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My understanding of FI, based on reading MMM back ...
# financial-independence
a
My understanding of FI, based on reading MMM back in the day, is: 1. Earn above average (software engineer) 2. Spend below average ("these wasteful consumerist Americans swaddled in luxury and convenience!") 3. Invest the difference 4. Retire early 5. Go do what you really enjoy, and maybe even make some money on it As @mysterious-tomato-10057 has mentioned, there is a shift to recognize that you want to make sure you're not making yourself miserable in the process. Now, when it comes to frum finance, the gut instinct is "we can't spend below average! frum life is so expensive" However that risks us losing out on lesson #2. From what I see, spending in our community keeps on increasing. The bar for what constitutes a good vaction, nice bar mitzvah, wedding or even upshernish keeps on getting higher. We we're gifted a subscription to one of the major frum magazines. It seems like even with a cover price, most of it is paid for by ads. For stuff we don't need. Yogurt in xyz newfangled packaging. Ready made mishloach monos up to $1,100 a piece (not kidding). Not to mention all types of retreats and luxury kitchens. Lesson #2 - spending below average means pushing back on all this. We don't need it. It doesn't make people happy, and we end up coming out ahead without it. Just my opinion :)
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m
I agree strongly with all of this but I get so much pushback whenever I say it…
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t
@acceptable-angle-23240 I hear ya, but honestly even without any of that, making above average salary doesn't give room to invest, never mind to spend below average. The bare bare bones of frum life can cost an average family 300k/year or more. And I'm talking minimal if any cleaning help, local vacations, no dining out, scaled back smachot, clothing from shein or alli, no name brand stuff.
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a
Right, so my point is that by taking "below average" to mean "below frum average" you end up coming out ahead.
t
1. Earn above average 2. Spend below Frum average 3. Barely cover your expenses 4. hopefullly be able to retire... I feel like that is sometimes a more realistic game plan lol
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m
I’m okay with 1,2, and 3, but am very passionate about fixing number 4 across the community somehow. Wish me luck. 4. Needs to be “successfully retire from all the great discussions we had on slack”
c
Ready made mishloach monos up to $1,100 a piece (not kidding)
Saw this. If it was the same ad, it was for business accounts though, not personal ones. Business finances work different than personal ones do.
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I also disagree that a frum family needs 300k to just barely stay afloat.
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money 1
t
@curved-toothbrush-84425 I'd be happy to see your sample budget breakdown that comes in substantially less than that. I can give you my real life numbers
m
@thankful-angle-58448 I would venture to guess 90%+ of families I work with make nowhere near 300k and they are doing very well. I guess you’ll comment after I start publishing peoples books which will include many locations
I am blown away that I see families with great savings rates making less than 100k sometimes because they just live off very little and that’s fine with them.
t
sometimes its easier to save more when you earn less. Just as an example, we missed the cutoff for almost alll of teh covid stimulus money @mysterious-tomato-10057 what age/stage family are you generally working with taht's doing very well on nowhwere near 300k?
@curved-toothbrush-84425 let's say 5-7 kids, a MCOL place (not NY or LA, but not the Midwest either)
(I meant 300k gross not net)
c
Assuming 6 kids and living in Lakewood: • Tuiton: 6k/ea (36k annually) • Housing: 4k/mo (48k annually) • Food: 2.5k/mo (30k annually) • Auto: 750/mo (9k annually) • Health Insurance: 40k annually • Clothing: 5k annually • Cleaning Help: 6k annually That totals to 174k and I think its actually pretty aggresive on the numbers, there are ways to make it way lower. With a 300k salary, After taxes and maaser you should end up with about 200k net income annually. Thats over 25k left over for miscellaneous expenses, savings, vacations, etc.
t
do you know anyone whose monthly credit card bill is 3000 with 5-7 kids (2500 food + 500 clothes)? Summer camp? Gas? any therapies? savings? Health expenses? (Tuition is much higher than 6k basically anywhere out of NY/NJ)
m
@thankful-angle-58448 Average age is 30 probably? but I have people from 18 to 70
tuition is almost 10k in baltimore i think, where is it 6k lol
c
Outside of NY/NJ housing is also way cheaper, there are also areas that the government has grants for tuition.
