Part II

Last week, I shared some reflections from our family’s 20-plus years of struggling with tuition costs. This week I want to share some practical lessons we learned along the way.

Housing: The best advice I can give you is to keep your housing budget under control. Pundits want to tell you that your rent/mortgage payments can be between 28% and 36% of your income. For families with kids in yeshiva, this is just way too high. When we bought our first house, my wife and I had a budget. But the real estate agent and the mortgage broker convinced us to go higher—which kept us well below the 28%, but was still a big number when our third child started school. Yes, when rates dropped we refinanced, but that mostly covered the increased taxes without putting much money in our pockets.

Keeping rent low is critical. In a tough year you can cancel vacations and cut down on eating out. You can delay paying a few bills and carry a little bit of a credit card balance. Your shul will give you a break on dues and the school will restructure your payments even if there is no fee reduction. On the other side, landlords, tax assessors and bankers must get paid on time, every time. Just being late brings on late fees that pile on at the worst moment. Being 30 days late can drop your credit score, stretching a bad year into a bad decade.

It’s not how much you make, it’s how much you keep! The old saying that the only two certainties in life are death and taxes has a few exceptions, at least on the taxes side. For example, families can save up to $4,200 per year in taxes with the proper use of a flexible spending account (FSA)¹. Another example: If you live in New York State, contributing to a 529 plan might offer an immediate tax benefit even if you cannot afford to save for college right now².

Choosing the right health plan is also critical. If you are paying for your own insurance or your employer offers you a choice of plans, choose carefully. Not paying attention can cost you thousands of dollars in extra premiums for benefits you don’t need, or save you thousands of dollars in after-tax, out-of-pocket expenses by paying a slightly higher premium as a pre-tax payroll deduction.

If finance is not your thing, talk to the professionals! It is easy to get overwhelmed by the abbreviations and numbers related to taxes and healthcare: FSA, HRA, HSA, IRA, Roth-IRA, 529, 401-k, 403-B, AGI, Co-pay, Co-insurance, deductible, Individual limits, family limits, tax credits, tax deductions—the list is seemingly endless. Go to your human resources department, your accountant (or your cousin the accountant) and get them to explain it to you. When you don’t understand, ask them to explain it again. Don’t be embarrassed to go back a third or fourth time. Keep going back until you understand it. Don’t get discouraged and don’t fall back on excuses that it is too hard for you. You simply have too much money at stake.

Stretch your buying power! Small choices add up. Saving 50 cents or $1.00 doesn’t feel so meaningful, but saving small amounts on EVERY transaction, all year long, adds up fast, so pay attention to prices while you shop. A great tip is to take advantage of the Bergen County Day School discount card. You can also pick up thousands of dollars a year in cash back and gift cards from credit card rewards programs. However, you can also find yourself hopelessly in debt from overspending because you spend up to your credit limit instead of your bank balance, so use credit cards wisely and carefully.

If you need financial aid, apply: A family with three kids in yeshiva high school has a tuition burden that is between double and triple the U.S. median family income. There is nothing to be embarrassed about in not meeting such lofty income requirements. When all your financial management tricks are exhausted and your income is still not enough, it is time to ask for help. When you apply, do so honestly and thoughtfully.

Hopefully this column has given you a little bit of hope for the future, even if it is just a pleasant daydream for now. Maybe some of the practical advice will help you navigate a little better along the way. Either way, I know that being short every month, even if it is just a few dollars, is exhausting. I have shared your pain and frustration for the last 20-plus years. I know it can be so all-consuming that you stop being aware that any other life is possible. Stick with it—better days are coming.

1 Based on the current limit of $10,500 for FSA and Dependent care and a 40% tax rate, a two-income family with young children can save as much as $4200 per year in taxes.

2  In New York, a state that allows a deduction for 529 contributions, you can make $10,000 worth of contributions to a 529 plan and immediately withdraw it to pay for K-12 private school. With a state income tax rate of 8.82%, that comes to $882 in tax savings.

Consult your tax adviser before making any financial decisions. Each family’s case is unique.

Richard Langer lives in Teaneck. His first career was as a small business owner and he has been executive director of the Hebrew Institute of Riverdale – The Bayit for almost 10 years. His varied list of volunteer positions includes his current service as an executive board member of The Idea School.