How can you pay for trips if your budget is too tight? Certainly, saving for travel money is not an easy task, which is why a sparkle of effort is needed to turn your dreams into reality.
Here are 4 Ways to Boost Your Travel Fund…
1. SELL YOUR UNWANTED OR UNUSED ITEMS ONLINE
Anything that is still in good condition and has a credible brand name will be flocked over by buyers. Even your old furniture can be sold in online sites such as Carousell and Gumtree. Nonetheless, you can always sell your precious items to your close family and friends through a Facebook group.
Rules on selling include: be honest with the product’s flaws, have a simple and accurate description, and charge right for postage.
The popular and safe websites (or mobile apps) for selling are:
Some companies such as Citibank or Virgin offer a significant amount of air miles every time you purchase. Once you have an air mileage credit card and use it abundantly (within your needs), you may even book your flight for free!
Image Credits: William Cho via Flickr
3. CONTROL YOUR UNNECESSARY BUYING INSTINCTS
Stop buying useless things that you do not need. Rethink if buying overpriced coffee rather than making your own coffee at work saves you more. Instead of buying lunch, pack your own lunch for at least 2 months. It will not only save more money, but it will reduce waste. It may seem simple, but these unnecessary expenses add up.
4. BE PATIENT
If you need to purchase something for your trip, wait for sale to come around or buy the last season’s model. When selling your items, you must be okay to accept an item price for less. You must practice the virtue of patience, as you wait for the right time before you may be able to travel.
Supplementary Retirement Scheme (SRS), as the name suggests, is a plan designed to help fund your retirement besides the CPF. It forms one of the multi-pronged approach by the government to help tackle the problem of a silver tsunami that Singapore is facing.
SRS is a voluntary scheme which offers tax benefits in the form of a tax relief for every dollar you contribute up to a maximum of $12,750 per year. There is no minimum amount and you are free to contribute any amount to your account with any of the SRS operators: DBS, OCBC & UOB.
You can also invest the amount in SRS in a variety of instruments such as stocks, bonds, unit trusts, fixed deposits, insurance and many more. You also have the option to keep them as cash which give you a meagre return of 0.05% per year.
One thing to take note is once you have decided to fund your SRS, any premature withdrawal before the statutory retirement age (currently at 62), there is a 5% penalty fee and 100% of the amount withdrawn is taxable.
If you have the discipline to keep it till the statutory retirement age, good news is only 50% of the withdrawals from SRS are taxable or what they call it as a 50% tax concession. And you can spread the withdrawal over a period of 10 years.
In other words, if you have manage to accumulate $400,000 in your SRS at retirement, you can strategically withdraw it over 10 years, i.e $40,000 a year – to pay zero tax. (Since only 50% of the $40,000 is taxable and the first $20,000 is not taxable.
In the cumulative SRS statistics published by MOF, less than half of the account holders are aged between 21 – 45 in December 2013. Only 11% of those those aged between 21 – 35. While it is understandable that these group of people are financially strapped due to family commitments, it would be wise to apportion at least part of their income to SRS to enjoy tax benefits.
While some may argue that the tax benefits are merely deferred and locking your cash up till the statutory retirement age of 62 is not attractive, a closer look into the numbers may prove otherwise.
Let’s take a look into a few scenarios, making certain assumptions.
1. 32 years old earning $50,000 a year
For someone who is taking home $50,000 a year, the tax payable is $1,250 ($550 for the first $40,00 + 7% of the next $10,000)
If he/she decide to fund the maximum SRS amount of $12,750, the taxable income would be reduced to $37,250 and the tax payable is therefore $453.75 ($200 + 3.5%*$7,250). The amount of tax saving amounts to $796.25.
a. If he/she decide to contribute all the way to 62 (30 years)
Assuming a growth of 8%, the SRS account would be sitting at a value of $1,444,360.94. There are many different way on how the withdrawal can be made. For now, let’s take it as an equal drawdown over 10 years, or $144,436 per year. Half of this amount is taxable which is $72,218. With a tax rate of $550 for the first $40,000 and 7% for the next $32,218, we get $2,805.26 of tax.
You might think that’s a huge amount ($28,052.60) considering that you have to pay it over 10 years and it is something which you could avoid should you not contribute to SRS as capital gain on shares are not taxable.
But let’s not forget that you also save $796.25 of tax per year for 30 years (assuming same income and tax rate), and should you have been more responsible with your finance to grow these extra savings at a modest rate of 4%, these savings would miraculously amounts to $44,657.63. That’s not too bad isn’t it?
The only drawback is you cannot withdraw from your SRS before the statutory retirement age without incurring any penalty fee.
b. If he/she only made a one time contribution of $12,750
Again, let’s assume growth is at 8%, $12,750 of contribution will grow to $128,298 in 30 years. This amount by itself will not be taxed if you are wise enough to spread the withdrawal over 10 years. (or 4 years)
Don’t touch it for 30 years? For a humble amount of $12,750, i will take it. Tax savings? $796.25. Opportunity cost saved? $8,021 at 8%, or $2,583 at 4%.
