I should add that I spotted this article in a frum publication and it was rewritten slightly, nearly hailing the arrival of the K-12 loan. Boo!
Dear Orthonomics,
Can k-12 student loans be discharged in a bankruptcy? I know that you usually can't do this with college loans. I send my kids to a Jewish community day school and was advised by a friend that I could take out one of these loans and have it taken care of via Chapter 11 or 13 if I run into trouble. I have also thought about taking out a loan against my house and my wife's 401K. We had a lot of expenses this year due to my son's bar mitzvah and my wife had her hours cut at work. We would welcome any suggestions.
Dear Reader,
My advice: don't. Secondly, stop listening to well meaning, but sorely mistaken friends. While I don't know if private K-12 loans can be discharged, bankruptcy is never a plan. Besides the complete lack of yashrut and the evil of borrowing with no viable plan to repay, a bad credit rating is a sure way to make sure that underemployment turns to a permanent scar on employ-ability. Credit rating is becoming increasingly important in the hiring process. If you need a security clearance, you will be in hot water. As I understand it, while bankrutcy isn't an automatic black mark and the circumstances can be evaluated, I can't imagine making a bar mitvah will be deemed as anything but irresponsible. While I have no idea what you or your wife do, I do know that a clean credit report is to your benefit. I also know that when you aren't chasing your tail out of desperation, that your mind is clear to dealing with financial blows.
Regarding borrowing from a 401k, once again, don't! Borrowing from a 401k is a particularily poor way of borrowing to provide what you don't have the cash t oprovide. There is a 10% penalty on early withdrawal. Then each dollar is subject to the highest marginal rate at the state and federal levels. And, if you phase out of available tax credits, which is quite likely, you will take another tax hit. Before you know it, the $30,000 became $20,000 and if you didn't pay up enough taxes, you can end up with a non-dischargeable debt to the IRS and your state's tax authorities. Not smart.
So what do you need to do. Draw up a budget that takes into consideration the new reality on the ground. The spending must be matched to income from current sources and anything that doesn't fit into the budget has to head to the chopping block. No 401k loans, no HELOC loans, no K-12 loans. Certainly not "creative", but sound advice nonetheless.
[Update: I apologize for not reading more carefully. I get asked all the time about early w/draw on a 401k. Regarding borrowing, my answer is the same even if there are advantages to this type of loan, as there are advantages to borrowing against a home for school instead of taking about a K-12 loan. This isn't about the fancy math, but about now living above your means and if you have to take from savings, that is a signal you are above your means. If you don't have liquid savings to take from, and must turn to retirement savings, kal v'chomer. I know it is painful to have to forgo on something expected, but we can't bankrupt ourselves in the name of a bar mitzvah, wedding, or even day school tuition].
Sincerely,
Orthonomics
125 comments:
Some 401k plans have a loan option which let's you borrow from you ivestments. The borrowing is repaid with interest. As this is not a withdrawal there are no penalties or taxes associated with it. You do lose the potential for earnings as you repay the loan as your investment balance is less. Whether to borrow or not is something that should be decided after a talk with a financial advisor. As the interest is being repid back to yourself, depending on the expected investment returns and the length of the loan it may or not make sense.
I was going to say what Anon said. In many cases (such as mine), interest rates were extremely low, and it is (for many) an easy way to tap the company match before you retire (which may be a very long way off). The payoffs for the loan come directly out of your paycheck, so it makes it harder to default as well.
Think about it. If there is a company match, you still gain a tremendous amount off a loan even if you do end up in default (which you should try not to do because of the penalty, but at least no one else loses out (except yourself)).
I should apologize for not reading more carefully. I get asked all the time about early w/draw on a 401k. Regarding borrowing, my answer is the same even if there are advantages. This isn't about the fancy math, which I can do, but about now living above your means and if you have to take from savings, that is a signal you are above your means.
I agree with Anon and Nephew, but no one is addressing the elephant in the room - the tragedy of the jewish frum lifestyle not having room for those who don't make big bar mitzvahs and who don't send their kids to yeshiva. Would this writer even be considering getting into the death spiral of loans if it wasn't for tuition and community expectations/requirements. The advice he should be getting is that if he can't get a sufficient scholarship and/or increase family earnings, then he (and so many others) need meaningful advice about alternatives - i.e. how to raise happy, observant children by using alternative educational models like public school.
My advice would be to stop living like all your neighbors do. You already made a mistake with a lavish bar mitzvah. Don't repeat it. I'd tell you to see if the yeshiva will give a scholarship to make it affordable without borrowing. If not, pull the kids out. Even if you do this for one year, it will give you the ability to get your financial house in order.
Again, stop living like everyone else appears to be. They're probably drowning in as much debt as you are.
Finally, I'd really wonder about the morals and ethics of some of the people you associate with (doubtless these values come from the very selfsame yeshiva system).
Personal bankruptcy has become much harder and it doesn't automatically wash away debts. You're much more likely to be turned away or put on an adjusted payment plan. But, to go in expecting to default as a way of cheating the bank is morally bankrupt.
I think that JS is unfair in using the word "lavish." The writer didn't indicate how much was spent (or on what). All that we know is that the cost was an added strain on an already stretched budget. In absolute terms (and in comparison to other Smachot in the writer's community), the amount may have been quite modest.
SL:
I disagree when the money that is needed is for a one-time purchase that is time critical. For example, I would rather take out a 15K loan to buy a used minivan than pay the auto loan rates (which would otherwise be higher).
Yes, it could be argued that you should buy a cheaper car, but many times, that is "penny wise and pound foolish".
To Anon 10:10: That is a product of his community (probably Northern NJ), not of "the jewish frum lifestyle". It is no different than living in Scarsdale or other such "community" where everyone feels they need to keep up with the Cohens'.
Smachot are rarely one time purchases! An argument could be made for a used minivan when you would be taking about a loan for a different used minivan.
Regarding this elephant in the room. . . parents who can't make the stretch anymore will have to be the ones to create viable alternatives.
After reading this, I'm on the verge of deciding to put off a home repair that is important but not absolutely necessary at this time. I was literally going to call the service provider this morning but now I'm having second thoughts. (We are also making a bar mitzvah this year, and I can't see how the associated expenses can come in at less that $5,000).
Anon 10:20,
Maybe our definitions differ, but in my book if you can't afford something it's a luxury and spending in such a manner is spending lavishly. Lavish means to spend in great amounts - it doesn't necessarily mean "fancy" or "opulent".
You don't have money, you don't spend it. It's really that simple. You can talk about social pressures, religious "obligations", and what not, but they're all excuses. You tell your son, "I'm sorry, we don't have the money to do what everyone else is doing. What can we do that we can afford to mark this occasion?" Maybe that's a small kiddush. Maybe it's inviting friends over for the bar mitzvah weekend. Maybe it's just some quality family time. Regardless, it's immature and irresponsible to do otherwise.
"Smachot are rarely one time purchases!"
One (girl) or two (boy) per child. It really does depend on the circumstances (and number of children!)
Nephew: from a previous post
A nerdy person might create an average simcha frequency by projecting the amount of time one has to save between the birth of a first child and the approximate date of the final simcha divided by the number of large smachot they need to plan for (if you only plan to throw a slightly nicer kiddush for a bar mitzvah, you might not need to calculate simcha into your projected frequency ). I would say that if the average simcha frequency is 2 years or less, what you spend on smachot would best come from current cash flow. If the simcha frequency mirrors the period between buying the next family vehicle, it wouldn't be completely unreasonable to dip into savings. If you are in between both frequencies, a hybrid approach could be a reasonable "rule of thumb" approach, but the lower the frequency, the more imperative it would be to avoid dipping into savings as part to maintain healthy personal finance. Like you mention with tuition, regular expenses cannot drain a family to the point they can't recover. I mention smachot because these too, can drain a family and put them past the point of no recovery.
http://orthonomics.blogspot.com/search?q=average+smachot
"Like you mention with tuition, regular expenses cannot drain a family to the point they can't recover."
That is the key point. If the writer expects to have a 15K simcha every two years for 10-20 years, then borrowing that from a 401K is unrealistic (unless it is a planned default). If there is space (and ability) to pay the loan back, that would be OK.
Borrowing from a 401k is a withdrawal, just delayed.
We're talking about someone that can't afford their lifestyle. So they borrow against the 401(k), what are the odds that they now can afford their lifestyle + repayments. They can't, they'll never repay it. If they "repay it" through garnishments, they'll run up debts elsewhere. Eventually, they'll either borrow at 18%-24% from the credit card company, or never repay their 401(k) and when they quit/get fired, they'll need to repay in 60 days (or whatever the window is), fail to do that since there is no income, and pay for the withdrawal then. The only good thing about that is their tax rate will be lower when they pay 401(k) taxes + 10% penalty, since they'll be out the income.
Or, even worse, they'll pass up a better job that would supply more money because they are tied to the 401(k) loan.
A K-12 loan is likely an unsecured loan, and therefore discharagable. Given the choice between an unsecured debt and a secured one (401(k) secured by your balance, HELOC secured by your house) you are MUCH better off with unsecured debt. Even if you pay 10% vs. 4%, much better to have the option to discharge.
Obviously, you prefer to pay off your debts, and the extra interest makes it harder, but if you can't pay off your debts, the downside with the 401(k) is permanently reduced net worth + big tax bite, and the HELOC is lose the house.
This is extremely stupid.
