Managing Personal Finance

Question 1a)

i)

1. To reduce loan repayments to under 10% of monthly income.

2. To reduce debts and loans to below 30% of asset value.

3. To achieve a monthly investments and savings of $1,500.

4. To set up a profitable business that contributes to my personal cash flow through passive income.

5. To achieve $50,000 of cash reserve.

ii)

1. To purchase a condominium while maintaining ownership of existing flat, renting out either property for passive income.

2. To increase monthly investments and savings to $5,000.

3. To replace employment income through passive income from multiple sources of income (rental, businesses, investments). Continuing employment is optional.

4. To achieve $250,000 of cash reserve.

5. Purchase MPV family car with 80% down payment.

iii)

1. To achieve $1,000,000 of cash reserve.

2. To reduce all personal loans and debt repayments to only property.

3. To convert businesses to self-run without my intervention, while providing me passive income.

4. To own and run a small private estate for senior citizens, not-for-profit.

5. To travel extensively without affecting cash reserve.

Question 1b)

i)

Statement of Cash Flow

As of 31 December 2011

INFLOWS

Active Income

Gross salary and bonus (including CPF) $50,500

Employer CPF contribution $8,080

Passive Income

Rental Income $25,200

TOTAL INFLOWS $83,780

OUTFLOWS

Savings $13,200

Fixed outflows

CPF for house mortgage $4,200

Car loan payment $6,000

Insurance premiums $6,000

Total outflows $16,200

Variable outflows

Tax $1,800

Food $3,600

Transportation $6,000

Clothing $800

Entertainment $1,000

Medical/Dental $800

Utilities/Household expenses $12,000

Miscellaneous $2,000

Total variable outflows $28,000

TOTAL OUTFLOWS $57,400

NET...