One of the most important points of this is the usage of CPF vs loan to pay for the house.

I'm starting to have the idea that one should as best as possible pay off the loan as soon as possible with CASH.
Using CPF to pay for the HDB MIGHT not be a great idea.

*Special thanks to Robin for highlighting this*

Think about it.
Let's say...
Every year we pay $10,000 using cash for our mortgage. We lose $200 to interest. Assuming 2% interest rate.
And if we use CASH. The story ends here.

But assume we use CPF to pay, like most of us do.
We use $10k CPF to pay our mortgage.
We lose $200 to interest.
BUT, we have to pay $10,250 BACK to CPF when we sell!!! Cos we have to pay ourselves the CPF interest.

Some may say, "Oh but your property will increase in value when you sell it."
And my response to this will be... Then where will you stay?
You'll again need to buy an expensive place to stay right?!

Don't believe me?
Let's do a simple simulation of 1 year.
You have
Cash : $10,000
CPF : $10,000
House Equity : $0
Total asset : $20,000

You use your CPF to pay your 2% loan, 1 year later this is the asset profile.
Cash : $10,000
CPF : -$250
House Equity : $9,800
Total asset : $19,550

You use your CASH to pay your 2% loan, 1 year later this is the asset profile.
Cash : $0
CPF : $10,250
House Equity : $9,800
Total asset : $20,050

That's a $500 difference in the above example.
Sure you can say you use CPF to pay and invest the $10k cash. Although I wonder how many people do that on a regular basis.

For me, I don't think about the home equity. Cos I'm still going to need a place to stay and even if I sell, I'll need to buy another place at current market prices.

The whole idea is... Even though you are paying 2.5% interest to yourself, it still needs to come from somewhere. Usually, for most people, it comes from their salaries. Not from other alternative investments.
By leaving the money in CPF, the government pays the 2.5%.

That's not to say my wife and I didn't use CPF to pay for our place. We did. But recently we've been trying to pay off the loan sooner using cash.
Although I still have a lot of concerns about the government changing CPF policies as the years go along.

IF someone has fully paid their HDB using a lot of cash, then they won't be "owing" CPF large sums of money usually this has been compounded for decades!!!
The loan to the bank is over but the loan to yourself is not!!!
And there may be trouble on the horizon for people who used their CPF to upgrade their homes when they were younger.

Imagine. A typical Singaporean changes homes 1-2 times in their lifetime. So by 50 years old, they may have fully paid for their HDB using their CPF, but their CPF is empty AND they owe themselves a whole load of interest.

Remember, most Singaporeans borrow at 2.6% using HDB loan.
Which also means they lose 2.6% of their CPF paying interest to the loan.
And they need to repay themselves 2.5%.
And so the question becomes...
Has HDB been appreciating at 5.1% year on year for the past 30 years.

In the early years of Singapore, I would probably say the returns probably far exceed 5.1%, but in recent years, I do wonder, after transaction costs and renovation, the returns of HDB year on year might not be very high.

Cos the true opportunity cost of buying a property using CPF is pretty much around 5.1%. maybe less if you using a floating rate loan, then it would be a bit lower.
The 2.5% you need to return yourself is real. And it needs to come from somewhere. Most people don't think about this. MOST not all.
More often than not, people ignore this and they don't use their free cash as investments, cos if you don't use the free cash to make up the 2.5%, means to return the 2.5% you will need to use your salary to "top" this up when retirement comes along.
Selling your home doesn't really work cos as mentioned in the previous few articles, you still need to buy another place to stay.
2.5% compounded over 30 years is A LOT of money.

There's a few ways to solve this
1. Use cash to pay for the HDB
2. Use CPF funds, and invest the cash on hand with more than 2.5% return.
3. Don't ever sell the HDB and rent it out to monetize the money.
4. Use your salary to "pay yourself" the 2.5%

Simply put. If you use your CPF funds, you need to pay yourself the interest, and that 2.5% needs to come from somewhere.


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So as I wrote my previous post.
And it slowly came to light that my HDB isn't really an asset. It doesn't grow in value. It's always depreciating due to the lease. If I want to extend the lease by moving to another area of Singapore, I will have to give up size and location.

Eventually as time passes, assuming I can live forever and keep trying to extend my lease by downgrading, I will end up in a super small place maybe just enough for a bed in the far ends of Singapore.

If it's a house for self stay, it's hard on convince myself that it's an asset that grows in value.

So this got me thinking.
In that case, what is value? What can I consider an asset?

And this really brought me down to a very simple line...
It's something bag creates value.
It needs to provide a service or product.

