Spending What on What?!?!

Hat Tip: Haemtza

From the 5 Towns Jewish Times: File this under Money Ain't A Thing/Baal Tashichit/Obscene

I thought this was Purim Torah and I was enjoying a chuckle until I realized the article was dead serious. The Agudah is spending a quarter of a mil on a stadium mechitza to be used for a single night. Read on [emphasis mine]:

Fresh off the exciting Super Bowl win of one of its tenants, MetLife Stadium in East Rutherford, NJ, can expect increased revenue next year. However, in this challenging economy, no opportunity to develop a new source of revenue should be overlooked. The stadium found just the source it was looking for: Orthodox Jews.

Our community has unique cultural and religious requirements, so MetLife Stadium worked hand-in-hand with Agudath Israel of America to accommodate religious fans. A major breakthrough has been announced: MetLife Stadium will build a mechitzah across the entire stadium to accommodate separate seating for men and women. The mechitzah will run through all seating levels. The result: over 20,000 seats available for a women’s section.

This will mark the first time in United States history that a mechitzah of this magnitude will be built. Negotiations to build this mechitzah could not have been easy. Flimsy movable partitions are not an option when public safety is involved. This will be a solidly installed mechitzah which will be supported by beams that are drilled into the stadium’s new concrete walls. The mechitzah construction carries a price tag of no less than a quarter of a million dollars.
Will women now be able to perform “the wave” at sports events with complete privacy? Unfortunately, current plans call for the mechitzah to be dismantled after the Siyum HaShas in August. Currently, the plans are to return the stadium to the same condition it was in before the mechitzah was installed. (But maybe MetLife Stadium will alter its plans after witnessing the tremendous kiddush Hashem.) Repairing the holes in the concrete is one reason why the mechitzah carries such a high price tag.

One can debate whether a mechitzah is actually necessary at this event. Yet, to encourage all segments of the Orthodox population to attend, there is no question that having a mechitzah is important.

If I wasn't convinced before, I am now that "we" have lost our minds. And the irony can't be missed re: the dedication. “This siyum, like others before it, will honor the memory of the six million kedoshim who perished in the fires of Churban Europe. It will be a powerful testament to the eternity of Torah and the idea that it alone can preserve our past and ensure our future.”

I'd suggest organizations stop flushing money down the toilet or there won't be any kemach to preserve Torah. This is the definition of spending like a drunken solider.

(Oh, as per the Agudah's psak your ticket, priced from $18 to $1000 is tax deductible: "Regarding a tax deduction for attending the siyum, the tax experts at Agudath Israel have advised the community that purchasing seats to attend a religious siyum ceremony is no different than purchasing a High Holy Day seat in a synagogue. You may take the ticket price as a tax deduction, but not the food purchased at concession stands." I won't comment, but consult your own tax advisor.)

(Link) It Feels So Good: After 22 Years. . . . Financial Freedom

Before I get back to my previous subject, I don't want my readers to miss a great post at BeyondBT. Michoel writes about Finance Independence and Success in the T'shuvah Process where, after 22 years of support, his family has made it their biggest priority to wean themselves off familial financial support.

In the process of becoming financially independent, they are already experiencing some wonderful side benefits:

**No confusion as to whose dollar is being spent/donated.

**Time belongs to him (better learning).

**Great respect for parents as they see principled, responsible parents (the frugal can and do say no! with conviction and the children are emotionally healthier for it.

The author sums up his post beautifully:

"I had been told in my days in yeshiva, that it was a big z'chus for non-frum relatives to allow them them the pay for your tuition. This was a classic cas of mis-applied-ffb-bt-hyper-religious-gobbly-gook. First build yourself. Then worry about saving the world. And then worry about saving your family. The biggest z'chs for them is to see frum Jews living in a way that will cause them to respect frum Jews. And you might be the only example they have."

Personally, I'm baffled there is any argument on the post. Do we not read (almost) the same birchat hamazon text? Do we not pray that we not be dependent on gifts and loans from flesh and blood? Is the borrower no longer slave to the lender? Are chazal's admonitions no longer applicable?

Related post:

Better and Worse Ways to Help Adult Children

Ezzie's New Jewish Economic Survey

Anonymous survey for interested participants. Head on over and read about the newest survey and take it if interested. More posts to follow this week.

Rabbinic Endorsements, Oy

Recently I saw an advertisement for one of these debt negotiation/settlement companies with a note that Rabbinic Endorsements were available on request. I've done no formal studies, but have noted increased advertisements in Jewish advertisement publications for this type of business in recent years. Other things I've noticed recently: sheitel companies advertising financing plans. Oh, and my favorite, a sterling silver company advertising financing available. Excuse the diversion. Back to the subject at hand.

Now I absolutely do think that a debtor should seek halachic advice from a qualified Rabbinic authority when they have hit a brick wall financially. In fact, it would be wonderful if more people would seek advice in this area far before they hit a brick wall. And, it would be even more wonderful if there was a culture that stressed the importance of living below your means so that fewer people were hitting the financial brick wall.

However, if I were a Rabbi (which I am not and cannot be) I would really want to steer clear from giving endorsement on particular businesses (at all). And especially a particular business within this particular industry.

This industry has (I'd say rightfully) come under a lot of fire recently for an entire host of issues, from faulty advice to faulty and fraudulent practices to questionable billing structures. While there are trade association and some regulation, the industry as a whole lacks the oversight that other professions are subject to.

I am certainly not accusing any company that advertises in any Jewish Ad Publication of behavior that is less than 100% yashar. However, if I was a member of a board employing a Rabbi that was offering "Rabbinic Endorsement" to one of these businesses, I'd be checking the liability policies!

I don't believe there are many accountants or lawyers out there that would be comfortable putting a stamp of approval on too many companies within the industry, at the risk of their own professional reputation (or worse yet, the reputation of their entire firm). And, forgive me for saying this, but I have no idea how a Rabbi can have enough information to endorse a business in this industry.

Also see the post Look Before You Leap: Debt Settlement

Guest Post: Some Economic Observations on the Current Kiruv Framework

Thank you to another great guest poster for his observations and thoughts. I redacted the name of one example of a program and as always welcome comments on an interesting topic.

