Helping Elderly Parents Avoid (Tzedakah) Scams

I received an email from a reader that brings up a very important and relevant subject for anyone who has aging or elderly parents or grandparents (who are showing signs of vulnerability). That subject is how to help the elderly avoid scams, particularly tzedakah scams, while still allowing that parent to maintain charge of their own finances. The reader writes the following, slightly edited for privacy:

Dear Orthonomics,

How do I keep my [elderly and trusting parent], who is mentally competent and in charge of personal finances from being taken advantage of by shifty charities? I have asked my [sibling who lives closer] to keep an eye on the mail [give our parent only the mail from] tzedakah organization[s] and medical charit[ies] that are legitimate.

However, I'd like to get [my parent] off these charity mailing lists. Do you have any knowledge of how to do this? Do I write to each individual charity? How do I keep my mother from being taken advantage of financially by these solicitations?

Dear Reader,

Note: Please only consider doing anything IF there are signs of vulnerability. I have family members who are well into their years that are highly capable of taking care of themselves and I have family members and clients that are sadly vulnerable, even where still competent. I'm only presenting some ideas where vulnerability is showing.

I really wish I had an answer to your question because if I did, I wouldn't be enduring continuous phone calls from nine in the morning until nine in the evening, oftentimes from shifty telemarketers who make false claims, to say nothing of mounds of junk mail. I don't personal receive much foot traffic from meshulachim, but this is also an area of concern that should be addressed. Hence, I'd like to hear reader tips and will publish helpful advice, bli neder.

In terms of phone calls, which you don't address, but are nonetheless commonplace, I think it wise that when you or a sibling visit that you intercept phone calls and ask that your parent be removed from the calling list. Just about two weeks ago when another tzedakah I'd never heard of called claiming I had made a donation last year, I told the telemarketer that I needed to be removed from their calling list immediately. I don't know if that is why my phone traffic has died down significantly, but it has and it has given me back a lot of our space. I don't want to hold up the "Mission Accomplished" banner too soon, so I will have to report back after the close of the calendar year. Many charitable telemarketers can be very high pressure and deceptive. The latest technique I've noticed is when someone calls as a Rabbi asking for you, which engenders trust and the introduction makes it sound as if he knows you personally. I think it is best to attempt to slow the phone traffic if at all possible. (I've been trying to slow the phone traffic so that we can enjoy dinner almost uninteruppted).

Regarding junk mail removal, Charityguide.org offers some tips and "do nots." I'd recommend performing this service for your parent. (But first, readers, have you used the Direct Mail removal service? Has it worked or backfired?) I feel a slight bit "deceptive" even suggesting taking matters into your own hands and performing this service for an elderly parent or neighbor, but scamming is big business. Protecting the dignity and future of our aging parents is important, and unfortunately dealing with some of these agencies is a menu for trouble, so best to engage in a bit of avoidance. Dealing with elderly and trusting parents is a bit of a tightrope act, and I do suggest gentle communication about an approach to giving as even a $5 check to a solicitor will beget more solicitations. Being selective is a must and developing an open relationship that does not threaten, but attempts to educate where need be is also important.

Foot traffic is a bit more difficult to deal with. Recently my own neighborhood has had meshulachim coming door-to-door well past (normative child) bedtime hours. This is an intimidating situation and it might help to gather the troops to make sure that when visits are being paid in the neighborhood, they are not being paid to all (including others who are vulnerable such as a mother who is home alone). I have noticed that there are some families and widow(er)s that are not listed in any comprehensive kehilla list. Removing addresses from shul directories, and especially comprehensive kehilla listings is probably worthwhile.

Beyond the tzedakah/charity solicitations, you bring up a very important subject regarding the elderly and their finances. It is imperative to help our trusting parents and grandparents avoid scams. Unfortunately, scams are everywhere and it isn't unheard of for family members that are supposed to help, to slowly drain an elderly parent. I'd like to continue to do more research into scam avoidance and continue to publish posts on such. Thanks for being the second (!) person this week to email me about scams.

Sincerely,
Orthonomics

Ask Orthonomics: Choices for the Young Man Learning

Dear Orthonomics,

I have a 17 year old son who has graduated HS, loves to learn and is actually quite good at it. He was also quite good at his secular studies and understands that he will be going to College and will IYH support his own family post-marriage. His RW yeshiva (hat and jacket/white shirt/etc) allows College, so at least that is not an issue. But here is the challenge:

He plans on learning until marriage and most likely even a year (2?) after that. So if everything went according to plan (and don’t get me started about how nothing ever goes according to plan, between my career as an [nicely paid professional] that only happened because my ‘plan’ fell apart, my wife’s career that only occurred because her ‘plan’ fell apart, and our 4 children though we had none after years of trying which included major medical assistance, I may be the king at being able to explain the posuk “Rabos machshavos B’lev ish) he goes to work in say 8 years.

His options are:
a) Go to College now, get it over with in 3-4 years, then sit and learn until he has to try to find a job
b) Don’t go to College yet, and start in 4 years (an idea I hate since it is too likely that in 4 years he will say “no”)
c) Start now, take it slow, take a year off, etc and finish up just as he plans on entering the work force

Assuming I reject idea (b) {he is smart enough to listen to me as long as I am paying his bills}. He is left with (a) and (c). Is there anyone out there who has insight into which option may be better? Does anyone have another option even better than these?

Thanks.
A Father


Dear Father,

You present two choices for the learner who is expected to be independent within an extended, yet still short, period of time, choice a and c. Each option has its pitfalls, and I don't think these are the only choices. For example, it might be wise to help him arrange different opportunities to help him determine a career path while/before he starts taking classes. You rightfully worry that after learning he might decide to not pursue a degree at all. On the flip side, many students take the easy way out during college by going for an "easy major" without having a career path in mind. Clearly, you want him to reach financial independence, so I think the real goal isn't how to complete a bachelor's, but how to ensure he develops his academic talents and enters the workforce.