2. 32 years old earning $150,000 a year
For income earner in the higher tax bracket, the tax benefit are more evident than those in the lower bracket.
Tax payable without SRS: $7,950 for the first $120,000 + 15% of $30,000 = $12,450
Tax payable, contributing $12,750 to SRS: $7,950 for the first $120,000 + 15% of $17,250 = $10,537.50
Tax saving: $12,450 – $10,537.50 = $1,912.50
a. If he/she decide to contribute all the way to 62 (30 years)
Same as (1), you will be taxed at $2,805.26 per year for 10 years.
Which will you choose? Save $1,912.50 per year for 30 years or $2,805.26 per year for 10 years?
It’s a no brainer.
b. If he/she only made a one time contribution of $12,750
Do i even need to calculate this?
So is SRS a sure win?
The thing to note in both examples is if you have other income sources at your retirement and say it adds up to $150,000. This would have cost you $12,450 of tax. If you add your SRS’s taxable amount of $72,218, you may end up in the higher bracket with $222,218 of chargeable income. Doing the maths, your tax payable end up to be $24,749.24. ($12,300 of additional tax per year for 10 years) More than what you would have saved from the tax.
In addition, your children will not be able to claim for ‘Parent relief’ since your income is definitely more than $4,000 a year. (But look, i can’t fathom the idea of someone retiring with less than $4,000 of income in a year anyway)
Some may also argue that you can make a cash top-up to your CPF and enjoy a risk-free rate of 4% in your Special or Retirement Account. (Currently with a $7,000 cap for yourself and $7,000 for your family members)
There are many other scenarios which may throw SRS out.
But the trick here is to keep the value of your SRS within the lower tax bracket while maximising the tax benefits on the other hand. (A yardstick of $440,000 will not cost you any tax since you can spread $400,000 over 10 years and the remaining $40,000 is not taxable once it is reduced by 50%)
I am also assuming you will not be letting your money sleep in your SRS account. You need to make it work harder than the 0.05% that the banks currently offer while managing the exposure to your risk and age profile.
An option is to consider using your SRS to buy into the STI ETF.
Various people have an impression that Yoga is expensive or that Yoga is only for the elites.
Compared to a monthly gym membership, perhaps Yoga can be considered expensive. Clothes, mats, and other props can be costly. But, if you prioritize the practice of awareness rather than flaunting for fashion then you may find yourself saving a lot more.
As Yoga teachers, you get to immerse yourself deeper in the practice and its doctrines. You become less interested in wastefulness and more interested in conservation. With that in mind, here are 6 Simple Ways to Save Money as a Yoga Teacher…
Image Credits: The Cosmopolitan of Las Vegas via Flickr
1. SAVE ON YOGA TOPS
Jessica Matthews, writer on “American Council on Exercise”, suggests that you can wear a simple tank top a fitted and stretchy t-shirt, or a sportswear top, whether or not they were designed specifically for Yoga. An inexpensive top or shirt can be just as comfortable as the designer ones.
2. MANAGE YOUR INCOME AND EXPENSES
In order for you to decide on how much you shall save, first you must be aware of how much you are spending. The typical things you will track as an expense are costs on training, travel, clothing, and books. The challenge now is for you to choose on which expenses you can reduce.
3. MAKE YOUR OWN YOGA PROPS
Abby Lentz, founder of the “HeavyWeight Yoga classes”, shared some Do-It-Yourself Yoga Props.
a. Yoga Blocks
It is possible to make a handcrafted Yoga Block if you have bulky, unused or old books, yellow pages, phone books, and dictionaries. Just slip a pace of hard cardboard halfway between the pages of the book to make it sturdy and tightly tape the entire areas close.
b. Yoga Straps
You can make your own Yoga strap by knotting two neckties together. You may also use a second-hand bathrobe sash from the thrift shop as branded Yoga straps are just made with cotton straps with buckles.
Image Credits: Roy Blumenthal via Flickr
4. PRACTICE AT HOME
Doing Yoga at home along with a video or audio companion is definitely more cost-effective than attending classes. The Internet has an abundant index of Free Yoga videos, health information, and Yoga poses catalog that you may use.
If your studio benefits include free classes, then take advantage of it. Aside from exercising, you will get a chance to study how different teachers conduct their classes.
5. INVEST IN THE BASICS
Two dollars for a mat and a dollar for bottled water may not seem like a lot, but it will quickly add up over time. Instead of buying or renting cheap Yoga mats, invest on a sturdy one that you can use for a couple of years.
Instead of buying mineral water on the studios you practice, buy a cheap water bottle and refill your own water at home. Through these steps, you will not only be able to save money but you will also be able to reduce waste.
6. Aside from saving money on Yoga, you can also save money through Yoga!
The definition of INVESTMENT is as follows: it is money committed or property owned that is acquired for future income. It has two main classes namely: fixed income (e.g., bonds or fixed deposits) and variable income (e.g., property ownership).
Mark Tier, the author of “The Winning Investment Habits of Warren Buffett & George Soros”, argues that they are seven deadly investment sins that unwary investors make.
What is observable with these so-called sins is that they are all irrational investment beliefs. Once you clear your judgment, you can make better financial choices.
