Support A Business Through Unnecessary Luxury Spending?

Conscious spending is one of the cornerstones to wealth, and I’ve been trying to practice it ever since I got the gospel that is financial independence. I’ve been reasonably good at cutting things out that I don’t care for, but lately I’ve been running into a problem.

I had a facial contract with a boutique spa for a couple of years due to some long running skin problems. Having monthly facials had improved a little but never really solved my skin problems. However, since getting onto a certain hormonal medication for other problems, my skin issues have more or less disappeared. Hence I have been ruthlessly cutting down on the frequency of my spa visits, and decided to completely stop once I used up my contracted visits.

I finished up all my visits a couple of months ago, and have not renewed. Yay for me?

The thing is, my last visit coincided with the laying off of my facial therapist, as the spa is being taken over by a new owner. This therapist has serviced me for as long as I have had the contract with the spa, and have been doing a fantastic job all this time, frequently going above and beyond what she needed to do, just so I could have a pleasant and useful visit.

Since being laid off, she has decided to open her own facial lounge with an ex-colleague of hers, and has called on me to support her in her endeavour. She has been calling quite frequently, as I understand that she has trouble getting enough customers at the start of her business. I have a soft spot for entrepreneurs like her, because I’m a child of entrepreneurs who used to be in similar straits. I am where I am today partly due to various kind people who supported my parents with their custom when the family business needed them, and I feel that I should pay it forward.

But also, I’m kind of conflicted.

Supporting mom-and-pop shops when you have to get something you need anyway is one thing. But what happens when you have decided that an item or service no longer adds value to your life, but another person, especially one you care about, needs to offer it to earn a living? Furthermore, the cost is something I can afford to spend, just that the service no longer fits with my needs and values.

Some people in real life have advised that I consider the cost of supporting my therapist’s new business as charitable contributions, but for my part, I find that extremely insulting to the person offering the service. I just can’t see it that way, and I don’t believe any entrepreneur wants to be seen that way.

I have finally decided to see the therapist just before Chinese New Year and get a facial done. New year, new face. I haven’t decided if I will sign up for a bigger long term facial package with her yet.

What will you do in such a situation? How far will you go in supporting a business that is superfluous to your preferred lifestyle?


Getting Expert Help

I have made an appointment to see a fee-based financial planner, and if nothing goes wrong, I will probably fork out a couple of thousand for him to do a comprehensive financial plan for me. I am also evaluating whether I will be handling over part of my assets for him to manage, specifically the equities portfolio, at a not-cheap fee, of course.

I actually had this idea a number of years back but didn’t execute because of the cost of engaging said planner, and more importantly…hubris.

Everyone around me, in both real life and virtual, was and still is advocating managing one’s own money. And here I was, university educated, with an engineering degree, no less. I’m not stupid; I can do maths. No reason that if everybody else could manage their own portfolios and various planning, why I couldn’t do the same.

It felt like if I succumbed to hiring out to a financial planner that I would be admitting that I am just too plain stupid to handle it all. That was really hard to swallow, so I didn’t.

And so I did the best I could. And I’ve got the basics covered, and my net worth is going in the correct direction at least. I’ve got a goal, and I think that I should be able to hit the target at the right time.

But with time passing, and the need for more fine tuning increases, I’m starting to feel a bit lost, and unsure and overwhelmed. And the more I educate myself, the more I’m realising past mistakes made, and the more I’m wondering if I really know what I’m doing (probably not) and I’m now constantly second guessing my next decision.

Gosh I’m tired of it all. I still like to read about personal finance management…but I’m starting to miss my romance novels. I realise that my interest and abilities only go so far, and I’m throwing in the towel. And my net worth has increased to a point where it is not ridiculous to spend that kind of money. It’s time to bring in the experts, even though I feel like a such a fraud…

No, I am not going to sit on the beach with cocktail while somebody else is doing things with my money. I will still be fully involved, but now, there is will be hand-holding and another brain to help put the pieces together. And if that makes me stupid, then I’m resigned. As long as I get to retire at 45.

And I’m writing this because I think there might be people out there who are also thinking they need to do it all by themselves. And if you are happy with that and can do it, kudos. But if you can’t and need help, it’s okay too. So we’re stupid, but at least let’s not be stupid and poor. Get some good help.

