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Thread: Advice on CashFlow Problem

  1. #1
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    Thumbs up Advice on CashFlow Problem

    First post (after reading for 1-2 years)

    -Holding HDB EA D14 with outstanding Mortgage of 200k at 1.4k / mth but currently rented out for 2.5k/mth. Est valuation ~630k
    -Bought in 2010 FH PC D19 and own stay, ~$3.6k/mth for 1m mortgage. Last transacted in same estate end 2011 at $200psf higher than my purchase.

    Was Dual Income No Kid (DINK) ~ 12+k / mth
    Now Single income two kids (SITK) ~ 8+ k / mth due to wife taking care of kids

    Foresee cash flow problem due to Single income, insufficient CPF reserve for mortgage payment, heavier expenses for increased household expenditure.

    Asking Guru here for sound advice:
    1. Am I over leveraged on loan?
    2. If have to sell one, which is more advisable under current climate?
    3. Any other means beside selling, borrowing from personal contacts? I foresee if able to tide through another 2 years, the cash flow would not be so tight.

    Your advice much appreciated.

  2. #2
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    Quote Originally Posted by Reisor
    First post (after reading for 1-2 years)

    -Holding HDB EA D14 with outstanding Mortgage of 200k at 1.4k / mth but currently rented out for 2.5k/mth. Est valuation ~630k
    -Bought in 2010 FH PC D19 and own stay, ~$3.6k/mth for 1m mortgage. Last transacted in same estate end 2011 at $200psf higher than my purchase.

    Was Dual Income No Kid (DINK) ~ 12+k / mth
    Now Single income two kids (SITK) ~ 8+ k / mth due to wife taking care of kids

    Foresee cash flow problem due to Single income, insufficient CPF reserve for mortgage payment, heavier expenses for increased household expenditure.

    Asking Guru here for sound advice:
    1. Am I over leveraged on loan?

    Rental income from HDB is approxi $1k and instalment including maintenance and tax for PC is approxi $4k. With income of $8.5k, disposable income is $8.5 + $1k - $4k = $5.5k. Only some savings of approxi $1k for a family of four with other financial commitment at current low interest rates.

    2. If have to sell one, which is more advisable under current climate?

    Not really need to sell.

    3. Any other means beside selling, borrowing from personal contacts? I foresee if able to tide through another 2 years, the cash flow would not be so tight.

    Just swap to living and address to HDB and rent out the condo, until your income increases to $10k pm, then swap back. I think your cash flow will improve significantly by about $1-2k.

    Your advice much appreciated.
    Just try above...

  3. #3
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    If u sell HDB, most of the money will go back to CPF. There is not much of additional cash inflow to lighten your burden.

    I suggest, u shift back to HDB to lower the cost of living and then rent out the PC. The interest expense on PC can offset against rental. I think u can get more rental income from the PC.

    It is a wise decision for the wife to be a stay-in mum.

  4. #4
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    Maybe your wife can do some part-time "work from home" jobs? Can add at least $500 more to total income?


    Another option is to rent out 1 room from ur PC, if u don't mind sharing.



  5. #5
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    3rd vote for stay in HDB ... u will get U-save and Ah Gong money for free... agree with Laguna that nothing beats a mum-at-home for your kid

    can sell car also if really desperate

    and stop all your education policies / ILPs / endowment insurance immediately especially it is < 10y !!!
    Ride at your own risk !!!

  6. #6
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    Term loan is an option. Might not be feasible for u given 60% LTV and it's a loan

  7. #7
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    Default

    Quote Originally Posted by Reisor
    First post (after reading for 1-2 years)

    -Holding HDB EA D14 with outstanding Mortgage of 200k at 1.4k / mth but currently rented out for 2.5k/mth. Est valuation ~630k
    -Bought in 2010 FH PC D19 and own stay, ~$3.6k/mth for 1m mortgage. Last transacted in same estate end 2011 at $200psf higher than my purchase.

    Was Dual Income No Kid (DINK) ~ 12+k / mth
    Now Single income two kids (SITK) ~ 8+ k / mth due to wife taking care of kids

    Foresee cash flow problem due to Single income, insufficient CPF reserve for mortgage payment, heavier expenses for increased household expenditure.

    Asking Guru here for sound advice:
    1. Am I over leveraged on loan?
    2. If have to sell one, which is more advisable under current climate?
    3. Any other means beside selling, borrowing from personal contacts? I foresee if able to tide through another 2 years, the cash flow would not be so tight.

    Your advice much appreciated.
    May I know how old are you and your wife; how old are your kids?

