Expenses review 2015

A year has passed when i picked up my financial game again and it is good to reflect back on what i have wanted to do in the beginning of the year: Game plan 2015

Before that, a personal reflection. I did not realise how much personal finance topics were far away from my mind until i actually sat down and decided to re-focus my energy and efforts on it. While i have always been saving and investing, it was not as disciplined and well thought out as it could have been. Dare i say, it was even quite haphazard.

When we fail to plan, we are planning to fail, and at the rate i am going, i would say i wouldn't have done very well when i reach retirement age. Granted i think i probably would not starve and sleep in streets, but definitely would be less well-off than i could be.

Back to topic. I wanted to cut expenses and increase revenue.

(1) Cutting Expenses

I have diligently used YNAB to record and track my expenses. [for some reason, i find it quite pleasurable to record every single transaction. I think it's my accounting training. I just love to balance my books to the cent] While i always have an idea of where my money went, it was good to have real solid data on what i actually spent on.

And truth to be told, the beginning months were quite tough as i tried to 'live on last month's income', which is a key concept of YNAB. I pay myself first every month when my salary is in, but using February's salary to pay entirely for March's expenses was something i wasn't ready for. After a few months of tuning my expenditure and allocation, glad to say that i have passed this 'test' set by YNAB.

So where did my money go to in 2015? The way i used YNAB is by categorizing my expenses in several buckets for analysis.

Car Expenses: $ 33,198.99
All car related expenses, includes loan, carpark, fuel, insurance and any related expenses. I would be the first to admit that the easiest way to improve my finances would be to get rid of this. Even if i take cab everyday, the savings would be hugely substantial. Something i am mulling about, but it's a lifestyle choice at the moment, and i really enjoy the convenience and experience. Lesson here (i haven't learnt it yet) is to cut this away to accelerate savings.

Fixed Expenses: $ 14,234.21
Insurance and taxes comes in here. I increased my insurance coverage for death and CI this year. This is termed as fixed expenses by me, and not much discretion could be made here from my part.

Monthly Bills: $2,943.24
These are my regular bills (phone + mobile broadband) and membership to my Taekwondo school fees and sports related expenses. A little high because i took my 2nd Dan grading in 2015, and it cost me $450 just to sit for the exam. Additionally, i had to sign up for several preparatory courses, and that cost a bit too. The monthly school (or gym if you will) also do not come cheap at $140 a month. I did rationalize my expenses here a little but cutting away the mobile broadband once the 2 years is up, although that helps only a little.

[My joint family expenses which i track in another budget (groceries, utilities, home broadband etc) comes up to about 5k in 6 months. For simplicity sake, i shall estimate it to be 1k per month. I will use this amount to add to my subsistence level of expenditure]

Daily Expenses: $9,081.47
As opposed to personal spending, these are expenses which i incur for the family, including dining out at restaurants, home maintenance fees (payment for part time maid), changing of light bulbs, family entertainment (movies night) etc.

Holidays: $8,239.05
So i took 3 trips this year, 1 week in Australia, 1 week in the UK and 2 weeks in Taipei. I was lucky that my trip to the UK was part of my work trip, so i managed to save on the airfares. Again, a luxury here which can be removed if need be. For 2016 i am actually trying to plan a trip to the states just to settle some banking stuff as well as to check out my apartment over there.

If you are interested, you can take a look here, where i share some pictures from my trip http://www.casualtaketwo.blogspot.sg/

Personal Spending: $6,175.5
Expenditure which i incur solely. Eg: Office meals, personal shopping (yes, YNAB software comes in here), entertainment expenses (unfortunately these can't be done away unless i'm a hermit), personal dining expenses and other expenses related to weddings/baby showers/birthdays etc

Total personal annual expenses: $73,872.46 [or $6,156 per month]

Quite high, i truthfully admit, and the bulk of it pertains to the car expenses. However, if i DO give up on the car, what is my subsistence level of expenses?

YNAB provides me the option to easily select those categories which i will have to incur to just 'exist', and i came up with the below amount (inclusive of family groceries/houseshold expenses).

Definitely no car and no holidays!

Total essential expenses: $42,140.98   [$30,140.98 + $12,000 [family expenses]]

Works out to about  $3,500 a month.

Gives me a solid target to aim towards for passive income. Will write about my investments in another entry.

And before i forget, wishing one and all a prosperous happy new year!

Cutting out the un-essentials in life

Since reviving my personal finance journey starting this year, have began taking small steps to where i want my finances to be, and that includes cutting out expenses which are not essential, or seldom utilized.

This month, my mobile broadband contract is up, and i took the chance to cut that away. Savings per month = $19.90. Sounds very little, but compounded over a long time, it can certainly add up!

