My husband was hired by a startup in Tel Aviv a year ago. A month after he was hired, a number of people were let go and they closed down one of the two floors they had rented in a large building.
A couple of weeks ago, thirty percent of his coworkers were let go. My husband went in for the special meeting held with the remaining employees to explain what is happening.
The chief financial officer of my husband’s company was one of the first in the Israeli tech space to be interviewed and talk publicly about the assumption there will be an economic recession over a year ago. He now explained that investment money used to go to start ups that were spending money hand over fist. No one wanted a company on a budget; they wanted to see growth.
Now the investment money is looking for companies that are lean, in order to get through the financial dip that is expected. He explained that they are making these cuts in advance, to prepare for what is coming with the hope that the company can make it through. They also have shut down their large spacious offices and are moving into a smaller space. He said that most companies still don’t see what’s on the horizon, they aren’t changing their spending or projections and a lot of them aren’t going to make it.
I was paying attention to what he said a year ago, and I’m paying attention now. Sometimes you don’t want to hear something negative like this, because it makes you feel anxious and worried about what your own future holds. But I try to move beyond my tendency to be avoidant of what I don’t want to hear, and learn from it.
If the chief financial officer is taking steps to buffer the company for an economic downturn by turning to frugal strategies, it seems prudent for us to take steps to buffer our families by doing the same.
Obviously I’d prefer to think we’ll be minimally affected by the economic bumps that are anticipated. Don’t we all?
As uncomfortable as it was to consider, my husband and I had a discussion about what would happen if we were to experience job loss. We decided that it would be prudent to scale our expenses down now. The intention is twofold: to create more savings, and to know that we could live on less if we needed to. It’s much easier and less stressful to do this as a response to a proactive and thoughtful decision than to suddenly and reactively need to cut expenses from a place of deprivation.
Though my husband has been managing the finances for many years, a few months ago we agreed that it’s time for me as the frugality ninja to step up to the helm since I enjoy rather than tolerate the minutiae of money management, and taking the above steps means looking closely at all outgoing money.
It’s taken a lot of time but I’ve been enjoying this purposeful and focused work, and have been gratified by the progress we’re making. Some of my efforts have been on cutting expenses, while sometimes it means spending more money now, so we won’t have to spend it later (eg replacing our old energy guzzler freezer with an energy efficient chest model).
We don’t have any debt other than our mortgage, as I’ve consistently stuck to my hard and fast rule of not spending money that I don’t have. This includes making five weddings in five years. If I did have debt, I would be focusing on getting it paid off.
Here are some steps we’ve taken:
- cut expenses in different spending categories
- looked for ways to increase income
- increased our savings rate
- paid down a chunk of our mortgage
- refinanced our mortgage to a set rate
- took care of non-urgent repairs on our vehicles rather than delay to when they become necessary
- withdrew pension funds (a recession would affect the stock market) and reinvested the money
- been generous with charitable giving while we have the ability to do so
Rather than being negative or alarming to think about, considering less cheerful possibilities has helped us make choices that have led us to feel more empowered and relaxed.
Expenses (energy, food, gas) are expected to continue to rise in the coming year – some financial experts say that they’re going to rise significantly. Increased job loss is also being predicted.
I don’t know if that’s what will happen. But I do know that if it does, the combination of rising costs and decreased income isn’t a good match for a relaxed home. I’m sharing some of what we’re doing to proactively buffer our family with you in the hope it will inspire you to take actions that will likewise empower your family.
If you’re already taking actions of this sort, I and other readers would love to hear about it! Please share in the comments. 🙂
Avivah
I wish I could say I’m further along with frugal solutions but I’m still trying to figure out how to get a pressure canner to Israel! I’m glad you made this post, as it’s very clear prices are rising in all areas and salaries are not. Electric rates went up for the fourth time in a year last month and eggs went up about 17% this month. We don’t have debt b/c we are renting but I have never yet been able to figure out if we are better off this way or by having a mortgage. I have wanted to withdraw the pension money for a long time and invest in real property but am not sure it’s the right strategy and have not been able to come up with a clear strategy that seems to make sense to my husband. He is open to suggestions but not unless they are backed up by research, which is very reasonable, I just haven’t been able to obtain the right research. I suppose if the answer was so obvious, everyone would do it.
Glad your husband’s job was in the 70% and may Hashem keep it this way. It’s very unsettling when companies do these things, we have seen that both in the US and in Israel.
And of course, remembering to give money to charity is super important for so many reasons!
