Expenses. T-bill. SSB. DBS, UOB and OCBC.

It has been more than a week since my last blog post.

Things have settled into a new normal for me.

In this new normal, my expenses have increased by 3x or 4x.

UOB should be very pleased with me as I exceed the $500 minimum spending required on the ONE Card by a large amount to get extra interest on my savings in the ONE Account.

The increase in expenses is going to be part of the new normal and not transitional, I suspect.

Fortunately, my passive income is buffered which means I am able to absorb the current higher expenses.

Crossing fingers that things do not worsen.

I am still not sleeping well but, fortunately, I am able to take refuge in virtual worlds.

This has saved me many years ago from going into a depression and it still works for me today.

Just spending time alone and being focused on things that have nothing to do with the real world.

Escapism?

Call it what you want but it works.

In a YouTube video I made not too long ago, I said that I could feel apathy setting in when it comes to money matters.

I can say that apathy has definitely set in.

It is next to me now, watching me as I pen this blog.

Apathy says, "What are you doing?"

AK says, "Listen to me, Apathy, you are just a guest. You should try not to get too comfortable."

Brave words.

Writing is therapeutic to me and I am just talking to myself which helps to calm my mind as I try to make sense of things.

Anyway, soldiering on.

1. T-bill yield dropping.

In the last auction, T-bill yield declined to 3.34% p.a.

It could have been worse, I suppose.

Anyway, I got my non-competitive bid filled.

Using cash, 3.34% is still better than what a regular savings account pays.

Of course, if we can get 4% p.a. like we get with the UOB ONE Account, we should maximize that first to $150,000.

With T-bill yields declining and this goes for interest rates in fixed deposits too, high yield savings accounts should have priority when parking our extra money.

There is, of course, the added benefit of liquidity.

I also use my CPF OA money to buy T-bills but I might stop doing this because the break even cut-off yield for 6 months T-bill is 3.33% p.a. in case we lose another 2 months of CPF OA interest.

I would just transfer the money from CPF IA to CPF OA when the T-bills mature.

One less thing for me to juggle.

So, it isn't a tragedy.

2. Singapore Savings Bonds.

10 year average yield on Singapore Savings Bonds is also declining. 

I bought some SSB offered last month.

That had a 10 years average yield of 3.22% p.a.

This month, the offer is for an average yield of 3.1% p.a.

It is still above the 3% average interest I would get for doing voluntary contribution to my CPF account, although not by much.

I think I will give it a miss.

Another less thing for me to juggle.

Yes, again, not a tragedy.

3. DBS, UOB and OCBC.

Things seem to have settled down for the stock prices of our local banks.

They have recaptured their supports.

DBS at $35.

OCBC at $14.

UOB at $30.

Mr. Market might have come to terms with the eventual weakening of net interest income as interest rates decline.

However, like I have said many times before, our local banks have other sources of income and they are likely to continue growing as they retain about half of their earnings.

This means that even for people who paid higher prices for stocks in DBS, OCBC and UOB, eventually, their investments will become much more valuable.

For me, being paid while I wait is not a bad thing.

Still, do not throw caution to the wind.

The world is not in a good place now.

So many things have gone wrong and could get worse.

We are fortunate to be in Singapore but we are not shock proof.

Mr. Market could go into a depression suddenly, without warning.

That is when we roll out our war chests.

Remember what I always say.

Don't be overly optimistic.

Don't be overly pessimistic.

Be pragmatic.

Be prudent.

Be patient.

If AK can do it, so can you!

"Don't sacrifice your own retirement and financial health!"

I produced a YouTube video recently on how much money do seniors need in Singapore monthly to cover basic needs.

The video got many comments and some of them were pretty shocking when it comes to providing financial support for parents.

I am archiving some of these in my blog as a reminder to myself that not everybody thinks like me and how things might be very different now.

@deschua76 said,

30 years ago when I was still a kid, I told my parents that I won’t give them a single cent when they retired and because of that the fear drove them to become financially free now! 

