Tag: T_paradox

disqualified by exclub[def] despite comfortable Brbr+FullerWealth

Posted on by tiger40490

update :

exclub concept brushes aside health, family harmony, career longevity, brbr, healthcare provision, citizenship,

Therefore, exclub is an incredibly narrow indicator of achievement or satisfaction.

In ffree^FOMO #9K/M and strugglfamilies earnS$7k #Julius, and again in this blogpost, I continue to put myself into the shoes of a 9K/M family.

With 9k salary, some exclusive “clubs” would reject my family members — financially disqualified to enroll.

These clubs include immigration (Singapore included), branded educational institutes, investment deals, cars etc.

In a similar way, when other kids (wives) can afford something nice like vacation deals, but I have to say “That’s unnecessary lifestyle creep we can’t afford”, it feels just like disqualified.

A slippery slope ! Even though we did qualify for many “exclusive clubs” like uchicago, SG citizenship, there is always an even more exclusive club. The billionaire-under-40 club would make most of us feeling disqualified and bitter, iFF we choose to feel bitter.

— paradox of China techie

I will try to give a concrete, specific description.

A 30 year old tech worker in Beijing (or Shanghai) may considers himself unsuccessful because a “decent” home typically costs RMB 5 million to USD 1 million, and his USD 60k salary (月薪 3万五) is insufficient. Basically, he is disqualified for the Beijing home-owner club.

If instead he chooses renting, then his salary could provide him a comfortable high Brbr (buffer) and a comfortable life. Consider

  • My parents together earn up to RMB 20k/M. They only need up to RMB 一个月几千块.
  • My uncles in Tianjin each earn below 10k/M in pension.

feel` richer^inferior @unchang`income #smartphone

Posted on by tiger40490

Inflation, recession, covid restrictions, rental income decline, health decline due to aging
.. are some of the common “stressors” that have not become my stressors, because they affect many people around me more seriously.

Q: What’s special about long commute? Why do I suffer so much while others don’t?
A: 49 out of 50 of my peers can tolerate it better than I can, just as in an economy seat on a long flight.

k_deflation

Past title: covid19 recession: feel`richer@unchanged income

During the covid19 recession, roughly half the Singapore nationals [1][2] experienced job loss or partial loss of income. This made my family feel richer than before the pandemic — a paradox because in theory, without income growth we feel richer only during deflation (price fall). Now I think this theory is inconsistent with how people actually feel — People feel richer when they rise relative to perceived peers, regardless of inflation/deflation, or income rise/fall

Therefore, my sense of rich/inferior is mostly driven by peer comparison or FOMO , although livelihood and Fuller wealth is driven by cost level vs (work+nonwork) income level

[1] I will not focus exclusively on the middle class.
[2] Pandemic-proof sectors like tech, healthcare … employ lots of foreigners

— case: real estate inflation: am poorer even though my rental cost increased minimally
— case: globalization reducing min cost@basicHealthy Food but only a small percentage of the people I know actually say they feel richer thanks to globalization.
Jolt: So deflation doesn’t make us feel richer, for most of us, most of the time.

The paradox of smartphone .. Even though globalization leads to concrete, verifiable life-enhancing deflation [in basic food, clothing, bicycle, toy, basic electronics etc], the ordinary person would feel impoverished if she only has a school-supplied (or pre-owned) old or slow smartphone! Even if this phone is actually faster than a new phone, she may still feel impoverished because it looks outdated ! Vanity?

So peer comparison rather than this “deflation” is the real determinant of perceived poverty. By a certain age like 45 or 65, we don’t care so much about exclub or FOMO, and we can afford to ignore the smartphones (and other fancy, new stuff) that our cohort have.
I think this is a form of mellowing up, a form of let-go.

— (shocking) example: when I receive a modest bonus (like SGD 10k), I feel inferior and poor iFF I know my coworkers get bigger bonuses. In theory, a $10k handout ought to make us feel richer.

— example: in a WallSt bank, all contractors were forced to take 2-week furloughs at year end, but luckily I was spared. Nevertheless, I was unable to work on Christmas and New Year holidays, and lost billing, but I felt richer in comparison to other contractors.

