Fixed Expenses Update: 2014

As most followers of this blog knows, we record our monthly expenses almost religiously. I have little doubt that this is the best way for us to find out how much we are spending every month. Otherwise, without doing this, when would we realise we have squirreled away enough for our semi-retirement? =)

To keep the monthly updates uncluttered, I have actually divided our expenses into two portions:

1. The fixed, recurring expenses and

2. The variable expenses

And for the past year’s monthly updates, I have been using the ammortized fixed expenses  calculated on 30th Aug 2013 as a simple way to calculate our total expenses for the month. Besides simplicity, this method has also helped to minimize the volatility across months.

However, this also meant that the updates aren’t as accurate as they should be. Therefore, to ensure that these updates are as relevant ad precise as possible and to also ably track the subtle changes of how we spend our hard-earned moolah, I have decided that an update to the fixed expenses portion was necessary.

The updates are detailed below.

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Mortgage: $916/mth  (up from $910 in 2013)

We signed up with the POSB HDB Loan and since we were one of the earliest takers a year ago, the interest rates are guaranteed to be lower than 2.5% for the first 10 years of the mortgage.

However, with quantitative easing by the US government, interest rates have slowly creeped up and our effective interest rate has risen from about 1.74% to 1.78%, resulting in a $6 increase in our monthly mortgage payments.

Study Loans: $100/mth (down from $300 in 2013)

As Mrs 15HWW’s parents turned 55 in early 2014, they have kindly waived her study loans for her undergraduate program. By right, she still had $10,000 worth of outstanding loan remaining.

Since we don’t want to deny them the pride of footing the entire bill for their children’s education, our intention is to somehow return them this $10,000 amount in a different way some years down the road.

There’s still $100/month of study loan payments as I still have about $4000 of debt outstanding. And it’s pretty obvious that I plan to take my time with it.

Parents Allowance: $450/mth (up from $400 in 2013)

This amount is likely to be considered really low by most of our peers. But we are blessed that our parents are still economically active and likely to be self-sufficient in their upcoming retirement years. With an upcoming pay raise for the Mrs, we have also decided to raise it for the year.

Insurance: $133/mth (down from $160 in 2013)

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 ($292/year) – Currently, both of us are insured under NTUC’s Enhanced Income Shield and we have 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 (and we have pretty good balances there), I have only included the two riders here. This has increased from $222 with some of the MediShield enhancements in the past year. With inflating healthcare costs, this is something that we expect to be increasing every year.

Home ($400/year) – We are both insured for 100% of the outstanding mortgage (around $245k currently). I am covered by CPF’s HPS while the wife is covered by Aviva. With lower mortality rates for young women, her coverage is cheaper at ~$190.

Disability and Life ($898/year) – Both of us are covered by the Dependents’ Protection Scheme (DPS). Mrs 15 HWW has a Manulife Choice Cover with an addiitonal Disability Advanced Payment rider for $316 a year. Since I am unemployed now, I would likely not renew my disability income policy with Great Eastern in a few months’ time. My Term Life policy with Aviva that sets me back by $510 a year with a coverage of $150k would remain though.

You can refer to this post for a more detailed description of our insurance purchases.

Taxes: $190/mth (up from $90 in 2013)

As I have mentioned in my previous post, taxes in Singapore can be kept low even with an above average income.

Income Tax ($2107/year) – Without the one-off 30% tax rebate and a higher income in the past year, incomes taxes have more than doubled compared to the previous year. But on an absolute basis, it’s still less than 2% of our total annual income.

Property Tax ($164/year) – With an AV of $11,100 for our place, and a tax rate of 4% for the AV amount above $6,000, we pay negligible taxes. And with an owner-occupied HDB Rebate of $40, it’s $40 cheaper than what we recorded in the previous update.

Utilities (S & CC, Internet): $96 (down from $110 in 2013)

S & CC ($66.25/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 and there’s an increase of about $3 this year.

Internet ($30/month) – It’s a 100 MBPS fibre broadband and we recently renewed it for the next two years at the IT show under a promotion price of $29.90!

Total: $1,885 (down from $1970 in 2013)

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The reduction of $85 in the amount of fixed monthly expenses is surprising but bodes well for a potential reduction of our overall expenses. Nonetheless, I understand that if we excluded the reduced study loans, it would have been an increase of $115, which amounted to an almost 6% increase. But then, you could argue that most of this increase can be attributed to the increase in income taxes and this process could go on forever.

So in the end, I will be using the figure of $1,885 as our ammortized fixed monthly expenses from the next update! =)

Note: You can refer to our previous fixed expenses update here if you’re keen on some comparison. 

