Mar 31, 2009

Mission Schools & Religious Beliefs

Commenting on my most recent post, many readers have tried to guess where my new house is, and what schools my children are or will be attending.

So kaypoh. :)

One question that arose was whether I should send my children to mission schools, when I personally am not a member of the relevant religion.

I don't see why not.

After all, my parents had sent me to Christian mission schools (primary and secondary) even though they were not Christians (and even though I was not, and am not, a Christian).

When picking primary schools for my kids, my top three criteria are that (1) the school has good academic standards, (2) the school is near my home and therefore it's convenient, and (3) the school offers a good range of CCA activities and programmes.

Whether the school is affiliated with any particular religion is not that important to me. If the school does have a religious affiliation, I see this as a minor plus point. I believe that such schools are more likely to place emphasis on values and morals, which is a good thing.

I am generally fine with the idea that one day, when my children are old enough, they may want to convert to some particular religion which is not my own. It's their own lives.

Personally I am more interested in spirituality than religion. I see spirituality, as religion minus the distractions.

I think that in general, organised religions do come with plenty of distractions. This is unfortunate, but true. Throughout the history of mankind, religions have always come with distractions. Sometimes in the form of cultural trappings. Sometimes in the form of political power-grabs. Sometimes in the form of over-enthusiastic marketing gone wrong.

But at their respective hearts, all religions are merely different paths to the same divine. Some paths are longer, and more winding than others. You could get lost along the way.

Especially if you fail to recognise the distractions, for what they are.

Mar 26, 2009

The Roof Over My Head

I bought a cluster house. It won't be ready until 2011. By that time, my daughter will already be in Primary One. However, under the MOE rules, next year I will still be able to use the address of my uncompleted new house to register my daughter for Primary One.

My new home is within a 1-km radius of the school that I plan to send my daughter to. So I enjoy a healthy priority, in the admission system. That takes care of that.

I am quite happy with the price at which I bought the house. The price is already $258,000 lower than what the developer had been asking for it, five months ago.

Also, I had gotten wind of the developer's latest strategy. I realised that waiting and holding out for an even bigger discount might be a fruitless exercise. I would only run the risk that someone else might buy the unit I wanted.

The developer's goal was to quickly sell enough units (about 50%) to cover its entire construction costs. Prior to hitting the 50% mark, the developer would be feeling somewhat desperate. However, after hitting 50%, the developer would have enough funds to proceed with the construction.

The developer would no longer be in any hurry to sell the remaining units. It could leave them unsold for several years. It could sell them at a better price much later, when the property market finally revives.

With my purchase, the developer crossed the 50% mark. My purchase might have been the last big bargain that the developer would give, for houses in this particular project.

My cluster house is 4600+ square feet if you count the roof area, and 3700+ square feet if you don't. (For some reason, it is standard practice to count the roof as part of the built-in area, for cluster houses). One reason why I bought such a big place is that I'm thinking ahead.

I expect to live here for many years. And my parents are getting old. One day, they might no longer able to look after themselves and live on their own (which they currently do). When that time comes, I'm happy to welcome them to come live with me. There'll be plenty of space.

Yes, I've heard about Minister Khaw Boon Wan's suggestion that Singaporeans send their aged parents away, to live in nursing homes in Johor Baru. No, I do not think that it is a good idea. I think that it is rather despicable, actually.

Mar 23, 2009

Economic Dark Clouds and Their Silver Linings

A reader emailed and asked me why I seem to be posting less frequently than usual.

In the past week, I haven't posted because I've been busy. With work, kids and .... house-hunting.

Yes, I've been searching and waiting patiently for more than half a year now. But in the past few weeks, I've been hunting especially hard, and I think I might (I say might, not will) finally put in the cheque and sign on the dotted line pretty soon.

So let it not be said that all is doom and gloom for everyone, during an economic crisis. Think positive. There's a silver lining in every cloud. For me, the silver lining is that the property market is now sinking to deliciously low levels.

