Monthly Archives: November 2013

Things I Am Doing Now To Speed Up My Retirement

Early retirement require careful planning and strict implementation of that plan. Every event along the journey has the potential to screw up your progress and set you back a few more years behind your retirement schedule. One of the key is how much are you spending each month, as a percentage of your monthly income, so I have been carefully doing several things which I thought might helps me speed up the process.

1. Keeping as little stuff as I can

I owns very little stuff, maybe less than 100 items if I excluded my books. My weakest link in stuff ownership always lie with books, I am currently in the process of transfer my books into electronic copy to clear up the storage space in my room. I have pretty much cleared out stuff that I didn’t use for the past 6 months and still looking at a few items that I used in the past 3 months.

This declutter activity is quite tedious, you will need to dig out things that you didn’t know were still there and making decision to continue store them or discard them. Another better option might be share them out on the freecycle site, a man trash might be another man treasure, you never know.

Throwing out stuff is difficult, it represented a decision you made in the past, an item you exchanged it with your hard earned money or maybe a sweet memory you shared with the people you loved. Throwing stuff feel like admitting that you made a mistake in the past, wasted a resource from the earth or destroy a sweet memory. In my opinion, by not throwing/giving out those stuff, you are making a bigger mistake. Souvenir that remind you of a sweet memory can be an exception here, other than that you should evaluate every item you owns in term of cost and benefit. Is this item giving more benefit than it cost me? Remember an item not only cost you a physical space but also a memory space in your mind. The less you owns, the less you need to worry about.

By keeping as little stuff as I can also helps me to make careful decision when buying a new item. More consideration and cooling off time was given to myself before I take out my money and bring home another new item.

Of course this is a personal choice, some people will keep stuff they used at least once for the past 6 months and some people will keep up to a year. Just make sure you have a adequate amount of stuff that don’t put too much stress on you.

2. Use a cheap cell phone plan

My personal cell phone plan is dirt cheap. I owns a Nokia phone which I bought for SGD 49, and I used a prepaid plan on this phone. A top up of SGD 20 give me about a month of usage, and the phone battery last me 2-4 days on a single charge depends on my usage. I never into smart phone although I does owns one smart phone for business purposes. It is mainly for instant chatting, checking email and making call.

Cell phone plan is a tricky one because it is a monthly expense and it is not fixed for most of the people, especially for the post paid customer. Small monthly expense always sneak out from people sight because they are small, not as obvious like big expense like mortgage or car loan. But consider this, a monthly expense of 50 dollars will needs an investment of 12,000 dollars with 5% return to support. How many of us has 12,000 dollars saved? And how many of us has them in an investment with 5% return? I would think that most of us are on the other side of the game, we carry a monthly expense of 30 dollars here, 60 dollars instead.

Choose a cheaper cell phone plan, it will do you good long term. 🙂

3. Get a cheap hobby

I confess, my hobby is not very cheap. Every year or so I need to buy a new pair of basketball shoe, that will be about 100 dollars, every week I spent 4-5 dollars on the rental of the court, I spent about 60 dollars on basketball and countless of energy on the game. But you no need to follow my footstep, you can do better than me actually. There are tons of free or almost free hobby you can take up.

Let’ start with the almost free hobbies first. One of them is reading, reading the books you borrowed from the library. It is not entirely free because you do need to pay to get your membership card done. But I think that investment is worthwhile, you get to entertain,educate yourself this way with very little money. Like to read exciting/romantic/mystery story? There are a bunch of fiction selection lying in the library waiting for you to pick them up. Like to build/knit/repair/learn something? I am sure you too can find a book teaching you what you want from the library.

If you are sport enthusiast, I bet you have no problem to invest some money to up your game a little bit. But it is always wise to evaluate your level before commit a sum of money into the latest sport gear. If you are not a professional badminton player, whether a racket weights 85g or 86g might not be an issue to you, and if you are not a competitive cyclist, a normal mountain bike would be fine for your weekly cycling trip. My point is, don’t overspend on equipment before you ever reach that level of competency, it is a waste of money. If you just want to get a little exercise, just walk. Walking should be the least costly hobby I can think of. If your budget allow, buy a pair of sport shoe for your walking session.

4. Buy enough clothing

I don’t really shop for clothes, except an occasionally trip to buy some working clothes. Most of the casual clothes I have now has lasted me for several years, some ever 10 over years. The key term here is enough, enough is different for everyone. For me, I keep 3 sets of working clothes, about 10 set of T-shirt/polo-T/short pant for casual wear. My working set cost me about 100 dollars a set, so there is about 300 dollars. I don’t keep number on my casual wear since most of them came from some many years ago, I guess my cost on owning them should be very low by now, probably less than 2 dollars per year per piece.