But, since I do like to at least attempt to answer questions posed, I think choice a (complete a degree and then continue in long term learning) will leave a gap between the education and its application, one that might make potential future employees wary. I'm really uncertain which the better of the two choices is, but I guess I lean towards choice c, get started, take some time off to learn (perhaps coupled with some shadowing in the workplace) and then finishing up with a flourish.

Now I'd like to concentrate on addressing a bigger philosophy. It sounds as though you are guiding your son regarding expectations, but worry about the "market forces" he might encounter along the way, leaving you wondering how to best guide him. I believe you partially alluded to that in writing, "he is smart enough to listen to me as long as I am paying his bills."

Beyond helping him determine the best way to continue learning while pursuing a degree, I think the thing that needs to be made most clear is that, while you are happy to make it possible for him to continue learning for an extended amount of time, he must simultaneously be responsible to prepare for financial independence. There should be no guessing game as to the timeline to reach such a goal and/or milestones need to be met along the way. I don't think you should necessarily dictate how he goes about getting from point a to point b, but he need to know soon you will not be paying his bills!

In the past, I wrote a post "Better and Worse Ways to Help Adult Children." I believe that post is worth revisiting because it discusses better and worse ways to provide adult children with assistance. In short, I think it important to allow freedom with boundaries, and don't make your assistance backfire by making things too comfortable through faulty or overly fluid arrangements. Any arrangement made should promote independence, not foster dependence. And, while you want to make him comfortable enough to meet his goals in learning and academics, he should be so comfortable that his natural motivation to gain independence is sapped.

Hope that helps. I'm certain my readers will have plenty of relevant advice on how to help a young man in learning best transition to the workplace, financial independence, and supporting a family.

Sincerely,
Orthonomics

Tax Strategies for 2011

2011 is around the corner and a reader asked me, in regards to my previous post:

SL: Assuming that Congress is too fractured to do anything about restoring some of the tax cuts, at least for the middle class and below, are there any particular tax strategies that you think make sense - i.e. sell stocks that have appreciated to get the lower capital gains tax, defer charitable contributions? accelerate charitable contributions? etc.

Getting ready for 2011 will probably be an ongoing subject here at Orthonomics, so consider this installment one. Tax professionals are only starting to figure out what strategies make sense. Or, as one journal writes "new taxes requires us to think outside of the box when it comes to tax planning. In many cases, this means considering strategies that would be contrary to conventional planning practices."

Here are a few strategies to consider:

Accelerate income and defer deductions: normally we try to defer income and accelerate deductions. Hence, a small business owner or landlord might expense equipment in full, a family will try to lower their capital gains taxes by selling loosing stock offset gains, those who pay estimated payments will make sure to send their estimated payment to their state before the close of the year, and in December of the Fiscal Year a family will write out some checks for last minute tax deductions.

When impending tax rates are significantly higher, due to increased marginal rates and the elimination of the 10% bracket, individuals should consider the following (I'm including advice for those who file a Schedule C or Schedule E):

Be aggressive with collecting accounts receivable: If you can collect in 2010, it is worth more than in 2011. Start bothering your customers, subject to whatever halachic restrictions there are of course. (I think I am going to bother a client right now). If you are a second income earner teetering on the next marginal rate, the motivate to collect now is high. Likewise, it makes sense to push off expenses/acquisitions, but only in a way that is yashar. I'm not recommending forgoing payment of bills to vendors, only holding off purchases or changing payment schedules where possible.

Defer Itemized deductions from 2010 to 2011: So long as it is yashar and halachically proper (it wouldn't be proper to withhold a pledge due imo), holding off a voluntary donations from December 2010 to January 2011 makes sense, as does sending estimated tax payments to your respective state in 2011, rather than at the end of 2010 as you might be accustomed to doing.

If you depreciate equipment and have normally either used a double-declining method or fully expensed under Section 179, consider a straight-line or other approach. Of course, you will need the cash flow to be able to pay the tax bill.

If you have a NOL (non-operating loss), you should consider carrying it forward (a one time non-revocable election) rather than carrying back, as is often done.

Capital Gains If you are thinking of selling appreciate assets, 2010 might be the right year to do just that. If you are experienced with stock dealings, you are probably accustomed to selling your losers to offset the gains. For 2010, you might want to defer the losses until 2011, to offset higher future capital gains or just take the up to $3000 loss allowable by tax code.

Retirement Savings
Convert IRAs to ROTH IRAs/Invest in ROTH IRAs. The advice to convert IRAs to ROTH IRAs seems to be popular advice, and in many cases it is good advice. But you have to be very careful here. 1. You need to have the cash in hand to pay the tax bill (actually the rules have changed an you can defer 1/2 of your bill, but I don't recommend playing this type of game) and 2. Conversions can threaten your child tax credits where you are on the verge of being phased out. Taking at $800 hit on your tax credit in the here and now, e.g., might not be the wisest idea. For that reason, while the advice does make sense, it is so important to run the numbers in order to understand the full impact and make an informed decision.

That is it for now. More to come as the strategies develop. Now back to reminding a client that is long overdue with funds that although I've been flexible due to the situation and trust relationship, I need that money before 2011.

Dear Orthonomics: When do you use your savings?

Dear Orthonomics,
Here's my financial situation. I'm married with 3 kids, expecting a 4th, live in a high tuition area and have two in school. The third is starting school next year. We have a combined income in the low $100Ks, I work full time, wife works part time, and her salary goes mostly to babysitting and taxes. After taxes, babysitting and commuting, there's barely anything left. She works primarily to keep her job for when all kids are in school (and she can work without paying a babysitter).
Now my question:We have been managing up until now, because we have a small mortgage, live very frugally, and basically spend NO money on non-essentials (read vacation, entertainment, trips, toys). The yeshiva gives us small tuition breaks, and up until now, we've been getting by.
With a third tuition next year, I project that our expenses will now surpass our income by several thousand dollars a year. Tuition burden will be approximately 30% of income. We have a nice amount in savings (expenses for about one year) but don't really add much to it, and starting in September, will add nothing to it unless we get a windfall.
It is reasonable for a yeshiva, or reasonable practice in general, to use savings to make up the difference in living expenses year and year?
My firm belief is NO. I consider yeshiva a living expense, and all living expenses should be covered by income. If income doesn't cover it, you can't afford it. Savings, in my opinion, is either for emergencies or special purchases that one saves for (car, house, smachot, etc.).
Am I living in a dream world, thinking that a savings account is sacred or is there is a reasonable expectation that savings are to be used to cover shortfalls in income? The danger, of course, is that expenses rise year after year faster than salaries do, so after enough years of doing this, savings will be depleted with no hope of recovery, and then there's no way to cover expenses either.
Please weigh in. Thanks!
Y. Doe

Dear Mr. Doe,

First off, wishing you a ba'shaa tova on your good news.

