A note on the CPF and a break from blogging.

Regular readers know that I only want to be a happy peasant. I was never royalty or an aristocrat. I am of the masses. 

DPM Tharman said before that the CPF is meant to help the working masses. That is why there is a limit to doing OA to SA transfer, to doing MS Top Ups to the SA and also to doing Voluntary Contributions to the MA.

For many people, it is easy to miss the big picture. A fixation on theoretical opportunity cost could turn out to be costly. 

In our investment portfolio, the CPF should be considered an investment grade bond component that gives us peace of mind (and relatively good coupons). It is not, however, the be all and end all in a sound retirement funding plan. 

We cannot build a house on just a cornerstone but to give up a cornerstone in a house, we must have a high level of certainty that whatever takes its place is going to be just as strong or stronger. 

If the alternatives have a higher level of risk or a greater degree of volatility, then, we would need a helping hand from Lady Luck to ensure the house remains standing in the years to come.

Be careful who we listen to when we build a house of our own.

I will be taking a break from blogging etc. for a few days. It is probably a good idea to get away from things familiar for a bit. 

Don't worry. I will be back. :)

In the meantime, keep building your house carefully. ;)

Related posts:
1. AK is showing off his CPF-OA and MA.
2. AK's SA outperformed in 2015.
3. Building a cornerstone in retirement funding.

Tea with FunShine: Less is more - Prudent Living.

This is a guest blog contributed by a reader who goes by the name of FunShine.

A bit about the writer - FunShine

The writer hopes that his personal account will be a good read for people hoping to take small steps towards different degree of financial freedom.

FunShine has been working in the Community and Social Service Sector for over 10 years. It has always been an interesting sector to work in.

He has decided to take a 6 months break and live prudently, surviving on his dividends and interests for his personal expenses.

FunShine does not want to compete with the Joneses and is contented with his lifestyle.

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My dividends and interest earned for the month of Dec was $338.37. Ever since the start of my break, I have been trying hard to just live on my dividends and interest for my personal expenses.

Due to this challenge to myself, I have learn and did a few things very differently in Singapore as compared to when I was employed.

1. Meeting with Friends Friends that choose to meet up are given a few choices. 

A. We meet in hawker or coffeeshop.

B. They treat me if we want to eat in restaurant.

C. I have meals at Home first then just have soup at the restaurant of my friend's choice.

Most friends are understanding since I am not employed. For those not so understanding, you just do not meet them. Thankful that during this season, I have been blessed by good friends.

2. Transport Transport actually is the main bulk of my cost which is hard to cut.

A. Meet friends for early breakfast, so that I can have the free transport before 7.45am.

B. If it's only a few bus stops or 1-2 mrt stations, walking is a cheaper alternatively.

C. Farrer Park Mrt to Lavender Mrt is actually not that far and you save a bit if you walk.

D. Punggol to Bishan by walking is viable if you have the time. Gd exercise.

3. Giving/Contributions I struggle with this part the most initially.

A. Contribution Contribution to joint account, parents and grandma must still be there. It's my decision to take a break but that does not excuse myself from my responsibilities as a son, eldest grandson and husband. Contribution from this category will eat into my savings. Thankful that I have enough for this break.

B. Giving to Church You still give just that the amount is reduced as God loves a cheerful giver. Besides, the air-con that I enjoyed in church, someone still needs to pay for it.

C. Donations Donations still carry on if necessary. As I want my tax deduction and giving somehow will make you feel good. Even better when you know the dollar and cents mean a lot more to you now then previously.

D. CPF contribution It's a bit painful to see that there is no money coming in to your OA account. As I have this habit of just keeping 20k in OA and any extra will be transferred to my SA account. Thankful that with the money left in my OA, making payment for my 4 room flat is a non-issue.

E. SRS contribution Contributed to my SRS for long term financial planning in Dec 15. Was bo Liao enough to contribute the amount such that my income tax next year is only $88. Last year income tax was $130+. The amounts are for the whole year not monthly.

4. Lifestyles Changes

A. Plain Water Bringing a bottle out used to be a big hassle. It's so much easier to just grab a drink from the fridge, be it in the Super Market or 7-11. With the challenge, I have to bring my own water. Healthier lifestyle not by choice but by the income I am depending on.

B. Long Walks I love long walks ever since my near fatal bicycle accident in 2008. Also, long walks are free and the scenery in our parks are most lovely.

C. Taxi You have the time. You dun feel rush. Why the need for taxi?

D. Restaurants All restaurants visit in SG is cut to almost zero. We only spurge on this when we are overseas as it is so much cheaper.

What's next for me?

I really dun have a very detailed concrete plan. But for friends that know me, I always have a overarching plan to follow.

Right now, is just to enjoy this 6 months break from Nov 15 - Apr 16.

As for my financials goals, since I have achieved personal expenses freedom which is a small step in the right direction, it's time to think about other goals.

It should be as follow:

1. Enough recurring dividend for the amount I give to my grandma

2. Debt free, pay off my 4 room HDB in full

3. Enough recurring dividend for the amount I give to my parents

4. Enough recurring dividend for the amount I contribute to my family account

5. Legacy Fund

Once there is no purpose for item 1 and item 3, the assets will go into this fund (item 5). This fund will aid in my giving, be it to charities or missionaries.

That's all for now.

Thank you for reading.

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For sure, keeping our needs simple and wants few will improve our financial well-being.

Good job, FunShine!

Related posts:

1. Think you cannot reduce your spending?

2. If we are not rich, don't act rich.

3. 3 points to make us happier people.

"Every man is rich or poor according to the proportion between his desires and his enjoyments."(Samuel Johnson)