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Overcoming Overdraft

by Ruth Mason
for The Jerusalem Post

There are three things we’re not taught that are really important,” says Jody Blum, a Jerusalem social worker and financial coach. “How to have a good marriage, how to parent, and how to manage our finances.”

Fed up with being one of the 70 percent of Israeli families who are constantly in overdraft, Blum started reading every book and taking every course she could find on family finances. The result: in six months, she had cut her overdraft by 50%.

“Everyone accepts overdraft as if it’s just a given, as if it’s free money,” Blum says. “But the average family spends one month’s salary yearly on overdraft interest. It becomes an addiction, and we pay the price in financial security and mental well-being.”

Fifteen of us overdraft junkies gather in the Blums’ Baka living room for her “financial household management” class for immingrants. Our first tasks: to explore our core beliefs about money.

“It’s for men to manage,” “money is power,” the best things in life are free.”

Our homework: to do a detailed, three-month review of our spending habits. Armed with our figures, we delve into the core of the class: learning how to set up a monthly budget and stick to it. Blum gives us money-saving tips, useful information, thought-provoking questions, forms to take home, and her own personal stories.

She tells us how she cut her monthly food budget by NIS 2,000, how she saved NIS 700 on her home insurance, how her weekly dinner-and-movie dates with her husband transformed into walks, and how the family’s Friday afternoons at the local pizzeria have been replaced by frozen pizza at home. It’s hard, Blum tells us, but it’s possible. And it’s not forever. Adapt sound financial habits, she says, and you will see light at the end of the tunnel.

Money is an emotional issue, Blum tells us. As the class progresses, people open up and prove her right. One woman confesses that a lot of money goes toward her need to impress people. A man tells us that after a week of trying to cut costs, he feels like he’s on a leash.

But progress is quick. A woman who took herself out to dinner before the first class (“I work hard, I deserve it”) brings a sandwich the second week. When another woman’s kids ask when they will join the pool this summer – as they do every year – she says: Let’s wait and see how much money we have in the bank. Camaraderie gorws as we share our struggles and successes.

By the end of the five-session course, one family has matched Blum’s record, reducing its monthly grocery bill by NIS 2000. Another participant decided to stop supporting her adult child. The woman so concerned about impressing others cleaned her walls rather than having them painted before guests arrived to stay, and invited a visiting American friend home rather than taking him out to dinner. A Beit Shemesh resident joined a free parent co-op summer camp rather than sending her kids to an established one. Another, who always went to a posh restaurant to celebrate her birthday, this year had a pot luck at the beach – and loved it.

“You can feel deprived,” Blum tells us, “Or you can feel liberated and empowered.”

Many of us felt we grew up some during the course. It’s not easy to say no to ourselves. But the satisfaction of taking control of our money outweighs the downside.

Here are some tips to get you started:

– Plan for the next month based on how much income you will be bringing in. Limit spending to what you make. Budget 8% to 10% of your net income for unexpected expenses, and set aside an amount to repay your overdraft.

– Write down all expenditures.

– Save your credit card receipts and reconcile your statements. One in ten people finds mistakes on his or her VISA bills.

– Plan your meals for the week and make a shopping list based on that plan. Shop at a discount grocery store, and don’t deviate from your list.

– Use cash whenever possible. It helps you keep control of your money.

– Bank on-line to take advantage of higher interest rates and lower fees.

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