This is something close to what Warren Buffet said.
To him, gold is not an asset. Cos it provides no service, it doesn't do anything, except sit around acting pretty.
Just that over the years, people just use it as a medium of exchange.
But that's hardly an asset, cos eventually, you will finish spending the gold. You will need to use gold to buy food.

A freehold farm could be an asset.
If managed well, you can hire people to tend to the land and sell the products and with the revenue, you can use it to pay off taxes and salary and expenses, and this will last forever.

This is absolutely different from an HDB, where it cannot be used forever, and if you try to extend the lease, you have to give something else up.

Cash is pretty much used as a medium of exchange. But it in itself doesn't CREATE value.
Gold is used traditionally as a medium of exchange and store of value, but if you use it, you lose some of it.

So if I buy a 99 year leasehold property and rent it out, do I create value. I think I can consider it as creating value, cos I "bulk purchase" a 99 year lease, and rent it out in shorter term leases.
And this is considered a service to people. Cos it allows people to rent for short term.

It's a depreciating asset but it generates a cashflow.
Same as an oil field. As they keep pumping oil out, there will be less oil, but as they sell the oil, it provides a service and product and it generates a cashflow.

And if you look at your HDB in this way. Then you are "bulk buying" a long term lease. And instead of getting a cashflow on it, we are basically just spending the cashflow by staying in it.

But there's little choice besides doing this, the alternative is to rent out the HDB and rent a small room for yourself.
But we aren't here to suffer so that's just ridiculous.

So... What are we talking about today?
Well... Assets. What is value? How do we retain our value across time?
And not end up in the HDB trap.

So we need to look for good assets which will retain their value and keep creating value. And can continue growing.

Now do you understand why Warren Buffet loves Coca Cola? Or tobacco companies?
Cos they create continuous services for a cheap rate.
These companies create addictive products cheaply and sell to the rest of the world.
They are bad for consumers. But nonetheless, they ARE providing a service and a product.

So another way to get around the HDB lease issue is to buy long term assets and rent instead of leasing the 99 year HDB. Except that you can't get a loan on it.
So for example one could invest $500k at @5% and get $25k per annum and use that to rent a place forever.
I assume that the capital increased by inflation so the dividends get pushed up yearly as well.

This MIGHT actually be better than buying an HDB which will depreciate over time.

Probably the way to best capitalize on your HDB will be to, once again, create value. One can rent out 2 rooms of their HDB and generate a positive cashflow. In this way, after 20-50 years, the cashflow would be able to fund more investments into other value creating services.

This can also be seen like car COEs which is extremely similar. A car is not counted as an asset. Cos we are usually consuming the car. However, if we are able to somehow monetize the car, then it becomes an asset.

As I keep typing, this idea of assets and value get clearer.

And so comes the next idea...
Would it make better sense to put all investments into equity or other investments? And treat housing as a regular consumable, meaning to rent/lease, whilst freeing up funds to make long term investments.

Cos that's what it is. HDB is a bulk purchase of rent. And maybe, just maybe, putting money into financial assets might be a better plan for long term preservation of assets/value.

For example. Since I stay in Queenstown, I am consuming a 4 room HDB at a centralized location.
I could sell the "value" of the centralized location by renting out my HDB and renting another 4 room HDB in a less convenient place.
And in between, I should have monetized some of the value of the location of my place.

This train of thought is actually quite scary cos basically it means anything with an expiry date is not really an asset unless it is monetized. You really can't afford to "squander" the validity period. Cos it's limited for only a period of time.

And I think it might be useful for my future investment ideas, cos it really does make me think a bit more about what I deem an asset and what I want to do with my HDB in future.

​
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A request from a reader who's concerned about the 99yr HDB lease problem.

There's a couple of ways to look at this problem, so

I'll cover a few scenarios.
I won't cover the situation where one can buy a freehold property. Cos if one has money, then this isn't a problem. The issue most of us will have is that we aren't really rich enough and are pretty stuck in the middle.

The simplest scenario is a situation like me and my wife.
We are a young couple. And we bought the HDB directly from HDB. We bought it at a discounted rate and after 5 years we are able to sell it.
Although we aren't really planning on having kids. The idea that the HDB will expire worthless doesn't sit well with me. So no matter what, I will try to preserve the "asset" if possible.

This would mean that after 15-20 years, we will likely have to move.
Why not move earlier? You may ask...
The thing is, we will only be able to sell our HDB after 5 years. We can also only buy an HDB from the market after 5 years.
Optimally, we should buy a 5 year old resale HDB and live in it for 10 years.
And sell it off when it is around 15 year old and repeat.
So similarly, we should sell our new HDB at 15 years old.

Basically we can only buy a 5 year old HDB, and we need to live in it for 10 years to make the cost of moving worth it.

