20 October 2006

Interesting Model For A Life

The article below is from AsiaOne. It is about Mr Melvyn Chew, someone who semi-retired at age 37. He is not fabulously rich - simply very clever at living very cheaply.

I don't really admire his lifestyle, but I do admire his courage in daring to live a life so different. I definitely understand what he's trying to say in Point 7. In my experience, people do often somehow expect you to want for yourself what they want for themselves.
You can enjoy retirement on $20 a day
By Narendra Aggarwal - Oct 20, 2006
Not many people are as lucky as Mr Melvyn Chew, who quit full-time work at age 37 to go into semi-retirement.

He decided to drop out of the rat race to opt for an easier pace of life.

Trained as a lawyer, he worked as a legal assistant in a law firm here for just three years when he decided to move on to acting and teaching, which he has been doing on a part-time basis since.

"I started thinking about not having to work full-time since I was in my 20s," Mr Chew, now 42, tells AsiaOne in an interview.

Said the bachelor: "Many people don't want to go to work every morning because they do not enjoy what they are doing. Coming from an acting background, I have many friends who, like me, don't like the idea of being tied down to full-time work.

I don't have a budget. I think I don't really have to work at all, if I keep expenses at this level. But it's fun to do so.

"You do not need a lot of savings to go into semi-retirement. But I made sure that I paid up my housing loan before I decided to take it easy.You don't really need huge savings to retire. I think if you have $50,000 put away, semi-retirement is a workable option.''

Being single helps as this frees him from the financial commitments which a married man would be saddled with. He gets by on less that $20 every day. Breakfast is at home, lunch costs about $2.50, and dinner, $3. Add another $3 for transport. "I really don't understand what people spend on - you do not need much money for
your day-to-day expenses," he says.

He loves cooking, so he doesn't eat out as often. But once a week, he gives himself a treat and goes to "a nice place to enjoy the finer things in life,'' he confesses. And despite his modest means, he has been able to suss out cheap holidays to Chiangmai on $200, Australia for $1,000 and even toured France and Spain for less than $2,500.

As for getting around, he uses public transport. "I live in a small walk-up private apartment, the size of a three room HDB flat, in Novena. So it's very convenient taking the MRT.''

His part-time jobs - teaching business law at Singapore Management University and Nanyang Polytechnic and some acting assignments - provide him enough to get by every month.

"My income is irregular. Some months it is in the hundreds, while in some other months I make a few thousand. I really don't keep track of the money. All I know is that I spend less than what I make.''

But he has to manage his tight budget carefully. "Budgeting to me is a game of some sort, while most people find it a chore and give it up after a while,'' says Mr Chew, but he declined to say how much of savings he has and how that money is invested.

What about the future? And old age?

"I do not worry too much about the future. I am a Christian and believe that God is looking after me''

Some tips from Mr Melvyn Chew on how to stretch a shoe-string budget:
1.You don't have to be rich to retire early. Such a sad fallacy. You simply have to reduce your expenses without really reducing your quality of life. Hence, if you can get along very well on say $1,000, you really don't have to be a millionaire.

2.To be totally retired can be boring and costly. So, it's best to have some work to do. If your work brings in say, $400 a month, you only need $600 from your savings or investments.

3.Decide which are the things you value most, and which give you the greatest pleasure. Go for what is most necessary to you and allocate money to these first, for example, a home, food, transport etc.

4.Be creative. If you are a sociable person, then share a home with someone. Or if you have your own place, rent out your rooms. If not, rent a room. Cook your own meals - that saves heaps.

5.Enjoyment. Very necessary. Otherwise what would life be? If you want to retire on very little, you probably wouldn't have much money here. Well, I decided to be radical. Sold off the TV. No more plays and theatre. But there are many cheap and enjoyable things to do. I've gone on $200 trips to Chiangmai, and $1,000 holidays to Australia. And a one-month trip to France and Spain for less than $2,500. Including delicious food, ballet performances, the Louvre (free first Sunday of the month), many other museums, the French Alps, Gaudi's Holy Family Church, Euro Disney, etc.

6.Cheap enjoyment? The credit card 1-for-1 offers are great.

7.It is also best to keep your careful ways to yourself. Most people don't seem to appreciate that you don't have to work while they do. They'd rather that you were mortgaged to the hilt. Don't let them know your careful ways or they'll use it against you.

8.So, look rich. But don't spend much. Do a bit of research. Take the Crystal Jade restaurants, for example. If you're just having dimsum, go to Crystal Jade Palace. The dimsum there costs about 15 per cent more than the dimsum at Crystal Jade Kitchen. But the service and ambience and general good feeling you get is more than worth it.