Some Economic Observations on the Current Kiruv Framework
by Rabbi Dr. Daniel P. Aldrich

After observing the current state of kiruv for the past few years, I have come to feel that some of the popular methods and frameworks may also providing external incentives that are not ideal for student growth. If I can be blunt, the current system is a pay to play system– one organization even calls it “Earn and Learn.” That is, to attract students – initially to a [Program Name Redacted] or similar seminar program, and then to yeshiva – mkarvim have a number of incentives, ranging from 500 dollars a semester in cash to free books and plane tickets. My biggest concern is that the system is, as we say in social science, “crowding out the intrinsic motivation” of the students who want to go. Fortunately, I don’t have to rely on my own intuition to understand the theoretical and empirical problems with paying people to do something that they (and others) may actually really want to do. A lot of peer-reviewed research on this topic has been done by others.

More than four decades ago, the economist Richard Titmuss argued that paying regular donors to give blood actually decreased their willingness to donate. His book, titled The Gift Relationship, suggested the radical notion that offering incentives to volunteers made them less interested in volunteering (you can buy an updated, edited version of the book at http://www.amazon.com/Gift-Relationship-Human-Social-Policy/dp/1565844033).

Titmuss showed that, in contrast to the American system with incentives and marketization of blood, the British system of pure volunteerism produced more blood. Scores of studies followed these initial observations. In 1978, Mark Lepper and David Greene showed (in their book entitled The Hidden Costs of Reward) that monetary rewards reduce motivation across the board. In 2008 Mellstrom and Johannesson showed (in their peer-reviewed article entitled “Crowding Out in Blood Donation”) that introducing monetary rewards for donation decreased blood donations by half. Closer to my own academic work on social capital and civil society, economist Bruno Frey (1997, 1999, and especially his 2000 paper “Motivation Crowding Theory: A Survey of Empirical Evidence”) showed that offering money to communities to host “unwanted projects” such as nuclear power plants and garbage dumps actually made them less likely to accept the offer. Without the incentives on the table, Frey showed, many local residents would have been glad to host a nuclear power plant. For readers interested in seeing how states have tried to solve the problem of building controversial facilities with a variety of tactics, please see SITE FIGHTS (http://www.amazon.com/Site-Fights-Divisive-Facilities-Society/dp/0801476224/). But once developers of these facilities started offering incentives, the residents lost their enthusiasm, calling the incentives “blood money.”

Economists, recognize this same effect, but label this phenomenon “crowding out.” In general, our cognitive space is divided into our intrinsic motivations (those things that we want to do) and external motivations (things we do, like coming to a seminar for fear of failing, because of incentives or disincentives). Offering incentives to a volunteer makes him or her less likely to participate – because if you’re offering money for the person to take on a facility or to give blood, then that signals to the volunteer that the outcome must have a negative value. In contrast, valuable things are pursued, and strong demand drives up their price. If a food manufacturer has to pay consumers to eat its products, it probably won’t last long. Parents fork out 45,000 dollars a year to send their precious charges to Harvard because they believe that it is worth it. Therefore, by paying students to participate in kiruv programs, we may be inadvertently telling them that being Jewish, rather than being a wonderful goal to aspire to, is an undesirable outcome that they have to be paid to accept!

The terrible irony with the kiruv system is that the problem is worse than just “crowding out” of the motivation of students who may have otherwise had a strong interest in furthering their Judaism. Imagine a student who is truly interested in learning more about Torah. He joins a [paid program] type class – and is placed with 10 to 20 other people, most of whom don’t share his natural motivation. They are there because they’re being paid to do so. They tap their pens, bounce their foot, repeatedly look at their watches, and shuffle impatiently as the time ticks down. I’ve spoken to local Shabbos hosts in various communities who have told me that their experiences with [paid program] students – who, to receive their checks, must go to several Jewish experiences like a Shabbos – have been less than rewarding. Those of us who do kiruv the "old fashioned way" (that is, without incentives, and based on long term relationships and incremental growth) feel very blessed that the students who show up at our table – and it may be as few as five, or as many as thirty five –seem engaged and interested in what’s going on.

So it is a double whammy – offering students money or incentives to do what they want to do actually decreases their motivation. Social scientists and economists have produced four decades of empirical evidence supporting this claim. And, on top of that, we’re forcing naturally motivated students to sit in close quarters with many other students who completely lack interest.

I wonder if others have noticed a similar trend, or feel that the system is okay as is?

-----------------------------------------------
Related reading from your truly:
Subsidizing the Ba'alei Teshuva
also posted at Beyond BT under the title The Benefits of Buy In for the Newly Observant

Another Elementary School Closing

. . . . this time in Toronto. One hundred plus students absorbed into other yeshivot according to YWN, but 30 rebbeim and teachers are without jobs after the school failed to pay staff for five months, or $500,000 in back pay which Matzav.com is looking to raise (as per Matzav pay is owed since April 2010).

No need to pull out a calculator, that is a 1:3.33 teacher to student ratio. Each of the 100 students would need to pay $5,000 to meet previous payroll operations, this in addition to regular tuition they were paying. Average back-pay owed is $16,667 per staff member. Averaged over 5 months that is $3333 per month per teacher.

I say this with all sincerity: I believe that smaller and/or more specialized schools (and this one, like the one in Lakewood, both are reported to both be Zilberman schools) have a place, especially in larger sized communities. However, these schools cannot expect to maintain a conventional environment resembling that of their larger counterparts. Additionally, the operational method cannot include reliance on the greater community simply because of it's size and communal history. It appears there is some moaning that g'virim did not step up to support the school. Small schools must be more heavily self-sufficient, relying basically on parents for tuition alone (read: fewer tuition discounts can be given). The staff ratios make me believe that this school was maintaining around 3.33-4.25 staff members per grade (not sure if the school runs K-6 or K-8?). A study of the one-room schoolhouse should be required when opening small schools.

Comments?

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?

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.

Why Can't We Push Rewind on this New Social Structure?

