Most marriage breakdowns are due to financial stress

I was watching Losing Our Jobs In COVID-19: This Is Our Story | Make It Work and it makes me feel grateful that I have not been affected much, if at all.

I did not lose my job, in fact I changed jobs. I prefer working from home instead of working in office, as it gives me more time with my family. I probably spend lesser during this period of time (less eating out, much less travelling to office and no overseas trips).

In the video, Daryll (the Singaporean) have to work a full time job, and take on food delivery jobs after that. As a result, he cannot spend time with his family and newborn son. I shudder to think what I will do in the same shoes. In the video, I noted that he still gives his parents allowances. Well done!

When I got married, I was keenly aware that most marriage breakdowns are due to financial stress. I do not ever want to be in such a situation, therefore I am quite risk averse. Some examples are:

• When we were HDB hunting, we had put down the option fee for a HDB resale that we like. It cost $735K. I remembered telling J that if we bought this HDB, she will have to continue to work, which she was OK. We had just started working then, and there was no reason to think that we will decide J should stop working later if we have kids. However, I wanted her to have the option of not working, and in the end, we forfeited the option fee and bought a $516K HDB.
• I have resisted getting a car for a while, even though our income could afford it. Later on, when we have our eldest, I asked J if she prefers a car, or yearly overseas holiday. She chose the car and so we got one. We do not have to cut down our overseas holiday yet (thanks in part to COVID these 2 years), but the option is there.
• Putting our 3 kids in SparklesTots. The childcare fees for them in total is about $1K. When people comment that it must be very tough financially (3 kids), I always tell them my 3 kids probably have lower expenses than their 1/2 kids, especially if their kids are in more expensive childcares and enrichment classes.
• Having enrichment classes in the Community Club. I always try to find lessons that are available in the CC, so that the lessons are cheap. The kids are still exploring, and I do not find it logical to enroll in expensive enrichment classes. As such, when my kid(s) want to drop the classes, it does not bother me as the classes are affordable. If the kid really shows talent later, I will have more financial resources to support them.

I believe that when the parents are free from financial stress, they will be better parents. 

Jiayou, the rest who are struggling in this difficult period.

Teaching kids money habits

When we only have 1 kid, we would normally go out on weekends as J was scared that K would be suaku. We would normally let K ride the kiddy rides if they are available, but would not put money in, instead trying to educate her (uselessly) that putting money in is not worth it.

I would always feel sad when K looked longingly at other kids on moving (paid) kiddy rides. She would sometimes scamper to board the kiddy ride after the other kid had left, and asked me how come there was no more electricity (as the ride no longer moved).

Later on, I decided to do the following:

• give K her own pocket money
• $1 per week for every year of age. Since K was 3 yrs old then, she gets $3 a week.
• I round up every transaction to $1, as it is easier for her 3 yr old brain to understand.
• If it is a transaction I approve of, e.g. buying from NTUC, I will round the amount down (e.g. $3.60 become $3)
• If it is a transaction I do not approve, e.g. buying from vending machine, I will round up.
• K can do whatever she wants with her money (to teach her responsibility and power of $$). 
• e.g. if we go out for a family meal and she rejects the family meal and want to order ice cream instead, she can. She will pay for her ice cream though.

Later on, when K wants to ride kiddy rides, she will decide how much she wants to put in. E.g. she has $3. Does she wants to put money into the kiddy ride, or does she want to conserve money to buy tidbits at NTUC.

Once K wanted to put money into a machine that she can turn a knob to dispense a toy. Although we tell her that she likely won't get the toy she wanted as the machine was filled with random toys, she didn't want to listen. She wanted to use her money (she had saved up like $10+). After a few tries (each try was $2), she understood that it was not worth it, and didn't want to put in more money.

I feel that giving her her own money helped to teach her the value of money. No longer does she look longingly at kids on kiddy rides (She has the power to choose if she wants to put in $). She now sometimes educates her friends not to spend money at the vending machine too (buy at NTUC is cheaper!).

Reply to comment on securing my family's financial security

 

Comment: Sad to say, 25X only works for the US or Canadian retiree and the Trinity study has a few conditions that are dangerous to extrapolate to Singapore's context without adaptation. 33X is probably a better figure to aim for.

I agree that the Trinity study is dangerous to extrapolate without adaptions. Here are some of my adaptions: 

• my 25x does not includes CPF, and I am working towards FRS for both of us while working towards FIRE. I am already 39, CPF Life kicks in at 65.
• At the start of my retirement, if market does not do well, I will likely go back to work
• I included as my housing loan as my expense. My housing loan is about $250k, and will actually be fully paid off in 16+ years. 
• I have yet to decide upon the indexes or ETFs that I will be in. For now, my thinking is that I will be split equally in 2 indexes (world index - VT and Singapore STI - ES3). I will rebalanced them each to 50% of the portfolio yearly (i.e. sell off better performing index to buy the cheaper index). I am still thinking about STI ETF though. This article explains.

* I was typing the reply in the comment box and due to the length of the reply, decided I should put it in a post.

Securing my family's financial security

I was looking at https://www.my15hourworkweek.com/2021/04/13/the-six-steps-of-the-wealth-ladder/ (again), and thinking that I have probably secured my family's financial security. The family's net worth have reached a point (currently about 10x annual expenses) where I think we will be able to maintain our current lifestyle (till the kids start working, and by then CPF Life will soon kick in) even if I got retrenched and forced to take a lower paying job. 

This is a post that I constantly re-read to motivate/remind myself.

I am highlighting the most important paragraph to me here.

