Getting Started on the Right Foot:
Too Much Too Soon
A reader wrote me an email asking if I can provide some advice to those getting their start on how to build a solid financial future. I figured I would go back to a post I worked on, but never got around to posting, many months ago and use it to start a new series.
A financial planner interviewed in an advice column directed at recent college graduates warned them not to take on "too much too soon." If there was ever a better way of summing up how easy it is to erode a potentially financially healthy future it would be it would be by over committing funds far too early in the game. Next time you are ready to purchase a "big ticket" item or commit to a recurring expense, ask yourself "Is this too much too soon?"
The following is my own list of 5 "too much too soon" traps that I see young people, especially young couples fall into:
1. Too Much House
Whether you are renting or owning, it is a good idea to start small and increase slowly. Last year I got a call from a father of a chatan who was looking for a place to rent in our community. Someone gave the chatan's father my name believing I "in the know" about such things. The couple was only planning to stay only one year while the chatan learned, and then they planned to go to Israel where he would continue to learn. The kallah had yet to work a fulltime job in her life, wasn't willing to work more than 40 hours a week (even though 50 plus hour workweeks are standard in her field of choice), did not have a job lined up (and her field of choice is not big in this area), nor did she have any contacts (I provided her with some contacts). This couple would consider no less than a two bedroom apartment! Definitely a case of "Too Much Too Soon."
Another friend of mine decided apartment living was too hard they must have a home immediately. They were owners, but the wife was insistent that they sell now, although they could have walked away with a tax free gain if they had only waited another half a year or so. Soon after they moved I ran into her and found out they were renting out rooms in their home in the basement. I asked her if they liked the arrangement or if it was hard to maintain privacy with such an arrangement. She said to me, "we don't have any choice. It is the only way to pay the mortgage." Oy vey.
Ariella recalls an email that appeared on her community's listserve. A lady is looking for suggestions on how to get her property taxes lowered before closing because buying this house has thrown them "over budget." Goodluck there. Taxes rarely go down. Nor do utilities (larger homes are more expensive to heat and cool). And, oh, by the way, stuff breaks. Be prepared.
2. Too Much Car (Too New Car)
This is probably the easiest trap for young people to fall into. A good friend of mine was telling me how difficult it is for them to make ends meet and how much stress it causes them. They live busy lives and haven't quite found regular employment or jobs they enjoy. I have to say that I was quite surprised when a few months later, they drove up in a brand new car. It wasn't a fancy car, but it was brand spanking new, with that new car smell. And, yes, it was purchased on credit. They could have bought the same model car three to five years older for half the price. Another friend of ours had to reluctantly part with a really fancy SUV he purchased on credit for a loss because the gas was running something like $400 a month. He simply could no longer afford to drive it. Ouch!
The bigger the car, the more gas. The newer the car (and the younger the driver--especially those of the male gender), the more expensive it is to insure. My advice: save up and buy a reliable used car. They are cheaper to insure. If you can't pay cash, you can rid yourself of whatever debt you carry on the carry as quickly as possible.
3. Too Much Furniture
It took us a year into our marriage to buy couches and a table that sat more than 2 comfortably and four less comfortably. At the time, a kollel couple was headed off to Israel where the husband would continue his learning and the wife mentioned to me that they were trying to sell their furniture (they were married one year at the time). My husband was not yet convinced we needed a couch, but I thought it would be nice to have a comfortable place to sit down since I was already 5 months pregnant. I figured this would be a win-win situation. I could buy some lightly used furniture at a price my husband thought reasonable. . . . .that is, until I actually paid them a visit. This couple had bought upscale furniture at an upscale price. They had paid over over $10,000 for the dining room and living room set and were looking for at least $7000.
I don't know if they ever liquidated their furniture at their price, or if they ended up paying for storage until they returned to America. But I have no doubt that if they had spent a more reasonable amount on a new dining room and living room set, they would not have endured the loss they took by buying too much upscale furniture.
4. Too Much Baby Stuff
Even the budget conscious can fall into this trap easily. The first baby is such a miracle and a joy. The marketers know what they are doing when it comes to selling you baby stuff. It seems like you need everything and they can easily convince you that you need the item labelled for babies, even if you have a perfectly find cup, plastic plate, or stool laying around. Most baby equipment is only good for a short period of time. If you insist on actually buying a swing, bouncer, carrier, etc, etc, etc, it is time to get acquainted with a nice consignment shop where clean, lightly used equipment can be purchased.
A post wouldn't be complete without a word on strollers. I'm sure the lobby in your shul looks like an upscale baby store's stroller display (I know that mine does). I do believe in buying a quality stroller. But, cost, quality, and function aren't always in a direct relationship and plenty of mothers who have bought a "status" stroller have found the darn thing doesn't really meet their needs. If your stroller purchase wipes out your savings, you are definitely spending too much.
5. Too Many Services
Cleaning help, haircuts, sheitel wash and sets, dry cleaning, and telecommunications can easily suck a budget dry. For the services you can't avoid, it makes sense to seek out a reputable, but less expensive service. When we first married, I dropped my husband's suits from the wedding and pre-wedding at the local dry cleaner that I saw people from the community going in and out of. The bill was big enough I felt like we just paid for half a suit. Soon after I learned that for those times we do need a dry cleaner, that there are cleaners that charge less than $2 a piece.
