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.