Houses, Cars and Savings

[weisoon]

Lets start the ball rolling...

[Melvyn Tan]

30 to mid 30s - how much savings in Bank to be considered ok (or sufficient)

mid 30s to 40 - ditto

[weisoon]

A good figure will be 6 months income in cash in bank to tide over retrenchment etc. So I guess it does not matter with age. Of course as one gets older and earned more( assuming promotion/increments etc) the savings will be more than the so called required 6 months.

[Melvyn Tan]

Ok, say if the apportionment is 20% set aside for savings, then what will be a prudent way for the distribution of the remainder 80%?

Actually i was considering in the Sg context of living that universally how much savings one ought to have to live in Sg in the age range of 20s, 30s and 40s

assuming the housing is HDB or lower end Condo and maybe no car or an average car.

[weisoon]

i don't think for house you should use 10x yearly wage as a guide....instead more like how long you think you will be working and a percentage of the saving that you will be using to pay for the hose.....

lets say you used 10x yearly, and you intent to use 30% of your wage to pay....with the interest rates, you will definately end up more then 30 years in repayment....meaning only applies to those aged below 30......

Something tineng mentioned in the other thread...

Tineng, you mentioned that " instead more like how long you think you will be working". One assumes that he will work till retirement. As at the point of committment to buy a house, one will normally factored in that he will be in continuous employment till retirement and also there will a factored yearly increment or promotions. One has to be positive in order to jump into the committment else, there will difficulty to upgrade.

Lets say at the point of committment of buying a $1.5mil house, the salary is about $15,000 per month. At that point, to earn that amount of pay, assumption is that the person is in the 30s and has already worked for more than 10 years in order to achieve the $15,000 pay packet. The savings or investment for the last 10 years has gotten him maybe a HDB or a condo of which there will some payments made. If he were to sell it off to buy the $1.5mil property, he will most probably get easily in the range of $200,000 to $300,000 total, meaning amount paid to for the bank loan, profit in selling and the CPF. So, the outstanding loan for the new property will be in the region of $1.2mil. Dividing this amount over another 30 years and the monthly payment will be in the region of about $5,000 to $6,000. With his $15,000 pay, this amount is quite comfortable. Remember the $5,000-$6,000 can be covered with also his CPF. So the net disposable cash per month will be reduced to about $10,000 to be set aside for savings (20%) and other investments or insurances.

[tineng]

no quite true.....most people will not be able to pay off their HDB by 30....., in the past it might be true because buying from HDB usually means selling off for a decent profit....this is not the case for those in the 30's now.....

for me it was even worst, consider i got from resale market.....even with the additional grant by the government, i still lost about $150K when i sold my flat....i though i was the only one, but upon talking to my new neighbours they also faced the same problem.....even my friends with brough new from HDB also faces dwindling profit margin when selling of their flat.....so seriously, when buying a new place, you can no longer take into consisderation your current HDB flat.....in fact, you might be actaully making a lost already......

in fact, with the enconomy recovering, it might become a bad thing.....because you now see people moving to bigger house but you are stuck with the old ones.....

[weisoon]

Ok, say if the apportionment is 20% set aside for savings, then what will be a prudent way for the distribution of the remainder 80%?

Actually i was considering in the Sg context of living that universally how much savings one ought to have to live in Sg in the age range of 20s, 30s and 40s

assuming the housing is HDB or lower end Condo and maybe no car or an average car.

Maybe an example will be good. Let assume a person with monthly take home of cash $3000.

Savings = 20%x$3000 = $600

Balance = $2400

Assuming house value is about $300,000 ( based on 10xyearly salary )

Minus all the downpayments (cash or CPF) and a loan from bank of 30 years

for $200,000. The monthly payment will be in the region of not more than $1,000 with a combination of cash and CPF. Assuming CPF used is $400, the cash out lay is about $600.

Balance is $2,400 - $600 = $1,800.

Assume owning a car value of about $30,000 2nd hand with loan of 5 years on a monthly installment of about $700.

Balance is $1,800 - $700 = $1,100.

