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July 2016 Net Worth Update

Asset

Retirement $47,250.33

Insurance $5,900.00

House #1 $258,000.00

House #2 $265,000.00

House #3 $280,000.00

Total Assets $856,150.33

 

Liabilities

House #2 Mortgage $163,587.94

House #3 House Financing $254,698.59

Ar-Rahnu $1,470.00

Car Loan $4,750.00

Total Liabilities $424,506.53

 

Net Worth $431,643.80 as at 31.07.2016

 

Payday was 25th July 2016.

 

Retirement is up $580 from monthly contributions.

Personal Financing is paid for.  The last payment was B$866.12.  Goodbye!

Car Loan is the next “pay down debt” goal.  This will increase my cash flow by B$250.  I know this probably should be the last one I payoff since it’s a 0% government loan but the bump in cashflow is just too good to pass up.

Why I’m Paying My Home Financing Early

I am a big believer in paying off your home financing/mortgage early.  Why? Well basically the monthly payments suck B$1652.59 every month is a huge drain on my monthly cash flow.  That is almost B$20,000 in payments annually.  However only about B$4,000 of that amount goes into paying down the principal which is the loan amount.  Meanwhile, the rest of that amount about B$16,000 goes to the bank as profit.  If I wait 25 years to pay off this financing I will pay almost the same amount of the loan in profit to the bank. That is B$239,284.33 in profit that goes to the bank.

Since there is no investment or savings that can guarantee a return of 6% – any extra money you have is actually best utilized in slowly paying down your home financing.  Currently, my bank has no penalties if a customer wants to make a partial payment on their financing.

I recently came across a great app to calculate savings you make if you pay off your mortgage/home financing early which is Karl’s Mortgage Calculator (Android).  According to the calculator, I can finish my loan in 6 years and save B$165,557.87 in profit.

It can sometimes be hard to stay motivated when paying off debt especially one that will take years to do. However there are a few ways to do so – my favorite are visual reminders such as these below:

debt doodles

From Map Your Progress

Or a simple graph

savings graph trigger

From Mustachian Post

Real Estate Investment: Expense Report – June 2016

Gross Income: $3,131

Expenses:

  • Mortgages: $1,081.50
  • Repairs: $0.00

Net Income: $2,049.50

Total time: 1 hour

This month I informed the tenants that they did not need to pay the last month’s rent which is the July 2016 rent because I hold two months deposit.  This is actually against the rules of the tenancy agreement but I was afraid that I would accidentally use the money.  The pre-inspection didn’t show any red flags so I was happy to just have them not pay the last month’s rent and for me to just return one month’s deposit when they exit the property end of July 2016.

There has been some interest around renting and buying the property but nothing confirmed yet.

June 2016 Net Worth Update

Asset

Retirement $46,670.33

Insurance $5,850.00

House #1 $258,000.00

House #2 $265,000.00

House #3 $280,000.00

Total Assets $855,520.33

Liabilities

House #2 Mortgage $164,017.86

House #3 House Financing $255,051.40

Personal Financing $910.59

Ar-Rahnu $1,470.00

Car Loan $5,000.00

Total Liabilities $427,919.85

Net Worth $427,600.48 as at 30.06.2016

Payday was 27th June 2016.

Retirement is up $580 from monthly contributions.

Cash will be omitted as this fluctuates throughout the month and is kept as low as possible.  If there is a balance at the end of the month it goes to paying down debt.

Personal Financing has decreased to $910.59.  I will prepay perhaps $10 this month then the balance should be paid off with the last personal financing payment on 28th July 2016.

Sell Vs Rent Investment Property #1

Sell or Rent?

Following the notice given by our tenant we did contemplate selling the property however a look at the numbers seems to suggest otherwise.  So when deciding we decided to put feelings aside and just look at the real math numbers.

Selling – Local Islamic Bank

If we were to sell the house perhaps we could sell it for $300,000 however is there any investment right now which could give us a higher return then real estate?  From an earlier post Investments in Brunei I discussed what investment returns were available in Brunei and it seems the highest return from an Islamic bank were 1.95% per year which is a return of B$5850 a year or $487.50 a month.