About the pressure canner – the one I bought was from Amazon and they currently ship to Israel (for an additional fee, of course!) That wasn’t an option when I bought it, which is one more reason my sister will have my unending gratitude for shipping it to me! I would have done this if I could have at the time, it would have been cheaper, faster and easier. This is the one I’ve bought twice, and continue to be very satisfied with it. (No affiliate link, linking to be helpful. :))
https://www.amazon.com/Presto-01781-23-Quart-Pressure-Canner/dp/B0000BYCFU/ref=sr_1_2?crid=33SV0GBV8TXSP&keywords=presto+pressure+canner&qid=1675674209&sprefix=presto+pressure+cann%2Caps%2C294&sr=8-2
About the financial research – I’ve been closely watching the worldwide economy and listening to a variety of financial pundits for a couple of years now. Everyone has their own advice and there are big differences in opinions as to what the right course of action is; at this point it looks like most of them are in agreement that a significant downturn is ahead.
I can’t say that withdrawing retirement funds is the right choice for everyone but I’m very comfortable it was a good decision for us. Like so many things in life, what’s right for one isn’t right for another, but You ask Hashem for guidance and bracha, and then you do what seems right for you. No one is going to make that decision for you. Keep in mind that leaving your money where it is, is also a decision. Good luck, Rivka!
Thanks Avivah! I went to the link for the pressure canner and it’s on sale so I decided to go for it and put in the order!
You are right that not doing anything is also a decision. We have made some not so good “decisions” this way in the past. If that is our decision this time, it has to be for the right reasons, not out of fear or out of complacency.
Aviva, I would love to hear frugal saving ideas. I too have worked very hard to acquire the philosophy of not spending money I do not have. I truly fear debt and hope and pray we never get there.
We have been saving very little this past year. Other than food and utilities all spiking, due to a car accident, our car insurance went up a few hundred nis. Our mortgage went up approx 600 nis a month. B”H I have a formula dependent baby so that’s another 300 nis a month. All together, that’s about 1000 nis extra per month than what was last February. Our salaries and buying tactics are basically the same, so in theory, that is 1000 nis that would have been put aside every month or at least partially spent on unexpected expenses. Now when unexpected expenses come up, I have no idea where to take the money from.
I’ve already started a lengthy post to respond to this; hopefully I’ll put it up in the next couple of days.
When things are tight, sometimes you need to shake your budget hard to find extra. I don’t know your specifics but I’d look closely at my expenses and consider what is really necessary and what isn’t. I like having a car, and now living where there isn’t much in the way of local public transportation it’s necessary – but we had ten children before we got a car five years ago. We finally bought it because life was so difficult with a child with limited mobility who wasn’t in school. Now he’s in school, so I would have the possibility of doing errands without taking him, so if I were in RBS now, I would call us having a car a want, not a need.
I shared what I did to refinance our mortgage to hold the rising mortgage costs steady. The rates are expected to continue to go up and monthly payments will continue to be affected. We chose to do this now, not wait until our payments are stressing our budget.
I’m not saying everyone should get rid of their car, but sometimes our expenses creep up on us and we keep paying for what we’re used to having, without considering if it’s a need at this time.
From what you said, I understand that you weren’t putting 1000 shekels a month into savings. Those unexpected expenses can be so frustrating and make it feel like you can never get ahead. However, I’ve found thinking about what expenses might come up and planning for them can somewhat alleviate the financial pressure. Holiday expenses, school expenses are never unexpected and can be budgeted for. There’s always an appliance or vehicle that’s going to need some kind of repair or replacement, so you can start a fund for that – then when it happens, you’re ready.
For us, it felt very slow to get above the point of being ready for the unexpected. We had a very challenging financial period after making aliyah, and it took a lot of time to go from hardly managing to managing. It takes time to get traction, and when you’re in the early stages it can be so disheartening. It’s like a snowball rolling down the hill, it picks up speed and the momentum builds faster and faster. Start and the gap between your expenses and what is left for savings will grow.
Our car is a large chunk of money but with our circumstances it is certainly a need. The 1000 nis was partially being put into savings. When the unexpected stuff would come up, I wouldn’t stress it. We always seemed to have enough B”H.
But this year (since the summer) has been far more money tight. I am relatively organized with all of our income and expenses, so I am aware where the money goes. Now after the credit card bills come off, my bank account is closer to double digits than triple digits. I transferred to a cheaper internet provider and cell phone company. That saved us about 20 shekels a month. We have been using less disposables. I didn’t sign up my children for chugim this year. Grocery shopping is a tough one. I always aim to eat healthy (whole wheat/spelt flour, whole grain pasta, brown rice, a lot of produce, etc.) but the past few months I have been buying mostly white flour and grains, as the price difference is very significant. I considered maybe cancelling our zahav kupat cholim insurance but my conscience keeps saying what is chas vshalom there is an emergency and I’ll need that supplementary insurance?
After reading your post about refinancing your mortgage, I am going to speak to my husband and see what he thinks. He recently heard from a client that mortgages will be going down soon. Not sure if that’s true but I sure hope so.
I am looking forward to reading your lengthy post! 🙂
It sounds like you’re already careful about your spending. I’ll tell you something that someone at a financial once told my husband after looking at our budget – sometimes you don’t need to cut down more, you need more income! Easier said than done, I know. :/