Financial gurus – who should I listen to?

financial gurusSo, which financial gurus should I listen to?

A word of advice I often give to my friends and family who are not as financially savvy is to read a ton, understand a lot, and then make your own financial decisions. I might be walking too fast or too slow. Heck, my footprints might not even be big enough! It is definitely not beneficial for them to just ‘follow my footsteps’. And with youtube and podcasts being a major form of media financial gurus use in recent years, there is really no excuse not to try to understand more. If reading is not for you, watch. If watching is not for you, listen.

*Note: I always listen to any video and audio clips at 1.5x or 2x speed. It halves the time needed and forces me to concentrate more. There are plenty of financial gurus out there that gives out tons of good advice and I have been covering on some of them in the past few weeks.

Joshua Giersch, A.K.A. Shiny Things from HardwareZone, HWZ

Peter Adeney, A.K.A. Mr Money Mustache

Dave Ramsey – author of The Total Money Make Over

Jacob Lund Fisker from Early Retirement Extreme, ERE

The point is:

Understand your finances. Take responsibility for your wealth.

Personal approach

I intend to achieve financial independence earlier in life with a frugal approach. My idea is to be able to do what I like without worrying about the financial aspects of life. Here’s a break down of the “regimes” I follow.

*Note: Legend as follows:

  • Joshua Giersch: ST
  • Peter Adeney: MMM
  • Dave Ramsey: DR
  • Jacob Lund Fisker: ERE

General

  • Minimise use of resources [ERE]
  • Give every dollar a job [DR]
  • Track budget [DR]
  • Keep an emergency fund [DR]
  • Use credit cards [MMM]
  • Cook [ERE], [MMM]

Home

Like most Singaporeans, I still stay with my mother but I am intending to:

  • Get a smaller house, preferably a 3 room HDB [ERE]
  • Live close to work and grocery outlet [MMM], [ERE]

Insurance

  • Buy term [DR], [ST]
  • Good hospital insurance (shield plan) [ST]

Investment

I’ve tried different methods of investing but I find Shiny Things’ approach the easiest to understand. Even more so when everything is catered for Singaporeans.

  • Dollar cost average [ST]
  • Do not stock pick or time investment [ST]
  • Do not invest in gold [ST]
  • Use Interactive Brokers for non-local stocks and Standard Chartered for local stocks [ST]
  • Primarily purchasing ES3 and IWDA [ST]

Retirement

  • Retire early! (earlier) [MMM], [ERE]

As can see my approach is quite versatile, adapting methods taught by many of the financial gurus. I do not strictly abide by any one person and I urge everyone not to as well. Let’s work hard together! Jia you!

Jacob: Early Retirement Extreme, ERE

Early Retirement ExtremeJacob Lund Fisker from Early Retirement Extreme, ERE

I am still relatively new in the world of personal finances and have always been questioning whose advice should I be following.  I am sure many people out there are facing the same issues so I am going to try compile information about different financial gurus.  Today I will be covering on Jacob Lund Fisker from Early Retirement Extreme (ERE).

Background

Jacob Lund Fisker is the creator of Early Retirement Extreme, the blog, the book, as well as the concept.  Jacob is from Denmark but has been living in the US since 2004.  He has a PhD in Theoretical Physics from the University of Basel Switzerland.  Jacob was a theoretical astrophysicist before he retired.  He is now working as a quant after “un-retiring”.

Jacob Advocates

General

  • Find a free hobby – as opposed to those that require constant funding
  • Get “engaged”, find your calling – once you find a hobby (preferably a free one as stated above), the less money you’ll spend
  • Minimise use of resources
  • Join a challenge to stay motivated

Home and Food

  • Stay close to work and grocery outlet
  • Get a smaller house
  • Consider radical alternatives for housing – RV, cohousing, room mate, etc
  • Learn to cook
  • Eat less meat – meat products cost more
  • Avoid pre-processed foods
  • Do not buy unneeded food, use a grocery list if needed
  • Buy groceries on sale

Possessions

  • Declutter your possessions – Give or sell things that you have not been used for a year (6 months for advanced, 1 month for pros)
  • Join your local freecycle – Give things that you don’t need, acquire things that you need
  • Get clothes used – freecycle > thrift stores > sale events from outlet stores
  • Set up your own personal freecycle to cycle stuff with you friends and neighbours – this is to reduce possessions and in turn expenses
  • Plan to keep everything you own forever – lifetime of the item
  • Learn to maintain and repair your possessions
  • Learn how to mend clothes
  • Get rid of your TV and computer game addiction
  • Buy and own classics instead of cheap
  • Quality over quantity
  • Consider everything you own for sale at all times
  • Buy clothes when necessary
  • Drop the cell phone plan – I personally think this is hard to do with our current lifestyle.  I propose doing some research and get the lowest possible plan