I am not going to address whether a Yeshiva asking a family to spend down their savings before receiving assistance is reasonable. Each yeshiva/day school is free to set its own policies regarding tuition assistance and schools have to worry about their bottom line, as do parents. In the long run, I think healthy finances for organizations and families go hand-in-hand. But most of our organizations simply aren't in the long-term macro planning mode. So instead of debating that question, I think it more important to address questions pertaining to familial finance.

Like you, I consider savings sacrosanct and believe that in all but emergency situations, savings are not there to cover day-to-day expenses but to carry a family over when there is an unplanned (but temporary) emergency, one-time purchases of big ticket items, and long term prosperity. Some have to budget their cash by the week or month, others in periods of 3 or 6 months. Whatever your time frame, if you cannot meet regular expenses with regular income (i.e. earned income) you have a developing issue.

Your instincts are perfectly correct when you state that tuition really should be met by a regular budget, not savings. I think tuition is a bit of a confusing issue for people. After all, don't regular Joe's spend 18 years saving for each child's college tuition and then dip into savings to cover that tuition? Yes, they do. They also have a small number of children and only expect to pay college tuition for a small amount of time. But Yeshiva tuition falls into a different category for the average Orthodox family. The years of paying tuition extend for large periods of time and for a large number of children, thereby pushing them into the "day-to-day" category.

Since you mentioned savings for smachot, I think we should take a brief look at this category of expense. Particularly, when must these expenses be covered by regular income and when can they be covered by savings? Here I think there are two factors to consider: 1) what is the occasion of the simcha? and 2) what is the family dynamic?

I'm going to differentiate between the "bar" and the "mitzvah". If a baby boy is born and the family simply doesn't have the cash from regular income to cover the basics of a brit milah (i.e. paying the mohel to perform the circumcision and serving a minimal seudah), then it will be necessary to turn towards savings. A circumcision is a must and it must be paid for. Same would go towards purchasing a pair of tefillin for a bar mitzvah boy (although I imagine one could borrow tefillin from a shul or gemach in a particularly dire situation, but I'm not really addressing a dire situations). With the exception of mitzvah purchases, I'd say that the rest of the simcha and its cost and how it is funded will vary depending on the family dynamic.

Within the Orthodox community we have families of different sizes, as well as differences in income. Those factors, and family size plays in heavily, will play into how a family living on a budget approaches budgeting for smachot. Above we considered some factors that make an expense a regular day-to-day expense or an irregular expense for which touching savings unreasonable.

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.

The letter writer is looking forward to reader comments knowing that their family situation is not unique. I'm sure my readers will deliver.

With only good wishes for your family and your new edition which you can "afford" although I'm not sure you can afford tuition at this point and may have to think out of the box (you are not alone there!).

Orthonomics

Moshiach will pay the Credit Card

I feel compelled to respond to a comment I received in the last post where I once again penned some thoughts to Matzav regarding what I believe is irresponsible journalism on the part of Matzav. Once again Matzav published a letter decrying the cost of being frum. But this time the article not only featured the subject of just how terribly expensive it is to be frum, but it centered around the subject of **contemplating suicide** in response to the overwhelming costs. Now, we all know that observance comes with a price tag, but there is a way of addressing that cost and a way to not address that cost. Frankly, publishing the words suicide in response to that cost is crossing a line in my book. I believe we are all familar with the words of Rav Feinstein who admonished a generation for saying "it is hard to be a Jew." I think the constant barrage of letters/editorials about being frum = broke do the same terrible disservice. My hope is that through this medium, I am able to offer up a different message that the challenges are surmountable so long as we recognize the underlying issues, approach the challenge with some courage and sechel, and trust that Hashem will not leave us socially ostracized and our children friendless and shidduchless because we didn't conform to the standards set by "the system."

This Pesach, Matzav treated us to an editorial whinning about how expensive Pesach is (Pesach poundcake is a killer). Two Pesachs prior, the Yated treated us to a letter complaining that Pesach has left families in the red (how do you afford those afikoman gifts and chol hamoed trips?). And each Pesach since I started penning my thoughts on these issues, I (with the help of some fantastic commenters) have put forward a number of money saving tips for consideration because I believe that man cannot serve to masters: Hashem and Mastercard.

This week I received this comment which I'd like to just address head on:

I've read the comments to the "letter writer" on Matzav and the comments here and there is a world of difference in the basic outlook. The comments on Matzav are religious in outlook - tefillah, Moshiach - and also very compassionate. Many commenters say they are in exactly the same situation and they totally understand. The comments on Orthonomics are highly practical and rather disdainful of people who put frum values ahead of balancing the budget. In fact, none of you really seem to understand the religious way of thinking. I have often read on this blog criticism of lack of birth control in the religious community - why do they have so many children? When I have commented that birth control will never be accepted in the frum world, I have read comments like "why not?" The point I'm making is that people who are religiously motivated and people who are motivated by practical concerns will never be able to understand each other. Oh, the reason frum people will not accept birth control is not because of community pressure - it's because first, frum people believe it is a commandment from the Torah to have children, second, they LOVE children, and third, they are willing to live at a very minimal level to sustain a Torah life. Visit Lakewood and see how most families there live. You will see that they truly believe in a Torah life, and while these are not your interpretations of what the Torah requires, they are admirably consistent. They are not motivated solely or even primarily by community pressure. They are motivated by BELIEF.