Networth November 2013

I had a slip and fall recently, which resulted in a visit to the nearest hospital A&E. Four stitches, a tetanus shot, and a hundred bucks later, I have learnt my most valuable lesson ever – reading while I am walking is not a good idea.

Also, the best way to appreciate various parts of your body is to take them out of commission for a while. I have always taken my left hand for granted, until now when I have problem using it. It has only occurred to me just how many actions require both hands. Sigh.

Luckily, the stars don’t seem to be as out of alignment in my financial life, because I am happy to report that I am worth about $792,000 at this very moment. That’s approximate increase of $7,500 over last month’s numbers and the immediate impact of getting regular paychecks again.

If I end December with just a modest increase of $3K, I would have clocked a total increase of $150K networth for this year, not including any paper capital gains from the condo. And really, my investment gains outside of the condo is really quite abysmal. That $150K increase came mainly from just plain savings – CPF, cash savings, whole-life insurance premium payments and mortgage principle paydown. It just goes to show how powerful a high savings rate can be when you first start out.

For a year where I worked only ¾ of the time, this is pretty phenomenal, and just a tad…scary. I didn’t have a single month this year where my networth didn’t increase, even when I was not working and getting paid. It feels almost too good to be true, and I am wondering if I somehow made a pact with the devil in my dreams or something, because how can I be so lucky? And while I can analyse the numbers and get some logical explanation, at times, I still feel like I didn’t do anything to deserve all this. I keep expecting something bad to happen every time I turn the corner.

Sigh…the life of a born worrier. I wonder if I will end up worrying myself into a self-fulfilling prophecy.

In other news, another neighbour at the condo development with an identical unit to mine sold his unit at $1.85 million, which is quite a bit lower than I expected. Since I don’t live there, I am not privy to the grapevine, and thus have no idea whether he sold so low because he was in urgent need of money or the market is lower than I expected. Anyway, I am adjusting my expectations of my condo valuation a little due to this sale.

I have also completed next year’s budgeting exercise. The biggest uncertainty so far is the condo lease renewal next May. I do have the advantage of a high initial rent, so I do have room for a substantial discount to keep my tenant, but the development is rather old and I haven’t really spent money in updating the unit, so I am keeping my fingers crossed that my tenant will want to continue his stay.

And so, that’s about it for now. More to come soon.

Daughters vs Sons

One of my female cousins is getting married next month.

She has four brothers, all married. All had grand wedding receptions that my uncle paid for – my uncle is a very rich man. She is his only daughter, so I thought we would probably end up attending the banquet of the century, or something like that.

But no, she is not having one. Because her younger brother had his last December, her parents felt it was too much of a hassle to have another one so soon.

She says she is fine with it, so we are fine with it. It’s not our time and money, so it’s not like the rest of the extended family should have any say.

Some years back, my uncle gifted each of his kids a property downpayment each, before they got married. They were all expected to continue making the mortgage payments for their own property, before and after marriage. When my female cousin announced her marriage plans, my uncle took back the property. I have no idea whether he reimbursed my cousin for the mortgage payments she had made. But even then…

Note – he did not do that to any of his sons.

And suddenly, her being the only child out of five to not have a wedding reception meant a lot more than just time and money.

Yes, she says she is fine with it. Can she say anything else and not be labeled entitled, greedy and unfilial?

It is not my time, my money, my property and certainly none of my business. But I am sad. Why am I thinking about gender equality among strangers, when parents cannot even treat their sons and daughters fairly, so close to home?

My mother has been subtly lobbying for my cousin with her parents, because it so happens that my mother was also the only one in the family not to have a wedding reception. Not even a home party. Because she was female, and she married a poor man. She felt it all her life, and while she never really blamed my grandmother for the unfairness, she never forgot it either.

But ultimately, there is only so much she could do, so we made up for it by giving my cousin a really grand wedding gift. But that is only us; we cannot take the place of her parents. I only hope that she really is fine with it all. Because I really am not.

Retirement Budget and Plans

Previously I made mention of how I intend to approach my (semi-) retirement at 45. Here are my projected retirement expenses again, close up:


I didn’t manufacture these numbers out of thin air. Most of them are based on what I have already been spending, with some adjustments based on a non-working lifestyle.

