My Full Year Financial Report for 2010 (Jan 10 to Dec 10)

Year 2010 is almost over, and now it will be a good time to generate my full year financial report for 2010 (Jan 10 to Dec 10).

My Monthly Expenses:

For my monthly expenses, it has gone up by $200. The increase is due to my utility bills which gone up by $50, and I have catered $150 monthly for my toddler enrichment classes. I always keep my expenses as low as possible by not spending money on the things that I will not need. For this part, I will give myself an "A" grade.

My Passive Incomes:

For my passive incomes, I have managed to increase it from $1640 (Dec 09) to $1953 (Dec 10). That is about $26 increase per month. In my New Year resolution for 2010, I have set two milestones for my journey towards financial freedom. The first one is to achieve a total passive income of $2000 by end of June 10 and the second one is to achieve a total passive income of $2400 by end of Dec 10. Though I have missed both my targets, I will still give myself a "B" grade.

My journey towards financial freedom:

I am getting closer to achieve my financial freedom. I will need to generate an additional passive income of $1247 per month (Total Expenses of $3200 - Total Passive incomes of $1953) in order to achieve my aim.

My Assets:

These are the assets that I have. I am proud to say that I do not have any liability.

My Passive Income (Month of Dec 10)

CPF(OA): $204 (from interest and dividends)
Cash: $1749 (from dividends and other passive incomes)
Total: $1953
Target: $3200
Achievement: 61%

I had posted recently in this blog that my expenses have increase from $3000 to $3200. So I have to adjust my total passive income target to $3200 in order to gain financial freedom.

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought two more lots of Singtel shares.

For passive income 4, there is an decrease of $40. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

How I spend my year-end bonus for year 2010?

Year-end holidays are approaching and finally I have gotten my year-end bonus. So how I will be spending my year-end bonus? After some thoughts two months ago, I have decided to spend my bonus on two things.

The first thing is to go for a holiday trip to Taiwan with my wife. I feel that now is the time to pamper (reward) myself and my wife after working for the whole year. Beside the expenses for the trip, I also got myself a cheap portable camera to take pictures there.

The second thing is to change my whole bedroom set. This includes buying of new bed frame, mattress, pillows and bolsters. The current set is about for seven year old. Hopefully the new set can solve my wife recent backache problem.

A thought after watching Disney animated movie “Tangled”

Last weekend, I had brought my wife and daughter to catch Disney animated movie called “Tangled”. It is a great movie and my family enjoyed it very much. This movie is about a girl named Rapunzel who was kept in the tower by her “mother” for 18 years. Rapunzel greatest wish was to go out of the tower to watch the floating lanterns. She was “saved” by Flynn to get out of the tower who promised to bring her to see the floating lanterns. Along the way, she was feeling some sort of insecurities in her mind and was thinking of going back to the tower again. But eventually, she managed to overcome her fear and fulfill her wish.

In our life, we somehow have to move out of our comfort zones in order to achieve more. As for me, I have chosen to take a path to get out of my comfort zones in order to achieve financial freedom. I have overcome my investment anxiety and fear of losing money by equipping myself with financial knowledge. Whether I can fulfill my wish of gaining financial freedom is no longer important as I have really done my very best!

Rome wasn’t built in a day, so as wealth

I don’t believe that wealth can be built up within a day or a short period of time. As for my case, I have been patiently accumulating my wealth since Sep 09. At the start (Sep 09), I am only able to achieve a passive income of $600. By the end of Dec 09, the amount has increased to $1640. And currently, the amount has increased again to $1961. The below is a simple chart on my monthly passive income.



I believe that if the amount can be increased by $300 per year, I should be able to achieve my financial freedom in four year time. Nothing is possible if you have a plan and patient to achieve it.

Switching from Double Income to Single Income

My wife and I have been discussing whether to switch from the current double income to single income. And we have decided to switch starting from beginning of next year. After the switch, I will continue working whereas my wife will quit her current job to become a stay-at-home mum.

What is the motivation behind for switching to single income?
Double income family is seen as a norm in today modern society as it can greatly lower down the family financial burden. In spite of that, why are we deciding to switch to single income?

As parents, we foresee the need for an adult to be around with our toddler so as to teach and discipline her directly. It is no rocket science to know that our education is getting tougher. Sending her to playgroup or child care might not be a good idea in our opinion as teacher attention level will be split among many students. It will definitely affect her study if she is not focusing well enough. We also find it very tiring to teach my daughter after coming back from work.

We would also like to send our daughter to a better primary school. In order to stand a better chance for our daughter to go to a good school, we will have to become parent volunteers for the school of our choice. So with my wife as a stay-at-home mum, she is able to commit her time as a parent volunteers so that I would not need to take leave from my work.

Are we able to live comfortably in today’s society on a single income?
I have been keeping track of our expenses and have a good understanding of our current financial situation. After deducting our expenses from my active income and my passive incomes, we are able to save a decent amount of money each month. So we will still be able to live comfortably on a single income.

My Passive Income (Month of Nov 10)

CPF(OA): $198 (from interest and dividends)
Cash: $1763 (from dividends and other passive incomes)
Total: $1961
Target: $3200
Achievement: 61.3%

I had posted recently in this blog that my expenses have increase from $3000 to $3200. So I have to adjust my total passive income target to $3200 in order to gain financial freedom.

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have got two more lots of Cambridge shares in the recent preferential shares offering.

For passive income 4, there is an increase of $1. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Net Worth Calculation

Net worth is a measurement of how much you exactly have currently. You can use it to determine how rich or how poor a person at any point of time. To calculate your net worth, you just need to follow three simple steps.

