Category: t_college

Each monthly wage extends Fuller wealth by2M

Posted on by tiger40490

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For the next X years in Singapore, my family burn rate is predictable (no college no mortgage) at around $4k/M excluding transfers, $5k/M total burn rate. I sometimes tell my wife “Every time we squirrel away $60k from (work/nonwork) income, we extend our Fuller Wealth by a year.” This /prognosis/ is almost too good to be true. Simplistic but motivational thought. Long-term forecast is naturally less reliable, subject to multiple upsets but still, some guesstimates can help us plan better. Just remember not to put too much trust in the guesstimate numbers.

This prognosis is a useful yardstick for comparison with other families. Some families can “add a year” quickly (a couple of paychecks), while others need a decade to “add a year”.

— going from strength to strength, from strong to stronger .. In 2018 I had a numerical projection showing barebones ffree. Then in 2020, I wrote to wife another numerical projection showing that salaries are not really needed.

So my Fuller wealth already exceeds those targets. Every new month, my nest egg is now more fortified/resilient [2], growing (by $5k+) towards a new target of “no need to flee to U.S.”

[2] Keystone of the “nest egg” idea is … defense — against hazards, missteps, contingencies, uncertainties.

How does this prognosis differentiate me from my cohort? Many people also grow their nest egg every month, but they don’t have a FIRE target amount like 25Y worth @ living expenses. I have multiple progressive targets.

— Let’s /substantiate/shore up/ some weaknesses of this prognosis.

  1. college cost will become relevant in about 8 years. Fuller Wealth is not about luxury or higher aspiration, but aiming at a basic healthy level of lifestyle.
  2. medical cost?
  3. inflation? Addressed in several blogposts. I believe SG CPI inflation is much lower than …

[21]livelihood[def2] x-class #S.Liu #w1r9

Posted on by tiger40490

(A letter to a friend) The concept and criteria for “livelihood” are fundamental to many discussions I had with friends including our last email exchange, so let me clarify.

Henry Luo, a schoolmate of mine and a fellow programmer , has 5 kids. Henry told me that parenting, even in expensive Singapore, is not such a financial burden when I said many Singaporean parents (I didn’t talk to Malay parents) can’t afford more than 2 kids. I’m sure Henry knows exactly what specific items are , or aren’t part of “livelihood”.

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  • [m $$] adequate healthcare …. yes is part of livelihood. As a specific example, Singapore hospital wards are classified by level of care. Pictured above, the lowest is class C with ceiling fans over a large hall housing multiple beds. C-ward patients still receive /adequate/ medical care, but not so much comfort. Access to this level of healthcare is a livelihood need.
  • [m $] healthy nutrition …. yes, but expensive foods or fine dining… are not part of livelihood. In other words, we can live well without them.
  • [m $$$] safe shelter … yes in a safe, /sanitized/, sustainable environment, free of hazards. Housing is the most elastic item in this list. Specifically, perhaps 2 bedrooms for a family of 4 would be a comfortable minimum by my standard.
  • .. exercise facilities .. is not part of livelihood. In my experience, all residential locations offer some clean open spaces or affordable sports facilities or both.
  • [$] reliable public transport …. yes, but a private car is not a livelihood requirement in the Singapore context.
  • .. When I lived in NY/N/MA, we were coping fine without a private car.
  • .. My parents, living in Beijing for most of their lives, don’t have a car.
  • .. How about telecom? See section below
  • ^^ All of these cities have extensive public transport networks + affordable tax networks (my parents use taxis every day).
  • [m $] rigorous public education …. yes, but a prestigious college is not a livelihood need. Such a luxury education is really for the affluent like you and the future “me”.
  • .. [$$] If my child is academically qualified but unable to afford a college education, I would (unfairly) classify it as a livelihood issue, but hey, why do I worry when there are multiple layers of financial assistance like 1) scholarships or loans 2) work-n-study 3) work for several years then go back to school
  • [m $$$] dependable retirement income …. yes a common factor in financial hardship. The “livelihood amount” is hard to define. As a concrete illustration, the Singapore government provides an annuity that pays up to SGD 2k/M of retirement income. Upon my inquiry, an officer said that amount was considered adequate for the majority of Singaporean retirees. I have since confirmed with friends (in their 50’s) and also read personal stories that even SGD 1500/M is adequate. Adequate for livelihood, not adequate for a “retirement in style“.

