FIRE-itis. An imaginary disease that when afflicted, causes the infected to pursue early retirement immediately regardless of their financial readiness. Full-time employment is no longer an option.
Consider this a sequel to the blog post that I wrote last year. In it, I briefly assessed my situation with regards to the possibility of pursuing early retirement regardless of my level of readiness.
It was an extremely fun and humbling exercise that revealed a possible route in a world that is presumably free from COVID-19 despite relying on sub-optimal numbers that were not yet built for the Financial Independence, Retire Early (FIRE) movement.
To be honest, it is very much like being in a roleplaying game.
My “skill-tree” in 2020 was built in such a way that tackles the issue of asset accumulation efficiently. Since then, I have somewhat “re-specialized” (re-spec) by getting my skill points “refunded” and re-allocating them in a manner that focuses a lot more on cash-flow as well.
It was no coincidence that the significantly higher amounts of alternative income in the months of August to December 2020 followed after my FIRE-itis blog post in June 2020.
On the work front, let’s just say that I have been assigned a role that I didn’t particularly enjoy since August 2019. I suppose I did OK and somewhat thrived in delivering what was expected of me, but it wasn’t exactly what I had signed up for.
I wasn’t happy. *Sigh*
So yes, I’ll be honest and admit that it was a deliberate pivot – and the landscape in 2020 just happened to be particularly suited for this pivot. No doubt, it was tough burning the candle at both ends. Juggling full-time work for salary increment and promotion while learning and hustling for alternative income. In a COVID-19 year, no less! I am such an idealist sometimes.
Anyway, I had previously mentioned three areas of concerns that immediately needed to be addressed –
- CPF and Debt
A lot has changed in one year (more like 9 months, actually) since I wrote that blog post. I think it would be interesting to re-visit this and take a look at how much has changed?
The answer – a lot.
These platforms are a little more suited for bite-sized engagements and little posts (e.g. portfolio updates, interesting reads, non-finance stuff) and you’ll find that the update frequency quite a bit higher over there.
Building on top of a basic safety net that I have built for my mom and dad, I have transferred an additional $20,000 into my mum’s CPF-RA (from my CPF-OA) on 14th January 2021.
With that $20,000, I helped her to apply for an increase in monthly CPF LIFE payout from $305.28 to $420.41 which is nice – a 37% increase.
Not a lot but hey, little bits add up to a lot over time. Over the course of two years, that’s a total of $60,000 that I have transferred into her CPF-RA.
Meanwhile, their tenants have been stuck and working in Singapore since the onset of the COVID-19 situation, so nothing has changed on that front. This brings in about $900 each month for them.
By combining the three streams of income (mom’s CPF + dad’s CPF + rental), it will allow my parents to receive $1,700 in total cash inflow per month. This is possible even when I’m no longer able to contribute any form of allowance to them in the short-run.
This $1,700 is critical for sustenance (daily and medical expenses) and enables them to minimize or even avoid drawing down any of their savings.
True, this $1,700 may not seem like a lot. A study last year indicated that a single elderly person living in Singapore requires $1,379 a month for basic needs. For a married couple, the number is closer to $2,300 – and it appears that we’re short by about $600 dollars.
Luckily, my brother will also be able to help by contributing towards my parent’s retirement needs which helps to make up a large chunk of the difference. Not luxurious, but it will do.
Both my parents have five-figure sums in CPF-MA which go a long way towards buffering against their recurring health-care needs.
Oh. No kids apart from a lovely little gem we sponsored in Vietnam, in case you’re wondering.
FIRE-itis Score : 2 / 5
Note to self –
Comfortable assuming status quo but can be improved to reduce reliance on rental income or sibling in case one of the income streams were to cease.
2. CPF and Debt
First, let’s take a look at the snapshot of my CPF funds at the end of 2020.
One year on, there has been significant improvements of about $45,000 if we compare December 2019 vs December 2020.
