My take on the cost of living in Singapore

I wrote 12 pages of stuff on MS Word - I totally flunked the five-page rule at work hoho! But well, this is my blog :) - and I still had things to say so I took out the middle NINE pages :p

So, costs of living.

To me, costs of living refer to everyday expenses. I would exclude housing because including it would just eclipse everything else, and it includes a lump sum upfront and later comes out of CPF, money we don't see. But I had a chat with YX the other day and he disagreed with me. So I'll discuss housing costs here as well for completeness.

The big question: is the cost of living really high and/or increasing?

Housing

So, the biggest cost first: HDB flats; if costs of living bother the 17.6% of households who live in private housing, presumably higher-income group, get a flat. Like my lovely three-room flat :)



Some people will probably whack me but I think public housing today is still largely affordable. By affordable, however, I should put these two words in the same sentence or at least para: "working couple" and "30-year loan period". If it's not explicit enough in "working couple", throw in "continued employment".

A few years ago, I thought we were going to be slaves to our house because Sito was considering a condo. But the PRC lady at the foot reflexology centre helped put things into perspective. She told me that she couldn’t afford an apartment in Shandong but in Singapore, even she could afford to buy a HDB flat after working for a few years, if only she was eligible! Lesson? Buy within our means.

Our marital home is a 3-room flat; we figured we wouldn’t need a bigger place until we had older kids. I guess we could have afforded private housing, but we had to give up on other things – we certainly couldn’t afford the MBA for example! And we don’t want to be saddled with a huge mortgage. So we bought a flat in a nice location. WT bought a 3-room as well but in another location that suited his budget – it was like a third the price of ours!!

That said, I don't think prices should continue to climb further. As a basic necessity, as public housing, the government needs to ensure affordability. Sure, monthly repayments aren't high and most of it should come out of CPF if you buy within your means. But the downpayment could be an issue, especially for young couples since we're trying to encourage earlier marriage right?

Let's do some rough maths.

1978: My parents bought a new three-room flat in Tomato Town for about $45,000 with a single-income household income of about $800. $800 is my estimate; it was no more than $1,000 which was what I saw on his payslip when I was 10 or so. So the whole flat was 56 times of monthly income.

2011a: Google for a resale three-room flat in Tomato Town right across from above flat. $310,000 with dual-income household income of $3,500 - I estimate based on the combined starting pay of two poly grads since they are the largest group of people who attend post-secondary education. (Uni grads are catching up these years.) So the flat was 88 times on monthly income.

2011b: A stone throw away in Hougang, a new three-room flat in Hougang Parkview (what fancy names these days!) launched on 25 Apr 2011 is going for $158,000. So using the same couple as above, the flat was 45 times of monthly income.

Ok, I cannot really compare the above three scenarios since I don't know whether my family was the typical in 30 odd years ago. But comparing new and resale, the difference is pretty stark. Let's kiv this point - difference in price between new and resale - for later.

And, while looking around the DOS website, I also saw that home ownership dropped from a peak of 92.0% in 2000 to 87.2% in 2010. The most immediate thought was that prices went too high during this period. But we had so many unsold flats from the late 1990s that took "more than five years to clear". I suspect two other reasons instead:

a) PRs are included in the figure. And we know the the number of PRs have been increasing. I'm guessing, that more PRs than SCs rent their homes as they come from a culture of home rental, and/or that they are mostly singles so they may not be ready to commit to a home yet or they are ready but cannot buy HDB and cannot afford private housing.
b) Couples are renting while waiting for their BTOs. And BTO sucks.

I can totally understand why people want their own house when they get married and/or before they start a family. A couple who has worked for a couple of years shouldn’t be hindered by the lack of housing when they decide to get married. But having worked for only a couple of years means that they probably couldn't afford a resale flat - see above. But a BTO flat takes another three years at least. Oh but of course HDB has some "advice" for us, like..

Plan ahead? Where is the romance when you apply for a flat before a marriage proposal?! Talk about people remaining single.. Live with parents? This is my favourite – how to do that when four-room flats since the 1990s are the size of my parents' three-room flat?! The next option is to rent, but having been imbibed with the ideal of home ownership, we tend to see renting as wasting money.

Some people said that HDB got their numbers wrong. Perhaps. But I think in the grand scheme of things, having some flats waiting to be sold is better than not having enough flats at the right time. It’s the cost of maintenance vs. social costs – which is more important?

