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While I've been working on publishing a very simil...
# general
m
While I've been working on publishing a very similar idea for our community, I recently found out Lakewood is doing the same thing so I figured I'd post them here so we can all discuss also. Opening the books. People are most optimal when information flows freely. Thank you in advance to everyone here who has agreed to let me anonymize and publish their financials. If anyone else is willing, please let me know! The first frum.finance version of this (which will include full investment projections) will be up soon, but here is week one of the incredible Lakewood project with Rivka Resnik doing it already! Open the books! What do people think? #C04SF2U3WSC
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s
I've seen this column and I think it's a great idea! There has been so much smoke around making a frum family work from a financial perspective and it's nice to see some of it finally lifting. It gives hope to people who are struggling to see how others in similar situations have successfully navigated through. I would love to see this extended throughout the frum world and I'm excited to see the results of our slack!
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m
I don't understand how life insurance is so low in relation to all the other expenses. I think the mortgage payment is worryingly high in relation to the amount of savings and current income.
t
Our life insurance policy is under 50 each for me and my husband. And we're probably a good 10 years older than these people. So the rate is not so surprising to me. I don't know why they are not insuring the wife, though. Just because she is not bringing in much of an income does not mean that if something would happen to her, there wouldn't be a huge uptick in living expenses
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m
I wish I could call them to beg them to insure the wife.
t
sorry i used a ton of double negatives. I'm saying they should insure the wife because if she would pass away the costs would still be very very high
m
I figured out the double negative and edited lol
t
if teh husband is 30/month insuring hte wife to the same level would probably be between 20and 25/month
seems a very small price to pay 🤷‍♀️
m
Agreed. I'm surprised when it's something that obvious they don't help them fix that before publishing their books.
It definitely makes me very grateful to live in Baltimore. I grew up around trying to keep up with the Jones in NJ so I love that it isn't like that in Baltimore
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b
I think the mortgage payment is worryingly high in relation to the amount of savings and current income.
What would you say is the maximum that this family should be spending on mortgage? (irrelevant now because they already bought their house)
t
Life insurance prices will vary a lot based on how healthy someone is and what policy they buy. A term policy is cheaper if you buy fewer years and buy it when you are younger. I could see a shorter term and/or lower limit for a wife in some scenarios. There is some stage where the kids are somewhat independent but the family still needs a lot of income.
b
Why is the emergency fund under "debt" and why is it $0 if they have 10k in savings, wouldn't that be considered the emergency fund if it wasn't going into an IRA?
m
@bumpy-minister-26192 You are correct, I believe the editor made a mistake.
b
What would be his wife's maternity leave money that presumably is more than her typical salary that went into savings for the house? (Assuming if this is mentioned and not her salary for savings than this must be more than she would usually make 🤷🏼)
a
So many questions... What's the housing market like in Lakewood? The house seems expensive. Is this their "forever" home? I found it funny that they straight out described Lakewood as materialistic. I understand that it has become more materialistic recently, but I guess by now it has shifted even more. I would have liked to see more of a breakdown on those categories they lumped together, and curious about how much their down payment was. Also, what's the plan on replacing the car? Tuition? It seems that the teaching job is not bringing much after covering for childcare, although that can be more for personal fulfillment. and perhaps a tuition discount down the line.
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m
What would you say is the maximum that this family should be spending on mortgage?
They don’t include any of their long term (or even short term?) goals in this document so I can’t really give you a real number like I normally do. 500 extra a month will be hard enough to create a good long term plan for retirement, tuition, and chasunos, and that is ignoring the fact that they acknowledge they will lose that 500 extra a month with the next kid. This leads me to say the mortgage is too high since its not leaving them much left for the future. Especially with the family acknowledging their tendency to engage in lifestyle inflation.
