Interest Rates: A Budget Buster

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    Red Adair

    Over the last few years we’ve been hit hard by price increases of necessities, especially food.
    A more recent blow to our budgets has been the rapid rise in interest rates we’re charged for credit cards, home equity loans, mortgages, and other loans.
    If you owe money and are locked into a low rate, you’ll be less affected. However, if your rate is flexible or you need a new loan, you’ll likely be hit hard. Flexible-rate home equity loans recently went from about 3% to nearly 9% over the last year or so, and they’re compounded daily so the actual rate is well over 9%. Some credit cards have an effective rate of about 34% (!!!) after daily compounding.
    People who took out low-rate loans years ago may find themselves paying thousands more than they’d expected to yearly, sometimes more than $1,000 additional monthly. Repaying these loans is like trying to fill a swimming pool which not only is leaking, but has just sprung another, bigger leak.
    This is a terrible problem for many families for which there’s no easy solution. I’m no financial whiz, but I’d suggest the following:
    1) Don’t borrow unless you absolutely need to.
    2) If you need to borrow and can access an interest-free loan from a private party, you should definitely look into it (even though friends and relatives loans can be uncomfortable). This is also true if you can shift a high-interest loan to a lower-interest one.
    3) Speak to professionals about budgeting and debt handling options and ideas.

    The inspiration for this post is simply talking to people and seeing how many are having difficulty nowadays. If anyone has better and/or more specific ideas and suggestions, please chime in.


    Here is yet another “idea”.
    Realize that you don’t need many of the things you bought. Look at how they live in EY. Do you really need two cars when the cost of a new car is astronomical? When “zaidy” was young in the 1980’s and 1990’s many families had one car. Can you really not manage that way? Its OK to fargin an Uber when stuck. its still much cheaper than two cars. Do we really need to go out to eat so much etc.
    I am not even talking about the Orlando, fancy houses, trips to Europe, EY and Cancun, fancy meat boards etc.
    I know everyone does this and its “nerdy” not to spend on the above. Its like king nerd to have one car and CVS use a car service. But get real and grow up.


    If you don’t borrow at ribis, you won’t have this problem. There is no law against living frugally and saving up money for things before buying them.

    The government’s idea is that by raising interest rates, consumers will cut back on consumption (drive older cars, live in smaller houses, wear older clothes, skip out of town vacations, etc.), which will lower demand, and result in lower prices. In other words, if you are suffering, it means the government is succeeding in what it is trying to do. Congratulate Brandon and the Congress in doing what they set out to do.

    Shimon Nodel

    If you have thousands of dollars in credit card debt, consider bankruptcy. It’s a way better option than closing your accounts or negotiating your rate. Declaring bankruptcy can actually raise your credit score because you can’t do it again for at least another 7 years


    Another public service announcement


    my 2 cents: If you realize you can’t afford the big house you bought in the sought after good neighborhood, simply move to a smaller house elsewhere or rent if the payments will be lower. It isn’t embarrassing and nobody cares.


    “Declare bankruptcy to solve your debt problems”

    Great idea! Don’t pay your debts, stiff your contractors, and declare bankruptcy….even ex-Presidents do it. Leaving others holding the bag is what makes America Great


    Chaim, it’s not just luxuries that people spend on. Tuition has increased exponentially since our parents were raising us, and it’s a crushing burden. With lots more families having 2 working parents, often 2 cars are needed in order to commute to work.
    There’s also housing costs. I saw a study that compared house prices from 1965 through 2021. They adjusted for inflation. House prices rose 118% from 1965 to 2021, even adjusting for the inflation. Income only rose 15.5%. In 1965, the ratio of avg house price to avg income was about 4.5. Currently, it’s about 7.33. So paying for the same size home that our parents had is costing us significantly more than it cost them.
    I agree about fancy vacations, and indulging on fancy foods. If you can’t pay full tuition for your kids, you have no business spending money on a fancy trip. I get that people need vacations to relax, but there are affordable options. You don’t need to fly the whole family to Israel.
    At the end of the day, let’s all just remember that all our money comes from Hashem. You want to ensure financial well-being? Make sure to give maaser. It’s guaranteed to help your finances. And don’t forget to daven. Davening and doing mitzvos accomplish more than any segulah for parnassah out there.


