"Cosmetic" changes vs. financial security

In this piece, Maariv economic reporters try to help a family who is in serious “minus” or overdraft. The husband brings home about NIS 8000 per month and the wife gets unemployment of about NIS 2300. She is hoping that her next job will pay NIS 4000. They also get a child allowance from the government of about NIS 300 (these details were in the print edition which I thought I brought home from my trip, but can’t locate, so they may not be exact). The wife is expecting to get a one-time reparations payment from her former employer (NIS 12,000). Their monthly expenses (including annual payments spread out over the 12 months) totalled NIS 14,154 and with the help of the experts at Maariv they will try to cut it to 12,353.

Their monthly expenses include NIS 4470 for their mortgage payment, or 40% of their monthly income. Maariv gave them very sensible advice: Sell the apartment, invest the capital, and rent until they are in a position to make monthly payments on a new apartment, or alternatively, rent out their apartment and move to a rental in a cheaper area (perhaps they could make do with a smaller apartment since their children are small, aged 2 and 4). But the wife tearfully refused because she moved twenty times before she was eighteen years old (although that’s a far cry from moving twice as a small child)..

Some of the expenses are quite interesting:
NIS 550 for cellphones (Maariv suggested trying to cut it to 300)
NIS 218 for cable (Maariv suggested doing without for a while, paying NIS 15/month to keep the account active)
NIS1800 for food (They already shop in a cheap supermarket; Maariv said to try to keep it to NIS1650)
NIS 198 for a mineral water bar (Maariv suggested bottles for NIS 60/month)
NIS 120 for a belly dancing class
NIS 500 toward the annual vacation to Turkey–they were told to cut it out for a year or two
NIS 3,160 for day care
NIS 260 for hairdressing and beauty treatments (the wife agreed to give up on her fingernail care for a while, in order to save NIS 100)
NIS 300 for cafes (advised to cut to 150 but one night recently they spent NIS 400 on alcohol without blinking)

This couple was also advised to use the unemployment reparations to cover the overdraft and avoid paying interest, and to stop contributing to their savings account. They could then take out a loan to tide them over, the idea being that their daycare expenses will go down when their daughter starts going to the public kindergarten in another year. This plan doesn’t take into account the fact that they will have other expenses as their children get older, including schoolbooks, increased food expenses, and extracurricular activities. Maariv also suggested that they use the car from the husband’s company, all expenses paid, to transport them to free family entertainment like a trip to the beach.

There was no mention of trying to cut their utility or food bills except by “trying to buy products from smaller companies.” What about the soft drinks and processed foods that are a staple of Israeli diets? What about reducing waste or buying in the shuk? Utilities and food comprise a huge chunk of a family’s budgets. Even cutting an electric bill by NIS 10 a month adds up after a while. And NIS 160 for haircare seems pretty luxurious to me.

Need I point out that pulling the children from daycare will save NIS 3160, while the wife’s new job will earn only NIS 4000. She will only make NIS 1700 more than her unemployment payment! Of course she won’t get unemployment forever. I wonder if her job will be full-time–I doubt it with that salary, yet she seems to be paying for full-time daycare. Actually part-time daycare is difficult to find her and not always priced proportionately.

From what I see, I would say that this family’s situation seems quite typical. Unfortunately Maariv’s advisors do not ask the family to make significant lifestyle changes that might bring them true financial security.

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Comments

  1. Now I can see why we aren’t the typical Israeli family. Our monthly cellphone bill is less than 50 shekels and my husband complains 🙂

    We don’t own a TV, Brita filters cost about 25shekels a month, no vacations, about 2600 in childcare, no cafes…maybe one night out every few months, and I know we still could cut back….cheaper grocery store (although I don’t think we go over 1200-1300) per month, always bringing lunch to work (that is my guilty pleasure–but I rarely spend more than 15 shek per day).

    It is interesting to see how others live!

  2. I like the “fix the family’s budget” feature in Ma’ariv- I read it every week.

    Utilities ARE very expensive here- remember a few years ago when electricity rates were raised 20%? I try to hang laundry when I can, especially towels- they would take 3 hours to dry in our awful electric dryer. Though now that the weather is getting colder, it takes SO long for those towels to dry!

