Saturday, December 31, 2016

How To Survive On A Budget While Learning A New Skill's #1 personal finance comparison platform by transaction volume, provides consumers with timely money insights and aggregates the latest credit card offers and up-to-date personal loan deals.

Re-skilling lets you develop knowledge and experience for higher-paying jobs, but you need to sacrifice time and money in the meantime. Singapore has seen a surge in the number of disruptive business models, from ride-sharing apps like Uber to do-it-yourself property sites like Oh My Home. While this is all well and good for the consumer, this has resulted in several traditional jobs being threatened. On top of this, the slump in the shipping and oil and gas sectors have left many Singaporeans retrenched. With the current economic climate, it may be wise for Singaporeans to invest time and money in re-skilling, to become qualified for more opportunities.
What Does Re-Skilling Mean and What Will It Cost?
To “re-skill” is to develop new knowledge and experience to get another job. It is quite different from just upgrading your existing skills. In general, re-skilling becomes necessary when the industry you work in is no longer lucrative. For example, assembly line workers are now learning construction or computer coding skills, as it is now common for robotics to replace their former jobs. It can also involve expanding the scope of a job. Many web developers are also digital marketers these days, as DIY website makers like WordPress and Wix have lessened demand for scratch-built websites. The true cost of re-skilling is not the price of the education courses or SkillsFuture courses. The cost is often time. Depending on what you are learning, you might require anywhere from weeks to three years (a typical degree course) to pick up your new skills. After that, you may still have to accept a lower salary than what you previously had, at least for a few years. You might get only entry level pay, as you would be considered inexperienced. Here’s how to manage on a tight budget while you re-skill for another job:
Calculate Your New Expense Ratio
Your expense ratio is the measure of your monthly bills to your monthly income. If you need to pay S$2,000 a month (for your mortgage, education loan, children’s needs, and so forth), and you earn S$5,000 per month, you have an expense ratio of 50%. Odds are, your financial situation has changed. You may be working part-time while you study, or recently retrenched. Recalculate your expense ratios against your new income. An ideal expense ratio is 30% (but this may not be possible). Still, your first step should be to cut out expenses – such as gym memberships or club fees – until you get to an expense ratio that is around 50%, If you cannot do this, you may have to consider more drastic action such as getting rid of your car. It is dangerous to have an expense ratio above 50%, as this normally means you will not have enough to save and invest on top of covering your basic needs. Note that you do not have to make drastic cuts to lower your expense ration right away; you can gradually reduce costs over the months until it reaches an acceptable level.
Talk to Your Financial Advisor About Revising Insurance Premiums
Given the interruption in your financial situation, you may not be able to maintain the old premiums (remember your expense ratio?). Speak to your financial advisor about reducing your premiums, rather than risk allowing your policies to lapse. Some insurance policies may allow you a “premium holiday”, or your advisor can help you switch to a more manageable plan. If you have started to work on a contract basis, such as being a freelancer, you may also want to change the payment methods for your premiums. For example, if your monthly pay fluctuates, you may want to pay a lump sum at the start of the year, thus avoiding high premiums during dry spells.
Record Your Daily Expenditures
You will have to be more disciplined in the coming months, and the best way to do that is to record your daily transactions. If you don’t take note of how much you spend, you won’t be able to plan accordingly. There are many personal finance apps, such as Mint and Toshl, that help you do this for free. You don’t need to keep tight tabs on your spending forever. Just do it for at least a month, in order to get a clear sense of how much (or how little) you should be spending on a daily basis.
Consolidate Your Debts
Get a low-interest personal loan and use it to pay off all your existing credit cards and credit lines. For example, you could get a personal instalment loan at 4% per annum, and use it to pay off your various credit cards which cost 24% per annum. After you have done this, cancel your previous credit lines. You can have them back once you have repaid your personal instalment loan in full. When asked for the loan tenure, have the bank work out how much the personal loan will cost every month. The longer the loan tenure, the more interest you ultimately pay; but the lower the monthly repayments become. So when picking the loan tenure, consider your expense ratio. Do not rush to repay the loan, and accept a monthly repayment rate that you cannot cope with. If you cannot deal with unexpected emergencies, you will just end up using more credit again, thus undoing your efforts to lower your debt. Currently, HSBC Personal Loan has one of the lowest interest rates in Singapore at 4.5% p.a. (EIR 8.5% p.a.). They also offer a loan tenor of up to 7 years, which is longer than the 5-year tenor available at most banks.
Spend Time With the Right Friends
Our friends influence our spending. If you hang around people who eat at pricey restaurants or go to town every weekend, you will end up spending just as much. It can be tricky dining out with friends who earn more, but the key is to limit your exposure. Don’t hang around them if you know you may be obliged to eat somewhere expensive. It can feel awkward when you have to pressure them to go somewhere cheaper, especially if they don’t enjoy it. Likewise, hobbies and lifestyle activities are infectious. When you are with people who enjoy the same things you do, be it scuba diving or golf, you will empower each other to spend on these things. The sooner you get back on your feet, the sooner you can resume your old lifestyle.
Do Groceries Online to Avoid Impulse Purchases
In order to save money on groceries, do not browse. Especially do not set foot in the supermarket, which is designed to cause you to spend impulsively. Instead, make your grocery list while looking inside your refrigerator, or in a quiet corner. Once the list is done, go online and order it, via sites like HonestBee or RedMart. Do not spend time browsing other products (that’s as bad as shopping). Order what’s on the list and be done with it.   