When we got in trouble financially, we racked up tons of debt, but it was all unsecured. That leverage was useful against credit card companies to get a reduced rate and payment plan. It's been a pain to payoff, and bankruptcy is to be avoided if possible, but way better than putting retirement or our house at risk.
Do NOT convert unsecured debt into secured debt. The lower interest rate is not worth it. If you get in trouble, the unsecured debt goes away, the secured debt does not.
Good luck.
Reading (my) nephew(s) earlier post on the 401k loan with the very low rate - I hope people are aware that the 401k loan likely will require immediate (or 60 days) payment in case of job loss. If you don't pay off the loan, you MIGHT get it treated as hardship and not have to pay the 10% penalty (if under 59.5) but you would still owe 'normal' taxes - all of this just when you can least afford it. Now I guess if that happens one can then try to get a loan to pay off the 401k loan, but who would lend money to someone who is unemployed?
There are three concerns with 401(k) loans.
1. The funds themselves are not gaining value in the market because some of the assets were liquidated.
2. If you reduce your 401(k) contribution by the repayment amount (so cash flow doesn't change), you are significantly reducing your retirement savings over the period of the loan.
3. As pointed out above, the entire loan is due if you leave the job (willingly or unwillingly).
With regards to borrowing from a 401K or 403B, DON'T! If you think tuition is expensive try retirement. As it is we are digging a deeper & even deeper hole for ourselves when this cycle of irresponsible borrowing never ends until it comes crashing down. Then of course it's too late to reconsider.
Uncle Old Actuary:
Yes, that is one of the downsides. However, your marginal tax rate will be lower (since you are not earning money on the job!)
To "I'm not Jay Wagner":
Normally I would agree. However, I know of people in their 30's & 40's with literally millions of dollars in their 401K (not me), and this is a good way to get at it for one time costs, such as a home, etc.
That being said, I agree with everyone that you would be crazy to take out a loan to pay tuition (or any other recurring cost).
Nephew: Given the cap on annual 401(k) contributions how does one get millions in a 401(k) particularly when only in
your 30's or 40's? (Apart from having worked at Apple or Google and having your whole 401(k) in company stock - something we are told never to do.)
Nephew - That being said, I agree with everyone that you would be crazy to take out a loan to pay tuition (or any other recurring cost).
So is it crazy to take loans to pay for college?
I know you didn't mean that, but that's the implication.
Regarding smachot, there are plenty of them:
* Shalom Zachor (usually small, but still an expense)
* Bris (simchat bat also rarely)
* Bar/Bat mitzvah
* Wedding (sometimes more than one after divorce)
Nephew - Normally I would agree. However, I know of people in their 30's & 40's with literally millions of dollars in their 401K (not me), and this is a good way to get at it for one time costs, such as a home, etc.
What do you mean by "home, etc"? Don't most employers limit 401(k) loans to $50,000? That may even be the law.
You all sound financially smarter than me. I am one person, 60 years old and unmarried. I plan to work another 10 years. At 70, I will draw Social Security of $3000 a month. I make only $73,000 a year, and have income from part time work of $11,000, for an annual income of $84,000. I have only $600,000 saved in 401k and Roth IRA because I started saving too late. I used to contribute 20% of my salary to the 401k. Now I contribute 30% of my salary to the 401k to make up for lost time. My company has profit sharing and in a good year like last year, they contribute about $6800 to my 401k. But the bottom line is, only $600,000 in 401k at age 60. And the 30% contribution is of the $73,000 salary. I live in New York and my rent is $2000 per month. I live frugally to pay my rent. Without family, I don't have a lot of demand for simchas, tuition, etc. And what New York woman would want a man who makes only $84,000? So I won't be taking on any additional expenses. My question for you is, will my income last into retirement? With long life spans? I'm in excellent health, exercise, healthy weight, etc. I might live to 97! Assuming I work at my job til 70 and continue to contribute 30% to retirement fund, how long will my money last? Forgot to mention, I invest entirely in equities, I'm in a stock fund with a good long term track record. I am not diversified, I don't have the time to slowly build at 5% a year. Will I be on the streets if I live to 85? Can anyone figure it out? Oh, I partly pay my rent by dipping into a savings account I've put away over years. The savings is going nowhere investment-wise, so it makes sense to me to invest my salary in stock fund and use no interest savings to pay rent. What do you guys make of my financial future?
Mark,
First of all, college loans are usually taken by the student, not the parent. It is a one-time expense (lasting four years), and they have their whole lives to pay it off, presumably using the income they gain from having a college education.
For K-12, the loans would be taken by the parents, and the expense for a single child will last 13 years, likely at least 20 years with several children. When those years finally end, your kids will be starting college, getting married, etc., and you'll be close to retirement age! How will you ever pay off those loans?
Regarding smachot, how much does it cost for a bar mitzvah boy to have an aliyah in shul? How much does it cost to get married - the halacha tells us - it costs a pruta (a few cents)! Anything extra is nice, IF you can afford it. If you need to take loans, you can't afford it.
I saw an appeal recently citing the "astronomical costs" of pesach. Why so expensive - it's supposed to be the holiday of lechem oni! Or, is it because we threw out tons of good food and bought lots of red meat and packages of Haggada cookies?
As a community, we need to get our heads on straight about what is and is not a necessity, and what is and is not a priority.
My kids' school has recently started to push these K-12 loans which they market as a solution to the current economic downturn.Last year we took out a loan on our house and literally have no way to pay for next year's tuition. This is a big issue for my wife, because if afraid of what her friends might say if we have to sent our sons to a public school. Several other families have has their kids teased for leaving this school, and I feel like a failure as a father. We are feeling like we have no options and are up against a firm deadline next month. Help!
Our Rosh Yeshiva recently talked about the need for parents to make sacrifices when it comes to providing a Torah education. He specifically called for parents to do whatever it takes including selling family heirlooms like silver candle sticks and kiddish cups. He also mentioned how some parents took out payday loans to pay tuition. I think that this is rather risky advice but it turns out that my brother actually did this.
Anon 4:58: To quote: "With a little bit of luck". Just get in at the right time and work the old IPO black magic.
Mark:
If you have five children who will need to go to YU, then you (personally) shouldn't take a loan for the five of them. If you have a single child, then maybe. It depends on your situation. Three or four years is not a "recurring cost" like 14 years of tuition. In addition, you can stretch the college loan out over 30 years, which makes it more affordable.
As far as your second point, 50K x2 (both spouses) makes a down payment, where otherwise they may still be renting.
Anon 7:45: Get out as fast as you can. I have suggested selling silver in the past (and still would), but would not suggest going into debt with no chance of paying back. As my aunt the Actuary says, you need to see their books BEFORE you sacrifice, just to be sure that it is a "joint" sacrifice.
To the annymous 60-yr old with the retirement question:
If between you and your employer you continue to add $25k a eyar for 10 more years, added to your $600k, Plus your Soc Sec shoudl be enough!
Assuming 6% a year interest, you will end up with $1.4 million. As you will be 70 at the time, I assume a 20 yr life expectancy, so you can draw down at least $70k (using a "dummy" rule of thumb of a5% withdrawal rate). In inflation adjusted dollars (3% inflation assumption) that is equal to $50k. Adding in Soc Sec and you are above your current income! Even if you earn less than 6% you will be OK.
HOWEVER: Being fully invested in equities is a terrible idea! A market crash similar to 2008-2009 will have devestating effects as you will have no time to rebuild.
While in general I hate Guaranteed Minimum Withdrawal products, your personal circumstances may be one of the few times I woudl recommend it. If you have no family to worry about leaving money to....
CAVEAT: I am NOT a certified financial planner; though i do have to admit I wrote the program specifications for planning that a reputable company uses...and I would need way more information to give you a full fledged answer...
Nephew - As far as your second point, 50K x2 (both spouses) makes a down payment, where otherwise they may still be renting.
Most banks frown upon using borrowed money for a down payment. In fact, more than frown, they almost always deny a mortgage to such people!
Besides, even if it were possible, how many young couples have $100k (you are only permitted to borrow up to 50% of the 401(k) balance or $50k, whichever is lower) each in their 401(k)'s and nothing at all saved for a down payment? If they each put $6,000 into their 401(k) a year and earn a steady 8% a year, it will take more than 11 years before they have a $100k balance!
Anon 5:56am, payday loans are the WORST way to handle such things. If anything, those kinds of loans should only be used for grave emergency that prevents you from making a living, things like fixing the car so you can get to work. You need to distance yourself from anyone who tells you to use payday loans for this purpose, such people are evil and very bad for you. That particular Rosh Yeshiva is even more evil because he is advising parents (even if indirectly) to take on destructive debt to pay his own salary!
"My kids' school has recently started to push these K-12 loans which they market as a solution to the current economic downturn."
Of course. What do they care? They just want to get paid like everyone else.
"Several other families have has their kids teased for leaving this school, and I feel like a failure as a father."
That should teach you something about the fine midot and values the yeshivas and communities espouse. And to think you're indebting yourself for this. You're only a failure, in my opinion, if you financially ruin your family because you're afraid of what some yutz neighbor thinks.
"We are feeling like we have no options and are up against a firm deadline next month. Help!"
You have options. You may not like them. They be uncomfortable. But you have options. If you can't pay, you can't pay. Either the school gives you a scholarship or you leave and do public education and hire a rabbi to tutor in combination with learning with your kids. It's not easy, but what's your alternative? Living on the streets? Never retiring? A lifetime of stress and anxiety every time an expense is incurred or a bill comes in?