Tuition is about 6k per kid in lakewood
There are ways to lower the food bills
Health insurance is usually at least partially covered by an employer
Gas is part of auto
m
There are ways to lower the food bills

https://media.tenor.com/eQ6C-MlqNHcAAAAd/aladdin-steal.gif▾

groceries depend heavily on how healthy the family is also. Families buying mostly processed foods and making pasta can easily have a grocery bill half that of a family eating home cooked meals.
c
Its obviously possible to struggle making 300k, but thats often a result of the choices being made, not because the Jewish lifestyle requires it
groceries depend heavily on how healthy the family is also. Families buying mostly processed foods and making pasta can easily have a grocery bill half that of a family eating home cooked meals.
Honestly, I have not found eating healthy to be all that expensive. Now eating take out, THAT is expensive.
a
Lakewood is on the low end for tuition. If tuition was 16k as it is for many mestivas/high schools, it's a totally different story...
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t
Here's my sample budget based on what it actually costs to live where I live (Silver Spring MD) wit h5 kids: Tuition: 55k Housing: 4*12 = 48k Cleaning help, 4 hours a week: 5.2k Summer camp/childcare: 15k (this is probably low) Food/clothing/gas, extra curricular: 60k (average credit card of 5k/month. this is with being moderately careful, but not crazy anal) life insurance: 1200 Savings for kids: 150/month/kid: 9k 401k: 20k That all equals 212. if you pay 20% taxes, that's roughly 270, and does not include maaser. And that's without luxuries, and not very much cleaning help
m
@curved-toothbrush-84425 you might have been able to do it cheaply, but I absolutely see incredible differences in peoples budgets from the ones eating protein and veggies to the ones eating boxed pasta.
t
re: health insurance being covered by employer, there is almost always a contribution required toward the premium, and there is always teh deductible to be met.
my budget also does not include saving for regularly scheduled big expenses, like new shaitels, or bar mitzvas or brissim or whatever. So between maaser and those things I think you're at 300k minimum 🤷‍♀️
m
for example a family of four can live off a 500$ grocery budget if they don’t care about health, maybe thats 700 with recent food spikes.
t
(Also that tuition at 55k, it would likely be higher if you were showing 300k of income. The "list price" of tuition is closer to 80k, 55k reflects significant tuition assistance)
a family of 4 that includes two toddlers? or a family of 4 that includes 2 teenagers?
m
@thankful-angle-58448 its all about the area. your budget is a 4k housing per month which is very high for other areas. In baltimore that would make you the emperor
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@thankful-angle-58448 let’s say an 8 and 10 year old
t
that is actually extremely low, I'm not sure there are actually hosues you can buy where the housing payments (PITI) would be 4k or less
c
The only thing that could actually be considered an expense that jews have that non jews dont is paying for private school and maybe 25-50% more for kosher food. Everything else is the same as the rest of the world.
t
@mysterious-tomato-10057 even in baltimore, it very much depends on the area. If you don't want to live in upper park heights, I don't know how much lower you're looking at unless you're talking about a verrry small starter home that has 3 tiny bedrooms
m
@thankful-angle-58448 you think in a relative sense 4k is low? I pay 1850 including taxes and insurance for my 5 bedroom 3500 square foot home.
t
no I meant its low for teh area. I lowballed it for this hypothetical budget to keep it more similar to other areas
@curved-toothbrush-84425 well yes, tuition and kosher food, including yamim tovim, and tznius clothes probably account for about 70k of the budget
of after tax money
plus maaser
plus the general expenses of having a way bigger family
c
70k of a 212k budget. Minus 20k for the 401k. So a difference of 122k. Do you think non jews with 5 kids need to make 150-175k/yr to live comfortably?
t
yes absolutely... that's probably why so many of htem only have two
although i will say its such a different culture its hard to compare. On the one hand, they safve much more for college. On the other, there aren't as many exepctations around parents paying for weddings, how much weddings need to cost, and the gifts that are exchanged
m
i really don’t think this is a frum non frum thing. its just life choices. My parents paid a lot more for my education than any frum kid (i didn’t grow up frum)
c
I guess I disagree. Kids aren't all that expensive once you account for tuition and food. They cost maybe 20k/yr for all of them. I think most people in Jewish culture just make very different choices
t
(we're talking combined household gross income, right)
b
Housing costs include utility bills? Seems missing?
t
I personally included that in my credit card bill
c
@bumpy-minister-26192 I included them as part of the housing costs
(we're talking combined household gross income, right)
yes
t
@mysterious-tomato-10057 btw 30 year olds are in general in a much better financial place that 6 or 7 years down the line. enough experience at work to be making decent money, but kids small enough (and not too many yet) that the expenses are not that high
m
I think our educations growing up were roughly 500k per child including college, obviously a frum child would be way cheaper. My point is we can complain how hard it is to be frum or just accept the world we live in and problem solve together.
