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Friday, 24 February 2012

Middle Class struggles in Singapore

The Middle Class really struggles in Singapore. I am not sure the exact income group to really categorized as one, but I believe among me and my peers, most of us belong to this class.  This post is not to complain about life being in the middle class, but to look at the common reality of life in Singapore.

Growing up, we are told to study hard, get good grades and you will do well in your career. If you do so-so or what we call moderately well, then as years passes by, you realised you belong to the one of the many in Singapore who continues to slog for a living or Middle Class. How come the schools here do not teach us about financial freedom ? How come there are no subjects about personal finance management in classes? Why is that Nobody told us that we need to be in the upperclass so that we will not be stuck in the rat race?

Average Singaporeans burn a hole in the pocket after their marriage, burn another hole when they get their first flat or property, burn another hole when they have kids. After so many holes, there are none left for retirement.

I had tea with a good friend today, he told me life is a struggle in Singapore, he belongs to the middleclass. After many failed attempts to apply for a HDB and getting fed up, they bought a executive condominium. Why?
They wanted to consider buying a resale HDB, but with them living around Clementi area, all the COVs being extremely high, they decided it is silly to pay for such a premium.

Their combined income had exceeded the ceiling inorder to buy a flat direct from HDB. Both had to used up a huge chunk of their cash to pay for the downpayment for the EC.

With the young baby growing up, they had to buy insurance coverages and endowment policies for the kid's future education. After paying for their monthly properties mortgages and insurances fees, in addition to the daily expenses, they have little left to save for retirement or even investment.

My friend is very thrifty by nature, but circumstances made him to commit himself to this situation. Stuck in the middles class, both need to continue to work inorder to supplement all the expenses. Now they are slowly trying to save up and continue to be thrifty.

The Singapore Government always encourages people to pro-create on Television news or on papers. All of the government officials belongs to the upper class.

You slowly start to understand the term "Talk is cheap" once you step into the middle class.


Saturday, 18 February 2012

Personal finance - Car Management

Many years ago, I was debating with a good friend how much we needed to earn before we can afford to buy a car. The amount came to 3,000SGD. However, after much deliberation, I realised the amount is greatly insufficient.

I always wanted to get my own car since I started work, images of sports car was always on my mind. I dreaded the long journey to work on a bus and the need to wake up early.

Having a car back then was a "plus point" to look good in front of chicks and is a sense of personal achievement.

Looking back now, I think it was a matter of going through a phase in life where you just wanted something new.

I got my car 8 years ago and I am still driving the same car, I must say I am the rare breed to continue driving a car for so long and not succumb to the need to have the continental car for comfort and "status".

Some of the pointers I learnt on car management:

1. Get a reliable car that is fuel economical.
2. Go for cars that requires minimal maintenance.
3. The bigger your car, the more road tax you have to pay to Government
4. Buy a car if your job is able to supplement the expenses.
5. Do a cash flow management before you buy a car so as to ensure you have sufficient cash flow on other expenses.
6. Always be prepared to pay "fines" as every average car owner contributes this to the Government no matter what. Need to cater for spare cash for this.
7. If you drink and drive, there might be a risk your car depreciates at a faster rate.
8. Set aside a sum for car maintenance and do more thorough maintenance during the first few years.
9. There is a need to change tyres every few years or based on your mileage, this is a re-accruing cost and tyres can be costly.
10. A driver will always experience tyre burst or other malfunction, be prepared to spend extra on adhoc basis.
11. Try to pay cash for your car if possible.
12. Have ways to offload your car easily should there be a need to relocate or when your company offers you a car.
13. Do not listen to over trade offers on cars
14. Learn to say no to car salesman.
15. Buy cars with a higher OMV.
16. If you buy continental cars, be prepared to spend excessively on maintenance.
17. Cars are a liability unless you rent it out.

Monday, 13 February 2012

Does good education guarantee success in life?

Many parents are putting in savings or endowment plans to plan for their children's education. The estimated cost of a tertiary degree education is expected to be double or triple in 20 years time. Singaporeans being the kiasu lot will want their kids to have the finest education in top schools and many often do volunteer work to ensure they get higher chances of enrolment.

When I first started out work after completing my national service, I had only a diploma and always tell myself I needed to upgrade, the main reason was I thought that by upgrading myself, I can ask for a better salary with a degree.

Over years of working and going through what I saw, I come to a conclusion that with a good education does not necessarily guarantee success, unless if you are in the government sector and a civil servant.

In 2004, I had a ex-colleague who has 2 degrees and was studying for a master. After working with him for 1 year, he was let go due to poor performance, this was at a MNC. In 2011 while at another company, I came to know he was let go again due to similar reasons.

One of my friend, paid good money to earn himself a degree at top 10 university in the world. Ever since he graduated, he had not stayed a job long enough and is now working for a job that does not require any degree qualification.

My colleague, he was a top student at a local University and has a masters degree and is now studying for a MBA. After working for more than 5 years at a private MNC, his wife;who only has a diploma is currently earning more than him.