"Our Rosh Yeshiva recently talked about the need for parents to make sacrifices when it comes to providing a Torah education."
No offense, but these rabbis are completely divorced from reality. They often earn very high salaries, get parsonage breaks, and have their "Jewish needs" provided for them by the community. They have no idea what sacrifices their constituents make or how difficult it is to pay tuition.
"He specifically called for parents to do whatever it takes including selling family heirlooms like silver candle sticks and kiddish cups."
Again, they just want to get paid. How much silver can a family possibly have? A few thousand at most. They just want cash now. They don't care about anything else. They'll ask you to sell something else next year if need be.
"He also mentioned how some parents took out payday loans to pay tuition."
It's stupid advice which is why he's a rabbi and not a financial advisor. He needs money for the school and he could care less where it comes from.
Here's the real question: what's he going to do for you when you come to him and say "Rabbi, I took your advice, I sold all my heirlooms, I took out payday loans. I'm broke. They foreclosed on my house. They took away my cars. I owe thousands of dollars due to the high interest loans you told me to take out."
Remember, no one's looking out for you or your family other than you.
Nephew - As far as your second point, 50K x2 (both spouses) makes a down payment, where otherwise they may still be renting.
And I forgot to mention. Even if that $100k loan were possible to buy a home, it isn't at all practical. Why? Because 401(k) loan repayments are amortized over 5 years, and aren't particularly competitive when it comes to interest rates, so the payment would be VERY high when compared with a traditional 30-year mortgage. That $100k loan at 5% would have a monthly payment of $1887.12!!!!
And I do happen to have 5 children :-) Very few frum families have only one child nowadays, so that case hardly applies. And as far as "need to go to YU", well, we'll see when the time comes. But from my current vantage point, the YU value compared to cost doesn't look particularly good.
Mark,
You're not the only one thinking that way. See: http://www.thejewishweek.com/news/new_york/stuck_middle_yu_special_report
Also, all this talk about 401(k) loans is ridiculous. Sure there may be financially savvy ways to take advantage of these loans, but is that really what's going on here? No. We're talking about someone about to enter on a downward spiral of mounting debt. Such a person is going to get completely hosed on a 401(k) loan.
It's a real problem in a lot of the financial advice I see bandied about in the Orthodox community - everyone thinks they're smarter than everyone else. They can time the market better. They can fool the banks by transferring credit card balances or using one loan to pay another. Whatever. If all these people were so smart and savvy they wouldn't be complaining about yeshiva tuitions or shul dues.
401k loans for first time home purchase can be amortized over 10 years not 5.
Most "get out of debt" advice says pay the highest interest rate cards first, as you reduce interest charges.
Dave Ramsey says to do a "debt snowball," pay the smallest balance first so you feel good and chalk up a easy win, and keep going. He says that debt reduction is more mental than math, if it was about math, you wouldn't be in trouble.
Furthering that he is right, once you pay off some of the cards, you get the 0% balance transfer offers, which you can then bring your high interest balances over to.
Now, if you are in a debt yo-yo, all they do is hit you for transfer fees and make it worse. If you are actually paying off $X/mo, then they work for you because you redirect them to other debts as you bring down your interest costs.
These are useful tools IF your finances are running smoothly but you have a prior mistake. OTOH, if your finances are a disaster, these tools will make it worse.
The banks offer these products because they are highly profitable. Most people screw up, they don't offer you the product unless they have reason to believe you'll screw up.
Maybe there are some serious NYC professionals that have always rented, socked away 15k-30k but lived in rented apartments and maxed their retirement but never their housing, and now want to buy a place in the suburbs...
Those people are NOT posting on Orthonomics figuring out how to pay tuition after running up debt throwing a lavish party... excuse me, Simcha.
Mark: I've seen it on many occasions. Of course, it does mean that you (and your spouse) are working in a "real" profession from your early twenties. The banks (even now) don't seem to have a problem with it. The IRS specifically allows withdrawals (without the 10% penalty) from a 401K for primary home purchase as well (as well as longer term loans, as my uncle pointed out) which is an additional option.
It is not for everyone, but for some (such as myself), it works.
P.S. Regarding the payments: It is no different than if you would put away $1800 per month for 5 years until you have a down payment. At least this way you have your home for that time. If you are growing out, it may be a good choice.
JS: You are 100% correct. There is no real solution besides living within your means. If you don't, no amount of Shtick will help.
"Maybe there are some serious NYC professionals that have always rented, socked away 15k-30k but lived in rented apartments and maxed their retirement but never their housing, and now want to buy a place in the suburbs..."
I think there are more than you may realize.
old actuary - 401k loans for first time home purchase can be amortized over 10 years not 5.
Thanks for the correction! I should have checked before commenting. It still comes out to just over $1000 a month!
But again, even if it were possible to do this, the probability of changing jobs within those 10 years is much higher than during 5 years, so the amortization will, in essence, have a possible balloon payment at that point. It's just not a good idea (if it were practical/possible in the first place).
I am the poor idiot who followed the financial advice of a rabbi at my son's yeshiva and now lives to regret it. When we had trouble paying tuition in 2008, we took out z high interest loan through a man recommended by the rabbi. Shortly thereafter my wife lost her job, and we borrowed more money and in the belief that thing would turn around. Long story short, we lost our house and fully paid for van and now live in a shelter sponsored by a non-Jewish organization. My son's school turned a blind eye to us and refused to let him return to finish his studies. The rabbi who helped get this situation started denies ever suggesting that we take out a loan from his buddy and makes horrible comments about our living in a christian shelter. We are surviving and have learned to be a lot less trusting.
Thanks old frum actuary for your thoughts. After Shabbos, can you tell me what Guaranteed Minimum Withdrawal products are?
My boss, who advises high net worth families on wealth preservation - I'm his secretary - told me I'm okay. His analysis required long division! He said if I just had $600,000 at age 70 I could withdraw $2,000 per month for 26 years before I run out of money. I could never repeat his analysis! $2000 a month? Plus $3000 Social Security? It's hard to believe I could withdraw $2000 per month for 26 years on an initial nest egg of only $600,000. He didn't even assume any additional income accrual or interest. I'll ask him again on Monday to show me his analysis. I think I figured out that 26 years times 12 months equals the number of months of retirement times $2000 equals $624,000. I don't have a clue how he figured out I'd be okay withdrawing $2000 per month at age 70 til 96. It seems fantastical. Any actuaries or CPAs want to contribute some math expertise after Shabbos if you have no better plans for the evening? My boss also disapproves of not being diversified. Fixed income securities I think he said. Shabbat Shalom.
Dear 60y.o. man,
Could you elaborate on what you think is fantastical
about the calculation of your boss?
Do you think you will live to be older than 96?
or
Do you think there is a possibility that your IRA will lose money in the future?
or
Do you think 2,000/month will eventually be too little to live on?
I am missing the fatanstical part, and I think maybe others are too.
gut voch
Liza
I work at a pawn shop. I am Jewish but the owner is not. You would be surprised at the number of frum Jews who come in to pawn items for various reasons not just tuition. A few years ago a guy a black hat came in with an old sefer torah. The owner had no idea what it was. So her called me over. When I explained what it was, the owner, to his credit, refused to take it. Most pawn shops are legitimate businesses and provide a service for the community, and a surprising number of Jews are involved in this business.
Pay day loans? Pawning family heirlooms, candle sticks, etc. Is this what the Frum life style has been reduced to? My wife & I ran out of money 2 years ago and we made the decision, at that point, to put our kids in public school. We were tired of the begging, community pressure, etc. Now we show a positive bank balance, take a vacation once a year and still have Yiddishkeit in our lives. Do not give in to community pressure. Only you are ultimately responsible for your bills not the 'community.' Tuition debt will bleed you dry. I don't think anyone who reads this blog needs to examine our books to see that fact spelled out in plain English.
Withdrawing $2k a month from $600k is no problem at all - if you earn about 4% a year the money will last forever. The problem of course is that over time, $2k will be worth less and less due to inflation. On the other hand, you have $600k NOW. By the time you are 70, with your current savings, you will have way over $1 million.
The "Guarantee" Products I mentioned above (Note: my compnay DOES NOT SELL these products!) works as follows - you give the issuer say $100k, and they promise you a minimum of $5k a year for life. If the underlying investments do well that payment can increase; if they do poorly they WILL NOT decrease.
The downside to these products are the high expenses, which usually means upon death there may be nothing left for the estate. (and that future increases are probably not as rosy as the Sales guy makes them out to be.) But if you are single and have no one you 'must' leave money to, this really may be a good idea!
Taking even half your money and buying this product (make sure the issuer is trustworthy - e.g., good S&P ratings) plus Social Security may already be enough to set your 'income floor' (the money you absolutely have to have to live - food, rent, electricity), while still allowing the rest of your money to buy the things you want to have but can probably live without - like Yankee tickets :)
Again, I am not a CFP and in general am not a fan of these products (if you would know my name and do a google search, you would find a research article I wrote blasting them), but I have recommended them to some people, it seems like you would be one of them.
Just find an agent you can trust, who puts you in the right product, and does not try to get you to give him all your money to manage.
good luck.
