What are you going to do with your year end bonus?

It’s the time of the year again, where Orchard Road is lined with bright glittery lights, and Xmas trees standing proud and tall in malls. My hubby and I headed to town last Saturday, hoping to do some early Xmas shopping for our yearly gift exchange with friends. But alas, the crowded mall and long lines at cashiers turn us off and we head straight to queue for our dinner instead. It’s the time of the year whereby people are generally in a good and giving mood, and it’s not just because Xmas is a few weeks away. “Most of these people must have gotten their year end bonus and increment!” I told my hubby, and he nodded in agreement! Having (more) money always put people in good mood.

So what do most Singaporeans do with their year end bonuses, after working hard for a full year? I guess it can be broken down into a few categories:

1) Buy, buy, and buy:
During the first two years of my working life, my bonus allows me to buy things I couldn’t afford to buy during the past 11 months with my miserable monthly salary. This happens to a lot of people. We see bonuses as a mean whereby we can finally buy what we have been lusting over the past months. It usually involve some big ticket items like a designer bag, gadgets, upgrading of cars etc. For boyfriends and husbands, it means splurging on your beautiful girlfriend or wife, and you get her a Tiffany and Co earring, or a Pandora bracelet for Christmas. For parents, it means buying the Wii game set or the latest iPad Air that your kid had been begging you for the past one year. For newly weds, it means a nice painting for your new home, or getting the matching set of cutleries that you absolutely need. For the materialistic princess like I was, it means getting the latest designer bag to outshine your colleagues.

2) Clearing credit card balances:
I started carrying a balance in my credit card since the age of 24. The amount started small, like 2-3k in credit card balances, and the first thing I did when I got my bonus was to clear the outstanding amount. It started with one card, then two, then three… Until I lost track of it. I sure hope not many people are like me, for it sure feels lousy to be dumping your hard earned money to repay debts.

3) It disappears from your bank account a few months after you got it:
I can so relate to this! Sometimes, after clearing my credit card debt, there will still be a little bit of left overs, but hey, it just disappears out of thin air a few months down the road. I still remember the first time I had my 5 figure bonus (about 12k after CPF contribution), and I cleared about 4k in debt. I thought to myself, after clearing my debt, I still have 8k left. That’s still ALOT of money for me to save! And I promise myself I’ll save the balance. A month later, I subscribed to 2k worth of my company’s shares, and a few months later, the remaining 6k really disappears into thin air, not to be seen ever again. And then I wonder, how many people are like that?

You save or invest it:
Yes, you decide not to splurge, to save or invest your hard earned money, and watch it like a hawk. How many of us can behave like we did not receive our bonuses, and resist not spending a single dime? I did it with my last year’s bonus. The first thing I did when I receive my bonus was to hunt for a good Fixed Deposit rate. I still remember waking up early on a Saturday morning, with hubby in tow, walking around the mall asking for rates from the different banks. I finally deposited my money with UOB, into a 4 months FD. Albeit some bad decisions and splurging on bags during my honeymoon (yes, the old me resurfaced briefly), I still have my hard earned savings and part of my past year bonus to show for in my bank account. And remember the 2k worth of shares I bought with previous bonus money? It was one of my best money decisions EVER. I sold the shares last year, and 3years down the road from the day I got that bonus, the proceeds still forms part of my net worth (albeit not a lot). I dare say, the rewards associated with saving and investing is way way way greater than splurging on a branded bag or two. And again I wonder, how many people are like that, choosing to save their bonuses rather than spending it.

I’m really really excited about getting my bonus in a few weeks’ time. Not because I have a wish list of things to buy, but for the fact that I’m getting closer and closer to my goal. That is, to retire early to do what I want and whenever I want, and gaining financial freedom.

Here’s another reason to quit your office job and retire early!

Something happened today that made me, my husband and his siblings all left work early in a mad rush. While at work, hubby called and told me in a shaking voice that his mom had suffered a stroke. Turn out, it was a panic attack (thank goodness). My mother in law was supposed to undergo a cataract removal surgery at a private eye clinic, when she had a panic attack and was sent to the hospital by the eye surgeon, who thought she had a stroke.

Anyway, right after the call from hubby, I immediately went to my superior, told him about the situation, and apologised for having to leave work early to attend to my family. Likewise for my hubby and his siblings, all of them went through the same thing, having to apologise for having to leave work to attend to family needs.

The thing is, why do we have to apologise for something that we are not sorry for? Family and loved ones DO COME FIRST, especially in time of such emergencies. Yes, we do have responsibilities towards our role, our job, our colleagues, and the company we work for. But at times like this, the desire to be freed from having a job we have no control over our working hours is even more acute. It makes even more sense to make good use of our pay-check to redeem our freedom, to do things that do matter, such as having control over how we utilise our time, to have the choice of spending time with people we want to be with. It make sense for me not to be using my salary to buy bags and shoes and beauty products, or dine at expensive restaurants like how I once did. And I can no longer relate to those who are using their hard earned money to splurge on branded goods, a bigger car, or on Italian furnitures. Isn’t having money in our bank account and a seven-figure portfolio more desirable? So that we can retire young and still be full of energy to truly do the things we want, go places we want to visit, and be with people that we want to be with.

My mother in law is still in the hospital as she has to undergo more scans and tests, and we are unsure if she will be discharged tomorrow. It pains me that my hubby and I have to go to work the next day, knowing that our hearts and minds will be with her, and it pains me that I overheard my sister in law calling her boss to apologise (again) that she is applying for urgent leave to accompany her mother tomorrow.