Investing

  • Do not buy and hold forever
  • There are no special times
  • Investment is a future cash stream – with a discount rate of 3% + inflation
  • Future and security of cash stream > value of portfolio
  • Rules for buying and selling
    • For any company, set a minimum entry point yield, typically 5% for companies and 10% for REITs
    • Enter position gradually, buying stocks in round lots of 100
    • Set exit point yields, typically 3% for companies and 5% for REITs
    • Once stock price moves close to exit point, if
      • Volatile, set calls with strike price around exit price
      • Nonvolatile or does not have options, set a limit order at the exit price
    • If no stocks to buy, buy short maturation (next year) single issue corporate bonds rating above junk
  • Jacob’s personal portfolio strategy
    • Do not own more than 20 stocks of different companies – this allows for substantial diversification while still making it possible to follow each company individually
    • No company should exceed 10% of total holdings – Jacob will not rebalance it, but he will not buy more
    • Own mainly US companies – It is easy to get international exposure by owning transnationals
    • No strict asset allocation
  • Method #2, Dogs of the Dow – For people who do not want to spend too much time dealing with investment
    • Rebalance into equal amounts of the 10 highest yielding Dow stocks each year
    • Each year, check back and sell any position that is no longer on the list and buy new positions in the top 10
    • To minimise capital gains tax, hold gainers for slightly more than a year and losers for slightly less than a year – I am guessing this does not apply in Singapore
    • Trade only once a year
    • Add or withdraw cash the rest of the year
    • Either use dollar cost averaging or value averaging

General Money Matters

  • Emergency fund is less relevant to a person on an ERE strategy – can always cash out the latest position if needed
  • Self insure
  • No need for detailed budgets or tracking expenses
    • Basically, 2 categories, money spent and money kept
    • More money in money spent means more money in investments which translate to income
    • Money spent is therefore seen as how large a principal must money kept be in order to accumulate enough for money spent
  • For extreme early retirement, there is only 1 way to calculate net worth
    • Sum up the following
      • Savings account and checking accounts
      • Brokage accounts
      • Real estate owned for rental (if any are mortgaged, subtract the debt)
    • Do not include the following
      • Any kind of tax-deferred/locked retirement account (unless you are older than 55) – I am guessing this would be the equivalent of CPF in Singapore, and the age bumped up to 65
      • The house you live in
      • Cars, boats, aeroplanes, or other big ticket items (unless you rent them out)
      • Bling-bling – I am assuming this to be jewellery
    • Compute expenses
      • If you are a home owner that does not own your home, the mortgage is an expense
      • Subtract any pension coming in
    • Calculate your annual expenses
      • Multiply by 25
        • If number is lower than net worth then congratulations, you are financially independent and can go for a few decades without a job
      • Multiply by 35
        • If number is still lower than net worth, you can go on forever

Summary

To quote the ERE wiki, “Early Retirement Extreme (ERE) is a movement… By embracing simple livingself-sufficiency, and prudence, a worker with a typical wage income can comfortably achieve a savings rate of 50-80%. The mathematics of compound interest and safe withdrawal rates dictate that an individual with such a high savings rate can achieve financial independence after only 5-10 years.”

Essentially, the idea of ERE is to achieve financial independence through (significantly) living below your means.  The concept is simple.  The implementation would, however, need hard work.  Jacob’s ideas definitely work.  Hack!  He even has all the math figured out in his book Early Retirement Extreme — A philosophical and practical guide to financial independence!  We just have to be prudent and really want this (financial independence) to happen!

My suggestion is to start (relatively) slow.  Follow Jacob’s 21-day make over.  Every single small step leads us to FI!  Alternatively, we can always start with Mr Money Mustache‘s methods which are not as extreme.  But what’s Early Retirement Extreme without some extremes?!  Let’s strive to get up some early retirement through some extreme means!!