Hat Tip: VIN

An article at the 5TJT looks at a Shaar Press book on relationships with in-laws. I'm sure there is plenty in there to keep a reader glued.

In the article Rabbi Twerski goes on record saying:

“The problem is that today more than ever, parents are meddling in children’s lives, and they believe that they have a right to do so,” Rabbi Twersky said in our Sunday-morning talk. He added that the prime reason that in-laws or parents get more involved in children’s lives nowadays is that in an inordinate number of situations in our community, children are no longer independent just because they’ve gotten married. He says that today in our social structure no one is really independent, and that fact is a significant contrast to the way things were not so very long ago.

Rabbi Twersky recalled that back not so long ago, when you turned 18 you went to work and were on your own—that is if your parents were not depending on your efforts to help keep the family unit afloat, which today is an unthinkable option. In discussing whether the situation of such profound dependence of married children on their parents is healthy or not, Rabbi Twersky said, “We can’t change the reality of our social structure. It is what it is and we need to deal with it as such.”

I find this talk that we can't change the social structure, much of which is largely self-created rather defeating. Why can't we push the rewind button and instill some expectations that existed not too long ago? There is a mitzvah for a man to leave his parents and cleave to his wife. A wife is to put her husband before her parents in terms of honor. The ketubah, hardly a romantic document, details the obligations of a husband to his wife. Our sages instruct a man to plant a field, build a home, and marry in that order, stating a fool does the opposite. And we recognize the problems created when dependent children, rather than increasingly independent young adults, marry. So why throw up our hands in defeat if it is our best interest to tackle the issue? Granted, today's adolescent period might be more lengthy due to the increasing education required for jobs. But I believe that we can still give our children increasing levels of responsibility and consequence to propel them towards independence for the sale of all involved.

As for in-laws who can't let go (I think I might know a couple!), the best defense to meddling is to provide fewer opportunities for such meddling. Dependency creates too many opportunities.

Weigh in please on the question of why we seem to feel so powerless today?

"Financial Impossibility": Stop with the Excuses Already

There is an editorial up by a Matzav columnist and Rabbi declaring frum living a "financial impossibility." I have dedicated a lot of space on this blog to trying to empower people in Orthodox community to take the bull by the horns and create financially viability for their family. I find it frustrating when the message that comes from all sides is that being frum = poor. I imagine that many of us have family members from the "old country" who weren't particularly fond of being poor and blamed it on religion. I find it highly irresponsible for people in positions of influence to put out a message that we are doomed by virtue of adherence to Torah, when in fact we are largely doomed by our own dysfunction and foolishness.

Part of that dysfunction is that we spend money like poor people. We have no clue how to prioritise, not at the communal level and often not at the individual level. The author of the editorial lumps simcha/wedding expenses and parental support together with food, clothing, and shelter. That is telling and it is exactly where the problem lies. He prefaces this list of expenses with the disclaimer that "most of these expenses cannot be considered luxuries by any stretch of the imagination." Pretending that this, that, and the other thing are necessities is exactly why far too many families in frum community are way in over their heads! We are spending like fools on an individual and a communal level and instead of taking an honest look at our spending habits, we declare most of it "necessary."

I have a brochure from a known tzedakah sitting on right here (I plan to scan it soon) which places Hachnosas Kallah on page one. The donations being sought for the kallah's package include (this isn't a complete list, just what I'm reprinting):
$3,600 for apparel
$300 for classes
$1,800 for 2 wigs
$900 for bed and bath
$2,800 for bedroom furniture
$840 for 2nd night sheva brochos
$2,500 for the shabbos sheva brochos catering expense and $800 for the hall
$1100 for the melava malkah

Following hachnosos kallah are pages regarding collecting for medical expenses, clothing families, food, and helping people in business. Yes, hachnasat kallah is a mitzvah, but the priorities in spending are beyond foolish. A couple that can't even dream of supporting themselves (the charity is also collecting for 18 months of rent for these couples) is doling out $3,600 for apparel!

The habits I see in the frum community are habits I see in many disadvantaged areas and in 3rd world countries (see this article on Egypt's average wedding cost in comparison to average family income). We have tons of smokers (and drinkers). We have families dripping in "bling" that don't make even $20,000 a year. Here is a clue: if the price of all your jewelry, the price of all of your silver, and the price of your sheitel exceed your yearly household income, it doesn't matter who provided all of these goodies, you have a consumption problem. We have families in section 8 housing who hire cleaning help. We borrow as a way of life (and are told that this is the way to survive). We marry of teens and 20 year old children to the tune of mid-five figures who have yet to pay an electricity bill of their own. Of course, we don't invest in their education because we already spent the bank on everything else. We spend on designer gear and clothing as if it was the 11th commandment (thou shalt dress children in matching clothing, buy shoes at Stride Rite, and push a McClaren, Peg, Valero, or Mountain Buggy stroller).

Our habits look pretty bad and it is time to take an honest assessment instead of turning a blind eye and calling most of the expenses "necessary." Enough with the excuses!

Recommended reading for every frum family should be Dave Ramsey's Total Money Makeover (reviewed here) and The Millionaire Next Door (to be reviewed). No, these books won't tell you how to pay for day school/yeshiva, chassunas, and sleepaway camp. But they will let you in on how financial success is built: a hate of debt, a willingness to step outside of the box, and a low consumption lifestyle, and savings to help generate security and eventually dividends. We have to remember that expense begets expense and that savings generate income. From Rav Salanter to the Ben Ish Hai, I have yet to see an endorsement of the crazy spending that we are told is necessary.

We need to deprogram ourselves from all of the bad financial advice we have been fed from the importance of household help to the necessity of everything under the sun and start to make adjustments. I sure don't need my children getting the message that living a Torah life means poverty. Our kids don't want to be poor and neither do I!

