Wednesday, December 22, 2010

The three bombs in life

I've heard a lot of people telling me that there are three 'bombs' in your life that can take away huge chunks of your money. These three bombs are wedding, housing and kids. I'm mentally prepared for them as I've heard them straight from the mouths of those who had been there and done that. But when two of the big bombs dropped on me this year, I was still shell shocked from the huge amount of money that I have to cough out. Let's take a close look at the three bombs:



1. Wedding


Wedding is expensive but marriage is not, haha! I mentioned some time ago that my purpose of savings is to build up my cash reserves in order to pay for a few things. I had budgeted 35k for my wedding, inclusive of everything and had managed to do so well within the budget. Inclusive of everything, my whole wedding expenses turn out to be around 26k. From what I understand, this is kind of low for a hotel wedding. Maybe it's because I don't have designer gowns, engagement rings, videographer and I've only a table size of about 12 tables.



I had fully expected to bear the cost of the 26k expenses without any returns from the banquet, which is ultra conservative for planning purposes. However, I had a pleasant surprise. Inclusive of the takings from the ang bao, I'd only spent around 13k for everything, which is very well below my intended budget. Many thanks to the well wishes from my guests! I must count my blessings and thank all the guests who had graced the occasion. I must say this money is very well spent because I had so much fun, especially during the dinner itself :)


I'll say that I handled the first bomb pretty well. It is much better than what I had anticipated :)


2) Housing


By housing, I mean the property that you're going to live in, not the one used for investment purposes. In my most recent budget to check on the situation, I'd mentioned that I needed 110k cash for HDB. It turns out that I need to put in around 70k cash for the down payment and COV plus all the miscellaneous fees for my 5 room resale flat, which is a huge relief for me. 110k represents a little more than 2 yrs of hard savings, so it's good that the amount of cash I have to put out is much lesser than that. 



I need to ensure that I have 60k to settle the renovation plus furniture for my home. The good thing is that I do not need the money now but sometime around May/June in 2011. This means that I have more time to save up the required amount and possibly to build up some cash reserves for the third bomb. I should be able to handle the 60k easily, especially with the combined help of my wife, so this shouldn't be too stressful for me. Things are looking good now :)



All in all, I think I handled the second bomb pretty okay. The high COV of 40k is quite a dampener. I don't know if the COV will continue to slide down in next year (it seems highly likely) but I don't want to miss the opportunity to get the ideal unit that I wanted. My thoughts on paying such a huge sum is this: how much can the valuation of the flat and COV drop in 1 yr? COV is more flexible and can drop a lot more, so perhaps 30k? Valuation of the flat is much more resilient and might take a few years before it can drop appreciably, say 30k again? Weighing the cost of the potential savings (let's put it at 60k) and the potential income and time lost on not securing the flat sooner, I think I'll take my chances of getting it right now.



Since the decision had been made, I'll concentrate my effort on what I can do best and what I can control - which is my job and how to get to the next higher level.



I've three of these ticking initially. Disarmed one, disarming one now and still have one more ticking...


3) Kids


This one is potentially the greatest money drainer, but one that also offers potentially the greatest reward. There's a very interesting post in valuebuddies regarding the cost of raising a child in Singapore, without including things like enrichment classes and tuition. I think in all, 700k to 800k per kid, spread over 20 years is likely to be the sum we're looking at now. I'll worry over the money when the situation becomes clearer. As for now, I think a very good amount to spend on the first kid is 15k, which includes hospitalization and confinement nanny and all the peripheral equipment needed.


Should be very do-able.

21 comments :

AK71 said...

Hi LP,

Solution set:

1. Cohabit OR go through ROM but no banquet.

2. Stay with parents.

3. No kids.

;-p

Anonymous said...

AK,

Following your advice :

1. ROM can close shop. Restaurants and hotel F&B drop maybe 20% business.

2. HDB can close shop. No COV anymore. Construction industry go into sever contraction.

3. Have to import even more FT or whatever T.

LOL

la papillion said...

Hi AK,

Not so much of a problem, I see them as milestones in my life. It's something to be achieved rather than to avoid :)

Let's take a look at your solutions nevertheless:

1) Cohabit can't buy HDB, haha! ROM but no banquet can't sit well with the in-laws. They have only one daughter so they wanted to make it a big affair. My parents are fine with a low key one but well, sometimes in life you have to compromise.

2) Not a bad option. But I wanted to expand my business so either I get a car and drive around places, or I rent a place and conduct my business or I get a property and live AND conduct my business. I think the last option, which I'm doing, seems to be the most cost effective and brings about the greatest satisfaction :)

3) Hmm, I want to experience life as a parent. Wifey doesn't seem to want any. We'll have to fight it out here, haha!

kanglc said...

Look at it this way. Our parents got bombed when they decided to 1) get married, 2) buy a house, and 3) have us. Don't worry about it.

Temperament said...

