Sunday, February 10, 2008

Singing the Budgeting Blues

So just what is left that needs to be included in the costs to be budgeted for? A whole lot. Let me just briefly give you a list.

Alcohol: Wine and mashkeh for Shabbos and Yom Tov
Cleaning/laundry/repairs: Either outside the home or the equipment and supplies for inside
Child care expenses: For a working mother or when you are going out without the kids
Computers/printers: Internet connection, paper, printer cartridges, basic equipment
Phones: Land lines and cell phones, equipment and monthly charges
Electronic Equipment: The sky is the limit here
Non-refunded Work Related Expenses: Teacher's supplies are not paid for by schools
Exercise: Equipment, gym membership, specialized clothing
Insurances: Medical, home, life, car
Household Furnishings: Everything that's not a bed or a table and chairs
Appliances/equipment: Microwaves, vacuum cleaners,shabbos clocks etc.
Student Loan Repayment: College isn't free
Tzedaka: Maaser is figured at 10-20 percent of net earnings
Retirement: As in 401k, IRAs, Roth IRAs
Savings: Putting away for a rainy day,saving for future expenses
Medications: Vitamins, aspirins, antacids, bandaids, prescriptions
Doctor Bills: Even with insurance there are co-pays, out of network and not covered charges, such as vision or dental
Mikvah: Not a freebie for women or men
Yom Tov Observances: Lulav and esrog, matzah, menorah, oil etc.
Shul Obligations: Seats for yom tov, dues, "shnudering," dinner, appeals
Gifts: To each other and to outsiders, flowers for shabbos
Repairs: Nothing works right for ever
Reading/listening/viewing material: Books, magazines, newspapers, CDs, DVDs etc.
Credit card bills: paying off balances, adding in interest on principal which raises the total owed
Tuitions: Still in college? Getting specialized training?
Simcha Occasions: Ones you give and ones you go to
Routine Maintenance: Exterminators, painting etc.
Family Obligations: Your sister/brother's wedding/bar mitzvah/sheva brochos etc.

Not a complete list by any means but still fairly comprehensive. And these are items that need to be budgeted for or someone is going to find themselves in real financial trouble.

Learning how to budget and work with the money you have available may put you in the position of having to say "Either A or B, but not both." It may also put you in the position of having to say "Neither A nor B." Unfortunately, many young couples, and lots of older ones too, say "All of the above" with no idea of how that will be paid for.

Budgeting means that instant gratification just might not be possible. But budgeting is the only sane way to get what we need without going bankrupt doing it. Living on extended credit is a sure recipe for disaster.

So how much do the items above cost? No definite figure because it depends on each couple's desires and spending each year. But it would not be out of the ordinary to add another $10,000--$30,000 a year, certainly for a young couple just starting out and who need to provide everything for their new home. (Note: this does not include school tuition and camps for children. That expense is yet to come.) That would put our young couple at $70,000 to $90,000 a year. And whatever the figure, it's coming from after tax dollars.

Well, there you have it: a pretty comprehensive look at what it costs to live when you get married and for the first few years. Obviously the figure can be reduced if you rent in cheaper areas, don't have a car and don't play the game of "Keeping up with the Schwartzes."


Anonymous said...

We had a role reversal in our house thanks to your budget articles. I blog and my daughter doesn't. I printed out the articles and made her read them. I thought she knew more about money then she really did. She thought you were all wrong. I pointed out where you were all correct. I was shocked though when she commented that "so I'll live on credit in the beginning. Others do it and they aren't suffering." You bet my husband and I are going to be doing a lot more talking about money with all the kids.

Anonymous said...

I'm now firmly convinced that you never sleep. Please, just a little breather so I can catch uup on the reading. pretty please?

Ari said...

Too much of what passes for budgeting with frum couples is actually planned poverty. A huge difference between the generations. Mine would have been horrified to be in debt and this generation plans on being in debt as a way of living.

Anonymous said...

I think Ari got that right. Today's kids look at being in debt as just business as usual. Sad commentary on what goes on today.

tuvi said...

The items you show also show why a husband and wife both have to work if they are going to keep out of debt. If you live where things are very expensive there is no choice but two people working. If you want mothers at home raising kids you can't live in Brooklyn or the other expensive areas without taking on real debt.

Anonymous said...

I think the problem is that the younger people don't want to hear about what things cost. They want what they want and they want to pretend that it's all okay. Not sure how many of them would be really happy if we sat them down and showed them the facts of money life. They're not really big on I'll buy it only if I can afford it as a way of life.

Anonymous said...

You missed a category of Jewish items. Things like tzitzis, a talis replacement and the everyday things of jewish life. And in really frum houses seforim should be its own category.

tourostudent said...

Funny but the theme for the comp classes this year is on wants and needs and learning to tell the difference. Were some great discussions on this. I suspect that profk had a hand in the topic.

Anonymous said...

If touro is discussing this with its students then the school has gone way up in the way I think about it. First jewish school I've ever heard of that even admits that there is a difference between the things we want and the things we need. And if profk had anything to do with it then she gets points from me for not just talking about something but actually trying to do something.

Anonymous said...

Know of lots of developing nations that have budgets smaller then what some frum people consider is necessary to have to live. Could we get real here?

ProfK said...

Just a note:
A comment on the clothing posting reminded me of this. I did not include any baby paraphernalia in the budget list aside from babysitting, because if I had some people might c"v have gone into cardiac arrest. if you want to see real budget breakers then children are truly it.

newmom said...

Isn't that what grandparents are for? At least they are always saying that they would pay anything to get and have the grandchildren.

ProfK said...

Youch newmom. There is a big difference between grandparents who give gifts to grandchildren and becoming the sole financial provider for everything a grandchild needs.

Anonymous said...

We have a sad but funny saying in our house - "Compared to tuition, it's nothing". Basically, compared to the tuition for (now 3 in school, but will very soon pay for all) our 5 children, every other expense is "nothing".

Tuition 5 x $13,600 = $68,000
Mortgage is only $12000
Real estate taxes only $3500
Home insurance only $3500
Car insurance only $2600
Electric only $1500
Phones/internet only $1500
All other expenses (including food, clothes, gasoline, etc) amount to only $18,000 or so (everything goes on the credit card, and it's usually about $1500 a month)

Almost all our kids clothes are hand-me-downs with a few items purchased at deep discount stores.