Step 1: Total up everything that you owned including your savings in your bank.
For example:
• Your house (currently valued at $300,000)
• Your car (currently valued at $40,000)
• Your stocks (currently valued at $50,000)
• Your saving (currently at $20,000)
Total: $410,000

Step 2: Total up everything that you owed including all your loans.
For example:
• Your housing loan (currently at $200,000)
• Your car loan (currently at $30,000)
• Your credit card bill (currently at $10,000)
Total: $240,000

Step 3: To calculate your net worth, just use the total for step 1 and minus away the total for step 2.
Using the example for step 1 and 2:
Net worth = $410,000 - $240,000 = $170,000

Please note that the net worth calculation does not involve:
• Passive incomes that you will be getting from your assets
• Future interests that you will be paying for all your loans.

Update on My Monthly Expenses

My Monthly Expenses:

I have done an update on my monthly expenses today. It has gone up by $200, but not to my surprise. The increase is due to my utility bills which go up by $50, and I have catered $150 monthly for my toddler enrichment classes. I am expecting my expenses to go higher in the next few years as my toddler grows up.

Due to the increase in my monthly expenses, I have to generate a passive income of $3200 instead of $3000 in order to achieve my financial freedom. Even though the journey to my target has become further, but I will be still trying to achieve it.

Don't Take Anything For Granted

I got the inspiration to write this post in the incident where my toddler refused to finish her food. I told her that she is very fortunate to have enough food to fill her stomach. I continued to let her know that many children in third world countries are suffering from hunger and lack of shelter. To prove my statement, I showed her some videos (from youtube.com) on children in third world countries. After that I asked her whether she want to go over to these third world countries since she refused to finish her food. She looked a bit scare as she was about to cry. She replied me with a no, and continued eating her food.

In life, we should not take anything granted especially our basic needs. In my opinion, one should feel blessed with hygienic food, clean water and air, a proper shelter, a job that provides you with enough income, and someone who loves you. One should not complain of not having other material needs like high tech gadgets, branded clothes or going for an expensive tour. I have come across some teenagers blaming their parents for not providing enough for their material needs. This make me feel very sad as these teenagers do not know what are their basic needs and the hard work their parents are putting to earn the money.

In my opinion, proper mindset must be instilled to one mind since young as it will hard to change when one has grown up. So I have begun to teach my toddler not to take thing for granted so that she can appreciate her current life more and will not compare herself with other for material needs.

Different Levels of Personal Finance

I have come out with a simple diagram to illustrate different levels of personal finance.


Financial Status:
I am using the concept of hot air balloon as an analogy for personal financial status. The hot air (Active income and passive Incomes) is used to keep the balloon afloat, whereas the load (Expenses) is pulling down the balloon. As long as you have enough hot air in your balloons to carry your load, you will be at the independence level.

Internal Safely Net:
This safely net is built normally by yourself to cushion the effect of the fall when you do not have enough hot air to support your load. The fall may be caused by losing your full time job or you are not unable to work due to health problem. At this internal dependence level, you will need to depend on your insurances and savings to survive.

External Safely Net:
You will need to depend on the external safely net when your internal safely net is broken. At this external dependence level, you have no choice but to depend on other to survive.

My Passive Income (Month of Oct 10)

CPF(OA): $196 (from interest and dividends)
Cash: $1753 (from dividends and other passive incomes)
Total: $1949
Target: $3000
Achievement: 65%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought two more lots of Singtel shares.

For passive income 4, there is an increase of $28. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Created ten blogs within a year

As you can see under “My Other Blogs” on the right side of this blog, you will notice that I have nine other blogs. The two newest blogs that I had created in the last two months are "My Ipad Apps" and "My Happiness Journey". I have to apologize that some of my blogs are not very active. The reason is because I do not have enough contents or knowledge to write articles on these blogs. The two most active blogs of mine is "My Investment Portfolio in Singapore" and "Lifelong Financial Freedom in Singapore".

To share a secret with you, I have more than 500 page impressions per day for all my blogs in total. Well it may not be very significant, but at least I am happy to know that there are viewers for my blogs. Once again, THANK YOU for your support.

Your non-necessities could be necessities to others

On 24 July 10, I have put out a post on my blog with title "Do I need an iPad?". In that post, I have explained some of the reasons why I do not need an iPad. In spite of that, I still bought an iPad for my daughter on 11 Sep 10.Even though, it is useless to me, but I can see that it could become a necessity for my daughter. It can help her to learn fundamental things like writing, counting, drawing etc. With the aid of the iPad as a learning platform, my daughter is now more interested and has better concentration in learning.

This example actually enlightened me that my non-necessities could be necessities to my family members. And sometimes we don’t just see our own needs, but rather the needs of other family members.

How much debt I have?

Today, I try to calculate how much debt I have. Currently the only debt that I have is from the mortgage loan of my flat. So I went to the HDB website to check my outstanding housing loan amount of my flat and then to CPF website to check on my total family CPF OA amount. Using the housing loan amount minus away my total family CPF OA amount, I get a value of about $40k. This means that my total debt is $40k.
Well after doing some calculation, I have estimated that I still need about 3 or more years for my family CPF OA amount to exceed my mortgage loan amount.

My Passive Income (Month of Sep 10)

CPF(OA): $195 (from interest and dividends)
Cash: $1701 (from dividends and other passive incomes)
Total: $1896
Target: $3000
Achievement: 63.2%

There are no changes in my passive income 1, 2 and 3.

For passive income 4, there is increase of $5. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Happy First Year Birthday To "Lifelong Freedom in Singapore" Blog

Happy Birthday to “Lifelong Freedom in Singapore” Blog.
It has been one year ever since I have created this blog. For those who have been following my blog, I would like to say a big THANK YOU for your support. Hopefully my posts are able to give you some ideas on wealth creation. My original purpose for creating this blog is unchanged which is to journey my way to financial freedom. I also have created many other blogs for different objectives which are related to this blog.

What have I learnt so far for the past one year?
The most important thing that I have learnt is this phrase “Assets create wealth and liabilities create debts”. For the past one year, I have been trying to gather as much assets as possible to increase my passive incomes. And it turns out to be leading a right direction towards financial freedom.