Regarding my parents’ retirement, I personally calculated that with their current HDB flat paid off, they should be able to live very well on $2,500 a month as long as they don’t do the Santa Claus act (my dad can give quite indiscriminately). For now, I anticipate that my sister and I will each contribute $1,000 a month with the remaining coming from my parents’ own savings. Heck, they can even rent my current room out for some extra cash once I move out of the house (and once they come to terms with it).

Based on the numbers, I should be able live quite well on a rental income from a well situated paid off HDB four room flat (about $2,500 a month), if I didn’t have to consider the support of my parents. The situation becomes pretty marginal once parental support is involved.

However, part of my retirement plan is also to make sure I have small dividend returning portfolio, giving me something like $10-12K a year (300K at 4% dividend yield). I may also annuities eventually, but only if the interest rate environment is more favourable. If this is also considered, then I have more than enough to cover all our costs with enough left over for small vacations here and there if we want. I am also likely to continue working part-time for a while, just to make sure I don’t drop out of society totally. All that income will be gravy.

It seems pretty cut & dried, but there are a few challenges ahead of me though:

1)      Locking in the condo capital appreciation at the right time. Buying a HDB in cash hinges on this move and I have two years to go before I can sell without the penalty of paying the seller’s stamp duty.

My father wants me to keep the condo instead of exchanging it for a paid off HDB. The HDB will give me a better rental yield and cash flow, but the condo has better chances of further capital appreciation. So this is where my father and I locked horns – I want the cash flow to stop working; my father sees it as throwing the chance to earn big money away.

Naturally, I have had to explain to my father about my early retirement plans and how this one move is critical to the whole project. And then, I had to sit and listen to a lecture about wasting my youth and potential, and how things will not always go as I plan, what will I do in retirement, yadda yadda yadda…

I could unilaterally decide, of course, the condo being mine and mine alone. But that is probably not the best course for family harmony. I would prefer to try and get my father’s buy-in in the next two years before making the authoritative decision. But man, it is frustrating to talk to him about this.

2)      Getting my dividend portfolio up to snuff. I am now averaging only a dividend yield of 2.5% due to some non-performers.

3)      Making sure I keep up the income and savings rate for the next ten years. The rental HDB will depend on the condo sale, but my forever home, the private studio apartment will need a cash injection of about $800K. That means saving $80K a year including CPF. I think I can swing that…barely…

So, there it is, my retirement plan in all its glory. Even if I cannot retire fully at 45, I see no reason why I should not be able to downshift to work that I enjoy by that time. Like shelving books in a library, or becoming an admin clerk, or becoming a PI’s assistant…

Choices…the best part of financial independence…mmmmmm…..

Personal P&L Statement – 2013

Seeing that it’s coming to the end of the year, I decided to run this year’s numbers a couple of months ahead, since I do not anticipate any major income or spending coming up. Not a celebrator (word?) of Christmas, hehe.

So here are my finances, laid bare for your perusal:


There is also another $20K+ worth of company stock given to me that is not included above, since I did not encash the stock. The stock still sits in my portfolio earning dividends.

Expenses figures under current are for 2013 spending. Under the retirement column are the projected expenses for early retirement.

The numbers in red are my greatest current weaknesses – cabs and snacks/eating out. Cabs are…well, a symptom of having to wake up at 5.30 a.m. every morning for work. I am trying to get that cut back, but I am at that point where I am wondering if it is worth spending the money just to make sure I get to the office faithfully instead of calling in sick…or quitting before I am ready. As for the dining out/snacks numbers, most of that is due to being at home for the last few months…I have been going overboard with delivery. As long as I am at work, it shouldn’t continue to be a major issue. I also have a habit of picking up the tab when dining out with certain friends, though that doesn’t happen so often.

I have also been trying to up the parental allowance portion; pay more rent, so to speak. But my parents refuse to take more as they are still earning an income. So, I just bank everything for when they actually retire.

The huge expenses for insurances are mainly due to my whole life insurance, as I am on a limited pay scheme. This means I pay extra premium each month, but I will finish paying by 45. Signing up for this was a youthful folly; I am now educated enough to realise the opportunity cost of tying up $700 a month in whole life insurance. However, given that I am now not in a position to qualify for more insurance cover, I am not sure if the whole thing did not sort of work itself out somehow.