Did other things over the course of the year, but shall leave it to another post. Meanwhile, happy to enjoy whatever savings i can.

I am working on a project called 'Less is more' at work, and glad to apply that to my personal finance journey.

Less spendings = more savings. :)

Achievement unlocked! Mortgage loan cleared

Went HDB today, and wrote a cheque to redeem the loan. Probably should have done this earlier, given the interest rate HDB charges is higher than market rate. [Well, i can probably refinance at a cheaper rate too, but then at this point in time, i think being clear of a housing loan probably works better for me]

Gotten the flat in Sept 2007, and gotten it free and clear in December 2015.
8 years 3 months.

Even though bank account feels slightly emptier, but it's still a good feeling overall!

Lessons learnt from itchy fingers

As you may know i sell options as a means of generating some income, and i made just another mistake in the month of November.

I had a WETF open put position expiring in Dec with strike at 14.75, which is sitting for me a nice profit.

Since we are in the month of November, i thought it would be a good time to close off the position as it was way out of the money (WETF was at 20.75), and i can sell another put option nearer to the underlying's price to expire in the same month, and earn more.

Unfortunately, i closed off my position at USD 265.19, and i subsequently sold options for USD 209.83 (at strike of 16.75)

Now, this is a lose-lose situation for me - i lost USD54 on this trade simply by having itchy fingers. If i didn't do anything, the option would have just expired in December (presumably) and i would be better off by that 54 bucks.

Also, with my new position, the strike is actually higher at 16.75 (compared to 14.75). I run a higher risk of being exercised should the underlying drop in terms of price.

What can i learn from this?

Put in a limit order when closing off a position (i closed at market thinking that the price shouldn't fluctuate that much), or if the potential gains are not too much, don't have itchy fingers!

Adding positions

Just added another 10 lots of STI ETF 2 days ago (really having a hard time adjusting from the concept of 100 shares = 1 lot!). I think i have added 40 lots of STI ETF since July this year. Not sure whether this will be the right decision, but with so much fear in the market that it will drop further, i have taken the opportunity to add to my positions.

I have to confess, i am stressed and jittery over the past few months when i added. I wonder if i am just being foolhardy but i believe that in the long run, markets will go up, and time in the market is more important than timing the market.

The volatile situation allowed me to add more positions than in normal circumstances, and i shall look back to see if i will curse or thank myself in the future!

The handy man can

My house has been breaking down in bits and pieces recently. So the bulbs has been going off one by one. I'm not usually a very technical person (admittedly i was a technician in the Singapore Army), but the wires and stuff usually escapes me.

Hired a contractor to remove the mould and repainted the toilet ceiling. (it was really in a disastrous condition, like those dilapidated haunted house), so when the toilet lights went kaput, i got the handyman to do everything at 1 go. That costed me $280.

The bulbs in my ceiling was off too, and lazy me also asked for the price. Seems like changing the bulb cost me $30. I asked how it was to be done, and seems simple enough. I got myself a bulb at $4.60, and saved myself the labour cost and mark-up of the rest.

Moral of the story - get enough life skills to handle minor repairs in the house.

NB: I had a plumber come once to unchoke my toilet. THAT set me back by $120. Since then, i got a plunger and been a part time plumber for my house ever since.

Compare and Contrast - Insurance

The internet is really powerful nowadays.

Due to my upcoming trip to the UK, extending a few days after a business trip, i need to source for a travel insurance.

Etiqa had a 50% off promotion for travel insurance purchased directly from them, and it must have been one of the cheapest (if not cheapest) available.

Of course, there are differences between coverages etc, but overall, i think this is the best deal available.

Shopping around did save me a couple of dollars this time round!

[although the trip to the UK will likely blow off any savings available]

Missing the boat?

Went to Taiwan for a 2 weeks break. During the period there, the STI dropped quite significantly. I remember checking 1 day and saw that the STI ETF dropped close to $2.80. I was really quite tempted but held off from utilizing more of my war chest, thinking that the market might stay flat for 1 or 2 more weeks until i am back.

Surprisingly (or perhaps not), the market bounced up quite a lot in the last few days, and STI ETF is now over $3. The market is really a beauty pageant, and the votes are swinging widely at the moment, and i might have missed the boat this time round.

But, who knows it might crash again soon for people to pick up?

All i can console myself is, i added 10 lots (still not used to thinking of 100 shares as a lot!) when the price was at $2.91. Unfortunately, i also added when the price dipped from $3.50 to $3.30! So i think overall for this year, my ETFs are a little in the red. With the year coming to an end, let's see how it will fare.

Happy Birthday Singapore!!!

50 years of independence - and i am thankful that i am born and bred in Singapore. This is a land of opportunities, and though there are tougher times ahead, i think being in this country, it is easier to earn, save and invest for our future, than some other countries around the world.

