Feetup and college and peer pressure

If you decide to send your kids abroad for college, you may need to significantly revise your retirement corpus

Some 10-15 years ago, one friend sent a mail to a few of us saying “_________ and I were discussing about his weekend trip to his holiday home in Nasik and realized that his weekend is pretty much how we want to spend in our lives. Of course, a life which involves sitting with your feet up and watching the rain fall would require substantial resources in order to maintain the current lifestyle. So, we decided to come up with an exact amount of money which would help us retire”

That was the beginning of “project feetup”. Along with our jobs, we spent a few weeks after that in back and forth emails and spreadsheet models, discussing how much we need to be able to “put our feet up and watch the rain”.

I’m looking through the mail thread now (thanks GMail!), and we failed to agree on a precise number. However, we came up with something in the range of ₹8Cr-₹13Cr, subject to the city that one wants to live in, whether you own your house and the number of kids you have (at the time this discussion happened, none of the discussants had kids).

A few years later, another friend officially retired in his thirties, and when being asked for his estimate of his feetup money, he came up with the same range (8-10Cr plus house; he doesn’t have kids).

My wife and I have maintained our own fork of this spreadsheet for the last few years, and the numbers have been creeping up (maybe in our original calculations, we had underestimated how we would upgrade our lifestyles?). Even then, the number in this range (₹10-15 Cr range) makes for one very important assumption - that you will support your children only as long as they are in school.

College in America

For most people of our generation, going abroad for undergrad was simply not an option. Unless you got a nice scholarship (like the Singapore Airlines scholarship to study in Nanyang / NUS), the “done” thing then was to study undergrad in India, and then get a scholarship to go abroad for masters / PhD.

Of course, there was the odd kid in our school who would somehow manage to get a fully funded admit to a university in the US, but this was so much of an exception that it didn’t become an aspiration.

Recently I met an old friend who casually told me that he had “set aside half a million dollars for each child for undergrad in the US”. I happened to mention this to a relative who I met a few days later, and she echoed the same thing. “Yeah, it costs that much nowadays, and we’re saving up”.

Today, Mint Moneycontrol (I saw the journalist’s name and didn’t realise he has moved) has put in a calculator on how much it costs to send kids to college in the US, and how one should save for it. It comes up with a higher number - ₹ 5.6 Cr (about $700K per child).

Now, the more perceptive of you would have noticed that this is of the same order of magnitude as what we had arrived at as “feetup money”. You have lived the last 10 years thinking you’ll need to save up ₹15Cr, and now suddenly you realise that (with two kids) you now need to save double! It’s not a happy feeling to have.

Mimetic desire

Earlier today, I had quote tweeted this tweet from Antonio Garcia Martinez, who wrote the incredibly funny Chaos Monkeys about his time in Facebook (among other things, in this book he has a throwaway line that would get him fired from Apple a decade later).

Now, the “fuck you money” that I mention in my tweet is different from “feetup”. Feetup is basically money that you need to have so you can lead a peaceful rest of life without worrying about future income. It still means that you might choose to work part time or something.

Fuck you money is more than that, where you have so much money that you can easily afford to piss off people and spite them.

In any case, the reason I brought this tweet thread here is for what I mention here at the end - you want to live the same lifestyle as your friends. And at the upper end of the wealth distribution, wealth follows a power law, which means that your friends who are richer than you are, on average, much richer than you. What this implies is that irrespective of how much wealth you have, it is unlikely that you will ever be satisfied.

That your cousin is sending her kid to undergrad abroad means you also want to start considering that (Indian parents 20 years ago simply didn’t think about this). That Moneycontrol is writing an article about this makes you think that this is the “done thing” now, and on the margin makes you want to do this. This pushes up the costs further (more competition means, on average, your kid will go to a worse school and you still end up paying the same money), but you want it because your friend or neighbour or cousin has it (there is this whole rabbit hole on Mimetic Desire, popularised by Rene Girard. Listen to Jonathan Bi’s lectures on the topic here).

Will colleges go away?

I’m still about a decade away before the first of my children is old enough to go to college. I remember thinking when she was two that “maybe college won’t be a thing by the time she finishes school”. So far, none of this prediction has come true, and college is still very much a thing, and people are still fighting hard for admissions.

Is there any hope that there might be some “progress” on this in the next 10 years? Or at least in the next 17?