Excellent Article: The Frum "Cash for Clunkers" Mentality

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


The Frum “Cash for Clunkers’ Mentality
by Avrohom Birnbaum

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

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

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

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

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

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

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

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

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

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

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

New Yorkers: This Is For You

Hat Tips: Rosie and Ezzie

Just in case you were wondering why you just can't seem to get ahead, it might be that you live in New York, the most expensive place to live in the USA, or even Queens, the 5th most expensive place to live in the USA. A new study by the Center for an Urban Future shows that NYC is so costly that a salary of $123,322 buys the same standard of living as $50,000 in Houston and a $60,000 salary in Manhattan, is equivalent to a $26,092 salary in Atlanta. Rents are 53% higher than the ridiculously priced San Francisco, the 2nd most expensive place to live in the USA.

New Yorkers also pay more for phone service, heating costs, and day care (although I do believe that within the Orthodox community day care is actually far, far less expensive in the boroughs than in any out of town community).

Larger Families and Equality

Earlier I posted some words of wisdom regarding discrepancies between income and siblings from the Money Magazine columnists Jeanne Fleming and Leonard Schwarz who authored the book Isn't It Their Turn to Pick Up the Check? Dealing with All of the Trickiest Money Problems Between Family and Friends -- from Serial Borrowers to Serious Cheapskates.

The end of the chapter dealing with siblings contained some words of wisdom that I think are important to keep in mind:

"Suppose you'd prefer that your children not end up with financial resources so unequal that they experience the jealousy, resentment, and worries described in
this chapter. What should you do? According to sociologist Dalton Conley, the more children a family has, the more likely there are to be significant income disparities between the siblings as adults. His advice: If you don't want large gaps in income and achievement between your own children when they grow up-and if you want to maximize each child's odds of being successful-don't have more than two kids."

I love sizable families, and the Orthodox world is blessed with large families and limited resources. During these tough economic times, what has been done in the past may no longer be an option. Many parents will feel terrible as it is natural to want to give equally, and I'm sure many parents will be tempted to continue to try to do the same for the sake of equality. I can even think of a family that doesn't want to push their daughter towards a different type of shidduch than the type she has been seeking for many years now, because it would make her different from her siblings.

Families that are just getting started with setting a standard would be wise to listen to my commentor tesyaa's advice from the "Hachnasat Bar Mitzvah Bochur" post which deals with a collection being taken up to make a Bar Mitzvah, complete with extras, for the oldest son of a family that has recently lost their business (the "hachnasat" part of the title was tongue in cheek as there is no mitzvah of making a bar mitzvah affair). Tesyaa writes:

A little different angle. I think the fact that this is "it is there [sic] oldest son" is a good reason to tone down the affair in the first place. I speak from experience, having made my daughter a nice (but not large or ostentatious) bas mitzvah 3 years ago. I did the same for my next daughter this year. I have (b"h) another coming up next Shavuos, and I would like to spend less. But having done one simcha model, so to speak, for her sisters, I'm hesitant to do much less for daughter #3 because I know her feelings will be hurt. If I would have made a cheaper simcha the first time, I wouldn't have this issue.

It is really hard to do different. But, perhaps it is just a reality of larger families. (And now I can return this book to the library. It was a nice easy read).

Guest Post: The Real Subject we Can't Talk About

Two weeks ago I linked to an Article by Rabbi Rosenbloom, "Can We Talk Seriously About Poverty?" The real subject we can't talk about that is, at the very least, highly correlated with frum financial challenges is family size. This blog has been around for approximately 2.5 years and in all that time, I haven't even directly touched the subject of large families, family planning, etc with a 10 foot pole. Of course, I've directly and indirectly alluded to the subject, but I have yet to give it its own forum. You just can't ignore the matter and write about finances. But, this subject is a halachic subject, a personal subject, a financial subject, a political subject, and a subject you just don't talk about. . . . . and since I don't have any firm opinions on the matter (or more acurately I have 10-20 conflicting opinions on the matter), I don't really find myself able to write anything remotely worth reading on the subject.

A few months ago, my inbox was filling up because Yeshiva World News posted a letter in the "Out of the Mailbag" section addressing Family Planning. By the time, I tried to link to the article, it was gone. I am told the article didn't last more than 3 hours before it was pulled. (I will challenge myself to beating the YWN record as I prepare for the onslaught of comments, despite a different readership).

This week, the author of the original article sent me an email with an attached document of the original article. I'm going to save my comments on his article for the comments section but am happy to give him a forum at my blog. The article follows below:

Family Planning – A Harsh Reality

No doubt there are those that are going to disagree with the following statements, but many would be hard-pressed to dispute the reality it represents. The following statements are not based on empirical research, but rather a data set based on numerous qualitative discussions with young couples in our community. I should also point out that having been in chinuch, both as a Rebbi and administrator, and a family therapist and now working full time in the corporate world, I believe I have some real insight into the different aspects of the following topic.
There are a number of challenges that Klal Yisrael is currently dealing with: shidduchim, parnossah, the internet to list just a few. Each one comes with its unique set of nisyonos and hardships. However, there is a new issue currently start to grow within the young families in our community. Family Planning. There are many young families in our community who are currently restricting the number of children they have due to the current costs of raising children. This is not being done out of choice, but as a practical last resort, as a way of preserving some sanity and shalom bayis in a home that would otherwise have none. As a Family Therapist I can tell you that the number one issue couples fight about are finances. More and more couples are faced with doing something they never imagined when they first got married, not having more children in exchange for not fighting about finances. Many young couples are reaching out to their rabbonim to discuss heterim that are available to them.

First, let’s look at the current fiscal situation for a young couple. A 30 year old couple with 3 children in school could potentially have a tuition bill of up to approximately $35,000, depending on where you live of course. If you add camp to the tab at $2,000 per child per summer the total cost of education per year is approximately $41,000. In order to earn enough money for education and camp the couple would have to earn approximately $55-60,000 per year. They have not yet housed their children, clothed them or fed them.

There will be those who are quick to jump and say, “Where is your bitachon? Have as many children as you want and Hashem will provide”. There is no question that the Ribbono Shel Olam is the ultimate provider, but not everyone can handle the challenges that come with being such a baal bitachon. That’s their reality. Does responsible parenting mean one is lacking in bitachon? We are talking about erliche families, who learn and daven daily in addition to earning 6 figure salaries. Who only want to provide the best possible chinuch and opportunities to their children without having to work 2-3 jobs and not even have the chance to see their children, learn with them or play with them.

