I think frum people do finances differently

amother

Tue, Dec 29 2020, 8:58 pm

I feel stupid.

My parents are BT. Both have professional degrees. Paid off high student loans and paid full price for everything their entire lives and we lived a very basic lifestyle because that's what they could afford. They put away for retirement and are living off social security and their retirement savings. When it came to things like yeshiva and weddings they borrowed against their home because they had no other choice and there was never any extra money.

I was raised to pay off student loans right away because its debt and debt is ethically and financially dumb. I was taught that against all odds do whatever you can to live beneath your means and cash flow everything. Unless its a need and you are literally left with no choice.

But Im an idiot because apparently this is not how frum people manage. The more I learn about how people pay for things and save for thier future, Im learning that people don't wait until they can pay cash for renovations or to buy an investment property, Im learning that buying a house with the intention of renting half of it so you can afford your mortgage is common and that many many people have investments even while having student loans and mortgages on second homes etc.

When Ive tried to speak this over with some friends, instead of admiration for my choices which are HARD (doing without until we can pay for cash with it, paying off student loans asap, buying a smaller house that we can afford on our income and not renovating it because we were taught to never ever dip into our emergency fund unless it is an emergency), instead of kudos Im being informed that Im not playing the game right. That I will always live this frugal life beneath the standards of the frum community and will never be able to afford frum life long term.

I keep thinking they're right because my parents barely did and they had great jobs, when it came to the big expenses they were screwed.

im almost 40 years old. I feel like I wasted my financial life away. And I wish someone would teach couples and young families this stuff.

NotInNJMommy

Tue, Dec 29 2020, 9:00 pm

I think it's not how most people do finances--frum, secular Jewish, or not Jewish--judging from what I hear from the likes of Dave Ramsey or if you've ever read the book "The Millionaire Next Door".

One of Dave Ramsey's lines is "Live like no one else so that you can live like no one else" or something to that effect.

Also, it's very hard to know what things are really like for others. Are they really living within their means, even with monthly payments? Does anyone really know your financial situation? The reality is we just don't.

Maybe some have a different risk posture re: loans, debt, etc. For some, they experience a lot of agmus nefesh with debt, for others, this does not eat at them, or if it does, they function ok with it.

One doesn't know what the situation will be when they are nearing retirement age if they have a lot of debt. Also, it costs money to manage money.

I'm very pro-Dave Ramsey, and I know I don't want to be self employed, manage many credit cards, or be a landlord. Some people have a personality to like being an entrepreneur or manage properties (and all the best to them!), but I'm not one of them.

Last edited by NotInNJMommy on Tue, Dec 29 2020, 9:17 pm; edited 1 time in total

little neshamala

Tue, Dec 29 2020, 9:22 pm

amother [ OP ] wrote:

I think youre just talking to the wrong frum people.
Im frum. Live among right wing yeshivish frum people.
We follow Dave Ramsey's financial advice, of "if you cant afford it, dont buy it."
We dont buy a house with the intention of renting it in order to afford it, and we dont pay for things by going into debt, and we only buy things that we have the money for.
We do this happily.
I cant imagine the stress id be under knowing im spending above my means and have things to pay back.

amother

Tue, Dec 29 2020, 9:25 pm

NotInNJMommy wrote:

Im also not the entrepreneurial type but can this type still manage the long term frum lifestyle?

Are you in yeshivahs, wedding stage and doing ok?

amother

Olive

Tue, Dec 29 2020, 9:28 pm

little neshamala wrote:

I grew up MO But same. We always lived below our means (taking out a loan for a cosmetic home renovatioN? Never! Live in it and save till you can afford to. No one ever died from living in a house with a kitchen not to. Your liking) I think your sample is too small and you’re drawing the lines in the wrong places

amother

Tue, Dec 29 2020, 9:30 pm

amother [ Scarlet ] wrote:

Sounds like they didn't invest for other than their retirement.

Everyone has different appetites for carrying debt. Its not ethically wrong.

Money is cheap now so to speak. It wasn't in the early 80s. Its not the same financial world your parents raised you in.

can you explain more?

also debt literally means you borrowed money and you are beholden to someone/institution so long as it is not paid back. It is a huge cultural shock that this is no biggie. I get it Im naive I realize this now. Hence my post.

