1) the amount is more than the minimum payment. the reason i save more is for contingency purposes, i really feel somethings wrong if i dont save cash savings


2) yea the 400 is food. i opt for comfort in terms of lodging

3) why not opt for max tenure?

1. It can create a false illusion that you are NOT living above or close to your means, that you managed to have some savings when you can't fully pay the credit card outstanding balance.

Take care of the credit card debt first, use every savings you have to clear it first, then re-built the savings. You will have more savings eventually, since you are not spending your hard earned money on unnecessary interest.

2. Well, just pointing out something you can spend less on, which can results in more savings.

3. Longer loan period, more interest to pay. Just like higher loan amount, more interest to pay. Again, just pointing something where we can lower cost of interest... if we wish to.

And be aware that there's no such thing as a STANDARD and NORMAL 30-35 years 90% loan, just because it was offered by the banks, and everyone else doing it.


This post has been edited by j.passing.by: Sep 12 2014, 09:52 PM

Cut back on lodging, use the extra to clear off the cc debt then start saving more to buy house so that you can achieve it faster.

Want comfort lodging but also want downpayment money? earn extra income, don't say "no time", "not my cup of tea" kind of thing when opportunity comes knocking. there's no free lunch.

FOLKS,

When taking a housing loan, don't just compute how much you can spare on the monthly installment, without regards to the loan amount and the tenure.

Try to compute the total amount of interest to pay if you can varies the loan amount and the tenure. The difference in the total interest can be staggering.

As an illustration:

a) House value 300k. Loan 210k. Interest 4.45%. 20 years. Monthly installment 1323.
b) House value 300k. Loan 270k. Interest 4.45%. 35 years. Monthly installment 1270.


(B) looks more attractive... less downpayment... easier to pay...

How much are the total interests?

But how many of us can afford the 90K downpayment when buying a house?

Nevertheless, I get your point on the total interest paid over 2 different loan tenure

Please note the 1st word in the heading of this thread. So your question is irrelevant!

It is 'you' who 'you' should be concerned in 'your own' financial matters. How others do it or how much others have is irrelevant to 'you'.

Anyway, they are illustrations - to drive home the point on how to avoid paying too much unnecessary interest. So don't get too fixated to the given 90k number.

Another way to look at it, say you cannot easily saved up to this x figure, then look for a cheaper house/apartment that you can afford; such that you don't have to have a 90% loan.

Or take a 90% loan, but still afford a higher installment and reduce the tenure.

It's up to you how to 'play' around the figures, but still the important point is this: pay lesser interest.

If you can only do the max (90% loan, 35 years tenure), then you need to really, really need to consider whether or not you are overspending.

"Spending first, then savings..." Take care of the spending, then you will have more savings. Less interest paid, more savings.

A house is the biggest purchase item in one's lifetime; so the savings we are taking here is long term savings, ie. savings for retirement. So less interest paid, more retirement savings.

And if you have enough savings, and don't have any investments other than FD, don't pull out too much from EPF.

Hi! Just to add, IF and only IF you are very good with your finances, you should actually go for the longest tenure and max loan. The reason being that there is semi flexi and fully flexi loans available today. The extra cash parked into these accounts can be used as EMERGENCY funds and you will still enjoy lower interests! AND your monthly repayment is lower too!

Note. That is a big IF! One of the tell tale signs that you're not really good with your finances is that you have credit card debts.



Edit: I see j.passing.by already covered this lol

This post has been edited by polkiuj: Sep 14 2014, 04:09 PM

That's an interesting take on semi flexi / fully flexi loans, but you are still going it the wrong way if you could only afford the house with the max loan and longest tenure. And hoping that you can reduce some interest in future with the flexi loans.

A wise man, I read, said - in not the exact words: It is not the unexpected outcome that will screw you up. It is the expected outcome that did not happen that will really screw you.

Me, being old school, would rather have a fixed budget, and keep it simple.

I would use a Standing Instruction to auto debit a savings account to pay the monthly installment. So no late payments, no extra fees/interest to pay. Any extra savings like annual bonus, put them into this special purpose savings account. It's a sort of emergency fund, and I can readily know how many months of installments are covered in case I lost my job. (This is another financial tactic: putting savings/expenses into separate envelopes.)

This post has been edited by j.passing.by: Sep 14 2014, 04:57 PM

Yup! As u said, neither is intrinsically wrong or right. It all depends on ur style. The problem with a fixed loan is that you can't save on interests unless u do a special write in (maybe). Or clear the loan.

The good thing about this flexi or semi flexi loans is that they let us keep the cash and yet still save on interest! Win win. Again, this already ASSUMES you have great financial management else it WILL be your doom. The great part about the loan is exactly as you put! It allows u to dump in ur bonuses. And the fact that your salary increases every year, u can put in more and more as you wish. Soon, your 35 year loan is actually left with only 20 years or less and you save hundreds of thousands in interest.

And the best part is that this account gives you the best 'guaranteed' interest rates ever. (Of course, your money does not grow. In this way, ur interest is interest saved rather than gained).

er.. dont be too sure that salary increases every year.
sob sob speaking from experience..

Sorry to hear that bro...

