Can A Family man survive with Salary RM 3,000??

How much should a family man earn to survive in a family?

Let’s say 1 family has a father, mother, 1 daughter and 1 son. I will roughly calculate his living expenses per month and see what would be the outcome….

                                          RM

Car Repayment                            450

(Proton Saga Aerobak; 7yrs repayment)

House Repayment                          750

(low cost house and repayment for 30yrs)

Electricity & Water Bill                 100

(No air-cond, no water heater)

Phone Bill (Telekom)                      50

Handphone Bill                            50

(the cheapest package)

Meals for family                         750

(3 meals on RM 25/day for 4 person)

Petrol                                   350

Children School fee, 2 person            200

(enough ??)

Children Milk Powder                     50

Household necessities                    300

(enough??)

(Shampoo, rice, sauce, newspaper, toilet paper)

No Astro

No DVD / VCD

No Online

No Season Celebration / Holiday

No Credit card

No Insurance

No KFC / Mc Donald

The total expenses are already RM 3050 not even deducted his gross salary for EPF.

And we know, there’s still millions of citizen who still don’t earn RM 3,000/month.

How about you ?? Do you have a daily or a monthly budget for you / your family?

RPGT Calculation

I have gone through 2010 Budget commentary and tax information. I would like to share with you by taking few examples the likely tax implications of RPGT re-imposed, which I think it is helpful to understand.

Example 1

Disposal of property which was purchased prior to exemption period of 1 April 2007 to 31 December 2009.

AA Sdn Bhd bought an apartment on 24 Feb 2007 (prior to exemption period) for RM 240,000 and sold the apartment on 4 February 2010 for RM 300,000.

                                        RM

Disposal price                        300,000

Less : Acquisition price             (240,000)

Chargeable gain                       60,000 

RPGT payable @ 5%                     3,000

Example 2

Disposal of property which was purchased during the exemption period.

Ah Keng bought a bungalow on 1 April 2008 (during the exemption period) for RM 1,200,000 and sold the bungalow on 9 September 2011 for RM 2,500,000.

                                              RM

Disposal price                             2,500,000

Less : Acquisition price                  (1,200,000)

Chargeable gain                            1,300,000

Less : Schedule 4 exemption

       10% x RM1,300,000 or RM 10,000

       (whichever is greater)               (130,000)

                                            1,170,000

RPGT payable @ 5 %                          58,500

Example 3

Utilisation of tax relief from disposals made prior to 1 April 2007 against tax assessed on property sold after 31 December 2009.

John has 2 shop houses bought on 1 Jan 2000, one of which was sold on 13 September 2006 and the other was sold on 18 Jan 2010.

(a) Sale of Shop house A on 13.9.2006

                                          RM

Disposal price                          300,000

Less: Acquisition price                (500,000)

Allowable loss                         (200,000)

RPGT loss relief @ 5%                  10,000

(b) Sale of Shop house B on 18.1.2010

Disposal price                         800,000

Less : Acquisition price              (200,000)

Chargeable gain                        600,000

RPGT payable @ 5%                      30,000

Less: RPGT loss relief brought forward(10,000)

Net RPGT payable                       20,000

GST 4% expected to come into effect in middle of 2011

Our government plan to impose a 4% Goods & Services tax (GST) by middle of year 2011 has been a hot topic nowadays.

Consumers may have to pay an additional 4% for the purchased items, however some selected items would be exempted from GST especially “essential” products such as padi, vegetables, basic goods (rice, sugar, flour, cooking oil), fish, meat and chicken.

The main purpose for the GST is to make the current taxation system more comprehensive, efficient and transparent. The sales and service tax (currently 5% to 10%) will be abolished and replace by GST.

The government expected additional RM 1 billion revenue annually after the 1^st year of the introduction.

This will bring an impact to 85% working population who currently do not pay a single cent of tax because they income is below taxable income. Now they have to pay the GST.

This may bring some burden to some businessman, as people might cut off or reduce their spending on goods which induce to pay the GST.

Opportunity Cost

What is “Opportunity Cost”? According to definition from Wikepedia , Opportunity Cost is the value of the next best choice available to someone who is pick between several mutually exclusive choices. Thus opportunity costs are not restricted to monetary or financial costs : the real cost of output forgone, lost time or any other benefits that provides utility should also be consider opportunity cost.


For instance, a person who invest $20,000 in stocks market, his opportunity cost is the bank interest he could have earn if he place in Fixed Deposit. Another situation, the opportunity cost of eating a lamb steak could be trying a salmon.

An interesting example: Amy was having a lunch with group of friends in a famous pizza restaurant, and it was really a long queue of people for pizza during that hour, Amy ask the manager to give her a discount of 20% to compensate for them to let their place to other people but the manager decline to do so and allowing Amy and her friends continue their chat.