And, it's my belief that the BTO system has contributed to the rising housing costs in recent years. BTO started in the early 2000s. The time lag and insufficient units released must have caused increasingly more people to look to resale when they could not wait anymore. The demand for resale flats, in turn, led to the steep prices. I mean, they are in matured estates and any seller would definitely want to make a neat profit. While we were house-hunting, a sweet old couple even renovated their place to up the sale price. The lag got worse and worse, and suddenly the resale market was booming and the price of BTO flats went up cos they somehow tagged the price to market price, albeit “discounted”. What crap.

The ideal is to sell them based on cost of building, i.e. discounting the cost of the land. To avoid affecting the values of existing flats, valuation should take into consideration whether the cost of the land was built into the original sale price. So, future resale flats should cost less while existing flats will continue to cost more. But this will seriously affect the demand and hence the price of existing flats, especially the more ulu ones. Someone who is desperate to sell would be stuck.

Anyway, we don't know the significance of that discount. If small, nothing changes. If large, the current resale market could diminish significantly overnight and people who could wait will wait for newer and cheaper resale flats. Things may then settle into an equilibrium where existing flats are sold at valuation or lower while new flats get to command a potentially neat COV. Not a good thing for current flat owners. (Btw, I have no intention to sell ours - gonna keep it in the family! Trying to convince Sito next :p)

I guess that's why the next best thing is to tag the prices of new flats to affordability. Seriously, I can't think of any solution to housing. Abolishing BTO may be a good start to address both affordability and availability. I think we are as expensive as we can go already unless real income growth catches up and fast.

Now to the everyday stuff.

Food

Food is only as expensive as our taste.

Simple and everyday taste: My favourite meal is 菜饭!



When I was back in Sg in November, I really wanted to have the mixed rice from downstairs. But cos Mum took me out to lunch every day and she cooked dinner, we often ate at little eateries near wherever we went to run errands. Those were yummy but I couldn’t help craving for my good old mixed vege rice :p Finally had it after a couple of weeks. I also like pork or shrimp dumpling noodles (白的，不要油) and seafood hor fun. All my favourites are so convenient and yummy at $2.70-$5 a pop. I can eat out every day! In fact, cooking for two can cost more, except when we cook things that would have cost a lot more outside, like steak.

Fancier but occasional taste: Of course I like fancy meals too but they are not for every day. And fancy to me means anything from a zi char stall at a coffee shop to a nice air-conditioned place like Sushi Tei or Crystal Jade or something in that range. Oh and Morton’s is good too but not for everyday meals!

Saving money: Now, I cook almost every meal cos eating out is expensive with 9.75% tax plus 15%-20% tips (but we save on tips if we buy to go :p). And contrary to popular belief, not every place in the US serves portions big enough to save for the next day.

Transport

Transport is as cheap as we want it to be and as comfortable as we allow it to be.

Comfort first: In Sg, I took the bus and/or the MRT every day. When I started working in the CBD area, I thought the morning crowds were not as bad as what I'd heard. I took the Yamanote line in Tokyo one morning during peak hour and couldn't help but move with the crowds towards one particular exit and I only managed to inch my way out into the safety of the ticket machine "hole" just before the escalators!

Ok, so by our standard, our system is crowded. But I'm not pissed that they are crowded. I'm pissed that Singaporeans don't know how to live in a real city! Refusing to move in is obviously crowding the area behind the doors. The worse thing is that people are standing in all sorts of pattern – if everyone stood facing the sides of the trains, we can fit passengers more compactly. Once, I had this guy who carried his son’s schoolbag on his back while the toddler sat. The schoolbag took up space that could accommodate another passenger!

Anyway, I find empty trains very sad for a city.

Costs: Um, are our bus and MRT expensive when the most expensive fare is $2+?? I think not. Unless you want to compare to donkey years ago. When policemen wore shorts *.*

And in Singapore, I don't need a car to go to most places. If I need to go to very ulu places, I have access to relatively cheap cabs. Cabs are good late at night. I prefer to fall asleep in a cab – uncle will wake me up when I’m near home! And cabs are affordable. Not like in our neighbouring countries la, but thankfully not like in Tokyo too – I took a cab for 10,000 yen before... BUT! Make an advance booking when you know it’s difficult to call for cabs. And this came up when YX and I were talking last week: they should scrap calling fees. Calling fees affect cabbies’ behaviour and badly!

