Building a House of Cards
alternatively, Tuition isn't the budget breaker in this budget!

Reading this letter in the newest Yated just hurts me. Budgets interest me and this budget is so overinflated, although the writer does not realize it, that it hurts. A family of six (four children) is spending a massive amount of money, and while she puts tuition as a primary issue in her letter. . . . . .tuition simply is NOT the reason their budget is literally out of control. Their costs are just simply out of control. I am literally picking up my jaw off my desk after reading this letter because I have a very solid idea of what the expenses for a family this size could be, and this is just shocking.

I hope the recent economic slowdown does not end up biting this family in the bottom. Household budgets is something I take great interest in (over the years, I've helped many people form a budget) and it is clear to me that this family has built themselves a house of cards. Their fixed costs are enormous, so much so that a turn for the worse in business or employment, could take them under, but not because they have an overinflated grocery budget (that could be changed with some hard work!), but because they have an overinflated mortgage and overinflated auto costs, etc. I've written so many posts about tackling the variable costs in a budget (food, utilities, consumer goods). But, if the obligations are massive (mortgages, car payments, students loans), cutting the food budget in half can't save you.

Presuming there are numerous families that have built a house of straw (and I'm certain there are), many families, and by extension the host communities, could be in for real problems if the big bad wolf starts to blow.

Read on [my notes in orange]:

LIFE IS UNAFFORDABLE
Dear Editor,
Today, after finally getting my kids back to school and catching up at work for the time I missed over Yom Tov, I opened up the four weeks of mail sitting at home. Maybe it was the timing that set me off, but when I opened my tuition bill for next year, I flipped.

Now, don’t get me wrong. As parents, we have committed ourselves for our children’s education to be top priority. That bill will, iy”H, be paid in full by hook or by crook. The teachers and the school staff members deserve decent salaries. But for three children, my bill was well over $20,000 [high, but it could easily be double]. What is so bothersome is that in this particular school, the tuition came out to be $8,000 per child and it goes up every year, yet the children get off every year more and more. This tuition is supposed to cover 10 months of the year. When you go through the calendar, you’ll see that it actually covers less than 8 months, which brings it to over $1,000 a month per child.

This led me to go through my expenses for the year and see exactly what my necessary living costs are and what I can cut out.

Truthfully, I am not sure how people survive. We have three kids in school and one baby at home.

Tuition is $24,000 (this includes the extra book charges, dinner charges, and the building fund fee, which we are required to pay).

Camp costs $4,000 for 3 children. One child goes to sleep-away camp. [Having seen what many camps charge, I believe cost is on the low end for camps, especially since the child in sleep-away camp is being fed].

Our mortgage, together with our homeowner’s insurance, is $48,000 a year [$4,000 a month] (and we bought our home before the prices got out of hand. Our property, even in today’s slumping market, is worth double what we paid for it). [I assume this includes tax also, but I'm told property tax is not overinflated in the boroughs. So, even if the property is worth more---which in my opinion is only meaningful if you go to sell it--$48,000 is an incredible amount of be paying on a mortgage].

$30,000 is spent annually on groceries [$2,500 a month]. This includes Yom Tov and extra shopping for the baby. [You have got to be kidding me!!!!].

Utilities cost $32,000 [$2667 per month]. [Once again, you have got to be kidding me!!!! Having been involved with shul budgets, I know you can heat and air condition a fairly large building on $32,000 a year. This is ludicrous].

$17,000 is spent on health/dental insurance. (If not for dental insurance, I would be including $20,000 on procedures done last year on my husband and two daughters). [$1416 per month. I don't know what private insurance runs. It seems overinflated to me. But, perhaps it is not so]. $16,000 is spent annually on car expenses, car insurance, and gas (since we both work and need to drive a lot). [$1,333 per month. A lot of money, but perhaps this part of the budget is the first reasonable line item].

This adds up to $123,000. This means that before taxes and maaser, we need to make a minimum of $170,000. In most cases, this requires both parents to kick in financially. [I don't dare open up this discussion again :)].

Therefore, we also need someone to watch our baby and need to hire help to make sure that the housework is done. In addition, for 2 of the 10 months that our children are home from school due to days off, we have to spend extra money to entertain them [the word "entertain" makes my skin crawl, but that is a subject for another post]- through school sponsored programs or other programs - since my husband and I cannot take off (our jobs don’t give us off for 2 months a year). This costs approximately $50 a day, which comes out to $2,000 a year. Our household help costs $22,000. This brings the family income to $194,000.

For the summer, we move upstate for income purposes. We spend an additional $10,000 on a bungalow and expenses. This brings the number up to a minimum of 204,000- and at that point taxes increase and so does maaser [I start my budget not from what we have to earn, but from what we have to spend from the primary income earner's budget after saving a set amount. Just noting this because this method of laying out a budget is strange to me]...

Remember, this is a 6-member family and we try very hard to monitor our expenses [whatever you say. . . .your food and utility budget would eat through our entire take home pay]. However, often, time is more valuable and we have to spend more on food so that we can spend more time with our children; we might shop at a more expensive local store than run around to cheaper stores. In this cheshbon, I did not mention clothing and other items such as Chol Hamoed trips, Afikoman and birthday presents [thank G-d. I think I'd faint if the cheshbon included those numbers], etc., but I think you get the picture. [Nor do you mention life insurance or retirement savings which is an absolute MUST, especially for a family spending like this].

After making this calculation, I started wondering. My spouse and I both work full time. We both try to make sure that when the kids are home from school - on school days - one of us is home with them. Sometimes it works and sometimes it doesn’t. We saved money when the going was extremely good. We also bought our house before the market exploded, so our mortgage is pretty reasonable for our neighborhood. But there is a whole generation that is graduating school now. They need to be able to live. Something in our society is going to have to give. We may have to create a secluded culture where we are all committed to hiring from within, but then we also need to make sure that our boys and girls are qualified to perform these jobs [I'd say a large part of the spending/budgeting issues just might be the already secluded society. Unfortunately, it is an uphill battle to educate about a different way when there is little to no exposure to it. And, yet, the spending habits I've highlighted on this blog erode the financial foundation of so many that I can't help but to try to be a small voice out there].

I know that this letter will probably have people writing in about how I could save money here and how I could save some money there. (I know I could. I could also move out of Brooklyn to Eretz Yisroel.) But the reality is that, boruch Hashem, I can afford to pay more than maaser, and I can afford to pay more than the tuition bill. As I see it, however, there are more of us who can’t afford basic expenses and these numbers increase daily. Our school system may need restructuring [darn right!], food prices have to come down [they are going up], our baalei battim may have to commit to hiring only frum people [they have bills to pay to, nu?], and other things have to be done [like a complete economic overhaul?]. But we need to start making changes and we need to start making them quickly. The economy is definitely not working in our favor. I hope to hear positive feedback.
C. K.

P.S. Check out some of the comments on ProfK's post, New York the center of the World. . . Not" written by those who left or want to leave NY and the parents/in-laws are hot under the collar about it. Yes, as the letter writer says, "we need to start making changes" and "something in our society has to give." Living in Brooklyn (or anywhere else that housing costs are out of this world) is something that will have to give.