranty-rights

[Gen Y Finance Journey]

CW: What do you think you need to retire?

Me: Idk, a couple million and many who want to retire early would think that's too much.

CW: WHAT? I'm aiming for like $12M!

$12M! OMG.

Similar experience with a good friend of mine. I told him that I could definitely retire in our current HCOL area on $2M, he said no way, you'd need at least $8M here. I will never understand what some people think they need so much money for.

[nobodyspecial]

Similar experience with a good friend of mine. I told him that I could definitely retire in our current HCOL area on $2M, he said no way, you'd need at least $8M here. I will never understand what some people think they need so much money for.

Take current before-tax salary, multiply by 40 years and then double it because you want to travel and play golf and buy a boat, then double it again just in case

[Travis]

CW: What do you think you need to retire?

Me: Idk, a couple million and many who want to retire early would think that's too much.

CW: WHAT? I'm aiming for like $12M!

$12M! OMG.

Similar experience with a good friend of mine. I told him that I could definitely retire in our current HCOL area on $2M, he said no way, you'd need at least $8M here. I will never understand what some people think they need so much money for.

I would imagine a lot of them think the money is being drawn from a simple savings account rather than a portfolio that continues to gain interest.

[mairuiming]

Over the last 10-15 years, I've had quite a few co-workers from India, often here in Britain on short-term 1-2yr assignments. Many of them have been earning UK-sized salaries while here, but tried to keep expenses super low (often by having big group of people sharing a small apartment) with the express aim of going back home with enough money to buy a house/have a lavish wedding/retire early. So I'm kind of surprised that the concept isn't better known in India.

Hi Ceratonia,
Concept of saving money is well known in India.
Our government's job is to collect tax. We don't get mediclaim, social security, pension, have very few good public school, have sub standard public hospitals, etc etc.

Let me explain why Indians on short term assignment abroad save 60-80% salary.
Putting some numbers will give a better perspective.

In India someone with 5 year work experience (say in IT industry) will take home close to INR 1 Million = GBP 10k = USD 15k per year. (foreign exchange rates)
If this person save 50% salary, annual saving is GBP 5k (or USD 7.5k).
Please bear in mind, with a smaller salary base maintaining 50% saving rate is a bit difficult especially when you have dependent (read kids, ageing parents, non-working wife).

Now consider this person is sent to UK/US on a 1 year assignment with take home pay of GBP 40k (or USD 60k) per year.
Key personal objective of this person in this 1 years is to save a heck lot of money.
Say, this person saves 50% salary (conservative estimate).
Per year saving during these foreign assignments is GBP 20 k (or USD 30k).

As you can see, during foreign assignment even if someone maintains the same saving rate as they would have done in India, this person can save 4 times more (in actual FX rates).
This provide a huge push towards Financial independence.

For those on this forum wondering why salaries in India are so low. Quick explanation is PPP - purchasing power parity.
In 2015 foreign exchange rates, 1 USD = 65 INR (Indian rupee).
However, In 2015 PPP rates, 1 USD = 21 INR (Indian rupee).
For example, If a Macdonald burger is $5 in US it will cost 5*21 = INR 110 in India (not 5 * 65 = INR 325). Therefore, salary of INR 1 million has purchasing power equivalent to USD 47k (or GBP 30k).

But when someone is on an assignment to US/UK etc, this person brings back hard cash/currency which is converted NOT on PPP but on FX rates.

Hope this explains.

Side note 1: Early retirement is a bit difficult to achieve in India provided consumer price inflation rate for last 25 years averaged at 8% per year. For FIRE, investments have to be put in high risk areas with returns of 13+% just to pay off your expenses and maintain purchasing power of your investments. With higher returns comes higher risk of volatility. Having said that, I know few people who are actively aiming for FIRE.

Side note 2: I read the forum and people talk about house size 2000+ sq. ft. In India, a 1000 sq. ft. apartment is considered luxury and will cost north of 5 times annual salary for average person (may be 10-15 times in good locations). YES, maintaining a high saving rate is extremely important and a foreign assignment goes a long way in putting a larger down payment. Home loan interest rate from public banks in India is close to 10% p.a.