Think about the choices that some families have to make: Sending kids to camp, in my opinion, a vital part of bringing up children or having another child? Paying full tuition and perhaps being able to hire a tutor when necessary or growing your family? Having your wife be able to work part time (or maybe not at all) or having another child? These are the choices currently being made by young couples today. Are they lacking Bitachon? Do they not have Emunah Sheleimah?

“Move somewhere cheaper.” Is that the answer? Instead of being able to provide the best svivah, hashkafah and chinuch to our children we should move to a new community that does not have these assets? Young couples should not be allowed to raise their children where they grew up themselves, because of factors beyond their control.

So what are the solutions? There is really no point in bringing up the topic unless there are some possible solutions. The solutions I am laying forth here have to do with the escalating cost of tuition in the Yeshivas and Bais Yaakov’s. For many families tuition represents the largest expense and that’s why many of the solutions lie there. The reality is with the rising costs of housing, food and energy many people are going to be forced to default on their Yeshiva commitments as it is. It’s not as if they are not going to house and feed their children. Yeshiva’s need to start to create solutions for themselves otherwise they will be spending more and more time fighting to collect money.

What can Yeshivas do?

1) Yeshivas should not offer full scholarships, only partial scholarships, even to their own Rabbeim. At one point in my career I ran a high school. Many parents could not afford the full tuition. Once we established the amount they could afford, I would take the remaining amount and tell the parents, “I will raise half and you raise the other half”. Parents were required to fundraise too. If the entire achrayos for the scholarship would have been on the yeshiva we would have had to raise tuition and only further perpetuate the problem. Rabbeim and others who cannot afford tuition must be involved in raising money; they cannot just rely on the yeshiva. There is no company in the world that offers that type of “perk” on top of a salary. Think about it, if a Rebbi has 3-4 children in the yeshiva and pays no tuition, his “perk” is worth $30-40,000 pre-tax! And someone is paying for that perk!

2) Yeshivas should not be allowed to force parents to pay tuition beyond the actual cost of educating the child. The cost of education is the actual cost of maintaining the class (salaries, physical plant and administrative fees) divided by the number of students per class. Yeshiva tuition is typically not a reflection of the actual cost per student. If a Yeshiva charges $11,000 per child and has 25 children per class the total amount of revenue per class is $275,000. It does not cost $275,000 a year to run a class. A percentage of full tuition goes towards supplying scholarships to needy students. Should Yeshivas offer scholarships to some students knowing that families being forced to pay full tuition may need to compensate by regulating the size of their family?

3) There must be a discount given for multiple children in the yeshiva. I.e. if one has 3+ children in one yeshiva they should be able to get a “multiple children” discount. If not, those being provided with free or heavily subsidised tuition are being encouraged to have more children while those being charged full are being forced to not.

Nothing is easy about these issues, neither the problems nor the solutions. If no one chooses to do anything about it though, there are many who will start to look for solutions that will at least give them some peace of mind, even if it means doing something drastic like family planning.

Building a House of Cards
alternatively, Tuition isn't the budget breaker in this budget!

Reading this letter in the newest Yated just hurts me. Budgets interest me and this budget is so overinflated, although the writer does not realize it, that it hurts. A family of six (four children) is spending a massive amount of money, and while she puts tuition as a primary issue in her letter. . . . . .tuition simply is NOT the reason their budget is literally out of control. Their costs are just simply out of control. I am literally picking up my jaw off my desk after reading this letter because I have a very solid idea of what the expenses for a family this size could be, and this is just shocking.

I hope the recent economic slowdown does not end up biting this family in the bottom. Household budgets is something I take great interest in (over the years, I've helped many people form a budget) and it is clear to me that this family has built themselves a house of cards. Their fixed costs are enormous, so much so that a turn for the worse in business or employment, could take them under, but not because they have an overinflated grocery budget (that could be changed with some hard work!), but because they have an overinflated mortgage and overinflated auto costs, etc. I've written so many posts about tackling the variable costs in a budget (food, utilities, consumer goods). But, if the obligations are massive (mortgages, car payments, students loans), cutting the food budget in half can't save you.

Presuming there are numerous families that have built a house of straw (and I'm certain there are), many families, and by extension the host communities, could be in for real problems if the big bad wolf starts to blow.

Read on [my notes in orange]:

LIFE IS UNAFFORDABLE
Dear Editor,
Today, after finally getting my kids back to school and catching up at work for the time I missed over Yom Tov, I opened up the four weeks of mail sitting at home. Maybe it was the timing that set me off, but when I opened my tuition bill for next year, I flipped.

Now, don’t get me wrong. As parents, we have committed ourselves for our children’s education to be top priority. That bill will, iy”H, be paid in full by hook or by crook. The teachers and the school staff members deserve decent salaries. But for three children, my bill was well over $20,000 [high, but it could easily be double]. What is so bothersome is that in this particular school, the tuition came out to be $8,000 per child and it goes up every year, yet the children get off every year more and more. This tuition is supposed to cover 10 months of the year. When you go through the calendar, you’ll see that it actually covers less than 8 months, which brings it to over $1,000 a month per child.

This led me to go through my expenses for the year and see exactly what my necessary living costs are and what I can cut out.

Truthfully, I am not sure how people survive. We have three kids in school and one baby at home.

Tuition is $24,000 (this includes the extra book charges, dinner charges, and the building fund fee, which we are required to pay).

Camp costs $4,000 for 3 children. One child goes to sleep-away camp. [Having seen what many camps charge, I believe cost is on the low end for camps, especially since the child in sleep-away camp is being fed].

Our mortgage, together with our homeowner’s insurance, is $48,000 a year [$4,000 a month] (and we bought our home before the prices got out of hand. Our property, even in today’s slumping market, is worth double what we paid for it). [I assume this includes tax also, but I'm told property tax is not overinflated in the boroughs. So, even if the property is worth more---which in my opinion is only meaningful if you go to sell it--$48,000 is an incredible amount of be paying on a mortgage].