I've taken some heat for mentioning that cleaning help sucks a budget dry. People who go the cleaning lady route don't want to turn back. My advice: avoid starting down the cleaning help path and learn to divide and conquer.
Tuesday, January 13, 2009
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"telecommunications can easily suck a budget dry"
the first thing to go should be the cell phone data plan (unless you need it for business)
"Most baby equipment is only good for a short period of time."
but you use it over and over for additional kids
agree 100% about the furniture. and even the expensive stuff these days is still crap anyway
"They could have bought the same model car three to five years older for half the price."
buy a 5 year old car and you take a serious a gamble. and i know you don't approve of gambling.
i think we've had this discussion, but i don't consider a new car to be a luxury. i mean if you can't afford it then you can't afford it and you shouldn't get a car. and even if you can afford it doesn't mean you need a escalade. but for people who do have some amount of cash (or access to reasonable credit), a new (or mildly used) car is better bet.
The cleaning lady was the first thing to gp for us once the economy went south (much to my wife's shegrin). $140 a month comes in very handy with other expenses.
I agree with your basic premise, up to a point. Some things it pays to invest in, because good quality items may last much longer. In terms of a house, I think there are a few points to be made. Unless you're buying a house in order to gut it, I would hold off on remodeling until you've had a chance to live in the house for a while and get to know its quirks. The home inspection doesn't really tell you what it's like to live in the house. My brother-in-law says that you have to live in a house for a full year to know what you need and don't need -- to learn about the heating and cooling systems, things like how the appliances perform for Yom Tov, how's the Pesach storage, etc. And you can save a lot by holding off on the cosmetics, like interior painting. My relatives spend $33,000 (!) painting their house inside and out. OK, they can afford it. But it's just for show, and kids will ruin new paint and carpet pretty quickly.
Dave Ramsey has a couple of useful rules of thumb regarding the house and car purchases that I would like to share:
Re: the house. In order for the house to be a "blessing" and not a "curse" do not buy a house UNLESS you can follow these guidelines:
1) are out of debt (and that includes student loan debt!)
2) You have 3 to 6 months emergency fund built up
3) You have 20% to put down
4) Your payments on a 15 year fixed mortgage are less than 1/4 of your take home pay
Re: how much car is "too much":
Total value of your cars should not be more than 50% of your household income. If it is, you've got more car than you can afford.
My own take on cleaning help:
I hated being a boss and I can't afford it anyway. My house is very dirty!
LOZ sez regarding the car: "if you can't afford it then you can't afford it". Unfortunately many people have no idea how to figure out whether they can afford someting. For years my husband's reply to my question of whether we can afford something was a shrug and a "Well, we need it." Many thousands of dollars in debt later we have learned our lesson!
(LOZ this is not intended to be a commentary on anything you said -- just using your statement as a springboard for my own 2 cents.)
Someday I will get around to writing that guest post on the lessons I have learned!
i wasn't aware that painting is so expensive
but a friend of mine skipped paining when they moved in and then regretted it. it's a lot easier to paint an empty house.
our apt. is actually way overdo for a painting (and the landlord is obligated to pay), but we haven't done it because it is too difficult.
Late model low mileage used cars are the way to go.
They are still under the original warranty, and they are much cheaper.
Caveat: If you buy a used standard transmission vehicle, make sure you can afford to replace the clutch. You have no idea the state the clutch is in.
"Most baby equipment is only good for a short period of time. "
This is true, but if you plan on having multiple children, it probably comes out even, or close to even, to invest in quality things like swings and carriers, and certainly carriages/strollers.
We've used the same swing for all three children and it still works great (probably because it's an old wind up model). Our stroller looks new but, again, it's on its third child. My friends who bought cheaper models with their first had to buy new ones for the third child because literally the wheels fell off or the seat fell apart. How is this saving money?
I usually think that the blame lies partly with parents of the couples. The young families that I see that have expensive furniture, new cars, etc. are almost always the ones where the parents offered to pay for it or offered to support the children.
I happen to believe that the best think a parent can do for their children is to tell them that the moment they stand under the chuppah dressed in white the y are on their own (of course as for paying for the wedding I believe parents should give the couple a reasonable budget and let the couple plan the entire event, you learn a lot from that).
Many more couples would realize that they can't afford new things if they only have the wedding gifts to spend instead of the parents credit card.
As for buying expensive things because they are better. Sadly I have too much experience here. Expensive doesn't imply better. When we are making a big important purchase we do research into quality. Most quality furniture and appliance nowadays are meant to last 10 years, no point in spending $10,000 on a couch that's break in 10 years and have your kids ruin it. Last time I checked a $1000 stroller didn't last any longer than a good quality one for $500 or less (and it costs more that our monthly rent when we lived in the states :) )
Some baby products such as bumpers and sleep position aids have been known to suffocate babies. Log on to kidsindanger.org to see what is safe. Some of the expensive, new stuff out there is dangerous. There has been lead paint found on high end cribs. Don't pay extra for a crib with a drawer under it. Those drawers break the moment that the baby decides to climb into it. Someone that I know recently bought a $90 high chair from a large baby mass marketer. The harness release button became dislodged both on the original and replacement harness. Both the store and the manufacturer now refuse to do anything about it because the chair was bought more than 6 months ago. The first time that the button became dislodged, it had to be extricated from the baby's mouth, cutting her in the process. I have been helping this couple fight for a new chair but so far, they are stuck with it.
