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Monday, June 15, 2009

Guest Post: Crossroads

It took me a while, but I finally convinced a reader of this blog to share her experiences of living life deep in debt in hopes that her story, as presented in brief here, can help other avoid similar pitfalls. Keep reading. If you have questions, I will forward them to her, although I cannot promise a reply.

This could be really long so I'm going to try and stick to the highlights. This was hard to write because it is of course, much more complex than can be expressed in a short essay.

Where we are now

$40k in credit card debt. 3 kids ranging 10 to 5. Our ages: mid-40s (me) mid-50s (spouse). Own our home with $130,000 mortgage. Spouse currently not employed due to an injury. Spouses' business owes IRS $20k and credit cards $50k. We have a $50k HELOC. Future feels very precarious. We are not saving enough for "retirement" (whatever that is). Due to this stretch of spouse unemployment we are almost draining the meager emergency fund. No other assets other than modest house. We have payed down about $40k in debt via Consumer Credit Conseling Services, but at $1500/month this is unsustainable and since I care not about my "credit score" I will probably declare chapter 7 bankruptcy in the next few months.

How we got here

In the interest of sticking to the point, I will divide this section into 2 subsections:
1) mindset/attitude and 2) crossroads, ie events where we could have gone one way or the other and what we chose. Why we chose it can be explained by mindset so I won't bother going into the mindset at every crossroad.

The Mindset

Here are several catchphrases that described the mindset that led me here. I don't think any of these are particularly unusual just like I don't think the end result (deep debt) is particularly unusual.

1. It can't happen to us. Other people go broke, but not us.

2. Comfortable with debt. My spouse was in the process of changing careers. How do you pay for schooling? Student loan of course! Starting a business? How do you fund it? Credit, of course. Need a car? Car loan. When you are comfortable with using credit to buy things, the criteria is no longer "Can we afford it?" because you can afford anything you want, rather "Do we need it?" And when you have a seemingly bottomless pit of money to pull from, that line between want and need becomes fuzzy indeed.

3. Everyone's doing it. But of course when you reach a certain stage in life you 1) buy a house, 2) buy a car. Of course if you are frum your kids go to day school. Again, no objective criteria for determining affordability. Other people can do it -- surely we could, too.

4. Frum Welfare mentality. When we started dealing with the issue of paying tuition and were starting to glimpse the foundering of our financial house of cards, in the back of my mind was this sense that The Commuity would help us out. Whatever that means. :-) It's in the interests of The Community to have happy, stress-free, home-owning families with kids in day school. The Schools being an extension of The Community would surely not let us flounder. That same mindset was reflected in that financial profile of the frum family where the woman expressed something about The Community taking care of her for a couple years in the event of her husband's untimely demise so they didn't need [more] life insurance.

5. Spending on the future. At the time we had our first kids and bought our first house, we still had not really established ourselves financially. We took on a lot of debt because we knew we'd be making more money in the future. Well, we are making more money now (or were until April), but the debt load was so high by then that a huge portion of it went to servicing debt.

6. This isn't really a mindset, but lack of communication between husband and wife on financial matters contributed greatly to this situation.

7. I should mention that I've had a credit card since college (mid-80's) so the credit spending habit has been loooonnng established.

The Actual Mistakes

Bought a house. We had enough for a modest down payment on a modest house (<$100k). But the house needed a lot of repairs and we are not do-it-yourselfers. Credit card debt +$30k. The house was a deal we "couldn't pass up", but in reality we couldn't afford it because we hadn't really established ourselves financially. We had >$50k in student loans and no emergency fund. That $30k eventually was paid off with inheritance money. Lesson learned: Do not buy a house when you are already broke from debt and have no emergency fund.

I stopped working full-time after baby #2 was about 14 months old (#1 was almost 3).. I was losing her mind. We 2 young babes (under 3) and no help from hubby, an 8 to 5:30 work schedule is a straight path to the nuthouse. However, this meant losing employer healthcare. Healthcare costs including insurance ended up being about $1200/month. We could not afford that so much of it went straight onto the credit card. Husband, in 2nd career till not financially established. I have to admit that it really gets under my skin when people (or schools) suggest that household help for dual-fulltime working famlies is a luxury. FYI I can not afford household help now and sometimes it's - ahem - very difficult. The stress of running the house myself and working full-time surely contributes to the current mindset (read on for more details on that). Let's leave that subject for another day.

Maintained faith that things would improve and anyway, people like us don't live like "that" so we continued to incur credit card debt. Lesson learned: where there is a will, there is a way. If you don't have the money, don't spend the money!

Refinanced home to consolidate some CC debt. Our monthly payment rose by $400. I did not understand the difference between secured and unsecured debt. Lesson learned: Do NOT TRADE UNSECURED FOR SECURED DEBT. I go nuts whenever I hear someone on the radio give that advice to someone with a lot of cc debt.

Took HELOC to finance business. As Dave Ramsey says, the cash flow should be from the business to the home and not the other way around. Lesson learned: Do not use your home to finance anything other than your home. I think many people have learned that lesson in the last year!

Bought brand new toyota sienna with inheritance money. Should have stuck with something WAY cheaper. But at least there is no car loan.

The Turnaround

We were in marriage counseling. And when I spoke to a therapist about our financial situation he got very alarmed. Clearly we were overspending and needed to stop. I decided at that point that I was not going to charge another cent even if it meant losing the house, which for me was the worst possible outcome to this situation. It was a turning point for me. At this point I was forced to confront some very uncomfortable situations, such as bouncing a lot of checks and begging the bank to cut down my overdraft fees, calling the kids' schools to say I had no money for tuition, told my cleaning lady not to come back because I had no money to pay her.etc. I also became fed up with my marriage and that enabled me to put my foot down a little more because I no longer cared what my husband had to say about it. It was all very liberating.

Read Total Money Makeover (Dave Ramsey) and started listening to the podcast. I finally started learning what it means to be able to "afford a house". Dave Ramsey provides many useful rules of thumb. Hearing stories of self-sacrifice and paying down debt was very inspiring. He also is very systematic about personal finance and I need that.

Increased work hours to qualify for healthcare. Signing that medical insurance form lifted a significant weight from my shoulders.

During a conversation with our accountant he disabused me of mindset #3 (see above). He pointed out that as far as he knew, everyone was struggling and many many people were not "making it". I felt better knowing that.

Spoke with a financial "big wig" in town. He runs a major charitable organization and is of an entrepreneurial spirit. However, he firmly told my husband that while dabbling in business projects was fine he needed to stay focused on working 40 hrs/week. This made the light bulb go off in my husband's head and he has been diligently putting in those hours since then though as a free-lancer so the benefits remain my responsibility.

The Here and Now

Though we are very frugal now, we still do not adhere to a budget successfully. I don't know where the mental block is. SL I'd like to pick your brain privately on this matter. [My pleasure]. The immediate financial picture is on hold due to temporary unemployment of spouse due to an injury. All creditors have been put on hold. We still owe a couple months tuition and only necessities are being handled. B"H we can handle necessities. The silver lining to the injury is that it will lower our income to the point where we can declare bankruptcy. Sad when bankruptcy is the silver lining.