    Tuition is tricky. In communities like Lakewood and chasidish communities it isn’t more than when we grew up in Brooklyn comparatively. (I am not counting girls seminary which is out of control)
    Housing is an issue and you got me there.
    Re cars, there are always some that need two cars. But firstly if you live in a city like Brooklyn, even with his working parents, there is always the city bus and subway. It’s how we grew up. Even if you live in Lakewood or monsey you’ll be surprised how much you can make do with things close by and one car. It’s almost a city . Wife can drive the husband on way to her work etc. Work is much mire remote now and one spouse probably works part time at home. I am not saying it can work for everyone. But you’ll be surprised what can happen if you realize we don’t need everything that we even call a necessity.
    Housing did stump me as that’s an issue and I thank hashem I bought ten years ago. But I’ll just say my mother ah always reminded me how she bought a house in the early 70s with interest rates at 10% and hyperinflation. Lines for gas were blocks long. She use to tell me how she baked stuff that didn’t need egg’s because eggs were so high . I laughed at her till eggs were $7 last year. Things weren’t always so easy then but the difference is like my mother people knew to do more with less. We are more spoiled now

    Shimon Nodel

    @gadolhadorah, I’m referring specifically to credit card debt. You have a problem with that? I see nothing wrong ethically


    Chaim, I am thankful as well that I bought my first home when I did, towards the bottom of the market after the 08 crash.
    I did move to a different house when the market was better, but I was able to roll the profit off the first house into the down payment for the new one, so it worked out well – and I got in when interest rates were at their lowest, under 3%. Even so, my monthly payment is high.
    You say tuition isn’t really higher than it was then, at least in Lakewood or chassidish communities. That may be true, but the majority of people don’t live in Lakewood. Home prices there have gotten so high that younger people can’t afford to live there!


    Shimon, where is it in halocho that not paying debts is a mitzva?


    A simple remedy from a mild inflation is to hold property instead of cash. Borrow at 2% before inflation and then watch your property value inflate 5% annually.

    Of course, you need some safety cushion in case feds raise rates too high leading to depression


    @ always_ask_a_question;

    Where exactly can you borrow at 2% now? And you assume housing will go up. That’s true in the long term but what if you need to pay those bills next year? Who says it won’t collapse by then?

    @Demoshe, I can’t question a personal decision. I just hope that you had a good reason to jump into buying new house. Many jumped simply during the covid gold rush in h a hast to follow the joneses and live more lavishly with a pool, and nice yard etc. They forgot that their “old” townhouse had a basement rental too and life was affordable. After all rates are at 3% and we are all getting stimulus plus PPP. Everything we invest in turned into gold , henceforth the inflation fueling. Now that kind of lifestyle begins to bite us. To be clear, I don’t mean you per say and I am sure you had a need.

    I do agree that there is a crisis for the new generation now. This is something that has happened in 20 years as there are no townhouses for cheap either.

    Sam Klein

    Start to live on and remember one sentence in order to keep your life and funding from going C”V Bankrupt

    now let’s discuss….
    Sure a person can go to a restaurant or go on vacation but there’s no need to travel from the east coast of America all the way to Florida or Israel. Sure you can go on a date to the restaurant or with friends but to go just because you desire to eat a good steak dinner is called crazy. You can go with your entire family on a beautiful vacation to Pennsylvania with so many places to go out and enjoy together versus going all the way to Florida and your family won’t be able to tell the difference between the two locations. I.e. it’s all in the person’s psychological mind about going to Florida and really it’s completely unnecessary and ridiculous.

    Many other different examples of no need to live like the Jones and remove it from your mind and don’t let it ruin your life but I’m not going to discuss it.


