Car affordability (Household Income Vis-a-vis Expenditure)

[Steptronic]

There have been lot of discussions in various threads on the car affordability in this high COE season. Based on my assumptions / calculations,

 

Top 24 percentile household income (11,600$ monthly after CPF) may afford 200k car

Top 30 percentile household income (10,300$ monthly after CPF) may afford 100k car

(thanks to Salary.sg for arriving the percentile)

 

My basis are quite generic and may vary from person to person. As a good rule, I have assumed 20% of the income as savings.

 

Household Expenditure basis:

House 1500, Children 2000, Utility 400, Food 1200, Transport 1700 or 3000, Misc 500, Income Tax 1000 Saving (20%)2000, Total 10300 or 11600 (depends on 100k or 200k car)

 

Car Expenditure basis:

Expenditure for 100k (200k) car: Car loan 1000 (2000), Road Tax 62 (150), Insurance 150 (250), Petrol 175 (250), Office parking 100 (100), Home parking 95 (95), Parking coupon 30 (30), Servicing 50 (100), Cashcard 50(50), Total 1712 (3025)

If you want to be more specific, you can workout with your expenditure / savings pattern.

Edited February 23, 2012 by Steptronic

[SimonTan]

Only for the financial experts to hawk their capabilities.

Normal people like me....only see the monthly $800++ affordable or not....if yes..then BUY...if not...then take longer loan period.

Really hard to sell the idea of 20%savings, 20%on car...the 60%on housing and food, etc.

Small time salary people like me earning $2500++ per month will not bother.

Money not enough already...still want to act Atas to listen to financial experts to extort the virtue of financial planning.

irony at best.

 

[Calvin79]

Only for the financial experts to hawk their capabilities.

Normal people like me....only see the monthly $800++ affordable or not....if yes..then BUY...if not...then take longer loan period.

Really hard to sell the idea of 20%savings, 20%on car...the 60%on housing and food, etc.

Small time salary people like me earning $2500++ per month will not bother.

Money not enough already...still want to act Atas to listen to financial experts to extort the virtue of financial planning.

irony at best.

 

Agree agree...

there are always stuffs in singapore that happens out of no where...

Eg. 4 weddings, 3 funerals, 2 one months... and whatever you work out is rubbish liao...

 

 

[Cdior]

Only for the financial experts to hawk their capabilities.

Normal people like me....only see the monthly $800++ affordable or not....if yes..then BUY...if not...then take longer loan period.

Really hard to sell the idea of 20%savings, 20%on car...the 60%on housing and food, etc.

Small time salary people like me earning $2500++ per month will not bother.

Money not enough already...still want to act Atas to listen to financial experts to extort the virtue of financial planning.

irony at best.

 

 

ya , earn not much, still listen to those expert for f. they tell u dont buy car, save all $, u save for many years, suddenly die or got illness, cb nv even get to enjoy the $. die liao, the @@ also canot close!

 

so just spend first!! dont think too much .....

[SimonTan]

Precisely.....using those financial experts guidelines.....

The moment I graduate and start work, I must already be savings up for my retirement.

Havent actually enjoy the cars, the luxury things....already being told the $2500++ salary is not enough for medical and retirement can be a LIFETIME demoralization factor.

 

Financial expert will say earn less, save less....but if saving $300 per month till retirement...and have to forgo cars, holidays, little luxuries....then what's the point of living?

 

For those rich levels....where even after saving 40% of salary, they can still afford a nice cars and nice house in Singapore, then of course got meaning and implement able to listen to financial expert to further increase their assets.

 

One need money to grow money.

For low pay scale people....the financial experts advice is like Kong Jiao Way.

 

 

 

 

[Kangadrool]

The so called "financial exbirds" actually want to earn your $$$ lah. These financial exbirds earn commission through sales of financial products cleaverly packaged in such a way to cleaver you without you feeling the pain. Then, one day you wake up, SMLJ, paying KNNCCB premiums for 20 years, still cannot break even. :angry:

[Maroon5]

There have been lot of discussions in various threads on the car affordability in this high COE season. Based on my assumptions / calculations,

 

Top 24 percentile household income (11,600$ monthly after CPF) may afford 200k car

Top 30 percentile household income (10,300$ monthly after CPF) may afford 100k car

(thanks to Salary.sg for arriving the percentile)

 

My basis are quite generic and may vary from person to person. As a good rule, I have assumed 20% of the income as savings.

 

Household Expenditure basis:

House 1500, Children 2000, Utility 400, Food 1200, Transport 1700 or 3000, Misc 500, Income Tax 1000 Saving (20%)2000, Total 10300 or 11600 (depends on 100k or 200k car)

 

Car Expenditure basis:

Expenditure for 100k (200k) car: Car loan 1000 (2000), Road Tax 62 (150), Insurance 150 (250), Petrol 175 (250), Office parking 100 (100), Home parking 95 (95), Parking coupon 30 (30), Servicing 50 (100), Cashcard 50(50), Total 1712 (3025)

If you want to be more specific, you can workout with your expenditure / savings pattern.

 

very tight. approaching it from a fixed monthly exp angle ie. everything minus the total car exp is alr 5.5K. the 2k savings can hardly cover should any one lose the job. i thk the above also failed to cover parents allowance, insurances etc. thats why middle class in sg is damn cham.

[Zanter]

I noticed the people who can afford often calculate lot or is it they can afford cos they are savvy enough?

 

In any event it issue is do we opt to pay additional 1.3k tax (100k car) or 2.5k tax( 200k car) just so that we can show off?