74 comments:

Lion of Zion said...

thanks for sharing your story

rachel in israel said...

Kol Hakavod for having the courage to share. I wish you success getting out of debt.

rachel in israel said...

SL: please excuse my ignorance, can you explain quickly the pros and cons of secured vs. unsecured debt? A quick google search shows websites who strongly recommend trading unsecured for secured debt...

thanks in advance

Zach Kessin said...

SL: please excuse my ignorance, can you explain quickly the pros and cons of secured vs. unsecured debt? A quick google search shows websites who strongly recommend trading unsecured for secured debt...

Short version, secured debt has some fixed asset behind it (like your house). So if you don't pay it the bank can come and take your house to recover its money. As this reduces risk to the bank they are often willing to give you a lower rate.

On the minus side if you don't pay they can forclose on your house.

My advice would be to cut up and cancel your credit cards.

Ahavah said...

Thank you so much for posting this story.

I cut up my credit cards four years ago but it will be another year before I have finished paying them off.

It was a hard and very sad lesson to learn.

guest poster said...

Thank you for your kind comments.

Secured debt is not bankruptable.

Unsecured debt is.

So you start out with $50k credit card debt. Some unforeseen event occurs and you can't pay it back (an injury, for example). Last resort you can discharge that debt in bankruptcy court.

This is not an option once you've transfered that debt to your house.

Secured debt: student loan, house, car

Unsecured debt: credit card

Shlomo said...

Secured debt sounds like "nechasim sheyesh lahem achrayut" in the halacha.

Zach Kessin said...

Secured debt: student loan, house, car

Actually in general a student loan is not secured debt, though you may not be able to discharge it in a bankruptcy, it is not backed up by any sort of asset like say a house or a car

rachel in israel said...

"My advice would be to cut up and cancel your credit cards."

Given that we don't have credit card debt and use them reasonably. I think will ignore this idvice :)

"Secured debt is not bankruptable."

Thank you guest poster. this information was not on the pages advocating debt consolidation into a secured debt. It does change the picture. I do have two questions, one technical and one personal, feel free to respond or ignore.

If you consolidated most of the CC debt into a secured debt, what are the advantaged of declaring bankrupcy at this point? Won't you still be liable for that debt (take away house for example)?

Personal question: you mention shalom bayit problem that came because of the finantial situation. Do you have any advice on how to avoid them? how to communicate better? etc.

Anonymous said...

Thank you for sharing your story. I feel for you. We all have regrets on how we've managed our finances. It's good of you to try to help others learn from yours. As for student loans, I don't think that was a mistake. If you have gone to a financial advisor before taking on the debt, I think many would have said that investment in an education is "good debt" since in the long haul, it should pay back in increased earning power and more job satisfaction.

Best wishes.

SephardiLady said...

Types of debt:

Unsecured-No asset stands behind the debt. Can be discharged in a bankruptcy.

Debt that can't be discharged-Student loans, tax debts, loans from 401(k)

Secured debt-Mortgages, HELOCS, auto loans, any other loan with a tangible asset that can be discharges

Regarding student debt: I don't particularly consider student debt "good debt" although it has been touted as such. For some it pays off. Others it buries. Certainly when there is other debt, taking on more is a receipe for disaster. Debt is incredibly scary, as my guest poster knows, because of just how quickly it can get out of control and how it controls you.

I do realize not everyone can pay cash. But many people do make very pricy choices because they know they can rely on debt.

Thanks guest poster! It is brave to share your story and I wish you hatzlacha at this juncture.

Zach Kessin said...

"Secured debt is not bankruptable."

For those of us in Israel don't assume that the same rules apply. Actually I have no idea what personal Bankruptcy law in Israel is like.

Zach Kessin said...

2 useful links...

http://www.solvency.org/
http://www.debtorsanonymous.org/

guest poster said...

Student loan on a 2nd career taken in mid-40's on top of a $20k student loan from early 20's is perhaps not the way to go. Hard to say. We will be paying $400/month for the next 20 years or until my husband dies. At that point we will be in our 60's and 70's.

The alternative would have been ... don't know. Not sure why a return to the first career was out of the question for my husband.

Student loans dog people for *years*. We are right now in economic hardship deferal because of the injury-induced unemployment. What if, G-d forbid, the income doesn't come back up to where it was? We could literally never pay it off. I think a better strategy would have been to look into programs for discharging student loan debt, such as working in under-served area for 5 years or something like that. My husband's 2nd career has been SO successful and wonderful for him. It's hard to say he shouldn't have done it. And yet, it's hard accepting living in the shadow of this debt for the rest of your life.

Question: If you consolidated most of the CC debt into a secured debt, what are the advantaged of declaring bankrupcy at this point? Won't you still be liable for that debt (take away house for example)?

The consolidated debt payment is $1500/month for another 2 or 3 years. The advantage of *chapter 7* bankruptcy is that all the credit card debt is discharged. No more $1500/month payments. Not still liable for that credit card debt.

Thanks to the poster above for the clarification regarding whether student loan debt is "secured". I tend to think oversimplistically of secured/unsecured debt in terms of unbankruptable/bankruptable.

Student loan debt, while not secured, is not bankruptable. Likewise IRS debt. Taxes you owe are not bankruptable. However, I believe IRS fees ARE bankruptable.

Like most people, we probably at one point had to make a decision between putting my husband's college tuition on a credit card, or getting a student loan. I'm sure there was no discussion and we automatically assumed it would be student loan. In hindsight, the credit card might have made more sense. Student loan is good debt because it is an investment in the future. So what difference does it make whom you borrow from? I had something like $75,000 available credit. That would have covered the whole cost of the Master's degree.

BTW -- Medical debt is also bankruptable.

Re: shalom bayit and communication. I doubt that lack of communication over finances is an issue where communication in general is healthy. This is an issue we continue to struggle with in our marriage. I have to say Dave Ramsey has a lot of great advice on communication about finances within the marriage and this is one of the focal points of his "program". He is all about changing behavior, and this is one of the behaviors he talks about. In fact, it's the first one to get addressed. One of the things my husband and I have never been able to do on a regular basis and I think couples *should* do is sit down at least once a week and map out the spending for that week. Dave Ramsey advocates for this once a month, but where finances are tight and income is not regular, once a week is better. Again, I recommend the podcast for lots of good advice.

Lion of Zion said...

SL:

"I don't particularly consider student debt "good debt""

our own real debt is my (massive) student loan. but what would the alternative have been?

(at least my degree is an employable one; one reason i changed professions is because my former one would have entailed a graduate degree that could have left me saddled with debt and unrealistic prospects for a decent job)

Anonymous said...

see this article in today's nytimes; it may be relevant to your situation
http://www.nytimes.com/2009/06/16/your-money/credit-and-debit-cards/16credit.html?ref=business

Ariella said...

