Financial Mistakes I wish I didn’t commit

If time travel is possible, I want to travel

10 years back to tell the younger me not owning a carLike many others, I have the aspiration to have the 5Cs too. The rationale of having a car is convenience, the freedom and to commute in comfort. Yes, it is but it comes with a huge financial burden which i overlooked.I fail to add up the cost of all things that are involved.Besides the monthly loan, there are a whole myriad of expenses. First, there are running costs like petrol, insurance, road tax, parking (home, office, ad hoc) and servicing. That’s not all. There are also incidental cost such as repairs, erp, fines. I did my calculations and I spent approximately SG$1050 every month on car expenses.The amount is excessive since I don’t use my car that much. I use the public transport to work and it is more convenient to commute in a bus or train than drive because I don’t have to think about the traffic and parking. So my family ended up using the car most of the time.Car ownership is not an asset but a consumable item as its value depreciates every year. Furthermore, the authorities in Singapore are currently discouraging its people to own a car. Policies introduced are aimed at making it harder for the people to afford one. The running expenses will definitely go up. Petrol price, car park charges, repair services will increase. Same goes for insurance premium. It will most probably be higher. For the ERP price, even if it doesn’t go up, it seldom comes down. Recent newspaper suggested that if a person in singapore owns a car from say aged 30 to age 60, he/she has spend $1.6m on car related expenses, so its pretty significant.
Note To Self – Before owning a car, make sure I really have a need for it and do my sums not only for the car expenses but also other expenditures like home ownership, insurance, retirement savings, etc. This is very essential when I have a family. If the sum shows that a car ownership is beyond the budget, stick to public transport or at most, join a car co-op.
5 months back to tell the younger me not lend money I cannot afford to loseI will tell the slightly younger me not to oblige to loan request from a friend. It was a significant amount. So I definitely want it returned and have clearly stated my intention to the borrower by stating the repayment date. However I haven’t receive a single cent back and am still hopeful that I can recover the money back.Why does someone approach a friend for a loan? First, the high probability of getting a loan since a friend will be obliged to help. Second, a friend normally won’t charge interest and late payment won’t incur penalty. Third, a friend is unlikely to haunt you to pay up when the payment is overdue. (Most of the time, the kind lender will only send a reminder through sms and Facebook.)A lender is always advise to have an IOU when loaning money to a friend. In my opinion, IOU provides lender a sense of false security. It is a proof that borrower acknowledges that lending took place. It could include repayment agreement. However, this written agreement does not guarantee that the lender will honour it.
The borrower acknowledges the IOU as that is the only way to get the money from the lender. Once the money is with the borrower, the lender is at the mercy of the borrower. It is now the onus on the borrower to return back the money promptly. The borrower could come up with multitudes of excuses to delay the payment.The lender can’t do much except patiently wait for the money to be returned. The lender also have to be nice towards the borrower and coax the borrower because if he don’t, the lender will not see his money again!

Update: Have not heard from this person on the repayment till today, 08 October 2017. Hope he is still alive and kicking. Else there goes my chance of getting back what i borrowed.

Note To Self – Be firm and concise. Say no when any friend ask for a loan especially if the amount is substantial. Instead, offer other form of assistance (but avoid being a guarantor). Consider the request if it is a small amount and treat it as a gift. (I have done this many, many years back. My friend asked for $500 but i told him directly I don’t have that much but i could give him $200. The word I used was give. So I was not expecting him to return it.)

FYI…I get the inspiration to write this entry after reading “How To Be a Successful Investor”. According to this book, there are altogether 8 deadly financial mistake to avoid.