Large Family - 5 year plan

[cal]

Shalom,

My family is on the cusp of some significant life changes, and I am looking for some input. Here are the numbers and the goals:

Life Situation: Married, 30 years old, 4 kids (ages 6, 5, 3, 1) with one on the way, Michigan

Annual Income: 24,000 + 10,000 tax return every April
Annual Expenses: 12,000
- Property Tax: 2,700
- Home improvements: 2,000
- Utilities: 2,000
- Home/Vehicle Insurance: 2,000 (No fault insurance in Michigan)
- Health Insurance: 0 (Medicaid)
- Transportation: 1,300
- Internet: 300
- Food: 1,500*
- Clothing: 200

Current Savings: 30,000
Investments: 1,300 (Started 100/wk in March after paying off house)
House: 200,000?
Vehicle: 2009 Dodge Caravan, 160,000 miles

Goal: Move family to Israel for 1 year to become fluent in Hebrew. Find property closer to family.

Difficulties:
1) The numbers I am getting for living in Israel for a year are (to me) astronomical (40,000 per year).
2) Already built houses near family start around 300,000, but ones where our kids could independently meet up with their cousins are generally over 500,000.
3) With another child coming, we either need to find a way to do three across in the rear of the Caravan or transition to another vehicle.

Filling in the picture:
I enjoy my current work (editing academic texts and teaching gymnastics on the side). I would love to transition into teaching Hebrew, but it would probably not pay significantly more. Moving to Israel in the next 1-2 years would allow my children to become fully fluent as well, which would allow them to be involved in my work (helping to teach Hebrew in the classroom).

My sister's neighbor is selling five acres for 30,000, which we would then need to build on. There is a minimum structure size of 1000 sq ft, otherwise I think we would put something smaller on it. We have not built before, so if you have advice here that would be appreciated. (We are thinking post-frame, 2 stories with bedrooms upstairs.)

I am somewhat traumatized at the thought of stepping away from our current lifestyle, but both Israel and my family are important to me. So I am looking for help in shaping a five year plan that involves a year in Israel, a move closer to family, and probably a new vehicle. Feel free to offer advice.

*Our food budget is extremely low due to a partnership with the school I am in. I assist with their food pantry and am able to pull what would come out to a hundred dollars/wk of produce and meat. We used to be more conservative in what we took, but working with them has opened my eyes to how many thousands of dollars of premium meat and produce is thrown out daily simply as a result of it being past a sell by date.

[Freedomin5]

To summarize...

1. You would like to spend on some large expenses within the next five years.
2. Your current income does not provide enough cushion to allow you to save for those three major expenses.

You really only have two choices to increase savings - make more or spend less. Since your spending is already very low, your only option is to increase income. So, what options do you have to increase income? Can you or your spouse take a part time job, with all part-time income going towards savings for your goals?

[former player]

I read your post as saying that you would like your kids, currently aged between 0 and 6, to become involved in your work of editing academic texts after a year abroad learning a second language.   That seems a little ambitious for children of that age, frankly.

As to your other aims:

1.  You have $30k in savings: you can't afford to move to Israel if you will be spending $40k to live there.  What happened to the kibbutz? Is that still a possibility for living more cheaply?

2.  If you are self-building and have the space (which you would on 5 acres), build single storey: much less technical and needs less equipment than two stories. Safer, too, working on one storey rather than two.

3.  Where you are at the moment you have extremely low expenses for a family of that size, which is what lets you get away with having a pretty marginal income.  But living that cheaply means you don't have options or room for change, because options and changes cost money which at that income level you will very quickly run out of.  If you stay at your current income levels, you are probably safest spending the rest of your life exactly where you are doing exactly what you are currently doing.  If you want to go out and about doing things in the world such as moving abroad for a year or building a house, more income would make it easier.

[cal]

Thanks for the feedback!