Another important thing that I have learnt is reinvestment. All the money gains from my passive incomes will be used to buy more assets. This will create an exponential growth for my passive incomes.

What have I achieved for the past one year?
I have tabulated my results in the table below. Somehow I am managed to gain $20100 in term of pure passive incomes this year. It may seem peanut to some of you, but to me this extra income is able to supplement most of my whole year of expenses. My total capital gains or losses has amounted to $15900. But since I am looking more on wealth creation, having capital gains or losses are not as important as having pure passive income.



What do I hope to achieve for the next year?
Well, I hope to increase the earning from my pure passive incomes by another $6000 per year or $500 per month. It may be quite tough, but I will try to achieve it. I also hope that all of you can continue to support my blog and I will be continue to post more articles on my journey towards financial freedom.

Control your money rather than being control by it

Are you are lured to buy thing that we do not need at all due to commercials, peer pressure, forced selling or impulse? Do you buy things without checking your bank balance? Do you always maxed out your credit cards and started to have debt?

If your answers to the above questions are “yes”, your finance is likely to be out of control and unmanageable. You are more likely to be being control by money. You will start to have fear when you do not have enough money to sustain your life. More fear will come when your debt grows into a huge amount that you are not able to pay up for monthly payment.

Taking control of your money involves a few things:

1)Knowing your expenses on necessities.
Listed down all the necessary expenses that you need to pay in order to sustain your lifestyle. Make sure you have allocated enough money from your salary to pay for all these expenses.

2)Knowing your debt/loan and monthly payment.
Listed down all the debts that you have which includes mortgage repayments. Make sure you have allocated enough money from your salary to pay for all these debts.

3)Knowing how much you can afford before committing to buy anything that you want.
Check how much salary you have left after minus off your total expenses and debt payments. Do not spend more than what you have left on anything that you want. If not, you are into getting yourself more debt.

Remember this point; financial fear can only be eliminated if you start to take control of your money.

Assets, Necessities, Non-Necessities and Liabilities.

For those who have been following my blog will know that I have been buying assets and necessities since last September 2009. The reason for doing that is to get myself wealthier slowly. Well it is true that I am getting wealthier slowly and I will continue to do that so that one day I can achieve financial freedom. Remember that buying liabilities and non-necessities can only make one poorer. I will re-emphasize these four terms “Assets”,” Necessities”, “Non-Necessities” and” Liabilities” again in this post.

Assets:
These are the things that will help you to grow your money. For example, a house that will help you to collect rentals, interest from fixed deposit, dividends from shares etc.

Necessities:
These are the "needs" that you must have in order to survive. For example, food, water, shelter, education, clothes etc.

Non- Necessities:
These are the “wants” that you do not need to have but will not take away your money regularly. For example, buy an expensive home theatre system which you do not need and you pay in full amount without using instalment. Without using instalment, you will not be paying any interest for the things you have bought.

Liabilities:
These are the “wants” that you do not need to have and will take away your money regularly. For example, buy an expensive home theatre system which you do not need and you pay by instalment. By using instalment, you are likely to pay more for the things you have bought due to interest incurred.

My HDB flat has doubled its value in 7 years

Last week I had received a leaflet distributed by a housing agent company. The leaflet contained the recent resale prices for the HDB flats around my area. I was quite surprised when I saw the transaction prices for flats which are of similar type and location as mine. The price is doubled of what I had paid 7 years ago. Based on the “Rule of 72”, my flat has actually gone up by 10% annually for the last seven years.

Imagine buying a flat now rather than 7 years ago, I might be facing a lot more financial difficulties. Let's say my flat costs $400k now as compared to $200k when I bought it 7 years ago. In term of the down payment of 20%, I will need to pay $80k now as compare to $40k. Where can I find $80k outfront to pay for my down payment?

For the housing loan, I will need to loan $320k now as compared to $160K. With this huge loan of $320k, I can never think of clearing my loan earlier.

For monthly mortgage repayment of 30 years with 2.6% interest, I will need to pay $1281 now as compared to $641. A monthly mortgage of $1281 means that a couple must have a combined monthly income of at least $5570 in order not to use any cash for the mortgage repayment. This can be stressful to me and for my wife as we cannot afford to lose any of our jobs.

My Passive Income (Month of Aug 10)

CPF(OA): $193 (from interest and dividends)
Cash: $1696 (from dividends and other passive incomes)
Total: $1889
Target: $3000
Achievement: 62.9%

There are no changes in my passive income 1, 2 and 3.

For passive income 4, there is decrease of $30. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

What is my destiny?

My life has been a straight forward one since I was small. At a very young age, I had been told to study hard by my parents and eventually I had managed to get a local degree. After my graduation, I managed to find a job. Then I got married after a few years and having a child currently. There are not much up and down in my life and sometimes I am wondering what my destiny in this world is.

Well, after thinking for some time, I begin to have more understanding about the word destiny. One destiny did not always mean doing something magnificent till the whole world knows it. It can be just doing simple thing that have positive impacts to other. Destiny is not fixed and can be changed as years go by. Well, I believe that being a good son, husband, father, worker and being able to share financial knowledge with others will be my destiny as for now.

Utilization Rate Of My Personal Items

Under the expenses in “My Cash Flow Framework”, there are two keys points to note. One is to identify what are the necessities and the other is to try to reduce liabilities. For the post, I shall discuss more on the first point.


I like to use utilization rate to find out what are my necessities. The formula is very simple, just take the total usage time in minutes and divided by 1440 (total number of minutes per day). I have tabulated the result as shown above for each of my personal items. For items that I seldom, I will estimate it to be 5 minutes per day. You can see that the top six items that I often use are refrigerator, bed, air conditioner, washing machine, laptop, bedroom TV .