Hi LP,
I tell you something very funny.
My wife's youngest sister when she got married to a lawyer, both husband and wife agreed not to do have any children. Some years past by, then don't know why they have 2.Already young adults now. And one is a GIC scholar.

Then my wife's niece who is a specialist doctor don't intend to get married as age is catching up.
Then don't know why suddenly she agreed to get married to another doctor.
After marriage, they don't intend to have children. So they have a pet dog. They treat the dog like their child. I tell you being doctors,they take such good care of the dog-child, you can see the dog's fur so shining and silky.
After only 2 or 3 years past, then suddenly again nature take it's course, they have 2 kids now.
You see there is always the "don't know why it happens."
Ha! Ha!
Cheers!

Createwealth8888 said...

Don't leave home or go near the bed without condoms if you don't want kids. LOL

Kay said...

In fact CW, all the more you should leave the home but you're right about not going near a bed haha.

Hmmm, on second thought, the bed isn't even a necessity too these days =X

Temperament, I sure hope the dog's fur is still shiny & silky despite the "appearance" of the two kids haha. You know, what's even funnier is that they are doctors and yet they didn't use the proper controls to avoid kids...I suspect deep down they wanted them =)

Jeremy said...

Dear LP,
Whatever comes comes. If the right life partner comes into one's life, work towards marriage. One is being loving and responsible to the other better half by commiting to love in marriage for one's whole life.

If living together as a couple away from parents is wise and within one's means, it's alright to do so. Some couples live away from parents to avoid possible conflicts as some parents like to interfere with the way the couples run their own family. This may undermine the role for the husband who is supposed to be the leader of his own new found family after his marriage, so he may be caught between his parents and his own family which may be unhealthy. However, there are also cases whereby understanding parents do not interfere and push their way as to how the new couples should run their family, so they do coexist in harmony staying with their parents, but this is lesser of a case. Even when staying away, the couples should still visit their parents often to maintain their relationships. Afterall, couples can still get free and sincere advice from their parents on how to run a family. :-)

Having kids is a natural progression of marriage, unless there are legitimate factors preventing that (e.g. poor health of one or both spouses that seriously endangers the life by going through pregnancy and having a kid). Why marry in the first place if one wants to avoid the responsibility of raising kids? Money can be an important issue here. However, it is not an excuse to avoid one's responsibility to become parents. If a kid comes along the way, the couple just have to do their best to work towards providing love for the child (spending time listening to the child, teaching him/her sound moral values and doing required daily things to care for the child, e.g. feeding and so on). The point is not the amount of money showered onto a child that determines whether one has done a good job as a parent, but the results of good parenting are shown in the child, in the formation of his/her character. Money cannot buy character. It needs enormously much more effort than money to mould a child's character.

My two cents worth..... :-)

Anonymous said...

Jeremy,

I humbly disagree with your view on kids. For every reason you can give me on why I should have a kid, I can give you a reason why I should not have a kid. So to each his/her own. Want to have a kid ? Go ahead and have one, no reasons needed.

When a couple decides to get married, it can be for companionship and not necessarily for having kids. Whatever decision they make is for them to discuss and agree. You talk of interfering parents and in the very next paragraph, you talk about why get married if not to have kids ? What is natural progression for you may not be for me.

Not everyone likes coffee. Some prefer tea. Want to have kids, please carry on. Don’t want kids, please also carry on. It’s your life. No one else is going to raise your kid for you if you decide to have one. Therein lies the decision each of us have to make with our other half on whether to have kids or not.

Choice

Temperament said...

HI Guys,
Before the PAPAYA come into power,that was about 1962, most families were "dirt poor". Yet at that time which family doesn't at least have half a dozen children to more than a football team.Some even with reserve players.
Somehow we survive until today.
Now, it seems the more you "haves", the more you don't want to share.The more you are 4KS.
Ha! Ha!
Cheers.

Anonymous said...

Temperament,

Those were the days when the police wore shorts and university education was almost free. Houses cost mere thousands and they don't know what COE is for.

Dinosaur era liao. Days gone.

Temperament said...

Hi Anonymous,
It was exactly what you said. But please remember at any period of time in life everything is relative.
But now why most people (me included), are having the 4KS.
I don't think people at Lim YEW HOCK's time ever think of the 4Ks.
I suppose they didn't even know what's the 4Ks.
If they knew, maybe you and me won't be around.
Ha! Ha!
Cheers.

Anonymous said...

Temperament,

Think about it. In 1990, I bought a 1200 ft2 freehold condo apartment for 350k and was earning 3.5k. If I am earning even 7k now, that condo is out of my reach for it would cost more than double. So relative is not so relative with the different times. Comparison of different eras are dicey. Earning power and inflation do not increase at the same rates.

Ultimately, you make your own decisions whether to have a kid or not. How far would $100 go 20 years ago and how far would $1000 go today ? 2 months in a nursery ? Life was definitely a lot simpler then.

LP estimates about 700k to 800k per kid. This is something for couples to consider.