The trinity study assumes a retiree will:

• never earn any more money through part-time work or self-employment projects
• never collect a single dollar from social security or any other pension plan
• never adjust spending to account for economic reality like a huge recession
• never substitute goods to compensate for inflation or price fluctuation (vacation in a closer place one year during  an oil price spike, or switch to almond milk in the event of a dairy milk embargo).
• never collect any inheritance from the passing of parents or other family members
• and never do what most old people tend to do according to studies – spend less as they age

It tells me that 25x annual expenses is very safe to retire on. Let's hope I will really dare to retire then!

*I have reached FRS for my CPF and working towards FRS for J. Upon the age of 55 (16 and 19 years away), I fully intend to top up both CPF to ERS such that we can each have a draw down of $2k (in today's money) when we hit 55.

We will be able to get $4k~ (H and J) per month when J hits 65. $4k should be mostly sufficient then.

The turning point

Why do you turn to FIRE? Why are you saving for retirement? Most people I know, don't seem to want to plan/save for retirement yet?

I was thinking what was my turning point? It was probably started due to me having a tumor in 2013. I had surgeries, and have since mostly recovered. Before the tumor, I was quite a workaholic. I vividly remembered a conversation I had with my brother who was working with me in my previous company (He was in another department. We both have since left.). I was having lunch with him (forgot where, parents or workplace?) when I was asking him some work related stuff. He answered my questions disinterestedly. When he realized that I had more questions, he commented that he didn't want to talk about work during his meal time.

Now, my priorities have changed. I realized that if I suddenly pass away, I will have regrets.

On his/her death beds, no one will regret that he should have worked longer hours, take lesser breaks etc. Your colleagues, friends even will probably be sad for a while, but your family will be sad or even suffer for a long time.

I know one of the things I will regret is not spending time with my parents. Now, I try to see them twice a week, and chit chat about things, memories, instead of fiddling with my handphone. Don't wait till they are no longer around.

Net Worth Growth Rate

I started tracking the family's net worth in 2016. Just now, I was wondering about the growth rate over the years.

The growth rate will probably get slower as my income will be contributing lesser and lesser as the family's net worth increase.

Assuming a per year growth of 15%, I will reach FIRE in 9 years, which is the year 2030. Let's hope I don't need that long.

Early month baby

Do you guys believe that babies born in the earlier months have it easier? I do. This article largely explains why.

Invisalign (Day 34)

Since my teeth straightening is a long journey, I decided to catalog the posts better. I changed a date thing in my second post, so its published date updated too. 

From now on, I will include the total day number on the post title and individual aligner day count in the contents. I'm quite confused about my days counting actually because I am supposed to change it at night before I sleep. But I suppose in the grand scheme of journey, +/- 1 day for each aligner will not matter much, as long as my teeth move into the correct position before I change to the next set.

Set 2

The experience of first putting on the second set was not was dramatic as the first set. There was a tight feeling, which did not hurt as much. By the 5th or 6th day, it was hardly noticeable.

But I uncovered how bad my teeth clenching was. My teeth were sore throughout the day. I had to consciously shift my bite to the front teeth. It was a bad decision. There was a night when I had bitten tightly throughout my sleep and my front teeth hurt very badly for the whole of next day.

I visited the orthodontist on day 30. Her advice for teeth clenching was to massage the jaw muscles to release the tension and if possible, open my jaws slightly so I wouldn't feel the urge to clench. On the same visit, she put attachments on 20 out of the 28 teeth that I have, with one tooth having two attachments. The attachments are tiny triangular stones glued to the teeth to grip the aligners tighter. This was part of the programme, so the aligners have the corresponding dents on them as well. I was given sets 3 to 6.

I left the clinic without aligners in the mouth. The orthodontist wanted the first wear to be at least 8 hours. Hence, I will need to have dinner before I could wear my set 3. The attachments scratched my inner lips quite badly and I thought that the abrasion would leave me with ulcers. 

Set 3 (day 4)

Set 3 was much tighter than the first two sets. I was given a handy hook to remove my aligners. After experimenting in the first two days, I concluded that the hook works better on the inner side than the outer side of teeth. The angle just made more sense. 

By day 3, the tightness feeling was almost unnoticeable. Yay to shifted teeth!

And today, I realised that the abrasion from the attachments was healed. I did not have to eat as carefully and painfully as the first two days. Phew~

Contribution to SRS

I have been contributing to my SRS for some time, to reduce my taxable income. I do not top up my SA. This is as SRS is more flexible than CPF SA. In the event that I need to make an early withdrawal, I can, with a 5% penalty. The withdrawal amount is also subjected to income tax. I reasoned that if I were forced to make an early withdrawal, I am likely not working by then and thus have no taxable income.

I was suddenly thinking, if I have more than $400k* in SRS (the maximum tax free withdrawal from SRS is $400k), do I still top up my SRS if I am still working then and need to reduce my income tax? The answer is a "Yes" for me. This is because only half of the withdrawal amount after the retirement age (62 for me) is taxable! 

Even if one's SRS is $800k, the withdrawal per year is $80k. Half of that is taxable = $40k. According to income tax rates, the income tax is only $550.

This is a reminder post to myself.

*if I have 400k in SRS, I should be staring at FIRE in the face, based on the ratio of my SRS stocks to cash stocks currently :)

The goose that lays the golden eggs

According to the Trinity Study, I need 25X (where X is my annual expenses) to retire.

However, I am also interested in one of the points raised in an updated study.

If you choose a reasonable withdrawal rate, you are very likely to end up with much more money than when you started! For instance, a 3.5% withdrawal rate over 30 years with 100% stocks would leave you about six times more money than when you started!

Although I do not live my life for my kids, I do hope that 20-30 years later, my portfolio will be big enough such that my kids are financially secured to a certain extend, such that they can choose how to live their lives. 

If it happens, I will also remind my kids not to kill the goose (the portfolio) such that their kids have a chance to be financially secured too. Maybe I should put everything into a trust then!

-H