Saturday, 7 November 2015

How To Immediately Achieve Financial Independence

Unfortunately, most of us (low to middle-high asset class) slogged our life away for the house (a building in which people live). Let us remove the super wealthy from this equation as property is probably dirt-cheap to them. Let us also neglect the fact that many treated property as investment, instead of residential.

I just did a serious review on my financial status (yes, again and again). I realised if we are to sell away our 4 rooms flat now and buy a 3 rooms flat, we are officially financial independence immediately! So, now the question is, the luxury of having 1 more room worth the extra 3 - 5 years of working full time? The most common answer I can anticipate should be not worthwhile. Ironically, most people will rather work till retirement age to buy as luxury a house as possible.

Alternatively, we can also buy a 4 room BTO flat at around $300,000. We may have to sacrifice on the location and accessibility to amenities compared to my current flat which is beside MRT, shopping centre and future various establishments. For 2nd timers BTO applicant, we will have to keep trying and waiting for opportunity to grab one, which can take many years.

If we want to maximum the effect of profiting from the property, we have to partially cash out it as early as possible. Why? Because the money can provide interest compared to a property stay idle and risk devaluation as lease get shorter and lose it competitive advantages (MRT will be established everywhere in future). However, we are not in urgency to move. We quite enjoy the conveniences that comes along with our current flat.

To make my options even more complicated, I am always a fan of staying near workplace. Since I am not going to work in 2-5 more years (or freelance) and my wife enjoy her work and may work for another 8 to 10 years, I am thinking to move near her workplace. This will save 2 hours of my wife and child’s time, as the childcare will be there anyway.

Summary, if I want to retire immediately:
  1. Stay in current flat and keep trying BTO (4 room). Downgrade again to 3 room during old age. Bite the cherry twice like what my friend said
  2. Buy 4 room resale flat near my wife workplace, where I may not have much profit (unless I bought 3 room resale flat). Thereafter, try BTO (3 or 4 rooms flat) years after
If not, I will just stick my neck out and work full time for another 5 years till 37 years old. I will achieve financial independence anyway. Alternatively, I will work full time for another 2 years, and continue with freelance for 5-8 years to achieve financial independence

My objective is to provide the best for my family. I will keep my options open. What is best for my family than my time and devotion? Here is a video that parents should watch : 


  1. Frugal daddy,


    I did'nt know there's official and unofficial financial independence?

    Actually, if those who own private or bigger HDB flat downgrade to HDB 3 room, many would me in your situation ;)

    Ah! The power of property!

    Most reach the mountain top via career or property ;)

    1. he probably wouldnt be able to do it without the inflation of the property. but we define our own definition of financial independence.

    2. Kyith,

      Inflation in equity prices?

      Inflation in yields?

      Inflation in salaries?

      Is that why landowners and governments fear deflation?

    3. Maybe I should do a mathematical version of this post to prove why is it possible? :)

      Until now, I cannot figure inflation is good or bad in daily life, not theory

  2. HI FD,

    I probably won't do it thought the incentive is probably much greater for me. I think my market value of my home should be near 750k, so I have a profit of 150k. And I will have nowhere to stay. And nowhere to work. And I love my place so much and hate the stress of moving around.

    So, thanks, I'll rather work longer, which is enjoyable to me anyway Haha!

    Why are you in such a rush? 5 yrs is also not a long time. I think we discussed this multiple times already.

    1. Hi LP, that why I have another special project that you know about it as another option. Good to have options in life right? :)

      I can't decide as at now but opportunities will tell.

  3. Our home will have utility value and the replacement home may have to trade off some utility value for some monetary gains. No free value in the market.

    1. Hi CW,

      Nothing is free. If you can let go, everything is free. :)

  4. I moved into a 3 room bto.
    Debt free after 2y9m.

    Would owe money to cpf if i sell coz all paid by cpf. But where i stay haha

  5. Hi Rokawa,

    it is tough for residential property. We can only either keep on downgrade or find a good deal to get cash out.

    Alternatively, rent if it made sense in the long run.

  6. Hi FD,

    Guess to own one house and downgrade to get FD is probably not worth it! Some of my Frds who bought three room with kids eventually regretted because afterall ur kid(s) will grow older, or maybe u will have more kids. U r still young u know...

    Guess I m very similar to LP thinking. if u like ur place so much, dun sell... not easy to find something u like...

    U r still in a very good age!

    1. Hi Rolf

      I actually think we can be equally happy if we can practice minimalist. Actually, that extra 1 room is only good to have. Having say that, there are certain lifestyles that I will try not to compromise. Living in my current flat is 1 of them.

      As for age, no doubt that I am still "young" but we never know when we are leaving this world. So young can be relative to and we would like to make every moment counts, isn't?