Note the title of my post, "Moshiach will pay the creditors." Way back when I was a student trying to wrap my head around the ins and outs of going concerns and bankruptcy chapters, budgeting and leveraging, I discovered these very issues were present right in my own community. I think the first time that it hit me was when I was sitting with a lovely Rebbitzen, small business owner, and friend who had just had a wedding like I'd never seen before, which was shortly followed by a much more intimate bar mitzvah. The wedding was a first wedding for this very large family and one of the largest I've attended to date. There was not a detail missing in the festivities from a formal vort, to the jewelry, to the edible flowers on the salad. I can only make an educated guess about the cost of the wedding, but I'm nearly certain I could put a child through (public) law school or med school including a generous allowance for living costs for the cost of the wedding. Somehow as we were chatting, I found out that they had yet to pay for the wedding. This might have been the first time I realized that people really did borrow against their homes to pay for things they wanted. I would not take out a credit card for another five years, so I was still in the dark that I could actually write myself a check for cash to take the vacation I so deserved.

Once my eyes were opened they were opened wide, I learned a lot quickly. A little later I was privy to a conversation between someone else and her daughter in which some rather large credit card debts were mentioned (they were adding to them because they "needed" new dresses for all the kids for a simcha and I believe the discussion was if they had enough credit for the purchase). I had just been signed to my first real job and couldn't comprehend how anyone could *pay* for such debt, especially given the demographic and career choice, and just blurted out, "how will you pay that off?" The reply: "When Moshiach comes, he will pay [off the credit card]." It would have been funny, except there wasn't a hint of humor. She later explained something to the effect that unless a frum Jew was wealthy, they would juggle debt.

A lot of what I have learned and write about comes from published words, conversations, and observations. But, I've also had my fair share of runs-ins with people who can't pay their bills or simply stiff you. E.g., I took on some work for a family that who does all of the same things my commenter mentioned. Every conversation has has a "religious outlook." Tefillah, bitachon, emunah, mashiach; it is all in the conversation. The problem? The work is done, but you get a message not to cash the check because something else came up. And the next check bounces from here to there and back again and the "practical" person ends up on the phone with a local posek trying to figure out what courses of action would be permissible to now collect the funds.

I don't separate the practical from the religious or frum. To me they are completely intertwined, and I see this in the Torah I've learned and from the Rabbonim I've consulted on "practical" issues. The commenter writes "[I/we are] disdainful of people who put frum values ahead of balancing the budget." To me balancing the budget IS a "frum" value.

The cannon canon of Torah is filled with instructions on how to engage in commerce and ownership. And there is a spirit there too. While borrowing is permitted, Mishlei comments on the relationship between the creditor and the debtor and tehillim makes mention of those who do not repay their debts. The sources address a mitzvah b'averiah in classic discussions on whether a person can fulfill the mitzvah of arba minim if they don't have ownership of the item. The wedding ring must be owned by the chatan to make a valid transaction. The Ben Ish Hai addresses such practical matters such as how a wife should budget and spend her husband's money in his writing for women. No less than Rav Salantar includes thrift in his middot.

Derech Eretz kadma l'Torah is a fundamental concept. I think that being able to pay your bills as agreed upon would fit right under the banner of derech eretz kadma l'Torah. Putting yourself in a position where you are engaging in a life of debt means that eventually something will give. Creditors will not be paid. Food and services that you consumed and made a beracha over will not be paid. Pledges that you made will go unfilled. Lawyers, dentists, and schools will go unpaid. Unfortunately there are businesses (grocery stores no less) with massive receivables on their books. Schools and shuls experience the same phenomena. Years ago I met a wonderful couple visiting from a certain neighborhood known for its piety. The family had a business within the community and when he found out I was an accountant, he wanted to share with me a trick he learned on how to 'clean out' as much as he could from the bank accounts of people who wrote him bad checks. Let's just say I didn't learn this trick in business school. I'm a very simple person. I still like to assume that when someone writes a check that it will cash.

Operating in a constant state of red invites ethical challenges. This is not to say that people who live with great wealth don't fall to the yetzer hara (think Enron), but supporting a lifestyle that is not commensurate with income is an invitation to the yetzer hara. I've seen it with my own two eyes.

To close I want to say one last thing: while many of my commentators feel strongly that families should not have "more children than they can afford," (there are VIN and Matzav commentators who say the same thing!), I have a liking for large families. I think that having a growing, expanding, and alive community is our lifeblood. I think it is well worth while to forgo plenty of extras to have more children. The issue that we have is defining the extras and we have made everything a requirement in the name of frumkeit so that we don't even know what "minimal" is. When camp become minimal and dental work to fix rotting teeth becomes extra, you have a problem. And that problem isn't particularly related to family size, but priorities.

Pushers

My vote in answer to the YWN letter writer's question is the police (I do want to believe the letter writer is just pulling legs with this letter. I've never seen drugs laid out on a lunch table in the really rough public school I attended for a summer. Smokers, (drug) users, and dealers had the sense to go across the street, a place I sure as heck wasn't going to).

1) the police because they are the only ones with the authority, capability, and know-how to take care of the PUSHER(S). There is no doubt in my mind that a drug dealer is a rodef. I have life experience to stand on as well as some professional experience. But those who are uncertain are more than welcome to ask their Rav. While I don't care in the least for users, PUSHERS are a different sort of animal. Drug pushers are the ones who entice the young and seek to addict them. PUSHERS infect a community. And PUSHERS are often entangled in a messy and dangerous web. I wouldn't approach a pusher directly. I would absolutely seek professional advice from people who understand the drug trade and have some experience regarding pushers and dealers.

I can't remember ever commenting on the Japan bochurim case, but let's not forget that behind those boys was a grand PUSHER. Millions of tzedakah dollars and a lot of energy has been expended by kehillot all over the world regarding that case. A shame that the PUSHER was allowed to operate in at least somewhat of an open manner.

As for telling a Rebbi Parents, and Menahelim, I'd say that they should all be informed too, but probably after seeking the advice of the police (even if you don't involve the police, I think you can still call the police department to ask for guidance). It is hard to know how enmeshed in the drug trade the boy with the scale is and if his point of access is coming from within the community or from the outside.