You will also see no line item for charitable donations. I normally do them out of my savings and do not wish to disclose the figures. Personally speaking, my charity spending does not excite me, because it is all institutional donations. I do them simply out of duty. What I really want to do charity-wise is to give directly to people who need them, like, pay off a large medical bill for a specific kid in hospital, or something like that. I prefer the more personal touch of such donations. But I’ve done my research and found no reliable way of doing so at this moment. All charities seem to just want you to give them the money to disburse as they deem fit.

Charity rant aside, I think I did okay generally, except for the few weak points mentioned above. If we take away the spending on taxes, rip-off life insurance and on my parents, my current lifestyle costs about $17.5K currently, and that involves quite a bit of luxury spending. I honestly don’t think I am frugal frugal based on that kind of spending; it will be an insult to some people I know. 🙂 But I do think I spend relatively low against my income.

Well, $17.5K is certainly a figure that I could work with in retirement.

And here is the other half of the picture of my 2013 P&L:


As can be seen, I lucked out in the rental aspects for the past two years. When I bought the condo, I expected to only be able to marginally cover all my costs and earn my return through equity gain. Some deity in heaven must have been watching over me, and I managed to get a lease that paid almost 25% above market rate. I personally don’t think that is going to continue once the lease comes up for renewal next April, so I haven’t gone crazy spending that extra income, and have saved it all in case of any vacancy next year.

Okay, this is getting too long. I would like to talk about the retirement column a little bit, but it will have to be the next post

Back To Work, And A Networth Update

I had a cleaning bout last week, which improved my mood quite a bit. I don’t know why it didn’t occur to me to do some deep cleaning and de-cluttering earlier, since it had always worked to bring me out of funks earlier. Anyway, this in turn made me think I was more or less back to normal, and I was…kind of happy and looking forward to work and earning an income again. Until my tenant called last Friday with a few issues to be fixed, and then…boom! I was plunged into anxiety land again.

And so, I am back at work…still somewhat anxious. And tired. Three months of sleeping in, and afternoon naps whenever, can wreck incredible havoc with internal clocks. The good thing is that my managers are not loading me with stuff. The bad thing is that I ran off my mouth about my anxiety issues, so they are looking rather askance at me.

Also, did you know that entry level admin clerks are paid $4K to $5K a month with benefits these days? I didn’t, until my financial advisor shared with me recently that she tried to hire one, and this was what they were all asking for. Seriously?! Am I just out of touch, or are job seekers these days all delusional? She couldn’t afford to pay this, so she is still doing without one. I told her any time she could afford to hire people to do basic paperwork for that kind of money, to look no further; I would up and quit my job in a heartbeat.

I also finally have my financial numbers. It seems that my time away from work didn’t do that much damage, because my net worth increased by about $4K from August, not including the $18K gift from my mother, thanks to some of the speculative stocks moving in my tiny, tiny portfolio. So, in total, I am at about $781K, not counting the capital appreciation from the condo (about $450K). I am pretty worried about all the local tightening in the lending market recently, but am hoping things will get better after the next two years when I plan to sell.

It does pinch me a little when I think about what the numbers could have been like if I had received a salary for the past three months. But there is a little exhilaration there too. Just a year ago, I was totally envious of someone else who took a one year sabbatical from her lawyer job and went back after she spent down her savings, and was sure I could never survive the same. And yet, here I am, three months without income, without a dent in my savings. Maybe I can be just as badass after all.

I feel a little guilt too, when I think of many of my peers hustling like mad just to move their net worths a dollar ahead; and of the additional responsibilities and situations that others have, like kids, serious medical issues etc, that make it harder for them to move forward, and it doesn’t seem right that I should get it so easy.

And yet, despite living what most people would consider a rather charmed life, the past few months have been littered with moments of wishing for someone to lean on, who would tell me not to worry my little head about things, and it would all be taken care of. And hot on the heels of that thought, would come more guilt for wanting such a thing when I have such an easy life, and feeling that I’ve betrayed modern womanhood and my independent fellow sisters-in-arms.

So, anyway, I’m back in with the living, somewhat richer, still somewhat messed up and a lot guilty (I should probably write a whole post on all the guilty things). Come along for the ride.