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.