(Oh, and if/when I make that purchase, I'll be back here again to tell you more about it).

Here's another example of a silver lining. For the past few years, a friend of mine had been trying to find a part-time job for the past few years. She wants to spend more time with her young children. However, she did not succeed in finding any such part-time job.

Now, however, her employer (Mediacorp) has asked its employees to go on a 4-day week. That's exactly what she wanted all along. Sure, there is a corresponding pay cut. But she's more than happy to accept the pay cut, in exchange for the extra time she wants to have with her children.

And there must be more people benefiting in different ways from the economic crisis. Maybe after years of being chronically overworked, your workload is finally easing to more acceptable levels. Maybe for years you've wanted to take time off to take a course, but the opportunity cost of quitting your job was too high ... until now. And so on.

Keep your chins up, folks. The rule about dark clouds is that they all have a silver lining. If you haven't found yours yet, keep looking.

Mar 13, 2009

Standby Money - Get It While You Can

In my earlier post, I wrote about the need to have emergency cash reserves. If you don't already have them, here's a quick way to build them up. From the TODAY newspaper:

Income checks: Onus on banks or borrowers?
Issue arises as more lose jobs, fall below salary threshold
Tuesday • March 10, 2009
Neo Chai Chin

A “WEIRD” conversation public relations consultant Lim Wee Ling had with a bank telemarketer a month ago went like this: “Ma’am, do you need a credit line?”


“But you could always do with another credit line. It’s possible that you could lose your job really quickly.”

Ms Lim, 31, was puzzled. “If I’m going to lose my job, all the more they shouldn’t be asking me to take credit,” she told Today.
In general, it is of course a bad idea to live on credit. In fact, I always think that anyone who actually pays interest on his credit cards must be either stupid or desperate.

Personal credit lines are a little different. Consider the fact that we are all now facing a prolonged economic crisis. You might have a job, but who knows whether you'll have one in six months' time, or a year's time. If you have plenty of emergency cash reserves, then you might not be that worried. But if you don't ....

While you still do have a job, you can get a personal credit line. When you don't have job, you won't be able to do so. So while you still have a job, perhaps it could be a good idea to apply for personal credit lines.

You then keep them on standby. As long as you don't use them, you won't have to pay any interest. But you keep them on standby, just in case someday in the future, touch wood, you do need to use them. (And I mean use them for essentials, not items like a new flat-screen TV).

In the not-so-distant past, a bank would normally grant to an individual a personal credit line equivalent to about twice the person's monthly salary. Under the new MAS regulations, a bank will be allowed to extend the person up to 4 times his monthly salary (if his annual income is at least $30,000).

So now, if you go apply for personal credit lines from three or four banks (eg DBS, OCBC, UOB and Standard Chartered), you could have an aggregate amount of credit lines easily exceeding your entire annual income.

Another consumer, Mr Lai Siew Kuan, got a call last week from a telemarketer, who told the 35-year-old property agent he could apply for a credit card even with a yearly income of $24,000 — that’s $6,000 below the qualifying income stipulated by the Monetary Authority of Singapore (MAS), for those aged 55 or younger.

Even as more Singaporeans fall victim to pay cuts or job losses, banks were recently reminded to periodically check the incomes of their credit cardholders. But how strict will banks actually get?

Last month, the MAS implemented revised guidelines on unsecured credit. One industry query it addressed was: What should happen with a credit cardholder whose annual income has fallen below the $30,000 threshold?

While such a customer may keep his existing cards, the MAS said, the bank must adjust the overall credit limit to twice his latest monthly income — and not grant any more credit until the customer’s outstanding sum falls below this new cap.
That's what the MAS said, in response to an industry query.

However, the actual regulations don't place any significant duty on banks to monitor on an ongoing basis the individual's employment status or monthly salary. In other words, at the time you apply for a credit line, the bank will ask you for your income statements.