Err.. That's the expectation la bro. Maybe if it doesn't them it's time to change job... That's considered an increment too (if it's higher la)

And that's exactly the problem between reading with an open mind and reading with an inconceivable mind with a preconceived concept. Please read again from post #427 onwards, and you should see that you're now going in a circle.

A flexible mind would not disagree on avoiding a 90% / 35 years loan, and would think "yeah, reduce the tenure with more savings, and (maybe) use a flexi loan to even further reduce the tenure in future as there is a possibility that I could afford a higher installment in future".

What I was trying to point out to you (and readers at large) was not about having a flexi loan or not.

It's about having savings and more savings before buying a house. It's about not being in a hurry to buy a house with the least amount of savings, and the highest amount you can borrowed that take the longest time to pay off.

It's about not overspending on a house. It's about being financially prudence on buying an affordable house that is not above or close to your means.

And if you can do it, you already cut down a whole lot of interest before you even get the keys to your new house, and begin paying the installments.

This post has been edited by j.passing.by: Sep 15 2014, 01:33 PM

try roystevenung

You can do a term life policy (with Critical Illness/Accident cover) till retirement age or depending on your youngest dependent.

PM me the following info:
1. Date of birth (dd/mm/yyyy)
2. Gender (male or female)
3. Smoking Status (yes or no)
4. Occupation (office or manual labor)
5. Your email address (for me to email to you the quote)
6. Your location (penang/kl, johor?)

Many thanks

Hi all, need advice if i'm in the right track on my money management

Nett income (after deduct epf and all): RM3.5k (already work for 3 yrs-current age 27)

House installment: RM700 (bought 2nd hand hs 2 yrs ago)
Car loan: 620 (still got 2.5 yrs left to pay off)
Phone bills: 80
Transportation:300
Savings: 500-800 (big chunck used for travelling- 2-3 trips per year)
Insurance (med card):150
Misc: 500
current saving :20K (consider as emergency fund put in FD)

Didn't do any kind of investment, money just sit in FD.



This post has been edited by Ant Tek: Sep 16 2014, 02:18 PM

Stop travelling. You can save more. Making 3.5k at 27 is consider little, but that is fine. What is worse is you spend your bucks on travel...

Wah, 800x12-rm9600/year

You are too generous to yourself, but how come so high, you alway follow tour, stay 5 star hotel and good food?.

I travel more frequent than you, but max 3-4k/year,
I stayed at 2 star hotel, enjoy local food, fly with AA promotion ticket only, DIY travel with prudent habit.

First thing you should know is there is no financial sifu or resident advisor here, just posters sharing their experiences and opinions – so don’t take all suggestions given as the gospel truth or expect any financial formula that will ensure success in whatever objectives you’re searching for.

Second thing you should be aware, is this poster (me) likes to use ‘you’ in his sentences. Don’t take them too personally; as most of the time the ‘you’ is NOT directed at you personally. But also the general readers/browsers/lurkers, as this is an open forum... no point addressing issues that are specific to you, as you are not paying me anything; and it’s more fun (and easier to bullshit) to just simply share whether opinions/ideas that crosses my mind.

Third, as you can see, I have too much time... so here goes...

Are you a smart consumer? If you think you are, then you already answered your own question on whether you’re on the right track on money matters.

For example, purchasing a medical card that cost RM150 monthly. How do we, as a smart consumer, know whether it was a value purchased or not? Do you spend the 150 after doing some shopping/research, or because it was recommended, or because a friend has the same thing?

In the case of car insurance, where you can get optional coverage on the windshield for, let’s say, RM60/year.

A smart consumer before getting this optional coverage would find out the cost of the windshield, let’s say about rm180. Then he/she will try to estimate whether it is worthwhile or not.

I wouldn’t off-hand say it will be worthwhile or not because everyone’s situation is different. He/she may be living near a quarry where there’s lot of lorries carrying small stones, or his/her house is in a plantation area with unpaved roads, plus lorries carrying palm fruits that frequently send flying a seed or two onto the cars following behind.

Or he/she may be living in a neighbourhood, where it is unheard of, of car owners replacing their windshields – even for drivers with many years of driving experience.

And even for that motorist living near a quarry, he/she may not think it worthwhile to have the optional coverage; as he/she maybe not that fussy – a small chip on the windshield, never mind, la... no need replacement; or he/she feels that the cost of the replacement is not a worrisome amount to be fret about... no big deal la, just pay out of the pocket as and when it is needed to do so.

On other matters, you seemed to be doing fine... emergency fund nearly touching 6 months of gross salary, just barely the minimum...

Savings per month 500-800... maybe you should try putting money aside into separate ‘envelopes’.

One envelope for travel, one envelope for gifts/festive season expenditure, one for long term (retirement), one for special purpose (like opening a small business – that dessert shop which you edited).

This way, you would know how much exactly you are really saving each month, after deducting those set aside for specific expenses.

As for investments, I biased towards unit trusts/mutual funds, read those threads for more info... I would suggest only invest those savings you aside for the long term ie. retirement.

Not everybody has the opportunity to start at high-paying job like oil-gas and earn big bucks in the first few years of their working life. Just saying.

And travelling isnt so bad... Just saying.

Reduce travelling to 1 trip per year.
better to use your saving to invest in unit trust. u can visit FSM for more information. Sifu there can help u