Lakewood Scoop: You Should Be Ashamed of Yourself

Hat Tip: A reader who writes "now I've seen it all".

The Lakewood Scoop, who only 4 short months ago was alerting readers that a MLM that many frum people had placed their money and energy into had gone bankrupt leaving others holding the bag and causing a bit of commotion (TLS Link) has just put up an advertisement fronting as a news story for some type of budding scam promising the kollel man and others the starts. It is brought to you by a Yaakov (Jack) Rottenberg via the Lakewood Scoop. Here is the text (abbreviated):

[Advertorial] Question: Are you sitting in Kollel wondering how you are going to be paying your monthly bills? Are you working 9 to 5 without covering your monthly bills, or do you cover your monthly bills but do not to have any accumulated savings? Are you tired of having to work month after month only to have to pay the same bills and do the same work over and over? Is the economy putting you under stress?

Well here is the answer for you,

Hi, my name is Yaakov Rottenberg, and I’ve been in this exact situation before and B’H by joining this business my situation has changed completely. This has been very successful for me and all my associates.

I’m talking about a billion dollar company available in other states that has just opened in New Jersey giving anyone with a vision the opportunity to earn UNLIMITED income based on what they put into it.

“You see, when you work you get paid for the work you produce but, you need to keep on producing the work to get paid”.

Imagine if you can work once diligently and then off that make residual month to month income for the rest of your life.

NOT POSSIBLE??

INCORRECT!!

With this opportunity you can do exactly all this and hopefully achieve FINANCIAL FREEDOM.

I’m not only talking about being able to get all the extras in life (although that’s also nice), we are talking about simply having an income that will pay your monthly bills month after month after month for the rest of your life.

The company was founded in 2006 & has quickly risen to one of the fastest growing companies in the US and one of the top fortune 500 companies.

This is the perfect business for anyone, whether you already have a business going, or whether you are sitting in kollel, whether you are old, young, single or married.

In this business you can work on your own schedule, with your own hours, at your own convenience and at your own pace.

Here are some quotes from other associates of mine. . . . . . . .

Lakewood Scoop, where is your yashrut or is (your) money all that matters? The man doesn't even NAME his company, but promises lifetime income served up on a silver platter. Be prepared to al chet for placing a stumbling block before the blind. Surely you can recognize the scam pattern!?! You were only just alerting the public to a scam 4 months ago and now you are hosting a shameless plug for an unnamed company? The klal's money, time, and energy is not hefker. You and I know full well that those who believe don't have what to risk (and these "opportunities" require "investment").

You should take this advertisement down immediately! This is shameful and desperate. Time to get back to the Torah basics and time to care about other people's money (or lack thereof).

A few signs an "opportunity" will leave you holding the bag:

*You must to pay to play.

*To get $paid$ you need to bring people into the business. (Stable, successful businesses do not seek to grow indiscriminately and indefinitely, they target markets, create niches, have HR departments that select who they want representing their company and product).

*Code words: "Financial Freedom" "Opportunity" "Change you life" "Unlimited" (markets are always limited), , "perfect business for anyone" (in real marketplace companies don't want just "anyone" representing their business), "work your own schedule", "dreams" $$$

*The defenders are like men on a mission (you sense that religious vibe).

Here is the comment I left at TLS (not sure if it will get published):

How low can you go to post an advertisement for a company whose name is not even published only 4 months after you alerted your readership to The Harvest America bankruptcy? That "opportunity" like this "opportunity" share the same patterns and the same religious zealousness on the part of the defenders. The world is promised and little can be delivered because the model simply doesn't work. Stable, successful businesses to not seek to expand indiscriminately and indefinitely. They are not "perfect for anyone." They have officers, managers, owners who spend tremendous resources ensuring their company is staffed efficiently, not staffed by just anyone. They know markets are limited and they seek to target markets and create niche markets. These companies don't want everyone and anyone selling the same product. Quite the opposite in fact.

This is a stumbling block in front of the blind. In the spirit of Rosh Hashana (guarantees on parnassa!? I think not!), it would behoove you to remove this ad.

Creating Greater Dependency

[Note: I sometimes choose to post on Israeli Economic issues, but my knowledge of the ins-and-outs of Israel are lacking, so commentary is always appreciated. Also, I know I do not recognize some other pressing issues facing Israeli society in my post such as the growing demographic issues. Nonetheless, some commentary].

I admit, I have not been keeping up with the blow-by-blow regarding kollel stipends in Israel. But any economist that bothers to factor in human behavior into their predictions and calculations will tell you that this latest proposal being pushed by Shas, in the name of "equality" (and appeasement, no doubt), is just another road to create yet another dependency class in Israel. Expanding a dependency program to another class of students will certainly create perverse incentives, especially when the requirement to qualify is not based on quality (of academics/research/Torah learning) but on quantity (of children) and lack wealth creation (note: students cannot personal income from a job of their own or spousal income to qualify).

According to an article published on 11/4/2010 at ynet.com and 11/5/2010 and 10/24/2010 at JPost.com, Shas Chairman Eli Yishai seeks to award University students raising one child or more the same assured income received by yeshiva students with three or more children.

Yishai states 1) it is all for the children and 2) naysayers speak out of hatred and to incite:

"We have no objection that [university] students will also receive the benefit. Anyone who would propose otherwise is behaving in a discriminatory way,"; "The entire goal [of the bill] is to provide support to the tens of thousands of children living below the poverty line and to close [social] gaps."; "We do not object that every student who studies should receive the benefit. Anyone who would say otherwise speaks out of hatred and to incite."

I speak not from hatred, nor out of lack of concern for "the children" but because this is bad public policy and faulty economics.

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

Guest Post: Orthodox Jewish Financial Crisis

A reader asked if I could feature his article as a guest post, and I'm happy to oblige. Happy back to school week to all my readers.

Orthodox Jewish Financial Crisis
David Jackson
August 26, 2010

On a recent Sunday, a young Orthodox mother was busy preparing for her son’s first day of school. That Monday, Yeshiva Bais Hatorah, a 350 boys elementary school in Lakewood, NJ never opened. The school had accumulated approximately $500,000 in debt. The following week another Lakewood school,Yeshivah Keter HaTorah, announced it too would not open due to financial problems. Parents were left scrambling to find alternative schools.

The Jewish Week recently published an article with an alarming title “Can Day Schools Survive?” The article states “Even more significant than the declining interest of mega-funders, day schools have been hard hit by the recession, which has not only made fundraising more challenging but has greatly shrunk the pool of parents able to pay tuition. With the day school enterprise facing dropping enrollment and rising scholarship requests, nearly a dozen institutions will not open their doors in September and many others worry about sharing that same fate.”


At most Orthodox schools across the US, scholarships have become increasingly difficult to obtain as the percentage of students on scholarship continues to increase. Collectively, Jewish day schools are in trouble financially. Marvin Schick, a leading Jewish day school observer, recently wrote: “Conventional Orthodox schools are also experiencing unprecedented hardship. Modern Orthodox institutions that in the aggregate cater to relatively affluent families and charge top of the line tuition that without pause grows each year are now in trouble and forced to make staffing and other cuts.”

Yossi Prager, the executive director of the Avi Chai Foundation for North America is also very aware of the situation. The Avi Chai Foundation spends millions each year funding Jewish education. His article written in a 2005, in the Orthodox Union’s Jewish Action magazine, titled The Tuition Squeeze’, depicts a cartoon of a family getting squeezed by the high cost of Jewish education. He writes that “there is a sense that many schools are at the precipice of financial crisis. .... Finally, and perhaps most importantly, is the critical need to close the gap between schools’ operating budgets and their incomes from tuition and fees. The gap can be as high as 30 to 40 percent of the budget.” This article was written before the Great Recession. The situation is much worse now.

