Is there a middle class frum family financial crisis ?
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- This topic has 39 replies, 17 voices, and was last updated 2 years, 1 month ago by Always_Ask_Questions.
February 6, 2021 10:54 pm at 10:54 pm #1945814
A recent post took it as a given that there is a financial crisis in the frum community in North America. I question if that is true. With so many people living a higher lifestyle than in previous generations (say even 30-40) years ago can it be true that we are suffering? Is the system really all based on borrowing and will soon collapse? Drive around a frum neighborhood in the U.S. and on the outside people are doing OK. What do you say?February 6, 2021 11:50 pm at 11:50 pm #1945827meir GParticipant
What exactly is your question? What’s obvious is the average frum family needs a boatload of gelt to live with current standards,tuitions camps simchas…its also true that on the surface the show goes on and it seems ok. The billion dollar q is how, ? Can it be that the avg working person can bring home 6 figures…its a nes galuyFebruary 7, 2021 1:41 am at 1:41 am #1945833ujmParticipant
Lower your standards. A large percentage of spending is in non-essentials/non-requireds. Stop that spending.February 7, 2021 11:05 am at 11:05 am #1945963bk613Participant
“A large percentage of spending is in non-essentials/non-requireds. Stop that spending.”
I disagree, a family with 4-6 kids will spend tens of thousands of dollars on yeshiva and camp alone. Add on housing, healthcare and food expenses and the average family would have to make well over $100k to just break even.
Yes, yeshivas give tuition breaks and there are government programs to help with food, healthcare and rent (which many of the frum middle class don’t qualify for) but it’s not sustainable to have a community running on handouts and subsidies.February 7, 2021 11:06 am at 11:06 am #1945979lakewhutParticipant
No, there is a materialism crisis. You don’t have to go to a bungalow or to Florida for pesach.February 7, 2021 12:30 pm at 12:30 pm #1945988
Live on one sentence and you’ll be able to manage with your finances
GET WHAT YOU NEED NOT WHAT YOU WANT
Sure we all need to take a summer vacation but to take 3 vacations a year is insane. And there are many affordable options for vacation that don’t have to cost you so much. Same when it comes to Simchas and how often going out to eat etc… These are extra wants not needs. Then you can’t have complaints when you spend over your budget and go into Debt C”V
as married adults we should all be living responsible lives and only spending on what a person can afford according to their Budget.February 7, 2021 12:31 pm at 12:31 pm #19459905TResidentParticipant
Yes, there is a financial crisis. First, although I live in the “Five Towns”, I have a very small house – my plot is 40×122, certainly smaller than many homes here, in Monsey or in Brooklyn. We have two used cars, a Toyota can and a small Ford. We haven’t been to Florida as. family in 15 YEARS. Second, my wife and I are both professionals and make decent livings but we are struggling. We NEVER go away for ANY Yom Tov and we spend our summers at home. The truth is, the costs of Yeshiva tuition, summer camps and Glatt kosher food are so astronomical that only the very wealthy can afford it. Those of us of modest (ordinary) means are virtually living paycheck to paycheck.February 7, 2021 2:53 pm at 2:53 pm #1946030
Thank you 5TResident for addressing the issue. My follow-up question to people like you is “do you feel that you are the norm or the exception?” I have spent some time in the five towns and my impression is that you seem to be the exception. Drive around and see how many houses (bought at very expensive prices) have been renovated. Look at the prices in the supermarkets and the amount of luxury items people buy. During vacation times it seems like people empty out to high-end places etc.
My point is that if it is true that the admission of “5T Resident” is so common I would expect at some point for the system to collapse or correct itself as it does in the rest of the economy. Why do we constantly see pesach hotels expanding, expensive sleep-away camps growing, people driving newer fancier cars, more newlywed couples living in Israel on parents dime, etc.