Good point about the "Frum Welfare mentality." There are people who know their income would never cover all their expenses who expect schools to charge them next to nothing because the question of their access to chinuch becomes the community obligation.

They also anticipate scholarships to camp. When I told someone that I have to drive my daughter to her day camp, she suggested I send her to the more expensive one that offers bus service because I could ask for a scholarship. I'm still trying to arrange a carpool for this camp because its fees are less than half the other one, and I don't bank on scholarship. My "advisor" should be waking up now to the fact that you cannot bank on them. She got an unpleasant surprise when a sleepaway camp denied a scholarship to her child due to lack of funding.

Miami Al said...

Think of student loans as a business loan, albeit personally guaranteed, not tax deductible if you earn over a certain amount, and not dischargeable in bankruptcy court (it's secured by your person).

Is it "good debt?"

If it enhanced earning power more than the cost of repayment, it's "good debt." If you are paying $400/mo for 20 years, but are making $1000/mo extra as a result, even assuming no tax deduction, you are ahead $200-$450/mo. depending on tax bracket. Yes you are "paying it" for 20 years, but who cares?

Is borrowing $20k to attend a state college worthwhile? Assuming a reasonably employable degree, yes, it enhances earning power by approximately $20k/year.

Is borrowing $75k - $100k to attend a private college worthwhile? It depends... an engineering degree from MIT or an economics degree from Harvard probably, you're looking at an extra $10k-$30k/year over the state college degree, plus long term advancement.

Is borrowing $75k - $100k to attend a small liberal arts college and study art history worthwhile? Probably not, because while you will have the "college graduate" earnings increase, it's not an employable degree, and the loans are pricey. Is spending $100k to attend Harvard Law viable? Probably. Borrowing $100k for a no-name law school, probably not, attend a cheaper program at a state university for $25k.

Few would argue that attending medical school is not a good investment in their future, but a graduate degree in Jewish studies is probably a bad investment.

Anonymous said...

I give this woman's husband a lot of credit for going back to school in his 40's. That takes a lot of guts and determination. Both of them may have regretted it if he never took the chance, and they may still have had serious financial problems.
The problem with not getting a degree when you are young, is that if you are shelling out money for tuition/student loans and can't live super-frugally like many students do (i.e. 5 roommates in a two bedroom apartment, no new clothes for 4 years, noodles or rice for dinner 6 nights a week, no car or an old clunker) because you already have a family, that can be a real problem. While getting married and starting a famiy while young has many advantages, there is a huge disservice to teaching children that it's wrong or bad to defer staring a family for a few years until you are done with school (or even worse that secular education is bad, or that only a few colleges are acceptable, thereby ruling out less expensive state schools and schools with better financial aid.

JS said...

Thank you for writing this. As I read it, I saw my in-laws. They have several tens of thousands in credit card debt. I am sure they also have significant business loan debt. We don't have a complete sense of how much trouble they're in because they refuse to talk about it.

They still don't realize how much trouble they're in and think they'll just get bailed out by an inheritance or will just keep living in debt until they die.

They have terrible communication issues because of finances and are constantly stressed out. Things are so bad that my MIL is on the phone every single day with banks and creditors trying to pay $15 here, $50 there to keep everyone satisfied.

Their children are all older so they have next to no real expenses now. However, they still spend beyond their means and don't even try to cut down.

rachel in israel said...

"at least my degree is an employable one; one reason i changed professions is because my former one would have entailed a graduate degree that could have left me saddled with debt and unrealistic prospects for a decent job"

SL: another great idea for a post. Advice to give to high school graduate about career choices. I have plenty of relatives who finished college with useless degrees and need to spend fortunes in grad school, most of them simply didn't understand the concept that their degree would be useless. I have tried to talk to some cousinds about it, of course they didn't listen, but at least I got it out of my system.
My question for parents of college students: How have you handled issues like this. Your son wants to go to X college that costs $50K/yesr to get a degree in underwater basket weaving. Do you refuse to pay, make him pay?
We are far from this stage but I see parents, uncle and aunts deals with this issue.

Dave said...

It is also important to note that bankruptcy laws were changed a few years back.

Bankruptcy no longer necessarily discharges unsecured debt; it is likely that the debtors will still have to pay some portion of the debt incurred.

guest poster said...

JS: re your in-laws. You've spoken of this terribly stressful situation with your in-laws before. I wonder if you can do the "Ann Landers thing" and cut out my story and give it to them with the hope that they can take inspiration from it.

Hope you don't mind yet another reference to Dave Ramsey, but another lesson I have taken away from his teachings is that it's never too late to turn things around. If they are trying to handle all the debt at once with $50 here and $15 there, they obviously are not even using any kind of reasonable strategy. Frequently he hears from older couples like your parents who are in dire straits and feel completely powerless to change things, partly because they feel like it's too late and they are too old to go back to work. There are ways to cope with extreme financial crisis. My husband never got on board with the Dave Ramsey thing, but if he had I would have called one of his counselors. They specialize in attacking huge financial crises with teeny tiny "baby" steps so that people can feel at least like they are in control and can move forward.

I just came across this link: http://www.daveramsey.com/etc/couples_resource_center/ "How to Communicate with your Spouse About Money"

Also this: http://www.daveramsey.com/etc/cms/index.cfm?intContentID=128 to finding a DR counselor.

More about the student loan. I agree that one needs to evaluate the student loan vis a vis one's potential career prospects and earning potential. My husband is in a healthcare field and there are many opportunities in healthcare fields to have your loans forgiven by working in an under-served area. No effort was made to look into any options other than paying it back for 30 years. And frequently no hard financial analysis is done before people take out student loans. It's "just what people do". Very cavalier. No debt of this magnitude should be taken without careful consideration of the consequences.

SephardiLady said...

Dave-My study of bankruptcy was before the passage of the new bankruptcy laws.

You are correct that even unsecured debt cannot always be discharged now. There is an earnings test that helps determine what type of bankruptcy a person is eligible.

Even after the bankruptcy a person is no longer free as there are controls on certain type of expenditures. Most pertinent to the frum community is some of the limits on what amount of tuition can be paid in private schools.

Another

SephardiLady said...

Few would argue that attending medical school is not a good investment in their future,

some doctors might differ. . . .
Going into medicine must be done for the love of medicine because it is getting more and more difficult for doctors.

guest poster said...

In our situation, in our state, we were told that if we made less than $55K in 6 months (equivalent to $110k/year) for a family of 5, we would qualify for Chap 7 bankruptcy* without having to take the means test.

I believe that once the Chap 7 is over, you are free to go with no restrictions placed on spending by the court.

Chap 13 bankruptcy is another matter. My husband was told that Chap 13 would be a good way to deal with the IRS debt of his business. Chap 13 places restrictions on what you can spend BUT the IRS cannot harass you. I came across someone recently who is a trustee of bankruptcy court who is a frum guy. The tax attorney we consulted, consulted with *him*. Boy, wouldn't a guest post by that guy be interesting??

* Chap 7 bankruptcy means you discharge ALL unsecured debt.

