HDB Chronicles - Short Sharing Session - Financing and Expenditure for the Renovation, Furniture and Furnishings

This article is part of a series that shares my journey to becoming a homeowner for the first time and will be among the final posting of the series.

If you regularly follow up on HDB renovation articles on Facebook and other websites, you wmay come across the costing as well. It is known that the overall cost of just renovations and furnishings less furniture and appliances could easily hit SGD 50,000 or more (even more if you are going to hack walls and do more exotic work!).

Readers of my blog may know through my posts that I bought and live in a resale flat. We were very fortunate to come across a unit that is kept in good condition. This saved us a lot on cost as it meant no hacking work and no spending on tiles. Additionally, my wife and I opted to keep the home simple and cosy. While ultimately your home is yours to do what you wish to, I advocate minimising spending in favour of investing. Haha.

Altogether I think I spent about SGD 30,000 - 33,000. Where possible, my purchases were funded using credit cards (OCBC Cashflo where installment is otherwise not possible or not worthwhile as retaining balance in the bank is crucial). Otherwise, it came from cash from my wife's savings, my savings as well as liquidated positions in my holdings previously.

Tips on Saving Cost

• Some of my LED lights and long fluorescent lights are sourced from shops in industrial areas. This can save you up to 50% compared to other brick-and-mortar lighting shops.
• It is possible to negotiate prices in certain cases to try and get a better bargain.
• Audio-house has fantastic pricing (including if you paid for electrical appliances although the selection is a tad limited. 
• Racks.sg also sells storeroom racks at good price.

Lobang

• Restroom / Water-works related - Shophouse at Blk 574 Ang Mo Kio Avenue 10 (Cash Only)
• Racks.sg
• Electrical Appliances - Audio-house (There's a store at Bendemeer area)

60-month Installment Payment Plan at Courts - a simple lesson in cashflow and expenditure management?

Recently I went to Courts to check out some furniture for my home. While browsing, I realise besides having shorter term installment payment plan (IPP) which comes free of charge, there is also the option of 60 month IPP.

For a cabinet costing $899, there is a 60 month IPP option that lets you pay, wait for it...

$39.95 a month. Whattt?

Multiply this figure by 60 and you get $2397. One would be paying 167% more for the product overall. If you annualise this value, you are paying an extra 33.4% effective interest per year!

This is even higher than your typical credit cards' interest rate!

In fact, in the first year alone, you are paying $479.40. That's slightly more than 50% of the original cost. If one is financing their big ticket items such as furniture or electrical applicances costing 4 digit, it is naturally a better option to opt for IPP that lets you pay off over 24 months/36 months, and interest-free IPP are not that difficult to find?

Usually the choice of IPP is made based off managing cashflow (especially when it's 0% interest).  It got me thinking about just under what kind of circumstances would warrant the extremes of selecting a 60 month payment plan.

No matter how much I wrap my head around this, it sounds like either bad expenditure management, bad cashflow management or otherwise circumstances forcing one to select such a plan.

A lesson is drawn from this - one should never let debt overrun expenditure management; it is a surefire recipe for disaster.