Dave Ramsey – author of The Total Money Make Over

Dave Ramsey
Dave Ramsey

Dave Ramsey – author of The Total Money Make Over

I am still relatively new in the world of personal finances and have always been questioning whose advice should I be following.  I am sure many people out there are facing the same issues so I am going to try compile information about different financial gurus.  Today I will be covering on Dave Ramsey. 😀

 

Background

Dave Ramsey needs no introduction to the folks interested in finance.  He is notorious for his loud and emotional speeches which is both motivating a tad bit funny plus scary at times.  Dave was born and raised in Antioch, Tennessee and graduated from the College of Business Administration at University of Tennessee, Knoxville with a degree in Finance and Real Estate.  He was once one of the youngest brokers to be admitted to the Graduate Realtors Institute and had a portfolio worth more than $4 million.  That was before he filed for bankruptcy and picked himself up afterwards.  Dave is now a businessman, motivational speaker, author, radio host, and a “financial guru”.

Advocates

General

  • Invest in stock mutual funds
  • Buy term life insurance
  • Everyone can retire a millionaire – most millionaires are unsung ones, they work and invest part of their income and retire a millionaire
  • Invest 15% of your household income
  • Saving for your children’s college fund
  • Act of giving generously
  • Track your budget
  • Give every dollar a job

Paying off debts

  • Use the debt snowball method to pay off debt – it will keep you motivated and you will pay off all your debts faster
    • Debt snowball: debtors pay off debt from smallest to largest disregarding interest rate
    • This method is criticised by many and generally work best for people with lesser control over their finances
  • Pay off your debt with gazelle intensity
    • According to Dave he saw a documentary where gazelles were running (frantically) away from a cheetah – this is how we should treat our debts, we RUN THE F***ING HELL AWAY FROM IT!!! (I typed this in caps to imitate Dave’s dramatic way of speech)

Summary

Dave recommends people to follow his 7 baby step formula.

  1. $1000 cash in a beginner emergency fund – *Note: this is in USD
    1. This is essentially a tiny cushion for unexpected events – example medical bills
  2. Use debt snowball to pay off all your debt (except for the house)
    1. List all debts from the smallest to largest and start paying off the smaller first
    2. Paying off the smallest one should give you the push to pay off the next one
  3. A fully funded emergency fund of 3 to 6 months of expenses
    1. This is to protect against bigger surprises – example job loss
    2. This should ensure you will never be in debt again
  4. Invest 15% of your household income into retirement
    1. Now with no debts and a cushion to fall on, it is time to invest
    2. Dave advocates spreading the money into 4 types of mutual funds – note that I am unsure about the differences, do let me know if you know
      1. Growth
      2. Aggressive growth
      3. Growth and income
      4. International
  5. Start saving for your child’s college
    1. Do not let college tuitions sneak up on you, save up in advance
  6. Pay off your home early
    1. Consider refinancing to a shorter fixed rate mortgage – not sure if this is applicable in Singapore
  7. Build wealth and give generously
    1. It is time to live and give like no one else
    2. Build wealth and be insanely generous
    3. Dave recommends leaving an inheritance for future generations
    4. You can now do anything you want!

Extra

For more information on Dave, visit his site here: https://www.daveramsey.com/

Or purchase one of this books.  If you are in debt, I highly recommend Total Money Make Over, for a simple step-by-step guide, try Financial Peace, for people with kids, you can’t go wrong with Smart Money Smart Kids.

For other articles from this series, please visit here and here.

 

Peter Adeney, A.K.A. Mr Money Mustache.

Mr Money Mustache
Mr Money Mustache

Peter Adeney, A.K.A. Mr Money Mustache

I am still relatively new in the world of personal finances and have always been questioning whose advice should I be following.  I am sure many people out there are facing the same issues so I am going to try compile information about different financial gurus.  Today I will be covering on Mr Money Mustache. 😀

Background

Peter Adeney, better known as Mr Money Mustache (MMM) in the cyber world, needs little introduction for the financial/frugal community.  He is a Canadian-born retiree who “writes bout how we can all live a frugal yet Badass life of leisure“.  In his exact words. He retired in late 2005 at the “ripe old age” of 30.  MMM came from humble backgrounds.  He grew up in Caledonia, Ontario and graduated with a Degree in Computer and Electrical Engineering with no debts.  He worked for 9 years and retired soon after that.  A “brief history of the stash” can be found on his website.

