Category: ffree

towards financial freedom

a bpost on FIRE-in-SGP

Posted on by tiger40490

https://blog.seedly.sg/fire-financial-independence-retire-early-in-singapore/ is a 2019 blogpost by a co-founder of seedly.sg. I don’t plan to spend too much time on it — not a major publication like the BizTimes article. Note both are written for the same target age group.

— age 45~50 — the ideal early-retirement age for most Singaporeans. In my early 30’s I had a very high Fuller wealth
— 50/30/20 — monthly income: 50% spent; 30% saved; 20% invested. An aggressive yet realistic plan
— YOLO (You Only Live Once) — a very common counter argument. I feel the author is in the same age group and presumably in sync with the debate.
— Earn/Save/Invest — you need to excel at 2 of 3 i.e. doing better than average.

 

[19]ffree discussions with2friends: @end@c++US

Posted on by tiger40490

Before I left U.S. in 2019, I had separate email discussions with SY and JL. To my surprise, they each replied (14 Aug 2019 and 28 Aug 2019).  Their brief answers are truthful, revealing and worth reading.

Without going into details of those discussions, I feel basically alone with respect to my ffree “state of mind”, as described in another blogpost, financial freedom=state@mind.

When living with family, I foresee a decline in this state of mind….

What would grandpa say?

realistic role models among us #CSY

Posted on by tiger40490

Hi Shanyou,

You said “我现在看周围的人，不是看他自己专业上干的怎么样，因为对绝大多数人干的再好也好不到哪里去” I totally agree. Looking around (including those Morgan Stanley EDs), I think 2% to 4% of my former colleagues/classmates are senior managers (above ED) in big companies across greater China (Not sure for how many years) and everyone else seems to be somewhere behind, in terms of salary.

Note the junior ED and Director in many ibanks are basically team leaders in charge of a few guys, but they are usually paid pretty well, around 200k.

Some specialists can probably earn more. But comparing salary is extremely touchy, irrational, unreliable, and not based on verifiable facts. We all try to be rational and philosophical about peer comparison. I wonder what is a simple, fair and realistic yardstick to see who among us can be a role model.

Obviously health and vitality, harmonious family, comfortable cash flow are basic foundations of “good life”, but what else?

In 2003 a friend of mine (Qi ChongLei) introduced to me his simple concept of “easy life” as a long-term personal goal. He is diligent and knowledgeable (now a senior manager in EBay China). Influenced by him, now I feel a simple yardstick is something like “bare-bones financial freedom to sustain an easy life“. My idea of “easy life” is more like “minimalist lifestyle”. I won’t elaborate, but those peers who don’t need to work are the luckiest even if their lifestyle becomes minimalist. Call them Group A.

If that’s impossible, then some peers can take any simple low-paying job and still live a simple-yet-comfortable life. Low-paying like pretax 50k / year. I think these peers are very lucky simply because they are free to take a break any time. These peers probably hit Level two of 6 levels@ffree #US perspective . I now feel these are the realistic role models. Call them Group A-.

I assume most of us are not in Group A or A-. Perhaps you know someone in Group A- but he may not feel that way about his life.

And then, there’s group F — many peers actually struggle on the “foundation” level — failed marriage; serious chronic illness; problem kids (Note academically mediocre kids like my son are fine kids) ….

A friend has such limited marketable skills that he can’t find any other job so he has to accept shitty tasks imposed by his boss, and work under constant pressure. Another friend is forced to work 7 full days a week. I said this is illegal. He said the U.S. labor law doesn’t really protect him, due to legal cost, legal evidence … Even if he wins he would lose his job soon.

I have more than one close friend who have only three-digit savings and/or heavy debt. High interest payments. Uncomfortable cash flow.

I classify these guys as Group F, perhaps unfair to them. Some of these individuals might have some level of financial success (even freedom) but not my role model. Financial freedom is the wrong priority, the most important but not the dominant criteria for a role-model.

