stupidbump,

1) How much does the house costs??

2) How far is the house away from your parent??

If YOU are buying a house, you will be buying a house that you can afford. Then, you will LIVE a neighborhood that is CONSISTENT with your life style. If not, you MAY BE pressure into living above your mean.

For example, in the EXTREME CASE, your parent give you a Bungalow in an expensive neighborhood. You will be FORCED into matching your life style with your neighbors. Is that what you want??

Either case, by accepting the house, you will be living in a place / neighborhood of YOUR PARENT choosing. YOUR ASSUMPTION of parenting and environment may not be the same as YOUR PARENT.

By accepting the house, you CANNOT say no to your parent if they make unreasonable request.

Everything has a cost.

Dreamer

Dreamer,

1. House is in Bandar Utama, I think it was RM525k if I'm not mistaken. Rather normal and standard neighbourhood.

2. They are still working in my hometown in Terengganu. 450km away from BU.

I get your point regarding the neighbourhood and lifestyle issue.
And for issues with parents, I am downright confident I'm not going to face this, as we do not intend to stay permanent in the current house they bought.
That's why I insisted the house be under either of their names.
The house will serve as more to a vacation house or retirement house for them in future, as most of my relatives are also around this area.

Bandar Utama is definitely not a 'normal' place, in fact it is an area full of high income earners. I have lots of freinds around the area with 5 figure incomes. If you want normal around the area you need to go to 'kota damansara' instead. Anyway there are much trappings there to spend your money with 1Utama, the curve, Ikano and Tropicana so close by.

But if you can stay for free, why not? Just don't compare to the Jones next door.

This post has been edited by gark: May 2 2010, 11:28 PM

stupidbump,

1) 525K house is NOT any normal and standard house. It is HIGH END neighborhood. It is NOT for people like you that earn 6K per month. So, if you live there, you will be SUBJECT to PEER PRESSURE to spend. Altos is probably not good enough for that neighborhood. 150K to 250K is normal for people in your income level. To afford housing loan of 525K, you need to pay about 5K per month. 33% rule = household income of 5K X 3 = 15K.

2) How will living among people that earn 15K per month will not change YOU??

3) The HOUSE had changed YOU. You would NEVER consider a 83K car if you THINK that you have to buy your own house. Just imagine what will happen to YOU if your wife live in that neighborhood see how other people SPEND. Ditto for your children.

4) As per your earlier question, my family of 4 spend about 2K per month for the past 10+ years. We paid off the car and the house. So, no car payment and house payment. We spend a lot of money on vegetable, fruits and seafood. We are big spender as compare to our neighbors. But, we are FRUGAL as compare to our income since I save 50+% of my gross income.

5) When you have an Altos, the peer pressure to spend will be higher than a Proton. I have a Proton Wira. When people ask why I do not spend on anything, I just say that I am poor. I am not as rich as they are since I am only driving a Proton. People ASSUME that I am poor so I am spare of any peer pressure to spend.

Dreamer

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Added on May 2, 2010, 11:34 pmgark,

<<why not? Just don't compare to the Jones next door. >>

It does not work in REAL LIFE. He might be able to do it. But, not his wife and his children.

Dreamer

This post has been edited by dreamer101: May 2 2010, 11:34 PM

If you are determined enough you can, anyway if you feel rich, it does give you more incentive work harder to be rich? No?

This post has been edited by gark: May 2 2010, 11:45 PM

Sometimes living in such a nice place may not make your LIfe happier

Spouses tend to have more debates on how to live their lifestyles, or rather IMAGES to project to others surrounding
you. To renovate or decorate such a house itself is odeli a problem.

So you could be trading off your freedom instead ( to do things normally you like to do ) .

It might be worth it or might not.

Just my view.

This post has been edited by SKY 1809: May 3 2010, 12:05 AM

gark,

Are you married?? It does not look like you are married. If you do, you will know that it does not work that way.