Side note 3: In India it is quite common for parents to cover the cost of kids college education. Because education loan in India is expensive. Public banks give loan @ 14+% p.a. Interest is charged while kid is in college. So If you borrow USD 25k for 4 year college education (current rate for good college in India), when child start working he/she would be looking at repayment on USD 40k. Maximum loan repayment tenure is 15 years. So repayment is USD 520 per month. This is higher than 50% of entire take home salary for a fresh college graduate. So parents save for their retirement and kids college.

Rant over. Have a good day.

[MgoSam]

Over the last 10-15 years, I've had quite a few co-workers from India, often here in Britain on short-term 1-2yr assignments. Many of them have been earning UK-sized salaries while here, but tried to keep expenses super low (often by having big group of people sharing a small apartment) with the express aim of going back home with enough money to buy a house/have a lavish wedding/retire early. So I'm kind of surprised that the concept isn't better known in India.

Hi Ceratonia,
Concept of saving money is well known in India.
Our government's job is to collect tax. We don't get mediclaim, social security, pension, have very few good public school, have sub standard public hospitals, etc etc.

Let me explain why Indians on short term assignment abroad save 60-80% salary.
Putting some numbers will give a better perspective.

In India someone with 5 year work experience (say in IT industry) will take home close to INR 1 Million = GBP 10k = USD 15k per year. (foreign exchange rates)
If this person save 50% salary, annual saving is GBP 5k (or USD 7.5k).
Please bear in mind, with a smaller salary base maintaining 50% saving rate is a bit difficult especially when you have dependent (read kids, ageing parents, non-working wife).

Now consider this person is sent to UK/US on a 1 year assignment with take home pay of GBP 40k (or USD 60k) per year.
Key personal objective of this person in this 1 years is to save a heck lot of money.
Say, this person saves 50% salary (conservative estimate).
Per year saving during these foreign assignments is GBP 20 k (or USD 30k).

As you can see, during foreign assignment even if someone maintains the same saving rate as they would have done in India, this person can save 4 times more (in actual FX rates).
This provide a huge push towards Financial independence.

For those on this forum wondering why salaries in India are so low. Quick explanation is PPP - purchasing power parity.
In 2015 foreign exchange rates, 1 USD = 65 INR (Indian rupee).
However, In 2015 PPP rates, 1 USD = 21 INR (Indian rupee).
For example, If a Macdonald burger is $5 in US it will cost 5*21 = INR 110 in India (not 5 * 65 = INR 325). Therefore, salary of INR 1 million has purchasing power equivalent to USD 47k (or GBP 30k).

But when someone is on an assignment to US/UK etc, this person brings back hard cash/currency which is converted NOT on PPP but on FX rates.

Hope this explains.

Side note 1: Early retirement is a bit difficult to achieve in India provided consumer price inflation rate for last 25 years averaged at 8% per year. For FIRE, investments have to be put in high risk areas with returns of 13+% just to pay off your expenses and maintain purchasing power of your investments. With higher returns comes higher risk of volatility. Having said that, I know few people who are actively aiming for FIRE.

Side note 2: I read the forum and people talk about house size 2000+ sq. ft. In India, a 1000 sq. ft. apartment is considered luxury and will cost north of 5 times annual salary for average person (may be 10-15 times in good locations). YES, maintaining a high saving rate is extremely important and a foreign assignment goes a long way in putting a larger down payment. Home loan interest rate from public banks in India is close to 10% p.a.

Side note 3: In India it is quite common for parents to cover the cost of kids college education. Because education loan in India is expensive. Public banks give loan @ 14+% p.a. Interest is charged while kid is in college. So If you borrow USD 25k for 4 year college education (current rate for good college in India), when child start working he/she would be looking at repayment on USD 40k. Maximum loan repayment tenure is 15 years. So repayment is USD 520 per month. This is higher than 50% of entire take home salary for a fresh college graduate. So parents save for their retirement and kids college.

