# What is the most expensive daily item? My personal take...

### 5 comments

About a month ago, I asked a question on dPoll on what people think is the most expensive daily item. There were quite a number of people who responded and I sincerely thank all who did so. Based on the poll, most people thinks that house, be it rented or purchased, is the most expensive daily item.

Checking Merriam-Webster, the definition of expensive is,

Commanding a high price and especially one that is not based on intrinsic worth or is beyond a prospective buyer's means

So I can understand why most people think that a house is the most expensive daily item. However, I personally focus on whether the price being paid is much higher than its intrinsic value.

### My Formula

I have a formula when it comes to making purchasing choices,

`Cost = Price - Residual Value`

When trying to determine is something is expensive or costly, I think about what is the residual value of the item at the end. For example, if I have a meal at a restaurant, there is no residual value after I ate the food. Hence, the cost will just be the price of the meal. On the other hand, when I purchase a house, the value of the house may appreciate. Even if it doesn't, it probably will have some residual value when I want to sell it later.

After I know the cost, the next step for me is to determine how often will I use it and calculate the cost per day. Now let me walk you through an example. When I buy a phone, I know I am going to use it everyday for as long as it lasts. Typically, I like to use the warranty period as a gauge. So if the warranty is a year (which most phones do), I am going to assume I have 365 days of usage. Let's say I buy an iPhone XS from Apple Store directly.

**It costs a staggering S$1649!** I am not an iPhone user, so I only get to know this while writing this post. I am not someone who sells my phone after I use. That is for security and privacy reasons because I know there are still ways to extract information from second-hand phones even if you do a factory reset. I am that paranoid 😅. So that means the residual value is going to be S$0 and it will cost me S$4.51 per day use.

### Costs of the Other Daily Items in Singapore

Once we are done with the formula, I am going to use the prices of daily items in Singapore and see what is the most expensive item here.

#### Food and Drinks

Price: S$30

Residual Value: S$0

Cost: S$30

Average Number of Usage Days: 1

Cost per Day: S$30

Comments: This is the cost of 3 meals a day for me on the average. Most of the time it is less than S$10 per meal but sometimes I spend more.

#### Clothes

Price: S$50

Residual Value: S$0

Cost: S$50

Average Number of Usage Days: 50

Cost per Day: S$10

Comments: Usually clothes start to wear out after 50 washes. I am calculating based on the average cost per piece of clothing over the average number of usage.

#### Transport (Public)

Price: S$5

Residual Value: S$0

Cost: S$5

Average Number of Usage Days: 1

Cost per Day: S$5

Comments: My average daily public transport cost. Including occasional taxi rides.

#### Transport (Private Car)

Price: S$75000

Residual Value: S$6000

Cost: S$69000

Average Number of Usage Days: 3650

Cost per Day: S$18.90

Comments: Cars in Singapore can typically be used for 10 years and it can be extended at a cost. My calculation assumes I buy a mid-sized sedan and use the car everyday. I also did not factor in the price of petrol, maintenance, loan interest and miscellaneous taxes. Therefore, this is the base cost of owning a car in Singapore and can be much higher. Here is an article that does a better job calculating the total cost of ownership of a car in Singapore.

#### House (Rented)

Price: S$800

Residual Value: S$0

Cost: S$800

Average Number of Usage Days: 30

Cost per Day: S$26.67

Comments: Assuming a single renting a room in Singapore. It costs about S$800 per month to rent a room.

#### House (Purchase and HODL)

Price: S$400,000

Residual Value: S$0

Cost: S$400,000

Average Number of Usage Days: 36135

Cost per Day: S$11.07

Comments: In this calculation, I am assuming I buy a public flat (known as HDB flat) and hold it over its 99 years lease period without selling. We can also try to calculate cost assuming that we sell the flat along the way, but the residual value fluctuates and it will be much more complex. But most of the time, you can expect to make a profit if you sell along the way.

#### Mobile Phone

Price: S$1649

Residual Value: S$0

Cost: S$1649

Average Number of Usage Days: 365

Cost per Day: S$4.52

Comments: See above example

### Conclusion

There are various way to measure if something is expensive or not. One can use the upfront cost, without factoring the residual value. But for me, I choose to calculate how much I am paying per day use. So based on above calculations, food and drinks are surprisingly expensive for me. Followed by renting a house.

Owning a car can be much more expensive than the calculated cost above. The irony is the more you use the car, the costlier it gets. But if you do not fully utilize the car, then it is also a waste. That is why, I think owning a car in Singapore usually doesn't quite make sense. You are caught in a constant dilemma.

What is your take on this? Do you agree with my calculations? And how do you determine whether something is expensive?

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