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Wednesday, September 10, 2008

Book Review: Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead
by Tamara Draut


(Please also see the Guest Post on Life Insurance following this post).

I keep walking by this book on the library shelf. Tempted to pick it up and give it a quick read, I've passed on the opportunity. Fortunately finance blogger TheFinanceBuff has posted his own 6 part review and I can see that my initial guess about what the contents would be was correct. I guessed the book detail financial stories of young people showing that they can't get ahead because of external factors when much of their problem (certainly not all of it) is their own fiscal behavior. I also correctly guessed that the author would then conclude with a call for more government action, rather than a cry for personal responsibility, which is a cry we could use more of.

Seems my guess was right on the money. The Finance Buff recommends highly against this book writing, "1 star, harmful more than helpful. Getting hung up on entitlement and developing a victim mentality will not help our younger generation get ahead." Couldn't agree more. Seems this conclusion has been echoed on my blog on a weekly basis no less in regards to the frum community.

The reason I bring the review to my own pages is to outline how financial trouble starts brewing. While the stories in the book are not profiling frum Jews, the patterns are similiar. If you want to get ahead, don't do what the people in this book are doing.

The Finance Buff's reviews include the following:

Stories from Strapped: College Education

Here is the secular version of the frum story I've seen:

Renee’s parents couldn’t afford to pay for her college, so she attended community college while working full time and supporting an unemployed boyfriend. A new job created conflicts with her class schedule. She dropped out with $4,500 in student loans. Four years later she’s still paying the loan. Without a college degree, Renee works as a legal secretary earning $28,000 a year. Renee regrets not being able to earn a four-year degree.

Renee's problem is not the small student loan, although she would be better off without it. Renee's problem is that she is trying to support two people on her own low salary and because her boyfriend isn't financially contributing, she has no time to plan for the future because there are bills coming due now. If Renee was frum, she might be trying to support a husband (either in kollel or in training for parnasah post-kollel) and young children on her low salary. And in addition to having more mouths to feed, she has daycare bills to pay, tuition bills looming, a minivan that has been financed because she needs to run carpool, and she can't get onto a career path with more potential because there are simply too many balls in the air at once. Renee should be able to turn her situation around rather quickly. I'm not so sure about her frum counterpart unfortunately.

Stories from Strapped: Paycheck

The author is trying to make the case in Chapter 2 that young people can't get ahead because they lack good jobs. No doubt that the global economy and outsourcing have made it harder to compete. But the stories to prove the case do anything but.

Here is the secular story:

Susan had seven jobs in six years after she graduated from college. She quit her first job because she wanted to live close to her future husband. She left her second job because another job offered a higher salary, and she quit her third job because the hours were too long. She left her fourth job because a startup gave her substantially higher salary and commission. After the startup failed, she was unemployed for a while. Then she got into retail, her sixth job. She left the retail job for law school. Now she works for a non-profit while attending law school.

With the exception of being laid off, Susan's inability to command a better salary doesn't have to do with lack of work, but rather her inability to stick with the same employer for an extended period of time.

I met the frum version of this story more than once when I was dating. It came in the form of young men who blamed the Yeshiva system for not encouraging them to pursue higher education, yet the higher education wouldn't have helped them get off the starting block because they would up and leave their employers regularly. One man around 30 years old who I spoke with seemed very lovely. When I asked about jobs, it turned out he had 10 jobs in his 10 years job history. He wished he would make more money. But, employees who don't stick around much past the time frame it takes to train them, don't tend to get raises. Other times the story revolves around a young man who sincerely wants to learn, but also wants to work and bounces between jobs and Yeshiva, settling into neither one.

I don't find the girls to bounce as much, but that often changes with marriage. Today it is popular for young couples to take a year to learn in Eretz Yisrael. The wife, barely into her career path moves. Perhaps the most dramatic bouncing I have seen was a young couple that lived in three locations in three years, each move coming with a change in kollel. The wife had taken on sole support, but of course was switching jobs like no tomorrow. . . . and she threw in some maternity leaves for good measure. I can only imagine that despite having taken on the primary earner role, she has been placed on the "Mommy track."

Stories from Strapped: Debt

The author makes the case that young people can't get ahead because they are strapped with debt, student debt and consumer debt.

Here is the secular story:

Lori, a 33-year-old living in Manhattan, still has $40,000 in student loans debt. She earned only $16,000 a year in her first job as a social worker and community organizer in New York. Her income "inched upward" over time but it’s still not enough to pay all her bills and loan payment. So she deferred payments on her student loans.


The frum version of the story is a young modern Orthodox lady who is working as a teacher's assistant, yet must live on the Upper West Side because she believes this is the place she must be to get married, yet her salary is not at all commensurate with living in one of the most expensive locales in the US. She also has student loans that are astronomical because she had to go to college in New York in order to get married.

Starting to see a theme? Once our friend gets married, her story starts to resemble those of Elaine, David and Lisa who have used their credit cards to fund furniture, weddings, and traveling for friends weddings.

Stories from Strapped: Housing

Did I mention weddings? Here the author makes the case that Housing is Too Expensive. I'd agree that housing is a stretch, even moreso for frum families who can't live just anywhere. But, the house of cards isn't just toppling because of housing costs, it is toppling because other expensive choices are being piled onto a shaky house. And some of those stories are about putting on weddings that couldn't be paid for in cash.

I'd say the secular and the frum stories have a similar ring. Debt undertaken in the name of marriage or to get to friends weddings. The difference might be that the major portion of wedding debt in the frum world is undertaken by parents, so one could say that this is a reason America's frum 40, 50, and 60-somethings can't get ahead and/or are sinking in a sea of debt. Even the travel costs to weddings are often undertaken by the parents of bochurim, or perhaps even the parents of the chatan as we learned in this post. Nonetheless, between the costs of dating, marriage, and being mesameach your friends, plenty of money is expended.