Friday, December 23, 2016

What Type Of HDB Flats Can Single Singaporeans Buy?'s #1 personal finance comparison platform by transaction volume, provides consumers with timely money insights and aggregates the latest credit card offers and up-to-date personal loan deals.

Single Singaporeans looking to own their own HDB flats can choose between a BTO unit or purchasing a flat from the resale market.
So you’re single and living it up, and the next milestone is to get your own HDB flat. You can finally avoid the increasingly pointed questions from your parents and also get bumped up another rung on the “I’m An Adult” ladder. It wasn’t so long ago that owning an HDB flat was but a pipe dream for single Singaporeans. Back then, the best you could do was to rope in a parent as a co-lessee, and hope they don’t go nosing around too much while you’re away at work. Today, HDB rules have been tweaked to recognise that many Singaporeans are putting off marriage until they’re older and that singlehood is becoming a more acceptable lifestyle. So if getting your own home is high on your to-do list, here’s a quick guide to the options you have available to you.
What are the HDB Eligibility Requirements for Singles?
First things first, HDB flats are only available to Singaporeans or PRs. You have to be at least 35 years old if you’re applying as an unmarried or divorced individual. The only exception is if you are an orphan with no siblings; you may apply for your own flat upon turning 21. Unrelated singles who are 35 years or older can also jointly apply for an HDB flat – up to 4 such individuals can co-own a flat this way. The only other eligibility requirement is the EIP and SPR quota (used to encourage and maintain social cohesiveness). However, this is more likely to impact your flat’s location, rather than act as a hurdle against your eligibility to apply for one.
What HDB Flats Can Singles Buy?
As a single buyer, you have 2 choices when it comes to HDB apartments – 2-room BTO flat, or a resale HDB flat. The table below presents a quick summary of the pros and cons of both options.
Which HDB Flats Should Singles Get?
2-Room BTO Flat
HDB Resale Flat
More affordable
(approx S$90,000 to S$135,000)
More expensive
(approx S$270,000 to S$350,000)
Longer waiting time
(average 3 to 4 years)
Shorter waiting time
(You can complete your purchase in as little as 6 months)
Restricted to 2-room units (35 sqm to 45 sqm)
No restrictions in flat type, starting from 3-room flats (65 sqm and up)
Lower availability
Higher availability
Brand-new apartment
Pre-owned apartment
Full 99-year lease
Shorter lease period remaining
Cannot sub-let
Can sub-let
BTO 2-Room Flats Are Affordable, But Restricted in Size
The biggest advantage of getting a BTO flat is a financial one – BTOs are priced significantly cheaper than those on the resale market. However, unmarried individuals are restricted to 2-room* Flexi units only, even if there are multiple co-applicants. With 1 bedroom and 1 living room, the total floor space of such units ranges from 35 sqm to 45 sqm. Clearly, a 2-room HDB flat is small, but if you apply for one under the BTO scheme, you’ll be getting a brand-new apartment that you can renovate to suit your needs. For example, the current 35 square meter model has a sliding partition in lieu of a solid wall, allowing you to realise an open floor plan apartment. However, 2-room BTO flats are notoriously hard to get. As recently as November 2016, the balloting exercise counted 7 applicants for each available unit among singles. Then, there’s the waiting time. Even if you’re lucky enough to be successful in your ballot, you’ll still need to wait around 3 to 4 years for your flat to be built before you can move in. *When referring to HDB flats, always subtract ‘1’ from the name to determine how many bedrooms you’ll be getting. So a 3-room flat means 2 bedrooms + 1 living room, 4-room means 3 bedrooms + 1 living room, etc.
Resale Flats Are Available Immediately, But Cost Far More
If balloting (and waiting) for a BTO 2-room unit doesn’t appeal to you, you can try looking for a suitable apartment on the resale market. Singles – whether individually or jointly – can purchase any type of HDB resale they desire, provided they can afford it. The main disadvantage of buying a resale flat is the cost. At present, and reasonably for the next 30 years or so, the smallest resale HDB you can probably buy is a 3-room unit. (HDB flats have a minimum occupancy period of 5 years, and with current supply not yet meeting demand, it is unlikely you’ll find any 2-room units on the resale market anytime soon.) The prices of HDB resale flats have been steadily coming down, thanks to government cooling measures. This has helped put resale flats within reach of most single buyers. However, you should still expect to pay around S$270,000 to $360,000 for a 3-room HDB resale unit. If your resale flat has less than 60 years remaining on its lease, you’ll be limited in how long you can use your CPF to pay for your mortgage. This means that as your mortgage matures, you’ll have to pay more cash out of your pocket. Do bear this in mind when planning your finances. After you’ve located and purchased your own HDB resale flat, you’ll most likely have to/want to carry out some major renovation work. Anecdotal evidence suggests that you should budget S$30,000 for a 3-room flat, S$40,000 for a 4-room flat, and S$50,000 for a 5-room flat for renovation. As a single homeowner, you’ll undoubtedly find a resale flat more expensive to own. However, a resale unit offers you one financial advantage that a 2-room BTO does not. If you don’t need the extra rooms, you can rent them out to generate some additional income. Granted, there are pros and cons to sharing your home with renters, but don’t underestimate the financial possibilities that leasing can open up.