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    19 thoughts on “Fixed Expenses Update: 2014

    1. Y

      Great effort on tracking your monthly expenses! In a way, it really shows us how inflation is creeping up on us.

      Cheers,
      Y

      1. My 15 HWW Post author

        Hi Y,

        You are right! Another benefit of such tracking is to observe inflation’s impact on us. Singapore’s rate is definitely different from your own household’s!

    2. B

      Hi 15Hww

      Good for you that your fixed expenses are down!!! It always does help in one sense or another.

      I was wondering is there any specific reasons you don’t pay off the student loans right away? Is the interest rate on those low? Sorry I might miss if you have explained anything on those.

      1. My 15 HWW Post author

        Hi B,

        Don’t apologise. You read everything carefully and didn’t miss out anything. =p

        Yeah, my student loan is a CPF loan and the interest rate is 2.6%. Something I feel I should be able to beat?

        Anyway the OCBC 360 account is offering 3% and I haven’t maxed out the $50k.

      1. My 15 HWW Post author

        Hi SMOL,

        Thanks for your well wishes! And I do want to contribute more to nation-building.

        Nonetheless, I am almost pretty sure that my tax obligations for the next year should be reduced. But it’s the long run that counts. =)

    3. km

      Hi 15HWW,
      How about SRS a/c? Heard that from my colleagues that it can be used to reduce personal tax? Personally i have not done a lot of research about it, but perhaps the thought of locking more funds in some a/c put me off :).
      I will need to invest some time running the numbers on this SRS topic, perhaps i will change my mind.

      1. My 15 HWW Post author

        Hi km,

        I have written a post solely on SRS a while back and I have to say it still doesn’t appeal to me at this stage. I might participate in it when I am older or when the benefits are tweaked more favourably.

        Nonetheless, it could work for you. Different strokes for different folks. =)

        1. km

          Hi 15HWW,
          Found the article. Thanks for the ground work, and couldn’t agree more :). 30 years lock-in are just too long for me. Is a good scheme, but maybe not to everyone.

    4. jun

      hi, new reader here, could you add a search bar to your site to facilitate searching for old posts? thanks! 😀

      1. My 15 HWW Post author

        Hi jun,

        I have added the search bar. Anyway, you can always try looking for older posts using the page ‘All The Posts’.

    5. Love

      Enjoyed your articles. Referring to your student loan, if it is just a few thousand just pay it all off. Pay and get it off your mind. Its a psychological feeling ~ to be debt free.

      Unlike a business, I do not believe it yield much benefit to be delaying repayment, for something that is a drop in the ocean for you now. (I also make a point not to defer tax payments to mthly recurring unless I was stuck overseas for several months.)
      It would release you, let you focus on your mortgage loan, or on more recent loans.

      1. My 15 HWW Post author

        Hi L,

        Thanks for your kind comments and glad you enjoyed my writing. =p

        As for your suggestion, I will think carefully about it. The only loans we currently have are my student loan (<$4,000) and the much more humongous mortgage loan. Paying the student loan will immediately reduce $100 off my monthly expenditure but as of now, I do enjoy the additional liquidity and reasonable interest rate (2%) by keeping the $4,000 in cash. I will probably pay it off when both OCBC 360 accounts are maxed out? Thanks for your suggestion!

    6. Love

      The easiest way is use bonus to pay it off at once, or use the profit from a few shares – which you can expense off the loan then forget about it.

      I didn’t find 4K to be that much an amt, yes I know some nagging reluctance of using real money to pay off something from the past. I would still do it as long as I find that an ‘administrative hindrance’.

      The important point is when paying – be in a good mood. Imagine you are the richest generous person, at the point of paying, you are donating money to a school or charity. Feel good about it and never feel held back.

      You will have many other 4 thousands in your life. It is psychological, how you think about money.

    7. Fanny

      Hi Mr 15HWW,

      Do you mind elaborating on your wife’s Aviva Home mortagage reducing insurance of $190? How is it comparable to HPS? Interested to find out more as we’ve just bought a flat 🙂

      1. My 15 HWW Post author

        Hi Fanny,

        I think the Aviva Home mortgage is comparable to HPS but if I am not wrong, it was slightly more expensive than HPS then. My wife had to take Aviva for her portion as we took up the HDB POSB loan. It was one of the conditions for the promotion then.

          1. My 15 HWW Post author

            Hi Fanny,

            It’s called “My Protector Mortgage” by Aviva. Hope it helps.