Thereafter, the bank generally leaves you alone. Even if you lose your job the following month or your salary is cut, the bank generally wouldn't know and therefore your personal line of credit therefore still remains intact.

As a practical matter, it is not feasible for a bank to monitor its retail customers that closely. There are just too many retail customers.

But, judging from banks’ responses to Today’s queries, credit cardholders need not expect a sudden slew of letters or phone calls from their banks asking for proof of their latest income.

OCBC Bank said the typical practice is to conduct checks “at selected points in time, such as at the point of application as part of the process in providing a new card”, said Ms Lynn Gaspar, its head of lifestyle credit.

Association of Banks in Singapore director, Mrs Ong Ai Boon, said periodic income reviews on customers are done to “better assess their credit needs”. Income documents are required when applying for a new credit card, an additional card, or an increase in credit limit.

Standard Chartered and OCBC both told Today they had “robust” risk assessment and credit processes in place to lend responsibly. OCBC and United Overseas Bank also encouraged customers who experience difficulty with repayments to approach them, so as to explore options on a “case by case basis”.

I have two personal lines of credit. One is from DBS and the other is from RBS (formerly ABN AMRO). I never actually applied for them. They came automatically with my credit cards from these two banks. That was years ago.

And I've never used these personal credit lines. In the past, I made some attempts to cancel them, but DBS and RBS both waived the annual fees and said: "Please, please keep the lines. They're free, after all."

Oh well. Thanks then.

Mar 10, 2009

Rules of Thumb .... And How To Have Better Thumbs

Here's some conventional wisdom from the world of personal financial planning. One of your early goals should be to build emergency reserves worth about six times your average monthly expenses. For example, if you usually spend about $3,000 per month, then you aim to build emergency reserves of about $18,000. This amount should be held in cash, not stocks or bonds or something else.

The idea is that if a person suddenly loses his job, he will usually succeed in finding a new one within six months. Thus if his emergency reserves are all nice and ready, then it can adequately sustain and support his usual lifestyle until he finds another job. The reserves should be in cash, because that's the safest, most liquid asset.

Two assumptions here. Firstly, that six months is enough time to find the new job. In more-normal times, this may sound reasonable. But current times are proving to be somewhat extraordinary. So quite arguably, the "six times" figure should be revised upwards, say, to "nine times".

The second assumption is that if you lose your job, you will largely continue to live the way you lived before, and therefore incur roughly the same amount of monthly expenses. In practice, this assumption could turn out to be true in many cases. Why?

Because when a person suddenly loses his job, he may not adapt quickly to the changed circumstances. He may promptly cut back on some smaller, more easily cuttable expenses (for example, eating out less often). However, there will inevitably be psychological resistance to the bigger lifestyle changes (eg giving up the car, or the maid).

Some of this psychological resistance will arise from the person's hope that perhaps he'll find a new job really quickly (eg maybe tomorrow, or next week), and therefore he doesn't really need to make any major lifestyle changes. The hope isn't necessarily unjustifiable or irrational. But it's important to have a Plan B ready, just so you're not unexpectedly caught with your pants down.

The way I see it, the trick to dealing with the psychological resistance is that even when you still have a job, you should start becoming very clear on what you've been spending it on. Then you'll know exactly what you need to cut, if it later turns out that you really do need to cut. Gather the information now, when you still have a calm, clear head. Don't wait till you actually lose your job, by which time you may be too upset and your emotions start getting in the way of rational decision-making.

Right now, do you know how exactly you've been spending your money every month? If you don't, there's a good chance that you're wasting some of it. And let's say, for the sake of discussion, that starting from tomorrow, you have to spend 30% less every month. What decisions would you make, which parts of your lifestyle would you adjust, to immediately bring your expenses down to that level?

Mar 7, 2009

Why Your House Might Not Save You

We don't know how long the current economic crisis will last. Maybe six months, maybe a year. Maybe two years, or three, or seven.

Some people might regard their residential property as their back-up plan. For example, they might be living in a 5-room HDB flat. In a worst-case scenario, if they really need cash, they could sell their flat and downgrade to a 4-room.