On the other hand, I look at my army friend, a secondary school dropout, but he is running his own logistic business and easily earning more than 120K$ per year. My property agent friend of mine, only has O levels, but he is earning 6 figures annual income and has a few properties to his name.

Couple of years back, I accidentally came across a few candidates interviews forms at my ex-company, many applicants had degrees and with relevant working experience, I came to realise how competitive the workforce over here is. Almost everyone has a degree nowadays.

However, if you have a high education and end up in any government job, most chances you should be doing fine, unless you happen to do something bad and get "condemn".

I went through my PSLE and O levels with satisfactory results, I ended up at a polytechnic where I hated what I studied. Although it took me a while longer to complete the course, I did not regret taking the course, reason being this diploma has opened doors on many careers for me. Now that I have a degree, I did not have a chance to utilise it unless I switch to another job.

Having a good education does not necessarily guarantee success in your work life. A good working attitude and having passion in your job is essential to drive success. Joining the right company is also very important. If a accountant joins a small firm, very likely his or her salary will not match the bigger companies. When it comes to the real working world, no one will compare your school results, its about meeting your KPIs and results, results results.

But nonetheless, a good education is sill important to have a head start in your career. If I had not gotten my diploma, I would not have the opportunity to work for so many wonderful different companies.

Last but not the least, having financial literacy is important. There is no point being a doctor or a director but yet you do not know how to understand and control your own finances.

For myself, I will plan to continue to pursue my further studies if time permits next year. Let's hope the government give out more educational goodies in the coming week.

Saturday, 11 February 2012

New work year and First blog articles being re-published

The start of my dragon work year has been super tiring and eventful, I can't believe I had to work overtime continuously daily ever since I have a baby. Thank god for the confinement nanny here and her presence has indeed helped to lower our burden at home.

Work is work, I have no complaints. But I am starting to realise I had simply no energy to do anything else after work. Maybe it has been awhile since I had worked so late that often. (salesman should not be working so late!) Stress level at work is not helping thanks to some unnecessary problems caused by my ex-manager. I tried to apply the 80/20 rule on my job, but even after with that, my energy level just cannot cope.

I need to start finding time to work out. Hopefully it will boost my energy level. I will need to ensure I stay healthy during these period and has decided to stop my other active income channels for now (like estate agent). Being batman instead of superman is good enough for now.

Luckily there is still passive investment through stocks to generate that much needed extra income. I will be receiving my Suntec reit and CDL trust dividends this month.

This week has been very eventful too as two of my articles are being re-published on http://nextinsight.net/
NextInsight, a hub for serious investors is co-founded by Leong Chan Teik, a former Straits Times senior correspondent, and Kathy Zhang, founder and MD of Financial PR. Both are very well respected and had achieved several successful milestones in their careers.

I am very surprised they took interest in my articles as I had only started blogging only since last October.
It is deeply honoured and I hope I can continue to contribute more meaningful articles moving forward. Hopefully my blogging can also start to make some tea money for me soon.

Saturday, 4 February 2012

Financial matters for 2012

A couple of years back, I used to envy people driving that Lexus luxury car and was so tempted to get one for myself, I told my friends I will get one of those as my next car, a rich man son's friend of mine even encouraged me to get one as he said this might enhanced my image in my part time real estate agent job.

Fast forward to 2012, I am thankful I did not succumb to my "wants" and made the silly mistake of buying the car, I am already contented admiring the car on my blog's avatar for now. If I had purchased the car, monthly car loan installments might be in the range from near to 1K$ per month or more. I look at my upcoming bills for this month, confinement nanny (3400$), hospital delivery and Gynea charges (6000++$), confinement food (1000$) and cord blood banking fees (2000$). Having to foot all these bills at one go is already a challenge since I only started back regular savings last year, I cannot imagine if I still need to service the high car loan and yet have some many expenses to foot.

I expect to see my savings greatly reduced after this month on these expenses. Coming months ahead, I am expected to get our first 4 room flat direct from HDB, another round of huge expense on renovation and furnishes come to my mind. Ever since marriage I wanted to be the alpha male, to me it is guys' responsibility to bring food to the table and I believe it is my duty to service all expenses. But after looking at my bank account now and being realistic about it, I have limitations to continue to foot all the bills, unless I sell my stock holdings.  I chatted to my wife and we came to a conclusion we will need to tap on her savings for the housing expenses ahead. Her habit of regular savings has helped me and I start to really see the need to have more savings and be frugal.

I can breathe a little easier now and can now continue to focus on our retirement plans. One of my new target now is also to save up as much cash as possible so that I can use it to pay up my next car in 2 years time. (not a Lexus but a second hand car). It is a challenge but I think it is feasible if one is frugal and disciplined.
With the sale of my company's stock options and external income coming in soon. I should be in a better cash flow position by March. I am thankful I will not need to sell any of my stock holdings this time.
Sometimes, two is better than one when it comes to financial matters.