Bottom line is that sometimes consignment is a better deal because it is already tried out. These stores watch for recalls and any consumer can check this. Status strollers might be found for half the original price on craigslist. When shopping for anything with a safety harness, check it out carefully and search the web for ratings. Do not buy a drop side crib. The cheap cribs at Ikea are safer than any drop side crib. Do not purchase odd sized baby bottles because nipples come with hole sizes for different ages and the nipples for odd sized bottles are hard to find. This stuff now needs to be BPA free. Spend the extra money on fragrance free baby products since the synthetic fragrances contain harmful chemicals.
Baby equipment should be high-quality for parents who plan to have many children. However, a Graco or Peg Perego stroller is sturdy and stable and runs less than half the cost of a Bugaboo.
For people planning to rent living space short-term, absolutely go with the smallest place that will be livable. It's cheaper to heat/cool, and cheaper to rent. $50 a month IS money. When you're buying, it's a little different. You don't want to outgrow a house after 2 years. On the other hand, you can have more than one child in a bedroom, and with creative furnishing, you can even make it comfortable (it's a lot cheaper to buy bunkbeds or two loft beds than to buy a new house.)
For couches, I highly recommend IKEA for people who plan to have children. There are few things worse than having your one-year-old vomit on your $10K couch... inexpensive couches with washable and replaceable upholstery are likely to serve better in the long-term, especially since you're often paying for the design and not the quality.
"you can have more than one child in a bedroom"
i'd like to know when it became illegal to have multiple kids in one bedroom.
Depends on what kind of deal you get on a car. My last car was purchased new, but it was a better deal than I could have gotten on a late model used car. It was the last of the old model year (a standard transmission that the urban dealer had trouble selling; the manufacturer requires them to take a certain number of manuals which are unpopular for urban driving.) I paid about the blue book for the car used. Late model used cars tend to be either leased vehicles or renals and have more accessories than I need, which you pay for.
re: new cars- i have found that you can excellent deals on new cars via a lease. im not sure what ur position is re lease v. buy. i was in a position recently where i needed a mini van my options were new, good used, bad used, or lease. for someone who's budget is tight i went with the lease- no $$ down and 300 a month. dont have to worry about repairs. with financing charges- surely buying would have been more expensive. buying a good used car, like 3-4 old was still pretty expensive (in the $17,000-20k range.) and really older models- with 90,000 miles, i felt wasn't worth it. so i leased. am i crazy?
More baby gear discussion:
Before buying, check with both the store and manufacturer about the return policy and what they do about defective products.
Car seats are only good for 6 years due to changes in auto manufacturing and even if the car is the same for longer, climatic changes wear the plastic out in 10 years, necessitating the purchase of a new car seat. Find a place to store all receipts for any baby gear, electronic item, appliance large or small, furniture, or expensive toy. Receipts can be like money when something goes wrong.
3. Too Much Furniture...solution, thy name is Craigslist.
but you use it over and over for additional kids
My own experience regarding baby equipment is that the first kid uses everything and the kid after that uses the same things less. There is just a different dynamic.
I do think buying a quality stroller (which does not have to translate into a stroller with the price tag equal to a small mortgage payment) is a good idea. But even with the stroller, I've found that I use the stroller less after the first kid.
"Expensive doesn't imply better."
100% correct. In fact, my $30 Target store brand high chair has served us well. My grandmother a"h asked us to pick out a high chair as her gift and was a bit taken aback when I only spent $30. My mother told me she thought that high chair would serve our needs best because of the simple construction (eaiser to clean) and I'm glad I listened.
Our used cars have served us very well is all I can say vis a vis the new vs. used. We have been driving each for 10 years now (one was only 3 years old, the other about 10), and while one will need replaced in the next few years, the other won't. If you average our cost over 10 years, the cost for both cars combined is less than $1,500 a year.
I helped by parents bargain for a used car (former rental) 15 years ago. If you average what they paid over 15 years, it comes out to less than $1000 a year now as the car is (happily) still going strong.
nyfunnyman-I think leasing is a bad deal. You pay all that money and don't own the car. And cars today run for a long time.
I disagree with the comment about buying things that are an investment, in the context of this post. SephardiLady is talking about people who do not currently make enough money to pay cash for these items. So rather than being an investment to purchase better quality items, they are putting it on a credit card and paying the interest, in some cases never completely paying it off so the interest keeps building.
(If we were talking about people who make an income where they can actually afford these things, than certainly it would be better to get something better quality - though, as commented above, this doesn't have anything to do with the brand name on the label.)
"3. Too Much Furniture...solution, thy name is Craigslist."
Be very careful with this in the NY area- I would not buy used furniture due to the chance of getting bedbugs.
nyfunnyman - dont have to worry about repairs.
Yes, you don't have to worry about repairs ... until you return the car at the end of the lease. In general a new cars has many fewer repairs than an older car, but the leasing companies will insist that you return the car to them in almost perfect condition (yes, after 3 years, they will make you buy new tires, and they may even make you fix all the small dings in the sheet metal). If you are planning on buying the car at the end of the lease period, you will almost always be better off buying it to begin with.
Sephardilady - In fact, my $30 Target store brand high chair has served us well. My grandmother a"h asked us to pick out a high chair as her gift and was a bit taken aback when I only spent $30.