Here in most of the US, people need a car to access most places and cabs aren't as cheap especially with the tips. I’m thankful that Evanston is compact so that I can walk to the supermarket although this supermarket isn’t cheap too... So yes, cars are expensive in Singapore but not necessary; cars are cheap elsewhere but they could become a necessity. To me, that’s going from $100-$200 a month on public transport to $car+$insurance+$petrol owning a car.

ERP? To cite a cabbie uncle who had to brake suddenly when the car in front suddenly and dangerously slowed down as we were approaching a gantry on the CTE at close to 10.00 pm, “These people ah, got money to buy $50,000 car but cannot pay 50 cents!”

Education

Education costs are affordable from primary school onwards. I don’t know why people keep worrying about higher education costs BEFORE having kids when they are so far away and when the kids can take tuition loans. Not to mention that while it’s the aspiration of every parent, not every child qualifies for university!

Pre-school education: This is sometimes combined with childcare services. It is run by the private sector and the fees vary greatly. Monthly fees range from $100 for half-day (the lowest I found online) to more than $2,000 for full-day. More than $2,000! Of course, most fees are in the lower end. Still, they add up when you have more than one child under the age of seven. Ex-job hazard, but there are structured financial support for needy families to send their children to childcare or kindergarten :p

For childcare, there is also the childcare subsidy, which would have helped more if fees don’t creep up with every increase in the subsidy.. Perhaps another way is to replace this subsidy AND the Baby Bonus cash component with a child allowance up to seven years old, to be used only for the child, like what the Baby Bonus co-savings are doing right now. Yes, I dislike the idea of cash payouts. In fact, the whole money thing monetises the joys of parenthood – hate to hear people say the government is not doing helping enough when parents are themselves responsible for raising their kids* – but the government cannot sit there and do nothing as well.

* And if anyone has a kid cos of government handouts, I doubt his or her suitability to be a parent at all.

I think pre-school costs are high because of the child-teacher ratio. Unlike older kids, young kids are not going to be sitting nicely at their desks all the time lor! And parents like to or feel obliged to send their kids to enrichment classes, which add to the cost. But are ballet lessons really necessary?? I told Sito I just want our kids to go for swimming lessons.

So for the first few years, costs are high. But after that, the costs drop a lot.

Formal education: I remember in my secondary school, which became autonomous midway but maintained low miscellaneous fees compared to my sister’s school, I had to pay $50+ every quarter – in cash after being called up in class cos the GIRO account was flat. So embarrassing I swore I would never let my kids suffer that.

We could somehow manage without financial aid from MOE despite the flat account, having applied and received all sorts of bursary awards from the community centre since primary school. The money paid for my first laptop and insurance when I went to Oxford.

Fees today still look ok. Mostly from the MOE website, per month:
Primary school fees: Miscellaneous of $5.50-$11
Secondary school fees: $5 + miscellaneous of $8-$16
Autonomous secondary school fee: Above + up to $18
JC fees: $6 + miscellaneous of $11-$22

A handful of independent schools charge (much) higher fee in the range of a few hundred dollars a month, but if you go there, you probably have a scholarship or a lot of money to begin with!

Tertiary education: I didn’t check all the individual websites but it’s about $2,500 and $8,000 per year for poly and university respectively, and much, much lower for ITEs. Expensive. But unaffordable? It depends..

I don’t know how but Mother managed to pay the poly fees of my siblings. Even though fees were slightly lower back then, the highest she earned was around $1,000 a month when she helped out at a coffee shop for about two years. She was a nanny for four or five years earning $300 a month. She received $300 a month from her ex-husband since I was born to pay for food and utilities for five persons until their divorce when I was 19. Her alimony for four of us was $500, which often didn’t arrive. Across the street, Yan’s dad used to drive cabs, now semi-retired, a humble occupation but one which supported a four-room flat and three children, and Yan went to poly then NUS.

I guess being thrifty helped. And I didn’t use Mother’s money except for long-distance calls before I discovered cheap calling cards from the UK. I think if I had used her money for NUS, my siblings would need to get loans. But of course, if I wanted to go to NUS without a scholarship, I would have taken a tuition loan, a bank loan since I had no parent’s CPF to borrow from. If I remember correctly from a research I did last year, the monthly repayment can range from $100 or $500 onwards, depending on the loan amount and repayment period. For a fresh graduate, I think that is totally manageable.