Will the property downgrade plan actually work? That depends on several different factors. One factor is whether you can find a buyer at all. In a prolonged economic crisis, the property market could become quite dead.

If you do find a buyer, the next consideration is the price your property will be able to fetch at that time. And then there's the outstanding amount of the mortgage that you'll still need to pay off.

In a very poor market, the sale price might not even be able to pay off the remaining amount of your mortgage. Let alone enable you to buy another smaller property to live in.

Here's an interesting case study from TODAY. In this case, the property downgrade plan proved to be a dud.
My Middle Class Prison
Friday • March 6, 2009
Tabitha Wang

MY FRIEND from Singapore just emailed me with the dreaded news: She has been retrenched. She could see it coming but even so, it still came as a shock, she said.

Her situation is not so bad, she admitted, with a rich boyfriend and parents to support her. Even so, she said, it felt weird to have no cash in hand. “What I wouldn’t do to be you now,” she continued. “You never had to worry about money.”

How wrong she was. I know poor because I’ve been there. Being poor doesn’t just mean living in a rented one-room flat with barely enough money to buy one meal a day. It can also mean owning a private condo and a car and still not being able to afford a meal a day.

Hong Kong’s Financial Secretary John Tsang recently came under fire from white-collar workers because the government’s latest budget didn’t make many provisions for them. He defended the decision by saying they could just re-mortgage their homes or live on savings. But what he failed to realise was that you can come from the middle class and still be poorer than a blue-collar worker.

Poor is not being able to sell your assets because their values have fallen so much that selling them would mean getting into bigger debt. And you can’t remortgage your home because no bank would give a loan to the jobless. So you end up living in a condo where you can’t afford to pay even the management fee and owning a car you can’t drive because you cannot afford the petrol.

Poor is when every bill strikes you like a body blow and you cross the road to avoid being seen by your usual bubble-tea seller because that $2 can buy you a meal.

I faced poverty during the Sars period, when my husband’s firm went bust and we were left with no savings and debt of over $200,000. Thankfully, I was still working, but my pay was just enough to service the monthly debt repayments.

It was a miserable time. With no jobs to be found, my husband plunged into despair.

No one wanted to rent my studio apartment. I wanted to sell it but the price had plunged so much that I would be owing the bank another $50,000 at least if I had done that. Keeping it and servicing the mortgage was, ironically, the cheaper option. We couldn’t afford to move back to it for a few months because we couldn’t raise enough money to hire a van.

The worst was praying my husband wouldn’t fall ill because we had no medical insurance. We couldn’t fork out the thousands needed to pay for his premiums.

When I tell people my story, they think I am exaggerating the difficulties. “Why didn’t you borrow from your family and friends?” they ask. Well, we would have were it not for pride (having been brought up by our parents never to beg) and the fact that we knew they didn’t have that much to spare anyway.

........ As the middle-income noveau poor, we were in limbo — we earned too much to qualify for any assistance but not enough to pay off our debts. But declaring bankruptcy was not an option, not if my husband wanted to start another business again.
I think that the above article is one that many property owners may want to bear in mind. One must recognise that there's a risk that the market value of your property could do a nosedive, just when you most desperately need to sell it.

Because the decision to sell your home is a big one (and may be attached to all sorts of emotional considerations), it's likely that you might delay it as long as possible. In other words, you treat it as a last-resort strategy.

The problem is that by then, you'll be at your most financially vulnerable. As Tabitha discovered.

Mar 6, 2009

The Singaporean's Guide to Survival in Bad Times

So I've decided to adopt a new theme for my blog. It will become a crisis management guide. I'll be blogging about different strategies and ideas that we can use to cope better with the bad times.

