trade-offs in spending power

I remember eagerly signing up for driving lessons after my 18th birthday. I believe that was around the age of surging testosterone; all boys could talk about was which car zoomed by. We all knew the car models by heart, and we ardently talk about the exotic ones even though we may never ever get to have one under our possession. Perhaps men equate material possessions to success, pivotal to their conquests.

After passing my driving test, the notion of owning a car harped on for a significant period of time. I had foolishly driven cars of friends; on hindsight that was rather foolish. Now that I have more inhibition, I am thankful nothing adverse had happened given my questionable driving skills.

I had once explained the tax system applicable to local cars to an Aussie, and she went like ‘geez’. An excerpt from OneMotoring:

Vehicle taxes and registration fees
All motor vehicles imported into Singapore are slapped with a customs duty of 41 per cent ad valorem. There is also a Registration Fee to be paid. The fee is $1,000 for private vehicles and $5,000 for company vehicles. In addition, when a car is first registered (whether new or used), an Additional Registration Fee (ARF) of 150 per cent of the car’s Open Market Value is payable. All these make the price of cars here artificially inflated compared to those in the States or Europe.

This is, without the variable COE and GST. It effectively translates into an amount (for a regular sedan) that can get you 5 cars in down under. You would think that deters Singaporeans but no, they get a loan (for the car) and then proceed on to complain about the ERP and parking charges. Like housing, when the demand exceeds supply, the prices go up. The applies to your COE, as well as ERP (which is based on congestion pricing/pricing externalities). This is somewhat exacerbated by a bullish economy; as long as there are people willing to pay a premium for a house/car, it will translate into higher prices. It can only be fueled by the collective actions of the people. I think by and large, people irrationally expect prices to stay stagnant and fail to see beyond a two year period. Consequently they make spectacularly awry financial decisions and then proceed to complain. We can’t all be Warren Buffet, can we?

It isn’t my immediate concern anymore, owning a car that is. It has an opportunity cost, as we get to spend yet less on other goods that may very well improve the quality of life. I would love to do my shopping at Cold Storage, even though it may be pricier. A Nesspresso machine would be delightful. But well, I have zero spending power now, being statistically unemployed after my exams. Some of my peeps have a head start already, hopefully I’ll claw some ground back.


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