That should be the way! Do or die! No excuses!!!! my parents constantly thank me for what I did. For your information and dissemination please.. #ToughLove 

And someone agreed with this comment. 

 @user-pi6mn9wj8n said, 

This is what ALL children should tell their parents. Why shld children hv to pay parents who hv no responsibility to take care their own financial health. 

The young hv it far harder than their parents did - with things like student debt and much higher housing costs. 

It is PARENTS that should be helping children at this juncture. DONT sacrifice your own retirement and financial health because u hv deadbeat parents who want/need handouts. 

To this, AK said, 

"Like that, children become forever liabilities.😱 Better don't have children."

In case you are interested in that YouTube video and the comments it generated, here is the link:

How much money do seniors need in Singapore in 2023?

Gurmit Singh's song is in my head now. 

"Things different already."

Money keeps flowing into my pockets.

Following my last three blog posts, I checked three accounts today.

My bank account.

My SRS account.

My CPF account.

Why?

To see how much pocket money I am getting from the recent T-bill auction, the one that took place on 14 September.

People sometimes look down on small sums of money, especially in today's environment of high inflation.

"Walao! $2 only you also calculate!"

$2 is also money.

Small sums of money add up to big sums of money.

Being careful with small sums of money can only help in our journey towards financial freedom.

Don't kick a pup because when the pup grows up, it will come back to bite you.

OK, this is true for regular folks like AK.

For "jin satki" people or high-flyers who make hundreds of thousands or millions of dollars per year, please stop reading.

You have come to the wrong blog.

Still here?

OK, shocking numbers up next.

Anyway, here is the breakdown:

$186 from $10,000 cash.

$148.80 from $8,000 SRS money

$216.16 more in interest income from $52,000 CPF OA money.

So, $186 goes into my current day pocket. 

$148.80 goes into my pocket which can only be unzipped 10 years later from age 62.

$216.16 goes into my pocket which can only be unzipped 3 years later from age 55.

Shocking, right?

Some people might be wondering why "rich" AK bought so little T-bills.

AK is just a regular guy and not "rich".

Why some people don't believe me?

Sigh.

T-bills are risk free and volatility free.

Not a bad way to make sure I have more pocket money now and in the future.

However, I am very aware of re-investment risk as high interest rates might not be around for long.

I will continue to wait for better opportunities to invest for dividend income.

While waiting, there is nothing wrong with getting relatively attractive risk free returns.

If AK can do it, so can you!

F.I.R.E. AK still needs $136K p.a. Growing richer or poorer?

This blog is just a bit longer than the video because I had a bit of problem with the voice recording.
----------------------

I have been asked many times before if I was ever bored in my early retirement.

To be quite honest, I find that question boring.

It was never something I was worried about because I was never married to my job.

I had many things I wanted to do but just didn't have the time for them.

So, I tell people that I am as busy now in my early retirement as when I was gainfully employed.

What I did worry about was whether I would have enough funds to retire early?

I was worried if I planned it right as I didn't fancy the possibility of rejoining the workforce.

That was during a time when I didn't know what was LEAN F.I.R.E.

Of course, if you have been following my blogs, you know what I think of that idea.

Having said this, all of us have different circumstances and, to be fair, LEAN F.I.R.E. could work for some people.



However, for people like me who have aged parents and for those who have children, if we want to retire early, it is financially more demanding.

We cannot afford to be too optimistic that things will work out on their own somehow.

There is only so much belt tightening we can do if things do go wrong.

For people who have dependents, early retirement is more demanding as we have to ensure our financial resources are sufficient to support more people.

Although my passive income seems massive to some people, once we take into consideration my expenses, it doesn't leave much room for error.

I don't track or blog about my expenses in detail, but I have blogged about my budget in whole numbers before.

In an earlier blog in 2019, I said I would need around $120,000 in passive income to cover my own expenses, parental support and CPF contribution.

$40,000 per item.

