Game of SMRT

Have you heard of some whizkids that are able to fly for free in the US? They do so by taking advantage of the frequent flyer schemes and some flaws in the pricing system of flights. Based on this I started wondering if we could also game the local MRT system and ride for free? Well, no such luck here! But using the various incentives out there, we can reduce our MRT fares considerably. Let's see how this can be done!

 I will use myself as a case example. Every Mon-Fri, I travel from the East where I stay, to the West where I work. Each of these trips cost me $1.88, so per day its $3.76. Assuming 20 working days in a month, that will be $75.20. Assuming I spend around $4 on weekends, and 4 weekends in a month, the total bill for public transport works out to be  $107.50 per month. Woah, that's a lot of money!!

Now, let's look at ways to reduce this amount.

POSB Everyday Card
 Do you know that POSB Everyday Card offers 100% cashback on your MRT and bus rides every Friday? Utilizing this scheme, I can reduce my MRT fares on Fridays to $0. So the new monthly transport fare will be 107.5 - 4*3.76 = 92.46. Good? This is a 14% reduction already! Let's continue.

Free Early Morning MRT Rides
Do you know by exiting before 7.45 am on weekdays at any of the 18 designated MRT stations in the city area, your ride will be free? I stay in the east and work in the west, so this means I can travel from the East every morning, exit at Tanjong Pagar MRT station, and re-enter and continue on my journey to the West. In doing so, my morning train fare is cut from $1.88 to $1.32, or a reduction of $0.56 everyday. So the new monthly transport fare will be 92.46 - 20*0.56 = 81.26, which is a 24.4% reduction in total. Let's continue.

Travel Smart Scheme
I have joined the Travel Smart scheme for a few years already. I am a platinum member meaning I earn more points for every km I travel. On average I earn around $8 in rebates every month. So the new monthly transport fare will be 81.26 - 8 = 73.26.

OCBC Frank Card
Using this card, you will get rebates of 6% if you spend >500 a month using this card, and if you use Flashpay auto top-up. Well, for me I don't spend so much on this card but I still get rebates of 0.5%. So the new monthly transport fare will be 73.26 - 0.5%*81.26 =  72.85.

Thats about it. We have reduced the fare from 107.5 to 72.85 which is a 32.2% reduction in monthly transport fare!

There are other techniques like taking advantage of a full refund when the MRT breaks down, but such chances are not frequent so I don't bother about them for now.

Retirement 2

In my last post, I wrote that there are two schools of thought to retirement:

• 'Extreme savings' : You scrimp and save so that you can retire early
• 'Work to enjoy life' : You continue working and have a late retirement to enjoy a comfortable lifestyle

 After thinking about it, perhaps there is a third school of though to reconcile both and have the best of both worlds. That is, the 'financial freedom' school of thought:

• 'Financial freedom' : You work to achieve financial freedom. This means you have earned enough to maintain your current lifestyle, and you are able to quit if and when you want to. You don't necessarily have to retire from work, but the point is you are no longer working for the money.

I think this is what I should aim for! Financial freedom!

So now, a quick analysis on how far I am from financial freedom:

Monthly expenditures (this includes everything from groceries to monthly mortgage to child education expenses and insurance policies) = $4100

Monthly passive income (from stocks, bonds, savings deposits, fixed deposits etc.) = $391

Hmm...well...seems I have some way to go...

Retirement

I had an interesting conversation with my wife last night. I told her that I will like to retire early, and accomplish this by extreme savings ie. eating out less, buy cheap stuff, cut back on holidays etc. However, my wife disagreed with me and said she will rather work longer so that she can enjoy life ie. eating expensive food if she feels like it, maintaining present lifestyle and so on. It seems these are two different schools of thought.

The 'extreme savings' school of thought partly came from the articles I read on Marketwatch, one example is:

http://www.marketwatch.com/story/how-to-retire-early-35-years-early-2014-01-17

From the article:
"One secret to their success? They live on very little for a family of three: about $25,000 a year. They own a car, but mostly bike. Dining out is an occasional luxury. And shopping for stuff? That’s best avoided. But their philosophy goes beyond mere scrimping, says Mr. Money Mustache. It’s about enjoying life with less."

But after listening to my wife and her arguments I'm no longer sure which school of thought I belong to...hmm....

Cost savings of using LED lights

LED lights are more expensive than fluorescent lights, but are there any cost savings in the long run? How many years it takes before we spend less using LED than using fluorescent? Let's do a spreadsheet analysis to find out!