For our first child, we went out and bought the nice highchair with all the "features" (probably more than $100 at the time, I think it was a Chicco or something like that). We used it for 2 or 3 kids, and it was good, but was very difficult (to impossible) to clean properly. You should have seen me outside with the hose and the brushes every year on the day before erev Pesach!!! It took a good few hours to take the thing apart and get it properly cleaned. We purchased a new "pad" for Pesach, but the rest of it had so many nooks and crannies that had to be individually cleaned with a small brush.
For our twins, we purchased cheap $20 each), simple, high chairs from Ikea -
These high chairs are great in many ways:
1) Very easy to clean. Takes less than 3 minutes for a regular cleaning, 10 for a yesodi cleaning before Pesach.
2) They don't force you to keep the child far from the table. They pull up right to the table like everyone else in the family eats. Wow, the kid is actually part of the family during mealtimes.
3) The child eats on the table surface, not a plastic surface which is much better for kashrut purposes.
I think what we might be missing here is the "live and learn" aspect to life. When I was young and people gave me financial advice, parenting advice, and career advice, it was hit or miss as to whether I listened. At a certain point I even consciously realized that I was making my own mistakes, but I was making my own decisions and living my own life. Young people are notorious for not listening to good advice.
The mistakes that can and should be avoided are the ones that come about when older people (parents and in-laws) enable the mistakes, by supporting children beyond what they need and by encouraging grown children to make irresponsible financial choices.
And the future is hard to envision. During my years of infertility treatments, if someone would have told me with perfect foresight that I would have 6 kids and I should be saving every penny for future tuitions (even if I would have believed it), I doubt I would have had the discipline to forgo dinners out, vacations, etc.
Leasing a car is almost always a bad idea. A lease period is ~3 years, while the useful lifespan of the car is ~12 years. During the lease, you pay all of the depreciation of the car, and for most of the actual cost. Either buy the new car, or buy a recent-used car: that way someone else has paid for the depreciation.
One good source for used cars: places that accept returned leases...
The IKEA antilop chair is GREAT - we have it and love it. I highly recommend IKEA for most things - though I've heard negative comments about their beds.
For a young couple starting out, I'd recommend buying decent mattresses and box springs and maybe even forgoing a frame for the bed entirely.
Mark - we use the IKEA chair with a tray - but since the trays are sold separately, we have separate trays for milk and meat.
You are right, making mistakes are crucial, the question is the magnitude of the mistake. If you spend $200 instead of $50 for a baby product it isn't going to affect the rest of your life. A bad mortgage, debt of ove $20,000 is likely going to make your life miserable for a very long time. The point of this post is not about the best high chair, but about extremely big mistakes that young couples are making which have the potential to ruin their lives.
As a parent you have to let your kids make mistake with money when they amounts are small. Waiting until they are married with a kid is going to backfire. I've met plenty of young people in their early 20s who have never dealt with money and are now making horrible financial decisions
Anonymous-I agree with you that there is a learn as you go element to personal finance. It is one thing to make the little mistakes mentioned above, although even the "little" things can and do through people for a loop.
The big mistakes are really problematic and I see them over and over again. Too much house and too much car are two biggies. Too much student debt is another. Investing before one has a cash cushion is another, especially it one's investment needs fed cash from time to time, such as in the case of a rental or a small business.
A "lifestyle" can become an addiction, which is why I don't think it is good to get used to certain conviences when there are alternatives.
My response to original post and to the comments is "it depends".
Outgrowing an apt or home soon after your original purchase will create additional short term costs (closing, moving, selling etc, prior to any significant appreciation.This potentially could have been alleviated by a better understanding of what you could afford over what you actually currently need. I see many young couples who are forced to move multiple times with the addition of each child. 1 bedroom apt --> 2 bedroom apt --> 3 bedroom house, no basement --> 4 bedrooms with a basement.
Housing decisions should be made based on affordability with a mind to future needs for it to be a good investment. Personally, I think Ramsey is too conservative, and not realistic, about when you can afford to buy a house.
Depends on what you need the car for and the annual mileage you will put on. If you need it for work (PT, OT, Speech) you need something reliable, late model/low mileage. If you don't you can get away with an older car. Lease only if you can afford it, it's not a way to save money that's for sure.
Again, my parents spent money on quality furniture when they got married and still have the furniture today some 30+ years later. If you can afford it without going into debt this might be a good "investment".
Too many services-
Depends on your workload and lifestyle. The cleaning help discussion keeps coming up on this blog. My thought is that no one can judge anyone else's situation. Some people cannot survive without the help and some can, there is no overarching rule about this. If both spouses work FT jobs it may not be feasible for them to also clean. Maybe they even can, but should they is the question? Maybe they are better off (emotionally, psychologically) having someone else clean.
SL- Too much student debt is subjective. What's too much for a lawyer? Doctor? CPA? Teacher?
They are all different. Long term goals also must be taken into account.
I am a big proponent of utilizing student loans to increase your long term earning prospective. Yes, MBA's earn more then non-MBA's. Their may be no ceiling for an MBA from a decent school. The odds of becoming a VP or CEO are greatly diminished by not having a graduate degree. I currently have 2 masters degrees and have gone graduation to 6 figures in 3 years. I work a 45-50 work week.