Temperament said...

Hi Anonnymous,
You are right in some ways.
But people at that time didn't think so much because most probably they didn't have much choices or none.
But simple common-sense would have told them to stop at two or zero. As was once imposed by our GOVT.
But how to stop at 2?
When was birth-control pill discovered?
And what was common-sense when reset by natural physical & emotional needs?
Ha! Ha!

So somehow you are fortunate now.
You can choose.
But don't regret your choice in later years when you may have different perspective of life.
Cheers.

la papillion said...

Hi Kanglc,

Neh, not worried about it :) I'm sure I can meet the challenges, haha!

Hi temperament,

The story of your wife's youngest sis and your wife's niece are all very interesting! I think when the time comes, the parenting instincts kicks in, there's no escaping :)

la papillion said...

Hi Jeremy,

Thanks for your advice, though I don't think it's really 2 cts, haha :)

At the present moment, I'm more worried about whether I can give enough time to my kids rather than the money. Money is spread over a long period of time, so it's important but not urgent. Time, however, needs to be spent on a daily basis. Huge responsibility to shoulder :)

Not easy being parents huh?

Jeremy said...

Dear LP,
Yes. Raising a child is a heavy responsibility and requires much time and commitment. However, this is the responsibility parents have to bear. Sometimes, I think that as humans we like to take things at our hands, such as needing time to pursue our dreams and ambitions, etc. blah blah blah, leaving no time for raising a family. It is the self-centered nature of man that results in doing only things that will benefit oneself most often. Notice that getting into a marriage and raising a family are both other-people centered important decisions in life. After marriage, we have a spouse to take care of his/her interests. Having children also involves us taking up the responsibility to care for them.

Sometimes, we become so self-centered that we do things only if it is convenient for us and benefits us. This is also the underlying reason for marriage breakups. Some people think of only themselves when they marry and when the marriage does not work for ownself, one usually blames the other partner for failure in marriage can demands one's right to ask for a divorce. There is often little thought for the other partner. Convenient come convenient go all in the interest of ownself.

The same goes for deciding to have a child. Only if having a child fits into my lifestyle and means of having one or can bring me joy, then I have a child. When things do not work out and parents have a difficult time caring for and teaching their child, sad to say they can vent their frustrations on their child or their spouse for all the things that do not work, sometimes even to the extent of using verbal or physical abuse. Notice it is always about own self-interest in making a lot of decisions or actions in life (whether a child can benefit oneself or when things go wrong, go around blaming circumstances, people and so on).

There is nothing right and wrong when making major life decisions (whether to get married or to start a family). But, one needs to examine his own inner self carefully whether every decision is only out of self-centered interest or have consideration for other people as well.

My two cents worth again...... :-)

la papillion said...

Hi Jeremy,

Good point there...I think there's some truths in being self centered when making decisions. But hor, if you think too much about others, e.g. the child, you might grow too fearful to actually take up the responsibility. You might think that since you can't take care of yourself now, what makes you think you can take care of your child.

I guess a balance between individual desires and other people's wishes have to be balanced :)

Thanks for your lengthy explanation and follow up :)

Anonymous said...

Temperament,

No worries. I made my decision with my eyes open and have no regrets. In fact, it was a joint decision with my wife. Some of my friends find it funny that I like kids and can handle most of them but do not want any of my own. I have taken care of my cousins when they were young and changing nappies is no issue at all, the reusable ones, not the disposable ones nowadays.

You can call me selfish and I will accept it. But it is still our lives and rightly or wrongly, I will live with my decision.

I only advocate that the couple make their own decision on whether to have kids or not to have kids themselves and not let someone else tell you what is right.

If I tell LP that the natural progression of a graduate civil engineer is to work for a construction company, he may show me the middle finger ! I am not one to tell him what to do with his life, which I am sure he is more than capable of doing himself.

Temperament said...

Hi Anonymous,
I am only saying as life goes on, many things will happen in future.
Some future happennings may change our outlook or understanding of life.
I believe what a person sees in life at 30 will definitely be different at 60. Then at 90 will be different again.
My mother is 90+, her main vision is of the next world yet she still has to carry on.

My apology if you think I am saying you are selfish.

Actually, we all have no choice because of high cost and standard of livings - we all have to be 4Ks.
My apology & Cheers.

Anonymous said...

Temperament,

No apologies needed and no offense taken. My views on this subject has not changed in the last 30 years. I am already looking towards a slower pace of life despite whatever MM says. Not all of us can be like him or have choices that he has.

All of us want the best for our children if we have them. If anyone of us do decide to have kids, we have to be ready for the responsibilities involved and the long journey it is going to take. I am happy for my friends who decide to have children and also happy for those who decide to stay single as well. No explanations needed.

You are right about our points of views changing with our life journey. But as yet my journey thus far has not made me change my mind or have regrets about not having children. To each his own so long as you are comfortable with your decisions.

Merry Christmas and a Happy New Year to everyone.