My family owns a pawn shop in the Detroit area, I want to clear up a few misconceptions about our business. First, most of our customers come in for short-loan that are typically under $100, and most of our customer pay back their loan and get their items back. Second, our customers come from all walks of life and most are polite and easy to do business with. Third, pawn shops base their loans on the value of the item pawned, thus, allowing those with no or poor credit the access to money when needed. Fourth, we do not force our customers to pawn their items and follow state and local laws. We have several regular customers who are Orthodox Jews, they are a pleasure to work with, and we welcome their business.
I am almost 50 and have nothing saved for retirement because it has all gone to tuition. I am not alone and have no idea what the next generation is going to do. My oldest son is a full-time kollel student with no real work related skills. I hate to admit it but I have had to resort to paydays loans to pay tuition in the past,recommended by our school's financial aid director, and it took me a long time to get out of that trap. I agree with others who question what we have become. I worry all the time about my family's future.
Dear Anonymous above me, (7:15),
I and my spouse have a question we would never
me'iz to ask in person:
Why don't you steer your children differently?
We have (more like had) friends who always had a hard time making ends meet, but were able to rely on the previous generation. They will not be able to be as reliable for their children (we thought). Yet, at the end of the day, their children are involved in kollel activities.
Somehow, this was very disillusioning for my spouse.
Maybe it took you awhile to realize the financial problems you were having were permanent?
Maybe it is too late for you to influence your son?
What is going through a parent's mind when they allow their children to think they agree with the lifestyle?
I do not mean to be rude, obviously this is more about what our friends did to their kids then about you personally, but I did wonder if you had any insight for me?
Liza
Liza,
I accept full responsibility now for choices I made when I was younger, but I now fear that it is too late to change course. I was concerned about fitting in with the other guys and not having my wife and kids be looked down upon. I was the guy who always had to give more than I could afford at the annual dinner and all of the other school fundraisers. I become best friends, or so I thought, with the Rosh Yeshiva and let him fill my son with the idea that full-time Torah study, without work, is a viable lifestyle. Like several other posters, we have had to sell what little we have and went into foreclosure on our house. My best friend, the Rosh Yeshiva, dropped me like a hot potattoe, and I am the one to blame.
And of course naming that RY would be lashon harah, so the rest of us will continue to send our kids to that yeshiva so that (we or) our kids can be brainwashed into doing more stupid things...thanks for nothing.
To anon 7:15 PM. That's why my wife & I made that decision, don't take this the wrong way but we didn't want to end up like you! As I said earlier Yeshiva tuition will bleed a middle class family dry & trust me your "friends" will drop you like a hot potato. I offer no solution except living within your means or you can kiss retirement good bye.
To anon 7:15 - its not too late. If you pull your kids out of yeshiva (unless you get full scholarships) and you and your spouse work full time till full retirement age (i.e. 67 or 68) and save all you can (you already are used to living frugally so you know how to do that) you can still salvage both your retirement and an opportunity to teach your kids that they can be good, observant jews without getting into debt or living off of others. Will it be easy? Of course not, but the alternative is not easy either and you may salvage the next generation.
Anon 7:15
The tone of your posting suggests that you have really learning anything from your experience and are trying to place blame for your actions on the Rosh Yeshiva at your child's school. He certainly did not force you to make any donations and where were you when your son was looking for guidance. If you ask me your problem is that you are too easily influenced by what others think. Excuse me for saying this, because I don't know you, but this suggests that you are weak father and this might be the reason your son went elsewhere when looking for direction.
Anon 3:11: Excuse me for saying this, because I don't know you, but your post suggests that you are exceedingly judgmental and self-righteous. This blog is a place to share ideas and support and learn form each other's mistakes. While it is ok to vent about systemic problems, it is not ok to be a self-righteous bully. All of us can look back at things we wish we had done differently. It is easy to understand how people get into these situations. This is not someone listening to a get quick rick scheme on late night tv. This is someone who relied on someone with the title Rabbi - a spiritual advisor who he thought was giving advice consistent with halacha. Until we have Rabbis telling people its better to put your children in public school and have some financial peace of mind and less stress at home then to send to yeshiva no matter what, stories like this will continue. We also have no idea why the son is in kollel. Parents only have so much control over their offspring's choices and children from hardworking families that value college education do end up in kollel or other situations where they are are not prepared to support a family.
I do not appreciate insulting others, even anonymous others. I want people to feel comfortable sharing their triumphs and tribulations. We all make mistakes and I appreciate when posters share and warn others regarding how they got into trouble.
I must say, after putting my kids in public school, I have never looked back. The other students in the school they attend are better behaved (!) and less materialistic than many of their former yeshiva friends. While we do have our challenges in regards to yiddishkeit, overall it is has been a postive experience. Unfortunately, the rabbis and the community clucking their tongues and voicing their 'concern' has only turned them away further. The bigger plus side? We are actually SAVING for retirement.
My name is Sara and my husband is being treated for clinical depression that was caused by our financial problems. There is no shame in getting help. Our rabbi does not understand the pressure we are under and repeatedly calls with appeals for more money which makes my husband feel like even more of a failure. Thank you Orthonomics for your blog because it helps use see that our situation is not unique. My husband is a good father who tried to spend time with our kids when they were young, but he had to work a lot of overtime to pay for tuition and other obligations because he is too proud to ask for scholarship money or other assistance.
Thanks,
An appreciative reader
Sara,
Refuah sh'leimah to your husband. Your rabbi sounds like the rabbi I ran from years ago. My advice is simple, find a new rabbi. They may have s'micha but one thing they can't be taught is compassion.
Boys need strong male role models. If the father is a strong role model, boys will follow the lead from their father. If the father is a weak role model, or nonexistent -- including physically living in the house buy never spending time with the kids -- the boys will seek out other, male role models.
If the father shows that he has no control over things and turns to the Rabbi for everything, then who appears to be the strong male and who the weak male? Why wouldn't a son see the Rabbi as the alpha male? It is totally logical, in that situation, that the boy turned to the Rabbi for his example on how to be a strong male, which led to him following the Rabbi's lead, not the father's lead, and therefore Kollel and not college.
I'm not saying that one needn't consult a Rabbi, you absolutely should, both for Halachic guidance AND spiritual guidance. However, you have to be careful how this is presented to your children.
If you seem helpless compared to the Rabbi, of course your sons will turn to the Rabbi and not you as their leader. Humans are tribal and seek out strong male and female role models when growing up. If you want your children to follow your values, you need to demonstrate how you live those values AND be their role model.
But, if you communicate that you are a failure to your children (whether you are or not) and hold up the Rabbi as the successful male who makes the decisions, it isn't shocking when the boys gravitate to the Rabbi for guidance and not you, after all, you simply ask the Rabbi everything (in the black and white world teenagers exist in).
Good luck to everyone, there are dangers in all worlds and all communities. We often emphasize the ones avoided in the Frum community, but clearly there are others within it that we need to be cognizant of.
Al,
I think what you're saying is true in general. But, I think a lot of frum culture is set up to idealize and idolize the rabbi and denigrate the parents. It makes it even more challenging. You have a yeshiva system which impoverishes the parents. The father (and possibly the mother) often slave away at work and aren't home enough to spend time with their kids. The schools keep the kids away from the home for the majority of the day. Programs are set up so the kids have mishmar and shabbatons and other learning events which take them away from home. The rabbis often invite the kids over for Shabbos. Meanwhile the fathers are encouraged to go to shiurim and run to minyan. Many shuls discourage kids from sitting with parents in the main sanctuary since they can be noisy and prefer them to be in youth groups.
So, you have very little time together. And the model at home is parents beg the rabbi for financial assistance and hearing that we can't do this or that because the money isn't there. Meanwhile the rabbi has all Jewish needs cared for by the community and seems to be very confident and happy. The parents seek out the rabbi's advice and guidance. They are unsure and question, he is knowledgeable and always has the answer.
It's a tough slog even if you try to be a good parent. Lord knows that on top of all these challenges there are far too many people who are just lousy parents to boot (such as the father who dropped his 18 month old at youth groups in shul which are intended for kindergartners because he wanted to participate in the kiddush club).
I'm reading these heart-wrenching stories above and I just feel terrible for these people and what they've been through.
The question I have is: at what point are we just going to face the facts that paying yeshiva tuition is a terrible, terrible financial move? I greatly appreciate this blog and am thankful to SL for putting the time and effort into it, but it seems like this is the elephant in the room that gets ignored. Yes, it's important to be frugal and save and not spend lavishly on simchas or holidays, etc. but let's be honest for a minute. You could add up all those frivolous expenses and all the luxuries and other wastes of money and they'd be a drop in the bucket compared to yeshiva tuition. There comes a time when showing your kids you sacrifice for Judaism by impoverishing yourself to pay for tuition does more harm than good.
It's simply impossible to pay yeshiva tuition and be financially prudent. The amount of money a family needs to earn to pay for yeshiva while meeting all of the other financial goals (saving for retirement, having an emergency fund, mortgage payments, upkeep of house, etc.) is simply astronomical and beyond the ability of 90+% of Orthodox Jews. So, while you may have many families who pay tuition in full, they're draining their own parents' resources and/or not saving for their own retirement and/or not saving for their kids' college education. It's a massive financial drain that impoverishes 3 generations.
It's great to get advice on how to cut down on a grocery bill, but I don't see anyone coming here telling a sob story about how buying too much beef led to their house being foreclosed, losing their car, or living in a shelter.
My parents borrowed heavily against their house to put us through yeshiva. They're still paying that off more than 10 years after my youngest sibling left yeshiva. Me and my siblings all have massive student loans because they couldn't help us much due to yeshiva tuition payments.