So the rest of the $1,100 will be aportioned to food, PUB bills, clothings, children education, insurance etc.

Basically, for me, earning $3,000 a month is a bit tight to own a car (even a 2nd hand one) as can see for above as the balance is quite tight ($1,100 for other family expenses)

Maybe someone can come up with a better example?

[Chris]

Where is the potion to spend at LFS? It can range from 5% to 50% of income!

[tineng]

Maybe an example will be good. Let assume a person with monthly take home of cash $3000.

Savings = 20%x$3000 = $600

Balance = $2400

Assuming house value is about $300,000 ( based on 10xyearly salary )

Minus all the downpayments (cash or CPF) and a loan from bank of 30 years

for $200,000. The monthly payment will be in the region of not more than $1,000 with a combination of cash and CPF. Assuming CPF used is $400, the cash out lay is about $600.

Balance is $2,400 - $600 = $1,800.

Assume owning a car value of about $30,000 2nd hand with loan of 5 years on a monthly installment of about $700.

Balance is $1,800 - $700 = $1,100.

So the rest of the $1,100 will be aportioned to food, PUB bills, clothings, children education, insurance etc.

Basically, for me, earning $3,000 a month is a bit tight to own a car (even a 2nd hand one) as can see for above as the balance is quite tight ($1,100 for other family expenses)

Maybe someone can come up with a better example?

seriously don't think with $1100 left you should own a car.....with the price of petrol, you can spend potentially $200-$400 more in petrols, so assumping:

- $300 for petrol

- $200 for parking (home and office)

- $150 got electrical bills for your fish tank

- $150 to buy new sps

- $300 for food (assmping S$10 per day)

DARN!!!! no wife and kids........

[weisoon]

no quite true.....most people will not be able to pay off their HDB by 30....., in the past it might be true because buying from HDB usually means selling off for a decent profit....this is not the case for those in the 30's now.....

for me it was even worst, consider i got from resale market.....even with the additional grant by the government, i still lost about $150K when i sold my house....i though i was the only one, but upon talking to my new neighbours they also faced the same problem.....even my friends with brough new from HDB also faces dwindling profit margin when selling of their flat.....so seriously, when buying a new place, you can no longer take into consisderation your current HDB flat.....in fact, you might be actaully making a lost already......

Tineng, of course my formula does not factored in market movements. One should not chase the market, be it share or property as when the bubble burst, it will be quite harmful.

Nowadays, those who bought new from HDB or even condo, do not expect to make a profit by selling it at a later date.

What happened in your case is all about timing. You happened to jump in at the height of the bubble in 1996 and we are talking about conservation of value/price. You are suffering the loss but the person who sold you the flat already made the profit from you. However, he may have bought another more expensive property and suffered even more than you today?

I believe you neighbours all not all first timers but some are upgraders. Did you ask them how much they made selling their old flat before they bought the present one?

[Melvyn Tan]

S$1,100/- for the rest really not enough at all man !!! Marine hobby + elect bills can be quite high man...

Looks like i may have to take up another job man !

[Chris]

I will sell my car. Save $$ and without car, cannot go so many LFS and save even more $$.

[Melvyn Tan]

seriously don't think with $1100 left you should own a car.....with the price of petrol, you can spend potentially $200-$400 more in petrols, so assumping:

- $300 for petrol

- $200 for parking (home and office)

- $150 got electrical bills for your fish tank

- $150 to buy new sps

- $300 for food (assmping S$10 per day)

DARN!!!! no wife and kids........

Insurances not factored also as well as investment plans...

Whoash !!! looks like to be comfortable bring home pay maybe should be S$4000/-? That means salaried worker who owns marine tank + a "can get by" car must be having a salary of S$5000/-?

Still in that bracket - not factored in Insurance and investment plans yet...

[AlfaRomeo]

We are considering only single-income family so far. I believe most of us are dual-income families as we all know that if you dunt at least earn $5k/month as a single income guy, it will not be sufficient to run a family in Singapore especially if u have kids.