— my top strengths in SelfMgmt, as I told grandpa in a 2019 call from Bayonne

AAA cash flow - burn rate including debt
A   cash flow - passive income
A-  cash flow - 30Y balance sheet mgmt
AA  #1) cash flow
AA  tech IV - QQ
A-  tech IV - algo @WallSt
A   #2) tech IV
A-  #3) wellness

Each is an extremely important strength. ( Some of them are probably viewed as competitive “advantages”. )
I only need to be really good at one of them to be rather successful.

However, in reality I’m “generally good” not “gr8” at any.

They each provide a cushion/buffer against the “blows” in our lives. No perfectionist please — No cushion can be perfect as life is full of adversities and setbacks.

[19]barebones ffree: kids inferiority, deprived@@

Posted on by tiger40490

Be prepared for prolonged hibernation (for boy). In one scenario, my family income might drop….

See also my blogpost

In contrast, this blogpost is more about deprivation.

— Q: among the three ffree scenarios, is the jobless scenario belt-tightening like 苦行僧, deprived –> kids feeling inferior to classmates?

A: As of 2020, the spending habits of my wife and kids imply a burn rate that is 50% higher than the $3k/M estimate in my bare-bones ffree. However, I have reason to believe that once kids grow up, my family burn rate will drop.

A: In my numerical analysis, I zeroed out luxury spend, mostly air tickets and restaurants, not the premium foods we buy from stores. In a jobless situation, I feel confident we Can make these adjustments and get used to it, over 2 years.

  • $100/M additional spend would provide creature comfort such as … nearby vacations, day tours
  • Remember, staycation hotels and restaurants are new to me and wife. Removing them is not deprivation.
  • In any city I know, there are plenty of high-quality free-entrance places for vacation. In fact, those commercial establishments requiring a ticket are usually smallish and artificial.
  • coffee shop 杂菜饭 (mixed vegie rice) is an example of frugal indulgence .. ##frugal indulgence ] SG 

A: In the Singapore context, S$2k/M is not abject poverty. In the U.S. low income might be more harsh… I can only imagine but my imagination is based on limited observations.

A: In any country, my kids would need to adjust and grow up as confident kids in spite of family income lower than classmates’.

  • me: Hi Mike, if you didn’t have your parents living with you as a kid, I wonder if you felt inferior to your peers in school.
  • Mike: Nope, I used it as ambition to do better than them.
  • me: I find it hard to believe. I saw this kind of fighting spirit and optimism only in movies
  • Mike: Its actually true
  • … I then shared with Mike my childhood experiences as the only kid without television at home. I felt deprived but survived.

— A: To live comfortably within SGD2k-3k/M, family member need to live like me — practice everyday mindful spending and restrict careless spending, similar to restricting calories. Basically, everything more than $10 needs a conscious decision. Tough? Easy for me.

On a deeper level, Freedom^Responsibility are two sides of the same coin. Responsible spending, Self-discipline and Living-within-means are necessary for financial freedom. Without them, even a $5k passive income would become “insufficient” sooner or later as you liquidate the income-generate asset.

The Business Times article described a max-savings lifestyle, not too different from me.

— globalization: food and clothing cost is reducing world wide, so is the minimum cost of living in SG. U.S. would require car ownership, even for a retiree !

Q2: but why is our monthly burn rate not reducing?
A2: I would say as a bachelor, my burn rate did reduce gradually, but as a family we all want the same level of luxury and creature comfort as our neighbors. We would FEEL impoverished and deprived if we can only afford to consume at the same level as 10Y ago (which has now become cheaper.)

This Q2 has implications on FIRE and bare-bones ffree.

Wife, as a mainstream consumer, wants to feel “affordable” when considering certain everyday “lifestyle” spend like a toy, personal care, home fixture, fancy food… If her friends can afford something, but I tell her “not necessary”, she would feel deprived. To me these “lifestyle” items are all unnecessary almost irresponsible, but I’m no purist either — look in the mirror! My wife is not a minimalist. Me? neither!

 

[20]ffree^FOMO #9K/M #Gary/Yin

Posted on by tiger40490

See also my blogpost on

After talking to Gary.Guo, I realized that I could be ffree but not free from peerComp pain — when I notice so-called “peers” earning a lot higher, and their families enjoying those things I used to dismiss as unnecessary… I would feel FOMO/FOLB i.e. left behind in the slow track. I think Henry.Yin also said that RMB 500k salary felt too low for an unmarried tech worker. I would hear similar sentiments if I talk to more people.