$30,000 is spent annually on groceries [$2,500 a month]. This includes Yom Tov and extra shopping for the baby. [You have got to be kidding me!!!!].

Utilities cost $32,000 [$2667 per month]. [Once again, you have got to be kidding me!!!! Having been involved with shul budgets, I know you can heat and air condition a fairly large building on $32,000 a year. This is ludicrous].

$17,000 is spent on health/dental insurance. (If not for dental insurance, I would be including $20,000 on procedures done last year on my husband and two daughters). [$1416 per month. I don't know what private insurance runs. It seems overinflated to me. But, perhaps it is not so]. $16,000 is spent annually on car expenses, car insurance, and gas (since we both work and need to drive a lot). [$1,333 per month. A lot of money, but perhaps this part of the budget is the first reasonable line item].

This adds up to $123,000. This means that before taxes and maaser, we need to make a minimum of $170,000. In most cases, this requires both parents to kick in financially. [I don't dare open up this discussion again :)].

Therefore, we also need someone to watch our baby and need to hire help to make sure that the housework is done. In addition, for 2 of the 10 months that our children are home from school due to days off, we have to spend extra money to entertain them [the word "entertain" makes my skin crawl, but that is a subject for another post]- through school sponsored programs or other programs - since my husband and I cannot take off (our jobs don’t give us off for 2 months a year). This costs approximately $50 a day, which comes out to $2,000 a year. Our household help costs $22,000. This brings the family income to $194,000.

For the summer, we move upstate for income purposes. We spend an additional $10,000 on a bungalow and expenses. This brings the number up to a minimum of 204,000- and at that point taxes increase and so does maaser [I start my budget not from what we have to earn, but from what we have to spend from the primary income earner's budget after saving a set amount. Just noting this because this method of laying out a budget is strange to me]...

Remember, this is a 6-member family and we try very hard to monitor our expenses [whatever you say. . . .your food and utility budget would eat through our entire take home pay]. However, often, time is more valuable and we have to spend more on food so that we can spend more time with our children; we might shop at a more expensive local store than run around to cheaper stores. In this cheshbon, I did not mention clothing and other items such as Chol Hamoed trips, Afikoman and birthday presents [thank G-d. I think I'd faint if the cheshbon included those numbers], etc., but I think you get the picture. [Nor do you mention life insurance or retirement savings which is an absolute MUST, especially for a family spending like this].

After making this calculation, I started wondering. My spouse and I both work full time. We both try to make sure that when the kids are home from school - on school days - one of us is home with them. Sometimes it works and sometimes it doesn’t. We saved money when the going was extremely good. We also bought our house before the market exploded, so our mortgage is pretty reasonable for our neighborhood. But there is a whole generation that is graduating school now. They need to be able to live. Something in our society is going to have to give. We may have to create a secluded culture where we are all committed to hiring from within, but then we also need to make sure that our boys and girls are qualified to perform these jobs [I'd say a large part of the spending/budgeting issues just might be the already secluded society. Unfortunately, it is an uphill battle to educate about a different way when there is little to no exposure to it. And, yet, the spending habits I've highlighted on this blog erode the financial foundation of so many that I can't help but to try to be a small voice out there].

I know that this letter will probably have people writing in about how I could save money here and how I could save some money there. (I know I could. I could also move out of Brooklyn to Eretz Yisroel.) But the reality is that, boruch Hashem, I can afford to pay more than maaser, and I can afford to pay more than the tuition bill. As I see it, however, there are more of us who can’t afford basic expenses and these numbers increase daily. Our school system may need restructuring [darn right!], food prices have to come down [they are going up], our baalei battim may have to commit to hiring only frum people [they have bills to pay to, nu?], and other things have to be done [like a complete economic overhaul?]. But we need to start making changes and we need to start making them quickly. The economy is definitely not working in our favor. I hope to hear positive feedback.
C. K.

P.S. Check out some of the comments on ProfK's post, New York the center of the World. . . Not" written by those who left or want to leave NY and the parents/in-laws are hot under the collar about it. Yes, as the letter writer says, "we need to start making changes" and "something in our society has to give." Living in Brooklyn (or anywhere else that housing costs are out of this world) is something that will have to give.

Asking for Payment Equals Lacking Tact????

The following appeared in Rabbi Ginsberg's chinuch column in this week's Yated, which focused this week on character development:

A teacher once shared with me a troubling incident he experienced. A student of his babysat for his children one evening and he promised to pay the student the following day. The teacher was troubled that the student requested payment the following morning and didn’t wait for him to make the payment. He thought that it was possible chutzpah.

I told the teacher that the child was not being disrespectful at all. At the most, the child may have been missing tact, as a student should not demand payment from a teacher, especially the morning after. However, I encouraged the teacher to view it from the eyes of the student, who is, after all, still a child. In the student’s eyes, payment was due and there was nothing wrong with asking for it.

Presuming a payment was requested politely, I certainly don't think it is chuptzah to request money due, nor do I think it lacks tact. Of course, the entire "troubling incident" would have been avoided completely if the pay was handed over by the parent upon returning from a night out. Personally, I wish I was more comfortable discussing pay (in advance). Like most females (I have to wonder if the student referred to was male or female and if the gender played into the accusation of "possible chupzpah" or "missing tact"), I get very uncomfortable discussing pay and/or pressing for payment. The female gender, in particular, has generally been conditioned to confuse work and chessed, oftentimes putting up with no payment, late payments, and/or undercutting business. Where does that get the self-employed/contractor? Unfortunately, not to the bank. Two years ago, I wrote a post offering some tips on discussing pay and ensuring timely payment. Two years later, I'm still working on taking my own advice.

A student who had the guts (or lack of tact, if you prefer) to ask for payment might just be cut out for working within the community and owning a business, perhaps a grocerybusiness. I have seen a handful of letters regarding non-payment and/or tardy payment of debtors and I have had readers write asking me to bring up the subject of just how difficult it is to collect payment when dealing with frum customers and how they are made to feel like beggers when they are rightfully owed money and have even paid expenses related to the job out of their own pocket (perhaps even pushing off their own creditors). So, I hope to continue the discussion on that from a variety of angles.

