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How aggressively do you save?

A resource forum for those interested in buying, selling, or developing a business; for questions about retirement plans; investing and basically any aspect of acquiring, keeping and increasing one's personal stash of filthy lucre.

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Re: How aggressively do you save?

Postby Mother Theresa » 16 Feb 2011, 09:33

Gao Bohan wrote:
dnwolfgang wrote:$1200 is only 100NT/day, figure out a way to save 100NT/day and you have your plane ticket.


OK, let's think about that. A typical family of four will pay $1200 x 4 = $4800 USD on airfare alone. At the current rate of conversion, that's 141,645.47 NTD. With a single income of 55,000 NTD (which seems about average), that's 2.5 months of gross salary for an English teacher. And then, it appears common for people here to visit multiple states or provinces, at least within North America. Depending on how many areas are visited, and on whether the family can avoid hotels by staying with friends and relatives, tack on another $1000-$3000 in domestic airfare/car rental/gas/breakfast/lunch/dinner/gifts (both to and from home)/etc. for a two or three week period. So we're looking at what, about $6,800 USD/~200,000 NTD for a typical family? That's close to 4 months gross salary. So an aggressive saver who can put aside 50% of gross salary (>50% of net salary) will save for 8 months to go on a two or three week vacation back to North America.


You're right about the first part, Gao. I took my wife and daughter on our biggest CNY trip ever this year: 2 weeks, with stops in three cities in the US, amusement parks, skiing, factory outlet shopping, rental car for 5 days, etc. Total cost: just shy of US$10,000. :( Yes, that takes a huge chunk out of our savings, but we only visit the US once or twice a year and it's not a luxury, its a necessity.

But, I believe you said NTD200,000 is 4 months gross salary for a typical family of four. God, I hope not. Maybe typical Taiwanese family with no college education, but I would hope most educated foreigners with a spouse and two kids are responsible/motivated/capable enough to earn more than NTD50K per month. Still, you've got a valid point: big fancy vacations make a huge dent in any savings plan.

GuyInTaiwan wrote:
Icon wrote:Insurance and retirement funds will have to take care of the far future.

How do you propose for that to happen?


That reminds me of a couple things.

My wife was just telling me she wants to pay US$2,000 per year for an insurance policy, of sorts, offered by a Taiwanese company, on my daughter. One pays that sum for six years only (total of US$12,000) and after the six years the company will start paying back US$400/month for the life of my daughter, at which time they pay back the US$12,000. My wife figured we can use that as a (small) pension plan for me, in addition to everything else we're doing. I think she said it works out to about 3% interest.

My immediate reaction: that's stupid. Anyone who knows anything knows that term life insurance is good (just pays benefit when you croak) and whole life insurance (which also pays pension benefits) is a ripoff. That's lesson #1 about life insurance. Common knowlege (though maybe not in Taiwan, in particular if one's spouse has a sister who sells insurance).

But of course there's the marital harmony thing: don't reject your wife's idea (particularly when she's Taiwanese and the idea originated in discussions with her family in Chinese) unless you are extremely strongly opposed to the idea.

And there's logic. If her whole life insurance scheme really does pay 3% for the life of my daughter, then I guess it only makes sense to reject it if I'm confident I can outperform that. A decade ago I would have been certain I could outperform that every single year, no problem. But these days. . . hell, a guaranteed 3% doesn't sound so bad, especially when we're only talking contributing US$12,000 over 6 years, not $100,000.

I'm also reminded of what I just read in this great biography I'm reading of Warren Buffett. Apparently, Buffett hated the idea of getting insurance, because he was certain (correctly so) that he could take the money he would pay in premiums and easily earn a far superior return on his own (which is what he did). But, of course, Buffett is a genius. His genius isn't/wasn't just in holding for long term. He works extremely hard performing his research and is/was a genius at picking the right investments, something us mere mortals (me especially) are far less capable of.

So, for Buffett a 3% return on an insurance policy would be pure stupidity. For me, as one small part of my portfolio, perhaps it may not be so stupid after all, particularly if one figures in the marital harmony factor.
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Re: How aggressively do you save?

Postby headhonchoII » 16 Feb 2011, 09:43

Get a spreadsheet and work it out. Some of the life insurance packages aren't that bad. I travel back to my homeland once every two years or so. With family it's going to get more expensive. I try to offlay cost by mixing with business trips to Europe if possible. If we take a short break in Asia I do similar. Air travel is a big expense. I didn't go back last year or take CNY holiday this year and saved quite a bit..but yeah you do miss out. This is an example of why earning more money can be a better strategy if at all possible, even saving 50% of 50,000 mth..you are not going to be travelling back to the West or wherever you are from very often, at least not with your family.
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Re: How aggressively do you save?

