Fuzzy Math - Personal Finances In The Frum World

[drosenberg88429]

Anonymous #4
Lakewood
8 kids kh
Housing about 12k/year after basement rental income
Utilities a few hundred per month
Cars are owned
Tuition 34k per year for 6
Babysitting/playgroup currently about 8k for 2, going up to 10k next year with more hours
Camp for 3 7k
Day camp for 5 4450
Medical insurance about $12,600 annually + several k in expenses
Dental insurance about $1800 annually + a few k in expenses
Gym membership 1200/year
Car Insurance 7500/year
Clothes and shoes... Way too much
Grocery about $250/wk, more yt time
Maaser, 10%+ of after tax earnings
Cleaning help about 7k/year, really depends on whether or not we have steady help and she shows up or not

These are mostly off the top of my head

Tuition is probably too low, depending on income.
Health insurance is likely too low, depending on income.
Groceries are almost definitely way too low, although also depending on income ($250/week for 10 is VERY tight).
Gym membership-lol. (One thing is almost for sure-anyone spending $25/person on food is not getting a gym membership.)
Cleaning help-above
Housing- too low unless no mortgage, or you bought 10 years ago
Car insurance-I'm assuming that's a typo. Should be $2500 a year. Total vehicle ownership costs with gas, tolls, maintenance, ect will be about that number. Probably more like $9k with depreciation/amortization accounted for.
Camps are actually not terribly off, iinm.

Overall, extremely impressive, though (down to the KH)!

[drosenberg88429]

I would guess that a rebbi earning 50k, tutoring on side, with wife babysitting in house, with 8 kids, is in same financial situation or better at end of day as husband full time CPA earning 150k with full time office manager wife earning 85k. A dollar in hand is worth 3 in the bank.

[Ephcc90]

I would guess that a rebbi earning 50k, tutoring on side, with wife babysitting in house, with 8 kids, is in same financial situation or better at end of day as husband full time CPA earning 150k with full time office manager wife earning 85k. A dollar in hand is worth 3 in the bank.

I certainly think that ever marginal dollar over x (100k?) and before y(200k?) amount is going to some combination of taxes/tuition/babysitting/masser.

[bubkiz]

You have my attention.

@aygart mentioned 401K and FSA.
Medicaid eligibility (the "big ticket" program for most) is based on AGI. FSA, HSA, and Traditional IRA contributions all lower AGI.
If one has a business, self employed or side gig (and between both spouses every Frum couple should have one) - there are many other ways to legally manipulate your bottom-line reportable pay.
Some examples:
1. Advertising expenses - Tzedakah donations(larger than the standard $18-$36) can be structured any donation into a legitimate business ad or sponsorship.
2. Hiring children in business - Children under 18 employed by a family business are exempt from FICA. They must be paid a reasonable wage for their age. For example: if a lady has a playgroup, she can pay her daughter to clean up the basement, check supply inventory, and other such tasks. If you own a basement rental, you can pay your kids to take down garbage, shovel snow, etc. These all reduce reportable income. (An added benefit is that this is considered earned income which allows you to fund a ROTH IRA for them. Part of the gains can be withdrawn penalty free for higher education expenses - accredited Yeshiva/seminary and possibly Kollel living expenses)

[Lurker]

Concepts like this are crucial for every frum family to know, but I think anytime acronyms are involved, especially ones that combine letters and numbers, most people become too intimidated to try to learn more. If someone knowledgeable could take some time to dumb it down into its simplest form, they could save communities hundreds of thousands of dollars (maybe more).

[Mordyk]

I budget Monthly so I think I cover all categories.

Here is for a Template:

Regular Income:
Help Income:
Govt Income:


House:
Tuition:
Grocery:
Health Insurance:
Car Gas Tolls Insurance:
All Utilities:
Cell Phone:
Cleaning Help:
Take Out Food:
Misc Home Purchases:
Subscriptions:
Life Insurance:
Cleaners:
Clothing for Family:

Charity:
Savings:


Family Luxuries:
Family Vacation:
Sunday Trips:
Restaurants:



Debt:


Total Expenses:

[aygart]

You cant drive with a car that's not insured. So the government came up with a program that makes the middle class pay for the poor peoples insurance. Dollar a day insurance gives the least amount of coverage possible so when DADI hits a regular insured person DADI pays out up to 5k in damages (and anything else, rental reimbursement etc. Is all included in that 5k max). If the damage is more than that the regular insured guy will have to go to their own insurance company for the money, raising their own premiums and in turn basically paying for the other persons DADI.

Uninsured/underinsured motorist coverage does not change your insurance ratings so it only raises the rates collectively.

[Euclid]

2. Hiring children in business - Children under 18 employed by a family business are exempt from FICA. They must be paid a reasonable wage for their age. For example: if a lady has a playgroup, she can pay her daughter to clean up the basement, check supply inventory, and other such tasks. If you own a basement rental, you can pay your kids to take down garbage, shovel snow, etc. These all reduce reportable income. (An added benefit is that this is considered earned income which allows you to fund a ROTH IRA for them. Part of the gains can be withdrawn penalty free for higher education expenses - accredited Yeshiva/seminary and possibly Kollel living expenses)

Mind blown! TIL thanks!

[Lurker]

I budget Monthly so I think I cover all categories.

Health insurance
Camp
Extra curriculars for kids

Maybe a category for "luxury" purchases (non-essential), and include take-out among that.

Also, maybe a category for additional bi-annual expense bumps for Tishrei and Pesach.

[Mordyk]

Health insurance
Camp
Extra curriculars for kids

Maybe a category for "luxury" purchases (non-essential), and include take-out among that.