One thing that I know should NOT be done is to approach the boys directly to befriend them in hopes of "changing their [lives]." Save you compassion and chessed for issues you understand and have the capability of dealing with. As my parents told me before going into high school, [and I'm dating myself, so younger readers, don't feel bad if you miss the reference], "you are not to go near, talk to, or be friends with anyone who wears a beeper." These kids had drugs and a scale out of the table. That is the signal to stay away! You aren't speculating about the use of the beeper. It is right in front of your face. I think PUSHERS are best dealt with by the police, but a person is welcome to talk to the baalei simcha hosting this mess, the wedding hall director, the (kashrut) mashgiach since the boys brought in outside drink, the boys parents, teachers, and menahelim. But befriending the boys; I give that the royal thumbs down.

Ask Orthonomics: A Tuition Dilemma

I always love getting reader questions and I received a number of questions this past week. I'm going to start labeling reader questions as "Ask Orthonomics."

A reader writes with the following dilemma:

His family came to the decision that they would remove their children from a school that they really like and that they want to see prosper, and enroll their children in a less expensive school that they also like. They are pleased with their decision.
However, a board member contacted them and asked them if they would stay if the
school matched the tuition of the other school. No official offer has been made by the school yet, but it is a possibility that one will come through. The family is uncomfortable accepting tzedakah, but the school really wants to retain students.

I think there are two ways of evaluating this situation:

1. The short-term: If the school makes a counter offer less than two months before the start of school, I don't think accepting the counter offer can be viewed as taking tzedakah funds. Enrollment is in, teachers have been hired, the fixed costs should be known at this point, and if there are empty seats in any classroom, it makes sense for the school to try to fill them with students that can pay more than their marginal cost. A family that has left the school because of cost issues, yet returns at a lesser cost is helping the school, even if they are receiving a discounted price. Likely the board member trying to win you back is well aware that

2. The long-term: Assuming the school comes through with a counter-offer this year, 2 months before the start of school, it is unlikely that the school will continue to extend such an offer in future years. That means that come year two you will be back in the same boat where you have to choose between a) applying for financial aid or b) switching to the less expensive school. I imagine that you could switch to a less expensive school and then be invited back, but chances are you don't care to be in limbo months before the start of school.

I don't think that you can view a potential counter-offer on the tuition cost this close to the new school year as robbing the scholarship fund. If there are empty seats and you can pay, you are contributing to the school's bottom line.

Ultimately it looks as though switching schools is likely inevitable. If that is the case I think the decision you make, should a counter-offer materialize, would be best based on educational and social factors. Will an extra year in the original school be of benefit to your children? Will switching schools in the future prove difficult for your children? Is there a particular teacher/resource you would like your child to have this coming school year? Is there a particular class grouping you would like your children in/rather your children avoid? If there are differences in school schedules, which schedule best suits your children for the coming year?

Hope this helps.

Readers, please do comment.

Ask Orthonomics:
High Income Earner Wonders Where to Go From Here

It isn't every day that I receive a note from a reader that is doing very well financially. This email underscores just how much of a bite tuition for is and just how important it is to make good financial decisions right from the start, whether you are learning in kollel or earning well into the six figures. The burden of tuition leaves very little room for error.

I think the letter also underscores the importance of being careful with the property of one's fellow, an instruction in Pirkei Avot. It takes incredible earning power for a couple to jointly earn $350,000. (The income this couple earns is split nearly evenly). There are few with such great earning power and just like they need to guard their own finances, we need to make sure that we are using their tuition and tzedakah dollars with care.

I am going with the writers numbers regarding after-tax income, as well as some of the estimated expenses, although I'm sure we can quibble. Taxes take a huge bite out of those in the upper income brackets. Normal employees can't do much to escape that. And, more children and greater itemization don't have the impact they do on those in the lower tax brackets.

Hi, I’m an occasional reader of your blog. I could use a bit of your help and perhaps help from your readers. Let me explain: My wife, two children (hopefully we’ll have more children soon) and I live in Manhattan and are looking to move in the not-so-distant future out of Manhattan. My wife asked me to figure out how much we could afford to borrow for a house, so I did the math, and I determined that we could reasonably afford to live in most places in the New York Metro area. Then I started
looking and asking around how much were the tuition costs in various
neighborhoods.

I nearly fell over backwards. There were very large disparities between neighborhoods with Northern New Jersey averaging over $15,000 per child, but schools in Brooklyn and Queens were considerably less. I did the math and figured that although my wife and I are very fortunate and collectively earn approximately $350,000 per year, if we were to have a total of four children and send them to school at $15,000 per kid per year, we really wouldn’t have much room for much else in our lives. Before you say WHAT?, please look at the numbers:
After we pay taxes and contribute to our 401k plans we’re left with about 55% of $350,000, or about $192,500, which is about $16,000 per month. Here’s a sample starter budget, BEFORE TUITION COSTS :

Income $16,000
Mortgage (3,000)
Property Tax (1,000)
Food & Household Items (1,200)
Heat, Electric, Water, Sewer (750)
Life, Home, Auto Insurance (600)
Student Loans (600)
Medical & Dental Bills (350)
Car Repairs, Gas, Tolls (250)

--------------------------
GRAND TOTAL BEFORE
TUITION $8,250

Now let’s assume we have four kids and we spend $18,000 per child ($15,000 tuition + day camp + books + clothes). This totals to $72,000 for four kids or about $6,000 per month. So let’s go back to our budget:

GRAND TOTAL BEFORE
TUITION $8,250
Tuition & Other (6,000)

------------------------
WHAT’S
LEFT $2,250

So we’re left with $2,250, but that is without:
· Giving anything to charity;
· Saving for college
· Saving for other events such as Bar Mitzvahs or weddings
· Clothing
· Shul Dues

So here’s my conclusion: move somewhere where the tuition costs are moderate.
The schools don’t have to be prep schools or top notch or have all the bells and
whistles. Nor am I endorsing public schools or the Chasidishe Yeshivas. However, as long the school provides a decent education, that’s good. If sending kids to what is considered an “excellent” school means cutting back on retirement savings or charity or college savings, maybe it doesn’t make sense to send kids to an “excellent” school.