According to Rabbi Dr. Tzvi Hersh Weinreb, the Executive Vice President Emeritus of the Orthodox Union, states that financial problems at the Orthodox days schools are one of the three biggest problems facing the American Orthodox Jewish Community.

On a bright summer’s morning, a father enters the Kiryas Joel Meat Market to buy some glatt koshermeat for shabbat. He worries about the prices of meat as it is very expensive on his meager kollel stipend. Nevertheless, shabbat is coming and it is traditional to eat meat. Kiryas Joel is a 100% Orthodox town, populated by Satmar Chasidim, 50 miles north of New York City. According to the US Census Bureau, in 2008, Kiryas Joel has the the highest rate of poverty for any town or city in the United States. Two-thirds of its residents live below the federal poverty line. The median household income was $15,848.


In Burrough Park, an Orthodox enclave in New York City, a frum social services worker stated that if it wasn’t for government welfare, ‘half of Borrough Park would starve.’ She was talking about the Orthodox Jews in the neighborhood. Perhaps she was exaggerating, but her words reflect a depressing reality. The poverty is real and seems to be growing.

A survey conducted for the federation five years ago showed that 350,000 Jews in New York City and state live close to the poverty line. The highest poverty rate is in Brooklyn. 27% of those 350,000 Jews are Ultra-Orthodox living below or the poverty line. That means that there are about 100,000 Ultra Orthodox Jews living in poverty in the area. This represents 25 - 40% of the ultra Orthodox population in the region.


In Lakewood, Dr. Casriel Roberts, who has donated over a million dollars to Bet Midrash Gevoa (BMG), the largest yeshiva in the US, warns of a financial catastrophe looming. He spoke at the Beth Medrash Govoha of Lakewood’s Annual Evening of Chizuk. “I am really worried about a tsunami that is coming ... There are 4,000 children being born in Lakewood every year. It is astounding. At the same time most of the schools are financially broke. And it looks like we will need to double the number of schools in the next 4, 5 or 6 years. The current generation of parents. I am going to estimate those ages 30 - 50 were mostly raised within the yeshiva system and never learned the secular skills to go be to go out into the world and earn a substantial parnasah [income] . So the current economic pain that we are feeling is not due, I believe to the recession so much as due this tsnumai wave that is coming towards us. .... It seems to me that financial gap that families are facing is more like 50,000 or 75,000 a year with baruch’ hashem all the children that we are having and the staying frum and the schools that are growing.”

In the right wing Orthodox communities, the growth of kollels and the lack of higher levels of secular education has been a driving factor in the large percentage of low income families. Most of them being large families. Low income, coupled with a large family is a recipe for financial hardships. Increasingly, the community is dependent upon government welfare such as food stamps, section 8 housing, medicaid and charity in an attempt to meet their basic needs. Sadly, these needs are often unmet.


Yet, the financial crisis in the Orthodox community is not limited to the right wing Orthodox. The Modern Orthodox and Centrist Orthodox communities are also facing significant financial problems.

Across the blogs, there is significant interest in the subject of money, as it relates to the Orthodox community. A few months ago a disgruntled Orthodox Jewish high income earner in the suburbs of New York City launched a blog called Bergen County Yeshiva Tuition Blog. The author calls himself a “200k chump.” What is a 200k chump? His family earns $200,000 a year but he still feels like sucker as they struggle to pay expensive day school tuition costs and high housing costs. He feels that given his high household income, he should not be struggling financially. Their income is in the top 5% of US households, yet he worries about paying all the costs.


The Modern and Centrist Orthodox Communities generally have higher incomes than the right wing Orthodox communities, yet many are still struggling to pay expensive tuition costs and high housing costs.

In the past few years, there has been a outbreak of high profile financial fraud cases in the Orthodox community such as the Abramoff, Rubashkin, the money laundering in the Syrian community, and two separate real estate ponzi schemes in New Jersey and Florida. Perhaps, the growing number of high profile financial fraud cases is an indication of a community increasingly desperate to obtain income.


Communal wealth, on a per capita inflation adjusted basis, is declining. Communal wealth is very important in building and supporting the intuitions necessary for Orthodox communal life such as days schools, mikvehs, synagogues and other charities.

Certainly, a decent percentage of upper middle class and wealthy households exists in Orthodox Jewish communities. Many community members do donate considerably to support the poor, schools, synagogues and other worthy causes. Yet, many of these communal institutions are still struggling financially.


The cold harsh reality is that the American Orthodox Jewish Community is dealing with a financial crisis. Major financial challenges exist both on the income side as well as on the expense side. On the expense side, the community is struggling to pay for private education, high housing costs and large families. On the income side, a significant percentage of families have low incomes, especially in the more right wing orthodox communities. Others, have lost jobs during the Great Recession.

This all begs the important question, what can be done in the Orthodox Community to remedy the financial crisis?

Oy! Second 11th Hour School Closing

Lakewood's school year isn't getting off to a great start. Last week, Yeshiva Bais HaTorah (350-400 students) announced it would not be opening the day before school. Today, shortly before school opening, Yeshivah Keter HaTorah (150 students) has announced it too will not be opening. It has been reported (see Matzav and TLS and VIN) that both schools had not paid their Rabbonim in months. I believe that the administration approached Rav Matisyahu Solomon for a psak on what to do regarding the budget. Shortly after, the Yeshivah Keter HaTorah Rebbes approached the same Rav and received the same psak.

There are some (ridiculous) comments I feel compelled to address. One commentator at Matzav asks:

I don’t understand: Is it better to have hundreds of kids without a school than to have rabbeim not paid? The rabbeim are either way not being paid bec. now they are out of a job. But we have hundreds of kids without school!

I've been covering non-payment since the inception of this blog and one thing I have noted is that Rabbonim feel as though they cannot walk, which is something I believe every single one of us in private industry would do should our employer fail to pay us. Some, like the commentor above, dismisses the opportunity that Rebbes would have if they were not working for free! I don't dismiss opportunity and I am a firm believer that Hashem puts opportunities in our paths. For a myriad of reasons, Rebbes as a whole seem to be held "hostage" by non-paying schools and acting as a group, or unorganized union, gives them much more power to do what should have been done months ago.

it's broken writes:
when are we going to real;ize that our system is broken
people are floundering
no money for food
no money for shcool
no money to marry off their kids
no money period
even people with job
seven p[eople who both wife and husband are working
we need a new system
we need housing
we need aubsidized food
we need help to support frum families
most frum families are struggling
moist people are not making ends meet
how long will it take till people realize
how many more mosdos will have to close


After declaring the "system" broken, the commentor calls for more of the same---welfare. Certain segments of the Orthodox community are highly dependent: dependent on parents, dependent on government programs, dependent on tzedakah. If such communities want to start solving their economic woes, independence is the answer, not (more!) subsidized food. I'd start paving the road to independence with a remediation campaign. Clearly, there are too many who lack basic skills, from basic English and vocational skills such as typing, to a lack of analytical thinking.

I think all the schools should enroll their children in the PS. What would happen is that the PS would have no room, and be forced to contract out for third party vendors. At that point the recently emptied private schools can become the third party vendor and receive generous compensation much like TT does. This would help fund the english dept costs, and tuition can be brought down to pay for the hebrew studies alone. This would help everyone, as the State would have to give more state aid since there are more children enrolled. In worst case, this should be done with the girl schools if not with the boys.

More predictable stupidity! To the residents of Lakewood and other heavily populated communities, public schools can handle some influx and they will do what they have always done when there are population shifts, use resources as efficiently as possible (and government isn't where I turn to for lessons in efficiency!).

