TEA with ENZA: Total Debt Servicing Ratio (TDSR).

Another guest blog that is actually a collection of comments by a very bright fellow I got to know on FB. Reproduced with his permission:

Total Debt Servicing Ratio (TDSR) = Debt Repayments/Income (per month)

Many of our textbooks are based on western spending patterns, which I think isn't feasible for Asians. I would target 25% of TDSR.

IMO, a household cannot have more than 3 durable goods under instalment (because they are going to be a drag over long-run), whereas housing and vehicles cannot, in combination, exceed 20% of gross combined wage median. Always concentrate on paying off one thing at a time since we only have this much of resources.

You see, Asian parents normally pay for their children's university fees. That is a big chunk.

In the USA and Europe, most parents don't. That's why they can have a bigger TDSR. Of course, the most important thing is SG cars are TOTAL WASTE OF MONEY. Only if we can really waste the "excess money", then should we ever own them. So, if depreciation plus insurance plus road tax plus basic maintenance are below 10% of your wage income, no harm. (which is quite unlikely in SG, all because of the COE.)

Are you too much in debt?

Read other guest blogs by ENZA: here.

Related posts:
1. Don't think and grow rich.
2. Slaving to stay in a condominium.
3. The Millionaire Next Door.

So, $350,000 gets peanuts? Upsize the peanuts!

This is what Privilege Banking customers at UOB get:



Apologies for the bad quality.

These are some seriously small peanuts.

Money in our emergency funds (less than $350,000) if left in a savings account like this will get only 0.1% in interest payment per year! Imagine that.

Better leave the funds in fixed deposits. We will still be paid peanuts but these peanuts are at least bigger.

I suppose this is true not only for emergency funds but also for any money that has been earmarked for some specific purpose in the near future. Don't just leave the money in a savings account.

It is time to upsize the peanuts!

Related post:
A special chest for emergency funds.