Story of a no-pay month - a mini-retirement

Ladies & Gentlemen...

Welcome back to your PersonalFinGuide. It's been a long time since the last blog post and today I have a really interesting topic to discuss.

Remember we discussed in one of the earlier posts about FIRE movement? Today's topic is somewhat inline with the same. No, it's not a full-proof financial independence story; but indeed a fascinating one.

A few months ago, a friend approached me for some tax related queries. The discussion went on and he expressed his interest towards the 'long term wealth generation' and eventually the 'FIRE life'. We both being mathematics-fans decided to give it a serious thought. I had been reading this for a while and this was a good opportunity for me to run some real number and test the ground reality around this.

We did some searches on the internet, ran through some deeply researched articles, books etc and wrote down a few pointers which are considered as pillars of FIRE movement. Here is the list for reference:

1> Must-have-type Insurances in place [Life-insurance, Health-insurance]: Securing your future wealth from potential attacks by unforeseen incidents, is of course, the first step. It's like building a protection wall before you start building your castle.

2> Wiping off bad debts: All kinds of debts except Home-loan are usually treated as hole-in-the-bucket. If one do not fix it early, the compounding effect would disturb the wealth generation over the longer period of time.

3> Emergency funds: Having at least three to twelve month's expenses worth of money saved in most liquid possible asset type. This is an additional cover over and above your insurance shield. Works best where the insurances cannot cover up. e.g. sudden irregularity in your current source of income.

4> Analysing your risk profile and actually start to invest: Once all these money leakages are fixed, you are allowed to start the actual task of building and accumulating wealth. Needless to mention, there is no 'one fix way' which would suite for all. Hence getting to know one's personalised financial risk profile is the key to peaceful investment journey.

5> Continue your investments in a well-diversified set of instruments, consistently: Wealth generation is not an overnight show. It takes time. Once you pick your way, keep moving on it slowly, steadily and you'll get there surely! That's how legends explains it.

Back to our story - this friend of mine, mentioned that he already had first two steps covered and was very much interested with the next one. I know him for a while now and I knew that when he says he is interested in something he is damn sure about it, always. I could see the glimpse of his sparkling thoughts through his eyes and it didn't take me long to understand what he was thinking. "You are thinking it right," I said, "If you manage to set aside your three months' salary worth of money, you are already halfway to FIRE"

He took it to next level when he said, "then I can even pull off my first Mini-retirement as Lacey Filipich mentioned in her TED talk.." (I would recommend you to watch that video on YouTube)

And that was it! He wrote it down in his diary in front of me that he, in next 6 month's time, will secure his emergency funds and willingly undergo a mini-retirement of at least 15 days to start with, no matter if it disturbs his current income source in any way.

Thereafter I almost forgot this discussion and last month, I got a call from this same fellow, "Hey, remember we discussed about planning my mini-retirement?"

"Ahh.. Yes," I said.

"I've pulled it off!!" I still remember that energetic voice. "And you know what? being on a long vacation and being on a mini-retirement are totally different things.." he continued.

"So you left your job?" I confirmed.

"Yes I do.."

"What's the plan now? And how about your upcoming expenses till next job?" I was bit worried.

"They said, they'll need another 45/50 days to credit my last F&F salary. I do have enough funds with me. I can easily survive for next three months without any paychecks. Considering 1 month buffer time, I will start searching for my next job in another 15 days and once I join, I'll utilise my emergency funds till the first salary there," He calmly said.

Then he went on explaining how he managed to prepare his emergency funds, what all challenges he came across, and more importantly - what all plans he has for his retirement days! I was very much impressed with whatever we discussed.

Here comes the happy ending of the story - Last week he texted that he has got a job offer now, with better pay and most importantly - he successfully executed more than 80% of the plans he made for his mini retirement period!!

Please keep in mind, the purpose of telling this story is not to encourage you to go jobless! In a nutshell, what I concluded from this story is - FIRE is not something you plan during first half of your career and then executing it mid-way by leaving everything behind and spending rest of your life on some far away Island. (As they show on the internet) Like I said earlier, financial planning do NOT have one-way-for-all type of formula. If someone like my friend can find an alternative which is suitable for him, it's absolutely fine.

We are free to plan our own alternative, provided, it do not disturb our inner peace and above all - our dependant's livelihood.

If you find this story info-taining, please feel free to visit rest of the posts. Let me know your thoughts. I'll take your leave. Have a peaceful and happy investment journey.

#financial_independence #mini_retirement