5 Secrets For Sustainable Spending

Spending sustainably comes down to living within one's means. Living beyond this may mean a lower standard of living in the future, as debts need to be serviced. Some sacrifices initially may actually mean a higher level of spending can be sustained in the future. This is much more preferable to being at risk of debt collection

Make a Budget

Old habits die hard, so it's worth fostering good habits early on. This starts with making a budget. One should set aside sufficient funds to handle standard expenses, like rent or mortgage repayments, credit card payments, car repayments, car running costs, council rates, electricity, water, other utilities and the like. Additional funds should be allocated for unexpected expenses like car repairs.

Hopefully there are still some funds left over. The remainder should be split between current discretionary spending and future savings for a rainy day. One needs to enjoy life and spending for enjoyment is part of this, but it needs to be kept in check. As long as one can consistently allocate even a small amount of funds to be saved, then one is on the right track.

Investments

Allocating savings into an investment fund is a good way to save for the future. Long term stock market returns of around 10% per annum are well above average deposit rates, and well above the inflation rate. Consistently adding savings to such a fund is a positive way to build up a nest egg. What has this got to do with spending you may ask? As your investments start to perform, the investor bears fruit in the form of managed fund distributions or dividends, and capital growth.

Spending From Surplus

These dividends, distributions, or profits taken on an investment can be allocated to spending. The difference to standard spending is that one is spending from a surplus. The investment can be left to continue to grow and provide further distributions in the same way that a tree continues to bear fruit. Re-investing distributions should mean even greater distributions (and hence even greater spending capacity) in the future. Continuing to regularly allocate savings to such investments will also enhance this capacity.

Save First, Spend Later

The strategy above admittedly does require a little sacrifice at the outset. One needs to curtail immediate spending for the benefit of future spending. The alternative of going into debt is a poor option. If consumer spending is financed by debt, then this debt acts as a restricter on future spending.

Credit can indeed boost spending, but this does have a limit. The more one spends on credit, the more future income one is then forced to apportion to paying off debt. Importantly, getting into the habit of spending more than one earns can make breaking this habit very difficult.

Purchase Outright

For all but the most expensive items (like a property!), one should really be able to save up funds to purchase them. It may be tempting to go out and buy the latest Plasma TV on credit, but waiting and saving will mean no interest payments, and the TV will also probably be cheaper by that time!

No one wants to have to negotiate debt repayments with debt recovery companies. Keep control of your finances by following the above steps to sustainable spending. Stick to a budget, and allocate some funds to savings and investments, so that future spending is worry free and enjoyable.

[This is a guest post]

Saving for Child's Education

After many months of saving, I am glad to say that the amount in my child's POSBKids Savings Account has reached a nice tidy sum of $3,600. I have basically been putting all the red packet money that he has been receiving into his bank account. (For those who live overseas, the Chinese have a custom of giving these red packets which are filled with money for occasions like Chinese New Year, birthdays, etc).

So all these money has come in handy. Unfortunately, if I do a straight line projection, it shows that I will still be severely short of the $50,000 that I hope to accumulate by the time my child hits the age of 18/20.

Sagrada Familia at Barcelona

I read the news recently about the Sagrada Familia in Barcelona being restored and how the first mass is going to be conducted there. I remember travelling to Barcelona sometime back and took some pictures of the Sagrada Familia. It is really an impressive looking building. Too bad the pictures I took had all these hovering cranes around the building as they were still working at restoring it.

Deepavali

Happy Deepavali to all my readers.

It is a rainy day and it helps that it is a public holiday so we can all sleep in. Wanted to go to a park or a beach but since it was raining, we decided to stay home.

I bought breakfast back for the family. Nice yummy food. Comfort food in fact. Nice hot coffee from the coffee shop, wanton mee, carrot cake and chui kui. Yummy!

Going to tuck in now, and catch up on my soccer news which I have missed for the past one week.

Standing Out from the Crowd

Everyday I board the MRT, I cannot help but notice how packed it is. But more importantly, I can't help but notice how small I am in this world.

The MRT is filled with people dressed in their office wear, all geared up to go to work. Some of them look confident. Others look tired.

When I look out of the MRT, there are blocks and blocks of HDB flats. Each block probably containing close around 1000 residents. And I am but an insignificant person living in one of those flats.

It makes me wonder how different I am from each of these individuals. How do I make myself stand out from the crowd? Am I a better person compared to the person standing next to me? How do I differentiate myself from all the other people around me? In short, what are the skills and experience I need to acquire to ensure that I stand out from the rest of the crowd?

Of course, there are the days when I just can't be bothered and resign myself to fate that there are probably zillions of people who are much better than me in every aspect. And perhaps, I should just be contented to live my quiet and peaceful life... Not to seek fame and fortune but to live a quiet and happy life with my family.

Best Breakfast Places in Singapore

I enjoy having a sumptuous breakfast on Saturdays and Sundays. It is the only time that I can relax and take my time to eat my breakfast. Every weekend, I search for the best breakfast places in Singapore to eat.

I am not looking for good food per se because the whole of Singapore is filled with good and yummy food. What I am looking for is a place with reasonable food, reasonable service and most importantly - a nice ambience.

Usually, this are cafes where there is the thick aroma of coffee that welcomes you the moment you open the door. In Singapore's sweltering heat, it helps to have some air-conditioning though I am generally alright if the place is outdoors but with some shade. There are usually newspapers or magazines for you to browse and the place shouldn't be over crowded.

