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 8th July 2016 as a simple way to calculate our total expenses for the month. Besides simplicity, this method has also helped to minimise 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, 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: $900/mth (down from $980 in 2016)
We are in the midst of repricing our loan with DBS and the effective rate would likely be FHR9 + 1.13% come August. There is a cap of 1.78% for the first two years which also means there is a 2 year lock-in period.
We still have about $220k+ remaining on our mortgage. So if the FHR9 remains at 0.25%, the our monthly mortgage would likely be $875.
I am going to be a tad conservative and take $900 as the average going into 2018.
Parents Allowance: $450/mth (same in 2016)
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 the gesture itself matters more than the absolute quantum.
Insurance: $142/mth (up from $133 in 2016)
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 ($398/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 still have pretty substantial balances there), I have only included the two riders (which we pay with cash) here. With the enhanced MediShield Life, there is already an increase in the premiums from $146 to $199.
Home ($400/year) – We are both insured for 100% of the outstanding mortgage. 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: $65/mth (up from $23 in 2016)
The taxes we paid in 2017 was reasonably low and it’s likely to go closer to $100/month next year, judging by our incomes so far.
Income Tax ($700/year) – It was my first year of self-employment and I really didn’t earn alot, paying just about $200 of taxes. The Mrs earned significantly more than me for 2016 and contributed $500 towards nation building.
Property Tax ($83/year) – With an Annual Value (AV) of $10,080 for our place, and a tax rate of 4% for the AV amount above $8,000, we pay negligible property taxes. In fact, our AV and tax went down compared to a year ago. Pretty shocking!
Utilities (S & CC, Internet): $104 (up from $99 in 2016)
S & CC ($73.50/ 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 and it’s slightly increased from $69 last year!
Internet ($29/month) – It’s a 300 MBPS fibre broadband for a price of $29! Serves our household of 4 really well.
Total: $1,661 (down from $1,685 in 2016)
The reduction of $24 in the amount of fixed monthly expenses has actually disguised the effects of inflation on our expenses. If we strip out the savings from the mortgage, the fixed expenses would have increased by $56, a 3% increase as compared to the previous year.
Somewhere in line with core inflation.
Interestingly, it’s been 2 consecutive years where we have managed to reduce our fixed expenses and I am going to predict with almost 100% certainty that next years’s number will be above $1,700.
So for the next twelve months, I will be using the figure of $1,661 as our amortised fixed expenses!