For many middle aged Singaporeans, they may be starting to think about retirement at 50 years old.
They may be sitting on an HDB which is 30+ years old.
And they are thinking... "Ok now what do I do?"
I'm going to think about it as, we don't want to have the HDB expire worthless.

So the options really come down to having to move.
Value of property is always a function of a few things.
1) Location
2) Lease remaining
3) Size

Even when my parents had an en-bloc, they had to move to the outskirts of SG to extend the lease and had a slight upgrade in size, but they lost a centralized location.

En-bloc doesn't allow the family to really have much additional benefit. They just get a price premium over the market rate.

So if you want to move house but stay in the same location, but you want to extend the lease, then you have to downgrade the size.

If you want to keep the size but extend the lease, then you have to move to a not so prime location.
If you want to "win" in any of the aspects, then you just have to top it up with cash.

So if you want to keep the size and location, but still want to extend the lease, then you need to "top up with cash".

There's pretty much no way to win in this game. It's just trading around.
Cos the lease is always depreciating.

So if I'm looking at myself, I'm currently staying in Queenstown, maybe in the next decade I might move to Punggol to extend my lease.
But by doing so, I lose the convenience of the centralized location. And I will further lose out on transactions costs.

And that's the end of the story. There's no way to win this game. All the lease hold properties are depreciating.

Even if you buy a freehold property, there's also no way to trade upwards.
If you want a better location, then be prepared to give up your freehold status.

That's pretty much the problem with properties for self stay. You can't really try to time the market. The only way is to sell and rent, then buy again IF the market goes down. But how many people are willing to do this?

So that's it... It's a messed up game. If you only have 1 property and you are staying in it. It's not an investment.
You're basically stuck with it.
Cos you will stay in it, if you want to trade it off, you will have to give up something to get something else.

The only way to escape the 99 year time bomb is really to buy freehold. BUT in Singapore, I wonder if that's possible in the long run. Cos eventually, freehold properties will also go en-bloc and you'll just have to move out and trade into another place. Furthermore, developers will just sell newly developed place as 99 year leases.

So if we look at this in the super long run, assuming the property gets handed over to the next generation, the property will keep trading smaller and smaller, further and further away from a centralized location. Cos there's no way to beat a depreciating "asset".
​
As I'm writing this list, it inspired my next post on...
So what IS an asset??? What is value?


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It's Monday and I felt like writing a simple post, since Mondays have the least traffic anyway. 
So I'll just chat a bit on what's been happening recently.

I've been out of town in KL as usual for the past week. I'm sure regular readers may have noticed, the usual links at the bottom of my post was missing cos it's hard to input links using my phone. 
It's Ramadan period, so many of the people in Malaysia are fasting. It gets a bit awkward cos my wife gets off work at 6pm and we start looking for dinner cos she tends to have to go back to hotel to work after dinner. And as we walk around, we see a lot of shops have people waiting to eat but they can't start eating yet. And it would be totally insensitive for us to go in and order and just start eating, so we decided to, either go to a non-halal restaurant, or just buy back to our hotel room to eat. 
We bought satay at MYR1 per stick, it's quite amazing, they use chicken breast meat to make their satay and they give around 50% more meat per stick. 

I'm going to Paris again later this week, barely 6 months since I last came back from Paris... 
My expense this month is going to go through the roof. Cos we bought our tickets quite last minute and it's the June holidays so it's quite pricey. We are extending a couple of days, so we need to cover a bit of our own hotel. Food is also expensive in Paris. 
A normal set meal for lunch is EUR15, which is around S$25.
Or I could just eat a sandwich at EUR5 which is around S$8. 
I'll probably have to make do with a sandwich on the days I'm alone. 

There's a high chance that once we get back from Paris we'll be going Malaysia again. 

It was quite ironic, cos my wife planned a short trip for us to Bangkok in July cos she wanted a break, and after we paid for the flight and hotel early this month, within the week she was asked to go Paris. 
And I told her... "Eh... we shouldn't have bought the Thailand trip, we are really spending too much time overseas, we need a break." 
Cos there's a high chance in June and July we're going to fly for her work again. 
We thought that we could catch a break this month and have a short BKK trip for ourselves in July. But now that we aren't getting any break, I hardly want to go to BKK. Oh well, still gotta go, money's been paid. 

It's quite a challenge every time I come back from overseas, cos I don't have much food left in the fridge, cos I try to use up my food before I go, then after I come back, I need to quickly find food sources to beef up my food inventory again. Of course the easy way is to use money to buy the food, but that just defeats the purpose. It's like a bad habit. Buying food is the easy way out when I can think of ways to obtain free food. The challenge is that I don't have much time when I just get back from overseas. 
For folks who don't understand why I bother to obtain free food, since spending money is easier, why bother right? It's the same idea as... why I bother to maintain my $4 phone plan, or why anyone wants to reduce their electricity bill, or any other ways to save money. 
The thing is... "Why bother" can be used on almost anything. 