Tuesday, December 20, 2016

Is It Better To Pay Off Debt Or Save Money?'s #1 personal finance comparison platform by transaction volume, provides consumers with timely money insights and aggregates the latest credit card offers and up-to-date personal loan deals.

When Singaporeans are juggling debt, which is the smarter thing to do – pay off debts quickly, or save money for emergencies? If you have debt and no savings, you may be torn as which of the two to settle first. Without savings you can’t cope with emergencies, but the longer you retain debt the more interest you pay. Here are some handy guidelines Singaporeans can use to strike a balance between the two.
Paying Off Debt Versus Building Your Savings
The argument for paying off debt first boils down to interest. The longer you retain debt, the more you pay in terms of interest rates. However, it is not advisable to go for long periods without savings. This is because, without savings, you could fall into a poverty cycle. For example, say you are eager to repay your credit card debt. You pay S$3,000 of your S$4,000 to rush repayment. This leaves you with just S$1,000 to live on. But what happens if you get into an accident or some sort of emergency, which costs you S$2,000? Chances are, you will again use credit cards for the funds, thus leaving you further in debt. Not balancing between saving and debt repayment often leads to situations where your pay cheque disappears as soon as you get it (all of it goes into debt repayment), but at the same time your debt doesn’t seem to go away. The key is to balance between the two, by looking at your situation. See which of these applies to you:
Situation #1: You Have Debt You Cannot Repay in 1 Year
If you cannot repay the entire debt within the year, it is generally a good idea to repay the debt more slowly (admittedly paying more interest) while still building up savings. As a typical example, consider your housing loan: Say you owe S$200,000 on your HDB flat. You have managed to accumulate savings of S$15,000 over time. Your mortgage interest rate is 2.6 per cent per annum (this is extremely low, as a mortgage often has the lowest interest of any debt). You could try to speed up your home loan repayment, by immediately putting all S$15,000 into your mortgage repayments. But what would that leave you? Before rushing repayment, your position is (S$200,000 in debt – S$15,000 repayment) – S$185,000. If you were to put all S$15,000 into repayment, your net position would be (S$185,000 in debt – S$0 in assets)…still – S$185,000. Your net position has not changed at all. The only difference is that now, you also do not have savings to deal with emergencies. This is the reason why most people do not want to accelerate home loan repayments. You can apply the same concept to other forms of debt. If you cannot repay a debt in its entirety, and you would take more than a year to do so, then you will need a balanced approach. Set aside 50% of your monthly income. Of this amount, put 20% into savings, and the remaining 30% into debt repayments. For example: if you earn S$4,000 a month after CPF and taxes, you might put S$800 a month in savings, and S$1,200 into debt repayment. The exact ratio will differ based on how much you owe and the interest rate, so speak to a Financial Advisor for further help. Nonetheless, keep in mind that for debts you cannot repay quickly, you should maintain a savings plan while paying them off.
Situation #2: You Have a High-Interest Debt That You Cannot Repay in 1 Year
High interest rate debts include credit card debts. In these situations, you will need to restructure your debt obligations. Take a lower interest rate to pay off the high interest debt, and then save while paying off the cheaper loan. For example: Say you owe S$10,000 in credit card debt, which has an interest rate of 24% per annum. You could take out a personal loan of S$10,000 at 6% per annum, and pay off the credit card debt with it. You would then proceed to save while paying off the personal loan, as in Situation 1. The key is to get a personal loan with the lowest interest rate, and one of the best in the market right now is the HSBC Personal Loan. Singaporeans who apply through enjoy an exclusive low rate of 4.5% p.a. (EIR 8.5% p.a.), plus a waiver of S$88 processing fees and S$50 cashback.  
Situation #3: You Are Able to Pay the Entire Debt in 6 Months or Less
If you are able to pay off the debt in a relatively short period (six months is a general guideline), it often makes sense to pay the debt before saving. In fact, many banks offer interest-free balance transfers for up to six months, making this quite viable. However, if you choose this route, you must be disciplined and pay off the debt as soon as possible. Also, you should consider your circumstances. If there is a chance that you will need money urgently in the near future, you might still choose to save and pay off the debt slowly.


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