I realize we’re extremely fortunate to have what we have, but I want to make sure to use it wisely. I’m sure we could reduce some of the numbers above, but it won’t make a ton of difference. However, getting the $6,000 per month tuition cost down to let’s say $4,500 per month would make an extraordinary difference.

So where am I going wrong? Or maybe even right?
Thanks!!!

Dear Reader,

First off, please forgive me if it seems like I am "talking down," I'm not used to giving advice in this type of scenario. That said, I am as stunned by the numbers as you are. It only goes to prove that everyone must be careful with the income Hashem has blessed us with.

I don't know that my advice will sound particularly profound, but then again, the ins and outs of healthy personal finance aren't particularly complicated. So I will put forward a some rules of thumb that will hopefully help you build wealth quickly so that you can more freedom to choose the schools and their neighborhood you feel is really best for your family.

I don't think there is anything wrong with choosing a school with fewer bells and whistles, but I think it would be far better if you really positioned yourself to be able to have freedom of choice when it comes to the chinuch of your children. Ultimately you want to get rid of the debt you do have, buy a home, and then put away money like there is no tomorrow. Paying off your home before you have more tuitions staring you in the face would be a fine idea too. Money put away earlier, as you know, will yield incredible dividends and give you far more freedom, so that is the basis of my advice.

• Pay off the student loan really quickly, preferably before you take on any additional debt (i.e. a mortgage). Things will look a bit more rosy when the student loan isn't taking up its own line item in the budget.
• Budget all regular expenses around (less than) a one income.
• While you still have "only" two children, you should be attempting to bank as much as possible for 1) an emergency fund, 2) college funds and other long term expenditures from the next car to the weddings, and 3) paying off your home. As your kids get older, more of your current income will be eaten up by day to day expenses and it will get harder to save. So the quicker you can put away funds, the better.
• Build an emergency fund of one years worth of expenses to insulate you from downturns in income, changes in the tax code, and job loss. The additional interest your emergency fund earns can be designated to fund the college savings plans.
• Don't overbuy when purchasing your first home purchase. It is easier to sell a more average home that is in nice condition with some nice cosmetic updates than it is to sell a more custom home. There is no reason not to buy a home that will suit your families needs and wants in the future, but until you know where you want to live and where you want to educate your children, you likely don't want to "marry" a home. So steer clear of anything too custom at this point.
• Make sure you are sufficiently insured: life, disability, and an umbrella policy beyond liability. Those in high yielding professions are very vulnerable, so make sure you are well protected in cases of liability.
• Frugality is the underpinning of getting ahead financial, no matter how much or how little you earn. Frugality is how you will build passive income streams (interest, dividends, capital gains) that can be used to fund future expenses. The quicker you get out of debt and start to build passive income streams, the more choices you will have
• Speaking of frugality, I most certainly do not expect high income earners to exercise the same types of frugal behaviors as I do. Chazal tell us we should eat at our means, so I don't expect those with quarter million dollar incomes to be making the same choices as those with five figure incomes. The saying "it takes money to make money" is a true one. But even where you do have to spend additional money to maintain the sanity needed to do your job, maintain whatever image and social expectations might be required (e.g. inviting the entire office to a daughter's wedding), you can still exercise frugality, albeit on a different level, through patience and preparation. A good read is the book The Millionaire Next Door.
• Make sure you have a great financial advisor and tax advisor on your team. I am not familiar with the all of the ins and outs of the AMT, but certain investments that might provide little return can throw you through loops, so you need to have a reputable advisors.
• While I normally do endorse using competent professionals in the community where the prices and expertise are competitive, when you have high income levels, you definitely want to maintain a great deal of privacy. Don't feel bad about employing outside of the community.
• Continue to maintain relationships with other high income earners, but also make sure cultivate friendships with a more frugal crowd to eliminate some of the pressures that come with running with a wealthier crowd.
• Don't be afraid of your wealth. Hashem has given you an incredible gift to do many things, from building your own tuition "endowment" to giving tzedakah generously. Don't feel pressured to support everything because you have a high income. You still have the right to be prudent even if blessed with wealth.

I am really most interesting the advice my fantastic commentors will offer. But before I open the forum, I want to make one more note. This particular family is fortunate that they work a fairly normal work week. Other families with similar incomes often work crazy schedules that leave their additional funds tied up in hiring around the clock childcare, even as their children grow.

Comments. . . . . . . .

Ask Orthonomics: Reader Seeks More tips on Lowering Pesach Costs

Reader Seeks More Tips on Lowering Pesach Costs

A reader wrote me looking for tips on lowering Pesach costs. I made one such post on money saving tips back in 2006. In 2007 I added some additional tips, less related to actual food.

I think the reader is doing great. But, there are always ways to cut back even more where needed. So please add your best tips. The readers are eager!

