The present crisis regarding the national debt of the Jewish State will not disappear even if we find oil today. The situation has deteriorated in the last ten years and only now the government is trying to address the issue. It won’t get better in the future and most probably for us, the citizens; it will only be harder in the next few years.

This is why we can’t let our personal present situation get worse or allow ourselves to enter any new “adventures.” Small debts can easily snowball into large ones that can lead to legal problems if not paid or legally discharged. Sooner or later they could crush you and your family.

My intention in this article is not to frighten or depress you, and not even to warn you, but to present you with a very comprehensive and short list I want to name “The guide for the perplexed debt.”

What You Must Not Do

Never ignore a warning letter from anyone, especially from an attorney. Even if the letter looks like a general form letter from a cell phone company, the National Insurance, etc.

These letters are not sent without a reason and a purpose and believe it or not, most probably it is not a mistake.

Every warning letter must be addressed at face value: As a warning before a legal procedure is taken that will require a lawyer’s assistance. Ignore it and the final cost to solve the problem or pay the debt will be much higher.

Never confront the debtor or his clerks because the antagonist created will certainly harm you in the future if you try to reach an agreement.

Don’t make promises you can’t keep! Not even an “I will call you back.” This is a sign you are not taking them seriously or you are not to be trusted in the future.

Don’t try to impose your way on the other side. If you don’t like the way they conduct their business — keep it to yourself or apply to be the CEO, but don’t try to “manage them” or criticize them because it won’t help you or them.

Don’t take a loan to pay another loan because this is the first step to digging your own grave. The interest and monthly payments won’t go away but rather will increase every month.

If you use your credit card as you are used to doing abroad — STOP, because you are now in Israel. Rules are different and “refinancing” doesn’t exist here. All they can really offer you is a “loan” to pay off the bill and give you more credit, creating a vicious cycle!

Loans have now many different names but they are what they are: LOANS. When offered Express Cash, Mezuman Mahir, Credit Payments, Mimun Mahir , etc. it is only a different name for a loan with less bureaucracy involved but high interest.

Even banks and lenders have new names. Credit card companies are offering you loans, private business with impressive names, insurance companies, they all want the same: to sell you expensive money they have and make a fast and high profit on each loan.

Purchasing a Home

Why not change the name Mortgage to its real name? Long term and expensive loan! This is what a mortgage is, involving several years of high interest, guarantors and guaranties (the property). As a result, when you take a mortgage your life will never be the same. You are now a landlord; you have a piece of land, but remember that it comes with a price and with many financial and legal obligations.

My advice is simple: Don’t listen to the bank and don’t take a mortgage if the monthly payment is higher than 20% of the combined income of the family. Life is good, today you are both healthy and have good jobs. What about tomorrow, 10 or 20 years from today? Can you be sure your financial situation won’t change?

Shopping

Before you leave the house make a shopping list to the supermarket. Don’t forget that inside that nice package will you find a product and nothing else. You may find that same product in a less attractive package for much less — the same product.

Israel is a small country and food is overpriced so try to be a wiser shopper when buying food. I will give you only one example. The ketchup industry is very small, therefore, you have very few factories producing the product. They make the same product but pack it with different brand names.

Don’t buy large quantities, try different brands, don’t be tempted by large packs or the buy 2 for the price of one. It is essential to remember: There is no free meal, no gifts and no magic. They sell to make a profit and not to make you happy.

Cars

Cars are probably the most expensive luxury in this country. Between insurance, annual license, maintenance, gas, etc. there is nothing more expensive to own than a car.

Cars are getting cheaper to buy and more expensive to keep. Don’t buy a car based only on its price, but instead compare its value to other cars with respect to lower maintenance, lower insurance premiums, and higher market value when re-selling, etc.

Purchasing your dream vehicle by using a loan is more like a dream car in a financial nightmare. Buy the car you can afford and not the car you want to have.

Children

They will cost more now. Schools are always finding new creative ways to charge for things they should give for free. Even worse, they are always looking to create more expenses and it won’t get better.

My advice! Be strong and learn how to say NO to your child. There is no need for that huge party in school, an iPhone is not a necessity and a 600 shekels pair of pants is nothing but the same pair that cost 100 but has a big brand name on it.

Just because your child wants musical instruments and lessons — or because you always dreamed of being a musician — he is probably not going to be the next Beethoven, especially not if you can’t afford to pay thousands of shekels on these things. Learning to say no will teach your child a valuable life lesson.

A Last Word of Wisdom

Debts like accidents don’t happen — they are caused, they are created and created only BY US!