My parents were very frugal. My dad would often tell me he could be living a life of absolute luxury: luxury cars, fancy vacations, big house, etc. and STILL be ahead of the game if it wasn't for yeshiva tuition.
I'm not sure why this issue doesn't get directly addressed: that paying yeshiva tuition for nearly every Orthodox Jew is a terrible financial decision.
Day school education is very important to me. I am quite willing to not spend money on fancy cars, a large house, fancy vacations, expensive simchas, and going our to nice restaurants and gadgets (IPDAD) in order to pay for Jewish day school. What I am not willing to do is spend so much money on Jewish day school education that there is very little or no money available for retirement, savings for an emergency, to give to charities.
This is a personal statement.
JS:
For at least the past generation, the social marker of "Orthodox" has been Day School Education.
It is to the point that someone who is willing to live an entirely observant life but will not swear to provide an Orthodox Day School education for all of their children will find it almost impossible to obtain an Orthodox conversion.
The fact that it is such a financially ruinous proposition seems to make it even more important; after all, to admit that it isn't necessary is tantamount to telling all the people who have beggared themselves paying for it that they were fools. If something demands great sacrifice, it is human nature to insist that it was worth it.
Dave,
Very true. One of many reasons I feel the institution of Orthodoxy is rotten to its core.
Anonymous 11:32,
I'm glad you're so devoted to day school education. But, unless you're making significant income (maybe you are), I don't see how your comment is anything but wishful thinking. How else can you possibly pay for day school tuition in full while having money to save for retirement, an emergency fund, and real charities?
"How else can you possibly pay for day school tuition in full while having money to save for retirement, an emergency fund, and real charities?"
It is not for nothing the tuition is called "the greatest form of birth control ever created by man".
I'm just curious as to how you would respond if I said the following:
My wife and I plan on sending our children to elite secular private schools - the type where there's a waiting list for nursery school. We originally intended to have 4 kids because we think children are such a gift. Unfortunately, we don't make enough money to afford these schools. But, elite private school education is so important. In the neighborhood we live in everyone sends to elite private schools. We'd be looked down upon if we didn't do the same. So, we'll just have 2 kids instead. It's simply not worth it to have more children if they couldn't be given the gift of an elite private school education.
JS:
Let's try this:
"My wife and I plan on educating our children and having them become upstanding members of society. We originally intended to have 4 kids because we think children are such a gift. Unfortunately, we don't make enough money to educate more than two children, and for the additional two, there is a greater than 50% chance of them ending up as drug dealers & pimps. We'd be looked down upon if we didn't educate our children properly, and more so, we would be failing both our children and society. So, we'll just have 2 kids instead. It's simply not worth it to have more children if they have such a large probability of becoming drug dealers, pimps and the dregs of society."
You are not taking into account the probability of a child becoming secular, and the cost of what many people (I'm sure you are excluded) feel should be place on making sure that your children end up on the "right" path.
Rational thinking does not come into play when there is a religious aspect at stake.
Otherwise, I would agree.
Since when is religion rational?
That said, I don't think the chance of a child ending up secular is greater than 50% if not educated in a yeshiva. It's a myth and a great canard perpetrated by the community.
Maybe I just place more value than others on home life and the influence of parents. Or maybe yeshiva parents feel they have such little influence because of how the system is set up.
The biggest issue is what do you consider "failure". I said secular above, but maybe that's too narrow. Is it failure if your child becomes Conservative? Reform? Moves to the left in Orthodoxy? How about moving to the right in Orthodoxy? Is it a failure if your kids don't do exactly what you do? Maybe you laugh, but I've seen parents lament the fact their kids now do/do not eat gebrokts or cholov yisroel.
You also have to factor in what the chances are of "failure" in the existing yeshiva system. I probably know more people that changed observance level (more observant or less observant) than people so stayed at their existing level of observance.
Also, you can't forget that a non-yeshiva education doesn't mean no Jewish education.
In the end I have no idea what the "risk" ends up being, but it's foolish to buy into scare tactics or compare the situation to becoming a pimp/prostitute or drug dealer/user.
Finally, I'll just state the obvious: if everyone was sending to public schools the Orthodox kids wouldn't be "different", there would be accommodations made to make it easier, and programs would exist to provide religious instruction in a rigorous manner. Right now a parent who opts out of yeshiva is look down upon if not ridiculed and has to struggle to provide religious instruction.
"In the end I have no idea what the "risk" ends up being, but it's foolish to buy into scare tactics or compare the situation to becoming a pimp/prostitute or drug dealer/user.
Finally, I'll just state the obvious: if everyone was sending to public schools the Orthodox kids wouldn't be "different", there would be accommodations made to make it easier, and programs would exist to provide religious instruction in a rigorous manner."
Agreed (especially with the last point), but I'm not the one that your have to convince.
P.S. Lamenting a practice does not make one a failure.
I have worked in the finance office at a Yeshiva for almost 9 years. My observation is that many of the families who complain the loudest are the very ones who tend to exaggerate the hardship they experience and who are in truth not good at managing their money. Sorry to sound harsh, but if they experience a little stress, most of the time it is due to their own poor decision making.
JS wrote "Anonymous 11:32,
I'm glad you're so devoted to day school education. But, unless you're making significant income (maybe you are), I don't see how your comment is anything but wishful thinking. How else can you possibly pay for day school tuition in full while having money to save for retirement, an emergency fund, and real charities?"
I am not sure we will be able to support 2 or 3 full priced Jewish day school tuitions. It depends on how our income and expenses change relative to Jewish day school education.
Anonymous,
This is precisely what worries me the most about yeshiva tuition.
Take the following hypothetical: Family makes a nice income and being prudent, they look at the numbers and figure they can support full tuition for 3 children while taking other necessary expenses and savings into account.
Thing is, there are so many variables involved and yeshiva tuition takes place over so many years that it's probably more likely than not that even a prudent family will hit some kind of snag.
Maybe a parent loses a job. Maybe the "last kid" turns out to be twins. Maybe a child has special needs. Maybe a parent falls ill. Maybe that big promotion didn't come through. Maybe the mother feels awful working long hours away from her children and switches to part-time. Maybe an emergency maintenance project comes up or a car needs to be replaced sooner than was anticipated.
Maybe yeshiva tuition increases year-to-year much faster than you anticipated.
After all, for even 3 kids spaced 2 years apart the time span for K-12 (forget years in Israel and college) is 17 years. A LOT can happen in 17 years. It's practically impossible to plan out that far.
Plus, the cost for high school is a dramatic increase from the cost of elementary school and involves a whole new set of "per family costs" such as journal ads, building funds, etc. That cost doesn't hit till around 13 years after your first child is born. How can you predict what those costs will be?
Point is, prudence in this matter isn't enough. A lot of things have to all go right for a very long period of time.
A small miscalculation and you're thrown to the mercy of the scholarship committee - you're a communal charity case. A lot of bad stuff can happen at that point. They can force you to draw down savings, stop contributing to retirement accounts, take equity out of your house, etc.
A bad situation can go to far, far worse.
And, because full tuition is so darn high, the chances are once you go on the dole, you're not coming off. You're going to spend the next several years with your hands out begging for scholarship dollars and falling behind financially in other areas because the school won't let you do what would otherwise be fiscally sound.
We're financially secure now, but getting myself into this trap scares the heck out of me.
precisely why more families need to look at homeschooling or public schools...
I have to tell a new school to which we are sending our son how much I can afford for tuition. I hate that question!
If I pay $500/month I'm living paycheck to paycheck. So do I tell the school that I can afford $500/month or do I tell the school I can afford $50/month because I need to plan for unforeseen expenses and that I can not live in financial peril?
Putting the kids into public school has had a mixed result. Both of my kids cannot stand the school population -- lazy, obnoxious kids who think the world should be handed on a plate to them.. One of my kids' schools is just plan bad -- very few good teachers. The level of chutzpah directed at the teachers is quite astonishing in my son's school.
Without the structure and culture provided by day school has been a train wreck for our Jewish home life.
Jewish school options for us are VERY limited. I'm going to go begging to secular private schools if I can't get a large enough scholarship or solicit enough money for his tuition. At least he will get a good secular educatio in that case.
If the public schools where you live are terrible you could consider selling your home and buying a small home in a good school district.
anon4252012,
You should say you can pay 500. It does not seem right to ask donors to pay for schooling plus contribute to your savings account, unless you say so explicitly and they agree (long shot).
BenSira:
Presumably they would also be able to pay more if they took in a boarder or cut back to beans-and-rice.
"Can afford" and "can pay" are separate things.