In the last city I lived in, the elementary school down the stree from me ran two kindergarten schedules. The first session of the day started at 7AM, the second session started at 1PM. At one time my (public) high school had a far larger population than when I attended. The school was opened right as the baby boom generation started to enter high school. The school did not build its campus to accommodate the incoming class. They build the high school to accommodate the predicated future high school population, not the huge amount of students that they needed to accomodate in the first 10 years after opening, and the school squeezed classes into non-classroom areas until the school populations returned to normal levels. Other public schools have concurrent year round schedules to accommodate students. Sometimes, high schools in the same district, only offer certain electives, extracurriculars, or vocational classes, in one location, although all qualified students can attend such a course if they provide their own transportation.

Perhaps if schools in heavily populated Orthodox Jewish areas would form their own "school districts" to increase efficiency, some of these problems wouldn't be hitting with such vigor.

HOW COME THE PUBLIC SCHOOLS ARE NOT CLOSING
OUR TAXES ARE FUNDING THEM!WE HAVE TO FUND OUR SCHOOLS, NO EXCUSES

The most intelligent comments are always in caps, right? I dare the commentor to leave his/her tax bill unpaid and see what happens. (A hint: the taxing entity can and will foreclose on your home).

UPDATED:

A comment from "Normal"
Yungerleit are paid 80 dollars per week only after being in Kollel for a few years [waiting list].
Women that teach are paid minimally.
For a family of eight children the tuition without camp is at least 28,000.00.
How are they expected to live?
Kollelim that pay higher wages should be welcomed into our town!

And pray tell, where in the world does this commentor think money for Kollel comes from? Clearly part of the massive remediation process needed must include an understanding of free market economics, wealth creation, and basic personal finance.

from destro613
maybe more tuition is needed

Maybe if we charge more for the same product that the average parent couldn't pay for to begin with, money will start to grow on trees? I think part of the remediation process must include the younger set running a joint lemonade stand with the older set. Any 5, 6, 7, or 8 year old who has ever thrown up a sign and a table in the front yard understands that charging more doesn't magically produce more. They don't need Algebra I to understand that functions don't always follow a straight line.

Higher Taxes: No I'm not Crazy Thinking that Yeshiva Tuition is Going to Become Even Harder To Pay

With apologies to my readers who object to politically charged posts, please be forgiving . . . . . . I realize that not all my reader are fans of the ATR (Americans for Tax Reform) and might take issue with the use of the terms "ObamaCare" and "Death Tax" as opposed to Health Care Reform and the Estate Tax, but as far as I can tell, all the details in the following article (posted after my ramblings) are accurate. I have also spoken to tax professionals and any repeal of the rollback appears highly unlikely. (Happy 4th of July!)

One thing I can't stand is when discussions of political policy turns completely self-centered and the entire focus of the frum community is inward, i.e. what's in it, or not in it, for me? But one reason I'm pointing out the tax changes coming your way and mine is because this is something the frum world needs to grapple with and get prepared for now. In January 2011 your withholdings should go up. If you are self-employed/contractor, prepare to make greater quarterly payments. In 2012, a higher tax bill is coming. So, feel free to self-center the comments and let us know which tax hikes are going to affect you, and how they will affect your ability to give tzedakah and/or pay yeshiva tuition.

Numbers would be even better (feel free to mark yourself under an anon# name to preserve privacy). I'm not usually so open, but my current calculation of tax hikes (assuming no change in income) between 2010 and 2011 to be in the neighborhood of $2600, which doesn't include changes on dependent care credits and the use of Coverdells. Nor does that include additional tax which we will incur regardless of changes in income as our itemized deductions fall (yeah for refinancing, boo for the rest of it). I've included the social security and state tax damage from capping the Flexible Spending Accounts in my calculation. To put the $2,600 in perspective, it isn't peanuts.

It if probably a good thing that I'm already convinced that yeshiva tuition isn't going to be something we can afford long into the future because, I hate surprises! We might as well start mentally preparing now. As I was trying to explain to a friend recently, adding another tuition + covering the steep tuition increases + all the other expenses that come with age isn't a simple matter of just cutting back on retirement savings because there isn't a 1:1 relationship. (Someone really should remind me not to enter tax planet while on a pleasant day in the park with the kids and the other Moms because I just start running scenarios and talking mostly to myself. Not to be politically incorrect, but ladies generally like to give "chizuk" not listen to ramblings from an accountant about teetering on the edge of credit phaseouts, the next tax bracket, and how big medical expenses are about to become even less affordable).

The article detailing many tax hikes is cut and pasted below. There is a lot of bad news in here for Americans hoping for an economic recovery. There is a tax hike in here for everyone, and by that I mean almost everyone (yes, even Kollel Families!). The 10% tax bracket is being eliminated for starters. Below is a chart of what the estimated tax brackets for 2010 and 2011 for those who want to start making calculations. My apologies for only including Married Filing Jointly. I'm not attempting to discriminate, but to not overload a post with too much information. A few comments, as usual, in orange will be interspersed in the article.

2010 Estimated Tax Brackets (Married Filing Jointly)
10% Bracket $0 – $16,750
15% Bracket $16,750 – $68,000
25% Bracket $68,000 – $137,300
28% Bracket $137,300 – $209,250
33% Bracket $209,250 – $373,650
35% Bracket $373,650+

2011 Estimated Tax Brackets (Married Filing Jointly)
Tax Bracket Married Filing Jointly
15% Bracket $0 – $70,040
28% Bracket $70,040 – $141,419
31% Bracket $141,419 – $215,528
36% Bracket $215,528 – $384,860
39.6% Bracket Over $384,860

Six Months to Go UntilThe Largest Tax Hikes in History From Ryan Ellis on Thursday, July 1, 2010 4:15 PM

BREAKING: Wounded Warriors Face New Tax This Independence Day

In just six months, the largest tax hikes in the history of America will take effect.

They will hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15% [excluding those who get hit by the AMT, all benefit from the 10% bracket. My experience tells me that many large families and kollel families sit in the 10% bracket]
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. [Ouch! The child tax credit includes up to 3 children currently. Really an ouch. I mistakenly confused the phaseout on a welfare credit I deal with too often with this credit (oops). This will really hit families hard. Not really an upside, but families that cut back on retirement and hit the phaseout won't get such a double-whammy] The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut. [A hit for dual income families].

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones. [In other words, don't think a yerusha will pay your bills. . . and, no, tax planning isn't just for the super rich].

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013. [Confusing sentence. In other words, dividends will be taxed as regular income and then, there will be an additional tax on investment income, including royalities and rental properties, come 2013 as part of the Health Care Package].

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). [In other words, if you overshoot on your FSA come 2011, you will end up forfeiting the funds because you will no longer be allowed to load up on Advil at tax advantaged prices].

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. [Special Needs is only one demographic sure to be hit by the lowering of the FSA. A few other demographics: families with lots of kids, families paying for catastrophic care, any family paying for braces or major dental work].

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers. [I wish I understood the AMT better].

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated."

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families. [Unlike most employees who must meet a 2% floor before deducting any business expenses as an itemized deduction, educators have been given a nice gift, decreasing both federal and state income tax. Like I said, these changes are broad and there is an increase in there for everyone].

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there. [Shuls, schools, and all tzedakas listen up. . . the news isn't good].

Read more: http://www.atr.org/sixmonths.html?content=5171#ixzz0sgPL3f3c

So What Can We Expect?

I probably should not have started my previous post with my commentary on the very wishful thinking that mass kollel could be preserved if everyone just started driving older cars, living in smaller digs, and cutting back on conspicuous consumption (read: weddings), because my musings really had less to do with kollel and more to do with lowered expectations and how lowered expectations impact character and community. Let's not fool ourselves into thinking that the root issues addressed re: supporting young kollel couples are not issues in the modern Orthodox community as well as American society at large! Lowered expectations indicate a loss of character which is certainly not a promising sign as we face the unknown in terms of the economy, national security, and more.