Dear SL,
I know that you are extremely busy preparing for Pesach. But if you have a chance to blog on how you keep down the cost of Passover, I would love to hear it. During the rest of the year, my food bills are extremely reasonable. I use all the frugal tricks that I can, and it seems to work. My family of five (plus nursing baby) eats well on about $125 a week. But then Pesach comes, and everything seems to fall apart. Without legumes, rice, and pasta as an option, I can’t seem to keep the cost at a reasonable level. Even not buying crazy items like frozen Passover pizza or Passover pasta, my food bill is ridiculous. Am I missing some trick?
1. My mother-in-law buys us shemurah matza. That is not part of the budget. I buy 10 pounds of regular machine matza at $1.00 a pound. (Five pound box=$5.00) and two boxes of whole wheat matza for $3.00 each.
2. I bought a case of good, not-too-expensive kosher wine at the local liquor store. It was $6.00 a bottle. I figure we have at least six bottles left at the end of Pesach.
3. I bought NO red meat for Pesach. [Ground beef can actually be fairly frugal. Small fried meat patties on Pesach are part of the fare here and I find that ground beef stretches well in a meat pie or in small patties. It stretches well because it is filled with matza meal and (yes) more eggs].
4. I bought whole cut up chickens on sale at $1.99 a pound and fish on sale at $4.99 a pound. I spent $20 on chicken and about $55 on fish. [Good prices. A number of regular grocery stores also put Empire Turkey on sale for less than $2 a pound. Only problem is that you have to eat turkey day in and day out].
5. I bought cheese on sale at the local grocery store. I needed a lot for all the matza pizza, matza lasagna, and vegetable frittatas that I plan to make. Cream cheese, yogurts, orange juice, milk, and butter were also on sale so I bought that as well. [This is probably one area that is inflating the budget. Unless you keep chalav yisrael, you probably buy OUD yogurts year round. We like yogurt, but it definitely adds up in the budget even when you are only paying 50 cents or less a yogurt. Kosher L'Pesach yogurt is at least double the price. But, there aren't too many great replacements aside from making your own yogurt, and I have yet to get that right!]
6. Eggs were on sale at $0.89 a dozen so I bought four dozen.
7. I know that I will spend about $150.00 on produce: lettuce, spinach, potatoes (!), sweet potatoes, apples, melons for fruit salad, cucumbers, onions, garlic, peppers, berries, mushrooms, carrots, tomatoes, etc. [If you have a produce stand near you, try stopping in and seeing if they have less expensive produce. I regularly visit one produce store that marks down the older produce. I never know what I'm going to get and it isn't great for serving raw, but for roasting or sauteeing, it works, so long as I'm planning to use it up quickly. You can pretty much roast, steam, or sautee anything. And Pesach is a fairly quick holiday, so if you shop before you cook and once during chol hamoed, you might find a bit of extra savings].
8. I bought milk and orange juice on sale. Coke products were a loss leader at the grocery store so I bought 10 bottles of kosher-for-Passover soda. (I buy soda all year so that is not the problem.)
9. I shopped with my OU list so that I could buy regular olive oil, coffee, and sugar.
10. I still ended up spending $75 dollars on special kosher for Passover items that I couldn’t figure out how to do without: ketchup, tomato sauce, spices, soup mixes, matza ball mix (okay, this one I could make with plain matza meal), matza meal, chocolate, cake mixes, syrup for the matza brei, and apple sauce (okay, I guess I should make this.) [We all spend extra money on Pesach simply because we need to buy unopened products that we normally buy a little at a time throughout the year. You can feel your wallet shrinking when you have to buy a lot all at once. In addition, we end up paying a premium for some products like tomato sauce. If you really feel the need to cut back on this part of the expenses, the best recommendation I have at this moment is to think about how you can adjust your menus in order to cut back on some of the KLP items. Unfortunately, that is easier said than done because we all have things we like to eat and that our kids are willing to eat. I wouldn't kick yourself over the cost of applesauce. I'mnot sure making your own would be less expensive, although homemade applesauce is always incredible].

What do other people do to keep the cost down? Also, how do other people manage to incorporate flavor into their cooking without all of the available spices, oils, and condiments. [I too would love to here more from others about getting more flavor into the Pesach menu. I try to make salads with lemon juice and vegetables with garlic, but I miss the things I can't get/use].

Ask Orthonomics:
Help Me Solve Reader Dilemmas

I am sorry some of the questions have been sitting in my inbox for so long. I apologize for having lack of blogging inspiration. Below are questions from readers. Add your comments please. I am thinking of this blog as a g'mach of sorts, where we exchange cost effective advice, instead of money or goods.

A reader writes:

In an effort to cut our grocery bill, I dutifully went out in November and got a freezer. Its a stand-up freezer (as opposed to a chest) and it isn't energy start, but I distinctly remember the energy sign saying that it cost about $60/year to run the freezer. They delivered it the first week of December and set it up in our (cold) basement. Its been running at a 4 setting- which is what is suggested. Its only about 1/4 full right now (I'm still trying to fill it up) and everything is frozen solid inside. I noticed that it runs a lot. We just got our December electricity bill and it jumped from $200 to $330. I know, I know, most people would wish for a $330 bill, but $200 is typically the high end for us. We budget about $190 a month, which evens out in the Spring and Fall. Anyway out kWh jumped from 528 to 815kWh, with an average daily use was 21.6 in November and 23.3 ion December (I honestly have no idea what this means, but it may be important). Anyway- could this freezer be increasing our bill that much? BTW- I've found some great sales and really have tried to be mindful to set aside money to be able to buy food when it comes on sale.

Sounds like you have an issue with a defective freezer. I only hear our energy star upright freezer running for a brief time after I close the door and from time to time it comes on. If you hear yours running all the time, it is possible that the freezer is faulty. I'd call the company and speak to them first. My reader Miriam points to this product, http://www.smarthome.com/9034/Kill-A-Watt-P4400/p.aspx , where you can find out what energy culprits are in your home. Before I'd spend on another product, I'd speak with the company, stuff your regular freezer and unplug this freezer until the next utility bill. I'd also consider whether the culprit is from another source (fan on the heater, workman and their equipment, or perhaps a neighbor doing work and using your outside plug). And, please report back.


Another reader writes:

Here is a situationt that has come up in our family that you may want to write about in your blog.

My family has been fortunate to get a fair number of hand-me-downs, especially for our younger boys. I dislike shopping and try to save money, so the hand-me-downs have been very helpful. Some bags have a lot of clothes we want; others have just a few, and some have no clothes we want. I pass clothes we don't want to WIZO (like a g'mach).

My children understand that we look through these free clothes before filling in with new clothes. Sometimes they reject a shirt or pants that I think they should accept, but I am generally willing to respect their preferences. After all, they have to wear the clothes, not me. And I don't want my kids to develop negative associations with hand-me-downs, like "those yucky clothes Ima makes us take". This system works pretty well for us.

Except for coats for my 11yo. We get some nice coats as hand-me-downs. Sometimes they're even name-brand coats, like Lands' End. They are good, warm, well-made coats. There's nothing wrong with them. They're not girly or stained or nerdy, just a little plain. But my son doesn't like them and wants a new coat. But a new coat is expensive. It seems unreasonable for me to lay out money for a new coat just to give into his whim. OTOH, he will probably avoid wearing the free coat except if he is really freezing. I know this from experience, since this situation has come up with him before.