Then, in another blog sometime later, I said that given the higher inflation we were seeing, I would increase by 20% the money for my own expenses and parental support.

That would bring total passive income required yearly to $136,000.

Fortunately, passive income generated by my investment portfolio, excluding interest earned in my CPF account, has been able to cover this.



Of course, regular readers know that I will not be making any voluntary contribution to my CPF account in 2023 and 2024.

This is because money earmarked for this purpose has been used to buy Singapore Savings Bonds when they offered 10-year average yields of more than 3% p.a.

My plan is still to continue saving money in my CPF account or buying Singapore Savings Bonds till I turn 55.

When I turn 55, I could continue with this plan, or I could decide to enjoy life a little more.

I was more inclined towards continuing to save more money in the past, but the COVID-19 pandemic got me thinking.

Life could be cut short quite unexpectedly.



Yes, the COVID-19 pandemic changed the way I look at many things, including investments.

So, there is a high chance that in another few years from now, I would only need $96,000 a year in passive income as I stop earmarking money for CPF contributions.

Just need money to cover my own expenses and parental support.

Of course, we don't live forever.

Although I wish my parents would be around for a long, long time, I am not sure they want to outlive me.

The day I become an orphan, I would only need $48,000 in passive income per year, all else being equal.

When I think of this, melancholy sets in.

It is bittersweet.

OK, I shan't be maudlin about it.

I am just going to talk about finance here.

Well, it seems that, over time, I will become richer than I ever was without having to do anything differently from what I am doing now.

My investment portfolio should still be generating passive income and even if that doesn't grow, over time, my wealth could grow as my expenses shrink.



I don't think I would ever need to draw on my CPF savings.

So, over time, just from compound interest, that should grow too.

Anyway, what is the message here?

Early retirement is definitely financially more demanding for people with dependents.

However, if we are able to achieve this, we are likely to do better financially over time even when we become aged.

Just remember that we cannot be too adventurous, and we should be able to avoid financially catastrophic mistakes which might force us to rejoin the workforce.

Anyway, this is just me talking to myself about my experience and perspective.

If you have made it this far, you could be just as mental as me.

If AK can talk to himself, so can you!

Related posts:
1. How much passive income is enough?
2. Inflation, passive income and my budget.
3. Retirement drawdown strategy.
4. Retirement adequacy for late bloomers.
5. 59% want F.I.R.E.
6. LEAN F.I.R.E.

DBS: 43% jump in earnings! Be a millionaire!

In a video I produced recently, I made some points on why Warren Buffett and Charlie Munger are not investing in banks now.

Then, in a video I produced in response to record earnings reported by DBS, I also made note of a few points.

For the benefit of readers who do not follow my YouTube channel, here are the videos.

This is the transcript of another video I produced recently.

Again, this is for the benefit of people who do not follow me on YouTube or prefer reading to listening.

Do you know that millionaires' effective income tax rate might actually be lower? 

This is true in the USA and it is also true in Singapore. 

Remember how much income tax I had to pay? 

Regular long time readers might remember. 

Yes, nothing. 

I didn't have to pay any income tax. 

This is because my passive income does not attract any income tax. 

No one would have guessed that I am a millionaire just by looking at me. 

Contrary to popularized images of millionaires, actually, most millionaires are very low key people who avoid ostentatious behavior. 

Most millionaires are people who live within their means, budget and spend wisely. 

They are mostly focused on ensuring their financial independence first. 

These are habits that take discipline, but ones we can all adopt to begin growing wealth. 

If these facts prove anything, it's that every one of us can strive to become a millionaire. 

And many of us can become millionaires. 

From 2012 to 2022, the number of millionaires in Singapore grew 40% to 240,100. 

This is according to a list published by investment migration company, Henley and Partners, together with global wealth intelligence firm, New World Wealth. 

In the World's Wealthiest Cities report, Singapore is now in the fifth spot. 

Millionaires are high net worth individuals with investable wealth of one million US dollars or more. 

So, it excludes the value of our home. 

Don't be envious of millionaires. 