In the meantime, here is a letter regarding some kosher grocery stores that have banded together to plead with those they have extended credit to to pay up. The fact that business owners have to pay for another ad to ask for money they should have been paid already (or for which a payment plan should have been put into place) is the real chuptzpah.

WHAT A WORLD
Dear Editor,
I was appalled to see an ad in a local
circular from grocery stores asking customers to pay up their balances. Can you imagine? Stores have to band together to get people to pay money that they owe? Why haven’t these people paid up their bills until now? The stores are gracious enough to offer credit, but why do they have to beg people to pay up? Where is the yashrus?

I understand that many people literally don’t have money. Well, you know what? Neither do I. I live day-to-day and dollar-to-dollar. And I only buy the very basic necessities, because I can’t afford more. And yet, when I go into the supermarkets, I see people loading up their wagons until they are practically overflowing. These people then go to the check-out lines and tell the cashier to “put it on my bill.” The cashier then points out to them that they already have $800 on their bill and that all accounts were supposed to be paid up already. I have witnessed this many times. And these people’s children stand there and watch this exchange. What kind of chinuch is this? What kind of generation are we bringing up when storeowners have to plead and beg bechol lashon shel bakasha for people to pay their bills?

Sincerely,Yosef Schorr

I'm afraid the type of chinuch that is being offered is one of cynicism because the kids witness a world that lacks in Yashrut and they see their parents might also be lacking. How different than the chinuch I got from my parents wherein every single bill (invoiced or uninvoiced) that was due was paid immediately and wherein my mother was usually the first to ask, what do I owe you?

Economic Terrorism



There is a very disturbing trend, witnessed in Eretz Yisrael, that seems to have hit the shores here in America recently. You don't have to go back further than the past two months for two examples of what I would only consider economic terrorism: the threats made to a wig store on Coney Island Ave and the cancellation of a concert dubbed "The Big Event."



The wig store story is bad enough. What is purported to have went down with "The Big Event" concert is just downright scary, even if you have little interest in pop Jewish music, don't ever plan to take your kids to a J-Music concert, or prefer a "goyish" philharmonic concerts as I do. Stories of Economic Terrorism in the frum community should concern you greatly.

The short of the long, based on what I can deduce, is that a concert was scheduled for March 9, in Madison Square Garden, featuring two singers, Lipa Schmeltzer and Shlomie Gertner with a charitable beneficiary (Simchat Zion, that makes weddings for orphans). Some Askanim (one by the name of Asher Friedman who reportedly heads a different charitable organization that gives tuition assistance) set out to shut Schmeltzer down and convinced nearly three dozen known rabbonim to sign a Kol Koreh.

All involved in the concert (tickets had already been purchased and advertisers had paid for space in the booklet) where unexpectedly rear ended. Lipa backed out of the concert first. Shortly after, he announced he was doing "teshuva" and turning a new leaf with his music. Next, he backed out of yet another already planned concert in London. Shortly after, the show was completely cancelled. Hundreds of thousands of dollars have been lost to the concert organizer (interviewed here), to say nothing of what was lost to the charitable beneficiary.



The whole thing is a massive train wreck. Down payments were made, services were procured and completed. Money has been lost and more money will have to be found to reimburse advertisers and ticket holders. Judging by the interview of the Concert Organizer linked to above, there is some sort of money that will be made available somehow to even the score. OBVIOUSLY since money doesn't grow from trees, if/when money is raised to reimburse those who lost money, less money will be available for other causes. [I don't have the play-by-play nor do I have time to get the play by play, but Chaim Rubin seems to have most of it].

The Jewish Star interviewed signator Rabbi Shmuel Kaminensky, who says that “[the request for a ban came] from rabbis in Eretz Yisroel. We didn’t want to differ with them," "[The request was] from mouth to ear and everyone went along with them,” "They [presumably the community activists/busy bodies] said was that it was a request from Rav Elyashiv and Rav Steinman. I didn’t confirm that,” and "Usually we meet together. This time, with time pressing, we did not get together. And maybe it was not the right thing.”


Yeshiva World commenters are praising Lipa for listening to Da'as Torah (practically crowing him the next "gadol hador") and praising Rabbi Kaminensky for his 'anivus.' The Concert Organizer is begging everyone not to blame the Rabbis and saying just how helpful they have been. Others are saying the entire Kol Korei was a fake or doesn't make sense (Rabbi Shafran), But, no matter what, there is a lot of damage is done.

I'm glad some can find the positive in all of this because I am REPULSED by what I have read and listen to, and I've only skimmed the surface and have no contacts. Others might be able to find the positive, but I have pieced together an ugly story of deception, sloppiness, and economic terrorism. I am repulsed that mafia men are allowed to run wild terrorizing Rabbonim, businessmen, and musicians, endangering others parnasah. If there is a need for change (and there probably is a need for change), this is clearly NOT the way to bring about change. I am repulsed that these mafia men have the tools to terrorize, and unfortunately the tool of choice is these Rabbonim who seem to be holding a rubber stamp. I am repulsed that Rabbonim appear to be used again and again and have yet to create (or called on others to create) a better system to disseminate information. I am repulsed that Rabbonim take their rubber stamp without doing their own homework. I spent a number of years in auditing and learned that you can't be too trusting, even when the person should be someone trustworthy. You always must do your own homework. I'm sorry to be so harsh, but where is the concern for other people's parnasah? Where is the concern for the community's money?

And what about others who make their parnasah partially or primarily through working with other people in the community. Would you want to go into business in this environment? Fortunately, I'm only an observer living outside of NY and Eretz Yisrael. But who knows when heavy handed economic terrorism will hit other large frum communities (I can think of examples of smaller terrors).

Ultimately, no matter who pays who, you can't "even the score." No matter how you play with the numbers, hundreds of thousands of dollars have been taken from the klal.

(Please do try to keep it civil, even though that IS asking a lot. I will be away from my computer starting tomorrow).