My question is not what should we should be doing. My question is what is the reality? Are most people like “5T resident” just squeaking by?February 7, 2021 4:12 pm at 4:12 pm #1946039GadolhadorahParticipant
Its all relative and depends what you mean by “financial crisis”The 5T is not Monsey or Lakewood. Average family incomes in the 5T is considerably higher than either Monsey or Lakewood. Family size is clearly one factor since 5T frum families are generally MO with fewer kids and a higher percentage of professionals with higher incomes. Also, the cost-of-living is higher in the 5Ts if you use average home sale prices or similar metrics.
The simple answer to the OP question is not so simple. You need to first establish exactly what is meant by “financial crisis” , adopt some uniform metrics on how that crisis is measured etc.February 7, 2021 4:34 pm at 4:34 pm #1946044
I read the public area of Imamotherdotcom. There are two extremes represented when it comes to spending. Some mothers argue that regardless of how broke they are they have to buy the kids a hoverboard, $100+ backpack (just examples). Or there is the son getting bar mitzvahed that needs a borsellino and a $50 hat is ‘just not right’ (<this is a quote that has stuck in my mind for years. The reasoning of many is their children will emotionally suffer if they don’t have the same things as their peers. Of course as those children grow up, they will need the diamond bracelet/watch etc or be ridiculed by their peers, or their parents will be looked upon with shame. Yes there are some purportedly wealthy women posting there but I’m guessing they are in the minority. Some are extremely generous to women who are strangers that need groceries or other necessities. It’s a real mixed bag.February 7, 2021 7:32 pm at 7:32 pm #1946076
I see that economic issues are often solved but the expense of more important things….
Parents are exhausted and unhappy trying tp earn to pay for everything and children are not seeing Judaism as a happy thing … this is a repeat of how things were in this country in 1930s, albeit at a higher standard of living.
One solution for exhausted parents – send kids to an online school (public are available in many states, except where teachers unions block them – NY, NJ.., and there are inexpensive private), and then hire teachers to teach Jewish subjects to a small group of kids, or teach yourself. Now you have free time and can enjoy learning with your kidsFebruary 8, 2021 7:22 am at 7:22 am #1946107press87Participant
Always ask question clearly you are a kofer ur probably one of this people who asks but doesn’t care about the answer huts because some kids don’t view Judaism as a happy thing doesn’t mean they all do the problem is more found in Flatbush where the regula bebo Torah who work have completely disappeared because they all moved to Lakewood which I sheets the Bnei Torah live and the problem is much less common. Only in Brooklyn where the parents don’t care about Judaism is the problem of kids not liking Judaism much more pronounced.February 8, 2021 7:23 am at 7:23 am #1946114
You wrote how expensive tuition and camp and even food in the 5 towns is… Ever heard of sending to local day camps and saving thousands of dollars compared to sleep away camps?February 8, 2021 8:13 am at 8:13 am #1946196☕ DaasYochid ☕Participant
Press87, someone is a kofer if he thinks there are problems in Lakewood too? That’s a new one.February 8, 2021 9:09 am at 9:09 am #1946203
press87, other than a presumption that I am a kofer, I was not able to fully follow your text. Could you please add some commas next time? I was able to parse the last sentence, thanks for separating it. I think you are right – people who do not work are often feeling happier. We are discussing in this thread the problems of professional families that work hard, pay high tuition, and are under stress. So, the kids end up seeing distressed parents and not joy of Yiddishkeit… Quitting jobs to get tuition breaks at someone else’s expense is not the Torah answer for many.
As I said, this is a repeat from 1930s. The joke I heard, I think from R Nosson Sherman, about a father who spends little money he earned on after-public-school Rebbe for his son. He asks his son – what he learned.
The son says – Yitziyat Mitzraim … Moshe built a bridge over Yam Suf, then sent helicopters and bombed Egyptians.
Father – really, this is what the Rebbe said?
