Tuesday, November 17, 2009

Monthly expenses vs passive income

One key thing on the route to financial freedom is to be aware of your own expenditure. You maintain your own balance sheet, cashflow and expenses.

So how are my expenses?

Let's have a simple breakdown. I track my daily expenses on an excel sheet, and for the past few months, my expenses on food, phone bills, transports, misc stuff, are <$800. Expenses on food, phone bill, transport, misc: $800 (take the max, although I allow up to $900) For household allowance: $500 CPF Education Loan repayment: $339 Other 'expenses' because of tuition are not included; they are simply deducted from the total amount earned. I consider it a separate entity. So lo and behold, my monthly requirement would be $1639!!!! That seems like a lot :( This is about 23.6% of my take home pay on the better months of tuition (I chose 23.6% because it is a fibonacci retracement number.... lame right?)

Thus, at the moment, to achieve financial freedom just from dividends alone and comfortably, I would need about $2000 worth of dividends on average every month. Grrrr..... At $460 monthly average, including my investment basket, I reached only 25%. That's with a cost of $70k (that means I have $30k stuck in stocks that are red)... And this means, to achieve $2000 worth by dividends alone, I would need at least $210k more in equities at the same yield.

Possible? Definitely! Feasible? Of course! Speed of achieving it? Very slow, but still manageable.

Ceteris paribus, extrapolating my possible earnings from my active work and dividends, I would need at least 3 more years! That would be by age 30.

Furthermore, I'm still thinking of getting an insurance for myself to insure my assets at the moment. That could slow me down a little.

To achieve it faster, I would need to boost my income substantially some way or the other. This will be part of my personal Goal 2010. What my plans are, I will talk about it in a later post. In any case, my main strategy would be to throw active income into passive income generators.

Anyone got any lobang for me?


  1. Hi Jun Wei,

    Are you a full-time tutor? At the age of 27, you are probably doing better than most people I met. I don't remember having any money at the same age.


  2. Hi dream,

    I'm only 26. Full time engineer + full time tutor... I teach almost everyday after work :)

    Just that now is holidays, so I'm taking a much needed break.

  3. your takehome pay is more than $5k which is very much better.

    I'm 26 this year and my take home pay is half of yours.

  4. Hi Wayne,

    that's because I do two jobs. :(

    It can be quite tiring at times.

  5. Everybody would rather have the option of passive income if so possible.


Please Comment >>