    @Sam Klein
    You are being quite judgmental in your comments.
    If I want to go to a restaurant for a steak dinner and I can afford it why should you pronounce it crazy. If I am not building a credit card balance at 30% interest it is not crazy. If I am not spending 5 times the cost of my typical at home meal and having the audacity to ask for tuition assistance it is none of your business.
    Obviously you failed or did not take Geography in school. Florida is on the east coast of the USA.
    There is a huge difference between Florida and Pennsylvania despite your claims. I went to Florida this year for the Yomin Noraim, the beach and Atlantic Ocean are not available and attractive in Lancaster or the Poconos.
    Your complaints about people keeping up with the Joneses comes across as jealousy.
    I have never accepted a penny in assistance in my life and have underwritten Yeshiva/day school costs for others. Why shouldn’t I enjoy what ai worked for?
    I don’t carry month to month credit card debt at interest. I am old enough that my residence is mortgage free.

    Every family must budget and decide what is important to them. If you are not inside their finances you should not be passing judgment.


    Shimon: Should they max out their credit cards and lines of credit before declaring bankruptcy?


    DaMoshe: Regarding tuition, the majority of frum Americans live in Brooklyn, Lakewood and Monsey (including their extended metro areas (ie Staten Island/five boros, Toms River/Jackson, Spring Valley/Airmont, and all the nearby towns.) And tuition is certainly much less expensive in these areas than outside of these cities and towns.


    Chaim, I obviously meant borrowing at 2% earlier. General rule: assets go up during inflation, and printing money 💰 in the past several years was a good predictor of inflation. There was not much risk of borrowing at 2%. Of course, as you are saying, one should keep cash to make sure payments can be met during market fluctuations. This is all al pi Rambam who, I recall, recommends job and property before getting married.. there was probably more in the financial literacy shiur in your yeshiva, not sure why you missed that


    Ujm is a famous talmid of not a real Scotsman mesorah: define frum as Monsey, and then discover that all frummies live in Monsey


    DaMoshe on housing costs: in 1965, average house size was 460 sq ft per person, now it is 1100. Go back to 500 sq ft per person and your costs will be cheaper


    DaMoshe on tuition: jewish community is mostly neutral on this: Both parents and teachers belong to the community. So if tuition increased, it means a combination of increase in learning, decrease of class size, higher pay for teachers who belong to the same community, more people not paying tuition, higher overhead supporting administration who are also members of the community. So nobody from outside to blame


    There are definitely way too many people following the Joneses and living a lifestyle they can’t afford. I am assuming that you live in CT. But if you’d only see what’s going on in “in town” communities, it is ostentatious beyond any belief. Way too many people are going to Orlando than can afford. The restaurants that are now $500 a plate is insane. People go to say they went and not because they can always afford it.
    Now what’s wrong if you can afford it? There is a lot wrong with these out of hand spending.
    1) it creates peer pressure
    2) you ever thought about what it does to the next generation even if parents aren’t the ones following the Jones’s? And the next generation goal is to be the next billionaire because this lifestyle with private jets etc. There is no way to shield your kids from seeing this and it becomes their goal
    3) Are you really thinking about Hashem when you go on live this kind of lifestyle? There is so much prikas oyl.

    I don’t Care how much tzedaka you give. This Outlandish lifestyle is disgusting and it’s corrupting so many people.


    The ostentatious behavior you describe is typical of nouveau riche and wannabes.
    ‘Old money’ whether Jewish or nonJewish never shied off its wealth, that is gauche.
    You know are spewing about Orlando, a city I never mentioned. I spoke about the Atlantic Ocean beaches and that could not be had in Pennsylvania. The comment I disputed said there was no real difference between Pennsylvania and Florida.
    Anyone in the CR who had read my comments over the past 15 years knows I understand the value of a dollar and don’t waste them.


    Chaim, if you indeed live in an unfortunate place with such values, maybe you should move to a more erliche place. In my humble experience, places where many people work professional jobs, there is less of showing off and the kids are less confused.