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c
Summer camp, paying for weddings, cleaning help. These don't have to do with the Jewish lifestyle. They're just life choices. Everyone can make their own, but having those is the very definition (IMO) of not struggling. (Also btw, your budget included $29k of savings each year. Thats a pretty healthy amount)
t
I'm not complaining per se. Just backing up the assertion that a frum family needs about 300k to not have to be actively worried about their day to day finances, if they want to include a responsible amount of saving
m
If they have bitachon they aren’t actively worried either way 😉
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t
right i said 300k could include some helathy amount of saving
m
I think conservative judaism is the most expensive judaism by far.
a
in case anyone is interested: https://livingwage.mit.edu/
m
@acceptable-angle-23240 they assume the max amount of children a family can have is 3 kids. frum yidden hold my beer
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t
@curved-toothbrush-84425 some of summer camp may be optional, the sleepaway costs. Day camp is not really optional, if you're assuming this 300k is coming from two working parents
(day camp here is between 300-375/wk/child)
c
they assume the max amount of children a family can have is 3 kids.
Just add about $5-6/hr per kid for 1 working and half that for 2 working.
a
@mysterious-tomato-10057 I think you can extrapolate the difference between 2-3 for the rest of them
I think summer camp, while it can be argued is not an absolute necessity, and your grandparents never went to camp, in today environment where you often have both parents working (and even if not,) it's very important for chinuch to keep kids positively occupied. so to me it is a necessity. It's part of the lifestyle creep of the modern world.
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t
@mysterious-tomato-10057 Just did a quick look at the Baltimore eruv on zillow. 1500/sf 3/2 home (which is verry small for a family with 5 kids, but is technically liveable) is about 3200/month 🤷‍♀️ Seems like a roughly standard option unless you want to live in upper park heights
c
which is verry small for a family with 5 kids, but is technically liveable
Only by modern standards. 50 years ago that was pretty average.
t
yes, however we don't live 50years ago
c
Humans haven't evolved so much in the last 50 years as to need anything different 🙂
t
(according to the MIT calcaultor, cost of living in montgomery county where i live is about 226k where I live... so add in the 55 of tuition and 20k of maaser, and it's just about on target)
a
in my experience 1600 sqft can work for a family with 5 kids, if it has a good layout, and everyone is on board. very important factor
t
ok, so i'll add to my disclaimer that a typical frum family needs about 300k to be able to meet their financial obligations without worry, and to be able to afford to live in a house that is a comfortable size for them
a
re: upper park heights, don't quote me on this, but looking at crime maps, it seems most of the crime in general are thefts and it seemed to me that they mostly happen a bit further out (cheswolde, fallstaff) which is perceived to be more upscale
t
um my father was mugged at gunpoint on my block inupper park heights
as was a neighbor
and another was carjacked
so.... 🤷‍♀️
I myself witnessed somebody threatening someone else with a gun on my corner when i was in third grade
and I don't think its gotten much better
m
a potential carjacking versus guaranteed financial failure? i’ll take the mugging (sarcasm)
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a
wow that's intense
c
💡 You cant spend a lot on a car if you dont have a car
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a
@thankful-angle-58448 I'd like to believe that it has gotten better in upper park heights and some of the crime has migrated. I live here for 4 years. when did you live there?
t
I left when I got married in 2009. However the carjacking was out of hte parking lot of the agudah, and was within the last two years
The feel we get when we go back to visit is that it feels much the same
might just be old perspectives though
a
that's totally understood
c
lock door
m
me right now
w
Re summer camp, we weren't so excited about sending our son and it's super expensive, a Rebbe of mine (who deals with lots of people) told me that today sending a kid to summer camp is (perhaps unfortunately) an expectation and is worth straining your budget for. Fortunately, my son didn't get into any summer camps since we don't have enough protektsia to get him into the ones he wanted to go to ( 🤯 you need protektsia to get into summer camp these days).
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p
Where's making weddings, paying for seminary, standard home maintenance, orthodontics, in this budget?
c
For weddings you should start saving way before the wedding. $50-75/month per kid will get you $30-45k 20 years later. You can also buck the trends and not spends thousands of dollars on pointless gifts (ie thats a choice, not a religious obligation). Seminary maybe falls more on the religious side, but is far from an obligation. Orthodontics falls under health care.
m
@proud-waiter-61863 it's not there which is why we say this isn't a good situation as described above.
n
I'm enjoying reading about $6k/year tuition. Don't have a clue how the Lakewood schools manage. Here in Passaic, it's $15k ballpark. Not including fees. And if everyone paid full tuition, the school's budget would just about be covered.