SL - Now that we've been married about 5 years, I can look back at our decisions and compare them to what we should have done. I'm not sure you're correct about all of these, though it's a good set to start, so I'm going to add my two cents:
1) Disagree (mostly). We thought this when we started, so we got a 1-bedroom apartment. At the time, rent for a 1-BR was $950 (climbed to $982 in Year 2), a 2-BR would have been $1,100. It seemed that the $150/month was not worth it for something we didn't need. Just two years later, when we needed a 2-bedroom, we ended up getting lucky and finding a 2-bedroom at $1,500/month, which is now $1,650/month. [Get out of NYC, I know - working on it. :) ]
In total, the amount we saved in Years 1 and 2 ended up costing us far more in Years 3-5. Had we taken a 2-bedroom to start and stayed there, due to NY rent increase laws, our rent now would be at about $1,300 maximum (though I suspect less).
I'm not going to calculate the TVM of the difference in time, which would only very slightly minimize this difference, but a safe assumption would be that had we originally started in a 2-bedroom we would have saved on rent alone about $6,000 in 5 years, or about $100/month. Our total spent on rent in 5 years is about $79,000 (omg, I'd never actually totaled it like that before - that's painful). It would have been a little over $72k otherwise.
In addition, each move costs money - moving costs, days off (if applicable), packing costs, and other less tangible costs. Our move was within a neighborhood, and we could do some of it on our own, but you'd have to put at least $1,000 even for a simple local move like that on a Sunday.
Plus, we'd have had the comfort of a larger apartment during those early years.
The reason I said (mostly) to start is that obviously every market is different. I'd guess, however, that most heavily Orthodox young couple areas have rents which rise faster than other areas. As many if not most frum couples have a kid within the first two years of marriage, and certainly if the couple has reason to think they would be within that majority, starting out in a two-bedroom and locking in a lower rent for a long time might actually be a very good idea.
2) Agree (mostly). Certainly in NYC, and likely in many other cities, one does not even need a car at all. We didn't get a car until we'd been married for three years, and my wife needed one to get to her job. Re: Buying vs. leasing, however, that's a bit trickier - some people don't have the means to lay out a few thousand for a car, and insurance costs (especially if the couple is young) could be substantially higher. When we looked into both when we got our car, we found we were better off leasing, at least this time around. There's also the higher maintenance costs of an owned vehicle, which a young couple meeting a tight budget might not be able to handle.
3) For sure! Or more importantly, find great furniture for cheaper elsewhere. We bought all of our bedroom and living room furniture for about $3,000 - two couches, two nice chairs, 2 wall units, and a full bedroom set in great condition. (And two new full-size beds/mattresses - some things you really don't want used.) Meanwhile, our console table (referred to by our guests as The Magic Table) is amazing, going from a small desk to a table we've had 14 people around in a couple minutes - something young couples should try to find. They're cheaper and save room.
One problem here is attitude: When we got married, Serach commented to a friend on their having spent a lot more money on fancy furniture. She replied that sure, for people like us (SerandEz), it's easy to say we'll get decent but not great furniture - at some point later on, we'll be able to buy ourselves a nice set. Her husband was going to kollel, and she figured this was their only real shot to have a truly nice standard of living.
4) Amen. We've been lucky that Serach is the youngest of four girls, and the family just sends clothes back and forth for each kid. We've spent less than $200 in my estimation on all clothes for two kids in almost 3 years. (Excluding gifts from grandparents, etc.) We spent less than $160 on a great double stroller that's super-adjustable and gets plenty of "wow, that's a great stroller" comments (for those who like the stature). And when it broke a bit, they sent us another.
5) Agreed. Each specific depends on the people, what's available, etc., but most can be cut or cut down. We used to get a cleaning lady when both of us were working full-time; it saved us a lot of headache on busy Fridays. Now I'm home and Serach doesn't work Fridays, and we're saving that $100 or so a month.
Now I gotta read all the comments... geez! :)
trilcat - we use the IKEA chair with a tray - but since the trays are sold separately, we have separate trays for milk and meat.
We purchased the two high chairs without the trays (but I did see the trays at the store) and brought them home. If they wouldn't have fit under the table (and the just fit perfectly), then we would have gotten the trays, but we really like that the entire family can eat at the same [kitchen] table together.
Ezzie-I think you make a better argument for staying out of highly populated frum areas where demand continues to increase exponentially. I just did an apartments.com search and it seems that the apartment I lived in about 10 years ago isn't renting for that much more now.
Ez's comment about the effect of NYC rent laws on housing, and my experience with car deals should make clear the need for clear analysis of financial choices, rather than relying on rules of thumb.
SL - While I agree, I'm not sure it's necessarily realistic to avoid. When it comes down to it, people want to live in an area with a ready-made infrastructure; young couples in particular are often forced to be in certain areas if one or the other is in school, in a residency, etc.
I'd have to agree with Mike's comment. At the same time, recognition that the ideas set out here are important to look into alone would help a large percentage of young couples avoid major early pitfalls.
Sephardilady - I think you make a better argument for staying out of highly populated frum areas where demand continues to increase exponentially. I just did an apartments.com search and it seems that the apartment I lived in about 10 years ago isn't renting for that much more now.
I also have to wonder if spreading out the frum population might not be healthy for frumkeit.