    Also, your current household income of 8k+ is after/before CPF reduction?

    I feel you should hang on and bear with it. Condo/HDB stay is really dependable to your family needs and expectation.

  8. #8
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    Besides swapping back to EA, since ur hdb loan is 200k, sell car, raise money + cpf & clear off this loan. Tahan a short pain & buy back a car at a later date.

  9. #9
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    Quote Originally Posted by yowetan
    May I know how old are you and your wife; how old are your kids?

    Also, your current household income of 8k+ is after/before CPF reduction?

    I feel you should hang on and bear with it. Condo/HDB stay is really dependable to your family needs and expectation.
    Yowentan,

    You not buying the landed anymore? Now can advise people already?

  10. #10
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    Quote Originally Posted by maisonjai
    Besides swapping back to EA, since ur hdb loan is 200k, sell car, raise money + cpf & clear off this loan. Tahan a short pain & buy back a car at a later date.

    Yah, the car should be the first item to get rid of.

  11. #11
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    Quote Originally Posted by Trapping-bird
    Yowentan,

    You not buying the landed anymore? Now can advise people already?
    I am commenting on the situation; I am not advising.

    I am going down to Flamingo Valley tomorrow to negotiate with the agent.

    Also, please keep to the topic and respect the threadstarter.

  12. #12
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    I will sell PC and still have 200k profit after paying for stamp duties and bank interests. Since PC prices is likely to moderate going forward, keep the money and wait for opportunity to invest in another PC less than $1m. You may rent out the PC or move in whichever make more sense or depending on your needs at that point in time. Your loan quantum will also be lesser and cash outlay reduces too.

  13. #13
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    Wink

    Quote Originally Posted by yowetan
    I am commenting on the situation; I am not advising.

    I am going down to Flamingo Valley tomorrow to negotiate with the agent.

    Also, please keep to the topic and respect the threadstarter.
    Hi , cool it.. Good luck to your flamingo.. It's a Fh and should be a good buy..

  14. #14
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    Quote Originally Posted by yowetan
    I am commenting on the situation; I am not advising.

    I am going down to Flamingo Valley tomorrow to negotiate with the agent.

    Also, please keep to the topic and respect the threadstarter.
    when will u be there?
    That many of us will go there to support u for the group discount

  15. #15
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    support might become pressure, better bring family along & make a collective decision for this big ticket item.
    good luck yo, we tan for ur update tmr....

  16. #16
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    Quote Originally Posted by Reisor
    First post (after reading for 1-2 years)

    -Holding HDB EA D14 with outstanding Mortgage of 200k at 1.4k / mth but currently rented out for 2.5k/mth. Est valuation ~630k
    -Bought in 2010 FH PC D19 and own stay, ~$3.6k/mth for 1m mortgage. Last transacted in same estate end 2011 at $200psf higher than my purchase.

    Was Dual Income No Kid (DINK) ~ 12+k / mth
    Now Single income two kids (SITK) ~ 8+ k / mth due to wife taking care of kids

    Foresee cash flow problem due to Single income, insufficient CPF reserve for mortgage payment, heavier expenses for increased household expenditure.

    Asking Guru here for sound advice:
    1. Am I over leveraged on loan?
    2. If have to sell one, which is more advisable under current climate?
    3. Any other means beside selling, borrowing from personal contacts? I foresee if able to tide through another 2 years, the cash flow would not be so tight.

    Your advice much appreciated.
    Option 1, since the interest rate is low now, extend your loan period.
    Option 2, Move back to HDB, rent out the PC.

    I am in almost similar situation as you, I extend my loan period and additional loan amount and get my 3rd property at 600k+

    By the year of 2015, I will rent out both HDB and PC and I will have positive cash flow of around 2k per mth.

  17. #17
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    I will nvr encourage u to sell the EA for reasons
    1. U cannot buy back unless u dispose the PC
    2. HDB has stopped building EA.

    EA, a bigger unit, one way is to see whether u can move in your parents/parents in law with u, and rent out their units and u collect rental. But personally, I dun like the idea as seems taking advantage of parents. If ur parents/ in law moved in, then ur wife may go to work again.

    It is not easy to be an effective professional mother at work. Stay in mum always has endless routine houseworks, marketing, cooking, cleaning, washing and ironing etc etc. and ended up like a helper. And also, stay in mum may not an educator as well.

  18. #18
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    Smile

    Thank you all gurus here for the inputs and have gotten more alternative options when the need arises.