I read your post as saying that you would like your kids, currently aged between 0 and 6, to become involved in your work of editing academic texts after a year abroad learning a second language.   That seems a little ambitious for children of that age, frankly.

Sorry, I edited the post to clarify. I would like for them to be involved in teaching Hebrew. You are right, it would be a bit ambitious to have them editing!

1.  You have $30k in savings: you can't afford to move to Israel if you will be spending $40k to live there.  What happened to the kibbutz? Is that still a possibility for living more cheaply?

I have wondered about the kibbutz option. I have looked a little at this to see what it might look like. If anyone here has any experience with this, I would love to hear their thoughts.

2.  If you are self-building and have the space (which you would on 5 acres), build single storey: much less technical and needs less equipment than two stories. Safer, too, working on one storey rather than two.

We had initially thought one story but then saw a build which seemed fairly simple as a two story without adding much cost. I wouldn't say that I'm particularly handy, though I've been making some progress in this arena.

3.  Where you are at the moment you have extremely low expenses for a family of that size, which is what lets you get away with having a pretty marginal income.  But living that cheaply means you don't have options or room for change, because options and changes cost money which at that income level you will very quickly run out of.  If you stay at your current income levels, you are probably safest spending the rest of your life exactly where you are doing exactly what you are currently doing.  If you want to go out and about doing things in the world such as moving abroad for a year or building a house, more income would make it easier.

This runs pretty close to Freedomin5's comments. One possibility that I have considered is renting our current property out. This could potentially double our income (houses smaller than ours go for 2,000/mo), but would add significantly to our expenses at least while in Michigan. Another option would be to rent out a room in our house at 500/mo, which would improve our income. With a good renter, I think either would work well, though the latter option seems less risky.

[marty998]

I find it exceptionally difficult to believe you can adequately feed a family of 6 (soon to be 7) on $1500 of groceries a year. If you do, it would be great if you could share, because that would have to be the lowest grocery budget per person ever on the forum.

You have a car but there is nothing in your expenses for fuel or maintenance. Nappies? Toilet paper? Activities for the children - sport or music or dance classes?

Do you budget for appliances? 7 people are going to be hard on things like washing machines.

<Edited out the last question. Probably not appropriate.>

[MrThatsDifferent]

7 humans on $34k!?! Wow! Everything you’re doing is so far outside my thinking I can’t even imagine how to assist you. Good luck though. I have no idea how two years in Israel will convey the level of fluency that your kids would need to help you teach Hebrew, but I guess you’ve got that all worked out.

[cal]

I find it exceptionally difficult to believe you can adequately feed a family of 6 (soon to be 7) on $1500 of groceries a year. If you do, it would be great if you could share, because that would have to be the lowest grocery budget per person ever on the forum.

You have a car but there is nothing in your expenses for fuel or maintenance. Nappies? Toilet paper? Activities for the children - sport or music or dance classes?

Do you budget for appliances? 7 people are going to be hard on things like washing machines.

I've added in vehicle expenses. It's a bit lower than our past year, but I am going back to biking to work and expect that to cut out a couple gallons per week. I do the oil changes myself and started doing brakes as well. We have had a couple issues with power steering leaks in the 5 years we've owned it that tallied a couple hundred each. Otherwise she's been amazing to us.

Also added a note on food. I work with a local pantry (see more at the bottom of the original post). We also have a garden which gets us fresh salads through the summer.

Kids are all involved in gymnastics (free because I work there) and horse riding / art (both paid for as electives for school in Michigan). I've actually toyed with cutting this because it adds so much driving (50+ miles per week) and they don't appear to be any less happy learning things in the yard, but for now it seems to be worth the cost.