What I really thought to be the crux of the post was this quote (emphasis mine): "In this day and age, it is unrealistic to expect young couples to abstain from eating fleishigs throughout the week and to subsist on a can of sardines or a small piece of chicken on Shabbos. Nor can we expect very large families to be crammed into one-room hovels without heat, like many who learned Torah mitoch hadechak in previous generations (even here in America)."

I've heard enough about what we can't expect and I'd like to start hearing more about what we can expect.

More of Health and Financial Pressure

The Yated just published a piece called "Preserving the Kollel Revolution." I'd say that publishing the article took a bit of gumption on the part of the newspaper given that it brings up an uncomfortable subject matter. The article covers some history of kollel in America--from revolution to mass movement. The article then looks at the challenges facing kollel, namely "the convergence of massive financial obligations" (i.e. parents have a compounding issue of paying for numerous weddings in a short period of time, long term financial support of the couple, and still support the other mouths they need to feed) and the health issues that are exasperated during this period of time. In the words of the author: "This [convergence of massive financial obligations] can result in terrible stress affecting the parents’ physical and emotional well being. This period of marrying off one’s children generally coincides with the time of life when middle-age health issues set in. The addition of relentless financial burdens may cause parents to literally fall ill, or greatly aggravate pre-existing medical problems." The conclusion of the article is that the culture of consipcuous consumption must be stopped by parents and bnei Torah because it is not the Torah way and that the price of ill health is "simply too steep a price for any child to pay." This conclusion falls under the heading "not a monetary issue; a health issue."

The premises of the article is that "Kollel, as an institution, is vital for everyone - not only for
the elites, the best bochurim, but for every yeshiva student who marries. Kollel provides the basis for a Torah life and it should be encouraged and supported by every means." The solutions to "preserve" kollel was to tone down the lifestyle and fight conspicuous consumption. Two examples the author notes are: 1) the ben Torah should drive a safe car that serves to get him from point A to point B rather than a late model or leased vehicle that raises the expectations of others who pass through the yeshiva/kollel parking lot and 2) reconsider the housing provided for the young couple as fewer families are choosing a one bedroom rented apartment and opting for a house or townhouse in the hundreds of thousands.

Perhaps you need to be driving around in a car that has outlived its prime by a number of years and that announces its comings and goings while budgeting a rather generous income in order to realize just how ludicrous these suggestions sound in terms of "Preserving the Kollel Revolution." Furthermore, the author insults the intelligence of the reader when he asserts the following: "it seems that certain alien concepts have crept into this most hallowed ideal of supporting our young couples. Undoubtedly, in today’s bountiful generation, we cannot expect our youth to conduct lives of Torah mitoch hadechak as done in previous generations. In this day and age, it is unrealistic to expect young couples to abstain from eating fleishigs throughout the week and to subsist on a can of sardines or a small piece of chicken on Shabbos. Nor can we expect very large families to be crammed into one-room hovels without heat, like many who learned Torah mitoch hadechak in previous generations (even here in America)."

Unrealistic!?!?! Puhleeze as the teenagers say. This is a generation suffers from an inflated sense of entitlement and low expectations!

More Economic Terrorism

I find the economic terrorism coming out of the Chareidi community to be particularly infuriating, especially in light of recent reports regarding the employment and state of poverty in this community. The Chareidi entrepreneur and business owner does not just have to deal with the usual headaches of red tape and tax. The Chareidi entrepreneur has to deal with self-appointed Vaadim that look to enforce standards of tzniut through duress. I believe this would be a bigger headache than dealing with just about any other red tape. Even if the business owner has secured permits, completed legal paper, and paid their taxes, the businessman always has to watch their back as idle and unstable men with plenty of time on their hands look to "enforce tznius standards."

Since I've started this blog, I've seen so many stories of businesses attacked by these self-appointed Vaadim. Anything relating to women seems particularly susceptible. In Israel, we've seen stories of clothing boutiques being threatened and even set on fire. A popular vocation for kollel wives in Israel is cosmetician services. But don't dare advertise your business in Modiin Ilit! The kehilla committee, has told publications that they are not to publish advertisements for eyebrow shaping, even if the ad is text only. Pharmacy and grocery stores in Israel face special challenges regarding kashrut demands and specific opening hours. Under normal circumstances the market would dictate things like opening hours or even having separate shopping hours or areas for which feminine products are to be secluded. But the Chareidi business man or the business man looking to establish a store in a Charieidi area knows that demands must be met even if the market might dictate a different policy. American pharmacy owners in areas like Boro Park or Lakewood also face similar challenges.

Even in America, a boycott was announcement when the owner of sheitel shop on the same street as Yeshiva Chaim Berlin refused the demand of some man to remove framed pictures (I guess this is better than requesting the removal of real live women walking around in the same sheitels).

So what is the newest report of economic terrorism? It regards an ice cream store (!)-- not a sheitel shop, not a women's education program, not a call center manned by Chareidi women, a cosmetician advertising eyebrow shaping services, a women looking to sell clothing, a woman looking to teach the arts to other women and girls, or a pharmacy being told to keep the pads out of public view or remove/cover a picture of a teen star (in a sheitel of her own no less).

As per this report published today, a new ice cream and candy store, Zisalek of Geulah, has found itself in the middle of a hashgacha battle and has faced protests regarding tznius, hashkafa, and ruchniyus. The store owner met with protesters and agree to institute the following to appease them:

1. The store won’t sell on Erev Shabbos after 1 p.m. ice cream that can be eaten immediately, such as ice cream cones, and will only sell at that point packaged ice cream that can be bought for families for Shabbos.
2. The store will not open on Motzoei Shabbos.
3. The store will close at 10:30 p.m. each night.

The store owner wouldn't agree to have female employees only sell to females and male employees only sell to males. (The quick way to bankruptcy!)

Running a business and making a profit is very difficult work! Profit margins in nearly every industry are normally very slim and adding demands that increase the most costly area of business (payroll) is sure to topple a business. To place demand upon demand upon Chareidi entrepreneurs looking to support their families in dignity is nothing but Economic Terrorism. The market will decide if it is in the best interest of a store to close at 10:30pm! The market will decide if it is in the best of the store to have an employee scooping ice cream after 1pm on Erev Shabbat!

I think it is obvious that self-appointed tzniut vaadim aren't the least bit interested in the financial health of their communities. (I'd argue that being self-supporting is integral to tzniut/dignity. "Hustling" certainly lacks dignity). Leaders, both lay and Gedolim, who are interested in the financial health of the community MUST tackle this issue with courage and allow businesses to function and prosper.

In Other Words. . . It's the Man's Fault

Note: There is another posting made today also. Shabbat Shalom to all my readers.

Hat Tip: The Wolf who has just about covered the economic aspects of the post.

News Flash: Israeli Chareidi leadership believes in the economic fallacy of a limited pie, whereas high income earners and the wealthy are keeping the poor poor. There is no recognition of lack of *marketable skills* or putting the cart before the horse as families try to play catchup they first have a (large) family and last plant a vineyard. Chazal were observers of the human condition. These leaders, not particularly.

In other words, the state of poverty in the Chareidi community can all be blamed on "the man." So it appears we have our own [insert name of self-proclaimed or elected leader]s who are completely unwilling to take a good look in the mirror and who, worse yet, have NO trust in the people they claim to represent. I'd go so far as to say that they believe those they represent are incapable.

