Buying a property with our own money, that’s most important. Our own money should usually come from savings over a couple of years. It can come from our parents too but should not be from some other speculative sources. This ensures the property price do not rise suddenly. When property prices rises too fast and too soon, the only reason is because the demand has suddenly increased and this will usually push up prices because supply of houses cannot suddenly appear. Building a new property takes years. How do we save? One way we could save a lot of money is by NOT buying a new smartphone every year or every time a new model arrives.
Briefly, if you did not know that there are good smartphones below RM1,000 then this may be an article for you. 😛 Google for names like Huawei Nova, OPPO or Vivo will reveal many good choices. By the way, even iPhones have below RM1,000 models yeah, not just that latest XR or XS. Assuming we ‘die-die’ must buy that above RM4,000 phone, do we know what have we lost in terms of ‘property?’ Take a look at the image. RM4,000 phone divided into 12 months is equal to RM333 per month. RM333 per month is enough to pay for an extra RM70,000 in property price. If the price per sq ft is RM500, then RM70,000 meant we could have bought a property which is 140 sq ft bigger. This is a size of a medium room in a condo of less than 1,000 sf. So, is it a choice between a RM4,000 phone or an extra 140 sq ft room?
Thinking slightly ahead, if we are a junior executive with our first property, an extra room of 140 sq ft would allow us to rent that room out for an extra RM500. That’s an extra RM6,000 per year which is actually enough for ANY model we like. Alternatively, this rental over a period of 5 years is equivalent to RM30,000 which helps in downpayment for a second apartment which meant that our property investment journey have started. We always blame the money being smaller today but the truth is, 20 years ago, this opportunity that I have just mentioned is not easy to do. There’s just not enough demand and supply then. The world have changed, especially where personal finance is concerned. Think about it and keep using that smartphone in your hand carefully. Cheers.
written on 20 Nov 2018
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Good discussion but I think people still commit for this as short-term loan rather than a long-term loan.
You are right Fong
Buy phone is easy, buy house is too difficult.
Yes, agree. Phone has instalment plan which almost guaranteed to be approved…
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