Also, maybe a category for additional bi-annual expense bumps for Tishrei and Pesach.

clothing i budget monthly, and adjust by the buying seasons. I adjust grocery etc for Yom Tov months as well.  i tried covering the basics

[bubkiz]

Concepts like this are crucial for every frum family to know, but I think anytime acronyms are involved, especially ones that combine letters and numbers, most people become too intimidated to try to learn more. If someone knowledgeable could take some time to dumb it down into its simplest form, they could save communities hundreds of thousands of dollars (maybe more).

Hence why I stated on the Retirement Funds thread that it would be use benefit to Klal Yisroel for there to be a short "Starting out Your Financial Life for Frum Marrieds" pamphlet or file explaining these concepts and alphabet soup.
Its been a long time dream of mine to put together a few paragraphs on Life Insurance, Retirement Saving, Building Credit, Renter's Insurance, Guarding your SS# (= not swiping for others), Frum Tax Planning and the like.
There is so much knowledge and writing talent on DDF that we can harness with regard to personal finance. If anyone is interested in collaborating pls PM.

[ExGingi]

Hence why I stated on the Retirement Funds thread that it would be use benefit to Klal Yisroel for there to be a short "Starting out Your Financial Life for Frum Marrieds" pamphlet or file explaining these concepts and alphabet soup.
Its been a long time dream of mine to put together a few paragraphs on Life Insurance, Retirement Saving, Building Credit, Renter's Insurance, Guarding your SS# (= not swiping for others), Frum Tax Planning and the like.
There is so much knowledge and writing talent on DDF that we can harness with regard to personal finance. If anyone is interested in collaborating pls PM.

I believe people going to @Dan's hometown for Chosson classes get some kind of a rundown on these kinds of things. Not sure how comprehensive, but I think a written guide is a good idea. English and Yiddish (and possibly Hebrew).

[skyguy918]

Did a lot of this with a Mint dump for the whole 2020.

Location: KGH
50k - Childcare (school and daycamp for 4th and 2nd grader, pre-k school and camp for 1, 1 at home with fulltime babysitter)
30k - Home (mortgage, insurance, property tax, gas/electric, water/sewer, internet, gardener, etc)   
10k - Food   
5k   - Health (premiums/dues, medical/dental expenses, gym, etc)
5k   - Transportation (own 1 used minivan - gas, tolls, parking, tickets, repairs)
2k   - Vacation/Entertainment
2k   - Insurance (life, disability, umbrella, etc)
Tack on ~20% effective income tax rate, ~10% to retirement accounts, 10% maaser.

Left out clothing and other general purchases since it's hard to sift through that stuff with my setup, but even a very broad estimate would be 10k at the absolute max.

A lot of this changes pretty rapidly (childcare likely to go up ~5-10k for next schoolyear), or was affected by covid/work at home (transportation, vacation, food will all go up).

[gozalim]

If one has a business, self employed or side gig (and between both spouses every Frum couple should have one) - there are many other ways to legally manipulate your bottom-line reportable pay.
Some examples:
1. Advertising expenses - Tzedakah donations(larger than the standard $18-$36) can be structured any donation into a legitimate business ad or sponsorship.
2. Hiring children in business - Children under 18 employed by a family business are exempt from FICA. They must be paid a reasonable wage for their age. For example: if a lady has a playgroup, she can pay her daughter to clean up the basement, check supply inventory, and other such tasks. If you own a basement rental, you can pay your kids to take down garbage, shovel snow, etc. These all reduce reportable income. (An added benefit is that this is considered earned income which allows you to fund a ROTH IRA for them. Part of the gains can be withdrawn penalty free for higher education expenses - accredited Yeshiva/seminary and possibly Kollel living expenses)

IIUC these help lower 1099 income, they do nothing towards W2. correct?

[bubkiz]

IIUC these help lower 1099 income, they do nothing towards W2. correct?

Correct.

[CountValentine]

Anonymous #4

Updated

Lakewood
8 kids kh
Housing about 12k/year after basement rental income
(I bought 9 years ago at the bottom of the market, I paid down a lot of my house early (which was a mistake) then refinanced the balance recently. And I decreased my mortgage payment for this calculation by the amount of basement rental $ I get)
Utilities a few hundred per month
Cars are owned
Tuition 34k per year for 6 (4.5k x 2, 6k x 2, 6.5k x 2)
Babysitting/playgroup currently about 8k for 2, going up to 10k next year with more hours
Camp for 3 7k
Day camp for 5 4450
Medical insurance about $12,600 annually + several k in expenses
(This is the actual cost... It's through work and of course they pay into it as well(
Dental insurance about $1800 annually + a few k in expenses
Gym membership 1200/year
Clothes and shoes... Way too much
Grocery about $250/wk, more yt time (probably too low, but I don't pay for meat or chicken for reasons I won't get into here)
Maaser, 10%+ of after tax earnings
Cleaning help about 7k/year, really depends on whether or not we have steady help and she shows up or not
Car insurance about 3750

These are mostly off the top of my head, some numbers are exact and others are guestimates

[Kobe Bryant]

Concepts like this are crucial for every frum family to know, but I think anytime acronyms are involved, especially ones that combine letters and numbers, most people become too intimidated to try to learn more. If someone knowledgeable could take some time to dumb it down into its simplest form, they could save communities hundreds of thousands of dollars (maybe more).

Couldn’t agree more. Which is why we have this thread. We should add a wiki with all the terminology. Investing for one’s future isn’t complicated or complex.

[Mordyk]

I spend on groceries average $1800 for family of 6.  Am I doing something wrong?

[Kobe Bryant]

IMO expenses without income is lacking context.

[gozalim]

I spend on groceries average $1800 for family of 6.  Am I doing something wrong?

week? month? year?