How do you buy a house at a young age in Singapore and stay debt-free?

  • admin

    How do you buy a house at a young age in Singapore and stay debt-free?

  • admin

    Be very disciplined and save aggressively, don’t compare with your neighbors/friends/relatives, invest your earnings/savings, live within your means, and most important of all, have fun!

    The first principle is to earn more than you spend. When you make more than you spend, you’ll become debt-free. The following are some suggestions and strategies.

    Be very disciplined and save aggressively- buy a cheap house that you can afford. Let’s say you’re looking at a home for 400K (of course, if there are even less expensive houses on the market, buy it!). Save 50–65% of your salary towards this. Say you earn 40K a year, so you’re saving 20–26k a year to pay off this. Reduce your taxes by putting extra money into your CPF, which you can then use to pay for your house. IRAS / CPF allows you a maximum of $7k top-up a year (this is in addition to your regular CPF contributions), which reduces some amount of tax for you.

    Eat and drink cheap. Don’t go to Starbucks. Go to a local coffee shop. Or even better, buy cheap coffee packs and prepare coffee at home! Eat economic rice (or something cheap at a hawker center), instead of going to a restaurant. Buy a cheap Android phone, or an even less expensive shell phone ($20-$40 at 7/11?). Use your phone until it is spoilt. Do not be tempted by upgrading every two years (or whatever the telco is offering). Find cheap schemes to get even less expensive rates.

    Take the cheapest transport, either MRT or bus.

    If your party leaves early, because if you go late, you’ll have to take the midnight bus or take taxies such as Grab and Uber, and these will cost you more, compared to regular buses or SMRT. Also, if you’re going to a party, make money while doing it! Adam Khoo, in his younger days, did this (look up his story). Alternatively, just party at home!

    Find a partner who shares or espouses these same values. When dating, your objective is to find a partner who has these values. You’ll need to carry out conversations over some time to determine whether your partner has these values. If not, it’s time to find another date. ;o)

    Keep studying to upgrade your skills so that you can earn more at the next job. Use your Skillsfuture credits (if you’re older than 25) to pay for your new courses. If not, get your employer to pay for whatever you want to learn (if possible). Don’t stay at the same job for too long, because most companies will not give you a pay increment of 10–25% in 1 or 2 years after working there, so, unless you’re getting good pay increment, move on to a new job after you’ve learned enough. If possible, never share your salary history, because companies want to suppress your salary growth, so they can and will keep paying you less. So this means in your first ten years, you’ll need to have worked at five or more companies. Never reveal your intentions of moving on to a new job, not to anyone.

    Don’t own a car. Cars are notoriously expensive in Singapore unless you’re prepared to get somebody to subsidize it. If you want, be a driver on the Grab/Uber route, where, based on my recent calculations and sharing on Quora, you’ll need a minimum extra of $20-$40 that you can throw away and spend on a car, so you’ll need to drive a few hours every day to earn that extra $20-$40. You’ll need to do this for about 5–10 years to own that car. And buy an old car, not a new vehicle. That means purchasing that car when it is at least five years old.

    Exercise and stay healthy, so you don’t have to see a doctor. A short 5-minute visit at the doctor is going to cost you between $30-$80 at least.
    Invest in stocks, unit trusts that can earn you a few more percent each year. You’ll need to learn how to do this by reading books or getting someone to teach you this. Visit the nearby NLB branch and borrow a few books (or more), so you don’t have to buy books to learn this.

    When shopping for stuff (food, groceries), compare aggressively, and buy things on discount. Also buy during Great Singapore Sales, where there are great discounts.

    Have fun when doing all the above. If you’re not having fun and are miserable, what’s the point of being debt-free?
    When reading and considering the above, consider the principles (eat and drink cheap, save aggressively, invest your earnings, live within your means, keep upgrading your skills, stay healthy, have fun), and not the specifics (the examples I’ve given) of what I’ve listed, so that they can be adapted to whatever new situations and requirements you find yourself in.

    I hope the above helps.


    Trade your short term fun and leisure for long term benefits.

    I will relate to you my personal experience.

    I started a very young family at the age of 22. When all my peers were blowing off the money on clubs and drinks, I was toiling away trying to climb up the corporate ladder, saving every penny I had because all of the money went towards my young family. My ex-wife then didn’t work, and I had my parent's support. So my career peaked fast within less than two years in Malaysia, where I was earning top dollars for my job bracket, that I had to move to Singapore to take advantage of the currency strength of Singapore. At age 23, I was earning quite a hefty sum compared to peers at that time (mind you this was nearly ten years ago with lower inflation rates and when property prices were still hovering below SGD500K). Once again, I hit a plateau, I knew I needed to get into the business, and there I was starting a business at age 24.

    I bought my house at age 24, and I had to put in all my savings into a down-payment. After deducting every payment I needed to make for installments, I would usually have nothing left at the end of the month. I remembered it clear as day, I was always waiting anxiously for my month-end payday to arrive. Some months, I even had to skip lunch itself to make ends meet. I never want to go through that again.

    How did I do it? Well, see if you can do this for a year. I am not trying to humble-brag here but to show you that this is possible, and I did it when I was 24 as a Malaysian working in Singapore.

    • My daily expense was SGD4 for food. I alternated between an SGD2 McChicken burger or an SGD2 Nasi Lemak (with chicken wings). That same stall is still there in certain MRTs, but I think it’s not SGD2.50 - SGD3.00. I packed my dinners back so that I can drink water at home.
    • I stayed near my workplace and commuted only using public transport (bus or MRT if required).
    • I missed out on holidays, never traveling back to meet my family for about two years. So CNY, Christmas, birthdays, and everything all festive seasons spent alone.
    • No holidays, vacations, or solo trips for myself. Believe it or not, I only started traveling, realizing my dreams, just this year, at the age of 32. But now I can do that worry-free and have no debts like most of my peers.
    • I took on extra gigs, coding, designing websites, and configuring enterprise software so that I could earn extra money. I usually sleep at about 3–4 am because of this extra work and had to be at work at 9.30 - 10 am. This bad habit has stuck with me until today, where I can never go-to-sleep early.

    I know of others who have done the same too, and even in more extreme circumstances.

    So ask yourself, are you willing to go through the necessary sacrifices?