    I agree that she should take the 2-yr-old out of daycare, but I think a 4-yr-old needs the socialization – and who knows, maybe the mother watches TV all day, so the kid would be better off at gan. And anyway, most Israeli mothers wouldn’t even consider being a stay-at-home eema. It’s a completely foreign concept to them (unfortunately).

  3. SephardiLady says:

    Timely topic which I hope to link to whenever I wake my brain up and actually make another budget post, which will be a little bit more about getting it on paper and starting to defines their priorities and adjust their needs/wants to make those priorities happen.

    If keeping their current residence is a priority, than other things have to fall by the wayside. Just from looking at the expense list, it seems that many things could fall by the wayside.

    Well, this is inspriring, so after our next set of chores and errands, I will have to put up another post and a link.

  4. Anonymous says:

    hmmm….ok, i can understand that people have a hard time cutting out some of the luxury items that they think they can’t live without, but at what point to we say “hey, suck it up already!” ?

    By no means am I saying that I think people should have to live without any form of entertainment or pleasure at all, because that doesn’t make for a good home environment or marriage, but 400 NIS on alcohol at a cafe??? I guess I have no room to talk because I’m not the head of any household yet, but I do know that my parents have always done a good job of balancing between wants and needs.

    My dad has a good job, but he doesn’t make bundles of money. My mom works now, but when we kids were younger she stayed at home. We never had cable tv growing up, and I can honestly say that we turned out much better because of it! We went to the library for free storytelling hours and checked out books and videos from there. I could go on and on, but you get the idea. We lived within our means, and I know my parents made sacrifices (my mom didn’t get her nails done every two weeks like she used to, and she colored her own hair, but she would go to the salon to get it cut about every 6 weeks). There are plenty of ways to really cut back without feeling like you “never have any fun.” It’s just a matter of whether or not you’re willing to do it.

    Great post, MomInIsrael!!

    –Hila

  5. Anonymous says:

    I’m enjoying your blog.

    I’ve been living in Israel for many years and would never advise anybody to rent long term as opposed to buying. Admittedly I personally had horrible rental experiences, but even without that the fact is that while renting you are at the mercy of the landlord who can basically choose to throw you out whenever he wants. Not a financially or emotionally healthy situation. Perhaps these people could purchase a smaller apartment or one in a cheaper location.

  6. mother in israel says:

    Safranit–
    There’s always more you can cut back, isn’t there? In the case of this family, it just seemed so obvious. . .
    RR–
    My son just started gan now at 5. The ganenet is quite surprised that he is adjusting so well and participating. I think that he has an advantage over the other kids in that it is a new experience for him and he was eager to go. We hang all of the laundry unless we have a serious backlog. I don’t get Maariv but I will try to check it out online this Friday. I bet it will give me as much material as Yated and Mispacha do for some other bloggers. . .And look out for my future post on why I don’t work out of the home. It just has to be transferred from my head to the screen, but it might take a week or two.
    SL–Don’t worry, your brain will wake up eventually!
    HH–Thank you! I have heard it said that young couples today don’t want to sacrifice–they want to start off right away in a big apartment in a good neighborhood. My parents’ generation didn’t do it like that. . . I would say yours too but you are the next generation already. I read your blog and wish you luck on your journey.
    Anonymous–Thank you! Yes, it’s too bad there is no system here for long-term rental because that would make much more economic sense for many families. Also, unemployment is higher in places where people own their homes as opposed to renting, because they are less flexible about job locations.

  7. SephardiLady says:

    Linked to your post with my newest budgets post.

  8. Larry (Maggid of Bergenfield) says:

    I think that’s the point. they want to help them with their monetary problems, but without any significant lifestyle changes. It’s just the way it is in a country that used to live with over 100% inflation. Real sacrifice is not what they’re advocating, just solvency. 30 years ago it was easier to live completely on credit than to save, because the currency was decreasing in value so frequently.

  9. mominisrael says:

    Interesting theory, although Americans have more debt than Israelis.

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