    Chaim: Your comment about costs and ostentatious lifestyles prevalent across “in-town” communities is a bit bizarre. There are those who live beyond their means EVERYWHERE and its not unique to (in-town) Brooklyn, Monsey and Lakewood frum neighborhoods. A trip to Orlando is not outrageously expensive nor do most yidden fress out at $500/person 5 star Moshelin Dining venues. Insecure people with a need to keep up with their more affluent neigbors live both IT and OOT, although in the latter case, you may have to drive a bit further to monitor the most recent displays of obscene opulence.


    @gadolhador firstly Orlando pesach is expensive since irs spring break. It’s usually upwards of $200 a ticket plus lodging . Now this sukkos was a bargain with $54 tickets. But still the cost of a place plus amenities etc. it all adds up. I can’t talk for most yidden and it isn’t just the $500 steaks. I will say that many especially younger ones are spending alot a lot of money on fads.
    @always_ask _questions, it’s very hard nowadays to make a living with professional jobs. Their salaries haven’t kept pace with true inflation of at least 25% higher pay on a net basis. That’s 40% on the top.(Gross)
    Plus student debt is nuts. Nowadays our own frum economy got so large that we have almost our own system. P.S. I work as a professional


    Unfortunately, even staying home for Yom Tov can be extremely expensive. The cost of food has gotten so high that it’s difficult for families to afford it.
    There is one thing I usually only do special for Yom Tov – I’ll make a roast. For Shabbos, the beef I’ll eat is cholent meat (which is usually a cheaper cut) and cold cuts. A roast (or a brisket, which I enjoy smoking) is something special for om Tov. The only exception is if I’m having choshuv guests for a Shabbos, I may make a roast, but that is extremely rare. It’s my item that is l’kavod Yom Tov.
    Anyway, the cost of a roast, no matter what cut, has gone insane. So now, I keep my eyes open all the time, because there is one store I know of that puts whole briskets on sale for about $7/lb. When they do, I’ll buy a 14-15 lb brisket. When Yom Tov is coming, I’ll smoke it. One piece goes into the cholent whenever Shabbos comes out on Yom Tov. Most obviously gets served. I freeze whatever is left, and will serve it for the second days.
    But meat is only one item. Grape juice is now $6 per bottle, although ShopRite sometimes has it on sale for $4.50. If you’re unable to bake challah, you can be paying $6 for each one. Cold cuts, even without the fancy boards, cost a ton. Salami, which has always been the cheapest one, was available just a few years ago for $7-$8 per lb. Now it’s $14. Pastrami is $25. If you have any guests at all (and what is a Yom Tov without guests?), you can easily be paying thousands of dollars to make a Yom Tov at home!

    Amil Zola

    I don’t spend a lot of time being concerned about how the Cohens spend their money or their financial choices. I choose to live debt free, drive a 20+yo vehicle etc. If someone chooses to purchase on credit or use equity lines of credit based on perceived home values that’s ok with me. My masser goes to paying tuition for those whose families are struggling, and if I choose to have an expensive steak at a rest or purchase one for my BBQ then I will.


    As many in the CR may have noticed Amil Zola and I grew up going to different schools together.

    Shimon Nodel

    @ujm, that depends, but perhaps yes


    you need to match work plan with educational cost. If you plan on a fulltime job in finance, then it makes sense to get loans and graduate from Columbia. If you are planning on being a p/t accountant, then a local community or online college will be appropriate.


    Having spent an adult lifetime on OOT shul, Yeshivos and Day School Boards, it is a fact of life that the closer the institution is to Brooklyn, Queens, Monsey the less it costs to employ rabbis and teachers.
    Two hours driving time seems to be the demarcation point.
    This is usually based on the wife’s desire to have easy access to shopping, family and attend simchos.
    An hour further away and you might have to pay 40% more to hire the same person for the same position


    @Amil Zola,
    You make a valid point but realize that we don’t live in a shell. This is a viral and interactive community. You may be strong and have the right hashkafa. But your children see things and notices it. They can’t live in a vacuum. The growing ostentatious lifestyle is addictive and alluring.