    To answer some of the query and provide more info for clearer pic.
    -I'm early 40s and wife 4 yrs younger. Kids are 12 & 2 - PSLE & per-nursery.
    -Car bought early 2009 (prob one of best time ever to buy ~5k COE), yes, can be sold now at original price w/o depreciation cost but incur interest cost. Will be inconv to sell due to work & family but option avail, definitely. Tks.
    - too bad did not go in propty in'09 but early '10 as unit near son's SCH not avail. But propty bought was enticing then, FH & <$700psf then, <300m from MRT, quite big area in estate as present built up prob < GPR 1.4. Only setbacks closing to 30 yrs old & walk-up type. But recipe for potential enbloc < 10-15 yrs, all HDB Already with lift, matter of time before private also all lift.

    Originally wanted to sell HDB then but agent persuade to rent due to higher yield. Cash flow was not so tight then as still 20% dnpy. Compare to present 40% 2nd ppty & yet so many takers, it's a marvel that market is so liquid. Am I missing something like hearsay u/c PC only do progressive of the 40% till TOP which is 3-4 yrs later.
    Mant thanks for reply and more views welcome.




    Quote Originally Posted by Laguna
    I will nvr encourage u to sell the EA for reasons
    1. U cannot buy back unless u dispose the PC
    2. HDB has stopped building EA.

    EA, a bigger unit, one way is to see whether u can move in your parents/parents in law with u, and rent out their units and u collect rental. But personally, I dun like the idea as seems taking advantage of parents. If ur parents/ in law moved in, then ur wife may go to work again.

    It is not easy to be an effective professional mother at work. Stay in mum always has endless routine houseworks, marketing, cooking, cleaning, washing and ironing etc etc. and ended up like a helper. And also, stay in mum may not an educator as well.

  19. #19
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    It is obviously taking advantage of them. It is worst if they have siblings. Time to let go of hdb if intention is to sell hdb. COV will drop further.
    Quote Originally Posted by Laguna
    I will nvr encourage u to sell the EA for reasons
    1. U cannot buy back unless u dispose the PC
    2. HDB has stopped building EA.

    EA, a bigger unit, one way is to see whether u can move in your parents/parents in law with u, and rent out their units and u collect rental. But personally, I dun like the idea as seems taking advantage of parents. If ur parents/ in law moved in, then ur wife may go to work again.

    It is not easy to be an effective professional mother at work. Stay in mum always has endless routine houseworks, marketing, cooking, cleaning, washing and ironing etc etc. and ended up like a helper. And also, stay in mum may not an educator as well.

  20. #20
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    Is it possible to minimise household running expenses since wife is staying at home? Eat at home as much as possible.

    Presumably there is no maid.

    Buying groceries when they are on offer, it is possible to trim down the bills.

    For our extended family household of 15 members, my relative (who does the purchasing) informed me that the monthly groceries bill is only $1000 (food and household cleaning materials, including laundry detergent etc). They only buy when there is a special offer on for the needed goods. We have no infants or toddlers therefore no expensive milk powder or diapers expenditure.

    Cut down on unnecessary tuition and enrichment classes. 2 year old to go to PA kindergarten or church kindergarten rather than expensive pre-school.

  21. #21
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    Quote Originally Posted by chiaberry
    Is it possible to minimise household running expenses since wife is staying at home? Eat at home as much as possible.

    Presumably there is no maid.

    Buying groceries when they are on offer, it is possible to trim down the bills.

    For our extended family household of 15 members, my relative (who does the purchasing) informed me that the monthly groceries bill is only $1000 (food and household cleaning materials, including laundry detergent etc). They only buy when there is a special offer on for the needed goods. We have no infants or toddlers therefore no expensive milk powder or diapers expenditure.

    Cut down on unnecessary tuition and enrichment classes. 2 year old to go to PA kindergarten or church kindergarten rather than expensive pre-school.
    1k for 15pax?? I thought my 100 for single pax was power... And that time I didnt even do meat nor milk... I was doing mini experiment on minimal sustenance test. Your relatives buy in bulk is it like 6 months at a go?

  22. #22
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    Quote Originally Posted by carbuncle
    1k for 15pax?? I thought my 100 for single pax was power... And that time I didnt even do meat nor milk... I was doing mini experiment on minimal sustenance test. Your relatives buy in bulk is it like 6 months at a go?
    Yes they do buy a lot once it's on offer. They only buy on offer and not at other times and they keep track of the price because not all offers are as cheap as they seem.

    Milk - we mainly use milk powder and not packet drinks.

    Meat - we mainly buy frozen meat or when offer is good for non-frozen meat, we buy and store in the freezer.