Ezzie, you're paying a premium to live in NYC, which you seem to recognize. I don't think your personal examples even really apply to couples who start out in Queens or Riverdale. As for infrastructure, it's not impossible to live a frum life in the boondocks.
The bare bones infrastructure that you really need to be frum is a shul with a decent minyan, a mikveh and reasonable way to get kosher food. Everything else is just a way to spend more money.
My parents moved from Queens to Stamford CT 30 years ago and that's what they had (shul, mikveh, and they bought kosher meat in Queens, a 40 minute drive.)I grew up there and it was a great life, even though we never even had a pizza store!
In most out-of-town communities, a family needs a car for each driver. There is not much in the way of public transportation or grocery delivery and everything is spread out. Some public roads are not very accessible to pedestrians. Some apartments will not rent to large families and have restrictions on the amount of people who can occupy an apartment. In some out-of-town communities it is hard to find a job that will not require its' employees to work on Shabbos. Men with kippas and beards might also be passed over for jobs.
The smaller the community, the larger the responsibility of each member becomes. If a community has only 10 men, no man can ever miss minyon. Every woman must assist in the mikveh. Children might feel out of place with their different mode of dress and holidays that their neighbors have never seen or heard of.
If the family is far away from extended family, it can be isolating and without the support of family, overwhelming.
There isn't one pattern of fiscal responsibility that will fit every couple's particular needs. Instead of advocating that a couple "only" do A, B or C, perhaps the emphasis should be that you can't have it all--decide which items are the most important/necessary to you, but understand that choosing those items means that you can't have something else.
Frankly, if you choose not to have cleaning help--and yes, that is a choice--then that does not mean that someone else is wrong for choosing that help. Again, what are you willing to "trade" for that cleaning help since you can have A or B, not both.
We're also not mentioning another car possibility, where a car is not part of the requirement for being able to work. Use a combo of car service and/or rental car for those times when a car might be a necessity. My friend did this for the first 11 years of her marriage. She lived where there was good public transportation. When she needed a car for some reason she paid the one-time fee for it. She paid no car insurance. She paid no registration or inspection fees. She had no parking problems or expenses. She never got a ticket. She paid no gas. She paid no routine maintenance. She had no monthly carrying charges for a car loan. It cost her about $800-$1000 a year. Even at the max, someone choosing this option would have paid out $15K at the end of 15 years. If we are honest we'll admit that most people do not keep a car for 15 years. That car would have cost a couple far more than just the purchase price during those 15 years.
ProfK-I respect your comment that one can trade this luxury for that. But, I've also seen enough budgets to say that some people can't have any of the above because there just simply not enough.
SL- I know this is off topic, but since you've written about this before, I wanted to let you know that the most recent (? January 2009) Where, What, When out of Baltimore has a review of Dave Ramsey's Total Money Makeover Book. The author of the review makes some good points, however, when he talks about the applying the book's principal to the "Frum Family" he writes, "Explain to Suzy Orman that some kids need to go to sleep-away camp for the 'ruach,' because if they stay home they will be influenced by the 'outside world.' Huh?" And he's serious here. Somehow, somewhere sleep away camp has become a necessity- this thinking is killing this community financially. I can scan and email the article in its entirety, if you'd like.
Excellent post, Sephardi Lady. I'm puatting up a link to it and would like to discuss adapting it to serve as the "Money Matters" piece for the spring issue of Kallah Magazine
aml, it is possible that some kids DO "need" to go to sleep-away camp for those very reasons. Until you've walked in another's shoes, don't judge them. I would say that sleep-away camp is not a necessity for the vast number of children, but for some, it just might be.
No, my kids don't go to sleep-away or even day camp, but I'm beginning to think my eldest (11) does "need" something, even if it's just organized play and learn "dates" over the summer, because he can only take so much of his (mostly female) siblings before he goes stir crazy, no matter how many outings I take them on.
Abbi - Oh, trust me, we want out. :)
But my point was that many young couples have little to no choice (or at least think they do) when they first get married but to live in Queens or Wash Hts., etc. These ARE their costs.
mariamp- unless you're talking about at-risk kids who need to go to a "special" camp to learn how to behave and integrate into society, I respectfully disagree.
I think I am talking about at-risk kids, but not necessarily those who need to learn how to behave, more those who have family or neighborhood issues where they will be drawn to the "wrong element" if they stay home. I hope it's a very small segment of the population, and therefore you and I probably do agree that the statement you quoted was, well, overstating the case. (Maybe his job is to work with those at-risk kids?)
I know the camp discussion has come up over and over and the feeling of many on this blog is that it is not a necessity, but a luxury. I have to respectfully disagree. As someone who can literally write a book on the benefit camp has had on: rich kids, poor kids, orphans, at risk kids, counselors, JC's, campers, rabbeim, privileged kids, under privileged kids and the list goes on...I think camp must be put into the category of "there is no general rule". Some kids can manage without, others need it desperately. Each situation needs to be evaluated individually. I feel so strongly about it that every summer I sponsor kids to be able to go, so yes I do put my money where my mouth is. Unfortunately, camp is a huge expense that is not for everyone, but I think it is wrong to place a general rule on it and say that it is wrong for everyone.
thinking... a couple of comments: (1) day camp is much cheaper and more attainable and (2) the real issue isn't camp- its this nonsense that luxuries are necessities.