    , what about a full time job in accounting? You also assume everyone is smart enough for Columbia which tough. I don’t know if you can post links but google Why No One’s Going Into Accounting WSJ. It basically doesn’t make mathematical sense to get a degree any more. What for? any decent nursing home administrator gets 150K after 2 years in while accounting gets maybe 90k if lucky. And it isn’t just nusring homes, its so many other frum jobs. Show me the math and path toward a decent paying college educated job that matches up.


    Chaim, yes, I just saw that WSJ article – other professional jobs have increased starting pay lately (contrary to your feeling), but not accounting … I heard about people going into nursing homes a lot .. In theory, this _is_ a professional job that requires some education, formal or not. In practice, this is one of the scarier occupation where it seems that one earns good money by violating respect to sheva and kavod habriut… there aer so many of these homes that get bad grades, newspaper front pages and even prison times.

    I also don’t think everyone should go to Ivies, to the opposite, one should choose education corresponding to expected job. Say, women who plan to be involved with kids, may not choose to get ivy education, unless they qualify for financial aid

    Amil Zola

    Chaim, my lifestyle is similar to CTLs although we are on opposite sides of the nation. I do not live in an densely populated Jewish area, or as I call the tri state area, the Jewniverse. My family left NJ before $5k chandeliers and Moncler puffer jackets became de rigueur.


    Disclaimer i am kind of tuned into this today purely bec I need a distraction from the sad news of which i didn’t sleep from last night.
    So exactly what college educated occupation offers a staring salary (or at least 2 -3 years in ) of $150,000 and doesn’t require an IVY league education. You can’t expect the masses to attend Harvard. Lets say it isn’t accounting then what is it? (I can tell you that it isn’t data science either. I dabble in that and its not as lucrative as they sell it to be) Do you buy into the AI bubble? (to me it sounds like the zoom and Peleton bubble)
    Nursing homes by the way just require 6 months of training. But I don’t want to get stuck just on that. Today you have people manging warehouses, amazon sellers, marketing all flavors, real estate and property management etc. These guys are all making 150K after 2-3 years. Will all this stick? Who knows? There is a video out there from Freda Vizel (a former chasdish jew but now secular) who i thought put it down nicely. We kind of built our own economic society where jewish commerce is nearly self sustaining from within.
    Ill bring up yet another mathematical point. It almost doesn’t pay to work in a field paying 100K gross bec of govt programs. if you sum up the value of medicad, Snap. wic, free child care, earned income credits etc it adds up to well over 50K in net income. It really doesn’t pay to earn less than 150K Gross because then you’ll lose all those goodies. Now may be altruistic and say its wrong on so many levels to take govt handouts. But when the math is so compelling its hard to tell others that they should just live altruistic lives unless its clearly assur in the torah.

    Amil Zola

    Chaim 87, in my area actuaries are getting entry level private industry jobs at $100K going to $150k in two years, with only a 4 year degree. Tomologists, radiation techs, instrument mechanics, diesel mechanics, project and program managers, data and program analysts all start at about 90k (entry level) a year here in the upper left hand corner of the US. Public sector salaries for the same jobs are at least 25% lower but come with benefits (paid leave, retirement, medical, educational etc) that make the actual entry level salaries much higher than the $90k entry level of the private sector.

    Naturally there are frum that won’t pursue these careers since some require contact with non frum individuals and members of the opposite sex or require relocation to areas outside established frum communities. And we must recognize that many frum HS don’t provide comprehensive career guidance for their students.


    Chaim, answering briefly for Same reason.. as gemora mentions, there is a difference between a professional skill and a business. Businesses come and go and create a lot of opportunities for aveiros. If people are afraid of seeing inappropriately dressed people, what about being locked in an inappropriate business relationship? What about businesses where everyone else hires cheap illegals or underpays taxes, you’ll have to be competitive?

    I am very much enjoying intersection of high tech and business, but I mostly value the business part for freedom from annoying bosses. I think any profession where you can run an honest small business is good.