I will spend more money on items with high utilization to ensure the quality of these items. I’m also look for longer warranty period to ensure that they are properly taken care of in case of any break down. For items with low utilization, I will be spending less money on them. I might not even want to replace them if they happen to break down.

This is one way that I use to identify my necessities. If you have other ways, maybe you can share with me.

Three times faster, but cost ten times more

Recently, I had taken a cab home from my office as I was not feeling well after work. The time taken travelling by cab from my office to my house is about 20 minutes. The cab fare that I pay is about $18.00 including the peak hour’s charges. As for normal day, I will be using bus and MRT. The total time taken travelling by bus and MRT is about 60 minutes and cost me about $1.80.

As you can see that it is really cost me ten times more travelling by cab just to be three time faster. I need to spend $16.20 more just to save 40 minutes of my journey time.

Amount of money spend to save time = $16.20/40min = $0.405 per min = $24.30 per hour.

In my opinion it is very expensive to take a cab especially when your hourly worth is less than $24.30. As for me, I will take cab only when it is necessary. This will allow me to save a lot of money in the long run.

My Passive Income (Month of Jul 10)

CPF(OA): $192 (from interest and dividends)
Cash: $1727 (from dividends and other passive incomes)
Total: $1919
Target: $3000
Achievement: 63.9%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an decrease. I have sold all my 10 lots of Starhub shares for a profit and I have bought 7 lots of Singtel shares this month.

For passive income 4, there is increase of $10. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Do I need an iPad?

iPad had been launched in Singapore on 23 Jul 10, and many diehard Apple fans had queued up before the launch in order to become the first few to own it.

Price:
Here are the pricing for six different models during the launch:
WiFi(16GB) - S$728
WiFi(32GB) - S$878
WiFi(64GB) - S$1028
WiFi+3G(16GB) - S$928
WiFi+3G(32GB) - S$1078
WiFi+3G(64GB) - S$1228

As we can see the price is ranging from $728 to $1228. The price is more expensive than a normal netbook which usually costs about $500 to $700.

Functionality:
The iPad can be used for Web browsing, e-mailing, viewing photos, listening to music, watching movies, playing simple games, word processing, creating spreadsheets, presentations and displaying e-books . Well all these functions can also be found in a laptop or netbook.

Portability:
iPad is very portable to be carry around. It is only about 680 (Wifi version) to 730g (Wifi + 3G version) whereas normal netbook will weigh about 1kg. With its thickness of about 1.34cm, it will very easy to hold with your hand. A screen of 9.7 inch, it is almost comparable to a normal 10 inch netbook. Due to its size and thickness, it is very easy to slide the iPad into most of the bags or haversacks.

Will an iPad benefit me?
In my opinion the price of the Ipad is too expensive for me considering the maximum storage space of 64GB. Many cheaper laptops and netbooks have already equipped with storage space of more than 100GB. As to me, there is no extra functionality being provided by the iPad as compared to a laptop or notebook, so there is no extra value to me if I buy it. For people who know me as a person who do not like to carry many things around, an iPad will certainty not suitable for me even though it is very portable.

Conclusion:
I do not need an iPad!!! I am still happy with my ASUS laptop.

My Investment portfolio has reached S$100k.

For those who have been following my other blog "My Investment portfolio in Singapore" would know that I have been slowly building up my investment portfolio. For every one or two month since Sep 09, I have been buying shares regularly and till today I have build a portfolio of $100k. The dividend yield of my portfolio is about 8% per year, which is about $8000 per year or $667 per month.

I always like to buy shares of companies that have strong fundamentals and give good dividends. And also I have come out with my own version of "My Rules of Investment" which will help to prevent myself from making any investment mistakes. To me buying shares is like buying a system that creates a source of passive income to me. Unlike trader or speculator, I am not so worry about making losses in stocks as long as the company is still giving good dividends. In fact, I like to see market to crash as it will provide me with the opportunity to buy good stocks at cheaper price.

Happiness is just about having enough.

To me, happiness is about having enough in everything we want in our lives. It can be having enough food to eat, having enough time to spend with my family, having enough time to enjoy my hobbies and interests, having enough time to sleep and having enough money to spend.

However if you do not have enough in certain aspects of your life, you may have a feeling of being deprive which is the main cause of unhappiness. By having not enough food to fill your stomach, you will feel hunger. By having not enough time to spend with your family, you may feel like a stranger to your family. By having not enough time for your hobbies and interests, you may feel unsatisfying about your life. By having not enough time to sleep, you will feel tired. By having not enough money to spend, you may be worrying about getting into debt.

Having more than enough is good but not necessary however. The ability to enjoy current happiness is much more fulfilling than trying to have more things in life.

Don't over commit your money.

A lot of people might be thinking of how much money they could make in the future and have started to over commit their money. With this in mind, they will start to buy big ticket items like a big house, luxury car, going for expensive tour paid by instalment. However if the future earning turns out not to their expectation, they will be burdened by their debts and will feel miserable for a very long time.

To avoid this problem, proper money management must be in place. One must know not see their future earning as a gauge to fund their current monetary commitment. In fact using current earning might not be good gauge also as one might just lost job on the next day. The best way is to know yourself how much money you can earn at a minimum based on your current ability if you happen to lose your job tomorrow. Next thing is to minus away 20% of the money for your savings. This savings will help you in case you are jobless. The remaining 80% of the money will be used for your expenses.

So for example, if you think that you can only earn $3000 per month, then $600 will be your savings and $2400 will be your maximum expense per month.

My First Half Financial Report for 2010 (Jan 10 to Jun 10)

Half a year of 2010 is over, and now it will be a good time to generate my first half financial report for 2010 (Jan 10 to Jun 10).

My Monthly Expenses:
For my monthly expenses, there are not much changes at all in this half a year. I always keep my expenses as low as possible by not spending money on the things that I will not need. For this part, I will give myself a "A" grade.