NotInNJMommy

Tue, Dec 29 2020, 9:36 pm

amother [ OP ] wrote:

Im also not the entrepreneurial type but can this type still manage the long term frum lifestyle?

Are you in yeshivahs, wedding stage and doing ok?

I don't know. But I'm going to try.

I'm blessed with a smaller family, kids still in day school. Not yet wedding age.

But I have other personal matters rather out of my control that cause a lot of financial strain, and effectively I'm working poor.

I bh have a house, a 401k, another employer funded retirement (defined contribution--not pension), and I'm trying to stay debt free...or get back to debt free. I've never gotten to the "fully funded emergency fund" stage with dave ramsey...although I do have a bh 15 yr mortgage on my home.

I do get some flack (comes up in the personal matters, long story) because I do live below my means and many things I do not treat as musts. My kids don't feel lacking because they aren't. I've only had some of these recent personal matters require taking out a LOT of debt, and I'm digging out from it with Hashem's help, but it's not my normal way of being. Thankfully, I could take on what I had to because I didn't have debt to begin with bh except the mortgage.

So, I get to work more of a 9 to 5 job. I don't have to hustle. I also live OOT (Northeast US) and grew up in the midwest. And I thankfully have a lot of introverts in my family so we don't need to be out and about much. (and my kids got the summer sleep away camp experience a couple times and that was enough for them)

In the end, I'm a pretty independent person and, for better or worse, don't get too wrapped into the neighbors' habits. Also, at the end I need a peaceful home, and for us, it's more peaceful to do some things more simply than to have me losing sleep over debts or being up all night managing accounts or being a landlord.

amother

Scarlet

Tue, Dec 29 2020, 9:43 pm

amother [ OP ] wrote:

Its not unethical to owe someone money. The bank doesn't lend money as a favor to you, its their business.

Interest rates were really high in the early 80s. They are much lower now. The kitchen reno that will both improve your life, and the value of your home won't cost that much more if paid for with borrowed funds.

Debt is leverage, we go down to move us higher up.

Also, paychecks alone are often not enough. Investment (risk) supplements networth.

amother

Olive

Tue, Dec 29 2020, 9:49 pm

amother [ OP ] wrote:

And I was taught that this means you cannot afford your house.

My new knowledge is that this creates an income long term that I will never have because I stayed in my lane instead of reaching beyond my pocket.

My parents bought a 2 family house When they were in their 20s and rented out a small apartment. Each tenant was worse than the next. The last one was a cocaine addict. I was young but vividly remember thinking, why is dad giving our tenant a vcr? My dad has to PAY him to leave! He trashed the apartment and didn’t pay rent and NYC protects the renters not the landlords. After that they pretty soon converted the house to a 1 family. I say this so you don’t idealize having tenants: there’s a lot than can go wrong. They can trash your home, your investment. Even now years late their stories terrify me (I own an apartment that I live in now but hope to rent out at some point, if I can. Stomach it)

Not to mention what if it’s during covid. Your tenant lost his job. You want to be. A good guy and give him an extension on your rent but you have to pay the mortgage so you say, ok, just one month. A month goes by and the guy can’t pay rent again. What do you do? Do you evict him? How? Courts were shut down ? Even if there open eviction proceedings take forever. Then what? In my view of you can’t pay the mortgage in your own then you can’t afford the home. You may disagree but I think the above points need to be made as they are all very probable scenarios

cozyblanket

Tue, Dec 29 2020, 10:04 pm

Oy, OP. It's so confusing.

You are doing it the right way. The money that could be debt can be invested instead. That's income in the long run. If you can't afford to save/invest, then you wouldn't be able to pay back the debt.

You are doing it correctly. Financial stress caused by debt can cause health problems and can certainly affect your quality of life more than having a house that isn't renovated. Less is more.

Please continue to follow Dave and run away from debt like a gazelle running from it's hunter. Doing what's right isn't glamorous, but it's still right.

amother

Scarlet

Tue, Dec 29 2020, 10:10 pm

lamplighter wrote:

Some people are raised (born with?) an aversion for owing money.
My husband is like that.
We have always lived super simple and he is not a risk taker because he needs to sleep at night (as he puts it). We will never be rich.
I grateful for his responsible nature and his work ethic and I just daven to Hashem that we can afford our lifestyle.
I will admit that this thread is scary to me. Is it not possible to afford frum life long term with a salary?

If you know what that salary is, you can budget and see. Nothing to be scared of.