On one hand, minimum acceptable food[1] cost is dropping globally, and I have way more than enough income to survive. On the other hand I feel lousy seeing some so-called “peers” earning 20 times more than that minimum, and twice my salary. Each of them seems to complain about cost of living.

[1] see globalization reducing minimum cost@acceptableFood

FOMO … The tendency to feel envious, and the tendency to compare to our neighbors are … basic human tendencies. Even a child would experience that. However, it takes a rational mind (wisdom) to control the tendency. Other people’s envy is the damper of my bare-bones ffree.

If we don’t compare to the (wrong) peer group we CAN actually feel pretty comfortable and carefree, basking in a glowing self-esteem.

So why do we choose to engage in the unnecessary comparison? In this question, I’m confronting the paradox of my adulthood. In pursuit of a more rational perception, I have a chance to find and restore some balance in my world view. I feel Theordore Rubin’s books shed some light. He introduced some good descriptors.

This is a confusing, subtle topic, with multiple layers. One of the analytical techniques is a list of questions.

Q: How much monthly (passive) income is enough ? Note Annual income is not very granular.
A: Philip Che said $5k would be comfortable for a family of 4. Wife said 4-5k for my family of 4, as discussed in SG: bare-bones ffree=realistic #WBank^wife^Che^3k

In the Chinese middle class family burn rate the single biggest poisonous element is top schools. Top schools entail humongous housing cost [1] + college funding. This single element has the (destructive) power to transform a carefree life into a stressful, miserable life.

Q: What did grandpa say when I said my son would go to an average American school while other immigrant Chinese families mostly live in top school districts?

Q: What would the early-retirement-extreme author say?

[1] actually you may be able to rent in a top school district.

— Q: With my low burn rate of, say, 3-5k, what if my wife earns 3k and I earn 6k from work like the Teo family? In theory my carefree easy life would be sustainable but would I really find Peace?

Main street tech jobs pay about SGD 5k.

A: I think most people in that situation would probably feel below-average in salary, and unsatisfied. Those without kids or not yet over the peak would feel /wasted/ at that salary.

With 9k salary, some exclusive “clubs” would reject my family members.

— See also the blogpost on khmer villagers and similar cultures in SEA, Latin America, and some Buddhist cultures — more satisfied, less striving.

$1k NNIA=more meaningful2ME than others

Posted on by tiger40490

Be it SGD 1k for a Singapore family, or USD 1k for a U.S. family, this amount of nonwork income ..

  • is not exciting for my cohort. U.S. cohort’s family burn rate is like 9k.
  • is far from enough to someone without passive income , because this amount is way below burn rate
  • but is a significant addition when my passive income is already close to family burn rate.

barebones ffree=realistic: Covid^wife^Claris

Posted on by tiger40490

See also CRBR estimates

During my q3sg years, I concluded and declared repeatedly that my wife and I can be realistically satisfied with SGD 3k/M non-work income. Perhaps 4-5k as a family of four? Perhaps a Level 5 ffree , as defined in 6 levels@ffree #American perspective

Now, during my hib19 phase, A major pillar of my carefree bliss is the fierce boycott to FOMO/kiasu, exclub, 上一个台阶, benchmark with the MDs, chasing the endless latency goal. I tell myself and my family that we don’t need even more money once we have enough nonwork income to support a certain level of lifestyle. So What burn rate is “good enough latency” for you? I guess this is between Level5 and 6 of ffree. This blogpost is more about barebones ffree something like Level 5.

Location is key, which determines affordability of housing, education, car ownership, hospitalization,,,, long-term (nursing) care,,,, rental demand,,,, inflation,,,, utility fees,,,,. These include some of the major concerns in every adult. I achieved my bare-bones ffree precisely because I have my answers to each concern. ( The early-retirement-extreme author also has answers to each item. )

I feel good but not conceited about my burn rate + savings rate. Also proud of my passive income. This is a constant wellspring/fountainhead of positive feeling. Hopefully no attachment.