My Passive Incomes:
For my passive incomes, I have managed to increase it from $1640 (Dec 09) to $1990 (Jun 10). That is about $50 increase per month. In my New Year resolution, I have set two milestones for my journey towards financial freedom. The first one is to achieve a total passive income of $2000 by end of June 10 and the second one is to achieve a total passive income of $2400 by end of Dec 10. I have slightly missed my first target by $10. For this part, I will give myself a "B+" grade.

My journey towards financial freedom:
I have getting closer to achieve my financial freedom. I will need to generate an additional passive income of $1010 per month (Total Expenses of $3000 - Total Passive incomes of $1990) in order to achieve my aim.

My Assets:

These are the assets that I have. I am proud to say that I do not have any liability.

My Passive Income (Month of Jun 10)

Here is the summary for month of Jun 10:
CPF(OA): $190 (from interest and dividends)
Cash: $1800 (from dividends and other passive incomes)
Total: $1990
Target: $3000
Achievement: 66.3%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase. I have sold all my 15 lots of SingPost shares for a profit and I have bought 7 lots of Starhub shares this month. I also have bought 2 lots of Singtel shares.

For passive income 4, there is increase of $15. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

The Monkey Experiment: The Habit Virus

Just to share what I have read from the internet which comes from a book titled "The NLP Pocketbook" by Gillian Burn.

Here is the story:
In a research study, five monkeys were placed in a cage with a ladder leading to a bunch of ripe bananas. One monkey headed towards the bananas, but hidden at the top of the ladder was a water spray which showered water over the monkey. So it abandoned the attempt. Another monkey tried; it too was sprayed with water. Each monkey in turn tried, but each was doused and eventually gave up. The researchers turned off the water spray and removed one monkey from the cage, replacing it with a new one. The new monkey saw the bananas and immediately tried to climb the ladder. However, to its horror, the other monkeys leapt up and stopped it.

Over time the researchers removed and replaced all the original monkeys. Every time a newcomer approached the ladder the other monkeys stopped it from climbing up. None of the remaining monkeys had ever been sprayed, but still no monkey approached the ladder to reach the bananas. As far as they knew that was the way it had always been done, and so the habit was formed.

What do we learnt from this story?
Sometimes we do not know the reason why we cannot do certain thing. Having feared by the unknown consequence for trying it, we have to blindly accept when people tell us not to do it.

Lifelong Asset Skills

Lifelong asset skills are skills that you have learnt and be able to benefit from it throughout your life even at old age. These skills seldom get obsolete and these include learning to play a piano and mastering a few foreign languages which are normally not taught in school.

These skills have to be trained at a very young age as they will get harder when you get older. In the past, when I was young, I am not able to be exposed to these skills and it is almost impossible for me to learn them now.

However as a father now, I would like to expose my toddler to these lifelong asset skills. So instead of buying expensive toys or clothes for my daughter, or buying expensive gadgets for myself (yes, no iPhone for me), I would rather spend more money to enrol my daughter to these courses. I am hoping that she is able to master one or two such skills, so that she will be benefitted from them in the future.

The Rule of 72

The Rule of 72 is a simple formula to out find the number of years required to double your money at a given compound interest rate. Here is the formula:

Years to double your money = 72 / Interest Rate

For example, if your bank is giving you 3% compound interest, you will divide 72 by 3, which means that you will take 24 years to double your money.


This formula is useful to understand the nature of compound interest. One thing to note that a percentage point difference in the interest rate will cause a big difference in the long run in the amount of time to double your money. For 1% interest, it will take 72 years to double your money, and for 2% interest, it will take 36 years to double your money. That is a big difference of 36 years!

Bought a book titled "The Black Swan" By Nassim Nicholas Taleb

I have just bought a book titled "The Black Swan" by Nassim Nicholas Taleb at Borders Parkway. The cost of the book is $32.90, but I only paid $22.90 as I have a $10 voucher card.

Taken from description at the back cover of the book, this book is all about Blacks Swans: the random events that underlie our lives, from bestsellers to world disasters. Their impact is huge; they're nearly impossible to predict; yet after they happen we always try to rationalize them. A rallying cry to ignore the 'experts', The Black Swan shows us how to stop trying to predict everything and take advantage of uncertainty.

I hope to finish the book in this month and if possible, I will write in this blog on what I have learnt from the book and see is there any linkage to my aim to achieve financial freedom.

Do I need an iPhone?

Presently I am carrying a simple nokia phone. As my contract is going to end soon, I will need to decide whether to get an iPhone now or just stick with another simple phone. I am considering three factors as shown below.

Price Plan:
Currently I am paying about $16 per month for my mobile plan which does not include data usage. At the moment, the cheapest mobile plan for iPhone is around $36. That will be an extra $20 per month of what I am paying now.

Cost of Phone:
Currently the price of an iPhone is around $500 to $600 plus under the cheapest mobile plan. If I don’t choose to buy an iPhone, I might be getting a simple phone for free by recontracting my current mobile plan.

Expectation of Phone:
Basically I need a phone that can call, sms and take good pictures. I do not need internet connection so iPhone is quite useless to me. And furthermore there are other phones that can take better photographs than iPhone.

Conclusion:
Based on the three factors, I will not be getting an iPhone as it is not cost effective and does not add any value to me.

The Pros and Cons of Using a Credit Card

In this fast growing world, using credit cards have been popular to people as an alternate form of payment to using cash. However it is like a double-edged sword which could make your life easier if you are using it wisely or disastrous if you have no control to it. So what are the Pros and Cons for using credit cards?

Pros:
1) Credit cards are easier to carry than cash. Instead of carrying a whole stack of dollar notes in your wallet, you can always replaced it by credit card when you are going to buy big tickets items like jewellery, travelling packages, laptop etc.