Son – no, this is my version. If I’d tell you what he said, you would never believe it ….February 8, 2021 9:38 am at 9:38 am #1946218
>> Ever heard of sending to local day camps
other option is to work/volunteer in a camp, whether local or not. Not only good for the budget, but better for the kids also. And, if you are still WFH, you can take a longer worcation with the kids yourself.February 8, 2021 11:37 am at 11:37 am #1946246akupermaParticipant
There always has been such a financial crisis, and there always will be. Just say Baruch ha-Shem. Having large families is for us a “feature” and not a “bug”. The law of supply and demand (cf: Adam Smith) will dictate that the level and expense of services offered (the supply) will fall so that it is in equilibrium of what families can afford (the demand), and this will a happen without any fancy committees doing anything.
Note that “middle class” is always a relative term – once it meant that everyone in the family had their own bed, the parents didn’t sleep in the same room as the children, and you had something other than potatoes to eat during the week.February 8, 2021 12:06 pm at 12:06 pm #1946257
Of course there is a middle-class crisis.
No, just because many in the 5 Towns and elsewhere are either upper-class (Two salaries of at least $100K or the equivalent) and/or have help from relatives, that doesn’t address the middle class.
Take typical salaries of today and typical house prices and real estate taxes of today, and compare the those to the same 10, 20, 30 and 40 years ago.
House prices used to be far, far, lower, while typical salaries have basically stayed the same over that period.
House prices in frum areas are typically $500K or more, with Real Estate Taxes at around $10K per year or more. If you live in NYC, the RE Taxes are lower but you likely more than make up for that with your City income tax.
For a 500K house, that means you need $100K just for the down payment. Even if you could somehow cover that (rich in-laws/uncle/whatever), that still leaves about $400K to mortgage, or about $3,000 per month including Real Estate taxes but before utilities, maintenance, repairs, etc.
Figure $50K per year total, after tax, just for the house. That’s already one “normal” salary (again, after tax).
Now add tuitions, even with breaks, and you’re looking at another $20,000-$30,000 or more, depending on the schools and number of kids.
So you need about $80,000 AFTER tax for just the house and tuitions. That’s without the car or cars, food and clothing, not to mention camp (as in day camp, never mind sleep-away).
And if both parents are working, then you likely need babysitting, which is another large expense (and also a big problem because in many cases those babysitters are not Jews, so that means the kids are effectively being raised, to a large degree, by a non-Jew).
Yes, this is insane.February 8, 2021 1:32 pm at 1:32 pm #1946268akupermaParticipant
HaKatan: If housing prices are too high, move to a cheaper location or move to a smaller apartment. If tuition is too high (or rather the “discounts” offered are too low), move to a cheaper school. While it is nice that some frum Jews can afford upper crust areas such as Nassau County or New York City, that does happen to be among the most expensive places to live. Overall in America, there is a steady migration from high-cost areas to affordable areas.
Perhaps should you be asking if there is an upper class frum family financial crisis?February 8, 2021 1:33 pm at 1:33 pm #1946269
Gadolhadorah made a good point about creating a metric for the question. Since I am the OP I will take the liberty to create a metric that will likely upset some. Since we will never really be able to agree on any of the specifics here I will try to create somewhat of a guide as to what I was thinking.
I agree that there are some basic necessities and beyond that there are comforts. If the majority of frum families in North America are struggling to cover the necessities then I would agree there is indeed a crisis in the frum community. If the majority are OK with covering necessities but struggle with comforts then hopefully the system will soon correct itself and the societal pressure to pursue these comforts will dissipate. I realize that at various stages of life people experience different expenses so I will try to be broad.
Again, please do not attack me for what I will label as necessities and comforts as I am just trying to put together something for the sake of the discussion. Try not to get hung up on the details.
Tuition (at whatever figure you have worked out with your child’s yeshiva) child care etc.
Utilities (gas, electric etc.)