As always, this number is inclusive of funds that I have already transferred to my parents because this is still my money. Overall, this represents a significant buffer against unexpected situations.
- CPF Ordinary Account – Reserved for HDB loan and partially invested via Endowus
- CPF Special Account – 4%
- CPF Retirement Account (Mum) – 4% to 6%
The number will continue to compound although it will be depleted by outflows via monthly HDB loan repayments and mum’s CPF LIFE payouts. If I had wanted to, I can always repay my HDB loan immediately but I chose not to.
All things considered, a pretty good CPF-related situation to be in right now.
FIRE-itis Score : 4 / 5
Note to self –
Worry-free at the moment and happy to coast with it. If the eventual financial situation allows for it, aim for Enhanced Retirement Sum (ERS) which is 1.5x of Full Retirement Sum (FRS).
The hardest of the three to tackle is obviously cash-flow.
My favourite tool for budgeting is You Need A Budget (YNAB) and it has been phenomenal since 2013. I know where everything goes, how I can optimize and exactly how much I’d need to live at different comfort levels.
This could mean the difference between a budget for the zombie apocalyse, economy rice i.e. “cai png” or an eco-luxury pool villa life!
The obvious idea of leveraging on geo-arbitrage was explored in my previous blog post and it relied heavily on the idea of generating cash-flow from our existing HDB property. Not ideal, but it will do when push comes to shove.
Nevertheless, it was humbling because it clearly highlighted the deficiencies and how I wasn’t ready at all. It would literally be living life on the edge!
If you recall the alternative income chart that was earlier in the blog post, the first / second / third / fourth quarters showed a huge uptrend in the total amount that was generated – from $522.11 in January to an amazing $2188.00 in December.
As chance would have it, I had purchased a copy of “Quit Like a Millionaire” by Kristy Shen and Bryce Leung aka Millennial Revolution on the 22nd March 2020. A piece of the puzzle clicked into place when I read about the idea of building a yield-shield and cash-cushion.
The amazing thing about personal finance is that we’re constantly learning about new things and re-calibrating our response to the idea of FIRE. Suddenly, the survival rate for this bout of FIRE-itis seems to have increased significantly.
- Alternative income has experienced an enormous increase and is expected to be able to sustain monthly expenses assuming status quo.
- Yes, there are expected to be good months and bad months.
- I have buffered a significant sum of money termed as “income support” that is equivalent to 50% of expected monthly expenses for a duration of 36 months i.e. the winter, if or when it comes.
- Excess alternative income from good months will be deposited into this “income support” bucket, or into income-generating assets.
- The shortfall will thus be drawn from the “income support” bucket on bad months.
FIRE-itis Score : 3 / 5
Note to self –
Not taking anything for granted and keeping expectations extremely conservative for now. Stay relentless.
Saving the best for last
For some of you super awesome folks that always come back to my blog AND follow me on Twitter, you might have an inkling of what is to come.
Like I’ve said, I am a lot more active on Twitter. Will I crack the legendary five-figure for the month of March 2021? Which in itself is pretty insane, considering that my take-home salary is closer to half of that. Check my Twitter account tomorrow to find out!
We shall see. Let me collect a few more months of data. Till then, I’ll see you in the next blog post!
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Hello! I’m Kevin, Turtle Investor
At the age of 30, I am the Personal Finance Blogger who laid claim to a negative net worth of minus $25,755 – and decided to turn things around.
- Seven years later in 2019, I hit CPF Full Retirement Sum (FRS) of $176,000 without making a single cent of CPF top-up.
- In eight years, I added $453,000 to my net worth (excluding the value of my HDB apartment).
- I reached over $12,000 in alternative income in 2020 i.e. money that was not earned as a result of my full-time job.
I am married to a lovely wife and that means dual income with no kids. In my free time, I chase miles so that we can fly in business class. My hobby is making pocket change off this blog and sharing everything I know with you!
Supporting My Family Who Is Impacted by Covid-19
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