How My ERE Strategy to Financial Freedom is Faring?

I’m a big fan of ERE. When I embarked on my journey towards financial freedom last year, I followed many of the principles outlined in ERE, just that I didn’t know there was an official term for doing what I was doing.

My ERE strategy is quite simple. Each month:

  • I contribute first and foremost to my financial freedom fund. My paychecks now pay for my paychecks later. I have a defined target that I absolutely must meet each month. This tactic has worked so well that I can’t believe how much I have saved over the past nine months.

  • I then contribute to my short-term goals. Sounds weird? Sounds counter-intuitive? Whatever happened to my medium-term goals? I want to enjoy the “now” as well — completely and without regret. My medium-terms goals (such as saving-up cash for my next car) are certainly important but come lower down the pecking order.

  • I then contribute to my medium-term goals. I just have one at the moment.

  • Finally, I either splurge whatever’s left or, if I’m in an aggressive ERE mindset, I contribute whatever’s left as a bonus into my financial freedom fund.

Here’s what my ERE-chart looks like:


Monthly ERE-savings are, on an average, 43% of my monthly income. Monthly expenses are, on an average, 26% of my monthly income. The remaining 31%, on an average, goes into everything else. I can break this down further if you’d like me to.

I want to bump-up that 43% closer to 50%! That would be serious ERE. That would require me to burn less petrol each month — consider this: 49,000 kilometers on the Swift odometer, 10 kilometers per liter of petrol, 4,900 liters of petrol, Rs 65 per liter of petrol (on an average), you do the calculations.

D won’t let me do it. She’s smitten with the Swift.

6 thoughts on “How My ERE Strategy to Financial Freedom is Faring?

  1. 75% would be serious ERE. Which is what ‘he’ did. 50% is pretty good ERE.

    I save 55% but only 30% towards retirement. The rest if for my sons education.
    Parenthood changes everything. Easier for Mr. ERE as choose not to tread that path. Dr. ERE actually, he is a physicist.

    Got to make a ERE calculator in terms of % savings.

  2. Actually, I did more than 75%. More like low-mid eighties.

    If you want to build a calculator, I can send you the equations. They’re also in the ERE book in chapter 7. If you skip the compound interest part, which is realistic for working periods <10 years, the equation becomes very very simple.

    PS: I'm confused by "everything else". If you took that money and put it into savings,you'd also be in the 70s%.

  3. Nice to see you here Dr. Jakob!
    Using your own rough estimate:
    30% savings, 30% expenses and 4% withdrawal rate (not sure if this applies to India)
    (1/4%)* (30%/30%) ~ 25 years for me to retire. This suits me fine as I have tenure for 29 years.
    Vinaya could retire in (1/4%)*(26%/43%) ~ 15 years.
    The only trouble is inflation in India hovers around 8-10% more for specific commodities. So I think its a bit of an underestimate.

  4. @pattu:

    50% is pretty serious ERE for me. Especially given my two splurges: Petrol and Travel. He he he…


    The 31% mainly comprises of savings for short-term goals (usually, travel, travel, and more travel) and savings for medium-term goals (only one now which is to pay cash for my next car so that I can travel some more). Looks like a vicious cycle to me. :-)

  5. @Sathish:

    Of that 43% ERE Savings, 32% goes into pure-equity mutual funds (just two of them; stay tuned for a follow-up post on why), and 68% goes into a mix of debt instruments. Of that 68% in debt instruments, the split between PF and other debt instruments is nearly 50:50.

    I’m naturally debt-oriented and my debt:equity ratio seems to be a natural fit for ERE.

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