Mortgage . For argument’s sake let’s put it at the average mortgage for a home for which you paid $400,000 including renovations to move into (the US median home price is under $300,000 but I bumped it up for frum neighborhoods)
One car per person in the house working. Bought not leased and keep the car until it is at a minimum of 10 years old or 120,000 miles. Not fancier than a Honda or Toyota
Food. Average food cost for a kosher home when 98% of the food is prepared at home. (I guess we could allow for going to a pizza shop once a month or so and buying challah from a bakery for shabbos). Family tries to shop for food on sale and avoids unnecessary pricey food purchases (as determined by the average purchaser in the general public).
Clothing: Hard to determine what is basic but let’s say they look for the cheapest prices around for average clothing and avoid frum clothing stores when possible (I am not getting into the halacha of “buying Jewish” but let’s face it, frum stores are high end)
Home maintenance: For people that have the skills they do their own home maintenance. Areas beyond your skillset you hire but only as needed.
Vacations: I consider summer homes and annual vacations costing more than $500-$700 to be a comfort.
Simchas: B”H we can make simchas but anything beyond the basics of what REAL Rabbonim call basic is a comfort. In my mind a basic Bar Mitzvah would call for Tefilin, a modest kiddush, hat and suit for just the BM boy. For a wedding just a lchaim, no vort, basic takanah package in Lakewood for about 250 people etc. In other words the kinds of simchas that simple people make. No trips to E”Y for a BM boy, no elaborate sheva brachos for the entire extended family etc.
Supporting children in kollel. It’s a beautiful thing if you can afford it but not if you can’t
Eating out. It seems to me as if restaurants have become much more accepted than they were 30-40 years ago.
Yom tov in a hotel or rented vacation home
Trips to eretz yisrael for pleasure or family simchas
Home beautification bound what is necessary for functionality
I also realize that many may disagree with any of these points but let’s not get hung up on details. I guess my concept of what is normal is from looking at what was accepted by most frum families 30-40 years ago. Those from the older generation will argue that we considered basics in those days were also comforts.February 8, 2021 2:54 pm at 2:54 pm #1946287
How many will be supporting the Democrats proposal to pay $3000 per child. 8 kids would equal $24k a year. Would these families be willing to give up means tested public benefits if those funds put them over the top?February 8, 2021 2:54 pm at 2:54 pm #1946289ujmParticipant
Anyone who sticks to your list of “necessities” only, 90+% of frum families will not be in financial crisis.February 8, 2021 4:01 pm at 4:01 pm #1946341bk613Participant
First off the credit is already $2000 so it would “only” be an extra $8000.
Regardless, what will likely happen is that yeshivas will insist on higher tuitions. They will know that you got this extra $1000 per child and will adjust their tuition breaks accordingly.February 8, 2021 6:30 pm at 6:30 pm #1946367
One of the biggest drivers of expenses today are the combination of property tax, of which the majority goes to fund a public school system which is not suitable for any Jewish child and tuition.
We are forced to pay exorbitant fees to fund a system that we cannot afford then have to go and build a parallel system for our children,February 8, 2021 6:31 pm at 6:31 pm #1946364
You seem to be ignoring the numbers,
A basic house in Lakewood, NJ and it’s environs, which is cheaper the New York costs aroun 500,00 right now and that is cheap factoring in taxes and the current low mortgage rate, and you already have 40,000 in expenses just to cover a mortgage.
Tuition in Lakewood, which is far cheaper then anywhere else is aroun 4,500 per kid.
If an average Orthodox Jewish Family in Lakewood has 7 kids that equals 31,500.
So just tuition and mortgage cost are 72,000 dollars for the average Yeshiva family.