2) Credit cards can give you discount when you are purchasing items from certain shops. Some people carry many different credit cards with them to see which one can be used to get the discount from the shop.

3) Credit cards allow you to buy first and pay later. Sometimes you need to pay a bill or buy something but you do not have enough cash at that point of time. In this case, credit cards are like someone who lends you the money to do your payment.

4) Credit cards allow you to buy thing online at an ease. Basically you have to key in your credit number and other details if you have confirmed your purchase.

5) Credit cards can be used in many countries. In this case you do not need to exchange a large amount of foreign currency for the country that you are going to. Most credit cards will do auto conversion based on the updated exchange rate when you do the payment in other countries.

Cons:
1) Losing your credit cards can be a headache. You have to call the credit card company immediately to block the usage of the card. It is to prevent any people who have picked your card from using it.

2) Though credit cards allow you to buy first and pay later, it may trigger people to buy more than the amount that they could afford. If you do not pay up promptly for the credit cards bill, high interests will be charged. Some people have become bankrupt as they cannot pay up for the credit card bills.

3) Security is a major concern if you are buying thing online using credit card. If the online website is not secured, important details like your credit card number, account number and your personal particular can be captured by hackers. They may just use these details for their own purchase.

Personally I do not have a credit card even though I am qualified for it. In my opinion, I feel that the Cons outweighed the Pros of using it. For big tickets item, I will normally use cheque or debit card to do the payment.

How much is your hourly worth?

I have a friend who teaches me how to calculate one’s hourly worth. The formula is simple, just divide the total amount of money you earned from your job by the total time spent in your job. By using this formula, he mentioned to me that if you are working overtime (OT) without any type of compensations like OT pay or day off, your hourly worth will drop.

I have improvised his formula by adding more details to reflect a more accurate calculation for the hourly worth. My formula is simply using “Net total Incomes per month” divided by “Total time spent on all the incomes sources per month”.

Net total incomes per month = your normal job income per month including all the bonuses (just total up all bonuses per year and divide it by 12 months) + your passive incomes per month - amount of money spent in order to generate for all incomes per month (this includes transportation, working clothing, shoes etc).

Total time spent on all the incomes sources = Normal working hours including travelling time, overtime + time spent on building up your passive incomes per month.

For example, let’ say a man has an income of $3000 and bonuses of $6000 per year. He has a passive income of $700. He spent $200 to generate all the incomes per month. He has to spend 160 hrs during his normal working schedule and 40 hours of overtime work per month. He will need to spend 40hrs on transportation per month.

Based on the above example:
His net total incomes per month = $3000 + $6000/12 + 700 – $200 = $4000
His total time spent on all incomes per month = 160hrs + 40hrs + 40hrs = 240hrs
His hourly worth = $4000/240hrs = $16.67

So how much is your hourly worth based on the formula?

My Passive Income Chart (Sep 09 to May 10)

It has been 8 months already ever since I started my journey towards financial freedom. I started with a passive income of $600 on Sep 09 and managed to reach $1905 on May 10. I have plotted a chart to check on my progress as shown above.

In my New Year resolution, I have set two milestones for my journey towards financial freedom. The first one is to achieve a total passive income of $2000 by end of June 10 and the second one is to achieve a total passive income of $2400 by end of Dec 10. I don't think I am able to achieve my first target of $2000 end on June 10. But I think it is still ok since I have already achieve $1905 on May 10.

My Passive Income (Month of May 10)

Here is the summary for month of May 10:
CPF(OA): $187 (from interest and dividends)
Cash: $1718 (from dividends and other passive incomes)
Total: $1905
Target: $3000
Achievement: 63.5%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought the following dividend shares: SingTel and Starhub

For passive income 4, there is decrease of $77. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

I am in the midst of building my passive income 5, currently there is no income from it yet.

Retirement planning: Increase your social circle

We will start to slowly deteriorate ourselves mentally, emotionally and physically when we do not have regular contact with other human beings. This is particular true when we are getting older. Having a supportive social circle enables us to communicate with one another, help each other in time of difficulties and care for one another. This will lead us to less stressful and healthier life.

Please note you should not set any age limitation for people you want to know or make friend with. By doing so you are restricting yourself the opportunities to know more people. It is important to know people of different age groups so that you can expose yourself with different ideas and interests.

Whether your current social circle is big or small, it will be important to keep expanding it while you are planning your retirement.

Retirement planning: Build up family relationships and bonding

In our lives, we tend to have difficulties like losing our job, having financial problem or having serious illnesses. It will be hard for us to face or cope with these difficulties alone and the best support we can get is from our own family. A family is like a shield that prevents you from being hurt too much from your difficulties. And the only way to make the shield stronger is to build up your family relationships and bonding.

Doing different activities with your family is one way to build up the bonding. It is not necessary to spend a lot of money by going for a family trip in order to build family bond. Some inexpensive activities like spend some times with your children to teach them a skill, or cook a meal or go cycling together with your family are some ways to build up the bonding.

You should not wait till your retirement to start to build family bond as it will be too late. Family bond must be constantly built up as to make it stronger and these will take a lot of time. If you are ignoring your family till your retirement age, you are likely to become a stranger to them and it will very hard to build bond with them.

So if you are finding yourself not spending enough time with your family, now is a time to find out why you are not doing so. Are your work commitment taking away times with your family? Or are you not interested in spending time with your family? Whatever the reasons, you should take some actions and start building up your family relationship.

Retirement Planning: Finding and developing your interest

Having an interest can help you to become a more interesting person which gives you something fascinating to talk about with others. It also allows you to meet new people with similar interests and keeps you occupied so that you will not feel bored. Learning new interest is good as it can keep your mind alert and active too. So make sure you include “finding and developing your interest” in your retirement plan.

If you do not have an interest currently, finding one might be hard. It really takes time to “trial and error” to determine the things you like to do and don’t like to do. So spend some time now to find out your interest and don’t wait till your retirement age to do it.