Families who don't even have one car face challenges. For example, someone in the family needs to see a medical specialist in another neighborhood. They can't go by taxi because the children need to ride in car seats and what will the family do with the car seats when they arrive at the doctor's office? I guess that they could try to shlep them in and then put them in the return taxi on the way home. Taking the family somewhere by subway means a separate fare for each family member and then managing them on the train. There are no bathrooms in some subway stations. The local stores that deliver the groceries charge more for those groceries. A family can shop online for clothes and other necessities but 1)internet service is not free and 2)there are often large shipping charges.
Life costs money. A person can do without many things for example, while most people can make parve or dairy suppers, I just got asked to make a new-baby supper for a family that is allergic to fish, wheat, eggs, carrots, onions, soy, garlic, chick peas, chocolate, to name only part of the list. Basically it is down to plain chicken and rice. They can't really economize on food.
One more camp related thing. Camp is, as some say, a necessity for those kids at risk, kids from troubled homes, etc, etc. But those kids would not benefit were there not "normal" kids there to provide normalcy. No kid at risk should go to a camp full of only other kids at risk. Not a healthy situation.
aml- day camp is cheaper, but at a certain age (10+) does not provide the same growth opportunities as sleep away camp does. Today's community leaders, both in the yeshiva world and the mo world, were some of the best counselors and administrative staff I ever had. They learned these skills in sleepaway camp.
I view it as a necessity vs. a luxury which is why I am willing to pay for others to go. If it was a luxury I wouldn't be putting tzedakah money towards it.
Today's community leaders, both in the yeshiva world and the mo world, were some of the best counselors and administrative staff I ever had. They learned these skills in sleepaway camp.
I wonder where the previous generation of community leaders learned their skills?
Also in camps, unfortunately, of a different variety.
A family that feels their child needs something different still has choices besides going into debt. They can seek an extra source or income (or scholarship, although I don't tend to promote that here), or they can seek other ways to cut their budget or seek an alternative.
I don't understand why the alternative needs to be 4 or 8 weeks of sleepaway camp or staying home if a family doesn't have what to squeeze out of the budget.
I am not advicating debt to pay for camp, I am a huge advocate for budgeting appropriately and not going into debt for any reason other then a mortgage. My point is that many people on this blog are too quick to dismiss camp as an unnecessary extra expense. There are many, such as myself, that are willing to cut costs or take on an extra source of income to ensure that my children have the opportunity to receive the same benefit of camp that I did. "Camp" as an entity should not be dismissed outright.
Thinking- I only speak for my family when I say that tuition sucks everything out of us and alternative budgeting this way or that doesn't help all that much. Sending away four or five or six kids for six or seven or eight weeks a year, for most families paying tuition is unattainable. Normalizing sleep away camp into a necessity doesn't help. It makes it harder- a lot harder. I don't care because I can say no to my kids, but others have a harder time.
As long as we go on telling ourselves that sending our children away for the summer is necessary, or taking trips during chol hamoed is necessary, or a gap year in Israel is necessary, or worse- new Yom Tov outfits for all are necessary or $60k weddings and bar mitzvahs are necessary- we are only doing a disservice.
I don't think anyone has dismissed camp as unnecessary- on the contrary,for those of us in dual-income families (day) camp is very necessary.
And no one is arguing that camp isn't character-building or defining for children. I think its great that you give to camps, because they are great. But, again, its a luxury most of us cannot afford.
When I was young we went to church camp (I am a convert) for two weeks and then day camp or to the grandparents the rest of the summer. This was the norm- two weeks. I don't remember what the cost was but I know my parents scrimped and saved to send us there; we we were all in public school, of course.
8 weeks of camp every single summer is not a general necessity. I agree that the camp experience is wonderful and powerful, and ideally every child should get that experience. I got one summer of camp, as did two of my siblings. A third worked at a few different camps doing hashgacha in his high school and college years. We didn't get to go to camp all summer every summer, because it was just too expensive.
We did go to NCSY, though, which gives some of the same types of experiences for a lot less money.
I would argue that camp is a high priority, but it's rarely a necessity.
Additionally, if you can't afford it, there are ways to get jobs at a camp which allow teens to have much of the camp experience for a fraction of the cost or for free in exchange for work.
Thinking - Today's community leaders, both in the yeshiva world and the mo world, were some of the best counselors and administrative staff I ever had. They learned these skills in sleepaway camp.
Mark - I wonder where the previous generation of community leaders learned their skills?
Thinking - Also in camps, unfortunately, of a different variety.
No, not that generation. The one in between the generation of the Shoah and the current 40-something community leaders. My parents generation, for example. My parents (after leaving their country of birth as children) grew up in New York City, and they with all their friends went to public school. None of them had families that could afford summer camp (of any sort, except perhaps a week of what was "day camp" at the time, and that was only for the well off folks). The rich ones might go to Grossingers or someplace like that (but still only for a week or two). While in grade school, most of them hung out with their friends after davening (which their parents forced them to go to every morning and evening). While in high school, most of them worked during the summers. None of them that I know of went to camp, in fact, I can't even name any camp that existed at the time.
So again, where did the current crop of 60-65 year olds get their community leadership skills? It definitely wasn't from camp. I think it was from the experiences of hard work and working hard for what you needed and wanted. And from other aspects of disciplined living.
And furthermore, I somehow doubt that the coddled youth in the luxurious summer camps of today are gaining much, if any, community leadership skills. I think the major skills they are acquiring there are the skills of entitlement.
