Saturday, December 28, 2019

Random reflections on my spending

Been awhile since I blogged, in fact more than a year! The initial rationale of having a finance blog in 2008 was to detail my decisions on spending and investing to provide a platform for reflection.


As I progressed in my career, the probability of financial independence becomes more certain. Admittedly I became over confident that my decisions on spending are right; up to a point along the way it became ostentatious and losing myself. Buying branded goods, driving luxury cars, watches, hotel membership on dining, 6 travelling trips a year (just to maximise the free 24 priority pass lounge visits – every trip I can utilise 4, 2 in SG, 2 overseas) became a way of life.

 This is no good. This is not me.

Where did the initial child like ambition of early retirement and simple life disappear?

Slowly, I started to declutter goods that I bought for the purpose of _____. As I struggled to fill in the blanks, phrases like “showing I can afford”, “keeping my image”, “keeping up with my peers” appeared at first instance.

Quite retarded reasons.

Fortunately, I have managed to declutter some. 2 years ago, I signed up for the AIA vitality and discovered that by wearing a fitness watch, I am able to earn $10 grocery vouchers weekly, discounted movie tickets monthly and yearly $150 cash rebate. The perks are more than sufficient for me to wear any other watches that do not pay me weekly cash!

3 years ago, I was at the cross road to change my vehicle. It was extremely tempting. Back then, I was driving a 2.5L luxury car and finances allowed me to continue driving one. It didn’t help when peers were changing to nicer rides. I test drove Jaguar, Mercedes, BMW, Lexus, Infiniti. Porsche was very close on my list as well. After all, a colleague who was earning lesser than me could buy one as well. I can stretch my budget to 20k a year depreciation cost right?

Fortunately, good sense prevailed. I evaluated the decision economically. I only wanted a car slightly better ( in terms of size, design, performance) than a bread and butter (point A to B) car like Toyota Altis or Honda City with slightly higher depreciation cost. 

I managed to buy a 1.6L humble continental ride that comes with only 6 speed gear box, all around sensors, memory seats, 4 doors (keyless entry), leather seats, Apple car play, reverse camera, 18 inch sport rims and free 1 year insurance cap at 1.5k. The dealer also provided 5 years warranty and servicing further reducing my cost of ownership till 2022.

The depreciation on straight line basis worked out to be $10k/year, cheaper than a camry of around $12k/year then.


x

So far it has not given me any problems other than being a “laughing stock” amongst my peers.

“Car already so expensive in Singapore, it is stupid to buy an expensive one and not enjoy it!”

“No resale value one!”

“Kiam kanna!”

These are some of the remarks made by peers. Living with it saved me at least $5k a year. I think I can live with it.

My main cost of living is housing, transport, travel and food. For housing, as my property is in the money, in a way I am living for free. This is because I am able to cash out upon sale of my property and all payments made for the house from day 1 will be paid back to me. I can subsequently invest the money to generate an income to compensate rent or simply buy another HDB and fully pay off with my CPF balance.

I am actually contemplating to sell my house for a resale HDB in order to live even more simply. Of course more objections from people around me living in landed and condos:

“What for? Save the money and not spend it belongs to the bank!”

 “I have not seen anyone getting rich buying a resale HDB.”

It may not happen eventually, as I am comfortable at my place right now. 

Although I rarely use the gym, pool and have never booked the common facilities. 

The things I like (and not available in a new resale HDBs) are sheltered underground parking, kitchen built-in rubbish chute, nice lifts with aircon lobby, balcony (for plants and clothes drying) and my low entry purchase price (on hindsight). Moreover, the monthly maintenance of $300 is about $150 more than a comparable HDB (after accounting for parking). I will probably end up spending $150 on gym/pool facilities if I live in HDB hence the savings are insignificant.

For food I am spending approximately $1.5k a month on it. This works out to be $50/day. I do know that by picking up the skill of cooking I am able to keep food expense to $500 a month. It is something I would definitely explore as I move towards early retirement. However at the moment, I still quite enjoy the daily restaurants dining.

In fact, I do try to dine at odd hours where possible where there are 1 for 1 deals in town and neighborhood areas. Some credit cards also allow 50% off dining which fits my budget and taste buds comfortably.

Some random rants! I think I need to blog more or I will just have endless to say in 1 post!