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Wednesday, October 17, 2007

DEBT END: The Readers Respond

In the previous post, I posted an article about families sinking *spiritually* and financially via debt. I commented that I liked the mussar in the article, but thought it was disingenuous to ignore one of the driving factors behind debt in the frum community: i.e. tuition.

Now I will start to present some of the readers' write articles with my comments in orange once again.


Dear Editor,

Rabbi Avrohom Birnbaum wrote in his essay "Dying to Borrow"that we have to live within our means, and stop borrowing to keep up with the Joneses.

While for those who indeed borrow to keep up with their friends and neighbors, of course he is right on the mark. However, Rabbi Birnbaum must realize that for the vast majority of middle-income frum families, it is simply impossible to live within means without running an operating deficit.

Take myself for example. I am earning what would be considered a "decent living" - approximately $130K/yr. We have been blessed with a family in the double digits, boruch Hashem. Over 40% of my income goes to tuition [Quick Calculation: Assuming he calculates from income, rather than post-tax income, that would be $52,000, a relative bargain with such a large family. That amount is about what is needed to enroll 4 kids in my OOT schools, both modern and not so modern] (the only financial investment that we will take with us to the NextWorld!). Otherwise, we live very frugally. Our children don't go to sleep-away camp [I presume they go to camp. We could and should open up a discussion about camp, but as you will see at the end of the letter the writer makes suggestions of what can be done, so I might as well put camp and what other models could be pursued to my forever increasing list of subjects to discuss], 50% of our clothing are hand-me-downs, chasunos are bare-bones, with no video, a one man-band, and minimal flowers [For an example of how other religious groups do weddings, see this post. I have yet to see a DJ at a frum wedding and I have yet to go to a wedding without flowers for centerpieces, except my own: see here. In that post I also mention vorts/l'chaims, which is something that is not a chiyuv, yet ever chatan and kallah I know has made one (except us), and many engaged couples make more than one, each in their respective hometown, and sometimes in their adopted hometown too]. . Our home has no room for our married children to visit without outsourcing our small ones to neighbors. Our cars are old. Believe it or not, we run an operating deficit of approximately $40K/yr. [Easy for me to believe, especially given the number of children]. As the kids continue to get married and as the cost of food and fuel continue to skyrocket, this number keeps ongoing up. [Shouldn't expenses FALL as children get married? Presumably one would need less food, less fuel. I imagine these parents are expected to help "support" which drives their costs continually up. Of course, it also may be that less children in school costs just as much between rising tuition and less scholarship awarded]. So, with all due respect to Rabbi Birnbaum, we don't need to be keeping up with anyone to enjoy the status of "The Debt-Ridden Folks." This status is being obtained much quicker these days for younger couples, as the cost of housing is approximately four times higher than when I bought my house. [Many young couples also have significant student loans, another factor that can't be ignored for the younger population.]

What is there to do? While I can't suggest solving the entire problem, I would like to suggest a few things that can help alleviate some of it:

1) We Yidden must do more to support our own community. Every dollar spent in-house has a ripple effect on our economy and our mosdos. [A whole post could be written on this alone. I find frum owned businesses, like kosher markets, to be prohibitively expensive. Some might try to guilt trip those who avoid the kosher markets, but I am certain if I did use them as a primary grocery store, rather than just for meat and cheese, products we use sparingly, that our grocery bill would double if not more!]

2) While there are, boruch Hashem, many gemachs out there, we need more money from the wealthy to help subsidize the cost of basic necessities in the form of low-cost food and clothing stores - in every community. [I'd prefer to see the super wealthy supporting the schools, underwriting tuition. This point doesn't seem to go with number 1. My own suggestion: don't rely on others to step up to the plate. If there is an area where money can be saved, get together with other families and make it happen, or start your own gemach. Here is how Mom-in-Israel puts together an almost free camp (I and II). There is no reason cooperatives couldn't be employed for pre-school, babysitting, etc. See Mom in Israel's tips for setting up cooperatives].

3) Our mosdos must work hard on building endowments in our schools so that the percentage of our income going to tuition can be reduced. [Agreed. In addition, staff costs are by far the biggest cost. Perhaps staff can be shared more effectively. My own experience is that hiring part-time costs does not cost half, more like 3/4's. And let's look at what is being duplicated and consolidate].

