When to own a car?

[valen248]

Hi Dennis,

During the '$1 Million' seminar, you mentioned a person with a mthly income of $8k can own a car.

This is based on the cost of owing a car i.e. $1.5k is 18% of the $8k, my note stated that you then factor in another 30% which I didnt write down clearly, need to trouble you to elaborate again.

Thanks.


Rgds,
Valen

[Dennis Ng]

Hi Dennis,

During the '$1 Million' seminar, you mentioned a person with a mthly income of $8k can own a car.

This is based on the cost of owing a car i.e. $1.5k is 18% of the $8k, my note stated that you then factor in another 30% which I didnt write down clearly, need to trouble you to elaborate again.

Thanks.


Rgds,
Valen

The 30% I mention is what an average person is likely to spend on paying for a House.

Singapore currently has a Car population of close to 600,000 or about 1 in 3 families own a Car. As I observe, there are many families with Household Income of below S$8,000 yet own a Car...and these people wonder why they always feel that "Money Not Enough".

[valen248]

I c, so would you say, if the cost of the owing a car is 18% or less of an individual's gross income, then it is reasonable? -)

[danielcheng]

I don't think there is a rule of thumb towards this, it really depends on your situation & priorities in life and if having a car is a need or want.

The below illustration may not be directly linked to owning a car but i feel compelled to share for thought.

Lets use a typical young family with income of $8k per month with 2kids. After cpf, take home will be $6.4k. Lets say you are staying in HDB & instalment is taken care by CPF.

We do some calculations by lessing monthly expenses/outlay(sample figures & type of expense are just rough gauges & may not be applicable to all):

Less:
Car + Petrol/Parking/ERP Expenses/Maint/Summons = $1.5k
Grocery + Household expense = $800
Utility bills + Home/HandPhone/Internet bills + conservancy = $300
Monthly expenses for both husband/wife (lunch+coffee break etc) = $600
Allowance for both side's Parents = $800
2 Kids Schooling + tuition expenses = $600
Maid = $700 (incl levy)
Shoppings+entertainments = $300
Family Life/Endowment Insurance Premium = $400

Total Monthly Cash Balance after expenses = $400.

So if someone with a young family do want to start building their nest egg/investment portfolio, there are a few ways,

*Start putting aside monthly savings for just incase fund soonest, $1k? Rule of thumb, at least have equivalent of 6 month's pay, so $8k x 6= $48k. How long will it take?

*Starting putting aside monthy savings for Investment fund, $1K? Any amt can start your investment journey, so when do you want to start saving to invest anyway? Tomorrow? Question to ask yourself, Can you afford to lose the money you invested? What will happen to you/family if you lose it all? Will you be ok?


So how to speed up your savings for investments & just incase funds?

Change to a higher paying job? But can you resist not to UPGrade your lifestyle with a higher pay?

Reduce some of your monthly expenses like Car, Entertainment, Maid etc? But don't cut your parent's allowance or ask money from them please


So how do you want to change your life towards attaining Financial freedom? It starts with you! You decide.

[hahabear]

I don't think there is a rule of thumb towards this, it really depends on your situation & priorities in life and if having a car is a need or want.

The below illustration may not be directly linked to owning a car but i felt compell to share for thought.

Lets use a typical young family with income of $8k per month with 2kids. After cpf, take home will be $6.4k. Lets say you are staying in HDB & instalment is taken care by CPF.

We do some calculations by lessing monthly expenses/outlay(sample figures & type of expense are just rough gauges & may not be applicable to all):

Less:
Car + Petrol/Parking/ERP Expenses/Maint/Summons = $1.5k
Grocery + Household expense = $800
Utility bills + Home/HandPhone/Internet bills + conservancy = $300
Monthly expenses for both husband/wife (lunch+coffee break etc) = $600
Allowance for both side's Parents = $800
2 Kids Schooling + tuition expenses = $600
Maid = $700 (incl levy)
Shoppings+entertainments = $300
Family Life/Endowment Insurance Premium = $400

Total Monthly Cash Balance after expenses = $400.

So if someone with a young family do want to start building their nest egg/investment portfolio, there are a few ways,

*Start putting aside monthly savings for just incase fund soonest, $1k? Rule of thumb, at least have equivalent of 6 month's pay, so $8k x 6= $48k. How long will it take?

