Wednesday, March 5, 2014

L.A.M. on How to Survive in the World's Most Expensive City

Yesterday, I blogged about Why the Most Expensive City is Singapore. As my boss used to say, "John, don't come to me with problems. Come to me with solutions." Using that as my mantra, I have come out with some solutions for surviving in the World's Most Expensive City.

1) World's most expensive cars

The problem: Singapore is the most expensive place in the world to buy a car. Buying a car with an Open Market Value of 30K could end up costing you an additional 115K worth of taxes, COEs and fees.

The solution: Convert your BMW into Bus, MRT and Walk. Public transport in Singapore is relatively reliable and accessible and does not come with the hassle of topping up your Cashcard, paying ERP fares, parking woes and traffic congestion. However, it does come with the occasional breakdown/delay and dealing with "smelly poor people" (In the words of Anton Casey, not mine I swear!). If you really need that additional speed/convenience, a taxi is just a push of a button away and at relatively affordable prices.

Potential Savings:7-10K a year in COE, 2-10K a year in road tax and insurance. 4.5K a year in taxes and fees plus savings on fuel, parking, ERP and fines.

2) World's most expensive politicians


The problem: Singapore has the 20 most expensive politicians in the world.

The solution: On a per capita basis, the salaries of the top 20 most expensive politicians costs about $6 per person per year in Singapore. For the working population, 50cents to $10 is deducted from your Salary every month to the CDAC fund (for Chinese employees), SINDA (for Indians), MBMF (for Malays) and ECF (for Eurasians) . If you are really adamant about recouping this $6, you are welcome to use the opt out forms here (CDAC), here (SINDA), here (MBMF) and here (ECF).

PS: Just because some politicians earn an astronomical salary, doesn't mean you have to take it out on charity ok?

3) World's most "expensive" Social Security Program

The problem: Singapore's social security program has the highest contribution rate and one of the lowest returns in the world.

The solution: If you think you can earn better returns than the 2.5% in your OA account and the 4.5% in your SA account, you can invest some of your CPF funds via the CPF Investment Scheme.However, if you don't know how to invest or are less confident about earning returns higher than 2.5%, you can transfer your CPF from your OA account to your SA account to earn an additional 2% interest on balances that is not required for housing.

The problem: Singapore has the most expensive alcohol in the world due to high taxes on alcohol as well as a GST of 7%.

The solution: Alcohol duties are based on the volume of alcohol. To reduce your tax liability on alcohol, either switch to a drink with lower concentrations of alcohol or reduce the amount of alcoholic drinks consumed. Alternatively, brewing alcohol at home for personal consumption is not tax liable. For the die hard alcoholic, there is always duty-free liquor and for the very religious, I heard that there is a carpenter who could turn water into wine.

The problem: Singapore has the most "expensive" military in the world on a per capita basis. With a Military Budget of USD 9.7Bn and a population of 5.4Mn, this works out to USD 1,796.30 (SGD 2,282.37) per person per year.

The solution: It's hard to put a price on National Security, as I have shown in a previous post, there are reasons why a country would spend 2-3X more than it's neighbours on National Defence. Although the size of the Military Budget doesn't impact the average Singaporean directly, there are ways to recoup some of these money on the table. For example, there is an IPPT incentive for passing IPPT, or getting Gold or Silver every year, ranging from $100 for a pass to $400 for a Gold. Guys, don't be lazy, train abit, keep fit and aim for Gold (or Silver or Pass), You can potentially recoup up to 18% of the Military Budget burden. Also maximize your benefits during Reservist by taking the time to catch up with old friends, network etc to gain "intangible" benefits. (PS, if this doesn't apply to you because you don't have to serve NS then you are already "freeloading" on National Security, so stop complaining.)

The problem: According to EIU, the proliferation of expensive malls and boutiques on Orchard Road (Singapore’s retail hub) import luxury European brands to satisfy a wealthy and fashion conscious consumer base means that Singapore is the priciest place in the world in which to buy clothes

The solution: Nobody says that you MUST buy all your clothes from Prada, Hermes or Celine. This woman who is giving up $70K worth of branded bags to exchange for rice for the less well off is the perfect example of how there are better things to do with your money than to buy luxury goods. Apart from luxury brands there have been many blogshops and online sites such as ASOS and Taobao which has sprung up in the internet age which allows the average Singaporean to look fashionable without paying a bomb.

The problem: Singapore is reliant on other countries for energy and water supplies, making it the third most expensive destination for utility costs.(based on EIU cost of living whitepaper)

The solution

Cable TV: In an age when everything can be streamed from the Internet, who watches Cable TV anymore? You can save $50 or more a month but terminating your cable TV subscription especially when our Cable TV providers have been outbidding one another, resulting in FIFA overcharging our Telcos on rights to broadcast the World Cup.

Internet: After terminating cable TV, you will need a good internet subscription. Fortunately, Singapore has one of the cheapest broadband services in the world.

Electricity: There are many ways to save electricity. Our government have even published a series of ways on how to save electricity. If you want to be really cheapskate, you can try to charge all of your electronics at work instead of at home to save some electricity.

Water: Refer to the following PUB website on water saving habits. Also, if you are really cheapskate, you can try to do your "business" at work and your showering at the gym.

The problem: Yesterday,  I mentioned how the Marina Coastal Expressway is the world's 4th most expensive transport infrastructure project on a per km basis. 

The solution: Based on a 50 year lifespan, the project costs each Singaporeans about $160 per year. SMRT has previously launched an initiative where commuters who take the MRT to the city area before 745am on weekdays will be able to travel free of charge. Assuming, you adjust your lifestyle a little, you can save about $1.20 a day on MRT fares or $288 a year on transportation. Even if you miss out on a couple of days, it should be more than enough to cover your share of this project cost.

The problem: Singapore is the 5th most expensive place to own property.

The solution

Grants: There are various HDB grants such as the Additional Housing Grant. First time home buyers can potentially offset up to 40K of the the purchase price of a new HDB flat. 

Loans: Choosing a suitable home loan, determining the rest, how soon you refinance or prepay can have significant impact on your loan payments. Some research will be needed. If you are lost, you can start here.

Buying property: Choosing the right property is an art. Fortunately for you, I have created a tool which can be used to to determine the value of a property which would be useful in helping you find the ideal value for money property.

Selling property: Choosing the right time to sell property is also an art. Like above, I have another tool which can be used to determine when you should sell your property based on lease remaining.

The problem: It is expensive to smoke in Singapore

The solution: Stop smoking duh!


The problem: "Cheap" dates in Singapore are expensive. What an oxymoron.

The solution: Be creative! There are many dating ideas to be explored without busting your budget. If you need some ideas, you can start here.

So there you have it. A bunch of solutions to help you survive the World's Most Expensive City. If you have any other ideas or comments, please free to comment below.



The said...

The solution to #10 should be the same as for #9 - stop dating lah!

John Lam said...

Then what about our low birth rate?

Anonymous said...

Grants and loans to make property ... cheaper? lol...

John Lam said...

I'll admit that I was scraping the bottom of the barrel in regards to housing, however, if you can think of a much better idea, I'd be happy to incorporate it in my article.