Postby headhonchoII » 16 Feb 2011, 09:52

GuyInTaiwan wrote:Gao Bohan: You're right about those holidays costing an arm and a leg. I don't know how people can do it. I have a friend in Australia whose father earns big money (and his mother doesn't work), but every year the entire family (three kids) takes a major holiday. Sometimes, it's somewhere relatively cheap in Asia (though I'm sure they stay in quite nice places and eat at at least moderately expensive places), but at least once every two years they go to Denmark to visit his mother's family and usually end up going somewhere else also. A few years ago, in addition to going to Denmark, they also rented a villa in France. Those trips have to end up costing them something like $20,000+ a pop. That's intense.

When we travel we either stay in really cheap guesthouses/hostels or we camp. Throughout Southeast Asia, we paid less than $10/night on average. We went to Iceland and Denmark for our honeymoon for three weeks. In Iceland, we camped all but three nights (and the camping and hiking was awesome there), and in Denmark, we stayed in a hostel. We cooked probably about 80-90% of our meals on the whole trip and tried to do free stuff like hiking or visiting free museums. Iceland didn't end up costing that much simply because their economy was in the toilet then. Even really working hard to keep expenses down, Denmark was expensive. We were only there for three or four days though.


GIT, you are still wasting money though. You can get plans for microlite planes on the internet and get a local manufacturer to put it together. Then get one of those deep diving suits for yourself and the wife, keep you nice and comfy as there's not much of a cabin in those things.. After getting proficient flying the microlite fit it with waterskis and learn how to fly below the radar, this way you won't need to deal with pesky customs officials looking for visa fees on your next big holiday. You can stop over the ocean and catch some fish everynow and then (don't bother buying a gas stove, you can cook the fish from the heat of the engine). With the microlite you can also land on any farmers field or beach, again no airplane landing fees. Perfect.
Well that's my two cents anyway :wink:
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Re: How aggressively do you save?

Postby GuyInTaiwan » 16 Feb 2011, 12:07

HH: Haha. Smart arse. :raspberry:
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Re: How aggressively do you save?

Postby Gao Bohan » 16 Feb 2011, 22:47

Mother Theresa wrote:You're right about the first part, Gao. I took my wife and daughter on our biggest CNY trip ever this year: 2 weeks, with stops in three cities in the US, amusement parks, skiing, factory outlet shopping, rental car for 5 days, etc. Total cost: just shy of US$10,000. :( Yes, that takes a huge chunk out of our savings, but we only visit the US once or twice a year and it's not a luxury, its a necessity.


I'm not making any judgments on people visiting their families back home. My wife and I have spent plenty of money visiting relatives in Texas and other states. Both of my wife's siblings have moved even further away from Texas than we have (that's your cue to crack a joke about Texas, go on, get it out of your system), and my dad lives in northern Ohio. But hey, this is the thread about aggressive saving, after all. Just trying to add a little perspective on the cost and required saving time for these trips.

But, I believe you said NTD200,000 is 4 months gross salary for a typical family of four. God, I hope not. Maybe typical Taiwanese family with no college education, but I would hope most educated foreigners with a spouse and two kids are responsible/motivated/capable enough to earn more than NTD50K per month. Still, you've got a valid point: big fancy vacations make a huge dent in any savings plan.


I stated my assumption that I meant a 4-person, single-income family, making 55,000 NTD a year. And I said 200,000 NTD is nearly four months salary (just over 3 and a half months). I'm basing this on the average teaching salary discussed in numerous threads, and the impression that I get that many posters' wives are staying home. But OK, let's say the wife is working, and add in an additional 25,000 NTD gross per month, for a total of 80,000 NTD per month. Saving 50% of gross salary, you've reduced saving time from 8 months to 5 months. It's worth noting that 5 trips = 1 million NTD, a tidy sum.

Again, I'm not making judgments here. We all need to see our families and/or take vacations to keep our sanity. I'm just crunching the numbers. I do the same thing for my family's expenses all the time. I would love to take my wife traveling overseas every year, there are just so many places we want to visit. But the ticket cost alone anywhere outside of North America is huge, then add in hotel/meals/transportation/museums/etc etc., the costs for even a short vacation are enormous. We still find ways to have get out of town and have fun, of course. We drove down to Mobile and took a fantastic, relaxing, one week Caribbean cruise for less than the cost of a two airplane tickets to Rome. I sit in awe when I hear about some of the trips taken by posters here. "Well first we visited my sister in Vancouver, stopped over in Alberta to see an old friend, then spent two weeks in Nova Scotia with my folks. Then we spent a few days in Rome, then a week in Greece, took a couple of days to do some shopping and visit the Hagia Sophia in Istanbul before heading to Laos, Cambodia and Vietnam. They have the most beautiful temples there! Spent two days in Tokyo and headed back to Taipei." OK, a bit of an exaggeration there, but not far from the truth for some folks. A few posters have remarked how difficult it is for them to save. I don't think it's any great mystery where the money is going.
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Re: How aggressively do you save?