    Our maids are reasonable cooks and can do most of the dishes -spaghetti, various pasta pies, pizza (home made), chicken rice, laksa, poh piah, rojak, mee rebus, mee goreng, mee siam etc

    We hardly eat out at hawker centres or restaurants. In fact, my kid thought it very embarassing that I am not very familiar with the system of ordering in a food court.

  23. #23
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    For a household of 15 pax, I would think no need offer to buy.
    Just go buy from distributor.. lol. Better than retail pricing.

  24. #24
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    Quote Originally Posted by focus
    For a household of 15 pax, I would think no need offer to buy.
    Just go buy from distributor.. lol. Better than retail pricing.
    You are right. Sometimes the supermarket cashier think we are buying to stock up a shop.

    However my relative loves to use the credit card and chalk up points and more discounts for the purchases. If buying from distributor, need to have COD. Some of the offers are at better prices than distributors (sometimes its for the supermarkets to clear stocks).

    You can see why nobody wants to move out. Even though it's squeezy at home but we have economies of scale.

  25. #25
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    Quote Originally Posted by chiaberry
    Yes they do buy a lot once it's on offer. They only buy on offer and not at other times and they keep track of the price because not all offers are as cheap as they seem.

    Milk - we mainly use milk powder and not packet drinks.

    Meat - we mainly buy frozen meat or when offer is good for non-frozen meat, we buy and store in the freezer.

    Our maids are reasonable cooks and can do most of the dishes -spaghetti, various pasta pies, pizza (home made), chicken rice, laksa, poh piah, rojak, mee rebus, mee goreng, mee siam etc

    We hardly eat out at hawker centres or restaurants. In fact, my kid thought it very embarassing that I am not very familiar with the system of ordering in a food court.
    Your maid Leticia Bongnino?? Very power leh. Got carry all your bags when go out not wakaka

  26. #26
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    Quote Originally Posted by carbuncle
    Your maid Leticia Bongnino?? Very power leh. Got carry all your bags when go out not wakaka
    No. Only need to carry them in when the good are delivered. Because of the high volume bought, we get them delivered to our house free of charge. Except for the frozen goods. Family members will carry them to the car and load up unless it's Tuesdays at NTUC where we send one maid (to get the 2% additional discount for senior citizens we send the granny over too).

  27. #27
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    佩服!!!!! I think you managing very well already. Still wanna save further? Maybe cut down on junk foods and tidbits? By house brand products exclusively? And use Low GI food like wholemeal bread vs white bread, grains and brown rice which can last longer in the stomach and much more healthy? Coz I see a lot of not healthy dish choices you cook:-(

  28. #28
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    Those "special" dishes are only cooked once a week and in rotation. We use the mix brown/red/white rice that is sold in NTUC (house brand). But some of the kids don't mind the brown rice so we have gradually increased the amount of brown vs white rice. Most of the week we have one meat, one fish and one vegetable dish per meal.

    We do generally stick to house brands. But some are not so economical as you think. Example is house brand dish washing liquid which does not foam up well and does not wash properly even after using a lot. So we go for more expensive branded dishwashing liquids which perform better.

    Yes, can save further! If any coupons for additional savings off groceries are published in the papers, we will try and get as many of those as possible (from neighbours/friends/work mates etc). My in-laws have always practised frugality to an art.

  29. #29
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    You guys are too extreme ... be careful buying cheap stuff means GMOs, full of pesticide, made of low grade palm oil, made in CHINA, meat full of growth hormones etc

    80% food my wife bought is organic food ... Cold storage cheaper than NTUC

    Very simple example, you eat Australian Broccoli or you dare to eat Chinese one?? The price differs by a lot ... how about Kampong chicken vs frozen chicken ?? It is crazy to eat frozen food for a long time ... I only did it when I was studying in UK


    Beware there is no free lunch in this world - expensive does not mean good, cheap food mostly are no good (unless u grow yourself)
    Ride at your own risk !!!

  30. #30
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    Quote Originally Posted by chiaberry
    Those "special" dishes are only cooked once a week and in rotation. We use the mix brown/red/white rice that is sold in NTUC (house brand). But some of the kids don't mind the brown rice so we have gradually increased the amount of brown vs white rice. Most of the week we have one meat, one fish and one vegetable dish per meal.

    We do generally stick to house brands. But some are not so economical as you think. Example is house brand dish washing liquid which does not foam up well and does not wash properly even after using a lot. So we go for more expensive branded dishwashing liquids which perform better.
    You guys are doing everything right already... Hmmm maybe change from NTUC to SS if there is one nearby? SS should be cheaper for most things no? I love NTUC online ordering though as I dont drive and nobody to help me carry...

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