Moving on...

I found 2 coffee machines recently. They were sitting beside my lift lobby asking to be taken. 
One is the Dolche Gusto machine where I can put in capsules, I found capsules previously so I can use it for a few days/weeks. Then I'll need to see if I can get/find more capsules. No, I have no intention of buying capsules.
Second coffee machine I found on a different day is those which you put in roasted beans and the machine will grind the beans and drip the coffee... it works, but I don't have beans to put into the machine... So I'll have to find a way to get free beans. 

CirclesLife has an interesting phone plan. It's a $0 flexi plan.
Sign up for free and get a SIM card sent to you. I already signed up. 
For $0 per month, I will get 1GB of data, 30 minutes of talk time and 10 SMS. 
This will add on to my $4 phone plan very well. Cos my data SIM has been reduced to 500MB and this 1GB offered by CirclesLife is totally awesome for me. 
Apparently, there's no catch, and it's here to stay. Oh well, why not right...
It works like a pre-paid plan. 
So at $0, you can get the 1GB +30mins of talk +10SMS.
Then if you run out, you can buy a short term 1 month plan to top it up. 
So for example you can top up +2GB for $12, +1GB for $8, or +30mins for $5.

I think if I wanted to, I could just switch over to this plan and cancel my pre-paid card. 
Then I could effectively reduce my phone bill to $0 per month!
I think the 1GB +30mins of talk +10SMS should be enough for my purposes. 
But... like what I said above... "Why bother"... see, it's so easy to use this excuse. 
I need to tell all my friends about my change in number, and my prepaid plan is already so cheap at $3-$4 per month, and I probably can bring it even lower than $3 at times. 

(If I top up my prepaid card online, I can buy $10 which lasts for 4 months, means it's $2.50 per month. IF I don't use up ALL the credits to make calls, I can extend the validity for another 6 months at $2.60, this means that potentially, I can use $10 to buy me phone usage for 10 months, which results in $1 per month at best. It's highly unlikely I'd still have credits to extend the expiry one more time after 10 months.)

BUT, I could potentially reduce all that to $0 per month if I switch 100% to CirclesLife, but here, I use the excuse, "Why bother", I would need to inform all my friends about the changes, and inform the banks about my changes and maybe even have to update my email accounts, cos these days you can use your handphone to recover forgotten email passwords... 
So I use the excuse, "Why bother" when I could potentially save $10-$20 per year if I really bothered. 
There is a catch though, IF I ever needed up use more talk time on CirclesLife, I MUST pay $5 for 30 minutes and it only lasts til the end of the month. 

Anyway... moving on...

DBS Visa Debit card, the "So called" awesome card which USED to give 5% rebate for Paywave transactions without any minimum spend has updated it's Terms & Conditions. 

The NEW T&C is unforgiving. 
They removed the limit of 3 ATM withdrawals, but now there is a $400 minimum spend. Which is just sad. 
I used this as my secondary card if I overuse my UOB One card, but now, this card is rendered pretty useless. Cos it's going to be hard to clock $400 worth of paywave transactions. And to use this card to pay for any other purchase without paywave is pointless.
​(The alternative will be to use DBS Live Fresh since that one also has minimum spend anyway.)

Whilst I was typing this post, my wife called and said we will be going to Malaysia again tomorrow, and it's supposed to be a public holiday...
Then we'll be back in a couple of days and then flying off to Paris again for her work. 

Anyway, that's it for today's post, I'll be talking about the 99 year lease time bomb for HDBs tomorrow or Wed, depending if I have the time tomorrow after the flight and everything...


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​​

When I visited my parents last week, my dad asked me if I still cut my own hair.
And of course I replied... Yea of course I still cut my own hair.

And he again marveled at how amazing it was and wondered how I did it and expressed his amazement.

And I told him...
I didn't start cutting my own hair cos I can't afford it. It's around $10. That's not much. And now that I go Malaysia often, I could get a haircut for even less. It's not about how much it is...
I started cutting my own hair cos I thought it would be fun to try. Why not? Most people believe it can't be done. I believe it can be done. So I decided to try... Around 5 years back...

And like everything else... First time wasn't so nice. Second time got better and took less time and now after around 50 times. I'm a lot better and faster.
And now... Why would I pay money to cut my own hair? It's free.

That's how we all learn new things. We all aren't very good at the start. Then we get better. Then we get a bit better then we reach a level of "fair enough" competency. Not great but good enough. And we more or less hang around that level of competency unless we want to pursue the new skill further.