A terrible dilemma for you all. We were content to go without in the 60's; we didn't know what we didn't have: music lessons, swimming lessons, camp, private tutors, SAT tutoring, enrichment activities, foreign travel (except for one year in Israel - in third year of YU at age 19-20), skiing, purchases of all kinds - we could afford what was FREE. We had so many library books it was difficult to keep track of their due dates. My father made a project of teaching me to read the Hebrew newspaper - Maariv, not Ivrit Kalah or something easy. Our leisure activities were reading and learning. That, and when a new refrigerator arrived, my little brother and his friend spent many wonderful summer afternoons playing in the box! We were taught: DO NOT ASK FOR ANYTHING. That was a rule. If we had earned some money, we went to the corner Carvel's and had a treat. We did not hunger for fashionable glasses. Girls wore socks til around 12th grade. We made musicals, plays, all do it yourself, while giving the occasional nod to our studies. Our parents grumbled about tuition, but not as much as you all do. They felt: How lucky we are that we got out of Oshkosh (where we lived until we were able to move to a more Jewish city, a city with a day school, imagine that!). My parents, or at least my father, deeply appreciated the ability to send his children to day schools. You all resent it and feel you are being ripped off. How dissatisfied you all are! How happy my parents were in comparison. The highlight of the year was the Trip to Brooklyn to see grandparents, whom we stayed with. Their home was like a museum of natural history, complete with 1918 Gray's Anatomy from my grandfather's brief stab at medical school. We were poor, but happy. In Brooklyn, we were thrilled at Drake's Cakes, a delicacy that was kosher. We loved Entenmann's donuts, unavailable in our city. We went to Farm Foods in exciting New York City, as our town had no kosher restaurant and there were no expenses for pizza - we had no access to pizza! You all missed the happy times.
Drake's Cakes and Entenmann's aren't cholov yisroel. Shikse.
Thanks, Anon 10:54! Happy but free we were nonetheless, which was my point.
Continued my happy childhood: All my happiness came from free activities - my best friend in shul, singing opera at age 9, writing plays and performing in them in school, carrying home as many library books as possible and reading them on Shabbos, going to shul where my best friend and I davened and played. I didn't realize, or only dimly, that I was deprived of anything. I remember how much fun it was, playing jacks! We had no electronic games, no costs. When we entered the toy store, my mother would anticipate our desires for toys, so she would announce: "We are getting one ball. If anyone asks for anything else, we are MARCHING RIGHT OUT." We learned self control from this. Now the children and their desires take first priority in the home, and the children control the parents with threats, nagging, whining. I have seen/heard this in conversations with friends. A mother cannot speak on the phone because her 7 year old cannot tolerate that attention be withdrawn from her, that she is not the total focus of her mother's life. No wonder you are all under such pressure. I told my niece to tell her preschool boys, "I am on the phone now. Play in another room until I am finished. Do not interrupt me when I am on the phone." This is said gently and politely. This has made her life much easier! Having a consistent policy toward being able to have a life of one's own which does not have to revolve around children and their needs. This policy will not help you pay the tuition, but it will decrease your stress level enormously because you will not be constantly under pressure from demands, threats, interruptions from out of control children. Their demands, if not deleted in preschool, will mount and their belief that they are entitled will increase, and your pressures for more and more expensive goods for your children will grow greater as the years go by. We had no demands, my father made the demands, and that was that we behave respectfully and obey. I know you do not believe in authoritarianism. This is why your lives are so difficult; you do not believe in parents' authority over children, but you have defaulted your job as parents and allowed your children to have authority over you, the parents. You are in thrall to their demands. If you could find the authority within yourselves, you would reduce greatly the stress you are under, and you would find the tuition problem become clearer. It is impossible to gain clarity when faced with non-negotiable demands from spoiled children. Get the children to behave respectfully and go to bed on time. Then you as parents can rationally think and discuss your options. A lot of stress can be avoided. It's not tuition that's the real problem in many cases; it's family life that revolves around children's demands. As my father used to say when we wanted to stay up late, "We are entitled to an evening!" All entitlements emanated from the parents. They were entitled. We were to listen and to do our homework. We were not the center of the universe.
Any comments about life in 60's America? About my gratitude that I learned obedience, self control, and respect at an early age? That I thank my father for being authoritarian and not tolerating disrespect, that I cherish my mother for teaching me I cannot have everything (or most things) I want if they cost money? I'd love to hear your reactions. I'm a professional writer and Hebrew translator and I am older and more experienced than most of you. That means I like to introduce new ideas to young families. That you do not need to suffer needlessly. That you can gain clarity by achieving peace in the home. That you achieve a peaceful home by exercising rational control of children's demands. That giving in is abdicating your responsibility as parents, though it's the easier path. You are stronger than you think. Reduce children's demands and you will have more resources, mental and financial, to focus on the tuition problem. Problems will no longer loom as large when you are no longer being nagged by 8 year olds. My ideas may seem to have nothing to do with the tuition issues, but they are directly connected. A peaceful home will allow you to think clearly and assess your abilities better. You will be able to make rational decisions, which you can't do now, being harrassed on all sides by the darling little autocrats!
You want a comment? You're smug and no one cares about you, your holier-than-thou attitude, or your life in the 60's.
My children attended a MO yeshiva in the Midwest and it bled our family dry financially. I worked two jobs as did my wife to pay tuition, which resulted is in a very stressful family life. Our kids' school could have cared less about this stress and would often call with requests for more money. Several of the rabbis made 6 figure incomes and lived lavish lifestyles. I developed depression and lost my job. No compassion from the yeshiva which ended up kicking my kids out. We subsequently rebuilt our lives. My kids ended up going to public school and ended up at the University of Michigan. It's been 4 years now since the you know what hit the fan, and I have not totally gotten over how we were treated by our former friends and community.
BenSira
I 100% agree with you regarding full disclosure.
What I wonder about sometimes -- are you really supposed to make yourself completely financially vulnerable before asking for help?
Clearly people who read this blog think so. What's the halacha on that?
I'm not sure how I feel about that. I'd probably feel differently if I made 7 figures. Or even 6.
And how about retirement savings? I'm not talking about contributing; I'm talking about draining what you accumulated before you got married/had kids.
It's financially perilous to do that! But perhaps worth it for your kids' education. And throw the family's Jewish life into the balance and it's probably even more worth it.
People have different tolerance for risk. If living paycheck to paycheck is going to stress you out so much that it affects your health are you still not allowed to save anything?
I'm being theoretical about some of this stuff.
As for my own situation.....
No house to sell. Single earner family. Small apartment. Small kids. Beans & rice - hmm hard to feed large children on that, have you tried it? But I get the point. Live frugally. I agree and I try hard to do it. My kids don't ask for and don't get extravanges unless they earn their own money for them.
Good future earning potential though for them and for me :-) Let's hear it for COLLEGE EDUCATION. I have one and my kids will all have one as well - G-d willing.
To all the anons out there - please get yourselves a name to use so that slow folks like me can try to follow the conversation and respond to the right "anon". Call yourselves anything; it won't give away your secret identity.
"it won't give away your secret identity."
Is that you, Superman?
Anon. April 27 - 12:53 - Thank you for commenting on my posts about the simple life in the 60's. You are too immature to be on my wavelength. You are too childish to control your children. You are a child still, and I am an older person and fully mature, though I continue to learn through life's experiences. If you are not interested in our lives in the 60s, it is because you are too young and shallow to realize how much you can do to get out of the dilemma you are in by learning from an older, less pressured generation. Your dilemma is following your heart and following your eyes, to quote the shema. You are among people like yourselves, so you have no examples of simplicity before you. You believe you can have all the luxuries and private school tuition, too. I agree with Miami Al that if you can't afford day school, send your children to public school, the best district you can afford to live in. Let them have a year in Israel, it may change their lives, depending on their ability to use what they are experiencing positively. I feel deeply for Anon. 4/27 6:33 who was "bled dry" by a yeshiva in the Midwest and oppressed by demands for money. Where is the chesed, the rachamim of the administrators? What kind of schools are these? How can they teach character if the administrators have none themselves? I feel for you all. I am not smug. I am experienced. Call me
Anon, April 27, 12:53 am: I wanted to add: From the anger of your response, I know I hit the nail right on the head. You realized that I was right, that your lives were controlled by demands beyond your ability or desire to control, that demands from children were being attributed to the school, there's a Freudian term for it, transferred to the school. It'll come to me. Your anger at my "smug" attitude, when I care so much that I present to you the only solution that works - the exertion of parental authority with love and determination - your anger at me showed me how correct I was in my assessment of the situation in many of your homes. If I were wrong, you would not have attacked me as "smug" and "holier than thou". If I were completely mistaken and your homes were oases of peace, you would not have lashed out at me. Lash out, do so. I can take you on and much more. I am only sorry you are so childlike. No wonder the administrators suspect you can pay more than you are admitting to, because emet is lacking in your character. Both truth to others, and truth to yourself. Why do I bother to write for such childish parents? Put your kids in public school, make an adult decision for a change, and give yourselves some peace. And have a set and definite bedtime. And no interrupting when you are on the phone. Do not tolerate a word of rudeness or disrespect toward parents. Do not buy presents for disrespectful children. Suddenly peace will enter your life, like a miracle.
Word I meant was "projection". You have a tuition probem, but you also have an out of control children problem, which you are attributing to the schools.
My wife & I lost many "friends" and have endured numerous sneers from the general community after putting our children in PS. Guess what happened: We made new friends (many are Jewish) and life goes on. The cult like nature of where we were before & where we are now are truly remarkable. We have met lots of nice people, a few "yeshiva refugees" and a couple of real putzes. Overall we now save money every month, we actually can take a real annual vacation and we feel more relaxed knowing that we can pay our bills. Spare me your lectures about how Hashem provides because you know that's BS. If Hashem provides for the righteous then why are they always at my door begging for money? Also the ultimate in chutzpah was when a "friend" asked me for a loan while "joking" about how much money we now have! I told him to go ask his "rabbi" for a loan, after all why would you want a loan from a shaygutz like me?
Addendum to above mentioned comments: In 10 years don't knock at my door for a hand out because you can't work any more. I'll be only to happy to direct you to welfare office! Plan better & you to will be able to afford retirement.