9.Oh yeah. a bit about cutting down. Clothes. Fifty years ago, people used clothes till they were worn. Nowadays, people seem to throw away brand new clothes. Well, I have items which are 15 years old. And people compliment me on them. Another thing, if you can do something yourself, then do so. I cut my own hair. So, I only go to the barber once or, at most, twice a year. But make sure doing it yourself doesn't cost you more in the long run, for example, buying all sorts of ingredients just to make a cake that can be bought more cheaply.

10.One more. Turn a hobby into a money maker. I happen to know Thai. And I enjoy teaching. I've been teaching Thai at various community centres - mainly for the fun of it.

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Anonymous said...

Rule #1: Don't get married.

At least, don't do it in Singapore. Don't get ensnared to the island by HDB loans.

Christopher Ng Wai Chung said...

This is the kind of article more Singaporeans should read of. I think Melvyn is a lot more interesting than many other Singaporeans who are featured in the news who are lauded because of their financial position. ( This unfortunately, includes myself. )

It's true - you can live on $20 a day. However, I have to disagree with Melvyn's idea that $50,000 is quite enough. Typically, to maintain your portfolio at its same value year after year, experts do not recommend drawing down more than 4% of your portfolio, the other caveat is that it has to be invested in a balanced portfolio of assets. So if you crank the numbers you will need about $180,000 invested intelligently in the markets to get your $20 a day.

From this analysis, Melvyn probably has a lot more than $50,000 and his occasional shots of sporadic income is important because there will be times when he gets sick or when his family needs help.

Personally as a dating single male, keeping expenses within $1000 is challenging, I expect a husband to find keeping withing a budget even harder. I have occasionaly exceeded $1200 because of them movies and cheap forays to Botak Jones. But at the end of the day, people can CHOOSE to be single.

Nothing in life must be set in stone. And one of biggest tragedies of being a Singaporean is that often our goals are those dictated by those around us.

Anonymous said...

Article on Melvyn Chew: "His part-time jobs - teaching business law at Singapore Management University and Nanyang Polytechnic and some acting assignments - provide him enough to get by every month.
I've been teaching Thai at various community centres - mainly for the fun of it."

Christopher Ng: "his occasional shots of sporadic income is important"

Yes, I agree with Christopher's observations. Think the main reasons Melvyn can survive as he did is because:

1. He is single, no/limited family commitments.

2. His home is probably fully paid-up, he did not mention anything about having to service a housing loan. This is really uncommon for the average Singaporean. If so, his job in his early career must have paid well-enough for him to achieve it.

3. Based on some old info, teaching/tutoring at tertiary institute fetches good money, around $50/hr for a part-time tutor. Again, this is an option open only to those highly-skilled and experienced persons, not for the average Singaporean.

4. Teaching at various community centres do bring in good money too. Do not sniff at that kind of income, each participant pays only a small fee but the class size is big, and so the total amount adds up. However, this is again not something the average Singaporean can do easily, because their long work-hours make it hard to develop a hobby to that level of expertise.

That said, I admire Melvyn for his courage to live as he see fit. My current lifestyle is somewhat similar, and yes... I can do it only because I was lucky to be employed for the few years of booming economy (for which my small HDB is fully paid), and have some income from part-time work. However, this is not a long-term solution for my case... it is to give me time to start some businesses.

As explained above, Melvyn's model is only feasible to professionals of his (and also my) generation for we were lucky to get into the workforce during the boom years. For those unfortunate graduates of gen-X/gen-Y and thereafter, they are struggling to find/keep jobs to simply repay their university loans. For the majority who are busy serving their HDB loans, his model is unworkable.

Anonymous said...

Interesting article. It is also interesting to see that there are some who agree in principle with how Melvyn lives but start to pick out reasons and 'confounding' factors as to why others cannot do the same.

Really interesting.

Anonymous said...

Another thing besides rule #1: don't buy 4D or Toto or bet soccer or engage in any other gambling activity. Everytime I see long queues outside Sg Pools outlets I can't help but snigger at those deluded fools. In the end, Sg Pools win. The people who betted lose. You only need to know simple laws of probability to figure this out.

Anonymous said...

Will Melvyn's model work for me? My terrace house is paid up, but property tax is $1000 a year. Debt free, since car paid out of cash. After taking out my CPF, there's $800,000 in FDs and 4 mutual funds. But try as I might, 5% low risk return is still an unattainable Holy Grail. Maybe I should ditch my family and kids and disappear into a foreign land.

Anonymous said...

this model is more of an exception than an achivable norn for many. before the rat can seep bugardi, he has to first drink plenty of sewege water.

Anonymous said...

