— Letter to Melvin Artes —
This is a summary of my thoughts. Recently I figured out U.S. cost level significantly higher than Singapore, in several categories. In quiet reflection, I often feel U.S. lifestyle offers many fancy, modern features (even more than SG), plus some countryside charms.. (Do I even care?) but at the cost of —
- Much Higher pTax, for the same property value.. $800~1500
- .. HOA (higher than in SG) is excluded from this list because about half my U.S. peers don’t incur HOA
- .. mortgage monthly (higher than in SG) is excluded from this list because it is also present in Singapore, and the amount is harder to estimate than pTax.
- Much Higher medical costs including insurance premium .. $800-2500… See U.S.med bx price=$400/head
- Higher transportation including cost due to private car.. $500-1500 for a modest car. In Singapore many people I know have a low need for private cars, so we make do without them.
- Public transportation also higher than SG. I currently pay USD 180/M excluding citibike fees
- —– Beyond the big-three, here are some relatively minor items:
- Higher professional repairs [car, fridge, wood houses…] are much more costly than in SG. ( Stone houses have lower maintenance costs but… ) Repairs are so expensive (while tools so affordable) in the U.S. that many Americans learn DIY.
- infrequent major repair costs were likely excluded when I asked my peers about their monthly burn rate. If you only incur such a cost once a few years, how do you include it in your monthly estimate?
- Elementary and secondary school costs are comparable to Singapore, since my kids are Singapore citizens.
- The other cost items are minor in my case
- Supermarket price tags are comparable to Singapore
- Utility costs are slightly higher
You introduced to me an interesting perspective — start from the top rather than bottom [1] and decide on an annual budget. Well, basically for roughly the same quality of life, my Singapore budget was about SGD 5k (USD 4k), whereas U.S. budget would be USD 8k excluding rent+mtg. In both cases I exclude mortgage payments and income tax but include pTax.
The $4k difference is largely due to the top 3 items above.
[1] Now in 2021, I have a growing suspicion about the top-down approach. It basically means “If my cohort (in the same income bracket) spend 80% of income then I will also spend that amount.” That is classic lifestyle creep and spending-by-peer-comparison. Following this top-down, I would spend on useless things like multiple luxury cars, luxury vacations. I suspect Deepak’s “seeking better life” leads to the same top-down approach.
I do have my American dream about opportunities, but with our combined income (low contribution from wife), the $3500 difference is non-trivial. My monthly savings will be halved because of this $3500 excess outlay. I had better ask myself “What’s more important — opportunities or monthly expenses?”
You mentioned the various government benefits that my taxes pay towards, but will I enjoy any of these benefits?
- · In Singapore we pay much lower taxes but my kids can get decent education, not inferior to here
- · Singapore medical services are not inferior to here.
- · Safe, clean streets are possible in expensive school districts but we get them free in Singapore.
- · Whatever a municipal government provides to residents here, using my pTax, I get in Singapore.
This is a complex question, so I need to put away the secondary factors and focus on the core issues important to my family. I have not done a thorough analysis, but my tentative conclusion is —
“For a given quality of life for my family (we don’t need cars or top schools) U.S. cost level is close to twice Singapore level, whereas our combined after-tax income level is roughly equal.”
We can have a separate chat about schools. My wife actually worries about guns so she doesn’t want any U.S. school, not even the top schools. I believe most U.S. schools are OK in terms of safety, so drugs and guns and bullies are present in every school but most schools are reasonably safe.
If I determine that 70% of U.S. schools have an unacceptable safety standard, then I may have to conclude this entire country is unsuitable for us. When I talk to the non-Asian friends the unanimous answer is a clear No. So I don’t worry about it.
— Q: Median household pretax income is 70k, so how do these typical families cope with those big items?
First, some statistical clarification. Households include many singular households. The median income among families with kids is different, possibly higher. Let’s assume 90k pretax. After tax would be 6k/M. My 2017 after-tax was around 6k/M.
- pTax .. many of the average families can’t afford buying home. Their actual rental is typically lower than pTax + mortgage monthly. Typical rent in NY/NJ is $1k-2k.
- pTax .. most locations outside NY/NJ have pTax lower than 1% and home value much lower than 500k. 1.2% of a $300k home means $300/Month pTax
- car .. is presumably a necessity for many average families, so they incur the same cost as estimated. Many choose to lease a car.
- medbx .. is discretionary spend. I assume some of the average families don’t buy or buy very cheap policies, and risk higher medical bills.