Developing your interest must be done as soon as possible. You should not postpone it till your retirement age. The reason is very simple; it is easy to develop your interest when you are still young. And if you keep practising it, you should be very good at your interest when you have reached your retirement age. It might be too late to start anything when you are old. And even though you try to work hard on it, eventually you might give up due to the physical constraint and slow learning ability when you are old.

My Passive Income (Month of Apr 10)

Here is the summary for month of Apr 10:
CPF(OA): $184 (from interest and dividends)
Cash: $1711 (from dividends and other passive incomes)
Total: $1895
Target: $3000
Achievement: 63%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought the following dividend shares: Cambridge

For passive income 4, there is decrease of $24. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

I am in the midst of building my passive income 5, currently there is no income from it yet.

Retirement Planning: Learn to be healthy and stay physically active

It will be too late if you wait till your retirement age to learn to be healthy. The reason is very simple; you can never be much healthier in your retirement age than at your current age. Hence improving and maintaining your current health status should be set inside your retirement planning. Failure to do so may result in poor health in the later part of your life. Even if you retire rich, without a good health you wouldn’t be any much happier as compare to someone who retire poor but with a good health. You are not able to do much thing and can be a burden to your family if you don’t have good health.

You do not need to be a health guru to learn about how to be healthy. You should already know some basic health tips by now. For example, have a balanced diet for every meal and do exercise regularly are some key ways to improve your health. If you can do things that keep you healthy from now onwards, you are less likely to result in poor health when you reach your retirement age.

Retirement planning is not just about gathering enough money for the rest of your life

If you think that a retirement plan is just making sure that you have gathered enough money for the rest of the life, then you may be very wrong. Just imagine that you have enough money for retirement now, what you will do next? You may want to go for a trip, playing a sport or doing something that you will never think of doing before. But what if you have done everything you wanted? More likely you will get bored and will not know what to do next. This is the common problem with many retirees who are clueless on how to spend their time. Many of them may just end up in front of the television or sitting at crowd places to watch people walking around. Some fortunate one will be able to find a part time job in order to pass some time.

In order to have a fulfilling life when you retire, you must start to do other thing other than just gathering money. The following are the things that you must also include in your retirement plan:
1)Learn to be healthy and stay physically active.
2)Find and develop your interest.
3)Build up family relationships and bonding.
4)Increase your social circle.

Failures are just Learning Experiences

I always ask myself whether I will fail to achieve financial freedom. Well, after going through the journey towards financial freedom since Sep 09, I realised that failures are actually learning experiences. Giving up is never an option for me because it will just label me as total failure.

In my post on "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn", I mentioned that we must keep trying until we succeed. For example, one of my passive incomes only gives me $4 in the first month. However instead of giving up, I did a lot of research and trying out different strategies. And as for now I have managed to increase it to more than $100 per month. The process of "Trial and error" by using different strategies is inevitable if I want to be successful.

In my New Year resolution, I have set two milestones for my journey towards financial freedom. The first one is to achieve a total passive income of $2000 by end of June 10 and the second one is to achieve a total passive income of $2400 by end of Dec 10. I am not worried or feel despaired if I did not manage to reach any of the two milestones. Instead I will just keep trying until I have reached these milestones.

The Mexican Fisherman Story

I have found an interesting story in the internet. The story goes like this:

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, "only a little while."

The American then asked why didn't he stay out longer and catch more fish?

The Mexican said he had enough to support his family's immediate needs.

The American then asked, "but what do you do with the rest of your time?"

The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life."

The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise."

The Mexican fisherman asked, "But, how long will this all take?"

To which the American replied, "15-20 years."

"But what then?"

The American laughed and said that's the best part. "When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions."

"Millions.. Then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

The moral of the story… Know where you’re going in life — you may already be there.

My happiness List

In my previous post titled "Money, Values and Happiness", I mentioned that only people who work for their goals that are consistent with their values and focus their money on the things that are most meaningful to them will find true happiness. Hence I have come out with my own initial “Happiness List” to focus on the things that I would like to do for my family and myself in the next two years.

My happiness List for My Family:
1) Go to Universal Studio Singapore (Done)
2) Go to Hong Kong Disney Land
3) Go to Australia

My Happiness List for Myself:
1) Go for Epi-Lasik Treatment.
2) Learn to play piano.
3) Buy a Full HD 50 inch plasma TV for less than $800
4) Buy a Netbook which supports full HD for less than $400.

Family Outing at Universal Studio Singapore (6 Apr 10)

I am so happy to bring my family to Universal Studio Singapore for family outing. Being a bit kiasu, we reached the place at 8.30am and rushed to the ticket booth to purchase the tickets. As my toddler is only 3 year old, there is no admission charge for her. The ticket for adult is $66. So in total I paid $264 for four adult tickets. For each ticket bought today, a $10 food voucher and a $5 gift voucher were given.

Here are the places that we had went and some photos that are taken today. You may want to use it as a guide to plan your route if you are going to Universal Studio Singapore.
Time - Place
0830 - Ticket Booth

0900 - Entry to Universal Studio Singapore

0910 - King Julien's Beach Party-Go-Round

0930 - Enchanted Airways
1000 - Donkey LIVE

1030 - Shrek 4-D Adventure
1100 - Taking Lunch at Friar's
1200 - Water World

1230 - Dino-Soarin’

1300 - Revenge of the Mummy

1330 - Accelerator
1400 - Lights! Camera! Action!
1430 - Rest at Discovery Food court

1500 - Pantages Hollywood Theater - Monster Rock

1530 - Shopping
1600 - Central Park Zooapalooza Tour - Madagascar

1620 – Kowabunga Kove – Holly wood
1700 - Exit from Universal Studio Singapore

Overall, it is quite a fulfilling day for my family and me. And it is definitely worth the money!!!