It is very painful to watch this community being led off an economic cliff. It is even harder to see that their own are leading them to the precipitous. Here are the money quotes:

"The country is lying to its citizens. Once again it has been shown that leaving the ranks of welfare recipients and joining the job market does not change the situation and people who work very hard for their living are unable to make ends meet."
"The problem is especially acute in the chareidi public. The state does not recognize the years of yeshiva and seminary study as it recognizes the years of study of its secular citizens. As a result both husband and wife who work earn paltry salaries, and are unable to extract the family from the cycle of poverty. On the other hand there are people earning as much as an entire neighborhood."
"We need a far-reaching change and a totally new attitude. There are enormous class gaps in this country that will turn into an existential social problem."
"Going to work solves nothing; that's all nonsense. In the State of Israel, today someone who wants to get out of the cycle of poverty has to network with the elites and the power centers just to get a decent salary that will really enable him to make a respectable living." [So start by earning an "unrespectable" living as our sages did].
"His dismissed out of hand claims that the chareidi public is to blame for a state of poverty rooted in a failure to enter the job market."

The one this that Gafni has right is this:

"These class disparities have led to very difficult situations throughout history in all places. . . . . " But I imagine what he has in mind isn't at all what I have in mind.

Guest Post from Kollel Guy

I agreed to host a guest post from Kollel Guy. I had referenced his blog just last week.
Below is the Guest Post. Feel free to add your comments.

Title: Kollel Has Become a Dirty Word

It seems that kollel has become a dirty word these days, especially around middle aged frum women in their 40s and 50s who are finding themselves having to support their children whose husbands are of course "learning in kollel". It seems that although they profess pride that their daughters married "learning boys," nevertheless, they resent being forced into footing the bill.

How would they feel if their daughter had married a doctor who was still struggling through medical school, with another 3-5 years of residency and fellowship after he gets out? Would they still resent supporting them through that time? Obviously not, because the son in law is actively involved in the pursuit of a (hopefully) successful career, one in which he will be able to readily support his family on his own when he finally finishes. They are able to overlook the short term and focus on the long term picture, which for them is a highly successful doctor making good money.

If you are in kollel and are being supported by your parents, know these two things:
1. Your mother (and mother in law) resent having to support you
2. You have the ability to change their attitude very quickly

If kollel was not just an end, but a means to a bright future, then supporting you would be a delight instead of drain. Not only would they be happier supporting you, but you too would feel better being supported by them.

It's tough to pick yourself up and leave kollel, but it's even harder to stay in kollel when you are not welcome. Tagline: I got out of kollel myself, and you can do it too. For inspiration, strategies, and down to earth advice on how to make a graceful exit from kollel, visit http://www.kollelguy.com/.

Nothing Outrageous About That!

Hat Tip: A reader who pointed me to Rafi of LifeinIsrael blog. Thank you!

Kollel Guy is calling out a Bais Yaakov administrator who, in the course of negotiating tuition obligation of a family in which the father learns full time, tells the father “It’s time for you to leave kollel, get a job, and pay tuition just like anyone else.” I simply don't see what is outrageous about this at all, unless, of course, you have a super-sized sense of entitlement that is!

Kollel guy goes onto explain why the rational is so outrageous (Cliff Notes for those not suffering from a super-sized sense of entitlement). He explains that a school's success is dependent on the makeup of the student body and that "Kollel families generally are of a higher caliber, and raise the overall standard of the school." He continues on that kollel families have higher standards of chinuch and that they don't cause jealousy by going to fancy hotels for Pesach and mid-winter vacation.

I don't know what alternative universe Kollel Guy is living in, but you would have to be naive to believe that having a high number of kollel families automatically equals better chinuch, and you'd have to be extremely naive to believe that having a sizable group within a community that is seen as a "drain" on resources does not contribute to a significant amount of resentment and jealousy. I certainly appreciate how many kollel families have given of themselves to help build Torah communities. But, let's not go overboard here. I'd suggest that KollelGuy spend an hour on the playground, a day in the classroom, or better yet, an hour in the halls of a yeshiva on the yomin noraim. An overemphasis on the material is responsible for many issues. I'd say lack of money, dependence on community, government, and/or parents, coupled with potential attachment issues from early childhood, has been keeping many a school social worker busy and is eating into some of the moral fiber of the kehilla at large, as we witness here when someone dares utter a commonsense suggestion to a father with elementary aged children.

Bottom line: it costs a lot of money to run schools and shifting the burden onto everyone else has reached its useful life. Kollel Father. . . . . . it is time to go out and work and/or become a SAHD/homemaking father if that choice makes more sense in the short term. It is your obligation to mechanech your children, not the Bais Yaakov principal's job.

[Incidently, there are many commonsense posts at KollelGuy's blog, including How NOT to Support Children and a discussion of working part time/learning where money is not of particular concern].

What Now? Unpopular Advice for Young Families that Will No Longer be Receiving Support

This letter appears in the Yated and I'm hoping that somehow the advice I am going to try to offer will make its way into the circles wondering "what now?" I want to make it clear from the outset that I realize that the advice I offer isn't going to be popular, nor are the solution I offer going to be easy. And the advice might even appear to be insulting. But, I'm trying to deal with the numbers for those who see no solution while their life seemingly crumbles around them.


THE FINANCIAL CRISIS: HOW IT AFFECTS THE YOUNGER GENERATION

Dear Editor,

As we are all well aware, the world is falling apart financially. Yesterday’s millionaires are poverty stricken today. The lists of tzedakah organizations are endless, and there aren’t any more donors. I can’t imagine anyone possibly saying they haven’t yet been affected by this crisis, because we all have.

I am writing this letter on behalf of the younger generation. For those of us who are married for about five years (give or take) and have around three children, our lives are really “just starting” in a way, whether our husbands are in kollel or not. At this point, we need a lot of money just to get by, no matter how simply we live. We have children to feed and our expenses are only growing.

When many of us got married, our parents and/or in-laws were wealthy. They bought us whatever we needed. They told us “Yes” to whatever we asked for, they agreed to buy us a more expensive house, and they leased us the nicer cars. It was all working perfectly. There were no problems.

Now, however, things are different. Our parents’ finances have changed drastically over the past two years. They can’t give us what they used to, and we now have huge mortgage payments, car payments and child care expenses with no way to pay for them. Although the women may have degrees, the husbands have nothing. They have no way to make a decent living now. No one ever thought about the future, and we didn’t have to, because we were rolling in dough! The husbands don’t have the time or money to start a business or go to school at this point. They need the money now, and the wives can’t work so hard anymore, as they have large families to take care of.

This letter is not coming to blame anyone or to sound ungrateful. Parents, we are so thankful for what you’ve done for us and we have no taanos that you can’t give us anymore. We’re just
asking, what should we do? What is the answer? How are we supposed to manage?

There is probably no answer to this question, but one thing I can say is that when my children get married, I’ll probably do things a lot differently. Maybe the way we’ve done things until now didn’t make as much sense as we thought they did…

Sincerely,
A Grateful Child
Strapped for Cash


A few comments before the advice comes:

*I've written before about my thoughts on better and worse ways to help adult children, and I believe a monthly check is possibly one of the worst ways to help adult children. I think this letter further reinforces the pitfalls of monthly support (especially where the money was not actually available indefinitely). I believe that monthly support feeds into an inflated lifestyle due to its normally fluid arrangement, often I comes with strings of dependence, and it hides many of the warning signs that a financial situation is headed in an unsustainable direction. Hence, where support is offered, I think it is best to either make a lump sum gift(s) or fund a specific purpose such as college, funds to start a business, etc.

*Note the language regarding these wealthy parents, "Yesterday's millionaires are poverty stricken." I believe that what the writer is referring to is Hashem's hashgacha over our financial lives, a concept I firmly believe in and a concept that is pivotal in a relationship with a personal G-d. That said, I continue to hear and read about wealthy people who are no longer able to put food on the table and make their mortgage payments. I certainly don't intend to rub salt in wounds, but I hope we take a lesson from the current status quo and start to understand that an over leveraged lifestyle that indicates "wealth" is possibly an illusion.

