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? 🙂
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 28th July 2014 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: $968/mth (up from $916 in 2014)
We signed up with the POSB HDB Loan and since we were one of the earliest takers two years ago, the interest rates are guaranteed to be lower than 2.5% for the first 10 years of the mortgage.
2 years have passed and in the most recent year, interest rates have spiked up. Our effective interest rate has risen from about 1.78% to 2.21% within a year, resulting in a $50 increase in our monthly mortgage payments. Aargh!
Nonetheless, we would likely be spending another $50 more on mortgage if we are on the HDB-CPF Housing Loan. So I am still quite happy with the reduced $50 savings every month.
Study Loans: $100/mth (same in 2014)
I still have slightly more than $3,000 in outstanding study loans. Some readers have commented that I should probably just pay it off in one lump sum. Reason?
Firstly, I can easily afford it and secondly, there’s likely to be an insurmountable and unmeasurable relief when I strike off yet another item off the debt list.
However, due to a specific set of circumstance (家丑不可外扬), I have decided to drag it out for another few years utilising the lowest payment that CPFB allows.
Parents Allowance: $450/mth (same in 2014)
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.
Insurance: $133/mth (same in 2014)
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. There’s every chance this category will increase the next year when MediShield Life kicks in.
Home ($400/year) – We are both insured for 100% of the outstanding mortgage (around $240k 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 additional Disability Advanced Payment rider for $316 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. But after two years of auto-pilot, an upcoming review of our insurance needs and expenses might be necessary. Stay tuned.
Taxes: $72/mth (down from $190 in 2014)
As I have mentioned in a previous post, taxes in Singapore can be kept low even with an above average income.
Income Tax ($739/year) – Our income dropped quite a bit in 2014 with my 6 month sabbatical and our income taxes dropped significantly from more than $2,000 to just around $700. And somehow, we don’t expect our income taxed to be above $2,000 in the near future. *sigh?*
Property Tax ($122/year) – With an AV of $11,040 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 (up from $96 in 2013)
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 there’s an increase of about $3 this year. Actually, on average, it has increased by 4-5% a year for the past 2 years! #effectsofinflation
Internet ($30/month) – It’s a 100 MBPS fibre broadband under a promotion price of $29.90! Serves our household of 4 really well.
Total: $1,822 (down from $1,885 in 2014)
The reduction of $63 in the amount of fixed monthly expenses is encouraging but mainly came about due to the decrease in income tax. If that was excluded, the fixed expenses would have increased by about $50, which amounts to a 2-3% increase. But then, you could argue that most of this increase can be attributed to the increase in interest rates and this iteration could go on forever.
So in the end, I will be using the figure of $1,822 as our amortised fixed monthly expenses for the next monthly update and onwards!
Note: You can refer to our previous fixed expenses update here if you’re keen on some comparison.