My brother-in-law manages laundromats, so we were able to buy a washer and drier through him that have lasted 5 years so far. He is able to get them at $50 a piece, so probably don't need to budget for those. We replaced the furnace and water heater when we bought the house. I scour craigslist for kitchen appliances weekly since ours are all from the 80s. So far I've replaced the heating element in the oven and a couple smaller things in the dishwasher for around $30-40 dollars over five years. So I guess we don't budget for them per se. (The frank truth is that we don't actually pay any attention to our budget. Our lifestyle preferences tend more toward walks to the park than going out and spending money. We really only look at finances when making these larger decisions.)

[cal]

7 humans on $34k!?! Wow! Everything you’re doing is so far outside my thinking I can’t even imagine how to assist you. Good luck though. I have no idea how two years in Israel will convey the level of fluency that your kids would need to help you teach Hebrew, but I guess you’ve got that all worked out.

Haha, thanks for the well wishes! I couldn't tell how to read that last comment, but basically most people end up paying a teaching assistant to model interactions in the classroom. So I am hoping to work with my children instead. I figure it will work out to be a profitable job for them and allow us more time together. It is probably a few years down the road, but I've seen it done effectively with other languages. Something like what these two kids do with Spanish:

https://www.youtube.com/watch?v=pk-tbCUSLXU

[meandmyfamily]

All I can say is "WoW"!  Great job so far!  I agree with the need to increase income.  We have 4 kids so I love hearing about other bigger families!

[waltworks]

I'll echo what others have said: your choices so far will basically restrict you to your current lifestyle forever/until you die. You have a lot of kids and a lot of responsibility and don't make any money, and you're living on the taxpayers' (Medicaid/EITC) dime - without that crutch, you'd probably be destitute/homeless.

Note that I'm not judging you here, you're playing by the rules and lifehacking quite effectively. I'd be uncomfortable as an able (and educated) adult operating that way, though.

If you want to fly to Israel and learn Hebrew and do all this other cool stuff... you are going to have to become a more productive/profitable member of society. Much, much more profitable. It sounds like you have a lot of education, so maybe it's time to send out some resumes and think about getting a full-time sit-in-a-cubicle job. Hell, there are a ton of entry level jobs working for ethical nonprofits that pay at least double what you're making.

I would not count on your kids producing income teaching Hebrew, regardless of what you've seen on YouTube. Assume you will be responsible for basically all the income until they are adults, because that's what's most likely to happen. Being a parent (I've got 3) means more work, suck it up.

-W

[cal]

Thanks, WW. I hear what you are saying and appreciate your willingness to put it out there. Just want to clarify a couple things: In just hitting the finances, I'm not sure it gives a full picture. Medicaid makes a huge difference for us, and EITC gives 10k a year that we put toward the house for 4 years and then in savings this year while we try to make sense of next steps. I didn't mention in the original post that I am working fulltime on a PhD which I hope to wrap up in another year. Once completed, I'll have access to some better paying work. (Currently I work about 60 hours a month as an editor. If I do this fulltime, it would be upwards of 40k.) So yes, resumes and more income should be in the future, unless I go the entrepreneur route and begin teaching Hebrew in which case it will hopefully be more income but may take a few years to develop to that. (The current structures designed for teaching Hebrew are self-defeating, except perhaps Middlebury Language School which I am currently checking out. So I am interested in beginning an independent school where people can do a year of immersion.)

I wasn't sure whether any of this made a significant difference for the five year plan at this point. The PhD is on my own time and has an annual (nominal) continuation fee. I do think it makes a difference in the moral scheme, so this is meant somewhat to clarify that side of things. I know you said that you are not judging, and I'm not a particularly sensitive individual (you've not offended me at all), but I wanted to give a fuller picture.

On your last comment, perhaps my own comments were unclear. I am hoping to pay my children rather than a TA for working alongside me in the classroom. I think you read it that I was hoping for them to generate income?

[waltworks]

That does make things clearer, but it doesn't change the overall problem, which is that you don't have the funds to do any of your goals (and barring a major change, you won't in 5 years, either). Your savings rate actually isn't bad, but it's from such a low base that flying the whole crew to Israel and back alone would put a huge dent in your entire savings - let alone actually living there for a year. If no unanticipated expenses *at all* come up, and you stop having kids, you might be able to go there in 5 years if you're willing to almost wipe out your savings. So it's hypothetically possible, but not super realistic.