Dreamer

It may surprised you that I am married for a couple of years and my spouse is much more frugal than me. She never asks for anything thats cost lots of money. Maybe it's due to our rags to middle class family background where we both come from.

This post has been edited by gark: May 3 2010, 12:08 AM

Thanks for your formula. Really looking for a way to check where my net worth suppose to be based on the salary that I'm having now . Assuming you just have your increment or salary adjustment, are you going to calculate using the new one or the old salary?

This post has been edited by jasontoh: May 3 2010, 12:20 AM

Any increase in incomes might not automatically increase your Net Worth.

At the end of the cashflow, the savings could remain the same. So your Net Worth could remain the same.

It is quite common for people earning let say 10K , but spending more than that each month.

They intend to live a good lifestyle and they always factor in an "expected" future better salary to justify for that.

Any change or improved in saving rate would increase your net worth, provided it comes with positive investment returns.

Just my view.

This post has been edited by SKY 1809: May 3 2010, 12:55 AM

You calculate with your new salary, so that you have a higher target to achieve to befit your new earning power. This formula actually encourage you to save and invest.

Bros...thank you for the comments.
The points stated above are really worth a ponder to me..

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Added on May 3, 2010, 10:59 am


Dreamer, just a question for you, no hard feelings, aight?

You can choose to anwer or not to answer my questions below, just for my benchmarking.

1. How old are you now? age range i mean
2. How much is your family's take home income per month?
3. Which state are you staying in Malaysia?
4. What field and what occupation are you in?
5. What are your goals in life?
6. What do you plan to do with your accumulated savings?
7. What machines do you use to maximise your current wealth?

I hope to get some specific answers from you before proceeding my queries.
Thank You






This post has been edited by stupidbump: May 3 2010, 10:59 AM

Just to share.. Our monthly payment for our house + maintenance is less than 10% of our take home pay. Car expenses also less than 5%. You dont need expensive car and expensive house to be happy, really

We live in a decent neighborhood but even our condo got ppl hving cars that are worth more than the house itself

Gark,

Do u have to factor in rental income and dividend when you use the formula?

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Added on May 3, 2010, 5:04 pmHi Stupidbump,

Maybe you can share with us your answers to your questions first?

This post has been edited by newbie99: May 3 2010, 05:04 PM

Well I do, since rentals form a large chunk of my income, so I included it. Basically the income is as per reported for income tax. But there is probably a lot of formulas out there, this happens to be just what i use to motivate myself.

This post has been edited by gark: May 3 2010, 05:07 PM

Haha.. good on u a property multimillionaire. I used your formula, it is very very close to my asset value. Pretty good formula indeed.

Nah not yet, I believe in asset diversification, remember to minus off the cost of interest and maintenance from your property income when you are using this formula.

Answers are actually already posted in my previous posts here.
Anyway:

1. How old are you now? age range i mean
1. 26

2. How much is your family's take home income per month?
2. 6000nett

3. Which state are you staying in Malaysia?
3. Wife in KL, me in China.

4. What field and what occupation are you in?
4. I'm in engineering. Wife in banking.

5. What are your goals in life?
5. To have a comfortable life, meaning to say basic needs and wants are easily met without needing to purposely plan or save for.

6. What do you plan to do with your accumulated savings?
6. I saved up 40% in local FD, 30% in investments, 20% in Forex, 10% standby savings.

7. What machines do you use to maximise your current wealth?
7. As above.

What should be the most important point is 5, i assume.
The reason for this question is because people have different definitions of comfort.
Some may be satisfied with their current condition, and some might not be satisfied no matter how much they had managed to secure.

One thing I really learned from my working experience in China, and which I really faced the fact is, Malaysians are too comfortable with their present life. Not being racist here, but as non-bumis, we really can say society competition is really not as tough.
It only takes a few more steps to get you ahead, no?
So many ppl tend to stay and hide within this comfort zone, and slowly we lose our basic survival instinct.