Stories from Strapped: Child Care

In this chapter, the author makes the case "and baby makes broke." Can't argue with the author that child care is expensive; darn expensive. Unsurprisingly, the author proposes the cost of childcare be undertaken by big brother.

The secular story and the frum story have a similar ring, but in the frum story "big brother" is the childcare provider who some feel should be doing a chessed and providing cheap care. Of course, in the frum story the costs are multiplied many times over, normally by 2, sometimes by 4, and even by 5 and 6. . . . .and then comes tuition and camp (which is not considered a necessity, not a luxury as we are continually being told).

Regarding the feeling that those who provide childcare are providing a chessed, my friends are always talking about how terrible it is that (frum) childcare providers charge so much (as if they don't have families of their own to feed). My friends also complain there are just simply not enough Jewish and frum childcare providers. My friends who are have been frum childcare providers tell me they have said enough because they didn't get paid on time, that the mothers were constantly asking for discounts because they "can't afford" so much (note to any babysitters out there. . . . never, ever, ever agree to give one mother a discount because it will come back to bite you when every other mother wants the same deal because people talk), that they were constantly being pressured into providing additional hours that the provider had specifically specified she would not do, and that they felt like shmattas by the end of the experience.

Conclusion

It is by no means easy to get ahead and stay ahead in this competitive world. But none of these stories are really about people who can't get ahead at all. They are stories about people who won't get ahead because they are making very expensive choices and are loosing financial ground while those making more frugal choices are gaining financial ground.

No doubt that in the frum world we have more limited choices. But, within those choices, we can't squander the parnasah that Hashem grants us. It is wonderful to have large and larger families. It is wonderful to attend friends weddings. It is wonderful to buy nice furnishings, clothing, etc. But, choices have to be made and if you make too many expensive choices equals broke.

I agree with the author that books like this do nothing but promote a victim mentality. I do hope my blog promotes a feeling of empowerment, because empowerment is what is needed to gain some footing in a tough world.

9 comments:

tdr said...

Argh. These stories are truly aggravating.

I was pleased to the see the tenor of the first 3 Amazon reviews was similar to that of your post. Hopefully this is an indication that this book is not as appealing to the mainstream as the publishers might have thought when they signed the deal.

Esther said...

Let's say someone wrote the book with your frum examples, and people in the secular world read it. I think the solutions would be just as obvious to them as the solutions to the secular examples are to us. Such as - limit family size, buy cheaper food, live in a less expensive neighborhood, and stop going to private school if you're middle class.

But we're not "allowed" to make financial decisions based on normal criteria. So in that sense there is the "blame the system" aspect because anyone following the system will suffer these problems. But objectively making the correct financial decisions (taking personal responsibility), will put a lot of us outside the frum world...

I'm not disagreeing with your post, in fact I'm pretty sure we're in agreement about this, but this topic just really upsets me. The pull between trying to do the right thing financially and trying to do the right thing Jewishly is nearly impossible for a family earning under $50K a year.

tesyaa said...

When does it make sense to cut back on retirement savings? Ever? I'm short of cash but I'm close to maxing out my 401(k). We have very little liquid savings but decent retirement savings (less with the market down, but we're not close to retirement, so I expect it to rebound.) I would feel better with a little cash cushion, but my husband warns me against cutting our 401(k) contributions. Can a family save for retirement and pay tuition at the same time?

Commenter Abbi said...

Sorry, I have to disagree about the childcare. Subsidized childcare makes a huge difference to many families here in Israel. It allows many families to get quality, supervised care, at a rate that allows the mother to actually take home the money she earns and make a difference to the family budget. It really breaks the catch 22 of child care and second income.

And there is a great system run by Emunah, a frum women's organization.

SephardiLady said...

tesyaa-A cash cushion/emergency fund is a must. Dave Ramsey, a radio talk show host on personal finance, lists building an emergency fund up before maxing out the 401(k) in his baby steps. I like Dave's approach to finances although I don't share the same view on every issue. The baby steps are here: http://www.daveramsey.com/etc/cms/baby_steps_2867.htmlc.

Not having liquid cash can send a budget into a tail spin. If you don't have enough liquidity, I'd consider cutting back, although not to the point you would loose match. (We are all down in this market. I can relate).

Can a family save for retirement and pay tuition at the same time?

Very difficult. I have been planning a post on "frontloading retirement." Frum people often really have only one chance to build up their retirement savings in a significant way, and that is before tuition hits. Something to think about.

SephardiLady said...

Esther-The solutions are obvious but still elusive. The subject upsets me too because I believe Day School education is important. But it is pricing people out quickly.

L said...

I don't live in Brooklyn and where I live it is perfectly acceptable to come to shul on Yomtov in clothing from Walmart and have only one selection of fish and chicken at your seudah. People here understand the economic state of both the world and the frum world and if small children are wheeled to shul this Rosh Hashona wearing hand-me-downs, no one will think negatively of the parents. There are ladies here whose sheitels come from those beauty supply stores that sell them for under $50. Hashem still loves them!
To the people here, the handbag form KMart is fashion. Shoes come from Payless. That is considered normal here. Wearing last year's dress is also acceptable as is wearing something from a neighbor's closet that no longer fits her. Some people even clean their own houses!

anonymous mom said...

I love Suzie Orman's columns and books because of the empowerment she is trying to generate. I think you stand alone, head and shoulders above the rest, SL, with what you are trying to do here for the Frum world. Thanks.

SephardiLady said...

nonymous Mom-I am flattered. Expect another book review of the more empowering type soon.