JS said...

guest poster,

I don't think it would help. My wife has tried talking to them to no avail. Her father disclaims any responsibility, preferring to let all the responsibility (and all the blame) lie with his wife. Her mother simply refuses to discuss it. Her mother has some undiagnosed psychological issues which make it impossible to discuss these matters with her - discussions about money make her incredibly upset and angry. She also believes very strongly in protecting her children and thinks by never even mentioning financial troubles she doing them a tremendous favor. Instead, half her kids are totally clueless about finances (they don't understand how to handle debt, how to budget, what is a need/want, etc) and the other half are freaking out about the parents' situation.

The whole situation is slowly coming to a head and no one is really sure what's going to happen. One of their sons is getting married (the non-clueless one) and had an incredibly stressful time because of his parents' financial situation - and "all" they were asked to give was $5,000. In the end, the grandparents paid it. Things were even worse for us because my wife's mother planned everything and insisted on everything being lavish even though she had no money. Just thinking about what the remaining son and daughter (the clueless ones) will go through for their weddings is upsetting.

Ariella said...

On going to medical school for a guaranteed job, I learned that only works if you are flexible about where you wish to set up a practice. NY malpractice is so high that doctors are squeezed beyond their actual cost of living with a family here. There is a family that is moving out of NY solely for that reason. The doctor's wife explained that they cannot survive on her salary alone, so their options are Florida, Mass., and Texas as states that have limited malpractice funding.

Offwinger said...

First, debt that is secured is debt for which there is a specific piece of collateral backing the loan. Unsecured debt has no such collateral. Secured creditors have the right to repossess that collateral if you default on the debt, even if you are not bankrupt.

It is inaccurate to define secured debt as debt which can not be discharged in bankruptcy.

In bankruptcy, secured creditors have special protections which allow them to collect from the collateral (though the extent to which some property is excluded differs from state to state). Unsecured creditors only collect an equally proportionate share from what the debtor has.

After the bankruptcy proceedings, and creditors are allowed to collect from the debtor's assets (to the extent there are any that are not excludable), the debtor emerges with most debts discharged.

Chapter 7 bankruptcy does not mean that you discharge ALL unsecured debt. As noted above, some debt can not be discharged in bankruptcy, period. One example is student loans. Another example is that if there is fraud involved in the bankruptcy (e.g., a debtor hides or lies about assets), the debt may not discharged either.

Chapter 7 does allow debtors to emerge with less future restrictions than Chapter 13. But it often comes at a higher "price" (e.g. the debtor needs to have less to begin with and/or keeps less afterwards).

Also, please note that while bankruptcy in the US falls under federal law, the list of permissible exclusions & other bankruptcy-related details are often a function of state law.

This means that two people can have similar circumstances and very different outcomes, depending on where they live.

If anyone is reading this thread and considering their options - including bankruptcy - PLEASE check with an expert in your particular jurisdiction. Do not assume that what is true for someone else will be true for you. This guest post is very interesting, as is this thread (though it does contain some legal misinformation). But please do not substitute the enlightening discussion here for actual advice that is tailored to your specific needs!

guest poster said...

JS -- I feel for you and your family re: your in-laws situation.

Thanks Offwinger, for further clarifying the secured/unsecured debt definition. Feel free to weigh in on the following as well.

An important point to remember about bankruptcy is that before you discharge any debt (let's just say credit cards is the only debt we are talking about here), the court will want to sell assets in order to pay off whatever of the debt can be paid off. Our only asset is our house.

States vary on how much "house" you are allowed to keep. We have approximately $20k to $40k of equity in our house and I was told that it's possible the court would not allow us to keep our house in the event of a bankruptcy since we have "so much" equity. Not sure if we were talking about the Chap 7 or the Chap 13 at that point.

Our house is jointly owned. And I am the one considering bankruptcy. So, would the court be allowed to sell a joint asset to pay off one single person's debt? Anecdotal evidence says no (I know someone who did this etc.). This probably varies by state I'm guessing.

SephardiLady said...

Offwinger is completely correct. Every state is different and bankruptcy law is complicated. Not only should a person in a terrible financial situation consult with an expert(s) that specializes in the law for that area, a person should not try to discharge massive amounts of unsecured debt without legal advice.

An anonymous poster points to a NY Times article above on credit cards companies now being far more willing to make a deal. This is not my area of expertise, but I believe that doing this will trigger taxes as discharged (personal) debt is taxable as income. Such might be fine for many people. But where debt is overwhelming, triggering more taxes that you can't pay off might not be the answer.

A lawyer and/or CPA is a good place to start.

Anonymous said...

JS, the clueless siblings need to be filled in, with the amount of information depending on their ages. They need to know something about what is going on with their parent's finances so 1) they can learn from their mistakes; 2) not plan on getting money that isn't there; and 3) try to ease their parents' situation by not asking for things that their parents can't afford. No one is doing them a favor by keeping them in the dark.

Shoshana said...

Thank you guest poster for your frankness and bravery. I see a lot of us in your story and I really take it to heart. Hashem should grant you revealed blessings and help you resolve this quickly and completely.

We recently paid off a huge chunk of credit card debt with an IRA from my husband's previous job. It was earning very little, especially in comparison to the whopping interest rates we were being charged on the credit cards. Our CPA advised us that we will be taxed/charged at 30% and we have set aside that amount of money accordingly. It's a big price to pay, but the relief is profound knowing that all of the credit cards are paid in full. Thank G-d we had the funds to do this and I can assure you that we will continue the frugal path so that it never happens again!

Charlie Hall said...

"Few would argue that attending medical school is not a good investment in their future"

I am a medical school professor and I would argue just that. Borrow $200,000, and after seven years (minimum) of pure hell you are finally eligible for a job that pays $120,000. Don't expect to get into the best paying specialties; they are extremely competitive. The ONLY reason to go to medical school is if you absolutely can not do anything else for your life's career except be a doctor. It takes that kind of committment.


"it is getting more and more difficult for doctors"

What doctors have to put up with today in terms of poor working conditions and lack of respect is shocking. And things are getting worse every year.


"doctors are squeezed beyond their actual cost of living with a family here"

A frum specialist in my neighborhood who is on the faculty of a major medical school told me that if he can't increase his income substantially within the next year, his 3 kids will be going to public school.

Charlie Hall said...

I am stunned that nobody here has discussed the halachic issues regarding bankruptcy. Specifically, I am unaware of anything in halachah that would permit not paying ones debts. Anyone familiar with chosen mishpat who can discuss?

I would also add that I've known a lot of people who have gone through bankruptcy and for over 90% of them, it does not help: They go right back to doing the same things they were doing before the bankruptcy, be it compulsive spending, living beyond means, risky business investments, etc. Bankruptcy is a quick fix, and like most quick fix, it doesn't last.

Charlie Hall said...

Zach Kessin said...

" 2 useful links...

http://www.solvency.org/
http://www.debtorsanonymous.org/"

I know many frum people who have found financial recovery in Debtors Anonymous. It would seem to be worth checking out. I know there are many meetings in New York, and there is a meeting in Jerusalem.

