Our Fixed Expenses

I hate hypocrites. These people say one thing, but do another.

No, I am not refering to the girlfriend that says “Anything’s fine for dinner” but gives you a frown when you suggest MacDonald’s, Ding Tai Fung or Sushi Tei. And I am also not talking about parents who spend their free time watching TV or playing mahjong but ask their children to study or read more story books. Ooops.

I am actually pointing my fingers at those financial advisers/bloggers who always advocate budgeting or recording expenses but in actual fact, fail to do so.

A few weeks ago, I wrote a post/guide detailing how a person could start recording his expenses to know where all his moolah is going. Since I said how wonderful such a habit is and blablabla, I must be doing it, right?

You bet and I will be showing you my records on this blog. Before you get all excited and jumpy about the chance to pry deeper into my daily life, I would like to point out that there’s still a couple of days to go before we welcome September. But to whet your appetite, I have decided to first reveal the fixed and recurring monthly expenses in my life. (As you will see, yearly expenses are also included and I have ammortised them over 12 months)

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Mortgage: $910/mth

This is by far the largest expense in our household. But it’s money well spent since we really enjoy chilling out in our home on weekends. We have actually reduced it from more than $1k (prior to June) thanks to the POSB HDB loan.

Study Loans: $300/mth

Yes, this amount is not for one but the both of us. We made a conscious decision to slowly repay these loans as we felt that conserving the extra cash for liquidity or investing it were superior options compared to repaying these 2.5% loans.

Parents Allowance: $400/mth

Our parents are relatively young and still working, so theoretically, there is no need to provide for them at this point in time. However, this $400 is more of a kind gesture and we both felt that it’s good to have this habit ingrained the moment we started our jobs. The allowance has even increased along with our incomes.

Insurance: $160/mth 

This is where it gets a little hairy and messy since it involves two person and there’s so many types of insurances that we buy. Therefore, I have split it into a few distinct sections:

Health ($222/year) – This could easily increase? with the new Medishield Life. But currently, both of us are insured under NTUC’s Enhanced Income Shield. We also purchased an additional Rider that reduces our coninsurance to 10% and cap hospitalisation expenses to $3,000 a year. Since the Shield is purchased using Medisave, I have only included the two riders here.

Home ($426/year) – We are both insured for 100% of the outstanding mortgage (around $250k currently) Both of us were originally covered under CPF’s Home Protection Scheme (HPS), but my wife has switched to Aviva (one of the conditions of the POSB HDB Loan). It’s slightly more expensive but for this policy, the payouts are given to the beneficiary instead of automatically being used to redeem the housing loan. I guess the additional flexbility helps to justify part of the premium increase.

Disability and Life ($1209/year) – Being slightly chauvinistic, I decided that my wife only needed the Manulife Choice Cover ($300k) with an additional Disability Advanced Payment rider for $313 a year. On the other hand, besides a disability income policy with Great Eastern that would provide about $2,600 a month if I am unable to perform my current job, I also bought an additional Term Life policy with Aviva that sets me back by $510 a year with a coverage of $150k. And there’s still my Dependents’ Protection Scheme (DPS).

Taxes: $90/mth

All I can say is, Singapore’s direct tax rates are really low compared to the indirect tax rates (i.e. GST).

Income taxes ($859/year) – The taxes we pay are less than 1% of take-home income after accounting for the 30% tax rebate announced in Budget 2013.

Property ($204/year) – With an AV of $11,000 for our place, and a tax rate of 4% for the AV amount above $6,000, owners of HDB flats pay neglible taxes. In most of the states in USA, $204 might only be enough to cover one month of their property tax. No wonder 90% of Singaporeans are homeowners.

Utilities (S & CC, Internet): $110

S & CC ($63.50/month) – The lights in the corridor, the monthly washing of void decks and the maintenance of the playground are all paid for with this sum of money. Part of it also goes to Semb Corp for waste removal.

Internet ($43/month) – It’s a 100 MBPS fibre broadband. It’s pretty fast for the household’s needs and we got it with a mobile plan bundle (together with a free laptop)!

Total: $1970

 

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With these fixed and recurring expenses, my wife would always proclaim that it would be miserable for us to stick to a $3,000 budget. I tend to agree (especially after deriving so much utility from spending $4 on a Coffee and Toast breakfast yesterday). But I guess we could always try for $4,000, or even $3,500? Lets see how we fare in the next post.

 

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13 thoughts on “Our Fixed Expenses

  1. johnson

    hi, nice post for sharing your expenses. I think many of the young couples have similar list, this will provide a figure for counterchecking. for insurance, seems like you have inclination towards disability benefits, but it seems most people are more concern with critical illnesses?

    1. My 15 HWW Post author

      Hi johnson,

      Even if one is disabled, he or she could still live to a ripe old age. The disability coverage is to minimise the burden on our loved ones. For critical illnesses, the expenses should be taken care of by Medishield & Medisave. Furthermore, one is either going to recover pretty fast or die quickly? from the illness.

  2. komatineni

    Good budgeting and frugal living helps a lot. I really liked the ‘parents allowance’ part and glad to see similar though process 🙂

    1. My 15 HWW Post author

      Hi komatineni,

      Thanks for your compliments! I don’t think we are exactly really frugal right now. There’s definitely flabby fat still lying around.

  3. LP

    Hi 15HWW,

    My fixed expenses is $2350. I guess the higher amount comes because of my higher mortgage loan for my HDB and also my higher insurance amount (I’ve 2 whole life to service). My variable is around 800, so my total expenses is about 3.5k (I rounded up to give a nice figure). It’ll be interesting to see your variable expenses, because that’s the fun part where your wife and your own ideas face off, lol!

    1. My 15 HWW Post author

      Hi LP,

      A variable of $800 is really pretty awesome! Just the money we spend eating out and shopping at supermarkets already exceed this value. LOL

      1. LP

        Hi 15HWW,

        Do take note that $800 is for my personal expenses only, not for the couple. It’s hard to keep tabs of my wife’s spending, so I don’t, LOL!

  4. SG Young Investment

    Hi 15 HWW,

    Seems like the mortgage loan is the largest fixed expense that many will have. No wonder my friends who’re already married say a $5000 family income is just nice to live comfortably in our current generation.

    1. My 15 HWW Post author

      Hi SGYI,

      Yes, unless one also has a car, especially a luxury one?

      Actually, alot of people are saying $5,000 isn’t enough if you have children. That’s why we are seeing a trend/prevalence of DINKs.

    1. My 15 HWW Post author

      Hi Inchvbean,

      Besides DPS, I have a term insurance with Aviva that disburses $150k on death or TPD.

      You can refer to my articles under the insurance category if you want to find out more.

  5. FI hopeful

    Hi 15 HWW,

    I am curious as to how you keep your health insurance expense so low with rider included. May I know if it is Plan C? I did the math for Plan C + Rider and it amounts to $266/year.

    Also, can I ask your opinion on how much health insurance is required. Is getting a higher level of health insurance necessary or is Plan C enough?

    I’m a big fan of yours. I just started working recently and hope I can get to FI soon too.

    Cheers

    1. My 15 HWW Post author

      Hi FI hopeful,

      Sorry for the late reply (been a little busy) and thanks for your kind words.

      I am no expert on insurance matters and without knowing much about your background, it’s difficult to suggest how much health insurance you require. My health insurance expense is artificially low as I only account for the rider under my fixed expenses.

      The rider is out-of-pocket expenses while the main policy is not included since both my wife and I are using our Medisave to pay for it.

      All the best in your FI goals!