Accompanying costs: I think I might be the only person who didn't buy a single textbook in uni! Unfortunately, textbooks aren't cheap. I do know a few who gave tuition while in uni to earn some pocket money. Helps that this is a tuition-crazy country *.* Other costs are discretionary and up to the parents and/or the children to control. These days, we often see young chaps shopping or eating at nice places. I hope it’s because they or their parents can really afford it..

I had a daily allowance of 40 cents to $4 by JC time. I used up everything in primary school as I was always hungry. In secondary school, I learnt not to eat during recess time and I hardly went out so I started to have some savings. When the school moved further away, I usually walked 20 minutes to school while a classmate staying nearer took a bus. I was thankful I didn’t need to spend on transport except when I had to go for Japanese class elsewhere. Even in JC, we had simpler pursuits like McD once in a while. Shopping? Well, a secondary classmate once commented that I was always wearing the same thing! I didn’t want to but I had no choice. I had to live within my means.

Baffled: So what is it about people saying that they worry that they won’t be able to afford their children’s education? Are times really hard now or do people expect prices to stay constant for 20 years or are the voices just louder?

Quality: This is a very important aspect of education. Sito and I were discussing pre-school just yesterday or so. I remember a chart from an overseas study in 2008 or so, that while good pre-school education was correlated with good test scores - academic and cognitive etc - some time in primary school, children who had access to only bad pre-school did worse than those who had no pre-school at all, after taking into account family background.

Currently, pre-school teachers don't earn a lot. An early childhood care and education diploma holder can start with $1,000, way below average! Some of them don't even go into this sector after graduation or leave the sector shortly due to the pay. At the end of the day, passion has got to reconcile with survival. If we pay them more, we can attract more and better ones into the sector. But that would affect the fees of course. The middle segment probably pays reasonably well without charging $2,000, but I think we need to do better. I may give it a shot once I receive my Montessori certificate! :)

Besides the quality of the teachers, class size also affects the quality of teaching. There is a recent suggestion to reduce class size by hiring 30,000 more teachers. This isn't the first time so why haven't the government jumped on this? Cos it's just so difficult to interest people to come on board! Trust me, my husband was a teacher. MOE teachers can be paid quite well. Not the top earners for sure but sufficient. It is just that it can be such a tough and unappreciated job, especially with difficult parents these days and all the non-teaching stuff.

Special education: Someone was telling me that parents of children with learning disabilities would leave Singapore if they could so that their children could get the attention and help they need. In the past few months, I have met at least three wives who work in this area, well-qualified people with the passion. It’s unfortunate that we’re underdeveloped and/or understaffed in this area. Special education in Singapore is not easy to get – waiting list, high costs etc. And there’s the constant worry of integration into society since ours is not a very accepting one. Something to work on..

Healthcare

I’m split on this.

Minor illnesses: Singapore is dotted with private clinics. I still remember 31 Jan 2007 when I had the thumb accident – my usual clinic was closed on Wednesdays so I went to another neighbourhood clinic. Dragging a flu-ish body to the clinic usually sets me back by about $30, including medicine.

I took these walk-in clinics for granted until now. Two weeks ago, I was feeling quite ill – headache, sore throat, runny nose. But I didn’t know which doctor would see me at such short notice – remember, I don’t drive so my options are already limited. And I'm paying through my nose for insurance.

Insurance cost US$4,900 per annum upfront - I probably spend a month's premium here in a couple of years or more in Singapore! I haven’t seen a doc for minor illnesses yet (touch wood!) but the whole miscarriage showed me that the insurance was grossly overpriced. At such a high premium, I still had to fork out an additional US$300 or so in co-pay, deductible and co-insurance, when I had nothing more complicated than a PAP smear, two blood tests and an ultrasound. Ridiculous, especially when I recall that a full health check-up in Singapore, including a PAP smear and a blood test, set me back by only $200 WITHOUT insurance! And I haven't seen the bills for the follow-up biopsy and the LEEP on Thursday yet, which are potentially more damaging to the wallet even with the stupid insurance.

In the UK, I had to make appointments as well. But at least it was free! And when things are free, you just have to lower your expectations; I remember waiting like mad in the clinic.

