Total Expenses for 2013

Total Expenses for 2013

Total Expenses for 2013

I’ve been diligently making a conscious effort to cut down on expenses, pay down debt and save money, and seems like my hard work has paid off!

My expenses still seems to be on the high side mainly due to the fact that my parents have retired, and I’m giving them close to 1k a month. I’ve also contributed slightly over 8k for debt repayment. It’s still a painful reminder of the amount of debt I’ve dug myself into, but am glad I finally have control of my financial life!

Without debt repayment, my total expenses amount to $33,944 which is a comfortable $2,829 per month. I don’t think I can cut my expenses down much further as it is already on the conservative side.

So the golden question. How much do I need upon retirement?
Looking at this table, I probably need about $14,600 per annum for living expenses, which is about $1,217 per month. Do note that these figures have yet to be adjusted for inflation, it’s just a rough guide.

Here’s the breakdown on an annual basis:

Insurance – $3,000
My insurance premium is a 15yr term insurance which I’ll stop paying when I turn 39. However, I believe I need to step up on health care insurance due to old age, and premium usually cost more the older we are.

Phone – $600

Transport – $1,000

F&B – $5,000
I’m a foodie and I don’t plan to scrimp on food.

Travel – $5,000
I’ll probably not shop much or have much entertainment, so I’ll reserve $5,000 a year for traveling and vacations.

So what’s the minimum amount I need to have for retirement? A quick calculation shows $300,000 is enough to fund my retirement. A $300k portfolio with an average return of 5% per annum is enough to generate me $15,000. Just enough for the expenses listed above!

Advertisements

3 thoughts on “Total Expenses for 2013

  1. Hi Jasmine,

    Wow $45,000 is really solid savings for the year. Great job! Does that include any dividends from investments or other income, or just purely from salary and bonuses?

    I believe it’s a good practice for you to give to your parents. Even if they are self-sufficient, I feel it is our duty to give back what they have provided for all our lives and that this is an act of filial piety we should observe. I read the news about many parents chasing after their children for maintenance to support them through their old age, and it’s a very situation indeed if the children abandon their parents and do not provide financial assistance. So a big thumbs up for that!

    Noted that if you stripped out your insurance premium your monthly expenses will still be around $2,600/month, and if you remove the parents’ allowance it is about $1,600/month. This seems quite reasonable and I think that if you can save around $50,000 a year that’s a very good achievement. The next step forward (once you have a good stash and zero debt) is to invest the money to generate good passive income, in well-run companies with solid fundamentals.

    Just curious though:-

    1) Do you still have any remnants of your debt left to pay for 2014?
    2) Your term insurance seems really expensive at $3,000/year for just 15 years of coverage! Why don’t you get a comprehensive policy which covers death, CI and TPD till age 65 for a reasonable premium? Does your insurance plan also include H&S which is very important? (This should be covered mostly by Medisave – the out of pocket portion is for the rider to cover the deductible and co-insurance).
    3) My suggestion is you could cut down on the travel expense to maybe $2,000/year (go nearby like Indon or Malaysia or Bangkok) and instead channel some of the money to entertainment, food and savings (e.g. $1,000 each). When you have much more savings and healthy passive income, you can always increase the travel expense. It’s a personal choice though – some believe they should travel when they are young and fit but this also means you drain away a lot of cash which could be compounded for better returns.

    Regards.

    • Hi again!

      Thanks! A huge chunk of my savings come from my monthly salary and year end bonus. There’s about $100 from dividend, $1,000 of realised gain from shares, and about $1,800 comes from company allowance.

      To answer your questions:-
      1) Yes I do. I paid 6k worth of debt in 2012, and 8k worth of debt in 2013, so the balance amount is around 4k, which are mainly monthly installments that I’ve previously signed up.

      2) sorry I wasn’t clear! My life insurance is for life, just that I’ve only got to pay for 15yrs. After the age of 39, I’ll stop paying premium but I’m still covered for death, critical illnesses and disability up till the day I say goodbye. I also topped up an additional $300+ a year for a comprehensive hospitalization coverage (on top of the basic medishield).

      3) Good idea on the saving money from passive income to generate even more passive income!

      With most things sorted out, now I should focus on earning more, and learning to identify companies with solid fundamentals! 🙂

      Cheers,
      Jasmine

  2. Hi Jasmine,

    Great to know most of the savings were from salary! It really goes to show how well one can do if one has the determination to set aside part of their salary every month as “forced savings”. The next important thing to remember is to break Parkinson’s Law “Expenses scale up as one’s income increases”, or some people refer to it as “lifestyle inflation”. Once you can conquer this, you’re on your way to even higher levels of savings, yet remaining contented with life’s simple pleasures.

    Another thing to ensure is that you and your hubby have shared financial goals; try to sit down and discuss personal finance together as a couple and set financial goals. That way, you won’t be alone in your wealth-building, and this is also to ensure arguments (over money) are minimized and that you can achieve agreement (and possibly synergy too!) in building wealth.

    Good to hear that you only have $4,000 left, which should be easy to clear. As for insurance, since you mention that it is a life policy, do note that such policies combine an insurance portion (term) and an investment portion (endowment), which is why you are paying for only 15 years. The expenses and fees etc are usually all front-loaded and you end up paying quite a bit upfront, only for the funds to generate returns for you which cover your future premiums. Going by the theory of the time value of money, this is not a good strategy (at least for myself) as it locks away a lot of my cash upfront while generating only negligible returns in later years. If I am not wrong, for a $3,000/year life policy the coverage should not exceed $500,000. For myself, I have a level Term policy which costs about $5,000/year but which covers me for $1 million for Death, CI and TPD till Age 65, with no premium escalation or drop in coverage throughout. You may want to ask your financial planner or broker on the options out there and to review your plan again, which I would recommend as you are entering a new stage of life (i.e. getting married).

    Regards.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s