Unless severely disadvantaged, all of us can be millionaires. 

There are many millionaires in our HDB estates and they lead simple lives. 

We might not know much about them because they are not very talkative. 

They are not crazy like AK who talks to himself regularly. 

Millionaires in our HDB estates are more common than you might think. 

People who have above average income would often tell me that it is difficult to build wealth in Singapore. 

However, if they were to examine their lifestyles, they might be surprised at how much money they could actually save if they were to make thriftier consumption choices. 

From experience, I know it is possible to build wealth more rapidly in Singapore simply by avoiding extravagance and excesses. 

Some readers who decided to make changes to their consumption choices with an eye on wealth building wrote to me, happy with their progress. 

Get the whole family in on the project and the success rate would be even higher. 

Remember, it is always the toughest in the beginning but if we are determined and disciplined, we can become wealthier. 

For most of us, the road to becoming a millionaire will have to start with baby steps. 

"The Millionaire Next Door" is a book which is a must read for many people. 

In fact, I would go as far as to say that the majority of the population should read it. 

So, do you want to be a millionaire? 

If AK can do it, so can you! 

Related posts: 

1. Income tax payable? 

2. STE: The millionaire next door.

Recession could hit Singapore. Do what Buffett and AK say?

Warren Buffett famously said to investors the following.

"Don't worry about economic predictions."

In his opinion, 

"... it really doesn't make any difference in what I do today in terms of buying stocks or buying businesses what those numbers tell me. 

"They're interesting, but they're not guides to me. 

"If we buy a business, we're going to hold it forever. 

"So we're going to have good years, bad years, in between years, maybe a disastrous year some year."

Now, this perspective is very interesting and also instructive.

It should be interesting to all investors.

However, it is only instructive to certain investors.

Who are these certain investors?

Investors whose circumstances are similar to Warren Buffett's, of course.

Not everyone has money gushing in regularly and, definitely, not everyone has more money than they would ever need.

We do not have the resources that Warren Buffett and Charlie Munger have.

When we read such opinions, therefore, we have to think of our own circumstances.

For most of us, paying attention to the early signs of where the economy might be headed is not a bad idea.

In a YouTube video I recently produced, I said that the Monetary Authority of Singapore is worried about the economy and if they are worried, we should be worried too.

Singapore's economy is slowing down fast and it is likely to get worse as many major economies seem to be heading for a recession.

So, the Monetary Authority of Singapore has decided to put fighting inflation on the back burner and not to tighten in a move that is expected to help support the economy.

Most people still need their earned income and they should worry about possible retrenchment.

Indeed, massive layoffs started in the tech sector and if a recession hits, other sectors would most likely also be impacted.

Only iron rice bowls will be safe.

What to do?

If we do not have an emergency fund, we should really start one.

If we have an emergency fund already, do a review and see if it is still adequate.

Even if we have passive income, we should have an emergency fund because passive income could dry up.

Whenever I recall how my interest income and dividends reduced during the COVID 19 pandemic, I get PTSD.

If we are fully invested in equities, we might want to start building a war chest.

If we already have a war chest but it is somewhat empty like mine, try to fill it up.

There are so many things that could go wrong in the next few months.

Geopolitics in many places could worsen.

The banking crisis really isn't over yet and, in a recent interview, Warren Buffett said so too.

Depositors will not lose money but investors will lose money because they made bad investments.

I am very "kiasu" but, given the uncertainties, I am more "kiasi."

I tell myself that I want to do a better job of preserving capital and having more cash really isn't a bad thing.

This is especially when the front end of the yield curve stays elevated.

A risk free return of 3.65% to 3.85% p.a. with zero volatility is very decent.

It isn't a bad idea to be more defensive, especially if it gives me peace of mind.

I said this to a reader in the comments section recently:

"Being substantially invested in equities already, I am more likely to regret not having resources in a bear market than not having invested more to benefit from a bull market, if it should happen."

