Originally Posted by
paulho77
Introduction
You are a middle-class earner. The catch is; don’t try to be funny and take risk. Market rewards patient investors. In strategy games like Dune and Warcraft, you must build your foundation before conquering new lands. I believe now, more than ever, that we need people to understand for the rule of economics, and acknowledge that they do not have the authority to do whatever they please + no such thing as “money grows money” in an super-efficient informed economy in the years ahead. Money only grows money if you are not a long-term slave to the banking system. (That means, in modern economics, if you have to borrow money to grow, you will eventually get tripped).
Do you know that many retired teachers are living in million dollar properties that are fully paid up? They saved and grab cheap properties during recession with their stable income. My topic today will focus on dwelling, income sustainability, transport and family.
Dwelling
You stand at important crossroad in history being the sandwiched middle-class. Making the wrong decision will have repercussions for many, many years.
• I don’t have a HDB flat now.
Nothing to be ashamed of. It is actually better to stay with parents. You do less household chores. If your in-laws bully you, you can always move out. If they are nice, stay with them and wait for the right time to enter the property market. Why? Because you can definitely get your dream condo at a more affordable price a few years down the road (yes, jump straight to condo) if you don’t have to force yourself to buy at the current high prices now.
The catch is timing. You will live for nearly 80-100 years, so what is a few years of waiting for the right price. Just make sure you got good savings. If you don’t have savings after clocking this kind of salary for years, something is wrong somewhere.
• I have a small house now.
Do you want to upgrade? Remember: when you sell high, you buy high. When can you buy cheap? Probably recession. There is no such thing as a good debt. A debt is a debt, because you are indebted, it limits your artillery firepower when the recession comes, then you will really miss the boat.
Please be patient. You cannot afford to be wrong in timing. Once you are wrong, you are stuck for life. It is not like playing computer games, you can’t restart. Don’t think about upgrading now, be thankful that you have a roof, for many newly-weds got to buy at much higher price than you, to start their family.
• I think I overstretched and committed to a million-dollar condo
I have only one thing for you; Please try to offload or pay-off asap. Look, housing loans interest rates used to be >5% years ago. Do your sums and you know that you will be killed by the higher interest rates if you loan 70-80%.
The best property prices will come when interest rates are high. Do not compromise your values or beliefs in cesspool of corrupted financial advisors or loans/housing salesmen who tell you to maximize your gearings to enjoy the low interest rates. The world will fall back to reward forthright people who will invest and works honestly, even if it means that they endure severe criticism and derision by some financiers/deal-markers who are enjoying fat bonuses.
Income sustainability
Congratulations, if you had worked hard to be fiscally responsible and debt-free. >90% of the people reading this article will not be in this category. The global economy have contributed to the deflation of fiat value, for which people like you and I will have to suffer the consequences a few years later (payback time).
You draw 4-7K, that means you are executive/manager-calibre. In a way, we are slowly become like South Korea. Most South Korean middle-income earners lose their jobs when they hit 40-45 years ago. The good thing is that conglomerates are more ethical and really compensate them $100-400K. The Korean society accepts this because it makes way for young blood in a company and those who managed to stay behind will be groomed as division/dept directors.
Human resource is like commodity now. You want a thousand dollars more, chances are, you got to work harder. I foresee many will lose their jobs when they hit >6K in the forties. The odds are as high as you getting bitten by mosquitoes when you trek through the forest. Nevertheless, it is not exactly your fault, it takes another long weekend to explain this but let’s focus on what you can do to mitigate the crisis when it happens.
Do you think you have hit the highest income ceiling possible for your calibre? If yes, try to job-hop to civil service (under non-contract hiring), including uniformed service (not only police or military). If a middle-incomer can get a civil service job for $500 less, please switch immediately.
Try not to think about entrepreneurship unless you willing to do dirty-jobs or work 6-7 days a week running your own business. Worst of all, when you start a new business when you are enjoying 7K fixed income, you are not taking a calculated risk. Overheads are too high in Singapore, even if you are hardworking, the rental will kill you.
If you lose your job suddenly. it is not a bad idea being a taxi-driver first, before planning your next move. This line is still something that is reserved for Singaporeans. You can usually clock 3K-5K depending on your working attitude. Taxi drivers in Korea makes only average US$1200-1500 each month.
Transport
You can really afford to buy a car (thanks and no thanks to cheap car loans) but you will stretch to your limit. Die lah, Toyota camry costs >$160K, a new C-class cost $10-20K more. Sure upgrade right? The price discrepancies are forcing people to buy more European cars. Now you see a lot of German on the road but then how many drivers can meet the monthly loan payments. Trust me, many more didn’t even have the spare cash to go for regular servicing after paying loans. Die x 2 lah.
Here’s some considerations:
- If you don’t need a car, good for you, you can save a lot.
- If you can delay having a car for 10 years, think about the countless $$$, that you will save fuel, taxes, etc. imho, >$100K by today’s standard.
- If you need a car, please buy resale. Choose carefully, I can’t teach you how to choose a good condition car but you can narrow down to some models. Eg. I recommend larger 2-3L Korean cars below 50K. These cars are made with high standards and low maintenance cost.
Family
Are you still motivated to fight unceasingly for the dreams that you have for your new-formed family when you married? I hope you still do. The rules of the game will be changing from wealth creation to wealth preservation.
Family is important. However, we got to admit that the hectic work schedule affects our family life. I am not going to lie to you and tell you rubbish like work-life-balance. There is no such thing in Singapore, wake up ok? But you can choose, you decide for yourself.
If you cannot spend time with your loved ones, make sure you save something for them. It is the bare minimum that we can do. In US and Korea, many kids got to pay off university debts when they start working, it is actually the same here if your kids got to use your CPF. Therefore, try to put aside some savings for them.
Family members cannot forgive us when we lose money in stock market, they might even call us gamblers when we lose money. When we win money, they take it for granted. So, why buy shares when you still have debts to payoff? If you don’t have to buy, don’t buy.