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Just read the whole thread. Remember seeing an important point (I think it was @thankful-angle-58448), that with lower income comes lower costs. This is true about tuition, taxes, possibly using maaser for tuition, insurance premiums, etc. Possibly more, but those come to mind. Once earning above a certain level, gross marginal increases in income tend to be much smaller increases in disposable income
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t
@nutritious-raincoat-28876 That's 100 percent true. Until you get to a LOT of income, after all your expenses are covered biravchus (i.e. no more tuition assistance to take away), then its just taxes and every dollar increase in gross income is still like a .70 increase in disposable income The way I see it in actual numbers (at least based on the numbers around me) is between 150 and 350k, there's not much difference in disposable income (not to say there's no difference in your financial health-- your ability to save for retirement will be very different in that range). Past 350 is where you'll start to see signficant leeway in your budgeting
a
@nutritious-raincoat-28876 Re: lakewood schools: probably larger classes, lower-paid teachers, less amenities, more fundraising
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c
@thankful-angle-58448 and @nutritious-raincoat-28876 how big are the classes in your kids schools? Any amenities?
n
20 is a large class. There is a lot of focus on each student, so I'm not complaining in the slightest. Still don't think that fully explains the difference, but I feel it's worth every penny. Wish my elementary school had been as good as my kids'...
t
@curved-toothbrush-84425 between 15 and 23 kids per class usually
c
Lakewood is normally 25-30 kids per class with 30 being more standard I believe.
So thats really more like 10-12k for Lakewood (once you account for the class sizes). It doesn't account for the whole difference, but its quite a bit of it. In addition to what @acceptable-angle-23240 said (lower paid teacher and less amenities). I would also add that from what I understand there are much less tuition breaks given in Lakewood, whereas out of town the threshold for receiving breaks might be much higher.
m
Do any teachers anywhere in the frum world get benefits like 403b match or health insurance? I'm wondering how our tuitions are still this low compared to non frum private schools
c
because (in lakewood at least) these are highly desirable jobs. Lots of people want to go into teaching related jobs
t
schools fundraise a massive portion of their budgets because they know parents are absolutely strapped
m
I wonder if that needs to be the case though. Thinking big here and out of the box, but I would have expected communities to have started shared endowments by now for perpetual funding.
t
there was an initiative in chicago years ago. I think the idea was that if everyone would endow 4% of their assets to day schools in their wills, tuition would be drastically reduced if not eliminated. It never took off, I'm not sure why
m
I like that. My preferred mechanism for tuition which I don't know how to get it to take off is a flat fee for every family, whether or not they still have kids in school. This way we distribute the pain and no one is afraid to have more children. Everyone pays x a year their whole lives for tuition. I believe satmar does it this way.
w
In Baltimore there was someone trying to start a system where everyone allotted 1% of their income (ostensibly 10% of their maaser) to go to the schools. He had a team of actuaries working on the cheshbonos, but his projection was that with this, tuition would be capped at 15% of net income / family (no matter how many kids you had in school), up to 200k, and then some other percent after that. (For context, some people are paying 30k tuition for less than 100k of take home pay.) I think he is still working on it, but it doesn't seem to have taken off much.
m
I'm confused with the proposal, if everyone gives 1 percent of their salary, obviously it would be capped at 15 percent of income since it's 1 percent?
w
No, in addition to the 1% people would then get a tuition bill. The 1% is actual maaser money, which they are ostensibly giving anyways, just now earmarked for educational institutions.
a
Was this the one that tied in with the vaad hakashrus as a food tax?
w
What I'm referring to had nothing to do with the vaad hakashrus, Was an independent fellow, trying to get some traction.
a
Ah ok. I remember seeing a proposal made by an individual that would have involved Star-K. It wasn't coming from them.
m
Definitely prefer the satmar method to this idea. If there is a tax, I don't also want a tuition bill. I also don't think my Rov would pasken that it would even qualify for me as being maiser so it's not like it's definitely earmarked.
n
@mysterious-tomato-10057 I believe many schools give parsonage to the Rebbeim, which is very valuable.
m
Parsonage is just a way for a portion of their income to be without tax, it is not in addition to their salary.