At this point, it is important to remind anyone who is eavesdropping on me that all of us have different circumstances.

So, just like how we shouldn't accept what Warren Buffett says as being instructive for everybody, we should not accept what AK says unquestioningly as well.

We are also wired differently and will have our own beliefs.

Do the right things and the right things will happen for us.

If AK can do it, so can you!

Recently published:
T-bill ladder completing.
References:
1. Fixed income strategy.
2. Survivability and opportunity.

Lean F.I.R.E. 2014 till now! Still going strong! AK is wrong!

A regular reader, Henry, commented: 

"A good piece from you about Lean Fire. 

Like you, I have a crisis mentality and always worried about money not enough after FIRE in my 40s. 

To the extent that I would review my savings versus expenses every month. 

Then I figured out I should use a withdrawal rate of maximum 2% and factor in a 2.5% annual inflation into my calculation. 

This relieved the situation a lot and I only look at the number once a year. 

Then C19 induced high inflation struck. 

Haha, had to rework those numbers again every few months. 

Glad that I'm still alive and just returned from a Europe holiday. 

Your blog is so good. I learnt a lot since 2014, the year that I FIRE. Thanks again."


Then, in reply to my comment, Henry dropped a surprise on me. 

Henry said: 

"Alamak AK. Cannot compare my Lean FIRE with your Abundant FIRE lah. 🔥 

Even go holiday also must go when there's promo and low period to save costs. 

Now back to the reality of "poverty" living. Lol. 

Your blog had helped many over the years. 

Sifu and role model. Keep it up." 

I was replying to Henry's comment and something just kept me shifting my weight on the chair. 

I decided the problem was not my chair nor my buttocks. 

I was very curious. 

Very, very curious. 

So, I decided to publish my reply as a blog to see if there is a chance of satisfying my curiosity.

My response. 

"Hi Henry, 

Oh, you went for Lean F.I.R.E. 

Was that concept already around so many years ago? 

I wasn't aware of the different forms of F.I.R.E. when I decided to retire early at 45 so many years ago. 

I just did it my way. LOL. 

The fact that you did it and have been successful for so many years shows that I might be too conservative. 

My blogs on Lean F.I.R.E. might then give people the idea that I am talking down on the concept. 

It is not my intention to talk down, to be honest. 

I am just sharing a cautionary message. 

Now, having read your comment, I am interested to hear from people who are on Lean F.I.R.E. or who are thinking about Lean F.I.R.E. as something viable. 

How do they feel about the concept now? 

Are they still comfortable with possibly retiring early with little or no room for error? 

Or is my idea that there is little or no room for error an error? -.-" 

Oh, yes, I know what you mean by "poverty" living. 

Rich people laugh at me for saving small sums of money! 

They say I have a poverty mindset. (TmT)


Thanks for encouraging me to continue blogging.

If I were to retire fully from blogging, everyone who regularly eavesdrops on me has lots of alternatives available now. 

In recent years, while I was hiding in my gaming cave, to borrow a phrase from Keng, so many new personal finance/investment bloggers and also YouTubers in Singapore popped up. 

Really, the only constant in life is change and this is a good change.

In recent years, I have been cutting back on social engagements and even the number of ways people could get in touch with me became very limited.

I am one step away from being a hermit.

I enjoy spending quality time with myself a bit too much, maybe.

Well, although I have been a semi retired blogger in recent years, a full retirement isn't happening yet. 

Yet. ;p

I still enjoy blogging and, now, I even enjoy experimenting with YouTube video production. 

Old dog learning new trick. ;p 

So, I will stick around. 

I have decided to publish my response to your comment as a blog because I believe it should have a wider audience. 

I want to share an important point and a not so important point here. 

1. AK doesn't know everything and could be wrong about Lean F.I.R.E. 

2. AK is a semi-retired blogger and a new YouTuber who is just having fun. 

Agree or not?" 

Recently published: 

Avoid Lean F.I.R.E. and struggling with higher costs.

Avoid lean F.I.R.E. and struggling with higher costs.