SephardiLady said...

Thank you Charlie for your comments on doctors. If you have ever wondered why a couple in chinuch can be more financially secure than the doctor's family, the massive debt load might be the answer.

Secondly, I still have to listen to the OU's credit crunch halachic response. I imagine that the permissibility of bankruptcy must have been addressed. The speaker at the talk was a bit too keen on bankruptcy.

I can't see this particular guest poster ending up in the same boat again. But many people do. Most financial problems are not math problems but behavior problems. This is also why trading unsecured debt for secured debt just doesn't seem to solve most debtor's issues.

Lion of Zion said...

CHARLIE HALL:

"I am unaware of anything in halachah that would permit not paying ones debts"

it's called shemita

(i've also heard of people defaulting on loans to make aliyah)

Anonymous said...

is that defaulting on loans to make aliyah, or is it taking out loans to make aliyah easier and then defaulting on them.?

Student said...

I'm currently a 21 yr old male student in YU with 1-1 1/2 years left in college. I'm very surprised that commenters seem to be against grad school, as I always assumed that additional degrees only up your base salary (obviously paying $100,000 for a degree that adds 10K a yr may not be the smartest investment). Even Charlie Hall seems to be wary of entering the medical field, which in my mind was always one of the safest and profitable professions out there. SL and others: What are professions that students should pursue that would set one up for financial independence down the line? For someone who wants to live a typical life in the NY area with ~4 kids, what avenues are available/advisable?

Anonymous said...

as a physician practicing in a frum community in brooklyn with plenty of neighbors as patientns,

there is a tendency, mostly amongst the orhtodox, is that when a doctor is out of network and gets paid, better than if he were in network, many patients adopt an attitude that the doctor got paid by the insurance and they dont feel that you deserve the 20 percent or the deductible. you got paid enough. they all say they are your friend and want you to write it off. by law we are required to collect for the co pay and deductible. many patients who pay their own insuranc premimums chose high dedcutibles to cut their payments but dont want to pay these deductibles when you ask for it.

but when i go to their pizza store or their business, they dont give discounts either. they also want to be seen yersteday and they abuse the non jewish staff tellling them, they are 'my good or best friend' so i shouldnt have to pay the balance. .

talk about entitlements.

yes i make a good living,
yes i am comfortable.
but i went to israel for a year then 4 years of college, 4 years of medical shcool and 6 years of residency (thats a little longer than most) before i started practice. when you are 33 or 34 when you start and you have to start paying back loans and during residency youre not home every 3rd night and weekend, and you have to miss your kids milestones, and during training the yeshivas say, pay full tuition because youll be a rich doctor, or if they defer you because youll be a rich doctor.(but you still have to pay it back one day) i cant say it was worth it.

medicare pays less today to doctors than they did 19 years ago and that is not even taking into inflation. the actual dollar amoutn is less. with obama care, doctors will get screwed but the public is in for a rude awakening.

you wont get the mri when you want it, youll have to wait for your operation , you wont get the tests when youll want them. theyll be waiting lists. ask canadians or brits or irish how they like it.
why does everyone come here for treatment.

its hard to recommend medicine now to someone
tuition at a private medical shcool is 45k alone without room and board. in ny, state schools are about 19k

you put your life on hold and frankly when there is reasonable financial renumeration, you can somewaht justify the sacrifices hoping that you can make it up to your kids when you finally make it.

but i dont think you'll make it under obama care.

SephardiLady said...

Student-Your question begs a further post. I'm headed to bed, but my short answer is that you need to quickly rid yourself of the idea of living a "typical life in the NY area." I'd also rid yourself of the idea of living a "typical life" outside of the NY area.

"Typical" (a diet heavy in kosher products, camps, preschools, balabatish smachot, a four bedroom home, two newer cars/minivans, etc) might as well mean "broke."

My readers actually introduced me to Dave Ramsey (it was like meeting the male, Protestant version of me!). Dave Ramsey likes to say, "live like no one else today so you can live like no one else tomorrow." So true. Frugality is the underlying key to staying afloat.

Now this is not to say that you shouldn't invest in an education. But taking out six figures of debt is risky. Taking on debt when you already have debt causes spiriling debt. Taking on debt when you can not longer live like a student will increase the debt two fold.

At the very least, those looking at financing college with debt should figure out what combination of actions can lessen the debt load.

More later.

Anonymous said...

SL - Thanks for your input. More towards the second half of my question: are there specific career paths that you would suggest that would lead one to be financially independent?

Shoshana said...

The maintenance guy who is on the payroll of our apartment complex spent about 6 hours today working on our air conditioning and duct work. He will be back tomorrow for about 2 more hours to finish up. I asked him if he went to school to learn HVAC maintenance and he said yes. I asked him what he would have made per hour if he was in business for himself. He said $80-$100. I looked up one of the best programs local to my city at a great vocational school. Total cost of program: $3,927. Materials Cost: $80. Completed in 12 months. They will even intern you out before you graduate. I'm impressed and it just confirms the plans I have for my kids to learn trades once they hit their late teens.

SA said...

Actually the Canadians love their healthcare system and it's a right wing myth that they don't: http://www4.hrsdc.gc.ca/.3ndic.1t.4r@-eng.jsp?iid=7


Of the UK, US and Canada guess which country is most dissatisfied with its healthcare? The US! : http://www.foxnews.com/story/0,2933,136990,00.html

And it would be a very good thing to have to wait for most MRIs, because most of the expensive testing done in the States is completely unnecessary, which is one of the biggest causes of medical overspending the states (which is why the US has the highest per capita HC spending in the world and the poorest quality): http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

JS said...

Just a brief follow up:

My father-in-law is a doctor, so it is true that not all doctors are rich, and some, like my FIL, are up to their eyeballs in debt. A lot of this has to do with the fact that he made a lot of bad career decisions and never successfully built a practice.

In terms of my brother and sister in law, they're both out of college, so it's not like they're too young to understand this stuff. They've just always been sheltered and don't see what's really going on. They have no idea what things cost, how to budget, how to save, or that debt is bad. Even worse, the parents still give them money or promise to help them pay credit cards which just exacerbates the problem for them and for the parents (especially since the parents just make minimum payments and no one sees a problem with this). The brother, who is older, is especially a problem as it seems he's making a lot of poor financial decisions (learned from his parents). He's also just harder to talk to about these things. The sister is younger and just starting out on her own so we're trying to give her as much advice as we can. My wife knows she has to talk to her siblings, it's just very difficult given years of "brainwashing" into this lifestyle.

Ahuva said...

Student - Here is the 2008 wage data the government puts out: http://www.bls.gov/news.release/ocwage.htm. If you're not interested in reading the whole thing (it's a little dry), scroll down to Table 1 which lists the number of people employed in each career category and what their mean hourly and annual wages are.

tesyaa said...

It's a violation of insurance plans when a provider waives the deductible or copay. The insurec could technically have his policy canceled.

tesyaa said...

And yashrus just doesn't EXIST anymore (except by accident.) As an accountant, is there something wrong with the following ad on our local message board?

