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.

4) World's most expensive place to be an alcoholic

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.

5) Most "expensive" military

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.)

 6) Most expensive place to shop

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.

7) 3rd most expensive destination for utility costs

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.

7) 4th most expensive transport infrastructure project

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.

8) 5th most expensive place to own a property

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.

9) 11th most expensive place to smoke

 

The problem: It is expensive to smoke in Singapore

The solution: Stop smoking duh!

10) 13th most expensive for a "cheap" date

 

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.

L.A.M.

L.A.M. on why the Most Expensive City in the World in 2014 is Singapore.

So the Economist Intelligence Unit has named Singapore the World's most expensive city to live in 2014.

This is hardly a surprise because the people in Sunny Singapore have always known that we have some of the most expensive things. Such as:

1) World's most expensive cars

Pictured: Buying a car in Singapore burns a hole in your bonnet.

Singapore comes out tops when it comes to purchasing an automobile. For the uninitiated, a Certificate of Entitlement which costs north of $70K is required before you can purchase a car. Furthermore, there is a registration fee of $140 and additional registration fee that goes up to 180% of the value of the car. On top of that,there is an excise duty of 20% of the the car's open market value. In essence, if you were to purchase a simple Sedan worth $30K, you might end up paying an additional $115K worth of taxes, COE and fees. In short, when you buy a car, you are donating an additional 4 cars to the government.

2) World's most expensive politicians

Pictured: World's most expensive hand wave.

It is an open secret that Singapore has the best paid politicians. Based on this article from Moneysmart, Singapore's Prime Minister is paid 3.5 times more than second place Donald Tsang (2.2million vs 642K per annum). However, the truth is even more skewed. Apart from the Prime Minister and the President, all of the other Ministers in the Cabinet are paid nearly twice as much as Donald Tsang at more than 1.5million per annum. This means that the top 20 highest paid politicians in the world are all from Singapore.

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

In Singapore the Central Provident Fund is a compulsory comprehensive savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare, and housing needs. It is administered by the Central Provident Fund Board, a statutory board under the Ministry of Manpower. The employer has to contribute 16% of the employee's monthly gross salary while the employee contributes 20% of his monthly gross salary.

Based on information from thehearttruths, Singapore not only has the highest contribution rate for our Social Security Program. (See chart above.), but also one of the lowest returns on employee contributions compared to other Social Security programs around the world.

4) World's most expensive place to be an alcoholic

According to rediff, Singapore is the world's most expensive place to drink alcohol. And with the latest increase in alcohol duties announced in Budget 2014 (see. L.A.M. on Budget 2014 and How it Really Affects You), we will see alcohol prices rise even higher.

5) Most "expensive" military

In my other article, L.A.M. on Whether Our Military Spending is Too High, I have shown how Singapore has one of the highest Military Spending in the world on a per capita basis and per sqft basis.

6) 4th most expensive transport infrastructure project



 The Marina Coastal Expressway is the tenth expressway in Singapore. It is Singapore's most expensive expressway and also happens to be the 4th most expensive per km at $680Bn per 1000 km.

7) 5th most expensive place to own a property

According to the Telegraph, at £10565 per sq m, Singapore is the 5th most expensive place to own a property, behind Paris, Hong Kong, London and Monaco.

8 & 9) 11th most expensive place to smoke and 13th most expensive for a "cheap" date

The people at zerohedge have concluded that Singapore is the 11th most expensive city for a smoke and 6th most expensive city to smoke a pack of Marlboro Cigarettes and with the latest increase in tobacco duties announced in Budget 2014 (see. L.A.M. on Budget 2014 and How it Really Affects You), we will see prices rise even higher.

On top of that, we are the 13th most expensive city (9th most expensive country) for a "cheap" date.

With these 8 reasons stated above, it is no surprise why Singapore ended up being the Most Expensive City in the World in 2014.


L.A.M.

P.S. Feel free to leave comments below on what else should be included in this "most expensive" list.

For solutions on how to survive the Most Expensive City in the World, look here.