A few months ago, I blogged about F.I.R.E.

More specifically, I blogged about lean F.I.R.E.

I said that some people would retire early once their passive income is able to cover their basic necessities in life, leaving very little or no room for error.

I cautioned against lean F.I.R.E. as I thought it was pretty shaky.

Of course, regular long time readers know that I like having buffers partly because I am mental but mostly because I think having a crisis mentality is not a bad thing.

I used an example of how I got pretty worried during the COVID-19 pandemic when both interest income and dividend income took a hit.

If I did not have sufficient buffers, I would probably have had to look for a job.

It would have been very difficult in a very challenging environment.

It would probably also have been very difficult because I was much older and have been out of the workforce for many years.

Why am I blogging about this now?

The catalyst for this blog was something I read this morning.

A F.I.R.E. movement pioneer who retired early 10 years ago at age 34 now says he must return to work.

Why?

He cannot afford his children's college education now.

I always say that kids are very expensive to bring up in Singapore. 

An estimate which I did almost 20 years ago showed me that it would cost some $250,000 per child from birth to graduation day at a local university. 

I am sure that the figure is much higher today.

It is so important to think ahead when we plan for F.I.R.E. or anything in life, really.

Think what could go wrong and what happens if we should have an accident or a few along the way.

Maybe, we planned to have two children but got lucky and were blessed with triplets or quadruplets.

It sounds a bit amusing when I say this and we might laugh at it, but it could throw a spanner in the works, especially if we are on lean F.I.R.E.

After being retired for 10 years, it would probably be a challenge to return to the workforce.

Our skills or knowledge might have become obsolete or our old position might no longer exist.

Structural unemployment is very real.

Even if we are not obsolete, we would probably have to compete with younger and probably more energetic people for the same job.

They would probably be able to settle for lower salaries too.

Costs are rising and people on lean F.I.R.E. might be able to cope if they rise slowly but if they should rise rapidly like what has happened in the last one year, it could become difficult or even impossible.

I would avoid the various forms of F.I.R.E. which are along the line of lean F.I.R.E.

I don't like to live life with little or no room for error.

This is why people who follow the Y.O.L.O movement, believing that they should live life to the fullest, can ill afford mistakes.

Things do go wrong like they sometimes do.

I always demand a greater margin of safety for peace of mind.

What about you?

Related post:
F.I.R.E. lean or shaky.

Comments section of the blog
on Mr. Lee Kuan Yew.

Recently published:
1. Mr. Lee Kuan Yew's wisdom.
2. Obsession with salaries.

Mr. Lee Kuan Yew on impressing people. Latest videos.

Mr. Lee Kuan Yew said this in 2011.

"I see no reason why I should impress people by having a big car or changing my suits every now and again to keep up with the latest styles.

"I've got many new suits that are absolutely in good condition because I seldom wear them.

"In fact, the older I get, the less willing I am to spend time putting on a suit and tie.

"I just have a blouson or a buttoned-up Chinese jacket, and it saves a lot of trouble.

"I have had them for many years and they are very comfortable."

Latest videos by AK production house:

Have a good weekend!

Recently published:
Why do we obssess with salaries? Why compare?

Related posts:
1. Mr. Lee Kuan Yew said China could become pushy.
2. Why I have been silent on Mr. Lee's passing?

Bankrupt before 30. Is this a trend? Don't let it happen!

This blog is just some stuff for my pensieve.

I know that being on the verge of bankruptcy is not fun. 

I am talking from experience. 

Becoming bankrupt must be a lot worse. 

The combination of high inflation and very high interest rates is expected to send many economies into a tailspin. 

Bankruptcies are expected to increase. 

Allianz Trade estimates that bankruptcies will increase globally by 19% in 2023. 

Bankruptcies in Australia increased to 238 Companies in February 2023 from 175 Companies in January of 2023. 

The US is expected to experience a 40% rebound with 18,900 bankruptcies. 

If we think this is only happening in places like the USA and Australia, consider this. 