I know of a few nice places. This includes Toast at Takashimaya, Olio Dome and of course Casa Verde @ Botanic Gardens. If I am just looking for a quick and satisfying meal, I will usually head out to Toastbox. The problem with Toastbox is it is usually jam packed on weekends and the ambience isn't great. At Toastbox, I will usually just have Nasi Lemak and a cup of coffee.

Where can the best breakfast places in Singapore be found? Anyone care to share their selection?

Update: Best Breakfast Places in Singapore (Part 2)

Over-Indebtedness Puts You At Risk of Becoming Obese

by Matthew Stathis

The worldwide economic crisis has caused an enormous number of citizens in high-income countries to become over-indebted, even though they may have severely reduced their standard of living. The rise in personal debt has corresponded with a parallel rise in stress levels, resulting in widespread lack of sleep. Now it appears that over-indebted people have one more worry to add to their list: they are at risk of becoming obese.
A study was conducted in Germany a few months ago that showed a relationship between over-indebtedness and obesity. Dr. Eva Munster and her research team at the University of Mainz have concluded that extreme debt obligations result in more than twice the likelihood that a person will be obese or overweight as compared to a financially stable person
The study defines over-indebtedness as the inability to make timely payments on one’s debts due to the imbalance between income and the cost of living. Low socio-economic status has long been considered a contributing factor to the worldwide epidemic of obesity. However, a direct relationship between indebtedness and obesity had not been considered prior to Dr. Munster’s study.

Are Over-Indebted People More Likely to Become Obese?

The goal of the study was to measure the general health of individuals who are over-indebted. Two German population-based surveys provided the data. The first was a telephone survey, which included 8318 respondents from the general population. The second was a questionnaire distributed to the clients of debt counseling centers, to which 949 over-indebted people responded. Both surveys obtained information on socio-economic status including age, sex, education and income. Information was also collected regarding body mass index (BMI, a measure of obesity that is based on one’s height and weight), smoking behavior and depression levels.
Males and females were found to be equally over-indebted. Many of the traits that are common to people of low socio-economic status were present: lower education levels, lower income levels, greater depression levels and greater quotidian tobacco consumption than would be found in the general population. However, the over-indebted subjects were younger than people of low socio-economic status usually are. Also, they were more likely to be overweight or obese.

Obesity A Corollary To Poverty

Previous studies have shown an association between low financial status and being overweight. However, this is the first study to show that financial belt-tightening, in the form of serious indebtedness, could result in a literal belt loosening. One reason is the diminished access to healthy food, researchers speculate. There is an inverse relationship between a food’s caloric content and its cost. High calorie (energy dense) food, such as fatty snacks and sweets, generally costs less. On the other hand, low calorie (low energy) food, such as broccoli or carrots, tends to cost more.
Impoverished people tend to eat low-cost food that has a high-energy content while they simultaneously reduce their energy expenditure – participation in leisure and social activities tends to be curtailed when on a budget. Another factor that contributes to higher BMI may be psychological distress. A person who is in a depressed emotional state may increase food intake to achieve a sense of well-being. Therefore, over-indebted individuals may self-medicate with food to improve mood.
In Germany, approximately 7.6% of households are over-indebted and 33% of residents are obese. Germans have the reputation of being the fattest people in Europe and the government has launched an anti-obesity campaign to address the issue. If it is determined to be so and if the German government is successful in its campaign to end obesity, the people might experience an improvement in their financial condition.
It is not clear from Dr. Munster’s study, however, what the causal direction of the observed relationship between a man’s waistline and his financial stability is. It is not clear if being indebted is a risk factor for becoming obese or the other way around. It has been suggested, for example, that obese individuals face greater difficulty finding a job that will pay the bills, simply because they face psychological (negative body image) and social (prejudice, stigmatization, etc) barriers that are uncommon to normal-weight people.

Extrapolating The Data

The medical community is considering whether the results obtained in the German study can be applied to other countries. In the United States, where the number of people who are over-indebted is on the rise, the study’s results are cause for concern.
Currently, obesity in the United States affects one in four people. The Center for Disease Control and Prevention (CDC) describes America as obesogenic, which means that society has created the conditions that promote obesity. This is due in large part to the congressional farm bill, which subsidizes the production of fattening food like corn and other grains, keeping unhealthy foods inexpensive. There is also a suburban culture that mandates long commutes by car and discourages walking. Furthermore, many jobs in the modern, technological workplace are sedentary.
Could over-indebtedness be another obesogenic factor in American society? According to a recent report, more Americans filed for bankruptcy during March of 2010 than any time since the overhaul of the federal bankruptcy laws in 2005.

Implications of the Obesity-Debt Link

The German study shows that over-indebted people are more prone to obesity. If this is true, with over-indebtedness on the rise in high-income nations, a corresponding rise in obesity should be anticipated. Since obesity is associated with serious health problems such as heart disease, stroke, type 2 diabetes and certain forms of cancer, a healthcare crisis should also be anticipated. As developed countries struggle to mitigate the parallel epidemics of obesity and over-indebtedness, access to healthy food by people of low socio-economic status must be considered a top priority.

Matthew Stathis, PhD, is a young entrepreneur who recently left his career as a research scientist at Washington University in order to learn and apply simple business and investment principles. Alarmed by rising rates of obesity in the United States, he maintains a blog where he shares and explains scientific information that can address this issue. Matthew has identified 3 clinically researched diets in the US, including Weight Watchers which you can read about here. Other diet programs that Matthew recommends and features in his site are Medifast, Bistro MD, Diet to Go, and eDiets