[m=aligned to Maslow’s hierarchy of needs]
[$ to $$$ = non-trivial financial cost]

A somewhat academic clarification on the “retirement factor”. Some sharp observers would point out that retirement doesn’t qualify as a fundamental/basic factor of survival, like food, shelter or healthcare. An average (lower middle-class?) retiree’s minimum burn rate is perhaps split between nutrition, healthcare and transport.

In fact, transport and education are not absolutely essential factors.  In the same vein, many housing “requirements” are elastic and non-essential. My concept of livelihood is different from basic survival. Each “policy” would target a certain standard of livelihood. In my chosen standard_of_livelihood, retirement is a major factor.

Livelihood is about the long-term survival of one’s family (so childless households perceive livelihood differently). As life expectancy increases,  livelihood worries grow, esp. in terms of healthcare and retirement income. This echoes the pervasive perception that superlong retirement can lead to hardship, unless you prepare over a long time. Therefore, many old folks choose to keep working.

I watched the 2021 Oscar winner [[Nomadland]], featuring livelihood struggles (and thrills) of thrifty old Americans surviving on a budget. By the above definition_of_livelihood, many of them have some but insufficient 1) retirement income 2) sanitized shelter from hazards 3) healthcare 4) perhaps healthy nutrition.

Worldwide, I guess as high as 80% still work hard to avoid “livelihood” hardship as in my definition. In some rich countries, perhaps half the population still have livelihood concerns such as street safety, sanitation, job discriminations, debt repayment, inflation, natural disaster protection… Singapore government often talks about the livelihood of Singaporeans. In their context, Livelihood (something like 生计) is about economic survival, satisfying reasonable needs, and not left behind. More precisely, the Singapore government has always used some criteria (eg: means testing) to judge if a family has livelihood needs. Their criteria are higher than financial hardship.

I hope these examples help to clarify what livelihood includes and what resources, aspirations fall beyond the basic standard of livelihood. The most common phrases I tend to associate with “livelihood” are hardship, deprivation, left-behind, and life chances.

Q: Is my definition_of_livelihood too basic for us the middle class? Well, Henry is also middle class, based on my interaction with him. I don’t think his 5 kids feel hardship, deprived or lower-class. In 2020 I visited his new home .. clean (thanks to a full-time maid), not /cramped/ at all.

— telecom .. comparable to transport as an essential /service/ needed by everyone, a livelihood “need”. Lack of telecom service is a hardship comparable to lack of transport service… really? (Q9)

Paradoxically, some families spend more on telecom [TV, broadband, mobile] than on public transport. I think it reflect the nature of telecom as “discretionary spend”, more like entertainment spend. Now, if you remove the entertainment layer and focus on the “essential service” portion, you may notice the telecom cost is improving decade after decade. The most essential of all, landline, is almost free ! A2: The “hardship” is about lack of essential service, which is very very affordable nowadays.

The livelihood standard is very different for me vs my family. For me, I need reliable broadband, mobile voice/SMS, minimal data, no TV. The cost of this package is much lower than cost of public transport. For my family and most middle-class families, telecom bill keeps growing. Part of the reason is the “technology upgrade” by the operators. Telecom operators constantly upgrade their infrastructure and stay on the latest. The upgrade cost is passed on to consumers. Apparently, land line, mobile voice service, SMS and basic data tend to drop in price. The increase in the bill amount lies somewhere else in the bill like more data, faster broadband, more TV channels… all discretionary.

39%Americans have enough savings for $1k emergency

Posted on by tiger40490

As of 2019, the typical Black or Hispanic family has up to $2,000 in liquid savings, the typical White family has more than four times that amount.

https://www.bankrate.com/banking/savings/financial-security-0118/  is a 2018 article, quoted in CNBC. ( https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-cover-a-1000-emergency-expense-with-savings.html is a 2022 update) Bankrate.com conducts numerous surveys every year. I decide to believe in this survey. The question posed:

Q: How would you deal with a major expected expense, such as $1000 for an emergency room visit or car repair? Each respondent can only choose one option below

  • 39% would pay the whole bill from savings…. Personally, I think some of the other 61% may have $1k savings but somehow would not fork out this amount, so they chose other options
  • 19% would pay with a credit card … (high interest) and finance the balance over time
  • 12% would borrow from family or friends
  • 5% would use a personal loan.
  • 13% would count on reducing spending from other parts of their budget. I believe this option means “use some combination of the above, without increasing aggregate debt level”
  • 6% would resort to something else and 6% simply don’t know or refused

Lower wage earners, those making less than $30,000 a year, were twice as likely to use some form of borrowing than savings, while households making more than $50,000 were more apt to use cash.