Assumptions:
Cost of LED light 24.6 W = $35
Cost of fluorescent light 32 W = $6.80 (Sheng Shiong)
Electricity tariff = 0.2233 per kWh
Days in a month = 31
Hours light is switched on per day = 6
Both the LED and fluorescent light does not spoil in the time period we are analyzing.

So there you have it! In the spreadsheet below, we showed that the initial cost of using LED is higher than fluorescent. However, after 92 months (7.7 years), the total cost of using LED will be less than the total cost of using fluorescent.

This is analysis of using LED purely from an economic standpoint, and it is up to you to decide whether LED lights make sense for you or not :)

	Cost of LED light 24.6W	Cost of Fluorescent 32W (Sheng Shiong)
0 months	35	6.8000
1	36.02173148	8.1290816
2	37.04346296	9.4581632
3	38.06519444	10.7872448
4	39.08692592	12.1163264
5	40.1086574	13.445408
6	41.13038888	14.7744896
7	42.15212036	16.1035712
8	43.17385184	17.4326528
9	44.19558332	18.7617344
10	45.2173148	20.090816
11	46.23904628	21.4198976
12	47.26077776	22.7489792
13	48.28250924	24.0780608
14	49.30424072	25.4071424
15	50.3259722	26.736224
16	51.34770368	28.0653056
17	52.36943516	29.3943872
18	53.39116664	30.7234688
19	54.41289812	32.0525504
20	55.4346296	33.381632
21	56.45636108	34.7107136
22	57.47809256	36.0397952
23	58.49982404	37.3688768
24	59.52155552	38.6979584
25	60.543287	40.02704
26	61.56501848	41.3561216
27	62.58674996	42.6852032
28	63.60848144	44.0142848
29	64.63021292	45.3433664
30	65.6519444	46.672448
31	66.67367588	48.0015296
32	67.69540736	49.3306112
33	68.71713884	50.6596928
34	69.73887032	51.9887744
35	70.7606018	53.317856
36	71.78233328	54.6469376
37	72.80406476	55.9760192
38	73.82579624	57.3051008
39	74.84752772	58.6341824
40	75.8692592	59.963264
41	76.89099068	61.2923456
42	77.91272216	62.6214272
43	78.93445364	63.9505088
44	79.95618512	65.2795904
45	80.9779166	66.608672
46	81.99964808	67.9377536
47	83.02137956	69.2668352
48	84.04311104	70.5959168
49	85.06484252	71.9249984
50	86.086574	73.25408
51	87.10830548	74.5831616
52	88.13003696	75.9122432
53	89.15176844	77.2413248
54	90.17349992	78.5704064
55	91.1952314	79.899488
56	92.21696288	81.2285696
57	93.23869436	82.5576512
58	94.26042584	83.8867328
59	95.28215732	85.2158144
60	96.3038888	86.544896
61	97.32562028	87.8739776
62	98.34735176	89.2030592
63	99.36908324	90.5321408
64	100.3908147	91.8612224
65	101.4125462	93.190304
66	102.4342777	94.5193856
67	103.4560092	95.8484672
68	104.4777406	97.1775488
69	105.4994721	98.5066304
70	106.5212036	99.835712
71	107.5429351	101.1647936
72	108.5646666	102.4938752
73	109.586398	103.8229568
74	110.6081295	105.1520384
75	111.629861	106.48112
76	112.6515925	107.8102016
77	113.673324	109.1392832
78	114.6950554	110.4683648
79	115.7167869	111.7974464
80	116.7385184	113.126528
81	117.7602499	114.4556096
82	118.7819814	115.7846912
83	119.8037128	117.1137728
84	120.8254443	118.4428544
85	121.8471758	119.771936
86	122.8689073	121.1010176
87	123.8906388	122.4300992
88	124.9123702	123.7591808
89	125.9341017	125.0882624
90	126.9558332	126.417344
91	127.9775647	127.7464256
92	128.9992962	129.0755072
93	130.0210276	130.4045888
94	131.0427591	131.7336704
95	132.0644906	133.062752
96	133.0862221	134.3918336
97	134.1079536	135.7209152
98	135.129685	137.0499968
99	136.1514165	138.3790784
100	137.173148	139.70816

Hello World!

I started this blog to raise awareness of simple ways you can do to save money and result in larger cash flows for investments/savings/enjoyment etc. As to the name, 'opti' is short for 'optimization' and as its name suggests, we aim to optimize our personal finances. Stay tuned for our articles!