*photocredits - Channelnewsasia

May we have more good times ahead!
Majulah Singapura! Onward Singapore!

Paleo lifestyle on a budget

Since using YNAB from the beginning of the year, i have generally budgeted $10 per lunch for myself. Most times i have kept way below my target, give and take some more expensive lunches due to occasions (friends/colleague  birthday/farewell/welcome etc). Also paleo meals are pretty expensive to adhere to.

For the uninitiated, the paleolithic diet, also know as the paleo diet or caveman diet, is a diet based on food human's ancient ancestors might eat, such as meats, nuts and berries. [source wiki]

This is generally to the exclusion of carbohydrates (rice and noodles) and diary products. Pretty hard to be satiated eating fish soup without rice all the time!

With the need to eat healthy and keeping to a budget, i am beginning to explore packing my own lunch occasionally. Viola! My lunch for next week.

1 Whole chicken from the roast counter at Cold Storage - $7.95

1 packet of salad at Cold Storage - $5.95

4 eggs, hard boiled - $2?

Total damage : $16 (rounded up because i will add some yummy spicy sriracha sauce!)

I split the above into 2 meals. Each lunch would then be $8. Within budget. 

I'm sure i can come up with more satisfying paleo lunches at cheaper rates. Let's see.

Airfrov

Recently came across something that is pretty useful if you are a frequent traveller. This platform (Airfrov) connects people travelling with people who wishes to purchase something from your destination.

Since a traveller would be travelling anyway, if one has some extra luggage space, why not take the chance to earn some extra cash on the way?

https://www.airfrov.com/

Even better if you travel for work frequently: Free travel, extra income. :)

Dividends Update - May 2015

Nothing much to blog about this month... but typically the month of May is quite a good month for dividends collection, as most Singapore companies have a December year end.

Security			Net Amt
KEPPEL CORP			SGD 360.00
SGX			SGD 40.00
SPH			SGD 70.00
MFG INTEGRATION			SGD 50.00
FRASERS COM TR			SGD 0.27
BOARDROOM			SGD 53.77

Total of $574.04

Frankly, given that it's a good months for dividends, my passive income from equities is really not a lot.

Aiming to get it higher!

Savings bond details released!

Here's more details on the Singapore Savings Bond: http://www.straitstimes.com/news/business/banking/story/singapore-savings-bonds-8-things-you-should-know-20150512

My take:
(1) Returns are 2 - 3%: Currently there are certain bank accounts which give around the same returns (eg: OCBC 360, UOB One account and DBS accumulator), and this is fairly liquid (although the SSB are not significantly illiquid)

(2) Cap is 100k: The drawback of those bank accounts are that the cap for interest are limited to the first 50k. If you have excess cash above 50k that is used as emergency cash and not for investment purposes, this could be a good place to dump to. [honestly though, i don't know who has 150k spare cash lying around - but there are many cash rich people that i don't know of]

(3) Capital guaranteed: Well almost. But backed by the government, that is as good as it can get. Relatively safe haven for your money.

Conclusion: Will i bite? I will potentially, if i have a lot of cash sitting around.

Financial Scams....

Was introduced previously to a 'deposit' scheme operated by this company called 'Miracle of Power ("MOP")' with a linkage for FX capabilities with an Australian securities company 'Easy Capital' sometime back in August 2014.

You can place money with Easy Capital to trade in FX, otherwise, the money you placed with them will generate a whooping 4% per month. Let me repeat. 4% per month. A whooping 48% SIMPLE interest per year.

They also harped a lot on how Easy Capital is registered with ASIC and hence very safe.

Fast forward 9 months, the current news i have now is that MOP has folded, owner no where to be found, Easy Capital's website is now no longer functioning... leaving lots of 'investors' in the cold and in the red.

There is an oft-repeated mantra - if something is too good to be true, it probably is.

I wonder why do people very often fall for such scams? I think it boils down to a few main reasons:

(1) Greed - honestly, if a scheme offers me 48% return a year.... that is absolutely astounding. I have never generated that much return on my portfolio before.

(2) Scarcity - The story was that the 4% is a marketing and promotional interest rate, and they will be removing such good returns for subsequent investors, so it will be much better to get it while it lasts.

(3) Reasonably plausible set-up - there was a good story. Nice website, a financial institution regulated by a first world country. Nothing of that Nigeria scam now... scams have progressed a lot.

I think if one does enough due diligence on that company, and went to ASIC/ASX website, one might probably be able to prevent falling for such scams. I didn't even bother to check out the company as i did not believe that the returns could ever be so good, promotional interest rate or otherwise.

True, i possibly could miss out on a good deal here and there, but i rather my money sitting nicely underneath my mattress rather than suffering a total capital loss. Yea, i am risk averse in that sense.

