In Singapore, the 5C’s (car, condo, credit card, country club, cash) are on par with your O-level results. That is, they’re all overrated and unfair reflections on your success in life. But no matter how “real” we pretend to keep it, many of us do care about these. So here’s how much you’ll need to learn to own all that:
First, the credit card
This one is straightforward. To qualify for a credit card, you generally need to earn at least $30,000 per annum (unless it’s one of those $500 student credit cards). Foreigners often need to earn about twice that.
For the snobbish, invite-only credit cards, you generally need to earn at least $180,000 per annum; sometimes even higher.
There isn’t really a monthly cost to owning a credit card, so long as you repay it on time. Otherwise, the interest rate is about 26 per cent per annum, and minimum repayments are either $50 or five per cent of the outstanding sum. There’s an annual fee that’s often around $180, but we discount this since you can often waive it with a phone call (except for American Express).
Second, the car
For our example, we’ll use a typical family sedan; something along the lines of a Toyota Altis 1.6 (A). This sort of vehicle has an Open Market Value (OMV) of $20,000 or below. At the time of writing, the typical price for such a car – with COE – is about $91,000.
The maximum Loan to Value (LTV) ratio is 70 per cent of the car’s value. On a seven-year loan (the maximum loan tenure) at seven per cent per annum, this comes to a down payment of about $63,700. Monthly loan repayments are roughly $910.
(There are also other costs, such as the registration fees, etc. But we’re looking at how much you need to earn here, not the total cost).
And if that was it, school buses would be out of business and car park owners would be billionaires by now.
You also need to factor in:
- Annual maintenance (about $600 per year, assuming no major accidents)
- About $2,000 per year for petrol (assuming no long trips to Johor)
- Road tax of about $750 per year, for the given model
- Parking, which comes to roughly $1,200 per year for most motorists
- Comprehensive insurance*, which comes to about $800 per annum for relatively safe drivers
Total monthly cost to owning a car: about $1,356 inclusive of the car loan (this falls to about $446 per month after seven years, when the loan is paid off; but note that maintenance costs are likely to rise too).
*If you use a bank loan for the car, you’re sually required to get comprehensive insurance, rather than Third Party Only insurance
Third, the country club
The average upfront cost of joining a country club is between $60,000 to $75,000 in Singapore.
Per month, however, it’s usually just a membership fee of around $90 to $200 (this varies significantly between clubs).
Fourth, the condo
The typical condo in Singapore costs about $1.5 million. This will get you a 1,400 square foot, mass-market (non central region) property.
The maximum LTV on a a condo is 75 per cent, which means a down payment of at least $375,000 (at least five per cent, or $75,000, must be in cash, and another $300,000 can come from your CPF). That leaves you with a loan of $1.125 million.
Over a 30-year loan tenure, at around two per cent per annum, this is a monthly repayment of about $4,160.
This is where we bring up the Total Debt Servicing Ratio (TDSR). The TDSR restricts your monthly debt obligations – inclusive of all debts plus your home loan – to 60 per cent of your monthly income. Now we know your car loan already adds $910 to your monthly debt obligations*, so your TDSR limit is $5,070.
To pass the TDSR restriction, you’d have be earning at least $8,450 per month.
*This is why you might want to buy the car after you buy the house. If you do that, you won’t have a car loan when working out your TDSR.
If you also want the cash though, you need to be making much more than that.
Excluding all upfront payments, your total monthly bill – comprised of car, condo, and country club – is roughly $6,516 (total the above for reference).
Now if you want to have cash, you need to also be able to save and invest; not just barely stay afloat with payments. That means keeping expenses to below 40 per cent of your monthly income (it doesn’t matter that the TDSR goes up to 60 per cent, that’s not truly affordable).
So first, let’s total up the upfront costs you have to cover, and divide them over a 10 year period (let’s assume you save up each month with the goal of affording them):
- The cash down payment on the condo is $75,000*
- The down payment on the car is $63,700
- Let’s say the upfront cost of the country club membership is on the lower end, at $60,000
That comes to $198,700. Assuming you save up over 10 years, that means setting aside $1,655 per month.
We’ll add this amount to the other monthly costs
Your monthly repayment for the house and car loan are $5,070, as noted above. The peripheral costs of car ownership, such as parking, maintenance, etc. adds another $445.
Next, we add about $140 for a monthly country club membership, and the $1,655 you’re setting aside each month to make the various down payments / upfront payments.
The total comes to $7,310. If this is just 40 per cent of your monthly income, than your total earnings should be in the range of $18,275.
But note that this assumed you’re handling all the costs yourself. If you have a working spouse who handles half the home loan, for instance, this amount drops to about $16,195.
*We’re assuming that, given the income range here, your CPF can cover the other $300,000 or close to it over 10 working years.
But wait, I know many people who earn less, but have all this stuff
The key reason is the 40 per cent expense ratio. If you really don’t mind committing 60 per cent or more of your monthly income to these costs, for example, you could have four C’s at around $10,000 to $11,000. But you probably won’t be able to say you have cash, since there’s a high risk you’ll lack savings.
Can you afford the five C’s? Voice your thoughts in our comments section or on our Facebook community page.
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