Wow, Understanding you really love to hear yourself talk and you do seem to think very highly of yourself. I'm not hearing the round of applause here from the rest of the commentors. I'm sure that must be because we're not worthy enough to be on your wavelength. Maybe one day we can all aspire to be you.
I remember once reading a Rabbi Tendler response that said "if you can ask me such a question, your 12+ years of yeshiva education had no imapct on your life whatsoever" but then went and patiently answered the question.
When I see comments like sending your kids to PS so now BH you have money to take a vacation it all makes sense to me. YOUR yeshiva education had no impact on your life so you figure it won't have any on your kids either so why not just send them to PS.
Maybe I am naive, but are you telling me that you can go to a yehiva with your W-2 or monthly paycheck and tell them "listen, this is what I make; food cost X, rent cost y and all I have for you is Z" and the yeshiva response is "well, too bad"? If so, then find your self another yeshiva or find yourself a real "torah rabbi" who you can use as your spokesman.
What I really think is happening is after subtacting X and Y you also need Y1 for vacations, Y2 for the PSE or Wii or whatever, Y3 for eating out, Y4 for pesach hotels, and THEN you tell the yeshiva all I have left is Z for you and the yeshiva rightly tells you "sorry that is not enough".
I know a number of people who do not make much money and while the yeshiva presses them, none of them pay even close to full tuition, and none of them have been tossed. Of course my circles are probably more RW than yours.
Two genearations ago people were willing to do anything to make sure their kids went to yeshiva; and now you are willing to throw that away because you are too embarrassed to admit you can't pay? Or worse - that your non-essential needs come first?
Wow, that last mishna in Sotah is coming true right befoe my eyes. Moshiach will be here any day now.
Understanding,
I'm glad it all worked out for you. Times are different now, and I'm not talking about teaching your kids derech eretz - that hasn't changed one bit (some did in the 60's, some didn't. Some do today, some don't -- and it's completely irrelevant to the topic at hand). Tuition in the 60's - early 80's was challenging, but significantly lower than it is today in inflation adjusted dollars. Schools were much leaner. You can argue that today's schools are better and we need more administrators and teachers and nice/safe buildings, etc. but costs have jumped dramatically. But the donor base has contracted. There are now multiple schools per metropolitan area all chasing the same donors, and the donor base is now much more limited in scope. I remember donor campaigns in the late 70's targeting non-religious Jews who felt Jewish pride (the Orthodox had not yet told them that they weren't Jewish enough), and/or Holocaust survivor's guilt, and/or had religious grandparents.
I've run the numbers. If you want to have a family of 3 - 5 children, live near a shul, and send them to private school, you need a family income of $200 - $350,000 per year. I know that's a big range (some areas are cheaper and some people live more frugally than others). But that's really the baseline, even if you live frugally in a low cost area.
So there's your response. You're right that it was somewhat easier to pay tuition in the 60's, and standards of living were lower, and you, apparently, were happy. But don't blame today's tuition crisis on people buying PS3's, because take away that game console and give the kids hula hoops and you still won't be able to make ends meet if you don't have two six figure+ incomes.
We will eat meat -
"Two genearations ago people were willing to do anything to make sure their kids went to yeshiva;"
You mean day school education was universal two generations ago? I'm pretty sure that's not remotely true.
"and now you are willing to throw that away because you are too embarrassed to admit you can't pay?"
I doubt it's simple shame. For some, self-reliance is a major part of their core beliefs. If you can't afford something you don't ask for handouts, you simply don't buy it. Others have been told that Hashem will provide. If Hashem hasn't provided (directly), then other doubts arise. But - and I've seen this personally - for some it isn't shame about not being able to afford it, it's the intrusiveness of baring your finances to the scholarship committee, and effectively letting someone else tell you what you can/can't spend money on.
"Or worse - that your non-essential needs come first?"
I agree with you here.
Avi - I've run the numbers. If you want to have a family of 3 - 5 children, live near a shul, and send them to private school, you need a family income of $200 - $350,000 per year. I know that's a big range (some areas are cheaper and some people live more frugally than others). But that's really the baseline, even if you live frugally in a low cost area.
This only applies to certain segment of Orthodox Jews. The real solution is to move to the right, the further you move to the right, the lower the tuitions become, and the more kids you can afford to send to yeshiva.
Another factor that makes this different from two generations ago is what has happened to the cost of a college education. If you have any hopes of your children getting a college education and you are not wealthy, you need to save early and often. Yes, we could let our kids get saddled withe huge student loans, but then how will they afford to live in MO areas and pay MO tuition.
Another difference is that two and even one generation ago, parents often had a pension to rely upon. Very few of those currently with school age children will have a pension, so retirement savings is a must, not a luxury.
My kids don't ask for much and tend to appreciate my frugality (something I didn't appreciate with my own mother), but they are exposed to far more materialism than I ever was simply because of where we live, and we don't live in a particularly extravagant kehillah.
While I can relate to life in the "1960's", parents are facing an entire new set of circumstances and part of the reason is that they don't live in "Oshkosh". It is true that kids do seem to rule the roost in some homes. It is also equally true that a lot of this materialism has been pushed upon families from outside the homes. Let's just say that Oshkosh Middle School would never think of running a class Ski Trip, wetting the appetite. But Yeshiva of Metropolitan Area doesn't bat an eyelash.
One of the dangers, as we grow older, is not recognizing that times change.
This is not unique to the Frum world; the parents and counselors of today's High School seniors largely grew up in a world where "get in to the best college you can, borrow what it takes, major in what you want, it will pay for itself" was good advice.
It isn't good advice anymore. The days when full tuition for a semester of College at a State Flagship University were in the hundreds are gone. We now have graduates (or worse, people who failed to graduate) with tens, or even hundreds of thousands of dollars in un-dischargeable debt that the degree will never pay for.
Day Schools have followed a similar drastic inflationary curve in prices, and the overall social pressure of the Orthodox world for conspicuous consumption -- while not helpful in the slightest -- isn't the problem. The cost of the schools is such that everything else is rearranging the deck chairs on the Titanic.
I lost my job last year and my severance pay ran out 6 months ago. We went through all of our savings and retirement funds. I met with the finance department and scholarship committee several times since my lay off and explained my situation honestly. There response was that I'd "better find a way" to close the gap between their offer of assistance and what they think I should be able to pay or my kids will not be allowed back in school next fall. The problem is that we literally have no money and have to take food from a kosher food pantry to feed our children. We are not a RW family and do not feel right going to the welfare office but I have an appointment with a case worker tomorrow, Problem is we still will not have money for tuition. My observation is that there really is a lack of compassion in the community. The finance officer was actually overheard joking about our situation by my brother at his shul, no one stood up for us, and several of the guys apparently had a good laugh at our situation. We will most likely be forced to sell our house at a lose and move into an apartment, and to be honest our situation is scary.
Sam W.
Sam W - I think in your dire circumstances public school is the only answer. Obviously, the MO administrators in your kehilah lack a sense of rachamim, which the frum have in spades. I appreciate all your commments explaining how much more expensive things are now than in earlier generations. I still think that we have too many electronic toys and "needs" that are wants.
Commenter Abbi - Your malice is aimed at too strong a target. Bully the weak, never the strong!
I feel for you all, you are in a terrible bind. The solution is public school, the commenter who chose public school and made new friends should be an example. How fortunate I am that I could go to Jewish day school - how grateful for my parents' sacrifices and low standard of living. They sacrificed for us, but we had meat to eat, even lamb chops occasionally. And we had library books! My father was a Hebrew scholar, and studying Hebrew is free. So I studied Hebrew, too. No wonder I appear smug to you - we solved so many problems by a very minimal standard of living, supplemented by Jewish scholarship.
Sorry, the above comment 5:51 is from "Understanding".
To we will eat meat on T"B this year: Tuition breaks were not enough for us & the "community" wasn't willing to make up the difference. Too much stress brought on by watching one friend after another go down in flames was enough for us to decide to make our decision re: PS v Yeshiva. As I like to tell people who have harsh, judgmental words for me: Please feel free to send a check for $2K/month to us & then you earn the right to tell me how to raise my children. Lectures about bitachon & emunah are simply wonderful but life isn't a happy ending Art Scroll book. The bank isn't interested in your emunah, they want their money, plain & simple. Oh & btw so does the Yeshiva. I was called irresponsible by an administrator when I was late with "building fund" check. There is another aspect to all of this no one seems to mention but what about the dishonesty tuition breeds? Google: Menachem Youlus & the Torah rescue scam. His excuse for stealing: tuition for his large family. For the record there are other scams going on daily for the same reason & I can name many. I will not steal to pay tuition. I'd rather raise honest 'frier' Yidden than thieving ones.End of story.
Sam W.,
If you live in Teaneck, please go to Project Ezra - they can do an honest assessment of your finances and intervene on your behalf with the school. If you don't have a similar service to avail yourself in your area - and your Rabbi's Discretionary Fund is equally inaccessible for help - then you do what you have to do with your head held high. Judaism does not require private schools, it requires that you teach your children Torah. I wish you the best in your job search.
Avi Greengart, excellent practical advice.