4) We must create a system for our chasunos like they have in Antwerp,where, together with volunteers, the cost of simple weddings can be lessened by a large margin. [See Harry Maryles' post on "Simcha Weddings" in Chicago. A good place to start might be modest bar mitzvahs. A challenge of weddings is that two parties are involved and there is a ton of emotion. More than one parent I know has just coughed up the wedding to make things more peaceful, or even save the engagement. Perhaps what we really need is volunteer mediators. :) ].

Thank you for allowing me to share my thoughts and for a great paper. [None of my comments are meant to be critical of this family. The notes are just an easier way to jot some thoughts down quickly].

Ezriel Schwartz
Brooklyn, N.Y.

Avrohom Birnbaum responds:

I thank Ezriel Schwartz for his important contribution to this discussion. Indeed, the plight of the middle class in our communities is one that truly warrants discussion. As a collective community, we must band together to think of ways that will make it easier for people who earn a living honorably to be able to meet their expenses without falling into debt. The suggestions put forth in the letter are a good start.

Nevertheless, I think we would be fooling ourselves to imply that "keeping up with the Joneses" is a reason that accounts for only a small minority of those who borrow themselves into a spiral of debt. There is no doubt that a very large segment of the population does borrow money in an irresponsible way so that they can make simchos that they won't be ashamed of [like I said, time for someone to roll out a better model. For an example of leading by example, see "Gashmius NOT on parade"] or buy a car or house that they won't be ashamed of [we need to better transmit the message that modesty isn't just hemlines and necklines]. It is that large segment of the population, or those contemplating joining that group, to whom my words were addressed [I still like the original article, but it seems like the white elephant is still being ignored. Oh well].

Yours Sincerely,
Avrohom Birnbaum


Mike S. said...

I assume the last sentence should be in orange?

On Kosher markets, ours is expensive for items that can readily be purchased from general brands, but for items that come from the kosher wholesellers, our store is cheaper than the kosher section of the supermarket, even tho the latter is quite extensive.

Tamiri said...

If you were to show this post to a curious "outsider" they would say to start dealing with all the issues (from cradle to grave) by having less children. Is that cruel? Is there any way to have our cake and eat it too?
Most families could probably wing 2 full tuitions.
Truth in advertising: I have 5 kids, not so many but not too shabby either and I feel sorry if people have to limit having children because of tuition.

Ahavah B. said...

What Birnbaum basically did was shoot down the obviously factual reality of the largest(?) segment of frum society. Basically, he dismissed the letter writer's concerns with a wave of the hand. That attitude is what is wrong with our leadership - their head-in-the-sand cavalier attitude toward struggling families. It is certainly true that people take out loans they can't afford in order to celebrate simchas - but Birnbaum is suggesting that prior to that, they didn't have any debt, and if they had just not done that, they would be fine.


People take out the loans because they figure they are ALREADY so far it debt that in the great scheme of things, they may as well let their daughters enjoy their wedding in style, or their son's bar mitzvah.

People who are on the border tend to try and make responsible decisions - they don't want to make things worse and perhaps even see a light at the end of the tunnel. But the vast majority of parents see no light - and since they are buried in debt anyway, why SHOULD their child not have a great simcha?

That, I think, is where we really are, and until people like Birnbaum acknowledge that, there will be no solutions to these problems. There are not hoards of rich uncles out there to "save us" from financial reality. Only a strong emphasis on market rate employment, apprenticeships for young men to learn arts and crafts and skills that will in fact make our communities self-sufficient, and a rejection of the self-defeating paradigm that double-digit kids is anything people should aspire to.

But I'm a pessimist, I guess. I don't see these things happening. All I see is things getting worse.

Ariella said...

With respect to weddings: there was a kol koreh issued to put a cap on the spending. It mandates no vort at all with a warning that the l'chaim should not become a vort in all but name. It caps the guest list for the dinner at 400 (but I'll tell you that is not a small amount of people to feed a full dinner to at usually $50 per person at a cheap place. Interesting that the cap on flowers is quite bare bones at $1800 tops for decorating the whole shebang (that is stretching pretty far if you plan to have floral centerpieces on each of the 40 tables for your guests in addition to a bouquet and chuppah decoration, while the music restriction allows up to 5 pieces, only venturing to recommend a one-man-band. One of the better ideas they give is the simple "no bar." Not only does this save a great deal of money but can prevent some people from overindulging while the booze is flowing freely, which can cause ugly or dangerous behavior.