The goyim have a rule of 30% of your income max being your home payment. I generally despise these broad reductive rules, but for the most part, the average frum family need to be doing even less than that. This family is doing 41% on housing (assuming they are giving 10% maiser which I can’t tell from the pdf? 37% if they aren’t giving maiser)
a
What's not clear (to me) is if Lakewood housing market is just "unaffordable" like NYC, or they overbought to have space for a growing family.
m
I think its the former? but I am speculating.
t
is a 500k house considered a very expensive house anywhere these days? Many communities have nothing even close to that
b
I also feel they'll need to plan for more expenses in the future...little kids little expenses, big kids big expenses...but their housing seems reasonable to me (coming from NY). If they're paying PMI that may even go down in the future (though taxes would presumably go up). Their payments may be tight for their budget now, but for living in Lakewood, can they really expect to pay less?
b
@mysterious-tomato-10057 I’m confused about your math here - you’re talking about gross monthly income? That would come out to $9583 per month if they’re making $115K. $2800 monthly mortgage would be less than 30% if maaser isn’t part of the equation
m
@boundless-area-4436 their usable income, which they claim comes out to be 7500 dollars post tax
b
Oh - got it. Thanks
t
@mysterious-tomato-10057 @boundless-area-4436 makes a good point though, the 30% rule of thumb is of gross income, not net. Now I know you don't like this rule, but you're using it to compare against
m
In baltimore I would say 500k is above what most people should be buying as a first home, at least based on the average income, expenses, and life goals I see. In other places like new york, this number would be silly.
@thankful-angle-58448 I only used it because I knew you were in this thread 😉
a
I think prices in Baltimore have close to doubled in the last 5 years. Even so, in 2021 bought a luxuriously spacious house for a family of 8 ke'h for $450k. And I thought I overpaid.
t
hahaha
m
Same with my home (purchased 350k november 2019 now worth 450k) is 3500 square feet with 5 bedrooms (and space for 2 more bedrooms if I finish the attic) My mortgage payment is $1850, i lucked out with the timing but even with todays crazier market, its still under 500k.
b
Almost seems like this was an example of a family living reasonably well currently, but when looking at the future it seems like there's not enough planning for it. Would like to see the equivalent of this family in a few years with say a few more kids, tuition, and with more kid related expenses. Then what happens?
m
@bumpy-minister-26192 I can say as those families come to me regularly it doesn’t look pretty. I am regularly getting calls with “I don’t understand what happened to our bills, we are financially responsible and everything looked good for us but all of us a sudden in the last year we couldn’t keep up with expenses and now we have 30k of credit card debt” People think they can spend their whole paycheck and forget the life gets more and more expensive.
@bumpy-minister-26192 it’s interesting how we all have such different perspectives loooking at the same sheet. I actually think the situation is pretty dire… I see families making much less with many more kids in better shape because of different spending habits. Remember all that matters is what’s left over, income doesn’t matter expenses don’t matter. At the end of the day, they net 500$ a month, which for the majority of frum families is not realistic for long term planning.
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b
They should have ended with a warning then that this family is heading to financial disaster unless they make some big changes in their lives! But their story sounds pretty common and nothing does jump out as unreasonable for the way they live, nor does it give you a sense that they need to be doing anything different (except vaguely consider future kids). Maybe end the article with advice on how to plan better for the future and not just leave it so vague.
a
I think they are aware of the precarious future as mentioned in the "Our Biggest Challenge" sidebar
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m
I think you’ll enjoy the frum.finance version of this style article, because I have the same idea but its coupled with a 70 year projection including costs of yeshivos, seminaries, weddings, etc. for each family
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b
His solutions were pretty lacking, nowhere did he suggest cutting expenses or his wife getting a better paying job
a
The matching clothing made me smile because it reminded me when we had 2 kids... Of course, 4 kids later we still have to be matching. We would not have it any other way g-d forbid, we just get more creative about what's considered matching.
m
@bumpy-minister-26192 its supposed to be a representation of the average frum family, so I think not having a solution is a good representation.
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pro tip, if anyone is considering starting ADHD medicine, start after you sign up for life insurance because mine is $150/month because of it instead of my wife’s $40/month🤦‍♂️
t
now THAT is fascinating. Is it because of side effects of the meds? or is it because ADHD is correlated with high risk behaviors?
m
i think the latter
t
... in which case it is exactly counter produtive to penalize medicating to control the condition 🤦‍♀️ (Unless the medication doesn't affect those tendencies)
this is fine fire 1
b
@mysterious-tomato-10057 That's a big difference, are your coverage amounts the same? Were your ages at purchase the same? Do you buy a plan outside your work plan (assuming that's one of your benefits)? Is the difference only due to ADHD or other factors also (so not a $110 difference, but maybe just $50?)
m
Our coverage amounts are the exact same, she is 3 years older than me. We buy a plan outside of work plan. The broker told me the only difference was ADHD.
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