I explained the situation to him. I also asked him if having a coat he *likes* (as opposed to just a coat he doesn't particularly care for) is important enough to him to spend some of his own money on. Of course, I woudn't expect him to pay for all or even most of the cost himself. But I explained that if it was important enough to him to spend *some* of his own money on, then I would be more willing to spend my money on it too. He said it wasn't at that level of importance, but he is clearly still unhappy about the situation.

So, two questions: In this specific situation, am I doing the right thing? And in general, how do other people approach giving kids choices about which hand-me-downs to accept?


I'm more interested in how my readers will respond than what I have to say. I think it is important to respect kids preferences in dress (to an extent) and I think you are doing this. We basically employ the same method: take what you like and we will fill in around the edges as needed and within a budget. Some kids are pickier than others, and I have one of those kids, so I'm symathetic. I won't give into whims that are expensive and go against the values we are trying to inculcate (although I haven't been asked), but I'm happy to respect the preference that pants have pockets in the back and front, or whatever the flavor of the month is, at the time clothing is picked out.


If your son isn't willing to pitch in a few of his dollars for a jacket of his own, I'd probably let the situation go. If the motivation becomes stronger to have a certain jacket, I'd state the budget before heading out, and make sure it is understood that not every jacket in the mall is a valid choice. Unfortunately, the post-holiday season markdowns have not been particularly strong.

Readers, share your ideas.

Another reader writes:

As one of those people who can't seem to get my food budget down below $250/week for family of 5, I'd like to see some more details on how people do this.


Some questions are:
1) How do you get your kids to eat the food you make. I can't seem to make them eat meals other than the standard "kid" fare. Do you bribe? Force? Deprive them of after-school snacks until dinner is ready? (I am usually scrambling to make dinner when I get home in the afternoon). How much after-school snack do you give? It's hard to give them enough to make them not hungry and yet not kill their appetite to eat a dinner they don't love (eg pizza). I have a hard time forcing my kids to eat meals even I don't find appetizing -- usually the cheaper, pareve meals. Likewise leftovers. So much food gets thrown out even though I do plan many meals. Just because I plan it, doesn't mean they will like it. Anyhow -- I find my food spending goes up when I plan because I tend to plan large vegetarian meals and produce is expensive. In the trash it goes most of the time.


When I got married my husband was like your average kid. His diet probably resembled your kid's diets. I started by introducing a new dish, and alternating with meals he would recognize. Soon, he started really enjoying my meals and the chicken nuggets became something of the past. Fortunately, this happened before the first kid started eating, so I never had to wean a kid off of pizza, nuggets, or fish sticks. I tell my kids that if they don't like what I'm serving, that they can make themselves a bowl of cereal or a sandwitch. And, I try to put meals I know they like into the lineup, rather than pack each night with something experimental. This way everyone feels that their preference is being listened too, and we also get the variety of a good diet.

As for snacks, my own kids love bananas (didn't always), which are filling and not full of fat and sugar. Hard boiled eggs also work. Some parents let kids put snacks in a box at the beginning of the week and take as they like, but when you are out, you are out. I use this for yogurt because my kids could easily eat three at a time. They conserve a bit because they know what they see is what they get until the next sale comes along.

2) How do you keep track of what you spend at the supermarket while you are shopping? Walk around with a calculator? Someone told me recently she does exactly that -- she uses a calculator and buys her essentials first, extras next depending on how much money she has left. I'm planning to get a calculator soon and try it.

A calculator works. I keep a calculator hany while I shop, but tend to add (and subtract coupons) in my head as I go along. I think it is important to keep track because shopping registers do make mistakes. Today I realized that something went wrong because the bill was a lot higher than what I had in my head and it turned out my club card didn't register. Glad I caught that before having to stand in line at customer service.

3) I'd really like to see some weekly menus for those of you spending $100/week on food. Especially from those of you who work full-time and don't really have time to cook. What do you serve for breakfast? Kid lunches? And, of course, dinner. Someone posted in a comment once that they eat fish and meat during the week and yet spend $60-$75/week on food budget? I'd love to know how. I do have a pressure cooker.

I think a lot of our savings is in the shopping, rather than the meals. We use a lot of tomato products, e.g., and I will buy lots of cans when the 28 oz can is on sale for $1. For breakfast I serve whatever cereals I bought for a $1.25 or less a box. If we run out, my kids make oatmeal. Lunch varies, but probably includes some season fruit and a peanut butter sandwitch. We have a lot of dinner options. Sometimes I serve legume based soups such as Indian red lentil soups, vegetable and pasta soups such as ministrone, a veggie and cheese bake that uses mostly cottage cheese, homemade pizza with smaller sprinkling of cheeses, bean and rice burritos. My kids love pasta and I try to vary the sauces, sometimes by adding a can of tuna for each 28 oz can of tomato sauce (a receipe no one thought they would like, but that we all enjoy). I sometimes serve tuna patties with frozen brocolli.

4) If anyone wants to work with me :-) I'll send you a sample of my weekly menu as well as an overview of my supermarket tape -- I'd really love some feedback/training in this area. Actually, that wouldn't be a bad idea -- to write down what I buy, what I cook, and then what I throw out to see where all that money is going. I've never done that before. If I get around to it I'll let you know what I come up with.

Sounds like a great idea. Send it over.

5) I work practically full-time and do 99.9% of household chores. I get up at 5 am and go to bed at 11 or 12 almost every day. I justify eating meat several times/week because I have no time and no household help whatsoever and it's really easy to prepare. When I come home really stressed out and in what I call "nervous breakdown" territory -- rather than order pizza out, I'll roast a chicken and make rice. It's easy. It's satisfying. It's a heck of a lot cheaper than pizza. I really can't feel guilty about this because I work my tail off. How do other "newly frugal" or FFB (frugal from birth) people deal with this?


Sounds like you need a little help. I'd collapse on this schedule. I'd say that before tackling a new menu, you need to get everyone on board with a vision and some responsibilities because you shouldn't have to shoulder it all.


Hope that helps. I'm sure my readers will be even a greater help.