*Re: "The lists of tzedakah organizations are endless, and there aren’t any more donors." This I believe and I hope this letter helps those who administer tzedakah agencies that it is critical to shorten the lists by funding first things first. I am still amazed that I am receiving solicitations where apparel, sheteils, and pricey sheva brachot for a kallah is mixed in with basic food for families that have no bread on their table! Incredible. But more on that later.

Now, let's talk about solutions. The writer seems to think there are no real answers. And, I'm almost certain that these answers would be laughed at and dismissed out of hand. But, I'm just going to present them anyways. I'm always thrilled when I receive emails from readers of this blog who have taken some of my advice and reported a positive change!

From the outset I think it is important to emphasize three things: 1) Some solutions I might suggest to piece together the puzzle are short-term. Short-term solutions may be unpleasant, perhaps very unpleasant. But, sometimes you have to plug the holes up before draining the boat. 2) I am not going to suggest taking on more debt or any "juggling act" to deal with the problem. Others are free to suggest such solutions in the comments. It isn't my style. My apologies. 3) It is an obligation for a father to teach his son a trade, so I don't think it is beyond the scope of this post to suggest that the parents who provided their children with all sorts of luxuries before fulfilling a most basic Torah obligation now help pick up the pieces.

So here we go in no particular order:

1. Complete the Role Reversal. I'm starting with the most offensive solution first! As the writer mentions, the husbands are ill trained and ill prepared for working, the wives are overworked by their growing families [and careers], and the expenses (including childcare) are out of control. The kollel lifestyle is extremely inefficient when it comes to preserving income. While many a kollel wife/husband has argued that stay-at-home-mothers also are part of a single income arrangement, the situations can rarely be compared. Normally the stay-at-home-parent does not have massive childcare expenses as their job is to take care of the children (!) and maximize the earnings of the income earner through frugality and availability so that the income earner can advance in his/her career by being able to work late into the night or travel where necessary.

Where the wife is already established in a career, a family may be well served to teach convert the kollel husband (or underemployed husband) to a "stay-at-home-dad." Short-term solutions are going to be about maximizing every dollar and putting away cash so that the long-term can be tackled.

I don't think many men have envisioned themselves as a homemaker (Mr. Mom) and I am fully aware that many men lack the skills, and desire for that matter, to run Daddy's pre-school, Camp Daddy, clean the home, cut the coupons, bargain shop, and engage in frugal cooking. But, minimizing large expenses is key. And, no matter how you cut it, day-care, preschool, and camp are large expenses that likely have to be cut out of the budget.

So there you have a possible short-solution to (significantly) increase cash, which I am labeling as "completing the role reversal." Of course, in a full role reversal world, the bargain-shopping, frugal cooking, Super-Dad would be able to roll into the hospital, birth the baby, and be back to running Camp Daddy within 2 weeks of giving birth. But at the very least, wives like the one who wrote this letter, should get a bit of relief.

Like I said before. . . . short-term, short-term, short-term. I believe Hashem designed the world with different roles in mind for men and women. On a long-term basis, this solution would likely be detrimental to the these familyfamilies. But, going broke can do that too.

2. Start from Scratch. The writer mentions leased cars and mortgages that are too large to handle. An important concept in business is to know when to stop throwing good money after bad. The leased cars can clearly go. In some cases they will have to be replaced by a "clunker." Just remember that many a tuition paying parent has driven a clunker to get from point a to point b to make their own ends meet.

It is difficult to imagine selling a home, but sometimes this is a worthwhile solution to investigate, especially where the mortgage payment can be traded in for a far lesser rent payment (although that will likely mean bunking up for quite a while).

The writer mentions cars and homes. She does not mention other assets. But chances are good that the parents who said "yes" to everything spent a tremendous amount of money funding the laundry list of engagement items from jewelry to silver, to say nothing of "push presents," fancy strollers, designer clothing, and sheitels. I try to listen to the Dave Ramsey Friday Show online while I cook for Shabbat (Friday is the day where people call in to scream that they are debt free), and have learned just what an impact a garage sale can have in getting the dominoes to fall while trying to get out of a sticky financial situation.

I certainly think that where expensive items can be converted to cash to change the financial footing, it should be considered. I understand that some of these items are sentimental and that I am stepping into sensitive territory. But if you need to rid yourself of the expensive lease and have something to pay for the clunker, or get rid of credit card debt, or actually come up with cash to start a business and/or fund a college/vocational education, it shouldn't be dismissed out of hand. Cold hard cash is helpful.

3. Different shifts. Back to eliminating those pesky daycare expenses, working different shifts can be tough on a marriage, but can be another good short-term solution for increasing cash in the short-term. I know of families that have arranged for long-term telecommute positions and other families that juggled children and graveyard shifts, all while keeping day care costs minimal. Those of us whose parents and/or grandparents owned small businesses likely spent a good deal of time being cared for on-sight. Once again, this is far from a desirable situation. But, in the short-term it can make a large dent. Of course, the long term solution is not just about cutting expenses, but increasing income.

4. Sharing resources within the family. I hate to place more work and responsibility on grandparents, but it seems to me that where the grandparents created a dependency situation, that playing a role on reserving the situation might just be the right thing to do. I do know of a number of kids with kids that have moved back in with the parents. Normally both the parents and grandparents are thrilled when such a situation ends!

I do know a number of grandmothers who provide unpaid daycare. Creating cooperative arrangements between siblings from the same families is another way to work together. Any such arrangements should be as formal as possible. Open ended arrangements are partially what got many of the families in these situations into trouble. So many grandparents look worn out as they care for little ones. And I know it isn't easy for these grandparents. I wouldn't make such a suggestion where an education and opportunity was provided. But where it was not, it might be worthy of consideration.

Siblings can also enter into agreements of their own. I recently met a mother who was out and about with her kids and her sister's kids. Turns out that the sisters share a purchased home (perhaps a duplex?) and everyone shares the childcare arrangements while the husband's complete their schooling and residencies. I believe that the wives each work part time. She told me that the arrangement is tough at times, but it is the best solution for them at this point.

Read about cooperative camps here. Such arrangements can be tremendously helpful in minimizing large expenses.

5. Don't lay down and play dead! The writer states: "The husbands don’t have the time or money to start a business or go to school at this point." Please, for your sake, stop making excuses because it is holding you back! You are young. You are healthy. You can make a dent in your situation. Don't convince yourself that you can't do anything at this point because plenty of people have changed course in life. But I do suggest getting out there and asking questions, listening to people, cooperating other families. The solutions aren't going to come from people who are in lock step with the thinking that has brought a good number of people to the place they are in now.

I'm going to conclude now before touching on any other sensitive subjects. We can deal with those in a future post. I'm also not detailing long term solutions as I think that it is fairly obvious. Also obvious is that tuition is a HUGE problem for these families and everyone else for that matter. Part of alleviating that problem will be to lessen the tzedakah roles and move people from dependency to work.

Commentors: offer up your own solutions and experiences in turning around a touchy situation. I have no monopoly on solutions and there is plenty more to talk about.

Till The Money Runs Out Do We Part

Hat Tip: Divrei Chaim

Rav Aviner, once again, brings some sanity into the world of Orthonomics(TM) as he explains to a son-in-law that his in-laws money is a generous gift, not an obligation and that he needs to straighten out his view of marriage because he is obviously missed the boat in this important area. (Also see Let Them Eat Cake, Rav Aviner re: collecting for a wedding for more (not so )commonsense advice).

