We are around 3 years into our minimum occupation period (MOP) so there's a number of people who are thinking about UPGRADING! What a wonderful topic...
The story is the same.
We have made a certain amount due to the appreciation of our HDB.
It's time to use this profit to downpay another property and take up another loan. They have even started calculating how much loan they are able to take with their current income.
Although we still have another 2 more years left before any of us are able to realistically sell and move out.
Now, of course everyone is entitled to have their own dreams and how they want to progress along with their lives. Not everyone is thinking about upgrading.
Some want to move to a condo, others want to move to a landed property.
They are also of differing income levels so everyone's desires are different.
There are always people who are doing pretty average. Whom, I personally feel, shouldn't be upgrading at this point in their lives.
But I suppose it's pretty normal. Cos people are getting bored of their current environment and upgrades are always exciting. The idea of getting a new place, buying new furniture, a new renovation. It's fun to think about and administer.
But from my frugal point of view, that's not really my cup of tea.
After my MOP, unless I get another HDB, the other option is to buy a resale. After MOP my lease is 94 years. If I buy a resale, I'll get less than 94 years. So I'll likely not want to decrease my lease tenure.
Furthermore, I can depreciate my reno and furnishing the longer I stay in my current place. So that's definitely a plus point.
Not to mention, moving itself has it's costs, more reno expenses, the inclination to buy new furniture, moving costs, legal costs, selling and buying expenses.
And all these costs need to be depreciated against the number of years of staying at a place. So the longer I stay at a place, the more bang for my buck I get on all the expenses I paid when I first moved in.
So upgrading or moving out is definitely not considered prudent and frugal in my book.
I don't know... and I also don't really understand.
I'm living pretty happily here. And I think most of my neighbours are doing pretty ok.
So why is there any need to move or upgrade?
It's not even on my mind. And yet, some folks consciously think about this... I really don't get it.
Do they have nothing better to do? Or nothing better to think of?
I'm not trying to be insulting. I'm just wondering why.
For instance. I go on with my daily life, most people live a routine life. So they go to work, come home, do their chores, take care of kids, go out on weekends, etc...
Where's the point where they suddenly think... "Oh I think it'd be cool to move and upgrade?"
I understand if the family has grown. If they have a couple of kids who need more space to run around. Or other special circumstances. I understand if they got a good increment and they want to upgrade to a better place cos it's time.
But there's always people who aren't in a spectacularly great position and don't have a good reason to move or upgrade and somehow they have this desire to do so.
Now, of course, they are always free to do it. Whatever makes them happy.
For me, I'm just scratching my head when I read some of the conversations that are taking place.
Cos... wouldn't it be better to save the excess money? OR pay off the HDB and live debt free instead? How about setting up more savings for a child's education fund? Or investing for retirement?
There's so much more things to think about which I feel would be better than to upgrade. Cos upgrading is essentially increasing consumption.
Cos maybe they move to a condo, means they will be living in it and using up the lease, and that lease is more expensive to use up than the HDB lease.
Also, there's going to be maintenance costs, transactions costs, reno costs, etc etc etc.
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