Scheduled Events: Mon, Jun 22: Monday, June 22nd - Annie Sez Coupon SHOP FOR A CAUSE on Monday, June 22nd AND RECEIVE A TAX RECEIPT FOR YOUR ENTIRE PURCHASE PLUS A DISCOUNT TO THE TIFERETH SISTERHOOD JUNE 23rd ROSH CHODESH EVENT: WHAT: For every dollar you spend at Annie Sez, the [Shul Name] Sisterhood will receive 15% donation and you will receive a tax deductible receipt for your ENTIRE purchase. WHEN: Monday, June 22nd, 2009 WHERE: Annie Sez; [adddress]

Anonymous said...

Tesyaa: After just paying my second quarter taxes, these things make me nauseous. I would like to believe that the person who wrote the ad is just ignorant, since a lot of people don't understand tax rules, but I hate when people don't go to the trouble to find out. There are so many easy to read materials readily available to guide non-profits and religious organizations on the basics --- and this one is quite basic.

SephardiLady said...

tesyaa-Illegal. No ifs, ands, of buts.

Anon819 said...

Thank you for posting this. I had seen your comment a few weeks ago on a post here, talking about considering bankruptcy, and had wanted to contact you. We just filed the chapter 7 paperwork. Our story is very similar to yours, and I appreciate hearing someone else experiencing the same thing.

Avi said...

@Student - It's simple, really. You want to live in the NY suburbs with four tuitions and some cushion to go out to eat, give tzedaka, and take a modest vacation every once in a while? Well, you have two options: A) find any career that pays $300K per year, or B) find two careers that pay $150K per year.

Your career options for A include:
- become a successful entrepreneur
- become a partner at a midtown services (law or accounting) firm
- become CEO of a Fortune 1000 corporation or CFO/COO of a Fortune 500 company
-become a hedge fund manager. In good years you might make a lot more than $300k, which should make up for years like this one

Your career options for B are considerably more diverse; all you need to do is ensure that both you and your spouse become a VP or a C-level executive at mid-sized or larger businesses. Finance, marketing, or computer science backgrounds are good to get you started, but you'll need to rise quickly and eventually be at the top of your peer group. Alternately, while one of you is a VP, the other one can go into medicine, become a tenured professor at an Ivy League grad school, or work as a senior level associate or partner at a mid-tier law/accounting/finance/actuarial firm. However, to make this work, you must both achieve this level - one of you cannot teach or do part time OT/PT/ST or be a social worker - you'll come up short.

Of course, you also need to avoid excessive student debt, don't have kids until you have established a career path, stay in an apartment until you can easily afford a starter house, stay in the starter house (or expand it piecemeal) until you can easily afford a larger house with room for your four children. Also, neither you nor your spouse should take off time for children or layoffs or medical issues because that will push out your timeframe for the kids/house/tuition. Since you don't have total control over all of these issues, you'll have to have some hashgacha pratis - I recommend regular tefilla and tzedaka.

Any questions?

Ahuva said...

@Avi - You can't live in NY suburbs + pay tuition on $200k/year? A family doesn't have to own their own home and that smaller number is reachable with two working parents in a number of fields.

Student said...

@Avi and @Ahuva -

I really appreciate your input. Honestly, it doesn't seem like there are too many options out there, as to get any of those $300K positions isn't too simple. I don't really know about the second option, since I don't know if my future wife would work with small children.

This question is also @tesyaa too:

Any advice for someone majoring in accounting? As I leave YU, I'll have less than $8000 in student debt, as I have a full academic scholarship and don't have more than $2000 of loans per year. Any advice for future career plans, and the steps to get there along the way? Is it a bad move to take a year off to learn when married, maybe with a child, as that would push things down the line?

Anonymous said...

SA---I guess it's a good thing when you find a lump in your skin and your internist says, "better get that checked out" for you to have a 3 month "cooling off" period? I agree many tests are done unnecessarily, but that has to do with out of control lawyers.

America has the #1 health system on the planet. Americans don't go to Canada when they have cancer. Canadians come here. There's always some Israeli family in town for heart surgery. Ethicists in England are already debating when is "too old" for care and when babies are too disabled for care.

Almost all innovation comes from America in medicine, and the best doctors. We are keeping the socialist countries afloat. The world will suffer if we enact Obamacare.

Incidentally, try taking the same poll of 60 year olds with cancer or kidney problems, and then you will find out who is happy with their healthcare. Makes having to pay a $10 copay for a strep culture not seem so bad....

I'd rather be treated and spend the next 20 years paying it off than die on a waiting list and spend those years in the ground.

Americans have no clue what it is like to not have a service available to them that they can buy/finance at some price. They go ballistic if the grocery store is missing 1 variety of exotic apple that they like. We freak out if the power is off for an hour. How will Americans react to being told their kid has to wait 3-6 months to get a cancerous growth examined, and another 3-6 months for treatment?

tesyaa said...
This comment has been removed by the author.
tesyaa said...

Student, I'm not an accountant -- I was referring to SL and other commenters who are accountants.

Commenter Abbi said...

Anonymous: I guess you didn't read my first link. The people in Canada who are happiest with their hc are 65+.

America has the crappiest system for the majority of its citizens. It's good for only .5 percent of the population. Not much of a system.

I'll take my Maccabi insurance here in Israel any day of the week over the crap they serve in America. I've never had to wait for any testing or any services including phsyical therapy and pregnancy ultrasounds. Stop believing the right wing propaganda.

In America, they let children with toothaches die from brain infections and nobody even debates it.

Miami Al said...

Med School ROI. A newly minted MD has approximately 50k - 200k in student loans depending on public vs. private med school. Add another 15k - 30k the averages for undergrad, and you're looking at 65k - 230k.

Your newly minted Doctor has an expected starting salary of 120k. Had he stopped with the BS in Biology, he'd have an earning power of $40k, $50k with a Masters. Keep in mind, the undergrad student loans got him to $40k.

Instead of Med School, let's send them to a PhD program. The RAship/TAship should pay for the education, so no more loans past undergrad.

Borrow 30k -> 40k, borrow 100k -> 120k, so for 100k investment, you get 80k/year, that's a great ROI.

Now, our young Doctor got into competitive medical school, and he believes that he is the worlds best and brightest. He kept in touch with some high school and college buddies. The ones that he hears from are the Doctors in the field already making 6 figures... he doesn't hear from the guy that flunked out of law school, owes an extra $30k in student loans and is struggling at $40k, that guy drops off the grid. He also doesn't hear from his buddy that is a struggling stock broker making $25k-$30k, but you can bet that at the 10 year reunion, his hedge fund managing friend is showing off pictures of his yacht.

The problem with Med School isn't the ROI, it's probably the best ROI degree out there... The problem is that the doctors compare themselves to their most successful non-doctor classmates, ones that succeeded tremendously in their field, and think that it is unfair that they are more successful. The most successful Doctors make great money, but not all Doctors are tremendously successful.