Mr Money Mustache Advocates

General

  • Focus on happiness
  • Understand what makes you happy
  • Get rid of debts
  • Live close to work – spend lesser on commuting
  • Bike (cycle) as much as possible
  • Do not borrow money for cars
  • Do not buy stupid cars
  • Cancel your cable TV
  • Do not waste money on groceries
  • Practice optimism
  • Using Credit Cards – big fan of cash-back credit cards

Investing

  • Invest in stock index funds
  • Paying off your own house
  • In rental houses (though this is quite unlikely in Singapore)

General Money/Retire Matters

  • Think of your time as
  • Your time to reach retirement depends on only one factor: Your savings rate, as a percentage of your take-home pay
    • Which is determined by 2 things: How much you take home each year and how much you can live on
  • Simply, if you are spending 100% of your income, you will never be prepared to retire
  • If you are spending 0% of your income and can maintain this after retirement, you can retire right now
  • You can retire once you have 25 times your annual spending saved up and working for you – this should be invested

Summary

According to MMM, there is actually no secret to early retirement.  In order to retire early (or earlier), we just have to decrease our expenditure and increase our savings rate.  Reducing redundant expenditure, like the daily Starbucks and the cable TV does add up over time.  MMM often calculate expenses as yearly expenses to make a point.  Example: A 5 SGD daily cup of Starbucks equates to 1825 SGD per year!  How long will it take for you to earn 1825 SGD back and what better use can you put the 1825 bucks to?  Would it have generated more income for you in the long run?  Think for the long term, always remember the higher your savings rate the earlier you can retire.  Now the Starbucks no longer seem as enticing right?

Here’s a table extracted from MMM’s website:

Savings Rate (Percent) Working Years Till Retirement
5 66
10 51
15 43
20 37
25 32
30 28
35 25
40 22
45 19
50 17
55 14.5
60 12.5
65 10.5
70 8.5
75 7
80 5.5
85 4
90 under 3
95 under 2
100  Zero

For more MMM goodness, do visit his site here: http://www.mrmoneymustache.com/.

For other articles from this series, please visit here.

Reduce expenditure: The small things you can do.

Reduce expenditure: The small things you can do.

Let’s face it.  We all have our habits and some are really hard to break.  The daily Mr. Bean for breakfast, impulse retail therapy, cab ride for “emergencies” are all so tempting.  But what if some changes in the way we approach things can alter how we crave for these additional expenditures?  These might not work for everyone but they worked for me.  🙂

Add-to-cart method

This method does take some self-control and practice but I no longer purchase right away after using this method.  Basically, add the item you want to purchase into the shopping cart (Amazon, Lazada, and any other online shopping platform) but resist the urge to purchase straight away.  Let the item sit in the shopping cart for at least a week (preferably a month).  If you still feel that you need/want the item after that, go ahead and purchase it.  It is very likely that the urge to purchase the item is gone by now.  If so, ta-da~!  This method works.

Walk

Like I mentioned in a previous post, I now prefer to walk wherever I go.  Especially to places that only use a single short distance bus ride (I would be able to save $0.77!).  My idea for this approach is to get oneself into the habit of allocating more time for commuting.  This not only saves the usual public transport cost, but it also ensures that there would not be accidental needs for cab rides.  If you ever oversleep, take the train or bus!

Unsubscribe and Subscribe!

The 2 sounds contradictory, but hear me out.  Unsubscribe to useless unneeded emails.  The emails that try to entice the shopperholic within you.  You know those.  After unsubscribing to those, subscribe to selected emails.  Only subscribe to things you need.  I.e. groceries, perishables, basically things that need to be topped up.  By doing this you won’t be tempted by needed items, but instead, focus on getting the best deals for the things you need.

Get things for free

Sounds impossible, but totally is!  Hand-me-downs are always awesome.  Clothes, furniture, even phones!  Just wait for your sibling or parents to re-contract.  Haha!  And you can always look elsewhere.  And like how Jacob advocates, join your local freecycle as well (and give something else in return too!).

Find alternatives

House brand isn’t always bad.  My personal rule is to try the house brand at least once before deciding if I should continue using the named brand.  Also, substitute!  This is especially true when cooking.  You don’t actually need to buy buttermilk if you have both milk and vinegar or lemon.  And you do not need self-raising flour if you have plain flour and baking powder.  I often substitute mayonnaise with yogurt too.  It’s healthier and I can make them myself. 

Joshua Giersch, A.K.A. Shiny Things HWZ.