Rant over. Have a good day.

Awesome post! Where in India are you (if you don't mind me asking, feel free to respond by PM if you prefer).

[cerat0n1a]

Great post, mairuiming.

[mm1970]

Over the last 10-15 years, I've had quite a few co-workers from India, often here in Britain on short-term 1-2yr assignments. Many of them have been earning UK-sized salaries while here, but tried to keep expenses super low (often by having big group of people sharing a small apartment) with the express aim of going back home with enough money to buy a house/have a lavish wedding/retire early. So I'm kind of surprised that the concept isn't better known in India.

Hi Ceratonia,
Concept of saving money is well known in India.
Our government's job is to collect tax. We don't get mediclaim, social security, pension, have very few good public school, have sub standard public hospitals, etc etc.

Let me explain why Indians on short term assignment abroad save 60-80% salary.
Putting some numbers will give a better perspective.

In India someone with 5 year work experience (say in IT industry) will take home close to INR 1 Million = GBP 10k = USD 15k per year. (foreign exchange rates)
If this person save 50% salary, annual saving is GBP 5k (or USD 7.5k).
Please bear in mind, with a smaller salary base maintaining 50% saving rate is a bit difficult especially when you have dependent (read kids, ageing parents, non-working wife).

Now consider this person is sent to UK/US on a 1 year assignment with take home pay of GBP 40k (or USD 60k) per year.
Key personal objective of this person in this 1 years is to save a heck lot of money.
Say, this person saves 50% salary (conservative estimate).
Per year saving during these foreign assignments is GBP 20 k (or USD 30k).

As you can see, during foreign assignment even if someone maintains the same saving rate as they would have done in India, this person can save 4 times more (in actual FX rates).
This provide a huge push towards Financial independence.

For those on this forum wondering why salaries in India are so low. Quick explanation is PPP - purchasing power parity.
In 2015 foreign exchange rates, 1 USD = 65 INR (Indian rupee).
However, In 2015 PPP rates, 1 USD = 21 INR (Indian rupee).
For example, If a Macdonald burger is $5 in US it will cost 5*21 = INR 110 in India (not 5 * 65 = INR 325). Therefore, salary of INR 1 million has purchasing power equivalent to USD 47k (or GBP 30k).

But when someone is on an assignment to US/UK etc, this person brings back hard cash/currency which is converted NOT on PPP but on FX rates.

Hope this explains.

Side note 1: Early retirement is a bit difficult to achieve in India provided consumer price inflation rate for last 25 years averaged at 8% per year. For FIRE, investments have to be put in high risk areas with returns of 13+% just to pay off your expenses and maintain purchasing power of your investments. With higher returns comes higher risk of volatility. Having said that, I know few people who are actively aiming for FIRE.

Side note 2: I read the forum and people talk about house size 2000+ sq. ft. In India, a 1000 sq. ft. apartment is considered luxury and will cost north of 5 times annual salary for average person (may be 10-15 times in good locations). YES, maintaining a high saving rate is extremely important and a foreign assignment goes a long way in putting a larger down payment. Home loan interest rate from public banks in India is close to 10% p.a.

Side note 3: In India it is quite common for parents to cover the cost of kids college education. Because education loan in India is expensive. Public banks give loan @ 14+% p.a. Interest is charged while kid is in college. So If you borrow USD 25k for 4 year college education (current rate for good college in India), when child start working he/she would be looking at repayment on USD 40k. Maximum loan repayment tenure is 15 years. So repayment is USD 520 per month. This is higher than 50% of entire take home salary for a fresh college graduate. So parents save for their retirement and kids college.

Rant over. Have a good day.

This was enlightening.  I'm well known for being a frugal one at my office, and at my prior job too.

When I met my boss at my last company, we chatted.  He's from India.  He saved $6k his first year in graduate school, which was 50% of his salary.

(In California)

[HairyUpperLip]

Rant over. Have a good day.