Our Finances: Now is the Time to Get Involved

A few years ago I helped introduce a newly widowed lady (non-Jewish) to her finances. With the exception of the checking account, she had no idea what assets she owned, where they were, or how to access them. Dealing with the death of a spouse was difficult enough. Having to deal with her own insecurities regarding this unknown territory only compounded the loss. The issues she faced were not particularly surprising, as she was in her 80's. The fact that there are (frum spouses among us) who haven't a clue, however, is unacceptable in my opinion.

This is an issue I've been aware of for a long time and have been planning to write about (I've even had requests by email). But, there is too little time and too much to say. However, when I spotted these two threads on the Imamother Chat board, I had to move this topic to the head of the class. In one thread, a poster asks the women "Do You Get An Allowance?" I opened it up, thinking it was a discussion about giving allowances [to children], only to find out that there was no grammatical error and the thread was, in fact, about receiving an allowance from one's husband. Ugh! One poster writes that her husband provides her with $200 a week for household needs. Lovely. Another poster asks "Who Pays the Bills?" Personally, I don't care which spouse actually pays the bills, so long as it gets done properly. But, this thread revealed further disfunction as posters revealed that they they are sticking their heads in the sand, not wanting to know too much about their own finances. One poster describes herself as "happily oblivious." She does not know what the monthly expenses are, where important documents are, etc. G-d willing everything is healthy, because it would be terrible if she husband has built a house of cards, chas v'shalom and she hadsn't a clue.

And speaking of disfunction, try this on for size. A poster writes: "For a while I did have my own separate bank account . . . . I was advised by another woman to have my own account as opposed to having my paycheck going into the joint account, because there might be extras that you want for the kids that your [husband] doesn't need to know about." Excuse me for giving unsolicited advice, but hiding expenses from one's spouse is a fast way to undermine trust and end up in Beit Din.

Anyone (male or female) that doesn't want to end up "up a creek," today, tomorrow, or after 120 should take my advice: if you are not involved in your family's finances, today is the day to get involved. Now this does not mean that you need to start taking over the spending, bill paying, coupon cutting, bargain hunting, savings, investing, planning, or bookeeping and tax functions. The person who is best suited for each function should be the person dealing with that function. It probably comes as no surprise that I deal with about 99% of our financial affairs. But, just because I have been designated Family CEO and CFO, doesn't mean that my husband shouldn't receive the prospectus.

At a minimum, each spouse should know the following, (even if you have to give your spouse the State of the Union address over breakfast, in between shows, or while he/she is on the treadmill):
*Household income.
*Household expenses, by category.
*What assets you have and where they are (a well organized file system and spreadsheets are essential).
*What debts you have, where, how much, and what plan is in place to pay them off.

To be continued. I'm just getting started (iy'h).

Insularity or Arrogance?

Rabbi Adlerstein has written a post for Cross-Currents titled "Silver Lining in the LA Scandal Cloud." Rabbi Adlerstein sees good things ahead now, that in the wake of this most recent scandal, Rabbonim and Mechanim are addressing personal honesty and integrity. He believes their efforts will help "decrease the likelihood of waking up to a different scandal in the future."

I might be one of the few bloggers who has the Tax Notes for this case sitting on my nightstand (lawyers, accountants, college students can access these through Lexis-Nexus or other legal search engines). Personally, I would not use insularity to describe the reason for perpetrating this fraud at all, but rather arrogance.

The sheer span, depth, and width of this complicated scheme, which evolved as it became more widespread and there were more tracks to cover, involved perpetrators from different subgroups of the Orthodox community, from a lawyer/businessman to the Spinka Rebbe himself.

I believe I have enough of a background with fraud to say that this is not a crime borne through insularity. Perhaps insularity combined with ignorance can bring result in small financial crimes, but arrogance combined with desperation is the brainchild behind complicated fraudulent schemes such as this one and others that we have been continually witnessing for at least the past 20 years.

I commend the Rabbonim for speaking out and trying to make an impact. I hope that their efforts will be well rewarded. But, I'm afraid that we must address desperation (!) side-by-side when speaking about honesty and integrity or we are wasting our breath. The more desperate, the greater a calculated risk one is willing to take. Normally, one doesn't rob a bank when they need $1000 or even $10,000. During an audit or investigation, a tip off that something just isn't quite right is evidence that someone is living far beyond their means.

A poster at Cross-Currents suggested that Choshen Mishapat should become standard for men and (especially) women (Why especially women? You will have to read the Cross-Currents comments. Personally, I don't think the women are the ones dreaming up these schemes). And on that note, I would also like to point out that parents need to make sure their daughters believe and act as equal partners in the financial dealings of their household. No one should sign on the line of their next 1040 Tax Form without knowing where the income and where the deductions came from. Every single one of these white-collar "victimless crimes" leaves a wife and children as the victims and I'm getting tired of it already.

Price Setting and the Shabbos Robe

Hat Tip: The Muquata and Lion of Zion

The JPost has an interesting article up about a Shabbos Robe cartel. According to the article, "growing concern over the survival of this niche market led a group of retailers and manufacturers this summer to form the Loungewear and Hostess Gown Council, which synchronized sale dates and markup prices. Sales are scheduled to be held on January 1 and on July 4, 2008, and the markup price for shabbos robes increased from 50 percent to 65% above wholesale."

Women who have waited for a "bargain" in the past are out in the cold this year and store owners, either unintimidated or completely ignorant of US Antitrust Laws, have even posted notices pertaining to this arrangement on their store doors. Amazing! (In addition, I find it hard to believe this is an industry in danger of survival, as it claims. Nor can I believe that markup was only 50% because that just doesn't seem like a sound investment in inventory for a proprietor. Sorry, just not buying it).

While I don't have a great personal interest in the price of Shabbos Robes (I like wearing them, but I can take it or leave it and at $150-$250 I'm sooner to leave it. . . . . fortunately there are less "exlusive" robes to be had), I do care a great deal about price fixing.

And, I'd like to know other ways (if any) that competition in the frum market is being intentionally thwarted?