5. Go car free

This is really a no brainer if you are living in Singapore. With the price of the COE skyrocketing, it is making less and less sense to owns a car here. The cost of owning a car here is equivalent owning a house in Malaysia, if you are open to the idea of retire outside of Singapore, buying a car here is a no no no. Public transport here is not great, but it is decent. It still done its primary job of transporting people from one side of the island to the other. If you want to explore certain part of the island that is inaccessible by public transport (where are those place anyway?), there are enough supply of taxi that can fulfill you wants.

Remember you are not only save money going car free, you also reduce the pressure on the earth because there is less resources being pull out from the earth to build that car and less petrol is burnt to push that giant metal box you could have bought.

6. Watch less TV

or play less computer game. TV and computer game are like addiction, their obvious purpose is to entertain and deep down you know it is an addiction that you cannot just switch it off as you wish. I play no computer game nowadays, I don’t get much entertainment from staring at a screen and try to move my finger fast enough to kill some monster.

TV can be a good tool to spread message to the mass but I think it has gone bad in quality. Its sole purpose now will be getting more viewership to sell the ads at more expensive price. TV program nowadays do whatever it take to get people to stare at that screen, I saw inappropriate scenes in a cartoon show, more and more mindless program to shut down our creative mind and advertisements that try to sell us stuff.

I don’t know but I believe there might be a force somewhere try to glue us to the sofa to watch the TV after our working hour, try to prevent us from come up with new business ideas or inventing new stuff that might change our life. It is in their best interest for us to just be comfortable with our life, work for 30-40 years and buy product from them at the same period of time.

So, if you want to make some changes to your life, the first thing you need to cut down is your time spent on TV.

7. Maintain/repair things

I don’t have many things to maintain since I don’t really owns that many things. One thing I have proudly maintain for the past 5 years is my back bag, I bought it since 26 April 2008. For the past 5 years, it needed two maintenance action because 2 parts of the main zip came loose. I pulled out my thread and needle and stitch them back as shown as below.

IMAG0111 IMAG0112 IMAG0113

 

I am glad that I have not many things to maintain or repair, I guess this is added benefit from owning small amount of stuff. ^^

 

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Filed under Personal Development

6 financial habits you should have to retire early

1. Value your money

Every single dollar represents the hard work, time and energy you put in your work and every single one of them has the potential to grow. If you want to retire early, value your money when you are making purchase decision. You have exchange your time for your money, and since your time is finite on this world, wouldn’t it make sense to make good use of them?

(Facts: 1 dollar a day invested into an investment vehicle with 10% return will give you 1 million dollars in 56 years).

 

2. Control

Take control on every cents that flow in and out from you. Do some extra steps every time you are making a purchase.

i. Compare price between sellers offering the good you are looking for.

ii. Ask for discount.

iii. Check your receipt, make sure it is correct.

iv. Balance your income and expense, know where did your money go to every month.

v. Evaluate your expense at the end of the month and look for improvement can be made to your expense.

 

3. Save

Obviously, if you don’t have any saving, you can’t retire in any modern society since it takes certain amount of money nowadays to get the goods and services needed to live our life. So, are you at least trying very hard to save 10% of your pay check if you are on low income and 30-50% of your income if you are on higher income? Cut down the number of credit card you are holding helps in this aspect, just keep one credit card with you and cut the rest. There is some statistic shows that this action alone can helps to cut your spending down up to 30% in the next 12 months.

 

4. Invest

With the inflation at the rate it is at now, it make sense for us to invest our money in investment vehicle that produces the money needed during our retirement period. Index fund, stock, property, insurance policy are just tip of the iceberg in them market of financial product. As always, we should be familiar ourselves with the product we are going to invest our money with before making any move.

With internet, there are abundant of information available free online for us to do our research. Interaction with other people with the same mindset or made the investment before us helps us understand more about what are the return and risk involved in the investment vehicle we interested. Bottom line, do your home work before throwing in your money.

 

5. Earn

The most valuable thing we can invest in is ourselves. Points mentioned above are important when manage out personal finance but all those come from one starting point, you. Increase you earning power is much more important and definitely helps in speed up your early retirement. As mentioned here, how fast can you retire depends on how many percents of your income can you save each money. And I believed you will agree with me that it is easier to save 80% of 10K than 80% of 3K.

So, explore ways to build more income streams, strengthen your professional ability and earn more from your daily job are definitely ways to consider here.

 

6. Protection

In our journey to earn our capital to fund our retirement, we need to get ourselves covered against various risks that are outside our control. Illness, accident and hospitalization are few major risks we need to take into consideration. Take some time to read about which policy should you take up to transfer those risk to insurance without burning your pocket every year, over the years.

Be careful with every policy your adviser recommended to you, take the time to research the policy and make sure it fit your needs.

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Filed under Insurance, Save, Spend