Personally, I spent most of my early summers at day camp, which for a few years I enjoyed and then for many years I hated. However, I think if there would have been other frum kids in my camp (it was the local JCC camp), I probably would have had more friends and would have felt less like the odd one out. I also spent one summer at the local public school district camp, which was considerably less expensive and therefore made it possible for my parents to pay for lots of extra activities the camp could provide, like gymnastics, swimming, skating, etc. I did go away to camp for one month between 7th and 8th and between 8th and 9th grades, and I went on NCSY's Michlelet learning program in Israel twice - though not consecutive years, because my parents wanted me to stay home and work for one summer. Yes, it was a luxury to send me (and later my sister) on these programs, but we were aware of that. My parents felt like their money was well-spent; not because they "had to" send us to camp, because there wasn't the communal pressure, but because of what we gained by going. I can honestly say I wouldn't be who I am today if not for those summers I spent. Also, my parents would send us, but then we were on our own as far as spending money went. We had money we earned from babysitting and working at a local doctor's office, maybe took out a little of our bat mitzvah money from the bank, did some odd jobs around the house, etc. We most certainly did NOT have access to our parents' credit cards or checking account.
As far as the general discussion goes (getting back to the point of the post!):
1) It depends on whether the couple is planning to stay put for awhile or if they're going to be looking to move in the near future. If they're looking to move in the near future, making due with the smallest livable space makes sense. If they're staying put, it might make sense to start with something slightly larger than what they "need" at the time so there's room to grow. Ezzie explained all that pretty well, I think.
2) I'm totally with you on this one. My parents explained to me LONG before I was even driving why leasing a car was less financially sound than buying in the long-term. (I saw commercials on TV for fancy cars for "only $$$ a month!" and wanted to know why we couldn't get a nicer one.) Personally, I don't have a car right now because b"H I live in a place with cheap, readily available public transportation. My parents actually offered me one of their cars because it's still in good condition and they don't need it, and I turned them down - it's too expensive to buy a spot in a lot and it's too much of a hassle to park on the street. And then of course there would be gas to pay for, tolls, repairs, etc. Not in the budget right now.
3) Agreed on this, too. Unless someone is buying stuff they expect to last them for the next umpteen+ years, there's no reason to buy new stuff. A lot of older furniture is better made, anyway, especially old wooden furniture. And a lot of times there's great free stuff on craigslist - a couple I know rented a van for a day and drove around the city, picking up furniture in great condition from people who were giving it away, and that's how they furnished their home. They have gorgeous stuff.
4) Haven't been through this yet, but I know my parents bought a lot of baby stuff for my sister and me at the "Sally Ann Boutique" (aka, Salvation Army). However, now that there's a grandchild to spoil, my mother is more of a sucker for cutesy baby stuff. My sister is pretty practical, though, and is trying to get stuff that will last through several kids and won't break her budget. For instance, she didn't buy her stroller in the "popular" color, because the less-popular color cost less, and the model is less of a brand-name in general and therefore wasn't too overpriced.
5) I hardly ever get stuff dry-cleaned. I try not to purchase items that will require it whenever possible. And as far as the cleaning lady goes - my parents have a service in, usually once a week, but that's their cheshbon. Personally, I refuse to get a cleaning lady, no matter how much my roommates gripe; I just can't afford it.
I'm that generation that you say did not go to sleep away camp. When I arrived in New York there were plenty of sleep away camps in existence for quite some time--just off the top of my head I remember Camp HILI, Camp Hillel, Camp Raleigh and the Bnei Akiva camp in Starlight Pennsylvania. My hubby, also that generation, went to sleep away camp when he was 9--don't remember the name offhand but it was a frummier boys camp in the Catskills.
I'm that generation that you say did not go to sleep away camp.
I didn't say that they did not go to sleepaway camp, just that it was much, much, less common, to the extent of being somewhat unusual ("yotzeh min haclal") at the time (the 1950's).
When I arrived in New York there were plenty of sleep away camps in existence for quite some time--just off the top of my head I remember Camp HILI, Camp Hillel, Camp Raleigh and the Bnei Akiva camp in Starlight Pennsylvania. My hubby, also that generation, went to sleep away camp when he was 9--don't remember the name offhand but it was a frummier boys camp in the Catskills.
First of all, I can't believe that you are over 60!!! :-)
So which camp did you go to at the time?
About 35 years ago or so, I went to Mogen Avrohom in the Catskills (one year, one session, as a camper, followed by a few years in various jobs). And even then, it wasn't all that common for kids to go to summer camp, I think far less than 50% of the kids went even for one session. And the only reason I could go is because Mogen Avrohom was a "Federation Camp" and was very inexpensive for those who qualified. I do know that the Bnai Akiva camps have been around "forever", but I can't find any evidence that Camp Raleigh existed 55 years ago (when 65 years olds today would have attended).
Like fine wines, some things have to age in order to come to the point of perfection. I arrived in NY for college in 1964; in 1965 we moved here. In 1966 I spent a few weeks as a counselor at HILI, down the road from Raleigh. It was not the first years for either camp. Maybe the 65 year olds didn't go, although I can't say for sure, but many 60 year olds did, and they are boomers too.
Sudden decision is not good we need to think every thing before deciding anything!!!
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