*Starting putting aside monthy savings for Investment fund, $1K? Any amt can start your investment journey, so when do you want to start saving to invest anyway? Tomorrow? Question to ask yourself, Can you afford to lose the money you invested? What will happen to you/family if you lose it all? Will you be ok?


So how to speed up your savings for investments & just incase funds?

Change to a higher paying job? But can you resist not to UPGrade your lifestyle with a higher pay?

Reduce some of your monthly expenses like Car, Entertainment, Maid etc? But don't cut your parent's allowance or ask money from them please


So how do you want to change your life towards attaining Financial freedom? It starts with you! You decide.

There's still income tax payment and unforeseen medical bills on any of the family members to take care of. Medical bills nowadays have risen to average $50 per GP consultation plus medicine.

Kids nowadays also have more activities. Young kids in nursery schools are already engaging in birthday parties, school excursions to malaysia, stage performances, etc. These expenses can easily eat up another $100 per month. For kids in primary school, they have excursions to further places such as australia, Hong Kong, Taiwan, etc.

Hence, the actual monthly savings could even be less than $200.

[ein55]

This is an interesting topic. How much money is enough. Whenever there is a pay raise or bonus, one may "upgrade" to another level of living std, so the saving will remain the same.

For double income family, if one's salary covers the family expenses, while the spouse (assuming $8k/month salary, eg a senior poly lecturer) income is solely for saving, it is possible to save $100k/year or 1 million in 10 years. With the help of 2 market cycle in 10 years, the asset could be doubled (conservative estimation).

The power of compounding will help to shorten the saving time, but this is provided the investment is a sound one, else power of compounding will be negative, asset value will be reduced!

This is life, some prefer to enjoy first, some prefer to enjoy later. However, I also observe older generation parents, making great sacrifice in life, they never "enjoy" their past saving, leaving all to the next generaton (if they don't know how to fish, the asset may be gone easily in a few years time).

[Dennis Ng]

This is an interesting topic. How much money is enough. Whenever there is a pay raise or bonus, one may "upgrade" to another level of living std, so the saving will remain the same.

For double income family, if one's salary covers the family expenses, while the spouse (assuming $8k/month salary, eg a senior poly lecturer) income is solely for saving, it is possible to save $100k/year or 1 million in 10 years. With the help of 2 market cycle in 10 years, the asset could be doubled (conservative estimation).

The power of compounding will help to shorten the saving time, but this is provided the investment is a sound one, else power of compounding will be negative, asset value will be reduced!

This is life, some prefer to enjoy first, some prefer to enjoy later. However, I also observe older generation parents, making great sacrifice in life, they never "enjoy" their past saving, leaving all to the next generaton (if they don't know how to fish, the asset may be gone easily in a few years time).

Hi all,
there needs to be a balance. We must not spend all our money and leave nothing for tomorrow. Neither should we scrimp and save and torture ourselves like the earlier generation.

I don't have a Car, nowadays I take taxi 99% of the time and yet my total monthly transport bill may be only S$800 (becos most of my trips are short trips of 10 mins or less). So I'm richer than someone who owns a car by about S$700 every month (in terms of monthly savings) and over 18 years since I started work, this works out to additional savings of S$151,200. And becos I know how to grow my money, let's say my average annual returns on investments is 8%, that works out to an additional of S$336,060 compared to a person who owns a car.

I think I enjoy even more than someone who owns a car who needs to drive, find parking space, worry about maintenance and a 1,000 other things. I remember there were 2 occasions when the taxi I was in got into a minor accident just when I reached my destination. I just asked the taxi driver am I needed in anyway, the driver says no, and I just walk off... while the taxi driver and the other driver then have to settle the issue.

Singapore transport system is very convenient and efficient. Most people really don't need a car. Of course at the end of the day we need to make our own decision. But if you earn less than S$8,000 and own a car, then likelihood you would have not enough money to save after all these expenses.

I told my wife that when our wealth reach S$3 million, I would go out and buy a Mercedes Benz, not that it makes financial sense to do so, but it is something we can well afford and it is a sort of a Reward (pat on the back) for myself to acknowledge that I've done well in managing and growing my money.