My question to Dreamer is:
What is HIS ultimate GOAL of working hard and saving every cent?
What is it that gears HIM to go on with discipline and will?

I admit, for myself, there are times I feel: what's all this? working and saving? being frugal and savvy in all aspects of life?
In the end, my children get to enjoy the life I worked so hard for.
Yes, I admit my parents led a similar life, working hard, saving every cents, and providing us with the best, but I really beg to differ at times.
That's why I am savvy on my own expenditure, but when it comes to parents, wife, siblings and friends, I spent.
It is some sort of gratification to them who made me who I am.


p/s:
If you noticed, I stated I am planning to trade in my wife's 2004 saga.
She commutes to and fro her work place in KL every day, and the manual gear of the saga is dreadfull during a jam(which is always the case).
Her safety is my utmost concern, so I will need a car with good safety features.
Another fact we should face is, Malaysian made cars are really not that up to standard in many aspects.


This post has been edited by stupidbump: May 3 2010, 06:37 PM

stupidbump,

<<1. How old are you now? age range i mean>>

I had worked for 20+ years.

<<3. Which state are you staying in Malaysia?>>

My family had been in Klang for 150+ years.

<<4. What field and what occupation are you in?>>

IT/Data Comm / Telecom

<<5. What are your goals in life?>>

FREEDOM.

Do what I love. Love what I do. Free to choose if I want to work or not working. I want MORE TIME in my life to do whatever I want.

FIRE -> Financially Independent Retired Early. My brother and sister did it at 49. My brother travel everywhere for fun.

<<6. What do you plan to do with your accumulated savings?>>

Retired early and spend it. I do not want to pass it on to my children. I believe INHERITANCE is a CURSE.

<<7. What machines do you use to maximise your current wealth?>>

Asset Allocation Model.

http://www.marketwatch.com/lazyportfolio

<< My question to Dreamer is:
What is HIS ultimate GOAL of working hard and saving every cent?
What is it that gears HIM to go on with discipline and will?>>

It is EASY when you STARVE regularly in childhood. I lost my father when I was 8. My mother had to raise 6 children on her on. Then, you face with NEP

In my working life, I faced successive and multiple recessions: Houston Oil Bust, Texas Saving & Loan Crisis, Asian Currency Crisis, Telecom Bubble and Bust. I have NO JOB SECURITY.

Dreamer

P.S.: You want a better car for you wife. But, 83K car is not something that is reasonable for you at this moment. And, if you have children, do you REALLY want your wife to work?? She MAY NOT earn enough to pay for the child care and all other expenses. It is CHEAPER and BETTER quality of life for her to be a home maker. You LOST that option when you buy a 83K car.

P.S.2: My wife is a home maker. She can make enough to contribute to family financially but WE choose not to do that. We want one of the spouse stay home. It could be me or her. Parenting come first for us.

This post has been edited by dreamer101: May 3 2010, 07:09 PM

Dreamer,

1. How do you define Financial Freedom, is there any minimum target or something to benchmark for this?

2. How near are you to that phase of life? Are you sure you can just let go of everything and tour the world without worries?

3. Kindly define JOB SECURITY if you don't mind.

4. I assume you are between >40yrs old, how old are both your kids at the moment?

For Q1, there are various modes to define Freedom, what I like in particular is the Yap Ming Hui method. How bout you?

As for being a homemaker, I think my wife will never agree, I mean at least at this young age.
For future, it's all uncertain and may subject to changes time to time.

But since you touched on this, have both of you consider the time your wife spent at home, when the kids are at school, attending curricular activities and tuitions through out the week?
Wouldn't your wife feel boring being alone at home?
My parents are both teachers, and I dare to proudly say that my mom did very good in balancing between work and home.
Never did we 3 children need to cook on ourselves or eat out.
And all of us were on scholarships during our uni.
That's why I always believed my parents are a role model when it comes to parenting.

Please advise.