I've been trying to get my mom to get off her cable subscription. It's expensive and useless in the current age. We can get everything online and on demand as long as we have an internet connection. But she wouldn't hear of it.
She likes the "convenience". She wants to go home and turn on the TV and watch her HK drama at a particular time... And rush home cos she's afraid of missing it.
Whereas online the whole serial is already completed and she can watch it anytime she feels like it.

Never once did she ask me HOW to do it. She just wouldn't hear of it and brushes it off as inconvenient. And she continues to give herself excuses not to learn something new. Well, her money so I can't force her to change.
I think I would have felt better if at least she asked me to show her how it was done before deciding that it was too difficult for her.

This manifests in a lot of our lives. There are many things that we can put in a little effort and we can reap the rewards for many years into the future.
Like learning about financial education, learn about ETF, dividends or interest rates. Or the different types of insurance.
Or learning how to cook. There's really little excuse not to learn a bunch of these skills. The internet is full of information.

Oh... Then again... We also need to learn how to use the internet. And I suspect my mum may not be interested to learn even that part.

I am pretty amazed by some 40-50 yr old aunties. They are pretty proficient in using their phones and internet. They can find their own dramas online, download them and watch them on the train. It's really cool to see that some of the older generation are embracing new things. They understand that it's good for them and they learn to use it.

I'm not even talking about high levels of proficiency. Just some good enough workable knowledge which is useful and beneficial. Especially if it is used regularly.

​Unfortunately, many of us aren't too interested in venturing out of our comfort zones. So we just pay for the "convenience".


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I don't know if it's just me... But I've been looking around... Especially when I'm at tanjong pagar or raffles place...

Why is everyone so busy?
Everyone's rushing around.
For what?
There seems to be a lust to keep being busy.
There seems to be something wrong with someone if he's not busy...

So I was thinking...
How do most people go through their lives?
Well, they wake up, wash up change and go to work.
If they have kids they prep up the kid for school.
And it's usually a rush. If the kid gets a little grumpy the parent gets angry and drags the kid along.
Time is important. We always need to rush. We all need to stick to some form of daily timetable and we can't afford to screw it up.

And we live like this most of our lives...
Even when we travel. A lot of us also rush through our travels. Not all of us, but a lot.
Some of us have been on group tours.
It's a rush. Rush from place to place, wake up early and spend more than half the time on the bus...
Some of us go on free and easy.
And this MAY be rushed as well. Cos we want to see a lot of things. It's rare that we travel so we want to cover as much as we can.
I remember when I travelled when I was younger. After the trip, I didn't feel refreshed. I was extremely tired. Yes, it was a break from work. But I wasn't resting. I was rushing around in my travels.

And there's a minority that really takes travel easy. They walk around have coffee breaks. Set a low number of places to hit and take the trip slow.

How many people are busy on weekends? We have to rush chores, buy groceries, send kids to extra classes, meet friends, etc etc...

The weekends are precious so we have to make full use of them to do stuff. We can't afford to sit around and waste the weekend away.
Same as our days of leave. Noone wants to waste leave sitting around doing nothing.
Our off days are precious as well...

And it's stupid... This whole idea is just plain stupid.
How can we/people live their whole lives, or at least a big chunk of their lives, like this.
Rushing around all the time. Stressed up with work, stressed up when preparing kids to go to school, stressed over paying for bills, stressed and rushing to work but yet bored on the train, rushing through our holidays, stressed when we plan for our trips.

Hell... What a sad existance we all live in.
Now, of course, not all of us are like this.
But it reflects a lot of how many people live.
How often do people have chill time?
People spend good money to get chill time. They spend money to go to a nice quiet place to have an expensive glass of wine or spend money to go to a resort with no internet connection and stuff like that.
And yet... All this peace and quiet is all available just at home... For free...

So why are we rushing around for? What are we busy for?
When many of us just want to disconnect from the world. A lot of us just want to have some peace and quiet.
Imagine. If there were no marketing, how many of us would want stuff which we never knew we wanted?

Most of us grew up in an era where there were no handphones, little internet, and we all still survived. We only wanted a branded bag when we saw another friend own one.
If your parents are rich, they buy you a branded bag which you never knew you wanted when you were young. When your friends see the branded bag which you never knew you wanted, they themselves also want the branded bag that they never knew they wanted... And our whole lives pretty much work out this way.
And why do so many people spend so much time at work? Cos they need money to buy stuff that they never knew they wanted.

And the thing is... How has our own time become so precious to us. How can our own free time be so lacking? Why we people have to "beg" for leave or wait for weekends?
IT'S OUR OWN TIME!!!