As usual, I look forward to you readers adding your suggestions and feedback in the comment section of each post. You can also email your thoughts and views to me at

Obviously I will cover topics such as money management and job security. However, that's not all. A prolonged financial crisis can affect many different areas of a person's life, such as his family life; his emotional wellbeing and his social activities. It will also affect decisions like whether to go back to school; whether to get married; whether to have a child, and so on. I plan to write about all of that.

The times are tough, and will get tougher. But a little ingenuity, and a little perseverance can go a very long way. For the year ahead, I wish everyone all the best!

Mar 5, 2009

Who Needs the MTI? Mr Wang's Readers Are Cleverer

Maybe minus 10%:
MM Lee GIC portfolio also takes a hit, down 25 per cent from peak
Thursday • March 5, 2009
Christie Loh deputy business editor

MORE than just a numbers game, worsening projections of Singapore’s economic growth are showing just how closely tied the country’s fortunes are to global goings-on.

Painting the most dismal outlook thus far by a Government official, Minister Mentor Lee Kuan Yew yesterday said the economy could shrink by an unprecedented 10 per cent, should international trade continue to falter.

“PSA cargo’s gone down by 30 per cent. So, we immediately shifted our expectations from minus 5 to minus 8,” he told corporate leaders at an hour-long dialogue organised by news information firm Thomson Reuters.

“If the second quarter shows a further drop of 30 to 40 per cent, it might go down to minus 10,” said the Minister Mentor.

Prime Minister Lee Hsien Loong had last week said the economy could shrink by 8 per cent, after the Government’s forecast in January of a worst-case 5 per cent contraction.

This is pretty scary, considering that in January 2009, the Ministry of Trade & Industry's forecast was around +1% to -2%. Just one and a half months later, Hsien Loong is saying -8% and Kuan Yew is saying perhaps even -10%.

Yet was it really that unpredictable? Ahem. In January 2009, one of my readers, who calls himself "The", was already pointing at the figure -10%. Back then, he had left the following comment on one of my posts:

"Looks like the perfect storm is brewing for the Singapore economy. The economists at the MAS/MTI, even if they are cognizant, are unlikely to put up a realistic forecast for fear of panicking the people.

The private sector economists are too polite or too kiasu to go against the official forecast.

Let me, a non-economist, cast the first stone and stone the first cast-in-stone forecast. The composition of Singapore's GDP (2007) is as follows:

Manufacturing 23.7%
Financial & Biz Services 24.6%
Wholesale &
Retail Trade 16.0%

These 3 sectors alone account for some 64.3% of Singapore's economy.

Given the global financial tsunami and contraction in trade, it is realistic to assume a contraction of 15% in these sectors, which means GDP shrinking by 9.6%. Assuming a more conservative contraction of 10% for the 3 sectors, GDP will shrink by 6.4%.

So, my quick and dirty forecast for Singapore's 2009 GDP growth - a decline of 6.4% to 9.6%. Let's take the mid point -- minus 8.0% GDP growth for 2009.

And the official MTI forecasters are still mucking around -2% to +1% growth for 2009.You heard it here first - from a non-economist.

20 January, 2009 15:59"

Another one of my readers (he was "Anonymous") left the following comment, also back in January 2009. The reference in his first paragraph was to a Credit Suisse report predicting 300,000 job losses in Singapore, in 2009:
"Mr Wang,

DOS has just calculated that the latest monthly wage in Spore is S$2,500.00,so if 300,000 get the walking tickets,straight away 4% off the GDP,should be more as of the remaining employees,many are getting up to 30% wage reduction.

Traditionally,corpoare profit accounts for close to 50% of our GDP,and under averge recession,corporate profit should decline by 20%,this round the decline should definitely be much higher.

Even a 20% reduction means another 10% drop in GDP.

Minister Tharman & PM Lee have both grossly under estimated the seriousness of the current situation."
Remember, you read it here first, on Mr Wang's blog. Sure, LKY will tell you the same thing .... much later.

Mar 4, 2009

How to Borrow Money From Yourself

A letter from Tan Kin Lian to the Straits Times:

ST March 4, 2009
Consider a relief loan scheme for needy workers

MANY businesses are suffering from a severe drop in consumer spending. They are not able to earn enough revenue to pay their wages and other expenses.

