Seventy percent of Israeli families are reportedly in overdraft. Month after month, year after year, they are not making ends meet. They cannot pay their mortgages, cover monthly expenses, or save for their retirement. This means that non-profit debt consultants Pa'amonim have their work cut out for them. "Personal debt is very big in Israel," says Canadian-born Mindy Ajzner, a volunteer advocate for the organization, created five years ago to help rehabilitate needy families through confidential financial counseling. Pa'amonim's team of some 300 volunteers are helping 1,800 Israeli families learn to balance their expenditures with their income. It takes about a year to complete the program. While many of these families comprise single parents - primarily mothers - earning a minimum wage, others have executive incomes, and a few simply had bad luck. The inability to manage money or live within one's means knows no social or economic boundaries, notes Ajzner. A team of professional consultants - mortgage and life insurance brokers, small business consultants, accountants, and lawyers - supports the volunteers. They deal with officials, negotiate with banks, and find ways to spread payments in order to facilitate debt reduction. Response to Pa'amonim has been very positive, and now the group is branching off into new areas, including a club for 17-year-old students to teach them good financial management habits before they head into adult life. A law recently passed by the Knesset that comes into effect on January 1, 2006, bars money withdrawals over pre-negotiated overdraft ceilings. Reuven Kuvent, president of Dun & Bradstreet Israel, says that initially this will be a major change for Israel because people's buying power will decrease. In the long term, however, overdraft forfeiture rates will decrease, which will be good for Israelis, banks, and the economy. Overdraft, an accepted part of Israeli life, often begins early in life. Banks offer overdraft access to soldiers, students, and young adults performing national service, in an attempt to capture long-term customers. For some, this is a dangerous perk. A small debt every month starts to spiral out of control. Rather than taking hold of the matter, many people simply ignore it, stop reading their monthly bank statements, and don't open their bills. They occasionally take loans from relatives to cover their most immediate problems without considering how they will repay them in the future. "A loan is not relief if you can't repay it," Ajzner points out. Pa'amonim, founded by Uriel Lederberg of Beit El, originally offered practical help to people in financial distress and gave money to those in debt crises. Soon, however, Pa'amonim volunteers noticed that the same people were coming back for more money within a few months. That's when they realized that to be truly helpful, they would have to teach people how to manage their money. "We knew there were people with financial problems in Israel, but we never imagined such a great extent in so many levels of the population," says Lederberg, adding that changing one's spending habits can be very painful. According to the Jewish Agency, Israel has 110,000 single-parent families, mostly headed by women who work, but have no savings. They typically have three children and are NIS 100 to NIS 200,000 in debt. They overindulge their children because of guilt feelings that there is only one parent. They do not know how to control their spending. "A lot of people are eligible for an array of benefits but don't use them either because they don't know such benefits exist or they don't know how to fill out the paperwork," says Ajzner. Another group of people with debt issues look wealthier on the surface but spend their money unwisely because they are busy keeping up appearances. Ajzner notes that such people are so preoccupied with how they are perceived by others that they are willing to create a false image to impress others. She gives an example: Instead of holding a brit mila (circumcision) at home with immediate family, some choose to host large catered affairs that they cannot afford. "These people don't think on a community level. It doesn't cross their minds to swap for things they need or want. If one neighbor babysat for another's child, the other neighbor could work outside the home. Or what about borrowing a little girl's party dress for a one-time special occasion rather than spending NIS 500 for a new one?" says Ajzner. Sometimes the most obvious solutions are the hardest to see, she says. First, one has to truly want to get out of debt. "There are many benevolent organizations out there if you know where to look." For most of these people, this is not about a one-time fix; rather, it is learning how to manage the money they have on an ongoing basis. Pa'amonim's objective is to help people get out - and stay out - of the "minus." Most clients are referred by social workers or gemachs. "First we talk to them and ensure a comfortable connection. Then we do an assessment to determine how much is coming in and going out every month. In other words: How deep is their debt?" Ajzner explains. Next is the checklist. This involves going through all the family's spending habits and looking for unnecessary items, overlaps, and omissions. Maybe they have several life insurance policies or are not capitalizing on their national insurance benefits. Are there less expensive alternatives to the present cable TV subscription? Can the family's favorite food items be purchased at less expensive supermarkets, and is the junk food bill reasonable? Mobile phones are another big culprit in debt management. In Israel's cellphone culture, it's easy to overlook how much one spends on phone calls. Unlike pay phones, there is no constant reminder to pay up before you can make your call - access is not cash dependent. The cellular telephone companies use slick advertising and marketing gimmicks to sell their product. People fall for the "deals," then cannot pay them off. Many of those who fall into serious debt also fall prey to the sophisticated marketing schemes prevalent everywhere nowadays. "Cellphones can easily be abused, particularly by young people. We try to teach people to make a plan about who you need to talk to urgently and who can wait until the low-rate hours," says Ajzner. "Overdraft is like having a toothache," summarizes Ajzner. "You have to get help, otherwise it gets worse." What's in your cupboard? Rachel (not her real name) is a work-at-home mother of seven children. Her husband is a technical writer. Last year, three of their children married. That, says Rachel, was the final straw in her family's financial crisis. "We were trying to keep our heads above water but just couldn't manage. Since I was raised to believe that nice people didn't have financial problems, it was too embarrassing to call the bank and see the extent of the problem on paper," she says. It didn't take long to realize that they needed help to go forward. "We wanted to save money but couldn't seem to do it," she explains. The first question the Pa'amonim volunteer asked when he arrived at her house was: "What's in your cupboards?" While that might seem like a strange question under the circumstances, it really got to the heart of Rachel's problems. "I was brought up to believe that if you had money, you were a somebody, and if not, you were a nobody," she says. Learning to live with cupboards that are not full all the time was a big adjustment, and Rachel admits that she will probably have to work on that idea for the rest of her life. "Today, I am in a much better place thanks to Pa'amonim," she smiles. "I know that deeds make the man, not money - and that is what I am teaching my children." For more information, call Mindy Ajzner 054-4451961

A way out of the bottomless pit

A non-profit financial consulting firm advises Israelis how to dodge the overdraft.