Singapore Savings Bond

MAS introduced a new product - Singapore Savings Bond.

Much have been written about it by various bloggers. The pros are obvious:

1. No lock in period

2. Higher interest rates than fixed deposit - similar to government bonds/treasury bills

3. Backed by the government (99.9% safe)

This is like having your pie and eating it!

I personally think this is a good product, who can argue against the previous points if you are looking for a risk-free return with a higher rate of return? In any case, i think the government will probably restrict the amount an individual can invest this in... otherwise, i think a lot of cash rich Singaporeans will just dump all their money in!

I do wonder a little of the motivations though: This will soak up the liquidity in the market..... banks will be 'forced' to offer a higher interest rates to attract depositors to place money with them. This would then mean that they will need to charge a higher rate on their loans (housing etc).

This is like a tightening of the money supply and would have a deflationary impact on the economy, and act as another damper on the housing market.

Am i right? Or am i worrying too much?

Contributing to society

So during the week, i joined my company for a citizenship event, as part of our goal to be a good corporate citizen. There are lots of charitable events being organised, but financial literacy (or the promotion of it) speaks to me the most.

It was a trip to Jurong Youth Center, targetting at kids aged 9 to 12. The aim? Is to inculcate the value and concept of saving money at a young age.

It was an activities based session - kids were given hypothetical scenario amount and asked to make spending decision.












A plate of chicken rice + drink at $4? or McDonalds meal at $8. I think most kids at that age (actually adults are guilty of it too, i know i am!)

End of the day, if the kids (and us) can take home the message that every dollar we spent is a decision in itself. Every dollar we spent now means a dollar lesser to spend in the future.

And that, is an important message for people of all ages.

Going dutch

Titbit of the day - recently i asked my boss (who is a Dutch), where did the term 'going dutch' come from. It was only then did i realise it has a sort of derisory meaning to it. It could be that traditionally Dutch people are stereotyped as stingy and tight-fisted which is why it could have a negative connotation. Another saying is that because Dutch are traditionally very hard working people (stemming from a protestant culture), they watch each dollar that they spent carefully and do not want to waste anything.

For most of my life, i had assumed going dutch in a meal means splitting the bill equally. However, technically, it means just paying for what you order. So in a group setting, if someone orders a bottle of wine, and you are a non-alcoholic, you only pay for your food and not the wine. Same applies if someone ordered a dessert and you are on a diet and choose not to partake. You should not be made to pay for that.

I think this is a good thing - as it levels the financial playing field amongst people and allow everyone to have a good time while sticking to their own budget. You can enjoy the company of your friends in an expensive restaurant, but choose to order something that suits your wallet whilst your friends can order entree, first main, second main, dessert and wine if it so makes them happy. You then do not need feel obligated to split and 'subsidize' their meal if you choose a cheaper option.

Have you ever felt pressured to order a more expensive option to be in line with the rest of your friends (even though you are really on a budget) because you know that the group of friends you are with will almost certainly split the bill equally - so that, in Singaporean term, you do not 'lui gi' or lose out when it comes to settling the bill?

In an Asian context, i think it could be a 'face' or ego thing not to highlight the fact that maybe you did not eat the dessert, or did not order a drink, and just pay the same as the rest. Others may stereotype you as 'stingy' or 'calculative', or it could be that you yourself feel that others may view you so.

THAT is definitely not wallet-friendly. Maybe more so if you are a male and in a senior position, and you could feel the pressure to pay/treat the others or others could expect you to do that? That is enough of a damper to prevent you from hanging out often enough.














Or if the group of friends you are with somehow always wait for you to settle the bill first and conveniently 'forget' to pay you back? Are you the thick-skinned type to chase back the money?
[Actually i don't understand why people don't just take out the cash and immediately pay back the guy who paid first - is it so difficult?]

I'd be a downer if i didn't try to put out a few solutions, so here goes: -
(1) If you only ate a main, and the others have desserts - when the bill come, be the first  to pull out your cash and place it on the table, saying i only had a pasta, and this should cover it.

(2) If somehow you paid first and it's a group setting, send a broadcast message to the group detailing the amount to be paid, together with bank account details. People are not singled out and probably won't be offended with a 'debt collector'. Even then, some people are not 'automatic' enough to pay up, and that's when you need to personalized a collection message.

(3) Suggest an alternative place which is more wallet friendly

(4) Minimize hanging out with people who tend to order expensive stuffs and expect you to split bills equally. Either you join them in eating expensive stuff (and engage in a lose-lose war, lol)

There~ 4 solutions to help you stick to your budget, and still have some level of social life. [Actually i suggest option 4 if your friends do not understand if you have a budget to stick to. Those likely are not your true friends anyway].