This result dovetails with a recent Federal Reserve report that found 44 percent of Americans couldn’t cover a $400 emergency expense out of their pocket.

19% of Americans also report that they have $0 set aside to cover an unexpected financial emergency, according to another survey.

— an exemplary saver featured at the end of the article:
Timothy Wiedman had around $25,000 in his emergency fund in September 2016 when he slipped on wet grass in poor visibility, and ended up in the hospital. The recently retired Doane University associate professor shelled out around $1,700. He was able to cover the hospital bills out of savings rather easily. Amassing such a large cache (25k) is no easy feat, especially as health care and college costs rise dramatically.

Personally, I will be targeting a similar amount of liquid cash reserve.

— Now I have more appreciation that large portions of the American families can’t afford the expensive colleges, even though colleges provide financial aid to ensure every admitted student can afford it. Many of the struggling families would not be able to support their kids adequately during the 12 years before college

Luxury education, big homes are priced out of reach for more than half the population.

— https://www.brookings.edu/blog/up-front/2020/12/08/the-black-white-wealth-gap-left-black-households-more-vulnerable/

Average value of liquid assets among white households was $8,100 in 2019 compared to $1,500 for Black households. (Does the negative data points go into the “average”?)

Furthermore, 72 percent of white households say they could get $3,000 from family or friends compared to 41 percent of Black households.

designerLabel≠2x better Quality

Posted on by tiger40490

Many Asian parents are not affluent enough to choose luxury designer labels but they act differently when it comes to college selection.

These middle-class parents don’t have 5 million net worth that enable them to afford a 250k “designer label” college education where the quality thereof is only marginally higher. However, the stereotypical Asian middle-class parent often chooses to spend like the upper class on education. They go for the most luxury they can afford.

“Prestige” is Kyle’s term. I call it “branded” as it’s similar to any /luxury designer label/. Designer labels marketing message usually includes something like “Yes we are priced well above the second tiers, but quality is what you get.”

Some Asian parents seem to consider branded college as 5x the quality of a 2nd tier college. Is that true? At a branded university, quality of education is often superior but there’s no objective numerical multiplier like “2 times better”. Spent 250k on top college but your kid outshone by colleagues is my most elaborate illustration of the quality paradox.

Even though as an insider I know the quality of education is similar between NUS, UChicago or other colleges where my colleagues studied, I feel a deep fear that sending my kids to the smaller brand could damage their future.

  1. transportation tools like Cars are the #1 best example of prestige translating to quality, due to heavy wear-n-tear.
  2. Building materials also have substantial differences in quality.
  3. furniture has quality difference.

Pattern: the more physical/mechanical something feels, the more I believe in its quality. For learning, 达者为师. Best books are freely available.

Best teachers are often at lesser-known colleges. So if a lesser-known college employs the real leading experts in the field such as Doug Lea, Stoustrup, John Hull or the 古典文学专家 in 北师大, then parents get a better bargain in those colleges, in terms of access to teacher.

I feel my friend CSY is trapped in a rabbit hole, unable to take a step back.

branded uni %%insider advantage #Kyle,Sofia

Posted on by tiger40490

A related ROI — gauging value@branded degree: a top-5 ROI@UChicago

One of the top 3 advantages of an insider — reduction in hazardous pressure to save up and push my kids for a branded college.

As Kyle pointed out, if we had not gone to UChicago or Columbia, I would have accepted the brainwash/propaganda and believed that branded colleges enrich a graduate’s life. Even with this first-hand experience as an insider, I still find it hard to resist the peer pressure from fellow Chinese parents. If I had not gained this insider insight, how much harder would it be? I would say impossible to avoid the brainwash and accept that these prestigious research powerhouses is actually poor value for money in terms of undergrad education.

Statistically, both Kyle’s career and mine count as two data points to support a high correlation between college prestige and career. However, if the survey asks me a binary question “Has your prestigious college education enhanced your career significantly?” we would say NO, but this crucial data is lost in the official statistics.

— saving 百万.. In 2021, I told Sophia that one tangible gain from UChicago is the insider insight. This insight would help me save a huge amount (USD 500k+) on college.