And yet... We have handed over our time to our companies, organizations who keep us working. Organizations who market stuff to us to keep us working.

It's a crazy spiral.
We want stuff, we work, we work a lot, we buy stuff, we have little free time, we spend money to buy free time, we spend money to unwind, we spend so we need to work even more.

And yet... The other way works out as well...
We want less stuff, we work a little, we have a lot of free time, we relax, we disconnect, we don't want as much stuff, we don't need to work as much...

And the best part...
DOES STUFF REALLY MAKE US HAPPIER?

What makes most people happy?
Usually it's free time to do whatever we want without the insecurity of not enough money.

So which spiral do you think is the path to happiness?


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As I flip through my Facebook, I realize, almost every post is marketing.
They aren't adverts. But almost every post is marketing in another form encouraging consumption, over and over again...

Don't believe me?
Go to your Facebook.
What do you usually see?
Usually they are posts of friends doing stuff.
I see friends bringing their kids to swim classes, bringing their infants to photoshoots.
I see friends who go out to places to eat. Some good food, some expensive wines, they take pictures of the food, the wines, the place, etc etc...
People take pictures of KFC, McDonald's...

Everyone is always doing something. Everyone is always buying something.

All these are marketing.
It's not necessarily advertisements by companies. But it's marketing...

It's like watching a movie and seeing Thor drink a can of Coke. It's not straight out advertising by the company. But by putting a can of Coke at the right place, it allows people to see a Coke and maybe influence someone to think... "Oh ya. A Coke at this moment would be nice."

And this form of marketing is everywhere. It's never ending.
Pictures on Instagram, Facebook, whatever other forms of social media...
All these forms of media allow people to see things they never saw before. To desire things they never knew they wanted. And it's quite insane... The neverending-ness of it.

Go through your Facebook. Everyone is sharing their experiences. It makes others want to do the same.
See your friend eat a bowl of ramen? Hey that reminds me, I haven't had ramen in sometime, maybe I'll go and grab one this weekend.
See your friend share his Sakura picture?
Oh yea, I haven't seen Sakura before, maybe I'll plan a trip next year.

Maybe another friend posts her OOTD. And this might make someone inspired to buy some additional clothes for their own wardrobe...

Another friend posts that their husband bought her a nice bag and dinner for their wedding anniversary... Oooooh this sets a higher expectations for all the couples who are within that group of friends...

Oh did u see on FB... So and so bought a new Audi. Woah... Maybe I should also get a new car as well...

Of course, none of us are really doing this for the companies. We are all just sharing our experiences right? To show everyone we are cool and doing stuff.
And yet that's what is it... Marketing...

All of us ARE online influencers. Just that we are all small time influencers.
We have an effect on the people around us.
New age media influencers just have a larger influence. But that doesn't mean we aren't doing the same role in our own way.

When we see a post, we all have thoughts, feelings that may not have been there if the post never existed.
And our friends also have such feelings.
Some people may think... McDonald's also want to post. So boliao...
But other people seeing the same post may think... Oh yeah, I'd like to order a McDonald's breakfast now.

Same as if we see a friend who's husband buys her an expensive gift and posh dinner on their anniversary.
Some ppl may think, woah what a waste of money. I hope my husband doesn't do such a thing...
And yet others would say... "Hey husband look at so and so... you better give me the same treatment when our time comes.

The thing is... We all are influencing each other. And with social media, it's a lot more. We are constantly getting updates from ALL our friends and the things they do.
Before social media, we get some updates from the folks around us, some close friends, people we meet often... Now, we are getting updates from loads of people. Distant friends or family that we hardly meet, online media personalities that we follow, pages that we follow, people we've never met, etc etc.

There's no end to this... It's an indirect marketing. It's not even done by the companies themselves but by individuals who just want to "share" (show off) what they have been doing. And yet... The secondary effect of this, is that it encourages consumption and makes people want things that they never knew they ever wanted.



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It's quite ridiculous really.
After I embarked on my freegan journey...

Note, as I said before. I'm not 100% freegan. I just get a lot of things for free and spend money on things that can't be easily obtained for free.
But yet I don't desire much things so in the end, I don't really spend much anyway.
So most of my necessities are obtained for free or are paid for by the vouchers on the AIA vitality app.

The thing is... After living like this for a couple of months. It becomes apparent. For me, it's hard to turn back.

When I hear my friends talk on WhatsApp or post pictures on Facebook.
Or when I see my mum buy stuff from the supermarket. Or when I see people choose fruits at a fruit shop...

I can't understand it anymore.

When people send me a good deal saying they bought something at 3 for $10... I smile at them. It's hard to appreciate such things anymore.
When I receive a promotion sms from UOB, saying to spend $50 at a supermarket to obtain a loaf of bread.