    I am not a navi to say which jobs will be good in the future, I work in data analysis and machine learning before ai became cool (again), and while there is hype, there are a lot of real products also


    Amil, you also need to look beyond the starting rate. People trapped in multi generational situation where work is not valued, May not be able to jump out quickly, it requires time and adjustment. But while economics of Jewish community may be similar to others, we have Torah sources that would help if that torah was actually taught properly.


    @Amil Zola,
    Actuaries do not start at 100K. I have many friends who are actuaries. They start more at $80K on average (Only a bit more than accounting). In order to earn 150K they need to become either an FSA on the Life side, which means passing 10 very tough exams or an ACAS on the causality side and pass 6 very tough exams. it take smore than 2 years unless you are a super star. And i refer to the greater NYC area which is almost the highest pay. One can work in consulting and slave away at 60 hours a week i suppose. But even there it will take about 5 years to make 150K.
    Data jobs and program analysts perhaps start at 90K but only rise by say 3% a year.
    And the point is what’s $90K worth when you can get $50K net in programs
    Re relocation , in this remote world that’s less of an issue

    The real issue you need to address is why slave away at a college educated job when you can at minimum earn the same without it and usually you can start off earning more? Even if you earn less, you get so many govt programs that why sweat? It seems to be only worth it once you exceed the 150k mark. I don’t see so many of the career paths listed above exceeding that.
    This is a new phenoionim . it used to be that you can’t earn much more than B&H like job at 50K in the frum world.

    All the other benefits you mention are nice. I’ll also add that min corporate generally if you get laid off you have 60 day notice plus severance. At a frum place its often just goodbye and then no paransa. But none of those benefits are that alluring to people when the base salary isn’t higher.

    You also touch upon a good discussion re a secular HS education. But today so many get into PCS like classes in accounting social work and a slew of other fields without it. They also don’t pursue a career till 5-10 years down the line after HS. I just don’t see its contribution to paransa the same as it used to be. There are other benefits to a HS secular education but from a paransa standpoint this whole idea of college just doesn’t to add up mathematically.

    Amil Zola

    Chaim as I said I live in the PNW, FWIW the data I’m using is current for my geographic area and starting salaries of 4 year public and private institution graduates. It may not hold true for the Jewniverse.


    @Amil Zola,

    NYC is the financial capital of the world with some of the largest insurers and highest pays. i know for a fact that your info on actuaries are exaggerated somewhat unless you are star that knocks off exams 123. But thats beside the point.

    The key question is, about the careers you quote where you start at $90K . Why is that worth it when i can earn 150K in jewnvierse? or when i can earn $50K in jewniverse but get another 50K net in handouts?

    Amil Zola

    90K is worth far more in the PNW then in the tristate area for a frum Jew. Our cost of living is substantially lower than that of the tri state area. And again, not all frumma live in the known Jewniverse, nor are we in lock step with the lifestyles of those in the east coast Jewish communities.

    Certainly be happy earning 50k in the Jewniverse and getting 50k in entitlements. We all have choices. I’m not here to confuse you with facts or regional data nor am I hear to convince you to change your mind. I merely clarified with some factual information.

    One of the things I find amusing on the YWN is the emotionality of mens responses. Why take umbrage if someone has an opinion different than yours or disproves your claims with facts? This is life in the world, people have different opinions and some research data before making claims. Its time for you to get over yourself.


    @Amil Zola,
    I have better good extensive research data on actuaries and its more than what you find on google. But Ok lets leave that aside and focus on PNW and earning 90K. And granted that 90K Gross is enough in PNW for a family with a few kids . (Not sure how but Ok)
    I am simply asking you a question. what’s the incentive to go to college and work at a job paying 90K when I can work at an uneducated job , earn 50K but get 50K in handouts?
    Why work hard?
    If I can ask one more question; For those in Jewverse who live simple lives why go to college when I can get a jewverse job for more? (Yes if i live in PNW and there aren’t jewverse jobs I may need school. But if I live in NYC why do I need school?)

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