The reality — U.S. top colleges are affordable only to the rich[1]. I know I’m not that well-off, so this saving will affect the quality of our family life [影响生活质量].

[1] For a modest family to get any scholarship from a Tier 1 college, you  have to compete with thousands of applicants and be really special. Selectivity is one in thousands. )

–I wrote to Kyle–
I feel both you and me have an insider’s assessment of the intrinsic value of a branded college — We know it is overvalued and not worth the money.

Similarly, there’s overvaluation of advanced financial math, including stochastic calculus. A few of my professors said as an insider’s advantage, they have a better appreciation of the limitations in the mathematics.

branded uni@@ #YH

Posted on by tiger40490

I feel at least half the Chinese (and Korean, Indian, Russian) parents in the U.S. seem to target the ivy league or other famous colleges so as a result they greatly increase the competition.

My wife and I don’t have the financial resources (like half a million), or the appetite or the time/energy to engage in this competition. Sometimes it feels a bit like a rat race…

If my kids are close to that academic standard then yes I will endeavor to help them grow towards it and hopefully get into a decent college, if not a famous one.

FYI I have a master’s degree from University of Chicago, on par with ivy league in terms of reputation and academic standards (with more Nobel laureates than most ivy league colleges)

I feel famous universities are like medical schools, sports cars, designer whey — designed for the rich and the image-conscious. In terms of quality of education, a lesser-known national top-100 college can be comparable and decent.

Crucially, many bright students accept a scholarship offer by a second-tier quality colleges (like SBU) after a cool-headed value/price evaluation. Their families recognize that branded colleges are, like branded clothing, only marginally better in quality. As a result, top colleges don’t have real monopoly on talent. Other colleges produce many successful graduates.

branded uni: best$value plan #Kyle

Posted on by tiger40490

Kyle believes college prestige does matter to job seekers, not only because of campus recruitment. Based on his belief, he wants to find a best value for his future kids — a low-cost college with good prestige.

Q: what level of prestige?
A: he said top 50 or lower by U.S.News ranking, which is based on nothing but professor research.

This prestige is not related to quality of education. I then told Kyle about Grace Dong’s experience at PACE. Peer influence from fellow students is a big part of quality of education. Obviously top colleges have more motivated, brighter students.

He stressed repeatedly that he didn’t want to send his kids to Ivy league. I think this is similar to my habit to avoid branded clothing. However, I would still send my kids to a branded college if I can afford it, because it’s no worse than an unbranded college.

Lateral thinking —

  • internship — is important for my son
  • Geographical location of the college is possibly more important than prestige. Some 2nd-tier colleges in NYC get many campus recruitments from Wall St
  • Q: how about sending my kids to Singapore universities?

250k gift4kid: branded uni tuition^tiny property #H.Y

Posted on by tiger40490

I like YH’s question.. practical question — “When my son goes to college, Should I cash out the RegoPark studio to help him pay for an Ivy-league degree, or let him keep the property?”

YH feels the cash-out route is not great ROI. YH felt that with a prestigious degree his son may be able to earn a bit higher, but those kids from lesser-known colleges also have some opportunities, possibly fewer. The house, if not sold, can help relieve the housing pain when he starts working in the tri-state region.

The house may appreciate over 4 years.

https://tanbinvest.dreamhosters.com/2019/01/07/spending-250k-on-top-college-but-your-kids-arent-more-success-than-his-colleagues/ is a blog I wrote on a related topic.

[18] martyrdom: discretionary spend@kids

Posted on by tiger40490

Many fellow Chinese parents (plan to) spend /disproportionately/on their kids because .. (hold your breath) they want-to not pressured-to spend.

Chinese parents feel good about /martyrdom/sacrifice/ — saving up and investing on kids education.

Labor of love — However, Some (33 to 50%) of my peers complain and appear to be under pressure to put up such huge amounts, due to peer pressure, and societal expectation like a “norm”.

How am I different?

  • I don’t plan to spend on /branded/ colleges, so there’s a 50/50 chance I won’t start saving until 4Y before college
  • I don’t want to spend on luxury vacations as an glorified “education” — unnecessary, unjustified and too costly
  • I do consider taking lower jobs to spend more time with kids, if effective and worthwhile.
  • commute — I want to spend huge amount to cut my commute so I can spend more time with family and for myself
  • non-academic — I plan to spend on kids’ non-academic pursuits, as Jenny on swimming, piano, coding, camps