I think it's humorous.

I get good artisan bread for free all the time. Why is there any need to spend money to get free bread...

There's no logic...

And when someone asks me things about financial planning. All the numbers go haywire. Cos when I look at the numbers.... All the numbers look so ridiculously large...
Why do you need $XXXX per month? You could do it with $YYY. You're retired. You have nothing to do when you're retired. So you can spend some time getting these stuff for free. It only takes about an hour or so a week. Furthermore, it's fun.

Now, of course I still buy things. There are things which aren't available for free, or something's which I am a bit more fussy about.

But the numbers are different.

I can easily say the required amount needed to retire is 30-50% less than what I initially thought was needed.

Even as I keep writing for this blog, I try hard to post relatable topics. Cos... It's really hard to talk about expenses anymore.

How do I go back to talking about good deals when I know the best deal is free?
It's just... Really really hard to go back.

How do I go back to being a normal consumer?
When I don't want much things.
And the things that I need are available for free?
What do I really need to buy?

When I start living my life in a certain way which I believe in, it's hard to turn back... Why would I go back to something which I believe is worse off?
Yes, everyone thinks what is better or worse differently.
Some people feel that they need to earn more so that they can spend more. That's absolutely ok. They believe in it and they work towards it.

For me, I always believed in living simply. And I experimented and was frugal and now I get things free. And this is the direction which I prefer.
It's probably impossible for me to want to go back to be a normal consumer. Why would I want to do it? Since it goes against what I believe makes people happy.

Now, when people talk to me about finance and budget and reduced spending... I can only smile... It's very hard for me to share my experiences in real life. When my mother-in-law asks about where I buy certain things... Or how much I pay for certain things... It's hard to answer without a long story to explain the whole situation.
So usually I give some text book answer. "Oh I don't use that item." Or some other response...
​
Life's just different now... How to go back to be a normal consumer...


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When raided, these organizations/people usually are found with stacks of cash which serves as evidence and I usually hear friends/relatives/etc... talk about how silly it was for them to keep bags of hard cash at their local residences, or when I hear people say... "if it was me, I'd have moved the cash overseas and hid it somewhere, in another country", etc etc... 

I'm not sure how much people know about money laundering or anti money laundering.
So let's talk a bit about it.

What happens is that a crime organization usually conducts it's business using cold hard cash, the actual physical notes, cos it's hard to trace and it doesn't go through the banking system, so it doesn't attract as much attention. 
It's like... an organization who runs illegal gambling dens. They collect their earnings in cash and pay their workers in cash, etc etc. 
The problem with this is that when the boss wants to buy a house, he can't be bringing in $2 million in hard cash to someone and says, "Hey I wanna buy a house/car..."
(Legend has it that this was done before at a property show room in Singapore previously. Someone opened a car boot full of cash and paid for a property in cash.)
Usually, this is where money laundering comes in. They try to put the money into the banking system without attracting attention. Usually by incorporating an honest business and declaring large profits and happily paying tax. Cos they don't mind paying tax else they won't be able to use the money to buy big stuff. 
So this is how money laundering usually works. 

The problem is, money laundering also takes time, they can't set up a company overnight and start declaring $20 million profits and start paying taxes. That's going to raise red flags. So it's a long drawn out process taking years. And if they are taking in more illegal money, faster than they can clean it, then they end up with loads of physical cash which they have to store. 

So when I hear friends/family/whoever talk about how silly it was for the organization/boss/person to have so much cash readily available...
What passes through my mind is... "Hello... friend, what makes you think they haven't?"

You see... people/organizations who are raided and found with stacks of cash are people who usually already have their operations in place. 
(Either that or they are inexperienced and they really had no way to put their money into the system.)
But the people on the top, the boss of the organization, they probably already have a system to launder the money, get their money into the financial system, and buy all their big ticket items. 
They already probably have already transported and hidden loads of physical cash in another country in a quiet building which they have bought under some other person's name.
The thing is... these stacks of cash that are usually found in their local residences is probably... 
Just the working capital...

Most of the time, when I hear comments from people, they are thinking only from one direction, they think that the criminal organization/boss is only receiving the money. So they think, once the boss receives the money, they should quickly hide it in a quiet corner... 
The thing is... most of these illegal activities also require payment. The organization needs to pay workers, bribe people, buy stuff, etc etc. It's an illegal business, but still a business nonetheless. So they still need to use the cash to do stuff. So they can't be hiding the money at the far corners of the Earth with no access to it. Simply put, the organization/boss still needs to use the cash. 

