Wednesday, November 09, 2011
Ask Orthonomics: Is This Expense Justified
I received an interesting inquiry which I will present (abbreviated below)
We are a family of six living in Israel with a monthly, post tax and post pension/savings plan income of approximately 16,000 NIS, (as per my exchange calculator approx $4300) give or take. Monthly expenses range between 17,500 and 19500 NIS I am in school and he works in the HiTech field. Prior to returning to school, monthly expenses were between 500 and 1000 NIS below our income . Our mortgage is our only debt and we pay approximately 3500 NIS per month.
Our children are in private school and the youngest is in private daycare. Returning to school has entailed additional childcare expenses. We don't have some of the more common luxuries, nor do we return to chutz l'aretz. Our grocery bill is relatively high, varying between 5000 and 6500 NIS/month.
Regarding savings, we have several hundred thousand NIS in savings and other investments. Half are in low risk investments. We draw several thousand NIS from liquid investments to cover the shortfall while I am in school. After graduation, we hope to add another 6000 NIS post tax to household income.
Now that I'm entering a more professional environment, I would like to put together a better wardrobe. I have one custom $1000 sheitel that is 10 years old, snoods, and scarves (my normal covering). I'm interested in purchasing a new sheitel and I have my eye on a 5300 NIS sheitel. I expect to enjoy it for 10 years.
My husband has concerns as to whether one wig will last so long and thinks in light of the current financial situation unnecessary expenses should be avoided. Our clothing budget for the past 12 months is approximately 7500 NIS, mostly children's clothing and good special sized shoes.
My question: is a 5300 NIS wig purchased for "mental health" justified.
Thank you for a writing. I can understand your dilemna as you begin to enter the working world. The situation in short is that you are currently drawing around $2500 a year on $26,000 of savings while you complete school. Your situation is not long term, nor untenable, especially as you continue to contribute to mandatory pensions.
It seems to me that buying a $1400 sheitel won't make or break the bank and there is something to be said for looking and feeling great while you are on display during clinical work. However, I tend to agree with the sentiment that it is best to hold off on unnecessary purchases, especially because you don't know what the future will bring post-graduation. The unknown is scary.
My suggestion, when faced with a luxury purchase that you really, really want is to seek alternatives. Perhaps there is someone selling a hardly used sheitel (happens all the time here) and you can score something wonderful for $500 or less. Perhaps there is a sheitel gemach and you can trade in your old sheitel for one in nice condition.
Since this is an area of contention, I think the default is to hold off the purchase and seek an alternative that works for both of you. I'm a big believer in coming to a solution that both husband and wife are comfortable with. I'd work to seek an alternative that fulfills the mental need in a way that is much less expensive (I do understand the need to sometimes have a wardrobe 'face lift'. And, you can even work to cut back an expense here or there to help cover the cost of the new-to-you sheitel, even though you are already frugal.