Major illnesses: This is where I’m less sure about costs in Singapore. I always succumbed to colds and coughs as a kid. Sometimes, if it was bad enough, we would see a doctor but I felt guilty cos it was expensive – even if it was $10 back then, that was a relatively big sum when my daily allowance was 40 cents! I thought and I still think that it’s cheaper for me to die than to drag on a major illness. Based on several recent reports, costs can go very high and people die anyway!

Medisave is good for little things here and there but I don’t think it will be enough for major illnesses. Even with means testing, the lowest income patients still have to pay right? The government should continue to subsidise hospital bills but we can’t have free healthcare either, not sustainable. We ourselves also have to take precautions – in two ways: (a) buy medical insurance which is relatively cheap in Singapore; top up people's Medisave to help everyone get insurance, and (b) eat well enough and keep fit! Taking the tagline from QQ Rice (yummy!), 年轻不养身，老来养医生！

Tax

To complete costs of living, I should probably say something about taxes.

GST: Based on my records between 2003-2010*, I spent an average of about $2,000 every month on F&B, transport, massages, facials, movies, shopping and dancing, excluding allowance to Mother, holidays and downpayment and renovation for flat; mortgage repayment is covered by both our CPF. Of course, I started out spending way less cos I didn’t have $2,000 after CPF and after giving allowance to Mother! But later, well, I had too much discretionary spending :p Thank goodness I still ate cheap! GST constituted about $100 of the amount when GST was 5% and rose to about $130 when GST was 7%.

* I started tracking all my spending by the penny since I worked as a relief teacher after JC! After I started working in 2003, the habit didn't go away. It wasn't until mid 2009 that I stopped tracking individual items; I started tracking what came out of the bank instead, and that was easier. But it was still right down to the cent!

Now, GST in Evanston is close to 10%. And I see tips as a form of tax too – additional 15% to 20% for restaurant meals, cab rides, haircuts, etc. Thankfully, there isn't much for us to do in this little town, and we're too lazy to go to C-town. So I don't shop much. We don't watch as many movies as we used to. And I've convinced myself I don't need spa treatments - I can do my own! (Although during one home pedicure, I scraped a bit of skin off my thumb *.*) And of course, I cook most of our meals. So the two of us spend less than US$1,000 each month, excluding our rent of $1,200+. What an improvement! But tax constitutes about US$120 of that.

Income tax: Many working Singaporeans do not pay income tax after taking into account various reliefs because the first $20,000 of the taxable amount is not taxed. In a way, I'm fortunate to pay a four-digit income tax. Every time I received the statement, I’d think “ouch”. But that’s about 5% or so of my annual take-home income so it’s not like I don’t keep a significant proportion of my income already.

Here, if both of us work here and file tax jointly, more than 20% our taxable income goes to taxes, excluding GST; if only Sito works, more than 15% goes to taxes. Granted, I’m reading off the same graph about quarter page from the top and the base may be somewhat different cos it’s so hard to understand taxes in the US but I don’t see how the gap between 5% and 15% could change much no matter which base is used, not?

Redistribution: Mum just told us that we were eligible for $100 each and Sito got another $100 for NS under the Grow and Share package. That hardly covers the GST and income tax we pay each year, but that’s the point, isn’t it? That those who earn more pay out more than they receive while those who earn less pay out less than they receive.

Based on the table in the website, someone earning below $30,000 and living in a 3-room flat would have received $800. But of course, people can always discount the value of $800 – cash is never enough ma... What is $800? Cannot even pay for mortgage, some may say. But it is my lunch money for 40 weeks of my usual $4 lunch at work in Singapore! And I used to have $3.20 mixed vege ($0.50 more expensive than the one near home!) or $3 wantan noodles, saving some loose change to queue 5 metres for the occasional $4 fish soup. $800 will also more than pay for the $350 income tax on $30,000, which will drop to $200 in YA2012. But I’ve learnt that I’m often more easily contented than others.

But there is a limit to how much I’m willing to pay to contribute to this redistribution of income. Current tax levels are fine. I really don't fancy paying angmoh tax to support people who don't work. I was so totally disgusted reading this.

Finally!

Can't believe I've reached the end! It has gone to 12 pages again! Is anyone still reading? Hoho!

I felt like I was back to my old work, looking for data to substantiate this and that! Of course I didn't do as thorough a job as I would have done if it really was work la.. But it gave me a familiar albeit smaller sense of satisfaction of finding things out for myself. Damn, I love and hate my old job!