Shiny ThingsJoshua Giersch, A.K.A. Shiny Things HWZ (HardwareZone)

I am still relatively new in the world of personal finances and have always been questioning whose advice should I be following.  I am sure many people out there are facing the same issues so I am going to try compile information about different financial gurus.  Today I will be covering on Joshua Giersch (Shiny Things HWZ). 😀

If you are a Singaporean who is into finances, this name will not be unfamiliar at all.  Joshua Giersch, better known as Shiny Things from HardwareZone (HWZ), is well-known in the community.  Shiny Things is active on HWZ, an IT-oriented online portal based in our homeland, sharing his knowledge with many of the forum-ers including me.  I personally follow his advice and would like to share his knowledge with everyone. 😀

*Note: All information compiled from HWZ, and his website.  Please let me know if I messed up somewhere.

Background

Shiny Things is a 30 plus-year-old from Australia, currently working at a software firm in San Francisco.  He was an FX option quantitative analyst for 2 years building options pricing tools for traders (in Excel / VBA), then as an FX options market-maker for almost 10 years, followed by spending 4 years designing and building risk management software for options traders [1].  Shiny Things runs a consulting business on the side, giving hedging and investment advice to large investors and corporations who need independent advice.  Lucky for us he spends time on HWZ giving us noobs great guidance and help.

Shiny Things Advocates

General Investing

  • Dollar cost averaging
  • Do not time investment – best time to start investing is always NOW
  • No stock picking [2]
  • Do not make many trading transactions – amount to high trading fees
  • Do not invest in gold [3]
  • For lump sum investments, either invest all at one go or split into 3 portions and invest each portion every month
  • There is no shortcut to getting rich

Purchasing

Rebalancing [4]

  • Do not rebalance in December – liquidity is at it’s worst
  • Rebalance in November if only rebalancing once a year
  • Rebalance in May and November if rebalancing twice a year – 6 months apart
  • Rebalancing more than twice a year is overkill

ETF

  • Stick to Vanguard & iShares – they only hold the stocks that they target to be vested in
  • For Overseas ETFs, go with IWDA – reinvest dividends hence easier to manage
  • For Singapore ETFs, stick to ES3 (top 30 Singapore companies) and A35 (multiple bonds)

Cash flow

  • If money is needed within 2 years, keep them in cash
  • If money is needed within 5 years, keep them in cash / bonds
  • Else, keep them in stocks

Insurance

  • Get good hospital insurance – shield plan
  • Buy term life insurance to age 65 if you have dependents
  • Never buy any other insurance plans – no ILPs, endowments, etc
  • There is no need for CI either – rate of payout is low, you should have enough cash to tide over

Summary

For small investors, our investment should be a mix of low-cost stock and bonds ETF.  For Singaporean investors, that’s ES3 + IWDA and A35, respectively; make the percentages equal to “110 minus your age” in stocks, and the rest in bonds.  Once a year, at the same time every year, rebalance your money – buy and sell to bring your stocks and bonds back to that “110 minus your age” proportion.  And as Shiny Things always says, go to the pub.

For more information, please visit Joshua at his website: http://josh.sg/.  He also wrote a book that details his recommendations.  Details of his book can be found here: http://richbyretirementbook.com/.  Or purchased from Indiegogo or Amazon.

 

[1] http://forums.hardwarezone.com.sg/107979305-post53.html

[2] http://forums.hardwarezone.com.sg/103070724-post4662.html

[3] http://forums.hardwarezone.com.sg/107498524-post5900.html

[4] http://forums.hardwarezone.com.sg/108098356-post6211.html

Read about my take on other financial gurus from:

Mr Money Mustache

Jacob, Early Retirement Extreme, ERE

Dave Ramsey

Ways to invest without risk / money

Just to clarify, I am using the word ‘invest’ in a very broad context.  But other than that, the points listed below and tested and proven ways to invest without any risk/money.

High-interest rate bank accounts

As I mentioned in a previous post, High-Interest Rate Bank Accounts, I prefer to have my emergency fund stored somewhere liquid so that it is easily accessible when I need them.  And the bank accounts listed in that post are the current list of high-interest rate bank accounts that I can find.  Do let me know if anything new comes along! XD

Well, theoretically you will need money in order to generate interest, but it is still risk-free?  Haha!

Credit cards

Contrary to what many might think, I think credit cards are great and would help in the money-making process.

  1. Promotions!  Free vouchers/items!
  2. Rebates.  Basically earning while you spend!
  3. Different card for different purposes!  Free entrance to museums, or clubs, free gym membership; find the card that suits you best!

*Note: Please pay your credit card bills on time!!