[Jaslyn]

it was just yesterday I heard of similar topic but was 'how much is enough'. A man who lives in a 5 room HDB with wife working,2 young children and a maid claim if earning is below 5k a month,cant survive.Seeing how fellows reefer build up the chart,I totally agree with him.

The above chart doesnt incl kids...not to forget,we all know kids are high end costs,way more if comparing to having a marine tank.

Thats my 2 cents worth

[tineng]

Insurances not factored also as well as investment plans...

Whoash !!! looks like to be comfortable bring home pay maybe should be S$4000/-? That means salaried worker who owns marine tank + a "can get by" car must be having a salary of S$5000/-?

Still in that bracket - not factored in Insurance and investment plans yet...

actually, those most confortable are people with saving to affort cars with just cash payment!!!! or have enough saving to replay loan after the tie in period (to make use of the 'incentives' offered by the bank)

personnally i have seens freinds adopting this strategy and actually making small profit (few hunderds) every time they change car!!!!!!

the idea behind this stratgy is to able to grab the first good deal that comes along without been tied down by loan......my friend had changed car with deals like:

- expat going back to their country

- rich people 'upgrading' thier car

- loan companies repossaing cars

- COE price dropping like hell

On the same note, i have seen the rich buying & moving houses eveytime making a good profit - they only need to wait for bank sale/auction......

cash is power!!!

[minsmarine]

some1 now start talking again

[Melvyn Tan]

You are right AR... S$5000/- singly or doubly is just sufficient to support a family just nicely... How on earth to sponsor children to University especially abroad man !!!

Looks like cannot buy expensive Angels and skimmers anymore !!! Just did a stupid chengai stand for supplementary sump + housing for future equipments !!!

[minsmarine]

In SG if you really want comfortable life, u need at least

20k a month income.

this is not for those in Private Eastate. Just talking about HDB group.

Like Insurance guy said, we need 500k ( current money ) for our kid university.

Where r we going to get 500K SAVING, even if can save half of it and the rest come back from investment. Mean

u need to earn at least 40k a month

[Melvyn Tan]

Looks like we are all poor folks man !!! at least for me

[minsmarine]

If u think seriously, it's scary.

So I told myself, where am I going to get 500k for my kid education

And I have 2, mean 1M.

Even if I save all my salary without eating, no house, I need 10 years to achieve it.

So, better don't think

Hey Melvyn, we r all in same age huh, I am not 49 years old as every1 thought

[Jaslyn]

its scary come to think of it.Lets dont even think about university for kids now.Even childcare...pre-school...even Pri school...think about the enrichment classes....I have seen parent paying over 1k per month just on tuition for their Pri school kid....everything that has to do with kids are all high end.

5k a month would be for JUST enough without saving type but if really talk about saving,insurance....and not having to worry about day in day out...maybe we are really looking at what minesmarine is talking about.

[Melvyn Tan]

Mins, me not 49, only 23 years old (kidding) still figuring out how to send my daughter to my alma matar...

Sometimes really wonder if i am dreaming everyday !!!

I consider myself in mid-management although current position says otherwise but still stuck in the money part.

[Melvyn Tan]

Next time can only buy common clowns and damsel fishes...for my daughter's future....NO MORE EX ANGELS...when is th enext shipment for clarion?

On a more serious note, we have to figure a way out to have more income stability from the already little we have, Mins, Jas, tineng, AR, weisoon, Chris? help me?

[minsmarine]

Lizard44 can share his experience on making money, however this guy is damn shy.

But serious thinking,

If we save all the money for our kids's future study,

Who will take care, when we need $$ ?

Another thread for Parents ?

Anyway, I buy weisoon 1 year salary for Car, so on so forth.

But we are assuming that economy stable and ur income not drop.

For the past 3 yrs, I took 35% pay cut to stablize the company I worked for, so there will be enough $ to pay all other staffs.

Since than, shouk, everymonth gone.

Me currently in "NOINCOME GROUP" so don't know what to say, all I can said, "Shouk, I have no saving"