In Singapore, we already saw bankruptcies rose last year in 2022. 

Although the Covid-19 pandemic hurt Singapore's economy, the number of people who were made bankrupt in 2021 sank to the lowest in five years! 

Ministry of Law data shows that 3,648 people filed for bankruptcy last year in 2022. 

That was fifteen per cent higher than the 3,160 applications filed in 2021. 

This comes amid much higher cost of living, rapidly rising interest rates and the loss of pandemic support measures. 

The number of bankruptcies is expected to increase this year in 2023. 

Property auctions and mortgagee sales are, therefore, expected to rise in 2023 on the back of increasing number of bankruptcies. 

I always say that it is not a bad thing to have a crisis mentality. 

Always think of what might go wrong. 

Even though it might not look like it could happen, things do go wrong when we least expect them to. 

Take precautionary measures. 

Limit your exposure. 

If you run a business, evaluate credit limits and terms extended to customers. 

This is especially so for customers who are at risk for bankruptcy or already struggling to pay.

Businesses could be made bankrupt because too many debtors could not pay up.

Don't let other people's problem become our problem.

What I did when I was working as a business manager back in the day was to ask for larger upfront payments and allowing a smaller amount on credit. 

As an individual, although it is important to make sure to have an adequate emergency fund, to avoid bankruptcy, it is more important to make sure we are not over-leveraged. 

An emergency fund is unlikely to save us if we are excessively leveraged when things do go wrong. 

If we are using 60% or more of our earned income to service debt and if we do not have any meaningful passive income, then, we should seriously consider deleveraging.

If we must have leverage, how much is prudent?

Well, I don't know exactly how much leverage we should limit ourselves to in order to be considered prudent.

However, if 20% or less of our earned income is used to service debt, I feel that is relatively comfortable.

It will give us the option to put aside more money, and in an environment where money has a much higher cost, it is not a bad asset to hold.

Why not use all our money to pay down debt?

Well, for most of us, if we do that and if we become unemployed, we are in trouble.

With global recession a greater possibility now, be very careful.

Of course, having less leverage will also give us the option of investing more money when Mr. Market goes into a depression.

We must remember that it is pretty easy to sink into bankruptcy if we are careless. 

In Singapore, bankruptcy is a legal process involving an individual or firm that is unable to repay any outstanding debt of at least $15,000.

Only $15,000.

Don't Y.O.L.O. 

Don't be like an ostrich sticking its head in the ground. 

There is no automatic way to be released from bankruptcy in Singapore. 

The good news is that bankruptcy is avoidable. 

How? 

To me, it is simply being careful and not to do anything financially irresponsible. 

I saw in the news that the young in Singapore are increasingly relying on credit card debt. 

There is also a growing "buy now, pay later" culture. 

These generate sounds of ticking time bombs to me. 

This is the story of a young person who was declared bankrupt before turning 30 years old. 

He got his first credit card soon after graduating. 

He was excited when he got the card and took it as a sign that he had arrived. 

Soon, he found how easy it was to spend money or, more accurately, future money. 

Scratch that. 

It was simply money he didn't have. 

Then, came the interest free repayment offers. 

No interest for 12 months? Really? 

He maxed out that card and applied for a line of credit. 

Rinse and repeat. 

Before long, he had a mountain of debt. 

How does one who is making $2,500 a month get out of a $50,000 debt pile? 

Warren Buffett famously said the following to people, especially those with credit card debt. 

"I think people should avoid using credit cards as a piggy bank to be raided." 

We have to be financially prudent before we can work towards financial freedom.

Recently published:
1Q 2023 passive income.

Reference:
Survivability and opportunity.

Singapore to split apart? Who to blame?

This blog was held in storage for many days because I was wondering if I should publish it. 

I haven't published anything like this in a while.

It is bordering on being political and it is something which many people probably have very strong opinions about.

Anyway, I decided to take the plunge.