I mention my ffree to many people and I start to feel positive about it, hopefully not losing my feet on the ground.

— covid19$$handout reflect`Realistic burn rate suggests as low as $1k/M family burn rate.

======== a few burn rate figures “just enough to be comfortable” for various individuals
— first, a U.S. figure: https://moneywise.com/a/the-7-stages-of-financial-independence says “Because lifestyles vary, a simple man can say that $20,000 is more than enough to cover everything he would need every year for the rest of his life, but another person may need $50,000 or $80,000 to cover their basic lifestyle needs and the occasional holiday abroad.”
— value-investing seminar “published” estimate: pre-retirement burn rate SGD 2k/M/head is considered decent for a typical Singaporean family, perhaps an HDB heartland family.

Instead of 2k/person, Aaron of DBS said 10k/M nonwork income would be comfortable for financial freedom. I feel this is one young man’s wild dream.
— Philip.Che once said if his family of four had SGD5k/M non-work income then his life would be comfortable and he would feel free to do something else.
In Dec 2021, Claris of HSBC said SGD 10k/M is a typical burn rate for a family of 4, echoed at Gabbar a few weeks later. I think such an “increment” is mostly driven by peer benchmark. Is it inflation? My basket cost grew 15-30% over 20Y.

— Similarly, at wife’s spending level, she told me SGD 4-5k excluding housing, major medical, college tuition and travel. As of Sep 2020 her answer was SGD 5k/M. I feel this quality of life is more than “bare-bones”. This quality of life is comparable to the amount my friend LZ recorded over 2019.

She wants freedom to spend any way she wants, without asking for approval.

I kind of believe I can be truly comfortable at, say, SGD4k/M burn rate (excluding housing + major medical + college tuition), but for her, the ‘comfortable’ level is possibly SGD8k/M.

However, what if the “peers” all make SGD20k a month? See %%bare-bones_ffree ^ envy+FOMO

rarity@ (liquid)millionaires #FullerWealth

Posted on by tiger40490

Q: how many millionaires are there per 100 people in your country?

  • — A historical review
  • Before I came to SG, I always felt a CNY-millionaire was like one in a few hundred in China.
  • After I came to SG, I felt a SGD-millionaire was very different from ordinary people.
  • In the U.S. media, “millionaire” still refers to the super-rich, presumably because despite high income, most Americans are poor savers.

I think SG is a rich population of relatively “even distribution”, giving rise to more millionaires (per 1000 population) than other cities including NY, HK etc.

All the discussions so far include home value as part of NAV. By this definition (i.e. NAV definition 1), many paper-millionaires are cash poor and paper-rich, with huge portions of personal wealth locked up in illiquid assets. Retirement account[Annuity…] is another illiquid asset class.

Compare FullerWealth definition. Those paper millionaires by Definition1 are often very poor by FullerWealth.

NAV Definition 2: NAV excluding your primary residence, including all retirement accounts that belong to you.
NAV Definition 3: NAV excluding your primary residence, including _only_ retirement accounts that you can use within 3Y.

In SG (and other cities), Definition 2 could cut the millionaire count by half or more.

The millionaire renter family is an interesting case. They often own investment properties.

 

j4 ffree analysis: jobless cashflow breakdown

Posted on by tiger40490

The fundamental concept and definition of financial freedom hinges on … Fuller wealth in a zero-wage situation.

My father said I don’t need to think about sudden and unexpected job loss and the cash-flow consequences. A few close friends I consulted probably felt the same way, though German, CSDoctor and Kyle seem to accept my analysis.

Now, I don’t need to convince other people about the validity of my projections. The more due diligence I do, the more validity I see in it. That due diligence gives me increasing level of inner confidence and consequently improvement in stress profile.

At a broader level, the amount of focused brainpower I apply on burn rate analysis is probably higher than my friends apply. My analysis gave me confidence.

In reality, long term cash-flow /concern/ is arguably the most visible and most common (possibly most important) source of household stress and livelihood pressure. As such, this concern has real, tangible costs and takes its toll on our lives.

financial independence=state@mind provides an agnostic and more cautious view.