It’s been a while since I last shared an update here, and for good reason. Over the past year, I’ve undergone significant progress in my financial journey, and it’s a journey worth sharing.

In my previous post, I mentioned my intention to pay off my home loan within the next two months. Surprisingly, I managed to achieve this goal even sooner than expected. I liquidated my investments from Index funds and directed those funds towards clearing my home loan debt.

The process of swiftly liquidating my mutual funds to make this payment reinforced my confidence in the power of Index funds and financial markets. Not only do they provide respectable returns, but they also offer the flexibility of liquidity, allowing me to access funds when needed. This versatility makes them an ideal option for emergency funds, albeit with the caveat of navigating through bureaucratic obstacles like RBI KYC regulations.

But let’s not get sidetracked. From June of last year onwards, I’ve been embracing life with newfound freedom and flexibility. With fewer financial constraints, I’ve indulged in experiences that bring me joy and fulfillment. Whether it’s traveling to new destinations, exploring the outdoors on my bicycle, or savoring the perfect cup of coffee brewed with my beloved coffee instruments, I’ve allowed myself to enjoy the simple pleasures that were once deemed frivolous.

It’s remarkable how liberating it feels to let go of the notion that spending money on oneself is wasteful. Instead, I’ve come to realize that investing in experiences and items that bring genuine happiness is an essential part of living a fulfilled life. Through this journey, I’ve learned the importance of striking a balance between financial prudence and embracing the richness of life’s experiences.

I can’t help but acknowledge the less glamorous aspects that have come to light along the way. While the thrill of paying off my home loan and gaining newfound financial flexibility was exhilarating, it also brought about unexpected challenges.

You see, despite maintaining anonymity in this space, my close circle of family and friends were privy to my financial strides. With news of my debt-free status and disposable income spreading, I found myself inundated with requests for financial assistance from some of my friends. Now, I’ve always considered myself generous and empathetic, traits that others have often recognized. Consequently, I’ve ended up loaning substantial amounts of money to friends over the past few months, with little hope of seeing those funds returned anytime soon, if at all.

In short, I’m just giving away my moolah.

This generosity, while well-intentioned, has posed a significant hurdle in my pursuit of financial freedom. I’ve come to realize that my desire to help others conflicts directly with my own financial goals. Recently, I had earmarked funds for a personal milestone – purchasing a car. However, those funds were redirected to assist a friend in need, highlighting my lack of self-control when it comes to extending a helping hand.

Thankfully, this cycle is soon to be disrupted as I embark on a new chapter in my real estate ventures. I’ve identified a promising project located in a prime downtown area, conveniently close to a metro station, and offered at an attractive price point. With projections indicating a substantial increase in property value upon completion, coupled with the promise of rental income once construction concludes in 2026, this opportunity aligns perfectly with my long-term financial strategy.

Furthermore, the track record of the construction company, coupled with the desirability of the locality, provides reassurance regarding tenant stability—a crucial factor in real estate investment. While I’ve experienced some tenant churn with my previous property from the same construction company, the demand has consistently outweighed supply, ensuring minimal vacancies and a steady income stream.

For my previous properties I’ve used up the rental income to pay down my EMIs. And I’m hoping to do the same once the current property is developed. I just need to ensure I am able to make regular EMI payments for the next two years. For this property I am not planning to aggressively pay down the home loan. I would rather contribute the rental income to buying index funds. That’s the plan so far, but let’s see how it goes.

Now coming to the moat. What’s the home loan amount, interest, tenure, and EMI?

My EMI is 3x from the last time. Home loan amount is 2x and tenure is same as last time for 20 years.

Based on my calculation, I can afford the EMI on my current salary although I’ll have to live a little autere life until I start benefiting from the rental income. Only because I want to continue my SIPs with index funds. I’d rather cut down on my extravagant expenses than cut down on SIP.

Since I had to use some of my investments as down payment, I’ve used it up from my retirement funds. This unfortunately means that my CoastFI and BaristaFI goal has been pushed back again.

CoastFI

Here’s how much I need to reach CoastFI

April 2024: 25,00,000

With current savings rate it would take about 4 years to reach this stage.

BaristaFI

April 2024: -70,00,000

With the current savings rate it would take about 10 years to reach this stage.