Excellent Article: The Frum "Cash for Clunkers" Mentality

Great article! Wish I wrote it. :) And from the Yated no less. I will file this under GOOD Financial Advice.


The Frum “Cash for Clunkers’ Mentality
by Avrohom Birnbaum

I have an admission to make. It’s going to be difficult to get it out of my mouth, or out of my keyboard and on to the screen, but I am going to gather the strength, steel myself, overcome the difficulty and make the admission. Okay, here goes: I drive a 1998 Ford Windstar! There. I did it! I got it out. It’s now public knowledge. I feel better already.

Yes, I am one of those guys who usually drives around town in what is classified as a bonafide old clunker!It even fits the criteria of “clunker” as set forth by our beloved commander-in-chief, President Barack Obama. Why, then, am I so hesitant about publicizing my admission? Is it because my car is missing most of its hubcaps? Is it perhaps because it has several unsightly dents and even has paint peeling in a couple of spots?

Maybe it’s because I am one of the only people driving that model car without Pennsylvania license plates and am a legal upstanding citizen of this great republic. Either way, over the past few weeks, a number of goodhearted souls have told me that they feel happy for me that I will now be able to trade in my clunker and receive some $4,500 from Mr. Obama towards a spanking brand new car. After all, my 1998 Windstar fits all of the government mandated criteria - it is a gas guzzling old car that I have owned for approximately 9 years, thus making me a textbook case of one who is eligible for the program. “Wouldn’t it be nice to trade in the old bus for a new Honda Accord, Toyota Camry, or perhaps even a Honda Odyssey?” a good friend proposed. The philosophical, one-word answer that I gave him was, “No.” I may get a $4,500 discount on the new car, but after all is said and done, the new car, with taxes, will cost me more than $20,000. That’s a lot of money that I am not willing to pay, or better said, put on credit, when I have multiple tuitions to pay and myriad other expenses that are part and parcel of sustaining a family. My trusty old clunker will just have to do for as long as the One Above grants it life. And, when its day comes, I suspect that it will be exchanged for another clunker that will once again fit Obama’s criteria.

My friend countered with what seemed to be an irrefutable argument. “You can buy the new car and then sell it after two years. You will get back virtually the entire balance of your loan and you will have had the use of a beautiful, brand new car for two years, for nothing. Zippo! Zilcho! Free!”

The refutation of his logic targets the crux of what is so troubling about the Cash for Clunkers program, and the many similar justifications that so many people make for buying things that are really out of their range. Firstly, after two years of enjoying the car, it is very unlikely that one will sell it. If one does sell it, one will be hard-pressed to step back into an old clunker after experiencing the taam of driving a brand new, mechanic-free, headache-free car. Taking advantage of the program will effectively place one in a status bracket and accustom him to a comfort level that he cannot afford.

That is the truly troublesome issue with the Cash for Clunkers program. It encourages the population to spend beyond their means and go into unsustainable credit debt. Was that not one of catalysts for the economic crisis in the first place?Indeed, one need not avail himself of the Cash for Clunkers program to see how - way before Obama cooked up the program - this mentality had already seeped into many areas of our own lives.

Recently, I was conversing with a frum electrician employed by many in the frum communities in both New Jersey and New York. He told me that in the 13 years since he began working, he has discerned a fundamental metamorphosis. “The standard of home in which I worked 13 years ago, which was limited to only the considerably wealthy, is today the home of the simple, poor or lower middle class income family.”

I asked him, “How could it be? How could a person with minimal income buy the kind of house that only the wealthy possessed a decade or a decade and a half ago?”

He replied, “Most of them have elaborate cheshbonos that ‘made it impossible for them not to buy the home’! It sort of goes like this,” he explained. “They get their hands on or borrow a certain sum that serves as a down payment. Then they design the house to have a rental; the industrious ones even find a design that allows for two rentals. Then they plan on living in the basement for at least five years while renting out the upstairs. If they do all of that, their monthly portion of the bill is just several hundred dollars more than they would be paying if they had to rent. Therefore, it would be a crime not to buy and own your own large home, no?!”

This is the classic example of how the Cash for Clunkers syndrome infiltrated our thinking long before the president proposed it. Everyone is a brilliant oiber chochom, concocting elaborate schemes to justify the excess. If everything works according to the scheme, one would be a fool not to buy the large house. Never mind the fact that so many of these people are young couples, barely after marriage, who are undertaking massive mortgages and massive debt that could destroy them if all the cheshbonos don’t work out as planned. Let’s say the rental market falls drastically. Let’s say the property taxes skyrocket. There are so many scenarios that can doom a person if he does not have a realistic cushion. Even if he is not doomed and somehow comes up with the payments, he will be in a constant state of angst about how he will come up with the astronomic monthly sum to cover the payment and thus forfeit some of his most precious assets: menuchas hanefesh, time for learning, shalom bayis, time with the children, and the list goes on... All because he thought he was smarter than everyone and the “opportunity” was too good not to take advantage of.

Perhaps we, as a community, should stop to ask ourselves whether we have been guilty of the same fundamental mistake and premise that is wrong with the Obama Cash for Clunkers program. Are we being oiber chachomim when it comes to our lifestyles? Are many of us behaving like “Obama on steroids”? Not only with the houses that we must have, and the cars that we must buy…or lease, but also with the clothes we buy, the recreation we “require,” and the general lifestyles that we live? Sometimes, driving the 1998 Windstar can ultimately afford one a greater comfort level than the brand new car. Sometimes, living for the first decade of marriage in a rented apartment or a small starter house while not giving a couple room to spread out surely affords them the room to breathe. Are the new car and the new house really worth it? What is the price - both spiritual and material - that they are truly costing? Perhaps it is time to analyze these questions in a moment of brutal, unadulterated emes. Think about it.