Escape velocity – is defined as the lowest velocity which a body must have in order to escape the gravitational attraction of a particular planet or other object.
I really have no business writing about Physics. I know nothing. Nothing at all. So much so, that I am a big Rajnikant fan and believe his stunts are real.
Then, why am I talking about ‘Escape velocity’? Have I totally lost it?Yes, I have.
Every time I think I have outgrown middle class, it seems to catch up with me. And it is official. The middle class is screwed.
If you don’t agree, let me tell you why.
There are a thousand options to do anything with money - spend, save, borrow, give, invest. The cost of living is growing at a rate you won’t believe. And your lifestyle is being automatically upgraded every now and then.
And this does not seem to be supported with sustainable income rises.
The government claims a 7% inflation (rise in price of goods and services) rate.
According to the government, an average Indian earns Rs.93000 per year and spends 50% of his income on food. All government schemes are aimed at benefiting him and rightfully so.
Now look at yourself. If you don’t earn Rs.93000 a year and don’t spend 50% of your income on food, the government is not going to help you. None of what the government does is meant for you. Your dissent doesn’t matter. You better learn to fend for yourself.
I am seriously tired of playing middle class. Aren’t you?
Tired of telling yourself you can’t ask for the nicer things, holding on to the job hoping for the next big jump, going on holidays to post pics on FB, wanting to do the best for the kids but hoping they aspire within your means, praying your old age should go through without too many events….
Enough. Just enough. Let’s attempt an escape from here.
That which will take you out of this ghoom ghoom ke rut of the middle class is ‘escape velocity’ to me.
Meanwhile, the old rules of money by which our parents and grandparents lived have silently changed. They didn’t announce it. They just pulled the rug from under the feet.
Knowing how the rules changed will liberate you. That is your ‘escape velocity’. Let me show you how.
Old Rule 1 / 9 - Buy property early
A generation is 15 years.
My dad bought his first house when he was 40 and had saved up meticulously for it.
I bought mine when I was 25 and borrowed heavily to do it.
And 15 years on, buying property as the first thing you do after you begin working is passé.
A property ties you down. At 25 you should be seeing the world, studying, upskilling, meeting people. You are going to have enough time to settle down. There is no hurry. Property prices are going nowhere really. You will miss no opportunity.
Living in a leased property permits you many luxuries. Living closer to work, saving travel time to do better things for one. Spending less for the roof over your head means, more money for creating wealth or seeking experiences or both. It gives you the flexibility and courage to go back to school or attempt a business on your own.
That… allows you an escape.
If buying the property was your idea of making an investment or saving tax, then those rules have changed too. There are better ways to save and invest, and equally good ways to save tax.
New Rule – Stay on rent longer.
Old rule 2 / 9 - Don’t borrow
This is funny. They said buy property early. And in the same breathe said don’t take big loans.
I don’t know how that can work unless you had a wealthy heir less uncle who died before he used up all the money and left it all for you lucky *&%^#$.
Loans are also called ‘leverage’. Leverage takes you up with lesser effort and in lesser time. Forgive me for the physics reference again. It is a pretty common finance reference too.
The new rule is to borrow and buy growth assets. Assets that can give higher returns than the rate at which you borrow.
Borrow to upskill. This has the best ROI I know.
Needless to say, you will borrow only as much as you can repay. This is considering your today’s income levels. You will not expect future increases in income to pay off your borrowings.
And when you borrow you will always always repay on time.
Leverage when used smartly can propel you out of the gravitational force of the middle class.
New rule - Use leverage intelligently
Old rule 3 / 9 – Aspire within your means
I have grown up listening to this quite a bit. “Beta, we are middle class. We should not aspire to be like them. You can only swell as big as your finger is”.
Haan haan meri……, that is exactly where I don’t want to be.
You should erase this memory from all your software and hardware right now.
Dream big is the new rule. This rule changed because environment changed. Technology and Global connectivity have had a part to play.
You hear of a gardener who became a business owner and now drives around in a sedan. You hear of two neighbourhood boys building a successful company and sell it off for millions of dollar. The rags to riches stories are getting a lot more common and closer home.
Change this one narrative in your head. I promise it will be the single biggest help in your attempt to escape.
New Rule – Aspire for Big Things
My elders meant well when they said “aspire within your means’’ and God bless their souls. They worried I would give up the so called ‘middle class values’ if I aspire for more.
How do you resolve this conflict between “middle class” values and “being rich”?
Look forward to it in my next post “New Rules of Money 3 to 6 of 9”.
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