Q: Parents supported their daughter and son-in-law for many years while the son-in-law learned in Kollel, but now they have decided to stop. The son-in-law will not allow the daughter to talk to her parents unless they give them all of the money they promised. What should the parents do?

A: This is certainly a desecration of Hashem's Name. First of all, parents have no obligation to give money to their children. The basic obligation is only to support child until they are six years old. According to a decree of the Chief Rabbinate of Israel after the establishment of the State, one must support children until the age of fifteen years old. After that, they can go out to work. Parents obviously help their children even after that, but it is a kindness and not an obligation. For this, the children should have gratitude and thank them each day. I do not understand what happened in this case. One must first be a human being. Ethics precede Torah. Before learning Torah, you have to be a good person. Perhaps the parents should speak with the Rabbi of our "scholar" and he will explain to him the proper way to act.

This is certainly an extreme case, but I hope I can lend some insights as to "what happened." And, I'm quite sure the Rav knows what happened too! While marriage should be a vehicle to create a bayit ne'eman b'yisrael, it can also be a good "business move."

In Hollywood, dating and/or marriage often appears to be a PR move. It keeps you in the headlines and being in the headlines is exactly where you want to be. We have all heard of women that marry to gain access to a family fortune. And we have all heard of men that are all too happy to dump their trophy wife like yesterday's garbage when she no longer fulfills her purpose.

While it is not commonplace, there are men who gain the motivation to date and marry in order to continue learning. As such, the #1 factor they are seeking is "support." Thankfully, feelings of obligation and love normally take over somewhere between dating and marriage and they roll with the punches.

I have little doubt that this husband continues to view his marriage as a means to an end and with a supersized sense of entitlement and ego to boot, he no longer sees his wife as useful and now is stepping in to blackmail his the out-laws (pun intended). The dehumanization of his wife is apparent now, but the marriage relationship was dehumanized long before the money tree stopped producing. Of course, there are many people from all walks of life that think marriage should be for their pleasure and convience. But when that attitude finds its way within our own walls, it seems shocking.

I am a firm believer that a good shidduch should have some practicality to it. So you won't catch me saying that finances are not important to a marriage, because having the means to raise a family really helps. But when money becomes central to the brokering of shidduchim, it isn't surprising to see questions having to do with the fallout.

Oy Vey: Beis Yaakov of Boro Park Slated to Close

Hat Tip: a reader (thanks)

I have to solve some financial issues today, as well as replace an appliance I've been thinking about replacing for 2 years now (yeah for furnish your dorms sales!), but it looks like there is a lot of blogging on deck as readers are sending articles like mad to my email box (thanks all!).

Today, a reader send me a link to this story. My reaction is practically adolescent because the abbreviation OMG flashed through my head, and I have never once sent a text, nor do I even recognize most of the text language out there beyond lol, and I'm certainly not lol'ing.

Boro Park Beis Yakov send out a letter to parents informing them that the school, the largest girls' school in Boro Park (perhaps the largest in Brooklyn, readers?) will not open in September. Of course they are seeking donations from the community in hopes of reopening. I don't know if this is one of the schools I've seen mentioned as being behind on paying teachers. I can only imagine that the board/administration decision was made out of desperation because plenty of schools have floated payments for months, and even years, on end.

I can't even imagine what parents, just 2 weeks away from the opening of school are thinking? What in the world happens when a school of this size announces they are closing? I can't imagine the clientele marching to the public school district office and enrolling their children. I hope parents will jump into gear, rather than just holding off for a miracle instead of concentrating on their children's education which must be a priority. If my own children's school announced it were closing today, I believe I'm not sure if we would try to get into another school or register with the school district to home school. Likely the majority of parents don't have the leverage and money to get their children into other school (after all, lack of tuition paying parents IS the root cause of closures). So, they have few options: fundraising, public school, or homeschooling. Fundraising isn't new in the frum world and obviously a wall has been hit. Public school is unlikely, even temporarily for this demographic. And, homeschooling would be beyond intimidating for the same demographic given the lack of familiarity and the unpreparedness, to say nothing of lack of know how and support. Oy vey!

The Jewish Observer, may it rest in peace, once wrote "Yeshivos have become very creative and entrepreneurial in finding ways to close their budget gaps" and "To an honest and realistic person, our school administrator knows his business very well. He has been successful in steering the ship through very choppy waters. This same executive director or administrator has become so talented at balancing the budget, his skills match those of any corporate CFO. The fact that he stays at the yeshiva is in itself real mesiras nefesh." I imagine "creative" accounting was used for many years. But, Virginia, "cash is king" and when you don't have it, it eventually catches up to you.

The letter sent out by the Beis Yakov blames the (potential) closing on the financial crisis. But, I personally cannot and will not place the blame on a downturn in the economy. I'm afraid the money management skills haven't matched the a corporate CFO. Many have been talking about the day when the frum community would hit a wall for years now! Many have decried the duplication of services, the growth of a near impossible infrastructure to support, etc. What do you think you get when you combine a growing infrastructure of non-profits + young marriage followed by kollel followed by late entrance into the marketplace + lack of eduction/vocation + a growing fertility rate + a ridiculously expensive 'lifestyle' from clothing to camp+ reliance on debt, parents, in-laws, relatives, and grandparents + underemployment combined with planned government dependency + a recession that has finally proved that credit does have a limit?

I don't quite know what to say about the potential closing beyond OMG. It is really scary, or as the reader who sent me the article said, it will be a tsunami if it closes. I do NOT want to see the infrastructure of day schools/yeshivas/beis yaakovs threatened, changed yes!, collapse no! If I didn't care, I would never have started this blog and dedicated so much time to trying to promote healthy money management from a grass roots level. I realize Boro Park isn't exactly my audience. But, I do have a good spectrum of readers, and I harbor no illusions that similar issues might be lurking in centrist and modern Orthodox schools too. So, I think we all need to be watching what happens there and begging our own schools to employ sound business practices (even if that means that not every single child can be provided with a comprehensive day school education. . . .the majority must goal. "No matter what your financial circumstances" simply is unsustainable).

More tuition blogging to come (unfortunately). Your thoughts.

P.S. The article notes that BY Boro Park receives some state funding. The Yated recently had an article on the tuition crisises that, after a lot of talking, concluded government funding was the only answer. There already is plenty of government money in the frum community and I pipe dreams won't take care of today's problems. Throwing up your hands and declaring there is only one answer, as the Yated did, isn't going to open up a school slated for closing.

Legal Symposium: Men Only



In light of the most recent major scandal involving Orthodox Jews and assorted crimes from money laundering to kidney brokering, the Agudah decided that perhaps it was time to dedicate an asifa to yashrut, which they named the "Legal Symposium." Given that major frum publications have managed to ignore decades and decades of organized financial crime, it certainly is a step in the right direction to even acknowledge that a criminal case took place. The Yated didn't once mention the Spinka case, nor did its online counterpart YWN. I did not read the Yated at the time of the Los Angeles to Brooklyn money laundering arrests which hit the airwaves in a very similar way (1994 I believe), but I doubt those were mentioned either.

But, as I tell my kids, the longer you wait to clean up a mess, the harder it gets to clean it up. This pronouncement is normally made as I shoo them out of the kitchen when something sugary. Once the stickiness hits the soles of the feet, I'm stuck cleaning not just a section of a floor, but numerous floors, surfaces, and soles of shoes. I'm choosing to take the mere mention that not every single black hatted member of the klal is anything but meticulously observant of basic financial decency as a positive sign. The case of the bochurim in Japan has resulted in pronouncements that the women should take on extra stringencies in tzniut, so I think we can at least be appreciative that the asifa has a more direct connection between the crime and the solution. Of course, a large gathering isn't going to solve any issues. The entire house is a sticky mess and the cleanup project is going to be massive.