Recently, after buying a Rolex Submariner in July last year, I bought my 2nd luxury watch, a brand new IWC Spitfire Mark XVI (or known as Pilot's watch), which I paid S$4,500 (got quite a nice discount on it). For many years before I reach financial freedom I wear a S$40 Casio watch. And I think this will not be the last Luxury watch I buy. (I look for luxury watch that is not only nice but has longlasting value).

It's ok to live like the Rich when one is Rich.

Problem is nowadays many people live like the Rich even when they are just middle class and struggling to make ends meet.

[lootster]

Well said Dennis, congrats for getting your Merc very soon! I believe you will achieve your $3m mark in no time.

There's much to learnt from you as I wonder how many merc driver out there has $3m before commiting haha....

[Dennis Ng]

Well said Dennis, congrats for getting your Merc very soon! I believe you will achieve your $3m mark in no time.

There's much to learnt from you as I wonder how many merc driver out there has $3m before commiting haha....

should be this year itself if market goes according to what I had expected.

[cmclee]

Dennis,
glad to know that you are a balanced person and does not stick to any self impose rules. Rewarding yourself in luxury when you could well afford it.
Have you visualized the color of your Merc ?
As for luxury watches, there are two brands that had stand the test of time that would retain its value. IMHO, they are Rolex and Patek. Let me know what is your next acquisition.

Cheers !
Charles

[newbie_mc]

I guess dennis is teaching us the important value of money, to have a car or not.. Plus whether to save for rainy days or spend.. It is all up to individual capability to spend.. I would save it than rather have a car and get ready to buy good fa stock in bear market and make my money grow several times.. Of course, everyone has their own plan and mindset..

[Angelong]

Yes, yes. thanks for dennis of sharing all his personal things with us, motivate and teach us on all these.
Even I know i have wasted the pass 10yrs on a lot of wrong moves and wrong steps. Now, guess I need a new start and hopes all the forum readers well plan their financial path as earliest as possible to avoid any regret in the future.

[Dennis Ng]

I guess dennis is teaching us the important value of money, to have a car or not.. Plus whether to save for rainy days or spend.. It is all up to individual capability to spend.. I would save it than rather have a car and get ready to buy good fa stock in bear market and make my money grow several times.. Of course, everyone has their own plan and mindset..

Hi newbie_mc,
yup, it's great that you know my intentions.

[Dennis Ng]

Dennis,
glad to know that you are a balanced person and does not stick to any self impose rules. Rewarding yourself in luxury when you could well afford it.
Have you visualized the color of your Merc ?
As for luxury watches, there are two brands that had stand the test of time that would retain its value. IMHO, they are Rolex and Patek. Let me know what is your next acquisition.

Cheers !
Charles

Hi cmclee,
thanks. Guess in your opinion, I should have bought Patek instead of IWC for my 2nd watch purchase.

For me, I got "submariner" (underwater) for first watch, so got a "Pilot's watch" (sky) for 2nd watch. haha, you must be laughing me for having such a "rationale".

I know very little about watches. Just wondering for Patek, which model is a good one to acquire, and what's the typical price range? Yes, my 3rd watch is likely to be a Patek (must 1 step at a time, haha).

[cmclee]

Hi Dennis.
I also own 2 Rolex Submariner. One is the same as yours and the other is the LV version i.e. green bezel and maxi dial. If you want to consider Rolex, for your next model, do consider the Daytona 16520 with Zenith movement. This is a discontinued model but can still get at pre-own shops in very good condition with original papers. Always buy Rolex Sports models in Stainless Steel !
Recall you mentioned Frank Muller. Personally I would not touch it.
Pateks can be very expensive when you go into complications. But it is the standard that all watches are measured against. In recent decade, german brand e.g Lange & Sohne, was able to match the quality and workmanship. End of the day is a personal choice, warm vs cold.


Here are links to a popular watch site
for Rolex (modern)
http://forums.timezone.com/index.php?t= ... &frm_id=26

for patek
http://forums.timezone.com/index.php?t= ... &frm_id=27

you may log in the forum and ask questions. Hope this helps in a small way.

Cheers !