As you might have suspect, I in fact receive tons of email everyday. Although I read most of them but I just couldn’t get time to reply each and every one. When I do, it is normally worth sharing with you. This is an email from Don (of course not his real name)
I need some advice. You can share this if you want to but I hope to remain anonymous. I am an engineer working in an oil and gas company with a fixed monthly income of RM6500 average. I am now 27 and graduated from the same university you came from 3 years back in 2007. Below are my monthly expenses:-
All in RM
EPF = 627.00
Tax = 600.00 average
MyVi Car Instalment = 492.00
House rental = 150.00
Utilities = 90.00
PTPTN = 210.00
Food = 500.00
Fuel = 160.00
Handphone bills = 250.00 (I help paying my mum’s, sister and fiancée’s line)
Insurance = 400.00
Misc spending (credit card etc etc) = 500.00 average
Mum’s monthly allowance = 1000.00
Total savings per month = 1500 average
To date, below is a list of my assets/savings in hand:-
Savings = RM 24000.00
House bought from developer in Dec 2009 and expected completion Dec 2011 = RM 398000.00
• Loan for RM350000.00 for 40 years with rate of BLR-2.25%
• Monthly instalment for 40 years duration is RM1300.00. Installment begins in 2012.
Own 2 cars. Proton Saga bought with cash at RM9600 after grad with money saved during uni days. MyVi bought RM49700 in 2009 loan for 8 years due to loan conversion from company loan to AmBank loan. Still have 6 years to go
counting from June 2011. Down payment paid RM12700.
Total invested in stocks = RM8900. I just started to get active again after 2 years remaining dormant. Lost a bit of money previously due to stupidity, laziness and greediness. However, I have learnt my lesson and educated myself to learn to research before buying any stocks. So far, I am holding it due to its potential and have yet to lock any gains. In other words, I am doing okay and if I sell it I will get a bit of money.
ASW 2020= RM900
Current family financial situation which you may want to know:-
1. My dad lost his job. So he does not have any income. Total combine FD, my dad and mum, is just a mere RM30000.00.
2. My mum fetches children to school with a net income of RM2000. Minus all the expenses (utilities, insurance, food, sister’s education etc) and the monthly RM1000 allowance I give to her. Nothing’s left. Expected to lose her job by 2012 due to no school children to fetch.
3. Sister’s ambition to study aviation. Finish Form 5 in 2012. RM250000 is needed to complete aviation courses.
4. Brother’s working in oil and gas with an average income of RM3000. Contribute RM500 monthly to mum’s allowance. Rest is for him to save till he can own a house. He just graduted.
5. Fiancée monthly income is RM4000. RM1000 savings per month.
1. Planning for marriage in 2012. Wedding dinner etc.
2. To buy a 2nd property, looking a condo/apartment, to be rented out.
3. To start an engineering business with my trusted friends by 2015 or earlier.
4. To earn my first million by 35.
5. To have 2 kids by 2015
6. To be able to support my parents
Why I can’t sleep every night that I felt like I am going nuts:-
1. By 2012, my parents will be solely depending on the RM1500 monthly allowance my brother and I give. I may end up paying them more for disposable expenses!
This is unavoidable ..when the day comes, you still need to live with it. However, human can easily adapt to a situation. There are people living in the arctic that proves no matter how bad is the situation, lives still go on. Your parents may have to adjust to a more frugal lifestyle when the time comes.
Our government do provide additional tax relief to family caregivers.
2. I can’t save enough for my wedding dinner and I am thinking to just abort the dinner alone and, perhaps, just go for a honeymoon trip to have a good time together. However, I feel guilty for not doing it for my fiancée.
You will get angpow from the relatives and friends you invite to the dinner. Invite more richer friends and you may have extra fund leftover after deduct the dinner cost. From my experience, some best friends and wealthier relatives give bigger angpow. I don’t think you will lose money in your wedding dinner.
3. Because of point 1, I may lose a chance to buy a 2nd property so it is affecting my plans to increase my net worth.
No choice. You need to make more money. You can also look into the possibility of buying properties without money down (through auction or desperate sellers). If your rental yield is enough to cover the installment, it means you don’t need money to buy your second property.
4. My parents’ house is in Sunway and it’s close to Taylor’s. I believe it may fetch good rental value and I am thinking of moving my parents to my new house while converting this existing house for rental. However, due to previous modification, I may need to fork out some money to add an additional toilet and to add new partitions all over the house for rental. Due to my personal plans, I do not have the money to finance such modification. How do I go about it?
You can refinance your parents’ house for more cash. The excess fund can be used for the renovation. This assuming that your parents’ house is fully paid off or has substantial equity built up. As long as your rents still cover the new mortgage payment after refinancing, it is a worthwhile investment.
5. Setting up a family with no parents support proves to be tougher than it looks. I fear that I may let down my fiancée due to my current financial burden and that I may not be able to support 2 children expenses.
Undeniably, children cost a lot of money. I can buy a bungalow and pay the installment from the money I spend on my son. But anyway, there is too much fun being in parenthood. Just adjust along the way and you will be doing fine. When I look back at my parents, they manage to raise 4 kids with only average RM1000/month income. It is amazing, isn’t it?
When you have more commitment, you will learn to adjust to the situation either by spending less or making more money or both. You are motivated to do so.
6. I am an ambitious person. I love making money. And I came to realize that I could never be rich if I work in an organization. I got to go beyond the boundaries. But I fear that with this entire financial burden, my plans fall apart.
You already have planned to start a company with your friend. Focus on that. I think you will succeed. Wish you all the best! When you see a successful organization or company, it means that once upon a time, there was someone who made a tough decision and taking risk to call the shot.
KC Lau, with my current practice,
Do you think I can achieve my dreams and goals?
What can I do differently?
Is it advisable to convert the Sunway house for rental purposes and abort my wedding dinner for the renovation and to buy new furniture for my new house?
Please feel free to ask me more questions. I am so worried of my responsibility as an eldest son, a brother to my younger siblings, a husband who loves his wife so much that he wants to ensure that she is happy and worry-free, a father who gives good life to his children and a man who is financially free and rich.
Below is his email reply after mine:
First and foremost, thank you for sharing your insights and experiences about personal finances. I take your reply “I think that you worry too much.” that I am currently managing my finances good enough to achieve my goals. And all I needed is to adjust myself as I am going thru life along the way provided that I am prudent on my spending and desires.
I had previously thought about your reply in blue. But I am seeking some reassurance because it does seem to me that I am rolling my hard earn money without savings surplus. This does shake me up a little as I don’t see property or stocks as savings due to its time needed to liquefy it. For example, my nett savings for year 2010 has been hovering in between RM25000 to RM30000. My target was to save RM30000 per year making it RM60000 for 2010. However, I did not make it due to the increase in my parents allowance, the down payment for my new house and jewelries for my wedding.
Anyway, I hope I can share with you once more when I have achieved all of my goals and is financially free. Thank you KC Lau.
To you as a reader of our emails:
What does this story remind you of? What advice do you have for Don?
Post a comment below.