Postby Gao Bohan » 16 Feb 2011, 22:58

GuyInTaiwan wrote:When we travel we either stay in really cheap guesthouses/hostels or we camp. Throughout Southeast Asia, we paid less than $10/night on average. We went to Iceland and Denmark for our honeymoon for three weeks. In Iceland, we camped all but three nights (and the camping and hiking was awesome there), and in Denmark, we stayed in a hostel. We cooked probably about 80-90% of our meals on the whole trip and tried to do free stuff like hiking or visiting free museums. Iceland didn't end up costing that much simply because their economy was in the toilet then. Even really working hard to keep expenses down, Denmark was expensive. We were only there for three or four days though.


Wow. I'm seriously impressed. I backpacked and camped across Italy with a friend when I was 16, but at 30 that's no longer my idea of a vacation. My wife and I love to go hiking, but at the end of the day we'd like a hot shower and a nice meal. You guys are truly super-savers! :bravo:
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Re: How aggressively do you save?

Postby dnwolfgang » 16 Feb 2011, 23:25

Gao Bohan wrote:I sit in awe when I hear about some of the trips taken by posters here. "Well first we visited my sister in Vancouver, stopped over in Alberta to see an old friend, then spent two weeks in Nova Scotia with my folks. Then we spent a few days in Rome, then a week in Greece, took a couple of days to do some shopping and visit the Hagia Sophia in Istanbul before heading to Laos, Cambodia and Vietnam. They have the most beautiful temples there! Spent two days in Tokyo and headed back to Taipei." OK, a bit of an exaggeration there, but not far from the truth for some folks.


Could be any of number of reasons. Could have been the 1 big vacation every 2 or 3 years (1 long trip is cheaper than 2 short ones because you reduce plane ticket costs!), they could be living on an expat package, they could have their parents partially pay for it, they could spend a big portion of their income on vacations, or maybe they just make a little bit more than you... Think about this, if somebody makes $5,000 US more than you per year, that's an entire extravagant vacation they can afford EVERY YEAR and still live like you. It's really not that hard to imagine to be honest. These numbers look big if you look at them in 1 big chunk, but if you average it out over a year or two it's not as insane as some people like to think it is.
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Re: How aggressively do you save?

Postby Icon » 16 Feb 2011, 23:42

GuyInTaiwan wrote:
Icon wrote:Insurance and retirement funds will have to take care of the far future.


How do you propose for that to happen?


Oh, I have the basics covered through work -extra group insurance- and a very pitiful extra retirement fund -aside from the retirement payment I'll collect in the year 2040 something. It would be nicer to have better, as said, moving into serious investment and such, and pronto.
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Re: How aggressively do you save?

Postby Gao Bohan » 16 Feb 2011, 23:57

dnwolfgang wrote:Could be any of number of reasons. Could have been the 1 big vacation every 2 or 3 years (1 long trip is cheaper than 2 short ones because you reduce plane ticket costs!), they could be living on an expat package, they could have their parents partially pay for it, they could spend a big portion of their income on vacations, or maybe they just make a little bit more than you... Think about this, if somebody makes $5,000 US more than you per year, that's an entire extravagant vacation they can afford EVERY YEAR and still live like you. It's really not that hard to imagine to be honest. These numbers look big if you look at them in 1 big chunk, but if you average it out over a year or two it's not as insane as some people like to think it is.


Did you read my posts? :ponder: I calculated the savings that need to be accumulated within a year to make a single trip in the same year, based on average earnings reported by numerous posters. Again, I am assuming a foreign teacher's salary for single income families and the addition of the average Taiwanese worker's salary for dual income families. It would take a very aggressive saving program, saving 50% of gross (>50% net) for 5-8 months to make a single trip. Your other points are well taken. An IP lawyer or highly specialized engineer at a multinational making $150,000-$200,000 USD doesn't care if he drops $7000 USD on a trip back home. Or anyone on an expat package that includes airfare back home or wherever. But most posters here are either English teachers, editors, or technical writers, and it's their stated salaries on which I'm making my assumptions. And many of these good folks lament their lack of savings. In any event, I personally find it helpful to look at the numbers, so I thought I'd share in case others do as well.
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Re: How aggressively do you save?

Postby GuyInTaiwan » 17 Feb 2011, 08:07

Gao Bohan: Most of the campsites had hot showers in Iceland. Most of them have staffed huts that you can stay in as well in case the weather gets really bad (and they can have snap blizzards even in mid-summer) and campers need to take shelter. We only encountered one campsite that didn't have such things. Honestly though, camping was the only way we could have done it. Anything that caters to foreigners is expensive there, including basic guesthouses. Anything that caters to locals (including camping) isn't as expensive (and their currency had halved in value while we were there -- which is why there were so many people there when we went there). Our main expenses there were camp sites, buses, and food. All of those things had remained relatively stable in price, but were effectively half as cheap. Everything else, such as tours and tourist accomodation had basically doubled in price to make up for the halving of the currency.

As for Southeast Asia, where there were hot showers, we had them. You can find places for $5-$10 in most of the major cities there where you can get a basic, but decent room (though we often only had a fan, rather than air-conditioning).
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