Money, Values and Happiness

Do you wonder why some people are not happy with their life even though they are rich and wealthy? The simple reason is they do not know what their values are.

Money itself does not bring you any happiness. If you are only focusing only on making money, there is no real happiness at all. It makes no difference whether you have $1 million or $1 now if you do not know your values. Only people who work for their goals that are consistent with their values and focus their money on the things that are most meaningful to them will find true happiness.

For example, people who value their family life will likely to spend more money on their family in term of expenses for regular gathering or holiday. By doing so, it will enhance the family relationship. People who value knowledge will spend more money on books or taking courses. By doing so, one can learn and understand more things.

Your values are integral to your character, to your life’s purpose, to the way you create your future. It is only when you know what your values are then you are able to make money decisions that are value-driven which will bring happiness to you.

My Passive Income (Month of Mar 10)

Here is the summary for month of Mar 10:
CPF(OA): $156 (from interest and dividends)
Cash: $1724 (from dividends and other passive incomes)
Total: $1880
Target: $3000
Achievement: 62%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought the following dividend shares: Cambridge and Singtel.

For passive income 4, there is increase of $40. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

I am in the midst of building my passive income 5, currently there is no income from it yet.

My Other Articles

Time and Money
Do you have both the time and money?

Industrial Age vs Information Age
Are you outdated?.

What does total freedom lifestyle mean to me?
How is it like to be totally free?

Expand your social network
Learn more thing by knowing more people from different trades.

Don't fall for "Get Rich Quick" Scams
Don't help the scammer to get rich instead!

Protect your health and have adequate insurance coverage
Make sure you have done enough for your health.

Singapore Dollar Fixed Deposit Comparison between Major Banks
How much interest do you get?

Money, Values and Happiness
What is the relation between these three words?

How much is your hourly worth?
You may worth lesser than you think after the calculation.

Lifelong Asset Skills
Learning skills that can benefit you for your whole life.

The Pros and Cons of Using a Credit Card
Will credit card really benefit you?

Time and Money

Time and money are two important things in life. We can categorize people based on the amount of time and money they have into four groups.

Group 1: No time, and no money.
Many low income employees are belonging to this group. People in this group will trade their time for money, as the result they have less time for themselves. They normally need to work for money in order to fulfil their basic needs and not be able to save a lot due to their low pay.

Group 2: No time but has a lot of money.
Self-employed, professionals (high income employees), small business owners are in this group. They are slightly better off than the people belonging to low income employees because they earn more. But one thing to note, they still trade their time for money and have little time for themselves.

Group 3: Got time but has no money.
People who are doing odd jobs or jobless are belonging to this group. As this group of people do not have a stable source of income, they will need to depend some sorts of financial aids from their relatives, friends or government in order to survive. They may have a lot of time, but are consistently worried about their survival all the times.

Group 4: Got time, and has a lot of money.
Big business owners, landlords, investors are in this group. People under this group are not working hard for money, but having money to work hard for them. They use money to make more money for them. They are at the best position to enjoy everything in life as they have both time and money.

My Articles on planning for Financial Freedom

Stop saying you are poor if you want to achieve financial freedom.
It is your mentality that makes you poor.

Don't quit your full time job just to start your own business
Don't forget you got expenses to pay.

What is cash flow diagram?
A diagram that can improve your financial status.

My Cash Flow Framework
A improved version of cash flow diagram.

Keep learning and Increasing your Financial Knowledge
The only way to achieve financial freedom faster.

"SMART" way to set your goal towards financial freedom
Knowing the proper way set your goals will make you acheive your goals easiler.

80-20 Rule for allocating time in building up passive incomes
You just need to spend 20% of your time on something more meaningful to you.

Forget about achieving financial freedom if you do not have preservance
It is not an easy task, but I will never give up.

Never put all your time in one income stream
You are exposing yourself in high risk by doing so.

Failures are just learning experiences
Don't be afraid to fail if you want to be successful.

My Articles on Retirement Planning

Why people don't plan for their retirement?
Are you guilty of not doing it?

Plan for your retirement as early as possible
You will never regret by doing your planning now.

How much will you need to retire?
You definitely need a lot of money.

Retirement planning is not just about gathering enough money for the rest of your life
There are other important things that you must put inside your retirement plan.

Retirement Planning: Learn to be healthy and stay physically active
You will not be happy if you have poor health when you retire.

Retirement Planning: Finding and developing your interest
Find yourself a interest to make yourself more interesting.

Retirement planning: Build up family relationships and bonding
If you don't do it, you will become a stranger to your family.

Retirement planning: Increase your social circle
It is always good to have more friends.

My Income Projection

I have achieved one-half of my targeted passive income!!!
I am getting closer to my target.

How long does it take me to reach a passive income of $3000?
A rough estimation.

Planning to retire in 17 years
Hopefully can be earlier than that.

My Income Projection Chart
Passive incomes make a great difference in the chart.

My Articles on Financial Freedom

What is Financial Freedom?
A very important term to know if you want to retire early in Singapore.

Why I wanted to achieve Financial Freedom?
These are the reasons that motivate me.

What is Debt Free Status?
Are you really in debt?

What are Assets and Liabilities?
Wealthy people will know these two terms.

How to reduce your liabilities to zero?
Sliming your own financial "fat".

How to prevent your money from becoming a liability?
Is your money getting smaller?

What are Good debts and Bad debts?
Debts are not necessary bad if you use it correctly.

What is power of exponential?
Einstein said, "The most powerful force in the universe is compound interest."

Everything in life in gambling
Don't you think so?

Three Stages in Personal finance
Are you still in stage one?

Journey to towards Financial Freedom should be enjoyable
Enjoy the journey and not suffer from it.

What is Rat Race?
You are in the race if you are working for money.

What is Leverage?
Use time of other to help yourself earn money.

The Rule of 72
A simple formula to out find the number of years required to double your money.