Apps and websites

Apps like Slidejoy, Phewtick, Peko, and Perks give out savings/rewards/ cash prices.  Sadly it has been getting harder to earn using these apps.  Do some research before starting!

Buy and sell stuff

  1. Buy low sell high.  Do intense research and look into market needs.
  2. Make use of tools like auction snipers.
  3. Sell in various locations like eBay, Carousell or forums

Sell your service

Everything you have!

  1. Sell your house.  You don’t have to sell your entire house.  I mean partially, like pet boarding or storage units.
  2. Sell your wits.  Give tuition.  Help with fixing a PC or a phone.  Help set up a Hackintosh.  The limit is boundless.
  3. Sell your muscles.  Be a mover, a delivery guy, a painter, or a weekend taxi driver.

These are things to earn cash quickly.  They tend to take up a lot of energy.  Only get involved if you are prepared.

Save 90% of your income (take-home pay).

How to save 90% of your income

As I briefly mentioned in a few places on my blog, here and here, I currently set aside 90% of my take-home pay.  And if I can do it you too can save 90% of your income/take-home pay!

First off, let’s establish the terminology.  When I say “take-home pay” I actually mean Salary – CPF – Mother’s allowance.  Yes, I know my mother is theoretically a part of my home but it is easier to do all my calculations this way.  Perhaps I should find a new terminology.  Oh well, that is a problem for another day.  For now “take-home pay” it is!

Food

Meal prep

I bulk prepare food for both my girlfriend and myself.  I will spend half a day on a weekend preparing at least a week worth of food.  To keep costs low, I am cutting back on meat and meal prepping with more vegetables and staples instead.  This is something we started very recently so we are still trying things out.  So far it is working out pretty well.  I even created an excel spreadsheet that has a breakdown of how much it cost per meal.  So far I am keeping the cost of each meal at the 1 to 2 SGD / meal range.

Try to “make” things if you can.  I have been making my own yoghurt out of whole UHT milk and it has been working out well since I use yoghurt in many of my recipes.  The idea of bulk purchasing UHT milk just to make yoghurt is really tempting at this point.  And this leads to my 2nd point.

Buy in bulk / on discount

It is almost always cheaper to buy in bulk.  Always look for package deals especially if it is something that does not expire quickly and/or used a lot.  Smaller stores, including small online retailers, tend to allow bulk rates of some sort.  Just ask.  The worst case is purchasing the item at the listed price.

I also shop at the discounted section.  Especially for items that are near expiry.  If I am going to cook soon and I can get the item at 50% off, I’ll get the one at 50% off.  It is exceptionally convenient nowadays with websites like RedMart providing a discount section.

Plan ahead

Well, how about eating out?  This is something both my girlfriend and I (mainly her) struggled a little with.  An eating out session is expected to happen sooner or later when you are out dating.  And specifically so when you do not live together.  What we eventually settled on are rare, more affordable meals only if we have to.  We will try to eat before heading out and only eat when we are back at home.  If all else fails, we will find an affordable place to have a simple bite.

There are also occasions when there is peer pressure for a social gathering.  For cases like that, politely decline, or if you are interested in going I would suggest an affordable place and then order something filling-and-will-not-break-bank on the menu.  I am also inclined to invite people over to my place where I can cook a meal for them, again without breaking the bank.

Transportation

Walk

I try to walk as much as possible.  I will only take buses for short distances if I can make full use of the transport rebate system.  More on this in a bit.  Also, since walking is beneficial for overall health it is generally a wise idea to walk more.

Make full use of the rebate system

Essentially, the Singapore public transport system fare is calculated based on the total distance, so the boarding charge for each individual service is theroatically free.

There are however some rules that govern the transfer system.

  1. Transfer time limit of 45 minutes.
  2. All journeys must be within 2 hours of the first boarding on the same journey.
  3. Single entry and exit allowed for rail.
  4. Current bus service must not be the same number as the preceding bus service.
  5. Maximum of 5 transfers can be made within a journey.

More info on the rebate system can be found here.

I currently spend about 50 – 75 SGD / month on transportation.

Plan ahead, avoid taxis / grab / uber

I now avoid all sorts of higher cost transportation like a plague.  I was “hooked” on them and convinced myself they are cheap and affordable.  Yes, they are convenient no doubt, but never mistake them for cheap.  They are nothing but.  Even if GrabHitch or UberPOOL is seemingly cheap, they do add up.  If you really need to get somewhere quick, go ahead.  But never let it be a habit.  I’ve been there and the aftermath is not very pretty.  Thus, always plan ahead when going out.  Take note of last bus/train timings.