The asifa to promote a basic message that all 10 of the aserot hadibrot actually still apply in this day and age (and no, mesira is actually not one of the aserot hadibrot, although VIN and YWN commentors seem to have a different set of 10), featured a rather strange lineup of speakers indeed including the zealous Rabbi Avraham Schorr and the Spinka Rebbe who just pleaded guilty to a major criminal tax fraud and money laundering. I'm not quite sure what to make of inviting the Spinka Rebbe to sit in an honored position and declare that there is no longer a need to do things illegally. The entire speech struck me as bizarre. I don't want to get caught up in the speeches quiet yet. It seems to me that greater effectiveness could be achieved by inviting someone who has actually sat in prison (and hasn't re involved themselves in more criminal activity), or, perhaps even better yet, inviting that person's wife to address the crowd (from behind a mechitza if necessary) about what the fallout criminal activity is. Of course, if there is no real fallout, the situation is far worse that most are willing to face.

Naturally, the asifa was only open to the men folk. While there have been a fair number of "frum" women who have been hauled in by authorities for various types of criminal theft and fraud, including one women and her husband who were hauled in shortly after the recent major scandal in New Jersey, I have made the point before that (naive) women are the ones who get to pick up the pieces. When a male criminal meets his fate, he gets 3 square meals a day, while the wife is stuck with the weight of the home squarely on her shoulders.

I will continue to try and make the case that finances are the women's business too (presumably she is signing on the Federal 1040 and should know what she is signing) and hope that those who read my blog will help get that message out at the grassroots level because I believe it is a very important one. While criminal activity, especially organized crime, is largely a men's club, it is necessary to given the ladies a seat at the table in their own home, if not the community at large, to help provide some "checks and balances." If the community is actually serious about starting to fight this evil, they can't exclude half the population.

As it stands, the women are asked to work and provide support to a growing family during the initial stages of the marriage, but don't seem to have much of a role beyond that. In terms of the individual household, it is very important for women to have a voice in the family's finances. Women tend to bring a different set of needs and wants to the table. Women tend to focus on security and balance out husbands that might tend towards great risk. Introducing a more risk-adverse voice to sit at the table certainly is unlikely to cause great harm.

Ultimately, the mess that the kehillah at large faces isn't just a men' issue. Perhaps the Agudah just couldn't find an arrangement to accommodate both genders. But I hope that if the subject of yashrut is to become an ongoing subject, that the womenfolk will be invited to that table too.

Back to the speeches in the next post. I need to cut this post off before it becomes a small book.

Better and Worse Ways to Help Adult Children

Yet another gem from the past Yated. It sounds like the father-in-law is trying to give his son-in-law a hint. But the son-in-law, never having managed money, can't really pick up the hint. And, it probably isn't reasonable to expect him to pick up the hint because he really has no concept of how money works. In another publication I read the words of a prominent Rav who mentioned that "support" should not be given with strings or guilt trips attached. Those who read my blog are no doubt aware that there are parents who do use money as a mean to control and/or keep their children "close."

It might come as a surprise to some of my readers, but I am not opposed to parents with the means to provide financial help to their children. But, I do believe there are better and worse ways to provide that help, and I think whatever financial help a family undertakes should be done with a great deal of thought.

CHECK - WITH A DRASHA
Dear Editor,
How do I write this brief letter without sounding like a kafui tov? I don’t know, but I will try. Let me first say that I am exceedingly grateful to my in-laws for providing financial support to my wife and me since we got married just under two years ago. With one beautiful child and another on the way, and the myriad expenses, their support is vital and immensely appreciated. I make it a point to express my thanks to my father-in-law each and every time he gives us or mails us a check.

However, each time he gives us a check, I hear a lengthy drasha about how difficult the economy is and how the future looks bleak. Now, as far as we know, and from observing everything going on in the life of my in-laws, there is no reason to believe that my father-in-law is experiencing any economic hardships. He is quite a successful fellow, and the $1,000 a month that he is so kind to give to my wife and me should not be affecting his bottom line in the slightest.

So why the drasha? Why make my wife and me feel like nebach cases? We thank you a million times for your help. We are kind, considerate and thoughtful. We even told you that we don’t take your support for granted and that if the economy is takeh so bad, we do not want to cause any hardships on you and would figure out a way to live without the support if we needed to. We only want to bring nachas, not hardship or disappointment.

So please, to anyone out there, if you are so kind to provide support to someone, whether they are a young couple or a family of married children, don’t make the people feel like shleppers. Don’t tell the people how hard it is for you. It often makes them feel so awful that they’d rather subsist on water and bread than have to take the check given in such a manner or accompanied by such a speech. In our case, we’d rather live in a shack than continue taking support in such a manner, but we know that expressing that would create an even more uncomfortable situation.

I’d like to conclude by saying that we realize that things could be worse for us and that this should be the worst thing in the world. We are indeed blessed. But if people would be a tad more aware of what they say or do, it would go a long way to making life more pleasant for others.

And yes, we are aware that in next week’s Yated, every shver and shvigger this side of the Atlantic is going to write in about how we are young, spoiled and lacking any hakoras hatov. We figured we’d write the letter anyway.
A Young Couple Trying to Do What’s Right

I believe the worst way to provide help is through a monthly check. Somehow, those receiving a monthly check end up in a master-subject relationship, not unlike those on various welfare programs who wonder if pursuing a career will hurt more than it could help. Those who receive financial help through the means of a monthly check, or combination of checks, appear to lose a great amount of confidence in their own abilities, especially as the funds are being used to prop them up in the present, not to help them build an independent future.

Few parents enter into a monthly check arrangement with a formal agreement (that they are ready and willing to enforce) stipulating how much and for how long. Not doing so is to the detriment of everyone involved. Fluid arrangements make it very hard for the provider to turn off the valve, even when the leak is causing havoc, and the receiver has little urgency to get to a certain level of independence by a particular point in time. In Orthodox families that are growing quickly, parents often feel that they can no longer turn off the valve, or in the words of a friend of mine who would like to actually close the value, "what? And my grandchildren should starve!"

Another problem with the monthly check is that it feeds into a lifestyle. Many parents, not wanting to see their kids live anything less than a middle class lifestyle, provide money for certain upgrades. Whether it be a yearly vacation, camp, smachot, or a larger apartment. Chazal tell us just how hard it is to change a "middah" and financial experts talk about how difficult it is to change a "lifestyle."

Another form of support that can be problematic is when parents take on certain bills for their children, such as auto insurance. I think parents might be better off gifting a certain amount yearly (with a firm cut off date), rather than picking up the tab for a particular bill, especially one that strips the receiver of involvement and choice and potentially inflates a lifestyle. It isn't healthy to be uninvolved with certain finances. Learning to budget and having the ability to make choices about each major area is important in the life of an adult (e.g. should I drive an older car to save on insurance? should I bother with a car at all for the time being?).

Working backwards, "better" help would include help that:

• does not make the receiver dependent on the giver
• does not rope the receiver into an inflated lifestyle
• allows the receiver to exercise independence and make decisions (additionally, allows the receiver to make mistakes and suffer the consequences)
• allows the receiver to use the funds for the future, not just the present

Loans/gifts to start a business, funds to help a student graduate from college debt free, help with a down payment on a home for which the mortgage is in current reach, or a one time lump sum are methods that I find to be less problematic than the monthly check. These scenarios mostly share a theme: the money given is being used not just in the present, but as an investment in the future.

And a final note, parents who extend support, but do not take care of their own needs, I believe do no favors for their children or themselves. I think an argument can be made that this is a form of deception. The receiver imagines the giver to be well-off, and ultimately the receiver learns the truth, perhaps to his detriment.

Your thoughts please.

Also: on a related note, see ProfK's recent post Overlook Us At Your Peril.