Tag: t_ffreeLimitation

[21]U.S.home: too many inflexibilities #w1r2

Posted on by tiger40490

See also

— livelihood vs FOMO
[L=a livelihood concern] This blogpost was written a few weeks after I defined the 6+ elements of livelihood . Grandpa and Jack.He would agree that Home ownership is not a necessity. The less affluent can stay rented long-term, so heavy rental burden is a livelihood concern.

[f/F=FOMO-related or FOMO-driven] Most of the items below are FOMO-related. The pTax, HOA and mtg burden are part of the “deal” when you join the exclub, and maintain your status … high maintenance !

== Given the multitude of constraints, we want to show (and posses) flexibility. It’s crucial to identify your points of inflexibility, i.e. your unique priorities (half-ranked) compared to peers.
— constraint: CC1 [commute] .. am not flexible. Arguably my #1 inflexibility
Sugg: favor connectivity
As explained elsewhere, long commute is not a livelihood issue
— [L] constraint: high rent in the U.S. .. am flexible
am flexible to keep renting long term, whereas my peers may prefer buying a home ASAP.
am flexible due to my Asia rental income
am flexible with half unit in small home
am flexible with lease spread including sublease
— [f] constraint: oversized price tag .. am flexible with small or old homes
Sugg: avoid big homes or top SDXQ
Sugg: buy small unit and lease spread
— [f] constraint: pTax .. am less flexible, due to my limited income + location requirements
Sugg: 43R lease spread to offset pTax
— [F] constraint: SDXQ .. am flexible with average schools.
Sugg: live rented in a reasonable SDXQ, and move if needed
— [L] constraint: CC2 [Chinese community] .. wife and I are less flexible
Possibly a livelihood issue for wife
— constraint: car-dependency .. I can reduce my inflexibility. This inflexibility severely limits my choice of location.
Sugg: favor walkable neighborhood

— constraint: resale liquidity … in a low-cost, low-growth location such as Bayonne or South Edison
Am less flexible because I hate losing money on rEstate.
“Appreciation” is related word.
— [f] constraint: mtg burden .. am less flexible, due to income
Sugg: lease spread .. pay mtg on rental property while renting
Sugg: pay down the outstanding
— [f] constraint: HOA .. am not flexible when condo location is perfect for family
am also less flexible, due to my limited income
====
— the ffree Q: The constraints listed in this blogpost highlight the limits to … my exclub status or my barebones ffree?

Jolt: If you retire early, then you would probably move to (a cheaper, more Chinese country or ) less expensive locations. Commute would be a non-issue.

You may want to cash out your residential properties and stay rented, with subleasing. Sales proceeds, invested in a “shrinking nest egg”, would pay your net rental for 30 years.

However, some affluent people would want to retire AND still keep their homes. They could use lease spread to retire somewhere “nicer”.

In any case, I don’t think CC1, CC2 are real limits to ffree.

— compared to my Chinese cohort

  • am flexible with 1) SDXQ, 2) renting forever 3) home-sharing/sublease,
  • we are inflexible with 1) CC1, 2) CC2,

— compared to a 10Y younger guy in a comparable profession

  • my #1 advantage: overseas rental income(s), substantial enough to defray the heavy burden of rental.
  • my advantage: bigger portfolio, producing a growing current income
  • my advantage: less sensitive to peer pressure, more mellow at my age
  • my advantage: semi-retired (if I so choose) .. less earn-more/move-up pressure
  • my advantage: I figured out a dev-till-70 plan, in my niche position
  • my weakness: slower adapting to daily driving

Who has more dependents? a 10Y younger guy may have 2 or 3 kids too.

luxury(+special) Edu: unaffordable to 中产华裔

Posted on by tiger40490

opening eg: In the U.S. context, medical school is for the upper class, as Tao.Chen of RTS told me.

In the U.S. branded college is comparable to top MBA schools or Joseph Schooling’s expensive training.

Similarly, top schools (in all countries), top colleges, private tuition, enrichment programs… can be considered as luxuries that lower middle class (like me) can’t afford easily.

I would have to struggle, sacrifice, endure a lot to afford them…

My barebones ffree is insufficient for this level of luxury. Before college phase, I think luxury education could be 70% of the annual family burn rate. This luxury alone can derail my carefree life.

Similar experience — the prospect of a 700k home (with pTax + mortgage) became a threat to my cashflow carefree /position/, until I devised the lease-spread idea/plan.

XR and YH have kids attending special-needs schools. My son is smart, but to protect him from bad influences, I may need to consider expensive school districts or charter schools. These choices can increase my burn rate by 40%. However, there’s a risk —

Some of the additional spending on education may have /unimpressive/ ROI, and waste my limited resources. This would be similar to SG government spending past reserve on the wrong covid19 rescue areas — wasting limited reserve.

Therefore, before I commit to spending the money, I need to weigh the cost and benefits.

  • top school districts cost me hugely in commute, pTaxes etc
  • private schools have high fees but may not help my son grow better

 

[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!

 

t_swan^t_misstep ^ffreeLimitation ^macroRisk #defense

Posted on by tiger40490

k_marro_risk

t_swan and t_misstep tags are mutually exclusive 🙂

  • t_swan .. (a.k.a. externalDisaster) are external, something happening to us
  • t_misstep .. are self-inflicted disasters
  • t_ffreeLimitation .. more broad in scope, so I try to reduce its overlap with t_swan or t_misstep

t_macroRisk is a sister to t_creditRisk and t_mktRisk. It refers to systemic risks beyond mkt risk or credit risk
https://tanbinvest.dreamhosters.com/wp-admin/post.php?post=12924&action=edit

Note   t_defense is often a concurrent tag.

savings enough2last20Y now5Y#with kids

Posted on by tiger40490
Burn rate can either reduces or contributes to long term look-ahead worry. Since my bachelor years, My monthly burn rate has increased all the way to $5k – $6k, largely due to the taxes (https://tanbinvest.dreamhosters.com/2016/10/21/after-tax-income-be-careful/)

One reason — when living alone (like White Plains) I enjoy and take pride in my “simple lifestyle”. However, when my kids are with me, I see such a lifestyle not as simple and beautiful but impoverished and deprived. I want a bigger home for them, toys, enrichments …

When a bachelor, my burn rate was below $1k excluding rent. Contrast the recent peak, when my burn rate exceeded $10k/m
  • $2.5k mtg
  • $2k on average UChicago
  • $1.5k on average allowance paid to wife and GM
  • up to $1000 “taxes” including utilities, MRT, town council, school bus
  • —– (7k so far) ——
  • $1200 on average pre-school fees. $1400 -> $800+$300
  • $300 insurance — annually Aviva $600 + AIA $1700 + AXA $1100 + Prudential $400 + MSIG $300
  • $500  training for boy (on average swim $100, fitness $300, piano $60, home tutor $150, ad-hoc community center courses)
  • $400 NTUC
  • $500? (on average) travel + dining
see also https://tanbintpy.wordpress.com/2016/10/09/reduce-monthly-spend-from-5k-to-4k/