Shift work in the ER pays a good salary, is pretty steady work, and a great ROI on the degree.

Regarding health care... our system is ridiculous, and it's going to get worse... Because regardless of what Obamacare starts at (a mix of good and bad), after it gets through Congress we're going to protect the trial lawyers that cause defensive medicine, the insurance companies that make money denying claims, and every other entrenched player. That said, the US funds almost ALL medical research because the socialized companies deny profits to the drug companies, and the marginal cost of pill production is small, so you are amortizing the fixed cost of R&D on the US. Our bouncing in and out of insurance is a disaster.

Our system is great if you are wealthy, carry your own insurance, have enough cash for deductibles/max out of pockets (our insurance discussions focus on the stupid co-pays, not the big risk) and never get a disease with "experimental treatments," or worse, never get too sick to work and therefore lose insurance and in this brilliant system, you are now responsible for the costs of treating a disease you got when insured because they were able to dump you.

If I get in an accident and can no longer drive, so I dump my insurance later, I'm not stuck with the bills from the accident, the insurance company still is.

Ahuva said...

"If I get in an accident and can no longer drive, so I dump my insurance later, I'm not stuck with the bills from the accident, the insurance company still is. "

Actually, that's not true. Car insurance covers liability. If you were injured in an accident caused by someone else, then their insurance would pay. If you were injured in a car accident that was your own fault, your insurance isn't going to pay much of anything unless you've purchased separate medical coverage. Even if you have purchased no-fault medical coverage, that tends not to be a large amount since it's so expensive. I don't think I have more than $5,000 in PIP + no-fault medical combined. There's uninsured motorist coverage (which would cover your scenario), but statistically I'm not sure that there are so many cases where the accident is someone else's fault *and* that person was uninsured.

Anonymous said...

People who think dealing with insurance companies is bad ought to try dealing with the IRS.

The private sector has problems, true, but the government solution is always worse.

Anonymous said...

Did you notice your report on Canadian healthcare was published by the CANADIAN GOVERNMENT? Would you accept a report on satisfaction with private insurance that was sponsored by Aetna?

SephardiLady said...

Student-
I don't really know what advice to offer an accounting student in the quest to make $200K and more except to say that you must make your career goals the single most important pursuit. I didn't go that route. I would say that I chose more low key work, but Hashem works in mysterious ways, and more low key work, chose me.

If you are looking to live a normal material life in the NY region, I don't believe that taking a year off to learn in Israel is going to be easy. Remember, it isn't just a year away from trying to "swim" in big firm, but a year away for your wife too.

(By the way, unless you are talking about earning two massive salaries that will cover the around the clock household care that is often needed when you have two spouses on high powered career paths, it is normally better when the income is concentrated in the hands of one income earner so that the other income earner can exercise some flexbility. Of course, if a recession hits, as now, and there are layoffs, maintaining that lifestyle isn't going to be easy).

Other advice: Get out of debt as quickly as humanly possible. Live like a student until you marry, and then live as cheaply as you can while you save for the first home. Then continue to live with less so you can have an emergency fund that is large lest life derail the best laid plans.

My own advice stands. . .I'd divest myself of the notion of living a "normal" life and concentrate on living a fulfilling life. Avi's advice is the way to get ahead in NY. But, it isn't very appealing advice. If you don't want to leave kids in care 6 weeks after giving birth and you want more flexibility, then you should probably reconsider the wish to live a "normal" life in NY.

Avi said...

Ahuva, you don't need $300K right out of college, but by the time you have a couple of kids in high school? Yeah. And this is to be comfortable (not extravagant, just "normal," like Student said) in the NY area, living in a pretty small home. The numbers aren't hard to figure out. Yearly amounts in today's dollars:

Tuition for two kids in elementary school ($30K), two in high school ($44K) = $74K.
Day camp for the elementary school kids = $5K.
Braces or tutoring or therapy (you've got four kids. Someone's going to need something) = $2.5K.
Property taxes on an expanded starter home = $11K.
Mortgage on $400K home ($300K home + $100K of work, or just $400K to start, assumes you saved up to put 20% down) = $26K.
Annual home repair = $6K.
Food = $15K. Add another $5K if you eat out a lot or if your high
schoolers are boys. I'm leaving it out for now.
Life insurance = $2K.
A car and a minivan ($50K/10 years at zero interest) = $5K. Higher if you finance or buy fancier cars.
Car insurance $1.5K
Gas $1K
Car maintenance $.5K
Medical (payments towards insurance, copays, medicine) = $5K
Utilities = $5.5K
Phone/wireless = $2.5K
Clothing = $5K
Household = $7.5K
Retirement savings = $20K
Simchas = $8K (assumes $10K per bar/bat mitzvah & $20K per wedding over a 15 year period)
College savings = None. Send the kid to a public college, it'll be cheaper than high school.
Vacation/trips to Israel = uh, no.
Maaser (includes shul dues, mikvah, etc.) = $20K
State, Federal Taxes and AMT on $182.5K in pre-tax income (that's after allowable tzedaka and retirement savings subtracted) = $69K? I'd need to run this scenario through a tax program with NY/NJ state tax rates. This is just a guess. It goes up if the charitable deduction goes away and/or Obama/Congress jack up rates on the "rich."
Total required income: $291K.

This isn't living a life of luxury, it's just what you need to pay tuition, give maaser (which R. Shachter says is optional), and save a little (really, just a little) for retirement and major life events. It also doesn't cover entertainment (not even cable TV), giving gifts to all the smachot you are invited to, and a bunch of other things, like school ski trips and other add-ons on top of tuition. Oh, and if you want to live in a larger/nicer house, that costs $600K+ in frum NY/NJ
neighborhoods. So I'd round it up $9K/year to be safe, and there you go - $300K.

If you follow SL's advice, you'd never live in the NY/NJ metro area to begin with and you'd probably also spend less on clothing and food. And if you can come up with $200K outside the NY area where housing and taxes are lower, you can probably make ends meet, especially if you cut back on tzedaka and retirement saving. But I'm not making this stuff up. This is the income required to send a large ("just" four kids!) family to private school from K-12, plus live within an eruv in an expensive metro, buy kosher food, give charity, etc.

Anonymous said...

Student: Plenty of accountants have excellent earnings working places other than the big firms. However, getting the training, connections and resume building that one of the big firms provide can be very helpful so starting there if you can get in will help you on your goals. Just remember, you will need to be prepared to put in very long hours. Also remember that it's never too early to start networking and building relationships. Even though its very hard to do when you are working 60 hours/week, get out there and get involved in professional organizations and community organizations. Attend seminars (eventually you will want to be a speaker), learn about industries you might want to specialize in/work for -- are you going to try to develop clients in banking? in high-tech? importing? hospitals? Figure out if you want to do audit work/financial reporting? tax? forensics? etc. There are different game plans/business plans for different areas of specialization.
Think ahead 10 years. Do you want to position yourself to get an-house position as a controller? What about a government job?
Remeber that absent getting a great in-house job, to get the really big bucks at a private firm, you need to be a good marketer so work on client communication and development skills. Finally, always remember that your good name and reputation is key.