I want to tell you all what my close friend told me tonight. I had told her I am anticipating suffering due to a family situation. She told me, "My mother lost 5 children and then starved for a year. My mother suffered [in Auschwitz]. What you are anticipating is discomfort." I asked her, how did your mother survive the selections? My friend said that her mother's friend, seeing she was joining the line toward death to be with her 5 children, physically pulled her back to the line for life. They ate potato peels from the garbage. For a year. "That is suffering," said my friend. "My mother told me," she continued, "that if I could lose my 5 children, I could bear anything." My friend said to me, "What you are going to go through is discomfort, it is not suffering."
This gave me perspective. My friend's mother remarried after the war, had two more children, and my friend has had 11 children and numerous grandchildren. She has stood by me through the crisis of my life.
This has nothing to do with the tuition crisis you all face. But perhaps it will put some perspective into what you are going through.
I support "not Jay Wagner" chose public school. Provide your children with a Jewish education outside of public school. Teach them yourself on Shabbos. Keep them from bad influences. I wish you hatzlacha.
Sam W.,
Sorry about your situation, but, whatever you do try to keep your kids in their current school. They will lose their identity if they go to public school and both you and they will be ostracized if you make this move. Perhaps you can take out a personal loan, but whatever you do, do not let you kids leave the community.
Sam W - (1) Go to your rabbi and tell him, This story is disgusting. (2) post the name of the school and the Exec Dir. maybe if people tell him they "know", this nonsense will stop. You are probably NOT the only one. (3) I cannot believe I am saying this, but RW yeshivas are much better behaved in this regard.
SM - Let's just say that Oshkosh Middle School would never think of running a class Ski Trip, wetting the appetite. But Yeshiva of Metropolitan Area doesn't bat an eyelash.
Ski trip? Ha! At our local school, the 8'th grade class trip is to Israel for 10 days!
Eat meat ... - but RW yeshivas are much better behaved in this regard.
Oh, much better behaved, they will allow kids to attend even without prompt payment, and instead will simply not pay their employees for months at a time. Only problem is that the former is "nice", while the latter is transgressing a "d'oraisa".
my long-time chavrusa is a rebbe in a RW (all boys) school; my wife teaches in a RW all-girls school. Neither has ever missed a pay check. Both located in FR/5 Towns.
Accusing RW schools of this whne it is untrue is clearly an issur d'oiraisa.
So you are claiming that the stories in YWN and VIN are untrue? It isn't me claiming that the rebbeim in many schools went unpaid for many months, it's the RW media making the claim! Interestingly enough, in the hundreds (Maybe even thousands) of comments on those articles, not one person ever denied it and said that it was untrue.
Maybe (definitely!) the 5-Towns schools are better off than the ones mentioned in the RW media articles? After all, the 5-Towns in general is much more affluent than many other areas such as Lakewood, Crown Heights, etc.
I appreciate all your commments explaining how much more expensive things are now than in earlier generations. I still think that we have too many electronic toys and "needs" that are wants.
We have lots of "needs" that are really wants.
Assuming your children are actually planning on working for a living, some of those actually do start looking like needs. Even leaving aside the usefullness of a reasonably recent computer for schoolwork and research, they are going to be competing with peers who are natively fluent in modern technology. And that technology is a requirement in the modern business world.
But, let's look at some numbers. Assume a family with 4 grade school children. Assume one family computer updated every three years, plus Internet access. Rough cost: $1100/year.
But with a family of six, maybe one isn't enough. Let's buy a new computer each year, so that we have three computers in the house at all times. Rough cost is now: $2100/yr.
But these children can hardly be expected to do without smartphones! A new iPhone every other year for everyone in the whole family! That adds a cost of roughly $600/yr, plus the phone plans. We'll triple that, and call it $1800/yr all up!
That brings us to, what, $3900 for a very generous family electronics plan. But, that means no iPads! So let's add another $1500 a year to buy a new iPad for everyone every other model year. Our price tag is now $5400.
Now, the cheapest Modern Orthodox Day School I know of is JFS, at $8500/yr (for tuition plus bus service).
So, even being really generous with our electronic doodads for the whole family, the cost of electronic largesse is $5400, the cost of tuition for all four children is $34,000.
There are issues with conspicuous consumption, but they aren't the root of the problem. Large families and private education don't mix well, unless you are very wealthy.
We replace the one family computer every 5-8 years and have a minimal Jitterbug telephone used by one parent only for emergencies, not recreational yapping. We have no i-Phones, no i-anything. I have Bose QC 15 bought over time to keep out the world and its noise, which allows me to think clearly. We have a savings account built up over the years through frugal saving, so we can handle the current family crisis at least financially, and seek emotional support from family and friends. We DO NOT SPEND MONEY except on what is free - walks in the park, library books, Torah study, going to shul. We bring lunch to work. (Shul dues? We tell the shul we wish we could afford to support the shul with a full membership, but are able to make a contribution to the best of our ability, which is currently $100. We have never been refused admission to shul. We do pay for the overflow minyan for the Yomim HaNoraim.) I work one full time job and two part time jobs. I am able to save one third of the income of my full time job so as to our retirement account. We have experienced great kindness and understanding from the rabbi and shul admnistrator in our family crisis. It is relevant that we have not been blessed with chilren; however, the sustenance and love we receive from 50-odd nieces and nephews gives us happiness no money could buy. We are grateful. I do feel for you and the pressures you are under.
The family crisis I was referring to is the loss last night of our beloved father. If you have not yet lost a parent, you cannot imagine the devastation you suffer. I certainly could not have. Rather than use the local funeral home, the Rav of my father's lifelong shul has offered his shul as a place for the levaya - funeral. This will be much less expensive than the for-profit funeral home, and also much more meaningful, as my father was a close friend of the late rav (his son is the current rav) and I was best friends in elementary school with his daughter. How many shabbosim we davened and played together! our family faces a devastating loss, but not alone. We are together in our hearbreak. Sorry, I know this is an irrelevant commnt. Perhaps this is why I am understanding. I understand loss. Loss of a Jewish education is one such loss. A terrible loss, but in the cases described here, may be the only solution.
I have observed over the years as a Yeshiva staff member who is not orthodox that there seems to be an effort to not help others in need and to encourage them is a passive manner to move on. We had a family in our community who had both financial and, in my opinion, emotional problems, and they were basically shunned by the community. This family left the state and became nonreligious, and the common refrain was "good riddance." This is sadly not an unusual story, and many, in our area at least, talk very badly and make fun of others misfortune behind their backs.
Understanding, Baruch Dayan HaEmet. So sorry for your loss.
"I've run the numbers. If you want to have a family of 3 - 5 children, live near a shul, and send them to private school, you need a family income of $200 - $350,000 per year. I know that's a big range (some areas are cheaper and some people live more frugally than others). But that's really the baseline, even if you live frugally in a low cost area."
3 Children in some communities paying for full tuition can be done for as 100K.
3 children in jewish day school paying fill tuition requires a family to have income anywhere between 90,000 to 400,000 depending on the Orthodox community and the Jewish school chosen.
Anon 6;20
If it's true, why not say it. Most of those who got themselves in hot water got there because of poor choices that they made. We joke of the time at my son's school, and don't really mean anything by it. So lighten up.
I imagine you also feel a loss for something you never had, such as marriage and children? And is it halachicly proper to leave blog comments when in mourning?
"3 Children in some communities paying for full tuition can be done for as 100K."
To be fair, I was only including MO to RW Yeshivish communities where secular studies are a serious part of the curriculum (and tuition is $8K - $18K per child). And I was including paying proper taxes, insurance, day camp while both parents work, shul dues, etc.
Dave,
JFS is raising tuition for Bergen County families to $9000 all inclusive (including door-to-door transportation). That doesn't change your argument (it helps it, actually), but I thought you should know.
Anon 2:31,
Yes, some people made poor decisions that have consequences. But pointing this out and saying negative - but completely true - things about people is the very definition of lashon hara. Joking about it makes it worse, not better.
My observation is that the MO lifestyle has become class stratified over the past 20 years. There are a few big spenders who have money, or at give the impression that they do, who call the shots, a lot of hangers on who are just making do, a growing number of families who are over their heads financially, and a small number of dysfunctional families who often receive a disproportionate amount of negative attention. This would make for an interesting sociological study. Unfortunately, I don't think that his stratification makes for a viable long term society.
Eat Meat (Yum!):
Your "Five Towns" schools are not really "RW" the way posters here use the term. If they were, you would not be sending there!
I believe the Far Rockaway/Lawrence community specificly is unique in the number of "working men" who are treated with Chashivus by Rabbonim for their (those who work) Torah. It is not "RW", but it is not "MO" either (at least as of now. Lets see what happens over the next decade). As such, it can't be compared to either the Lakewood or Teaneck communities.
In these hard financial times, we need help in learning how to better utilize entitlement programs. I know several people who was in financial trouble who waited too long to get help. Perhaps the community could sponsor financial planning workshops that focus of the benefits associated with these programs and eligibility requirements.
I work as an entitlement counselor for a social service agency in the Bronx. The amount of aid available is often surprising and it much easier to qualify now for assistance than in the past. It is hard to know what you might qualify for if you have never applied for assistance in the past and a good starting point might be to contact your local federation office. You should not be embarrassed to get help if you need it.
Thanks for the forum,
Isaac
I'm leaving the blog to get married to a surgeon in another city. Good luck to you all. By the way, the anonymous commenter who noted that I should not have been blogging while in mourning - I was not yet in mourning. Shiva only begins after the funeral. My father had died a few hours earlier. If he felt my behavior was inappropriate, then he should have said that. It was not however, unhalachic.
I hope you all work out your problems - without my unnecessary presence.
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