But yes, it is a life saver for many many families.
n
Yes, that was my intention - partially tax free salary
Tuition as maaser definitely deserves its own thread 😀
m
Does it? it seems simple. Beshas ad chak its a great heter, try your best not to rely on it. If its not that simple, start a thread!
n
w
Since the specific suggestion was what brought it up, I'll just respond with one thing here - his suggestion was not to pay part of your tuition bill from maaser - it was to have a flat maaser donation to the school that precedes any of the school's calculations of what tuitions should be to balance its budget. That makes it halachically quite different than paying a tuition bill from maaser.
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n
@witty-engineer-80805 Agreed
t
I like the will endowment better because its not affecting anybody's daily budget. The person donating it is not alive anymore to spend their money anyway, and their yorshim just get 4% less-- if they have a big yerusha it will still be big, and if it is small, the amount they're donating will be pretty insignificant.
m
It seems like way too much logistical and legal headache. How do we make sure someone doesn’t change their will? How do verify? Do we read through everyone’s will? How do we get notified if their will changes? The will can still always be contested by the children and we would need to fight. The contests wills will be the big yerushas that will actually be the reason this works. I imagine the big people won’t want to sign up to this anyway because it comes off as an unfair amount of yerusha to have to give comparatively. Also, like, if enough people don’t pass away, how do schools survive? You’ll end up incentivised wanting people gone yikes eek
t
I don'tthink it was meant as an enforceable mandatory thing. More as of a "if you want to contribute to your community but have/want to be giving liquid cash, here is a way you can do it in a relatively painless way, that can have major impact if theres widespread adoption"
m
if it isn’t mandatory, then I don’t see how we can use this to replace tuition. My suggestion is to remove the concept of tuition to alleviate the burden of families and fear of having more children.
t
I'd be really resistant to anything of this sort being mandatory 😬
even a flat community wide thing
m
Well yes the cultural resistance is why I have no plans to push this idea, even though i believe it would make people’s lives better,
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t
I think that camp can give the kids chayus that they don't get in school. I did send my kids, but they went fewer summers than their friends. We've made one bar mitzvah so far. I spent a lot on the tefillin and the lessons (he now leins regularly so it was worth it). We did fly to NY to get an aliya in 770. I sponsored a washing seudah in shul and I made a small, heimish melava malka for his class, their parents, some family, and some friends - total maybe 70 people. Weddings are expensive. There are nice halls that have packages, but there are also a lot of other expenses: l'chaim when they get engaged a number of presents for the other side sheva brochas bringing siblings to the wedding - some may be out of town, or your whole family may be flying somewhere. It does add up. We made one wedding so far. It was nice, heimish, not that expensive. My daughter's friends commented that they really liked it and thought more should be like it. It can be hard to manage the cost though if you have a lot of guests.
c
R' Eliyashiv didn't have any sheva brachos. But I feel like if someone suggested that today people would say "You need to have one! Chas v'shalom if you don't! (Also the Kallah needs a brand new dress for each of the Sheva Brachos! Chas v'shalom if she doesn't!)". And yet theres probably close to $10k spent on sheva brachos alone. I also wonder what would happen if one of the set of parents told the other that they're skipping the gifts, and they should feel comfortable to do it too. Would the engagement be broken? Does anyone really need to go into a marriage with a $10k+ ring, $2k+ bracelet, $2k+ watch, plus whatever the other gifts are?? Its such a waste of money. Its criminal.
t
our gifts were pretty cheap - a few seforim. I think under $100 for each side. Sheva brochas are often paid for by friends, shul, or family. I paid for one, it was a brunch in shul since the wedding was not where we live. I know at least three women who did not want or get diamond rings.
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w
I think these things depend on what circle you are in. All of our sheva berachos were hosted in homes of family / friends / family friends, with home made food. My wife bought my "chosson shas" for me with her own savings. A diamond from a ring my grandmother had owned went into the engagement ring. For one of my close friends who got married on the earlier side, a group of "the bochrim" made him a pizza-party sheva berachos.
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m
I grew up in a 900 Sq Ft 2 Bedroom apartment. 2 boys, 2 girls in the same room. The "tiny", semi-detached houses in Baltimore with the unfinished basement and backyard are gigantic in comparison
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m
It's all about what you establish as your norm. That is why I am trying to not by a bigger house so I don't make that my new norm now that I've gotten used to much less space through college.
If you can avoid lifestyle creep you will be very well off.
r
I could agree. I grew up from and in a Jewish day school. I also went to a frum high school and bh with Hashem's help, my parents put education first by paying much more than others.
@mysterious-tomato-10057
m
so what do you mean you “could” agree?
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