SIN #1. BELIEVING YOU NEED TO PREDICT THE MARKET’S NEXT BIG MOVE
Warren Buffett does not believe in predicting the market’s next big move and nor does he care about it. He says that “forecasts may tell you a great deal about the forecaster; they tell you nothing about the future”.
SIN #2. GURU BELIEF
Some people are tempted to listen to “money gurus” that are believed to predict the market. “Media gurus” make their money from discussing about investments, selling their advice or charging fees to manage other people’s money. But, their followers are not all rich. If you could predict the market’s future, wouldn’t you shut your mouth and make a pile of money yourself?
SIN #3. “INSIDE INFORMATION” IS THE WAY TO MAKE REALLY BIG MONEY
Study the companies’ annual reports as Warren Buffett did. He, along with George Soros were once unknown in the investment scenes and now they are making a significant amount of money. You can work your way up the ladder without having to pay for inside information.
SIN #4. DIVERSIFYING
The source of Soros’s success is exactly the same as Buffett’s: a handful of investments that produce huge profits. Knowing the right companies to allocate your money to takes guts, wits, and luck.
SIN #5. TAKE BIG RISKS IN ORDER TO MAKE BIG PROFITS
Like entrepreneurs, successful investors know it is easier to lose money than it is to make it. This is why…they are more concerned with not losing money that making them.
SIN #6. SYSTEM BELIEF
Some people believe that a certain “system” can guarantee investment profits. It is human nature to find patterns and look for the formula. But, by doing so, you are just flushing your money down.
SIN #7. BELIEVING YOU KNOW THE FUTURE AND BEING CERTAIN THAT THE MARKET WILL PROVE YOU RIGHT
This is far more tragic than just believing you can predict the future. The investor who falls under the spell of the seventh deadly investment sin thinks he already knows what the future will bring. Hence, he or she might gamble it all and eventually lose everything.
Image Credits: reynermedia via Flickr
These sins tempt investor and cost them an awful lot of money. This is why it is tantamount to avoid these cognitive illusions.
If you are planning to buy your first property, you will be made to get accustomed to a term call “TDSR” or Total Debt Servicing Ratio (besides SIBOR, LTV and the likes) introduced on 28 June 2013. Not surprisingly, 1 in 3 home buyers are not familiar with how the TDSR works.
TDSR is one of the 8 rounds of property cooling measures enforced the the Monetary Authority of Singapore (MAS) since the financial meltdown of sub-prime crisis in 2008.
It has been more than a year since it was implemented and has since impacted the property market in Singapore, dampening demands and preventing housing price to go out of control.
What is TDSR?
To ensure financial prudence in borrowers, a framework is set to ensure that a borrower cannot has a outstanding debt repayments more than 60% of his gross income. This not only prevent home buyers of excessive gearing, it also ensure that financial institutions (FIs) are able to manage their credit risk appropriately.
Outstanding debt repayments encompasses ALL your financial liabilities which includes and are not limited to: student loan, credit card debt, car loan, personal loan, etc.
When your overall debts cannot exceed 60% of your gross income, it also means that if you are earning a gross income of $3,000 a month, your total debts cannot exceed $1,800 (60% of $3,000). That is to say if your existing outstanding debts amount to $1,000, your mortgage repayment should not exceed $800 – calculated with the higher of actual interest rate or 3.5% (for residential properties) or 4.5% (for non-residential properties). On top of that, there is a Mortgage Servicing Ratio (MSR) of 30% that stipulates that the amount that goes to service your mortgage should not exceed 30% of your income. In this case, your maximum allowable repayment is $900 (30% of $3,000).
* If you are a variable income earners (e.g commissions, bonus), there is a 30% haircut which means only 70% of the income is used in the calculation of TDSR.
Why is there a need for TDSR?
With low interest rate and growing investment appetite, coupled with excess capital liquidity – it could be an eerie reminiscent of the housing bubble in 2006 which eventually goes burst and causes mayhem. Fortunately, Singapore has various cooling measures which include a limit on the maximum loan tenure, loan-to-value limits and imposing stamp duties such as the Additional Buyer Stamp Duty (ABSD) and Sller Stamp Duty (SSD) and has managed to curb inflating property prices. There is also a stricter liquidity rule which requires bank to hold quality liquid assets such as cash and government bonds to withstand an intense 30-days shock witnessed in the 2008 crisis.
What happens after several rounds of cooling measures?
As one would have expected, property prices has been heading south and dampening demands has led to many unsold units. The URA’s Private Residential Property Price Index has fallen for the fifth consecutive quarters in the latest URA’s flash estimate published in 2 January 2015. For the entire year of 2014, prices has fallen by 4%. There are anecdotal evidence that if prices fall by 10%, Singaporeans have the liquidity and means to snap up the units!
Housing loans has just increased by 6 per cent in September 2014 from a year ago, a stark contrast of the peak of 23 per cent in August 2010.
The property market is still lackluster and Minister Khaw Boon Wan seems adamant to keep the property cooling measures, home buyers may find themselves landing a good deal with 50,000 new units to be completed over the next 2 years.
Anna Agoncillo
MoneyDigest