Awesome post! Where in India are you (if you don't mind me asking, feel free to respond by PM if you prefer).
[/quote]

yes, I agree - great post. Also curious what part of India you reside in?

[mairuiming]

Rant over. Have a good day.
--
Awesome post! Where in India are you (if you don't mind me asking, feel free to respond by PM if you prefer).

yes, I agree - great post. Also curious what part of India you reside in?

I am from Meerut (tier 2 city in North India. 70km/45mile from New Delhi)
Currently working in Beijing (China) on a 2 yr assignment.

[ShoulderThingThatGoesUp]

I sheepishly admitted that I had shopped on Black Friday, because I bought a new dishwasher. I mentioned that installing it was annoying because I made two separate hardware store trips for plumbing parts. Coworkers were super impressed that I installed a dishwasher, because apparently that's magic.

(The dishwasher that came with the house was designed in a way that made it disgusting and impossible to clean.)

[MrMoogle]

Two people in my area have bought new cars in the last month.  One was a new muscle car (I think it's a camero with a lot of options), the other a used truck (for ~$25k).  Each time, there was a parade of people who went out and looked at it.

[mlejw6]

Two people in my area have bought new cars in the last month.  One was a new muscle car (I think it's a camero with a lot of options), the other a used truck (for ~$25k).  Each time, there was a parade of people who went out and looked at it.

That reminds me: my coworker got a new car recently. It's a BMW SUV. However, it only seats 4 people because it has this weird console thing in the middle of the back seat. It's bigger, but less useful than his previous car: a Civic. Lol!
But, at least he doesn't brag about it.

[boarder42]

Bonus season is coming up at my company (where bonus's are really just deferred salary) Anyways.  i have a coworker who is much older than me, still has student loans and has pre-ordered a motorcycle, it arrives at the end of this week but they can't pick it up til they get that bonus cash.

[Making Cookies]

Two people in my area have bought new cars in the last month.  One was a new muscle car (I think it's a camero with a lot of options), the other a used truck (for ~$25k).  Each time, there was a parade of people who went out and looked at it.

That reminds me: my coworker got a new car recently. It's a BMW SUV. However, it only seats 4 people because it has this weird console thing in the middle of the back seat. It's bigger, but less useful than his previous car: a Civic. Lol!
But, at least he doesn't brag about it.

Now I have to go look that up. How would the back seats fold down? That's the biggest advantage of the wagon body style (SUV or sporty wagon).

[MgoSam]

Bonus season is coming up at my company (where bonus's are really just deferred salary) Anyways.  i have a coworker who is much older than me, still has student loans and has pre-ordered a motorcycle, it arrives at the end of this week but they can't pick it up til they get that bonus cash.

Oh, I'm told bonus season is crazy on Wall Street. There you have traders making millions, but living paycheck to paycheck and hoping that their bonus is enough to keep them satisfied.

[JordanOfGilead]

Two people in my area have bought new cars in the last month.  One was a new muscle car (I think it's a camero with a lot of options), the other a used truck (for ~$25k).  Each time, there was a parade of people who went out and looked at it.

That reminds me: my coworker got a new car recently. It's a BMW SUV. However, it only seats 4 people because it has this weird console thing in the middle of the back seat. It's bigger, but less useful than his previous car: a Civic. Lol!
But, at least he doesn't brag about it.

Now I have to go look that up. How would the back seats fold down? That's the biggest advantage of the wagon body style (SUV or sporty wagon).

It's a BMW. They didn't buy it for utility, they bought it for luxury. They probably bought the SUV for some illusion of safety. My supervisor and my dad both refuse to drive anything lower than a small SUV because they say it feels dangerous.

[infogoon]

Oh, I'm told bonus season is crazy on Wall Street. There you have traders making millions, but living paycheck to paycheck and hoping that their bonus is enough to keep them satisfied.

As someone in the part of New York State outside of New York City -- that is to say, the area largely subsidized by taxes on Wall Street bonus checks -- I hope they keep working hard.