[18]Y I feel ffree !!US cohort despite higher pay #Deepak

Posted on by tiger40490

See also big discretionary spends

Background, by definition, my “peers” all have kids, and working in (financial) IT, often with 2 incomes.

Q: why am I feeling financially free but not the U.S. peers despite their higher income
A: My advantages are 1) burn rate 2) nonwork income
A: For their USD 90k burn rate supported by employee health benefit, at 4% reliable return, they need 2.25M invested.
A: For my SGD 36k burn rate supported by medishield, at 6% rental yield, I only need SGD 600k invested

  • passive income — i.e. the incoming side —
    • my projected real-estate passive incomes add up to S$4k+. Do some of my peers have a similar income? Not sure
    • I think too few of my peers have seriously focused on reliable, consistent passive income
  • burn rate — i.e the outgoing side  —
    1. My burn rate is 20-30% lower than my peers in the same location. For example, during the initial stabilization period after my family comes, my burn rate is possibly 7k, including rent + med bx + car
    2. my actual SGP burn rate of S$4-6k is less than their USD9k, largely due to location difference and childcare. Rural China, Malaysia, India .. would be even lower. I think Rural America is somewhat lower but not sure how much. I can ask some U.S. colleagues
    3. In terms of “minimum” burn rate, I think their average in the U.S. is 2 to 4 times higher than mine in Singapore, largely due to medical, transport and rental cost.
    4. SG citizenship — offers cost advantages in terms of medical, college ..
    5. In the job loss scenario, my confidence about reducing burn rate is not echoed by U.S. peers. Can some of them cut from USD9k to USD5k? I assume yes but none of them shows confidence.
    6. I don’t aim to buy a 700k home or send my kids to private colleges. Free of these burdens.
    7. My minimalist lifestyle is rare among my peers. This lifestyle is not theoretical, but visible in action
    8. my confidence about my household burn rate is rare among my peers

— After the analysis, now a more casual look at peer’s burn rate:

I discussed with grandpa about a huge difference between me and my colleagues’ burn rates.
This difference is rooted in their long-term optimism about their earning growth and stock market returns.

(In contrast, my self-confidence about my salary sustainability is based on IV.)

One thing easy and really useful to do with money matters is break-down analysis.
I can see my younger (and some in 40’s) colleagues spending more than I do on food, rent, mortgage, car, vacations, entertainment, gadgets, kids’ enrichment ..
These are often big-ticket items or creature-comfort spending, and clearly luxury IMO

Many believe food is never a big ticket item, but I think they spend $40/D i.e. $15k/Y vs my 4k/Y.

Q: sometimes I feel I can’t (allow myself to) cut further down below my peers because my family could then feel deprived, but can I?
A: I think I some capacity to ignore the peer pressure and maintain my superior brbr.

— In Sep 2020, I discussed “livelihood pressure” with DeepakCM. I described a fictitious family earning 250k [1] combined. Deepak said after-tax 150k/Y or 12.5k/M.

If they spend 10k/M then Brbr is stressful not comfortable. I feel comfortable brbr is 2.0+ but I guess the typical family is unlikely to save half the income.

Deepak pointed out that immigrants leave their home countries behind, and come to U.S. in search for a better life, so these high-income families would spend to enjoy. Lifestyle creep — a stark contrast to my financial discipline.

Q: If these immigrants are able to “accept/cope with” a simpler life but choose to enjoy a better, more /comfortable/ (actually lavish) life, then why do they complain about livelihood pressure like depicted in 中年男士40-50压力最高@@?
A: It depends on the acceptance — like my carefree acceptance vs reluctant, grudging acceptance. I think exclub and FOMO are fundamental /drivers/ in these high-earning immigrants. They are driven to spend, and driven to endure livelihood pressure. Some are unable to say NoThanks, as I described to my sis.

Q: Are they on cashflow high ground, with their high income?
A: No necessarily.

Q[1]: 250k … what if combined income is 300k? I think by most wealth-management standards that income would put the family in a different league . Indeed, some of my U.S. (I didn’t write “SG”) friends, my ex-classmates, and possibly my sister are in the “wealthy” exclub and not comparable to the rest of us. Their livelihood pressure, their Brbr, their assets are not comparable to mine.