I do have some exceptions to this rule of mine though.  Grab/Uber is acceptable when:

  1. I am in Johor Bahru
  2. It is midnight, I miscalculated and there is no longer any public transport home

Leeching

Lodging

Yes, I am living with my mother and I love every minute of it.  Mother is home.  Mother is love.

Bills

All my family’s bills are under my mother’s name and hence she settles them too.  I just give her a fixed amount every month.  My personal phone bill is around 30 SGD / month.

Misc

In my home, everything is shared.  We can eat/use anything that we see which can actually save a lot of money.  I never had to buy garlic because garlic is always stocked up.  Haha!

(Other) Expenses

Insurance

Currently, I am paying approximately 230 SGD / month on insurance.  More on the type of insurance I have here.  I am happy with all my insurance plans and do not intend to add anything extra in the near future.

Misc

I try to limit the number of misc items I buy, but sometimes there are certain things that are way too cute to pass up on.  I have to confess I purchased (my girlfriend paid for it though. =X) 2 fox plushies from Minoso 2 months ago.

There are also sudden unexpected expenses that need to be addressed.  Things like medical bills and sudden death of the mobile phone.  But I tend to keep these expenses as low as possible and try to find alternatives for them.  Example:

  1. Medical bills -> Over the counter medicine
  2. Mobile phone -> Cheaper alternatives like XiaoMi

Summary

As can see from my breakdown, it is actually not hard, and certainly not impossible to save 90% of your income.  Just be more diligent and plan more.  Your future pocket will thank you.

Being Frugal In Singapore.

Being frugal in Singapore?

Singapore is actually one of the ideal places to live frugally.  Sure, our standard of living are not as frugal friendly as our neighbouring countries but we have our unique frugal options.

Transportation

We are barely a red dot on the globe.  And thanks to the fact that we are barely a red dot, transportation is a breeze.  Everywhere is near for us.  We can literally reach the other end of Singapore in approximately (or sometimes less than) an hour!  This means that we can walk to many places with ease.  Even if walking is not an option, our public transport takes cares of the rest.  Not only do we have rebates if we had to switch to a different mode of transportation, we have government help via Travel Smart Rewards.  We even have “concession card” for people who travel a lot.  Yes, even for adults!

For those who are credit card savvy, you should be able to figure out how to earn some extra rebates. 😉

Food

Some may argue that food prices are high in Singapore.  But truth be told, you CAN indeed get cheap and good food in Singapore.  Yes I am talking about the hawker centres and the coffee shops.  No I am not talking about the Kopitiam franchise.  I am talking about the actual neighbourhood kopitiams.  Not only are the food wallet-friendly, those are the places you can get the most delicious food!  Stop paying 12 SGD (or more!) for a plate of chicken rice when you can get it at 2.50 SGD.

If you are worried about hygiene, go do some homework to find those ‘A’ rating places.  There are many around.  You just have to spend some time finding them.  Your wallet will thank you.

Housing

I think many will oppose with me on this one.  But hear me out.  Yes housing is indeed expensive in Singapore.  However, when compared to other developed countries (in urban areas), it really isn’t that bad.  And we have an advantage in mortage rates!  We have a 2.6% (theoretically CPF ordinary account interest rate + 0.1%) fixed rate interest offered by HDB as well as bank loan interests as low as 1.6%.  This is huge difference when compared to other developed countries.

1. Belarus 29.28%

2. Argentina 27.30%

.

114. Spain 2.36%

115. Singapore 2.29%

116. Hong Kong 2.24%

.

126. Switzerland 1.57%

127. Japan 1.33%

As can see, Singapore is ranked 115 out of 127 countries listed.  Our mortgage might not be the lowest (huge bow to Japan for keeping mortgage rates so low) but it is definitely looking a lot better compared to many of the countries listed.

Also, renting is not too bad in Singapore too.  It costs around 700 SGD for a single bedroom (and as low as 500 SGD if lucky).  Our foreign counterparts (I used USA as sample data) would have cost around 550 USD (800 SGD).  Furthermore as I mentioned in the first point, transportation is a freakin’ breeze no matter where we stay.