We are not even beginning to talk about utilities, insurance, food, clothing, shabbos, yom tov, simchas, day camp etc…February 8, 2021 8:39 pm at 8:39 pm #1946382
Bke, I apologize. I totally messed up that post and the figures. The alternate plan by the demos would give an annual $3000 per child annually, by check, this would not be a tax credit. Nothing was mentioned about what would happen to the basic child tax credit or if this additional income would impact means tested public support.February 8, 2021 8:41 pm at 8:41 pm #1946384
1. I do not want to quible about the numbers. I generously put the cost of a house at $400,000 since it seems to me a person could buy a very comfortable house in a frum neighborhood (even on the East coast) for about that much. The fact that people CHOOSE to squeeze themselves and pick houses in expensive areas is a choice. That fits into the comfort area. A person can’t buy a $1M dollar house in Boropark and then kvetch how much it costs to live there. No one told him he needs to live in BP. It seems to me that you can still buy a modest house even in the environs of Lakewood for $400K and certainly for a lot less in other fine frum communities.(If necessary we will spell them out for you)
2. My point was to ask a question. If we say say that these things such as basic shelter, food, education etc. are necessities do you think that the MAJORITY of frum families are not able to afford these basics and would therefore be considered in crisis or would you say most frum families have no problem affording the basics? Perhaps they have trouble affording the extra comforts but that is the next step of the discussion.
3. My unscientific observation seems to be that since so many people seem to be enjoying a life that is beyond the necessities (into the comfort zone) my guess would be that most people are doing OK. I find it hard to believe that the system can sustain itself otherwise without collapsing. But hey I could be totally wrong in my observation and conclusions.
That is why I threw it out there for discussionFebruary 8, 2021 10:00 pm at 10:00 pm #1946399
I would venture to guess that some have parents or others helping them with their housing or they are otherwise living in sub-standard conditions, which therefore enables them to afford some “luxuries”.
But it is not normal to need help from your parents, even when you are both working.
Regarding out-of-town, in most cases that means, maybe, as low as $300,000 instead of, say, $500,000, (figure $10,000 per year saved) and possible lower taxes (figure $5,000 per year saved), though usually higher tuitions would more than make up that ($15,000) difference.
Either way, it’s still insanely expensive. 40 years ago, salaries were not much lower than now, but house prices were less than just the down-payment is now. Meaning, say, $60,000 for a house, not $600,000. And taxes were also thousands less.
The bottom line is that unless someone else is paying the down-payment and perhaps even more than that, a middle-class typical frum family cannot afford to pay tuitions and buy a house in a typical frum area.February 9, 2021 4:33 am at 4:33 am #1946447
“you need 20 percent of the price of the house for the down payment before the mortgage”
Actually FYI in today’s day and coronavirus mortgage rates you can get a mortgage for very low BUT ALSO with just putting down like 3 or 4 percent of the price of the house to buy it and put everything else on the mortgage versus how it used to always be for years of a minimum of 20 percent down payment. Yes that’s the new generation and economy were in today.February 9, 2021 8:01 am at 8:01 am #1946464☢️ Rand0m3x 🎲Participant
Mishpacha had a piece about this 2 weeks ago. Google [ “Fuzzy Math” “Alexandra Fleksher” ].February 9, 2021 12:32 pm at 12:32 pm #1946603
True, but then you need to pay another $500 per month or more to pay that additional amount mortgaged and likely PMI, making the monthly payment on a typical house + tuitions for a typical frum middle class family even less affordable.February 9, 2021 3:16 pm at 3:16 pm #1946638
Actually it seems to me that the reason for the many “luxuries” we see now is pretty much because of what you see as the result of most socialist/economic economies.
You can either be rich or poor, or single.
Rich can afford life, poor is supported by the government, single has no expenses.
However middle class families need to earn a salary that forces them to pay taxes that can only be afforded by the wealthy, so as such they must stay poor.