This is an inspiring article. Mr Wang, thanks for posting it. I'm not one who normally reads local newspapers (because they are generally full of PAP crap).

I too have been thinking of going into semi-retirement to pursue what is truly important to me, time with family, reading for self-learning, but have not had the courage to deviate from the beaten path. I'm married with no kids and in my 40s, but my wife shares my philosophy - that we can get by on part-time/freelance work and savings as long as we live within our means. I reckon I can get by on $1000 since there is enough money in the CPF to pay off the HDB loan and I don't own a car.

It is good to hear about the experience and thoughts of others who are currently living this lifestyle or used to live this lifestyle.

Anonymous said...

be more 'inspired' tomorrow when ST will psycho you into believing why early retirement is such misery lol.

too many catch on to this idea is gonna make a lot of rich folks very unhappy if you know what i mean?lol.

we are a dot, but we have big egos thus account for big rich ideas that need serf inputs to survive.

so you can only speak for yourself and shall remain an unrealizable dreams for many...

Anonymous said...

I think it's not economical to cook your own meal after factoring the water needed to wash the pots and pans, the kitchen counter, the oily floor. There is also alot of upfront investment involved, gas stove, pots and pans, kitchen appliances, codiments etc. I think economical rice at $2.50 for two greens and a meat dish is definitely a time, water, electricity and money saver

Anonymous said...

Clearly, the last post demostrates the kind of understanding that exist in Singapore about Opportunity costs, which is a rather fuzzy one. It's economical to buy economic rice only if when not doing so would incurr for you a greater cost than the $2.50.

It's talking about semi-retirement anyway, not someone in the midst of a busy career or trying to survive.

Anonymous said...

To quote an acquaintance who finally settled into London after great sacrifice: "if you REALLY WANT something, you can get it". The answer lies in a balance of "when? what? and how?".

It is easy to plan and stick to a strict budget IF you are:
(a) healthy (i.e. no costly medical expenses),
(b) do not have dependents (spouse, parents or children), and
(c) do not have outstanding loans.

Of course, one has to do one's own maths, each person's circumstance is different. Melvyn's example may be fairly simplistic, probably just to give an overview illustration. He has not mentioned recurring costs like Town Council fees, property tax, income tax (from previous year's income), etc. Nevertheless, it is possible to pay for such known costs with proper budgetting. The only concern is a sudden unexpected big-ticket item, e.g. HDB upgrading or serious illness. One will need to set aside a certain emergency sum and/or have insurance for such matters.

It is advisable to try adjusting to a tighter budget while still working so that the lifestyle adaptation will be easier when one finally go into semi-retirement. E.g. Take public transport (skip the taxis), cut down to $3/meal for working lunch, cook and eat dinner at home, etc.

To anonymous at Saturday, October 21, 2006 10:56:51 PM: It is possible to get free pots, pans, cultery as gifts from friends/relatives/neighbours if one would be humble enough to ask for them ;-) Cooking utensils, gas stove-hob and other fixed costs like furnitures (bed, wardrobe) should be already covered before entering semi-retirement. Dirtiness of kitchen depends of the type of cooking you do. For me, 1 pot to cook and 1 bowl/plate to serve everything. Mostly steam, stir-fry or boil and I don't usually spill when I cook, so cleaning-up is fairly easy. Considering the costs of vegetables at $0.65-$1+ per packet that can be spread over several meals, cooking may still be the cheaper option.


Gilbert Koh aka Mr Wang said...

Actually what I find appealing is the idea that the semi-retired folks can turn your hobby or hobbies into a money-making venture. In other words, you do what you like to do, and you earn money at the same time.

Eg if you play a musical instrument, you could perform Friday & Saturday nights at a pub. Perhaps give music lessons on Tuesday & Thursday afternoons. The rest of the week is free time for yourself.

If you're into photography, you can do freelance assignments at weddings or for ad companies / magazines. You do only as many assignments as you feel like doing.

I knew a young architect (who designed big commercial buildings) who freelanced by designing people's homes (anything from 4-room HDB to nig landed properties) and seems to have a lot of fun doing it. This perhaps is the kind of stuff that he could if he, like Melvyn, ever "semi-retired".

moomooman said...

I think he forgot to mention writing for Asiaone....

Anyway... $2500 for 1 month trip to France and Spain?

Assuming the cheapest air ticket you can find...say $500 (say you beg for it) you left with $2000 to spend on lodging and food. That works out to approximately $67 a day or maybe $35 EURO.

Assuming he eat bread costing 5 EURO a day... and he doesn't take public transport in Euro (he walk from Airport to Hotel)

$30 EURO a day for lodging?

I'm not too sure if YMCA is that cheap in Europe.

moomooman said...
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