And let’s just be honest.  Most of us are still leeching off our parents.  We Asians do not have the leave-home-by-eighteen unspoken rule.  In fact our parents prefer us to be around.  And as Singaporeans we will most likely be around till we either get married or turn 35 (in Singapore singles can only get a place of their own if they reach 35).  That being said, if we stay with our parents, lodging is theoretically free.  And yes I am aware that many Singaporeans do give our parents a portion of our salary, but that is another topic for another day.

See.  Frugality in Singapore is AWESOME!  Let’s jia you!

High interest rate bank accounts.

High interest rate bank accounts

I am an advocate for emergency funds.  And by that I mean a portion of your money, preferably 3 to 6 months of monthly expenses, kept somewhere easily accessible.  I personally prefer to keep mine in bank accounts with high interest rates.  Fortunately for us, there a quite a number available in Singapore.  We just have to break down each one and find one that suits us.
Note that below is just a simple breakdown.  Also, do let me know if I missed out something or got anything wrong.

OCBC 360

OCBC 360 is what I have been using for the past 2 years, as I mention in my first post.  It is great for people that have their salary (>= 2000 SGD) credited via GIRO.  Especially if that is the only criteria that can be met.  So far OCBC 360 yields the highest interest rate for crediting of salary only.  I am currently in the midst of shifting to UOB One account (more on this later).
Base: 0.05%
Salary: 1.2% (GIRO >= 2,000 SGD)
Payment: 0.3% (online or GIRO >= 150 SGD)
Spend: 0.3% (>= 500 SGD)
Invest: up to 1.2% (visit below link)
Extra: 1% (on first 70,000 SGD if balance is >= 200,000 SGD)
Max: 1.85%¹
More info:

Bank of China SmartSaver

Great for big spenders + high-income earners.  The information I got from the website was a little vague.  I would call up BOC to check on the terms just to be sure.
Base: ?%
Salary: 0.8% (2000 – 6000 SGD), 1.2 (> 6000 SGD)
Payment: 0.35% (3 transactions of >= 30 SGD via online or GIRO)
Spend: 0.8% (500 – 1500 SGD), 1.6% (> 1500 SGD)
Extra: 0.6% (fulfill any one of the above)
Max: 2.55% – 3.75%
More info:

Maybank SaveUp

Slightly different way of doing things.  Maybank’s SaveUp is easier for people with a housing loan and etc to hit the minimum requirements.  Standard means like a crediting salary, credit card use, and payment options are still available as well.  Visit the website for more info.
Base: 0.1875% (first 3k), 0.35% (next 47k), 0.3125% (anything above 50k)
     – Average 0.24625 for first 50k
1 Product: 0.3%
2 Products: 0.8%
3 Products: 2.75%
Max: 2.99%
More info:
 

UOB One Account

This is the account I am intending to move to (from OCBC 360).  Basically, I wanted an account that does not need me to credit my salary since my salary may not be GIRO-ed to me.  UOB One fits the bill, and hence the move.  I might have some difficulties hitting 500 SGD every month but we will see.  Hopefully, everything will iron out soon.  I’ll keep things posted. 😀
Base: ?%
Credit Card (>= 500 SGD) + Salary (GIRO >= 2,000 SGD) or
Credit Card (>= 500 SGD) + Payment (3 transactions via GIRO): 1.5% (first 10k), 2.0% (next 20k), 3.33% (next 20k), 0.05% (above 50k)
Max: 2.0266666667
More info:

Standard Chartered BonusSaver

This is another account that is great for big spenders and high-income earners (see BOC SmartSaver).

Base: 0.1%
Salary: 1.0% (GIRO >= 3,000 SGD)
Payment: 0.25% (3 transactions of >= 50 SGD via online or GIRO)
Spend: 0.78% (>= 500 SGD), 1.78% (>= 2,000 SGD)
Invest: 0.75%
Max: 2.13% – 3.13%²
More info:

Citibank Maxigain³

This account is great for retirees and people who do not spend on credit cards and/or meet any other requirements.  Offering high interest rates (even though there is a waiting time), without needing to put in efforts.
Base: 0.8%
Additional: 0.1% Monthly (up to 12 months)
Max: 2.0%
¹ I deliberately excluded the “invest” and “extra” portions as most of us would not have 200,000 SGD in bank accounts (they should be in investments earning us more money!).  Furthermore, I do not advocate purchasing of the types of insurance they have to offer.
² Did not include investment portion as I do not advocate purchasing of the types of insurance they have to offer.
³ Uses SIBOR moving rate.  View website for further info.