Hi gurus,

Need your wise advice on the situation below:

My brother was an office executive in his early 40s. He resigned from his position two years ago due to some conflicts in the office. He resigned rather emotionally and was confident of getting a new job. But he did not after two years. He has been living on his savings, luckily his wife is still working. Now he is quite desperate as his savings are running low. Here are his options:

1. Give up his job search and drive taxi. This option will enable him to stay in his condo and contribute to family expenditure, but he feels embarrassed with his condo neighbors, family and friends.

2. Sell his condo (no more mortgage) for $1.7m, then buy a HDB flat for $500k. He can then invest $1.2m which gives him $60k pa in dividends. With this option, he need not drive a taxi and able to contribute to his family expenditure. But with this option, he is embarrassed with his family and friends (cos downgrade from condo to HDB flat).

What should he do? What would you do if you are in his shoes? Please advise. TYIA.

This situation is not rare, but thankfully also not common. People losing their job but fear loss of face to downgrade.

Personally, I would downgrade and consolidate my finances. Face is after all a temporary thing. In your brother's case, he is still in a position of relative financial strength. Downgrading and freeing up the money for investment is the way to go.

Once he secures another job, he can always go and buy another condo. If not, he is free from worry about putting up false pretenses.

Firstly, I would like to extend my condolences to your brother for his predicament. This is life, nothing is for sure. Today you are a high flier, tomorrow you could be in the dumps. So, always be humble in life. Do not talk big to other people, including your subordinates, the cleaner or your maid.

Looking at his situation, you mentioned that he is using his savings and his wife is working. One way to manage his situation is to look at his expenses. Since his wife is working and earning, can his family manage their exepnses to live with one income? One of the good thing is that he has cleared his home mortgage. So if his wife is earning say $100k pa, can they live with $100k pa?

Here are some of the big items he can cut:

1. Maid services - he can terminate the maid's services and start learning doing the house work. He can do the laundry, cleaning the house, cook simple dishes, iron clothes etc. You can save about $1000 per month (besides the maid levy and pay, the maid also has other expenses such as the food she eats, medical, etc). He can then save $12k pa.

2. Car - he can sell the car away and save about $1000 per month - petrol, pro rated insurance and road tax. If he is still paying his car monthly instalment of say $1000 per month, then by getting rid of the car, he can save $2000 per month or $24k pa.

3. Insurance - check whether he can review the family insurance policies to include only the necessities. Cut off those investment linked ones as they are expensive to maintain. Maybe he can save $500 per month or $6k pa.

4. Groceries - avoid buying branded products, just the house brand will do. He can save $200 per month or $2.4k pa.

5. Cut other unneccessary spendings, save about $300 per month or $3.6k pa.

So, by cutting all these, he can save about $48k pa.

So, if he his annual household spending is currently $130k pa, by doing the above, total spendings will drop by $48k and become $82k pa. This is within his budget since his wife is working and earns $100k. The family can still stay in their $1.7m condo. He can tell his friends, neighbours and friends that he has sold his car to reduce his carbon foot print to save the planet.

However, if by cutting expenses, the total expenses are still higher than his wife's pay, he has no choice but sell his condo and invest. To hell with pride and face. Survival is more important. Hope these ideas help. All the best to your brother.

Yes i go for option 2if i were him. ..but him, being a Middle age Singaporean, for him to get a similar paying job could be tough given today society competitiveness of PR and Young graduates. at only 40 unless get a job pe..perhaps a lower paying one. ..he may have to Live off his downgrade proceeds till retirement. .tough time ahead for him

You should appreciate what FTs have done for this country.

Again, another man staying with daughter? Is the married? If single is fine..

Your brother's situation is not so bad as he still has his condo, which is a big asset for him, especially since there is no more mortgage. He need not go all the way to the extreme of downgrading to a HDB flat, which understandably will be a big blow to his ego and status. Living in a HDB flat is of a lower standing, in society's view. This is a fact. What he can do to lessen the impact of society's perception is to downgrade to a cheaper condo. There are still many condos selling at $1m or less, he can go to propertyguru and set the search parameters and do the search. He can then sell his $1.7m condo and buy a $1m condo. This condo may be smaller or older or located is a lesser district but it is still better than staying in a HDB flat, which has a much, much lower status for him and his family. He can then invest $700k in a 5% dividend stock, which gives him $35k pa. Together with his wife's income and perhaps reducing his total expenses, his family will still be able to function well financially, without impacting much their social status. I think this is a more "middle of the way" approach. He can then continue to focus on his job search. With the new employment policy, he now stands a better chance of getting employed again.

Options 1 and 2 need not be mutually exclusive. He can also look for another job while driving taxi.

Well said, many workers (even construction workers) from my country worked here for 10 to 15 years and able to save sufficient money to return home and start their own business/retirement/investment. Those who been working here for long time and are worried about retirement probably did not work hard enough when young... I am in IT line and doing well here..

mine...working for past 9 years...31 this year, in IT..

Cash = around 15k
Share = around USD20k
CPF = around 100k for ordinary

Single, no house or car but absolutely zero debt. No installment and no late credit card payments (this is something i am very strict about...i have excellent credit rating and always obsessed about remained zero debt.)

What I earned, what I have, is what i got...Not a gross value but true net value.