Likewise the house building, starting from a skill level of zero and while basically working 2.5 full time jobs? Not going to happen. If that's a serious goal, I'd put the PhD on hold and go find a job working for a GC as their assistant or something, where you can see/do a lot of the stuff you'll need to know and get at least a cursory knowledge of building. Side benefit: you'd probably double/triple your income. If you're doing an online PhD in something esoteric... I also wouldn't count on great job prospects in that field in the future.

Does your spouse have any marketable skills to do some form of working from home (I'm assuming they are taking care of the kids, so a job outside the house is probably out). Run a daycare from the home? Do work online?

At what income level does your EITC start phasing out?

I guess this is my point: if you really love the life you're living, keep living it. If you want to live a different life (live a different place/different house/new job) you are probably going to have to make some sacrifices NOW to pull it off in 5 years. They are probably going to be uncomfortable - quitting either the current job or the PhD program or both, so you can focus on making money/learning skills that will let you do those things.

-W

[dlesh]

Hi Cal,

My wife and I moved to Israel a few years ago and have three young kids. Although some of your current costs would be defrayed by living here, there are a number of other things that are more expensive/additional considerations that might skew your numbers a bit. I don't know where in Israel you'd want to live, which obviously shapes rent, food, childcare and transportation costs. What I will mention is that there are certain unanticipated costs, including:

1. Hiring an accountant who specializes in expat tax. It's very, very hard to handle your own US taxes once you factor in Israel-specific things like pensions, child stipends, etc. This is easily $300 - $500/year.

2. Renters in Israel pay property tax, which can be anywhere from $400 - $1,400/year, depending on where you are. If you are planning on purchasing a property, you'll need to account for lawyer's fees, mortgage fees, and purchase tax (depending on how expensive the property is), as well as property tax. Your desired location may also have a supplementary annual security fee, to defray the costs of gating, lighting, and security guards.

3. As you probably know, cars here are incredibly expensive. A base-level Kia minivan costs about as much as Lexus does in the US, and that's before delivery fees, the car's annual test, a driver's license conversion, insurance, maintenance, or fueling the vehicle. Gas here is about $7/gallon, so filling up a minivan would run about $130, or so. These costs trickle down into the used market, as well.

That said, I wouldn't call living living in Israel "astronomically expensive." We certainly spend less on our kids here than we would in the US. For instance, medical care is inexpensive, school (after a certain age) is free, you get stipends when your kid is born, internet and phone service cost just a few bucks a month, fruits and veggies can be bought for a song, and publics trans is very subsidized.

It's obviously, ultimately a values call. We personally love it here, but it also helps to be knowledgeable of some of the financial nuances of making the leap.

[Cassie]

As your kids get older they will get more expensive. They made need braces, teens want some new clothes, may play sports, date, drive, etc.   You are highly educated need a full time job with HI.  Although you are following the rules this story is a example of what makes some people mad about paying for social programs. They are designed to be a last resort for poor people.   Right now you can’t afford to pursue your dreams. If one of your kids or parents develop a major health problem even with Medicaid you will be in trouble.

[shuffling_money]

.   You are highly educated need a full time job with HI.  Although you are following the rules this story is a example of what makes some people mad about paying for social programs. They are designed to be a last resort for poor people.   Right now you can’t afford to pursue your dreams. If one of your kids or parents develop a major health problem even with Medicaid you will be in trouble.

That^^^^^ times 1000!

I'm not sure if the OP posts are true or not. If true, you are gaming the system which is "legal", but really you want advice and come here?
OP is living a stereotype right now. Have seen it first hand in parts of NY state. Ooooff I can't, I just can't.
Go get a higher paying job and take responsibility for your family