Because of this fact there are many wealthy people in the Jewish Community and many poor and a vanishing middle class.February 9, 2021 4:03 pm at 4:03 pm #1946659
Random 3X-Thank you for directing me to that article. It seems that all she does is raise the same questions but “bleibs shver” as we say in Yeshiva. She does not offer any real answers.February 9, 2021 4:06 pm at 4:06 pm #1946662SaraZipporaParticipant
America has a small middle class, culturally and economically-speaking, compared to most Western nations. As is well-known, what’s left of it is shrinking by the year and has been doing so for a very long time. No surprise that frum families, with all the extra outlay, find themselves especially short-changed.February 10, 2021 1:09 am at 1:09 am #1946808
>> just putting down like 3 or 4 percent of the price of the house .. yes that’s the new generation and economy were in today.
Ein Hadash Tahat Hashemaim – this happens before every housing crisis. So, if it happens in your area already [not in mine, I believe], please do not buy RE, or at least do not buy on the outskirts of the city … typical pattern is that when things are going hot, prices in best areas go up, say, 20% and people start buying in more “affordable” areas where prices go up 100%. Then, things go down and people in “affordable” areas with 4% down foreclose.February 10, 2021 1:25 am at 1:25 am #1946813
>> America has a small middle class, culturally and economically-speaking,
fact check: often claimed, but is true only if you consider being in an “upper class” a bad thing.
quoting Rakesh Kochhar, Pew Research, 2017:
US has less “middle class” than Europe – 60% v. 70-75% in France and Germany when middle class is defined “relative” to the income in that same country (2/3 to 2 median incomes). Part of it because .. US has, o horror, 15% upper class, while Europe has 10%. Lower class in US is 26% v. 18% in Germany/France. So, differences are not dramatic and mostly in US favor.
When adjusted for cost of living and using US standards, Germany/France get almost same 63% middle class, 4% upper class, 33% lower class. When trying to adjust for possibly not including myriads of gov benefits in Europe in the above, France is 92% of US.
College-wise, al pi OUSD, number of people with tertiary education in US is > 40% from 20s to 60s; UK slightly behind;l in in France 40s for 20-y.o, going down to 20 for 60yo; Germany in 20s (take in mind their non-college career tracks). Russia, Canada, Israel, Japan South Korea are 5-10% ahead.February 13, 2021 10:49 pm at 10:49 pm #1947770☢️ Rand0m3x 🎲Participant
However middle class families need to earn a salary that forces them to pay
taxes that can only be afforded by the wealthy, so as such they must stay poor.
Correct me if I’m wrong, but in the US, don’t you only pay each tax bracket’s
rate on the portion of your income that puts you in that tax bracket?February 14, 2021 8:16 am at 8:16 am #1947788
Yes but there are limits on deductions.
To the best of my knowledge ( and I am not an accountant) Tuition is not Tax deductible, nor is Day Camps, nor is tutors for a child who needs it, Kosher food, nor is food for Shabbos & Yom Tov.
And it is quite common for a frum family to be paying upwards of 50,000$ of basic tuition.February 14, 2021 8:56 am at 8:56 am #1947878SaraZipporaParticipant
@ Alwasy ask questions: Thanks for the stats but I’m not sure where your point about “upper class” (however that may be defined) comes into the discussion. I certainly did not mention the “upper class” or suggest that it is a bad thing.
My point was about culture as much as econimics. In Europe there is a cultural middle class, i.e. a class which defines itself as such according to its cultural and intellectual interests and output, rather than accourding to materialism and money. It is harder to measure the wealth or economic significance of this class relative to other classes, as people of all backgrounds may see themselves as being part of it.February 14, 2021 7:08 pm at 7:08 pm #1948094
SZ: not sure where your point about “upper class”
My point is that one of the reasons Us “middle class” is less is because the “upper class” is larger. That is not a bad thing, except for commies.
As to “culture”, OUSD numbers show that US had a (decreasing) lead on educated population over Europe from 1920s. What you define as “culture” was remarked upon by Tocqueville: Americans tend towards practical skills that are useful when going to frontier (whether physical or virtual) rather than poetry and philosophy popular among European aristocrats. So, you may be unfair discounting applied intellectuals as just “materialism”. They are the ones who connect the world though railroads, radio, electricity, special forces, internet.
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