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 squirrelled away enough for our semi-retirement or even quarter-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 amortised fixed expenses calculated on 12th July 2015 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 and precise as possible and to also ably track the subtle changes of how we spend our hard-earned moolah, I have decided that a yearly update in the middle of the year to the fixed expenses portion was necessary.
The updates are detailed below.
Mortgage: $980/mth (up from $968 in 2015)
We signed up with the POSB HDB Loan and since we were one of the earliest takers three years ago, the interest rates are guaranteed to be lower than 2.5% for the first 10 years of the mortgage.
And in the past year, the interest rates have actually hit 2.5% for a few months and we ended paying close to $1,000 for our monthly mortgage payments. At this moment, the rates have since dropped back to about 2.35%.
I am going to stick out my limbs and hazard a guess that $980/month is just about right going into 2017.
Study Loans: $0/mth (down from $100 in 2015)
I have about $2,000 remaining on my study loan and since this is the debt that attracts the highest interest rate at 2.5%, I have decided to pay it off.
Going forward, this should really help us to reduce our monthly expenses.
Parents Allowance: $450/mth (same in 2015)
This amount is likely to be considered really low by most of our peers. But we are blessed that Mrs 15HWW’s parents are still economically active and likely to be more than self-sufficient in their upcoming retirement years.
Considering that their combined income is higher than ours, they don’t really need it. But we insist on this allowance and I guess they are happier with the gesture itself rather than the absolute quantum.
And we decided not to give a raise since inflation is minimal and we gave ourselves a massive pay cut for the past year with our employment decisions
Insurance: $133/mth (same in 2015)
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 co-insurance to 10% and cap hospitalisation expenses to $3,000 a year. Since the Shield is purchased using MediSave (and we have pretty substantial balances there), I have only included the two riders (which we pay with cash) here. When the subsidies for the MediShield LIFE cease to exist in a few years’ time, the amount will definitely be bumped up.
Home ($400/year) – We are both insured for 100% of the outstanding mortgage (around $230k currently). I am covered by CPF’s Home Protection Scheme while the wife is covered by Aviva. With lower mortality rates for young women, her coverage is cheaper at ~$190.
Disability and Life ($900/year) – Both of us are covered by the Dependents’ Protection Scheme (DPS). Mrs 15 HWW has a Manulife Choice Cover with an additional Disability Advanced Payment rider for $318 a year. My Term Life policy with Aviva that sets me back by $510 a year with a coverage of $150k is my main policy.
You can refer to this post for a more detailed description of our insurance purchases. If there is a need to increase our coverage, the newly improved SAF Group Term Insurance should come in handy.
Taxes: $23/mth (down from $72 in 2015)
The taxes we paid in 2015 is so ridiculously low that the only way is back up.
Income Tax ($170/year) – With 4-5 months of unemployment and a much lower salary when I was teaching, I am only paying $7 of tax for 2015! The Mrs also enjoyed a 3-4 month break and paid slightly more at $160.
Property Tax ($106/year) – With an Annual Value (AV) of $10,640 for our place, and a tax rate of 4% for the AV amount above $8,000, we pay negligible property taxes.
Utilities (S & CC, Internet): $99 (same in 2015)
S & CC ($69 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 it’s the same price as last year!
Internet ($30/month) – It’s a 300 MBPS fibre broadband under a promotion price of $29.90! Serves our household of 4 really well.
Total: $1,685 (down from $1,822 in 2015)
The reduction of $137 in the amount of fixed monthly expenses is encouraging but mainly came about due to the repayment of my tuition fee loan and our insignificant income taxes.
Unless we reduce our home mortgage, my bet is that next year’s fixed expenses will only go up.
So in the end, I will be using the figure of $1,685 as our amortised fixed expenses for the next 12 month’s expenses updates!