My daughters' school has set up its own limitations on bas mitzvah celebrations. The truth is even without it, I would not have thought of hiring a hall, gowns, hairstylists, bands, and photographers for my daughter's celebration, which will be modest even by this school's standards. But, as my daughters' inform me, there are families whose daughters have had exactly the elaborate type of affairs the school seeks to avoid. But people with the money and social expectation of such affairs would probably go ahead despite a school letter. And I don't think there would be any consequences for them. It's just the school letter sets the tone for the majority who do not have to feel too bad then for not spending ten thousand dollars on a bas mitzvah, for their daughter will not be the only one to have a small party.

SephardiLady said...

In a past post that I linked to here, I mentioned the wedding takanah or kol koreh. Even if the takanah had been taken seriously, families that can't afford that type of wedding but try to will still be put into debt.

DAG said...

The market WILL correct itself...the only question is how many Frum Jews get swept out in the Tidal wave

mother in israel said...

The letter mentions his old cars-- in the plural-- without comment. Even old cars must be insured, and they tend to use more gas (speaking from experience here). Paamonim, a non-profit organization in Israel that helps people get out of debt and balance their budgets, won't loan money to anyone that owns a car.Of course in many American suburbs that's not an option.

SephardiLady said...

Depending where you live, two cars can be a necessity. The schools are often not located in the community and bussing is more expensive than maintaining the car, and those who cannot be serviced by public transportation still need to get to work. If your employer pays for transport, you are in luck. If not, maintaining and insuring an older car can be a "wash," or perhpas the more economical way of doing things.

I admire those families I know who manage on one car. But, it isn't always feasible.

SephardiLady said...

DAG-Agreed. But in an optomistic moment, I'd like to think we could look into the future and quell the tidal wave. :)

Anonymous said...

Please expert budgeters out there--HELP! Maybe I am doing something wrong. I earn $100,000 per year and have ten kids (eldest is 18). My wife earns enough money to pay for a cleaning woman once a week and is a stay-at-home mom. Groceries, tuition, car expenses, simchas, gifts, clothes, health and dental costs not covered, medication and orthodonture are not at all covered, etc. total more than our income. I am posting from a friends computer as we have no tv or internet at home.

Anonymous said...

There is no way to support 10 kids on $100,000 a year unless you live in a rural community and get free tuition - so I recommend that you make aliya and live on a moshav - you will get free tuition, free healthcare, and extremely cheap housing

Anon E Mouse said...

Your wife could cancel the cleaning woman and work for $$$ at home (which won't be easy while being a mom to 10 I'm certain!).

Meanwhile your 18 year old could work part time (I assume s/he is a senior in high school?).

But for a family of 12, shopping in bulk and couponing will be crucial too.

Before making aliya, make sure you have a salary lined up there--- it makes me crazy to see people making aliyah with no idea what they'll do for a living there.

SephardiLady said...

Anonymous-I will put it up for my readership to comment.

SephardiLady said...

But, I will have to wait until tomorrow. So give me a day. Thanks. :)

mother in israel said...

Boys can wash the floor too. If all your teenagers are away in yeshiva, teach your younger kids. Here's my post on the subject:
kids and cooperation

Tamiri said...

anonymous with $100K: I think this is a gag. How can you write "My wife earns enough money to pay for a cleaning woman once a week and is a stay-at-home mom" - she makes money staying at home? Yet you write "I earn $100,000 per year", no plural "we earn".

Ahavah B. said...

Anonymous 7:40

If you are really in that much trouble, then you must understand that things CANNOT go on the way they have been. Things are going to have to be drastically changed until this situation is under control - serious belt tightening, to say the least. If you can admit that and accept that, then there is hope. If you can't, then you're doomed.

You didn't mention how old your youngest child is - every child you have who is at least 14 needs to get out there and get a part time job to help you get out of debt. You need to be honest with them and involve them in your budgeting process. If your youngest child is pre-school age (I am not in favor of putting kids younger than 4 in daycare) you wife needs to also get a part time job during school hours or make more $ at home.

And I agree with the comment above - a "stay at home mom" does NOT need a cleaning lady. You have got to get real, or things are only going to get worse.

There are no doubt other things that can be done, but only a hard honest look at where your money is going will help you figure out where to increase income and decrease spending.

If you would like to email me privately, I would be happy to show you how to set up a spreadsheet for bill paying and budgeting. This accomplishes three things - one, it shows you where the money is really going, and two, it shows where priorities are lopsided, and three, it provides a framework for structured bill paying instead of constant spending.

Ahavah B. said...

PS Anon 7:40

To contact me privately, click on my name highlighted above. It will go to the profile page, which lists my blog. The top message on the blog is for you.