In The Straits Times on 4 March, Chua Mui Hoong wrote that Singapore was “at a juncture when the internal contradictions of its hyper-competitive system are becoming apparent, causing much angst, from the low to middle to high-income residents.” 

“They worry if they can attain the essentials of modern life, a home, job, school for their children and caregiving for frail family members. 

“Those who are wealthy, still worry about access to good schools and whether their children can do as well in a game they themselves excelled in.” 

This, plus what Pritam Singh said in Parliament about how "two Singapores" could possibly emerge, got me blogging.

There was a big discussion regarding Singapore's income inequality and the suggestion was that Singapore's income inequality issue was worsening.

However, that is probably more a popular and erroneous perception than reality.

Singapore’s income inequality has been declining. 

The Gini coefficient decreased from 0.478 in 2012 to 0.437 in 2022.

Lawrence Wong shared the results of ongoing efforts to uplift lower-wage workers. 

Lower-wage workers had seen higher income growth than those earning more than the median income in the last five years. 

What is my opinion?

There will always be income inequality.

Hard truth.

It is hard for me to accept that a cleaner should be paid as much as a doctor or even a high school teacher in a capitalist society, for example.

Of course, in a communist country, equal "pay" should be expected.

So, do we want to live in a communist country?

I know I don't.

Then, there is this concept of "essentials of modern life" which Chua Mui Hoong mentioned in the newspaper article.

I have blogged about needs and wants before many times.

We only need so much money in life.

The rest is for showing off.

If we keep our needs simple and our wants few, our life will "basically" be better, no matter how much money we make.

The problem starts when many things which are not essential get classified as "essentials of modern life."

Need a home?

What about a HDB flat or even an Executive Condominium?

Need a school?

What about a neighborhood school?

Need healthcare?

What about a government polyclinic or hospital?

In my last visit to the doctor in the polyclinic a 20 minutes walk from my home, I paid $20 when the actual cost was about $80. 

Yes, my medical bill was about 75% subsidized and I am not even a senior citizen (yet.)

There is an over-emphasis on income when it comes to measuring financial well being.

Seriously.

Must people earn a lot more money to be rich?

I have a blog that says average income workers can be rich too.

I have a blog that shares a reader's experience on how to have more passive income than "richer" friends.

If we spend as much as we make, it doesn't matter if we are high income individuals because we will always be "poor."

It isn't how much money we make that determines if we are rich or poor.

It is how much money we keep.

There was a study done in an advanced country that showed how 40% of upper middle income families were living paycheck to paycheck in that country.

Why?

They habitually spent as much money as they made or more than what they made.

How to be financially better off like that?

Then, there is the issue of assigning blame.

Really, there should be a greater emphasis on taking ownership when it comes to our financial well being or the lack of it.

 

As you can tell from the video, I am proud to be Singaporean and proud of our CPF system. 

If you haven't watched it yet, you might want to give it a chance as it shares the view of a foreigner.

I like the CPF system because it is a system where the government helps those who help themselves.

I don't like as much the way the government has been giving out free money in recent years.

However, I am very much aware that there are low income families which genuinely do need some financial relief.

Still, if the government keeps doing it, then, it might foster feelings of entitlement amongst Singaporeans who, I feel, can be pretty ungrateful at times.

Honestly, I do not think Singapore is such a terrible place when it comes to economic issues.

Don't talk about Pakistan or Sri Lanka.

I think we are even better off in Singapore than in the U.S.A. when it comes to economic issues.

Of course, Singapore is not perfect but waving a banner that suggests Singapore could split apart because of growing income inequality is just malicious.

The P.A.P. government probably would not say many of the things I have said in this blog because they must think about winning the next election.

It could cost them some swing voters, I suspect.

I don't expect this blog to do well and it could even get me flamed.

However, long time regular readers know that this is a topic that I feel strongly about and I just need to get it off my chest.

Related posts:
1. Average income workers can be rich too.
2. More passive income than richer friends.
3. Don't make difficult times more difficult.
4. Survivability and opportunity.