These businesses are not able to get the bank credit needed to tide them over until the economy recovers. The banks are reluctant to take the credit risk, even though the Government has agreed to underwrite 80 per cent of any loss.

The Jobs Credit scheme may help these businesses to reduce their operating costs by 5 per cent to 10 per cent, but will not be sufficient to stem the losses. These businesses will then have to retrench their employees.

Many thousands of employees face the prospect of losing their jobs in the near future. The $20.5 billion resilience package will not help them. Job fairs will also not help.

I suggest that a relief loan scheme be introduced. This scheme is to be administered by a government agency and will allow a worker who has suffered a loss or drop in earnings to apply for a loan to cover the shortfall (subject to a monthly cap).

This loan will be subject to an interest rate of 2.5 per cent and can be drawn for a period of up to 24 months. The loan has to be repaid from future earnings or withdrawal from CPF savings.

This is a loan, not an unemployment benefit. It will provide financial relief to affected people who will then not need to rely on credit cards or loan sharks and bear a high interest burden. It will also reduce the bad debt burden from the banking system.

The idea doesn't really make sense to me. Instead of giving the jobless man a loan, charging him 2.5% interest, and having him make repayments later with his own CPF money .... you might as well let him use his own CPF money straightaway.

Among other things, this way he would save on the interest. It's not nice to charge desperate people interest.

Of course, from past experience, we already know how the government feels, about letting needy people use their own CPF money to support themselves (even during indisputably difficult times).

The government is very concerned that you must save enough money to support yourself in your old age. So concerned that it doesn't care if you die of poverty-induced starvation, long before you grow old.

Oh well.

I actually have an idea which modifies Kin Lian's loan scheme, such that it might be more palatable to our pig-headed government.

Instead of the government lending money to the unemployed, it could allow the unemployed person to borrow a (limited) sum of money from his own CPF account. This would be on an interest-free basis (why would you make a person charge interest to himself).

Later on, if/when the chap does find a job, you could make him contribute more money per month, to his own CPF account, to repay the "loan". For example, instead of contributing 20% per month, the person might be required to contribute 30% per month.

The extra 10% goes towards repaying the "loan". After the "loan" is repaid, the person's contribution rate then reverts to the usual 20%.

A neat, elegant idea, isn't it? And our ministers couldn't think of it. Hrrrmph. How very "world-class" they are.

Mar 3, 2009

Why The Retrenched People in Singapore Particularly Need Help

NTUC promises to help retrenched workers:

Feb 21, 2009
Retrenched to get more aid
By Nur Dianah Suhaimi

RETRENCHED workers can expect more help from the National Trades Union Congress (NTUC), which hopes to boost its war chest to $20 million this year.

Particularly in need are retrenched workers who received little, if any, retrenchment benefit, said its secretary-general, Mr Lim Swee Say, yesterday (21/2).

To help this group tide over difficult times, NTUC may add a new 'hardship grant' component to its Care and Share fund, which currently provides aid to needy union members in the form of transport and utility vouchers.

The fund will increase its annual budget to at least $20 million this year, compared to $13.1 million last year and $7 million in 2007.

Mr Lim, who is also Minister in the Prime Minister's Office, spoke to reporters at the Healthcare Services Employees' Union (HSEU) bursary awards event yesterday.

'With the global recession, we expect to see some retrenched workers whose companies have folded,' he said. These workers may not get any retrenchment benefit or the sum could be too low to tide them over in the short term, he added.
NTUC should help them. In Singapore, retrenched workers are particularly vulnerable. That's because Singapore is literally the easiest place in the world to pay a worker peanuts; make him work overtime; and then sack him without compensation.

Am I exaggerating? Engaging in hyperbole? Unfortunately not. My statement is proven, among other things, by a detailed international study done in 2007, covering more than 150 countries around the world.