We should knowing the spending for a customer in a pizza at least $20 and the cost is only $10 (assume), if a customer dine and chat for 2 hrs there, this will affected the next customer decision to lunch over there, if that manager give Amy discount 20%, and Amy would leaving at ½ hrs, hence the manager actually able to get a profit of $6 and by allowing the next customer to dine they can gain another $10 profit, isn’t that worth in this situation? However, the manager denied taking a $4 less but he can accept to maintain the $4 and yet forgo the earning of $10 opportunity.

Hence, the unseen opportunity cost as well should be taken into account when you are plan for your investment portfolio in order to maximize your return or increasing your marginal profit when you make a decision.

Learn Some Basic Key Financial Ratios

The analysis of financial ratios enables investors to assess a company’s past and present financial condition and operation results.

1) Liquidity ratios

·        The ability to meet its financial obligation which fall due in the next 12 months

i) Current ratio = Current Asset / Current Liabilities

ii) Quick ratio = Current Asset – Inventory / Current Liabilities

iii) Net working capital = Current Asset – Current Liabilities

2) Activity ratios

·        Evaluate how effectively the company is making use of assets.

i) Average Collection Period = (Acc Receivable / Total Credit Sales) X 365 days

ii) Inventory Turnover Ratio = Cost Of Sale / Average Inventory

iii) Total Asset Turnover = Annual Sale / Total Asset

3) Leverage ratios

·        Usage of external funds and impact of such financing on financial position of a company

i) Debt-Equity ratio = Loan + Deferred Liabilities / Shareholders Fund

ii) Interest Coverage = Times Interest Earned Ratio / Total Interest Expense

4) Profitability ratio

·        Amount of resources utilized to bring in absolute profit figures

i) Return On Equity = Net Profit After Tax / Shareholders’ Fund

ii) Return On Asset = Net Profit After Tax / Total Asset

iii) Net Profit Margin = Net Profit / Total Sales

5) Share Market ratios

·        Ratios used to assess the performance of a company for stock valuation purposes.

i) Earning Per Share (EPS) = Net Profit After Tax / Preference Share Dividend / Number Ord.Shares Outstanding

ii) Price Earning ratio (P/E) = Market Price Of Share / EPS

iii) Dividend Yield = Annual Div Per Share / Current Market Price

iv) Dividend Payout Ratio = Div Per Share / EPS

v) Book Value Per Share = Shareholders’ Equity / No. Ord.  Shares Outstanding

How Much Should I Pay When I Buy A Property?

Let’s say I am buying an apartment on purchase price RM 150,000 and get a 90% financing. Below is the calculation for stamp duty, legal fee, MOT (Memorandum Of Transfer). The total amount I should prepare is $4,575 + $3,092.50 + $15,000 (10% of deposit) = $ 22,667.50.

Property Price           : RM 150,000.00

Margin Of Finance    : 90%

Loan Amount             : RM 135,000.00

Sales and Purchase Agreement	Purchase Price	Tier Rate	Payable
First 150k	150,000.00	1.0%	1,500.00
Next 850k	0	0.7%	0
Next 2M	0	0.6%	0
Next 2M	0	0.5%	0
Next 2.5M	0	0.4%	0
Exceed 7.5M	0	0.3%	0
		Legal Fee	1,500.00
		Service Tax (5%)	75.00.00
		Disbursement	1,000.00
Memorandum Of Transfer	Purchase Price	Tier Rate	Payable
First 100k	100,000.00	1.0%	1,000.00
Next 400k	50,000.00	2.0%	1,000.00
Exceed 500k	0	3.0%	0
		Stamp Duty	2,000.00
		Total	4,575.00
Loan Facility Agreement	Loan Amount	Tier Rate	Payable
First 150k	135,000.00	1.0%	1,350.00
Next 850k	0	0.7%	0
Next 2M	0	0.6%	0
Next 2M	0	0.5%	0
Next 2.5M	0	0.4%	0
Exceed 7.5M	0	0.3%	0
		Legal Fee	1,350.00
		Service Tax (5%)	67.50.00
		Disbursement	1,000.00
Execution Loan Doc	Loan Amount	Tier Rate	Payable
Total Loan Facility	135,000.00	0.5%	675.00
		Stamp Duty	675.00
		Total	3,092.50

Other fees included MRTA, Fire Insurance, Caveat, furnishing expenses and miscellaneous expenses.

It is needed a huge capital ($ 22,000++) to buy a $150,000 property, what if buying a $400,000 property? or $ 800,000 shop lot ?

Hence, we should have a well planning on our cash flow before we decided to buy a property for investment purpose.