It would be naive to think that they would be able to run their "business" with only a couple of thousand dollars. I have maybe $500 or less in my house at any point in time, cos most of my funds are in the financial system and I don't need to receive and pay out money for a business. 
But these organizations/people are running a multi million dollar "business" which primarily deals in cash.
They can't be holding only a few thousand dollars in cash. They need a cash float of a few million dollars!!!
They take some money, they pay some money, they take more money, they pay more money. 
We can't be using our normal way of living to analyze such situations. 
The bigger their "business" the more cash they need to hold. It's just logical right? 

Sometimes, it's very easy to look at a story from our own point of view and our own lifestyle and give a simple conclusion. But many times, we need to look at the story from the other side, and that's not so easy to do. Cos we don't see much of the other side, and neither do we know people from the other side who can tell us their story. 

Just thought readers might be interested in such a topic...


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So many regular readers know that my desire for material things is pretty low. 
So I was really curious, I hear stories about people who like to spend money. 
When they have money in their pocket, they have a tendency to spend it. 
When they receive their salary, they have a desire to quickly spend it. 
There's no sense of delayed gratification.

Now for money, I don't have much desire to spend it. There's very little that I really want so money in the bank or in my wallet, I don't have a higher desire to spend it regardless of how much there is inside the account. 
So I was wondering to myself. How does it feel like to WANT to quickly use up the money. 
The thrill of no delayed gratification. The feelings of... the item is there, I HAVE to use it up. 

I was really thinking very hard in any kind of scenario which I ever felt that way...
And it dawned upon me...
I actually have this occurrence quite often. 
I have a weakness for some food...

For example... a pack of chips, assuming it's a big packet. 
My wife is quite ok to open a pack of chips, take a couple of pieces, and seal it up to eat another day. To her, it's like just enjoying the flavour of the chips today, and a bit tomorrow. It's not about whacking the chips all in one seating. 
Whereas for me, once the bag of chips is opened, there's no TOMORROW?!
What do you mean wait for tomorrow, the chips are opened, it's gotta be finished today, or so I tell myself. I just want to finish it on the same day, regardless of the size of the bag. 
(This is only for opened chips, if the bag is sealed, I am absolutely ok to leave packs of chips for other days/weeks.
I don't like all kinds of chips, like... I don't like Lays, I don't really like keropok, so I don't really have a desire to quickly finish these.)

Or if my mum leaves some fishballs or siewmai on the table/steamer for everyone to snack on throughout the day when I visit her on Saturdays. 
Throughout the day?! No way!
I'll probably keep picking the food left around and it would probably be gone in 2 hours. It wouldn't last the rest of the day. 

This really got me thinking, cos it's a close simulation to how other people feel about money. 
You may think it's quite a frivolous comparison, cos the effects of eating what's on the table or a pack of chips versus using up one's salary is very different. 
Yes, the effects are different, but the feeling is the same. 
The feeling that I have, when I see siewmai on the table is very much... the siewmai is on the table asking to be eaten, why do I wait til later? Of course if I got 2 siewmai later I'd probably wait for later, but it's likely that there would be less siewmai on the table later cos someone else would have eaten some. So it's better to just eat it as early as possible. 

And that's when I started understanding the desire to spend. 
Cos it's somewhat similar. 
Some people see money in the bank account or wallet and they just want to spend it. It's calling to be spent. Why wait til later?
Well, in the case of money, the effects are greater, but humans aren't good at estimating the future and so many people don't plan too far ahead.
For money, there's actually quite a lot of reason on why one should wait til later. But that's not the point of today's mental exercise. 

​The thing is... everyone has some form of weakness. 
Even workaholics have a weakness, cos they want to finish the work today when some things can be done tomorrow. 
It's like leaving something undone and somehow the feeling is... you just gotta finish it...

Whether its household chores... Some people are OCD and they can't stop cleaning the house, they just keep moving, sweeping something, wiping something, etc...

Or it could be some kind of food like me. To me, food is on the table, it needs to be eaten.

Or work that's left undone...

Or money that's left unspent...

Or that Korean drama that you just gotta just "chiong" finish...

It just feels wrong just leaving the "task" alone and waiting til another day to do it. 
And different people feel differently for each different "task" and scenario. 

So ALAS, I am now a bit better able to understand the desire to spend money. 
The mental state of... why wait til later when you can have it NOW!!!
Now I understand, cos I myself have instances when I just want to have something NOW!!!
I don't want to delay gratification. I don't want to wait til later or tomorrow.
I now understand the struggle it is to curb desire. Cos leaving that pack of half eaten chips on the table is just so wrong, it's just asking to be eaten. Why do I want to eat a few pieces today and wait to finish it slowly throughout the rest of the week when I could just eat it NOW!!!


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