[Chucky2007]

Percentage of expenditure is for good guide for peope with income that is 200k n above..

 

Every household have minimum expenditures, very difficult to squeeze out more $$. Example if yr household minimum expenditure is 5k, household income is 7k, then surplus.. if earn 15k, then additional savings of 10k per month.. but if apply percentage of expenditure on a 10k income.. definitely not feasible as it will need to more spending definitely. Example. A househod that makes 8k a month& saves 20% will have abt $1.6k savings.. another household having 20k that saves 20% will have 4k savings.. absolute amount different.

 

Got different school of thoughts on these n no right or wrong.

 

Personally me n wife calculate what's our max expenditure for us to lie comforably n not az a miser, then we just save the rest.. got pay raise, bonus or not still spend the same.. i dun really like the percentage theory as if one can earn more, n keep expenses close to budget, if can save 50 or 90% of salary will be good. Sorry i sound paranoid but i m preparing for mid 40s retrenchment..

 

 

 

 

 

[Detach8]

When I was a low wage worker I didn't care and just bought myself a car. It was really crazy and I was living paycheck to paycheck. I even had to "borrow" money from parents to pay annual insurance (~$2K) because I didn't have much savings and on months that I had to pay my road tax I had to really eat chye png every day just to pull through. I had to resort to public transport at times becaues I work in Tanjong Pagar and parking was ridiculously expensive.

 

Now looking back I think it was a mistake for me to have committed myself to a car as I would have saved a SIGNIFICANT amount ($10K/yr!) and would have had more fun traveling and enjoying good food every weekend.

 

I think while a lot of people are thinking spend while we are alive, I would say we need a balance. Whether you will die today or tomorrow we do not know. But what I know is while we are young and still have lots of energy we should strive to work, earn, enjoy and save a little bit.

 

Of course 20% guideline for transport spending doesn't work, but I think the bottom line is to look at how much you save for a rainy day - about $200-500/mth is a good start.

 

Had COE prices not gone up a lot of people would have been in deep s--t when the financial crisis hit late last year and AFAIK alot of my friends in banking industry got laid off. Luckily none of them had a car.

[KARTer]

The so called "financial exbirds" actually want to earn your $$$ lah. These financial exbirds earn commission through sales of financial products cleaverly packaged in such a way to cleaver you without you feeling the pain. Then, one day you wake up, SMLJ, paying KNNCCB premiums for 20 years, still cannot break even. :angry:

my MIL bo tak chek and 101% illiterate, worked as hawker whole life, and whole life no "financial advisor/expert" to help her, end of the day she now retired with passive income enough to live eng eng seng seng... give pocket money to grand children.... happy everyday...

Edited February 23, 2012 by KARTer

[KARTer]

The so called "financial exbirds" actually want to earn your $$$ lah. These financial exbirds earn commission through sales of financial products cleaverly packaged in such a way to cleaver you without you feeling the pain. Then, one day you wake up, SMLJ, paying KNNCCB premiums for 20 years, still cannot break even. :angry:

if really need a car to go A to B and for work, buy the cheapest possible + reliable, just nice. got extra money? buy slightly better one for feeling "shiok" or hao lian, its still ok. No right or wrong answer as long as there's enough money left to save up for children education etc.

Edited February 23, 2012 by KARTer

[Wintersonata]

my MIL bo tak chek and 101% illiterate, worked as hawker whole life, and whole life no "financial advisor/expert" to help her, end of the day she now retired with passive income enough to live eng eng seng seng... give pocket money to grand children.... happy everyday...

 

Because at her times, there aren't that much temptations of iPad, iPhone, multiple holiday trips, good restaurants, chionging pubs/discos, million dollars HDB, etc.

Just honest folks saving money for retirements.

 

With the new generation of SGers, too much wants, luxury products, cars, spas and pampering themselves without much savings.

Edited February 23, 2012 by Wintersonata

[Celicar]

$11K+ monthly income can afford $200K car?!?!

[Steptronic]

$11K+ monthly income can afford $200K car?!?!

In addition, can save 20% too..

[Ril3k]

Because at her times, there aren't that much temptations of iPad, iPhone, multiple holiday trips, good restaurants, chionging pubs/discos, million dollars HDB, etc.

Just honest folks saving money for retirements.

 

With the new generation of SGers, too much wants, luxury products, cars, spas and pampering themselves without much savings.

 

agreed.. to many distractions and ... back then 3k salary is a lot but can buy 4RM AMK HDB at 45k.. monthly salary is 6% of HDB.. now AMK HDB smelly smelly 500k.. the same person mabbe earn 5k now but the monthly salary is 1% of HDB cost.. prices have gone up a lot with real income not catching up.. that's why middle class can only smell the good stuff.. cannot makan

[Sforester]

Would rather look at annual depreciation. Its old school, but its realistic.

SE keep saying annual depre is outdated and monthly affordability is the 'in' thing.. The latter is deceiving since you can attain affordability if you stretch your loan... Can't understand those who bought new cars when the car cost = > their annual salary package (fixed components). For a start, bring back the 30/70 rule where one can only borrow 70% loan.

[Steptronic]

Would rather look at annual depreciation. Its old school, but its realistic.

SE keep saying annual depre is outdated and monthly affordability is the 'in' thing.. The latter is deceiving since you can attain affordability if you stretch your loan... Can't understand those who bought new cars when the car cost = > their annual salary package (fixed components). For a start, bring back the 30/70 rule where one can only borrow 70% loan.

Depreciation was more relevant when COE was low. Now, more than 50% of the depreciation is from COE itself. That is why there is a shift in focus.