Selling – Overseas Property Investment

I have been thinking about buying property abroad specifically student housing in the UK but the problem is lack of knowledge and fear of a student housing bubble.  There are several real estate agencies in Brunei selling property in places like Australia, New Zealand, Philippines, Malaysia and the UK that boasts returns of 7-10% for 3-5 years assurance.  If there are any readers out there who have invested overseas please let me know I would love to learn more about it.

Renting

If we were to rent the house I believe it could easily rent for $1000 a month perhaps a bit harder to rent for $1200 a month given the current economic conditions but would be possible once economic conditions get better as the house has been rented before at this amount.  This would translate into a return of 4% (more than twice that compared with if I were to sell and just put it into the local Islamic banks in Brunei).

Conclusion

For now renting is the best return for our money but perhaps in future (when I have done more research on it) it would be great to try out investing in property overseas.

Real Estate Investment: Expense Report – May 2016

Gross Income: $3,131

Expenses:

  • Mortgages: $1,081.50
  • Repairs: $0.00

Net Income: $2,049.50

Total time: 0 hours

This is like the previous month where the income is truly passive.  Unfortunately this month the tenant has given us two months notice that they will be ending their tenancy on 31st July 2016.  So income could fall in the following months because of vacancy.  We have written to the Public Service Department to have it rented by the government in the meantime.  Will keep you guys posted on the status.

May 2016 Net Worth Update

Asset

Cash $1,711.39

Retirement $46,090.33

Insurance $5,800.00

House #1 $258,000.00

House #2 $265,000.00

House #3 $280,000.00

Total Assets $856,601.72

Liabilities

House #2 Mortgage $164,378.80

House #3 House Financing $255,444.21

Personal Financing $1,805.34

Ar-Rahnu $1,470.00

Car Loan $5,250.00

Total Liabilities $428,348.35

Net Worth $428,253.37 as at 30.05.2016

Payday was 28th May 2016.

Retirement is up $562.87 due to dividends + $580 from monthly contributions.

House#3 Financing went down but still have not received a call from them about my financing balance but I did manage to meet with them and they said it was normal for the first month to be fully profit not sure I understand why but I have chalked it to religious reasons I am ignorant of but I would have appreciated more transparency and early warning about the first payment :s

Personal Financing has decreased following $3,200 prepayment I paid earlier this month together with the normal payment.  I have also paid the final prepayment of $2,110 before I leave it alone to finish off on its own in July 2016 thus avoiding early settlement penalty.  With this financing set to end in July-August 2016.  The next goal would be to start hacking away at the mortgage especially since HSBC is set to wind down operations. God willing the target date to finish house #2 is September 2019.  This is also around the time when my husband will have finished his Degree at UBD and be back in the workforce thus freeing up some expenses.

Ar-Rahnu has gone up as I have refinanced the gold for another 6 months and the value of gold has increased. One new improvement to this service that I am looking forward to is that customers will no longer have to retrieve the gold and refinance again and that payments will be all be cashless in future.  This will decrease the hassle considerably.

+562 Increase from TAP & SCP Dividends

The Employees Trust Fund (TAP) has announced a 1% dividend today for TAP and SCP for the financial year ending 31 March 2015.  It is quite low but I guess it was to be expected given the economic climate currently and we are quite lucky it wasn’t 0% which was what happened in 2008/9 financial year.

As you look back at my records I am surprised to note that total TAP dividends paid out since I started working in 2004 amounts to $5,685.49.  My contributions have been $24,345.83 while the Brunei Government has contributed the other $24,345.83.

Also I’ve noticed that dividends have been very much dictated by the global financial crisis.  Here are dividends history of TAP.

2004/5 – 4.25%
2005/6 – 4.25%
2006/7 – 4.25%
2007/8 – 4.25%
2008/9 – 0% Sub Prime Loans!
2009/10 – 2%
2010/11 – 2.3%
2011/12 – 2.4%
2012/13 – 2.5%
2013/14 – 1% Low Oil Prices!
2014/15 – 1%

Another way to look at the contributions is that because it is 5% of my gross salary.  If you divide total contributions by 5 and then multiply it by 100 it will equal the total amount of money that has passed through my hands in income from the Brunei Government (or employer(s)).