Early retirement. My dream, my goal.

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!

Retirement in Pattaya?

I just returned from a trip to Pattaya and Bangkok to visit my uncle who is currently staying there with his family.

My uncle is looking at the possibility of getting a retirement home in Pattaya for it’s happening nightlife and gorgeous sea view, and it helps that it’s only a 2hrs drive from Bangkok, where they are currently staying.

Being a fan of properties, naturally I went along with him. I was in awe with the good quality renovation and furnishing, cool facilities, nice layout, good view of the sea, and above all, the attractive prices of condominiums in Pattaya.

Here, do feast your eyes on the photos below.

The Riviera is simple gorgeous. It is my favorite development among the 5 projects I went to.

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After Riviera, we head to Palm, which is even nearer to the beach. It’s beautiful as well and already fully sold.

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The cloud:

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This one is my least favourite, so I had forgotten the name of the development.

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My favourite unit at Riviera cost around SGD110k for a one bedroom unit (35sqm), which requires a 15% down payment. There will be a 50% balance payment upon completion of construction, and the balanced 35% to be settled using a 30years mortgage loan.

The prices are really attractive compared to housing in Singapore. For a one bedroom unit, it cost about SGD800k which is a total turn off. Regardless, overseas retirement is just a thought. I’m still decades away from my retirement and I should focus on building my capital first.

When retirement turns ugly

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When retirement comes to mind, we usually think of all the wonderful things we will be doing when we are no longer bound by our jobs. We will have the time and freedom to travel, do the things we love, and to spend time with our loved ones.

However, I was proved wrong today. It suddenly hit me that retirement can be scary and you can never really be prepared for it, mentally, emotionally and physically. Yes, you can be financially ready, you might have have enough passive income every month to sustain your lifestyle, have enough savings to last you for the next 20 years, or comprehensive insurance plans to protect you from emergencies, but it takes more than just money for a happy and fulfilling retirement.

By the retirement age of 62, we may no longer have the energy to travel all we want, when we want, and where we want. The long flight to Europe or the States can make us physically tired. We feel tired from the endless walking and exploring of new places. Our stomach may no longer be accepting of cuisines different from what we usually consume.

How about we forget about traveling and focus on our loved ones instead? Our children and grandchildren? By 62, our kids have turned into adults and might already have a family of their own, or be too focused in their own careers that they hardly have time for us. They might not need us as much as we need them now. They have a life of their own and we may only see them during the weekends, or worst, they may only visit us once a month or only during special occasions like birthdays and Father/Mother’s Day.

How about the sense of loss we will feel when we no longer have a career? Suddenly, something important is taken away from us, something which we have been focusing on for the past 40 years of our lives.

I had been trying to get in touch with my ex-boss since her retirement early this year. Finally today, my ex-colleagues and I were able to pay her a visit her at her place. After her retirement, we heard news of her falling sick and was hospitalised for awhile. We texted and called her, and tried to get in touch with her, but she replied saying that she wasn’t ready to face us. Until today.

It was only this day that I finally get to hear her story. 3 months before her retirement, in November 2012 , she was approached by our CFO that the bank is giving her 3 months notice for her retirement coming January. There is no other suitable positions for her within the bank except for the post of a filing clerk. A filing clerk! I couldn’t believe my ears when she told us that. It is a total insult for our Head of Management Accounting. There was practically no retirement compensation for her as well, only one month salary and an additional 10K. She was with the bank for more than 10 years and this is what she received for her retirement.

Shortly after, she went into depression and started getting really unwell, having to call in sick for most of the last 3 months at work. She did not even turn up for her last day at work, and a colleague had to collect her belongings and couriered them over to her. That was when she was being hospitalised and was being treated for anxiety and depression. This is what retirement can do to a person. Having worked with her for 4 years, she had always been a strong person physically and mentally. She hardly goes on medical leave and was quite a workaholic. Of all people, I can never expect her to go into depression because of her job loss. Her total medical bill for 40days cost her 16K.

I guess that it didn’t help that she was single and that work had always been a top priority her whole life. It was just too much for her when she loses her life focus. With the additional insult of offering her the position of a Filing Clerk, she lost her self worth completely. She did have supportive siblings, nieces and nephews constantly around her though.

It was fortunate that she had always been financially savvy. The medical bill was mostly covered by CPF and she only had to fork out 5K in cash. She also owns properties, has money in her fixed deposit account, and an investment portfolio. At least she does not exactly have to worry in the financial aspect.

LESSON LEARNT
I always thought money and being financially secured is the most important thing in enjoying our golden years. Money can solve most problems like medical bills and can fly us around to many different places and keep us from worrying about bills. However, it is equally important to have good health, a loving family, and still have passions and goals to lead a fulfilling retirement. We need to still feel useful in our old age, to be able to help others or contribute to the society. Money in this case is just a tool. A tool to make our lives easier, more comfortable and have less worries. We need life purpose to keep us strong and happy.

So now, besides saving, investing and growing wealth, I am going to commit myself to finding other life passions, and also to continue building and maintaining meaningful relationships with people. In my quest for wealth accumulation, I noticed that I had been a little aloof with friends and colleagues, and had preferred my time alone, reading or thinking about things in general.

I thank my ex-boss for helping me realised that money is important, and that many other things like good health, friends and family, and having passion are all equally important as well. I hope she’ll recover soon and be able to fully enjoy her golden years.

Oh and one more thing.

NEVER EVER RELY ON YOUR EMPLOYER FOR RETIREMENT. TAKE MATTERS INTO YOUR OWN HANDS AND START NOW.