Anonymous said...

Abbi, I have to disagree, I think it's good for a lot more than .5 percent of the population!

Mark

Anonymous said...

"I'll take my Maccabi insurance here in Israel any day of the week over the crap they serve in America."

Here, I have lot's of experience as I had Maccabi for almost 10 years, and Maccabi Magen and Maccabi Zahav for almost all of that time. I also had a Sharap policy through my workplace for most of those years.

For routine things, Maccabi is perfectly fine, other than some small procedural issues and periodic inordinate lines. I hear that they (and all other options as well) are excellent for childbirth and infant care. However, for acute events that require urgent care, they are not so good. I've heard a number of stories and even had a terrible experience myself, in the worst area of care in many opinions, orthopedics. I broke my hand pretty severely (open wound, bones out, bone fragments dislodged all over the place) and required orthopedic surgery as soon as possible. I arrived at the hospital in an ambulance (which I had to pay for in cash myself, not covered at the time) and was minimally taken care of - X-ray, clean the wound, wrap it in gauze, and told to rest and see my doctor the next day for a referral to an orthopedic surgeon. I went to the orthopedic surgeon (on the Maccabi plan) and he told me that he can schedule me for surgery in 6 weeks, and that he would set the bone, and rebreak it in 6 weeks to position it correctly. I didn't like that advice, so I went to a different surgeon (head of orthopedics at Tel Hashomer (Sheba)) and he told me that he could schedule me in 6 weeks as well. Then I contacted my Sharap company and they sent me to the exact same doctor (head of ortho at Tel Hashomer) and he then told me 2 weeks. Right away there is a problem that Maccabi Magen can get 6 weeks and Sharap gets 2 weeks! Then I tried to use some protectzia and went to a family friend who was a respected doctor to try to get me something better than 2 weeks, and this guy gave me astounding advice. He said that there is a shortage of orthopedic surgeons in Israel and that if I can, I should go to the USA to get it fixed. So I did.

My cousin drove me straight to the airport that evening, I purchased a ticket at the counter, and flew on the 1AM flight to JFK. Arrived at JFK at 6:30am or so, my mom met me at the airport and drove me directly to an orthopedic surgeon in Cedarhurst (10 minutes from the airport) that they called the day before. He examined me, told me to keep it elevated to reduce the swelling, and scheduled me for surgery the next morning at 7:30am. That's about 25 hours after I landed. I still had good medical coverage in the USA, because I was on a long-term leave of absence from the job I had before I moved to Israel a half year or so earlier). I did have to pay for a large part of the physical therapy afterward, but the bulk of the expense (2 surgeries at about $30k in total) was paid by the insurance company.

By the way, I asked my surgeon if he would ever wait 6 weeks, or even 2 weeks, in a case like this and he was aghast, and said "no way", it would be much more likely not to heal right and then wouldn't result in 100% ROM. Just the few days of delay I had was contributory to requiring a second surgery to release a tendon that had "gotten stuck"! That was a cool surgery as I had to be awake for part of it to move my hand on demand so he could tell if the tendon had been properly released. How many people can say that they actually saw (well blurry because I didn't have my glasses on) a tendon in their hand move when they move their fingers?:-)

For almost everything else, Maccabi served me well, but for the one big emergency I had in 10 years, they failed me miserably. Sharap failed me as well. But overall, healthcare in Israel is quite good, maybe even too good in that it is generally too interventionist, too much antibiotics, too many doctor visits (everytime I was sick and had to stay home from work I had to see the doctor to bring a note for the payroll department).

Mark

Anon426 said...

Just to augment SL's advice to the Student:

If you have loans, as I think you said you do, PAY THEM OFF AS QUICKLY AS YOU POSSIBLY CAN.
This is the single greatest investment you can make for your family's future.

Charlie Hall said...

"it's called shemita"

Doesn't apply to school loans!

"i've also heard of people defaulting on loans to make aliyah"

Disgusting.

Just the kind of thing that will make Israel hated.


----------

Charlie Hall said...

SA is correct, Canadians and Britons live longer and are healthier. The waits for MRIs don't seem to have affected their health. Americans have the "I want what I want when I want it" attitude.

My wife and I spend a Shabat in Toronto a few months ago, and my wife, a family physician, got to talk extensively after Shabat with a Canadian family physician. The life for a primary care doctor there is SO much better! They never have to worry about getting paid. They send one bill a month to the provincial government. They never have to argue with HMOs. We were ready to think about emigrating. (And Canadian doctors don't have to borrow anywhere near as much money as American doctors in order to go to medical school.)

tesyaa said...
"It's a violation of insurance plans when a provider waives the deductible or copay. The insurec could technically have his policy canceled."

Not only that, but it can constitute criminal fraud. For a government plan, it is a federal offense.

Charlie Hall said...

"America has the #1 health system on the planet. Americans don't go to Canada when they have cancer. "

America USED to have the #1 health system. Not any more. The reports of bad care I've *personally* heard are horrifying.

And some Americans do go to Canada for cancer. The late Sen. Spark Matsunaga went to Toronto for cancer treatment, even though as a US Senator, he was entitled to free care anywhere in the US.


"Almost all innovation comes from America in medicine, and the best doctors."

Also not true (probably never *was* true). Many new drugs are developed in Europe, and some in Asia.

And many of our best doctors earned their medical degrees outside the the US. Here is an example:

http://en.wikipedia.org/wiki/Nora_Volkow


"try taking the same poll of 60 year olds with cancer or kidney problems, and then you will find out who is happy with their healthcare"

They are unlikely to be happy if they are among the too many Americans with no health insurance.



"Americans have no clue what it is like to not have a service available to them that they can buy/finance at some price. They go ballistic if the grocery store is missing 1 variety of exotic apple that they like."

You are correct, and that is one reason why our medical care costs so much (and does not provide commensurate returns).

Charlie Hall said...

"here in Israel"

Israelis are on average healthier and live longer than Americans.


"Instead of Med School, let's send them to a PhD program. The RAship/TAship should pay for the education, so no more loans past undergrad."

That is what I did. And I make about the same as my MD spouse. With no school loans, ever.

But Americans don't want to work hard, so they don't apply to PhD programs. The ones at my institution have a student population that is about 80% Asian.


"The private sector has problems, true, but the government solution is always worse."

Actually, Medicare is by *far* the most efficient health insurer in the US. There are a few things the government does very well and that is one of them.

Ahuva said...

Has anyone read this? http://www.npr.org/templates/story/story.php?storyId=105444714

I found this part particularly interesting:

"All the studies we've seen nationally show that between 25 and 30 percent of the uninsured in the country are eligible for existing entitlement programs and either don't know it or don't sign up," Beilenson says. "That is an important lesson to be learned. Because of the 48 to 50 million uninsured Americans, you could say — even to be conservative about it — 10, 12, 14 million of them, you don't have to have any new program whatsoever. You just have to do better outreach and better targeting of people to get them enrolled in those programs."