I was reading this interesting article on MSN titled “Huge debts, paid off fast” and stumbled on something worth a thought. Here is an excerpt from the article:
Thompson also decided to live on a cash system rather than try to “budget every dollar — that would drive me crazy.” She is paid twice a month and allots herself $150 in cash to cover “gas, groceries and anything else I want that is not a bill. … When the money is gone, it’s gone.”
Thompson said she still goes out with her friends but typically uses coupons or dollar menus when she eats out. She still gives $300 a month to her church.
Since February, Thompson has paid off $8,000 of her debt, and she expects to be debt-free by November 2007. She stays motivated by remembering her goal.
I don’t mean to offend anybody’s religious setiments here, but $300 is equal to the woman’s monthly cash expenditure on essentials like gas, groceries, and other “non-bill” items. Consider this, if she has paid off $8,000 since February, which means she is paying roughly $800 a month (assuming this article is recent). The article says that she intends to be debt-free by Nov 2007. She could easily divert the $300 charity-funds to her debt payment and get out of debt much faster. FYI, she makes “about $32,000″ annually.
What would you do? Stop your charity for a while and get out of debt faster? or keep donating and keep you debt alive for a longer period of time?
{ 1 trackback }
{ 17 comments… read them below or add one }
I am not religious at all, but I thought about your question. I noticed the same comment when I read the article last week. I think, for me, I wouldn’t stop donating completely, but I’d reduce my donation amount substantially while I dug myself out of debt. I’d probably volunteer more at the church, temple, etc., to compensate. When I was in the black, I’d pick up where I left off. Isn’t there an old expression about God helping those who help themselves? He’d understand my smaller donations.
Thought-provoking question!
Interesting question. I am still in debt and I do still donate to charities but not every month. I don’t think that it makes sense to be doing a monthly donation that adds up to that much. I usually donate a certain amount, say about $200, to a specific charity each year. I would not stop that donation unless I was in a really bad situation but I think that is about the max that for me. I guess it is all about balancing giving with concern for one’s self.
I’ve been thinking about this a lot. I haven’t read the article before now, but I have been thinking of giving monetary donations this year since we have more income and less time. Before, when we had less income and more time I gave my time. I’d walk dogs at the local humane society, help volunteer at meals, volunteer at my son’s preschool, etc.
But, we have a lot of debt. I guess everyone has to do what feels right for them and their financial situation. For us, I think with trying to volunteer time when we can as well as give some money (although not a lot) will work well for us while still paying off debt.
If I were in the same situation, I will not make that size of donation every month. In stead, I will put paying off my debt at a higher priority than making donations, just to be financially responsible to myself.
I’m still in student debt (can see how much by clicking the networth thing), and I definitely donate. A lot of people look at charitable donations as a fixed expense and don’t feel like they can or should reduce them when paying off debt. Except in cases of extreme debt, one shouldn’t short a charity in order to pay down a debt faster. Would you expect your company to cut your pay in order to pay off their debt? Charities (and especially churches) count on contributions merely to survive. If my husband and I reduced our charitable giving, our church would no doubt notice (and be concerned).
My husband and myself have tithed consistenty for about the last 2 1/2 years. During this time we have been able to eliminate all our debt except for our mortgage. My husband has been able to take a year off of work to return back to school for a career change without incurring more debt. Before we tithed consistenty, our finances were a mess. We always thought that we could fix the mess ourselves, but that was never the case. We now put the Lord first and give Him the first fruits of our wages and increases. He has blessed us in so many ways, and not just financially. We still experience trials and tribualtions, but these only increase our faith.
I know this might sound like a bunch of hooey to some of you, and in previous years I would have thought the same thing. And that’s okay. All I can tell you is that since I put the Lord first in all areas of my life, my circumstances have steadily improved.
If the debt was a short-term situation like credit card debt, I would concentrate on paying that off, but would then feel compelled to make up the donations after paying off the debt. More so if it were the situation that Dimes points out: if the charity in question depends on your giving to survive, then I would definitely “make up” whatever the shortfall was. This is all based on the assumption that I was giving regularly to a charity/cause that I believed in.
Great question. I have given money (about 10% of my income each month) to my church ever since I can remember…in the times of plenty, and in times of not-so-plenty (or debt). I have always been able to put food on the table, go out with friends, drive new-ish vehicles, and live a comfortable life. Sure I could use the extra $600 a month to drive a Hummer, buy a bigger house, or pay down debt, but what is that really worth? To me it is more important to share what I have been blessed with to help other people and support the community I am a part of. I also like to live by a biblical principal that says something along the lines of “To whom much is given, much is required”…on a global perspective we are the one with “much”. Just my 2 cents.
Jon
For the case under consideration, I would like that Thompson get rid of her debt first. Consider this, won’t she save some on the debt interest if she pays it off faster? In fact, with this approach she can donate the additional savings on the debt interest to charity when she is debt free. Now, isn’t that a win-win situation?..She is out of debt faster and the charity also gets a few extra bucks in the end.
The answer above is a very simplistic approach to the situation. There are more “deep-thought” questions on this that I have not raised, for example, why does charity imply “money”? isn’t charity in deeds the real charity?…and some more, but there will be a time for this discussion
All you guys, thanks for responding to the question.
I respect people who believe that their faith calls them to tithe. I know Free Money Finance talks about it a lot.
But I personally believe that people who are deeply in debt should remember that they have explicit obligations to their families and to their lenders. I’d much rather see them put more money towards eradicating their debt, and give more when they are debt-free.
BTW, this has been an issue with the recent bankruptcy law. The old law allowed all filers to tithe to churches or charities. The new law requires “better off” filers to repay creditors without allowing for charitable donations. There has been some legislative movement toward changing the new law to conform with the old.
While I would personally pay off my debt first, she doesn’t appear to be suffering any with the way she is managing her money. Still, she could take some or all of that 300 and at least pay one or two high interest bills first.
for me… i find when i tithe… things go well… when i don’t its a messy…
i stopped for a while… but not for debt reduction… but i also donate a lot of my time as well which is why i justify not giving 10% now… but i want to slowly increase the amount as i pay off my debt.
i find its something i don’t want to eliminate to get out of debt faster.
Tricia, your comment got caught in the spam plugin and hence the delay before it appeared above. Sorry about that.
Dimes asked,”Would you expect your company to cut your pay in order to pay off their debt?”
I think that’s an interesting question as well. I would not expect my company to cut my pay to pay off debt. Then again if I were an employer, I wouldn’t do that to my employees as well.
I’m not sure I really understand the correlation of the question. I don’t believe that anyone has a contract with their place of worship (maybe I’m just ignorant and they do).
There are legal requirements of companies to pay workers for work done.
My set of morals says that it’s best to pay off creditors. I can’t imagine a God that would ask for his/her own payment over previous debtors.
I think Golbguru has it right. Get out of debt and donate the extra interest afterward. Perhaps doing a little extra for church functions would be the equivalent to the $300.
Of course the ideal would be to not go into debt in the first place, but since for most of us that’s an impossibility or we’re working on it. I dont think that paying a perfect or over-perfect tithe is a recipe for success or failure. It’s about having your house in order. If you are on a straight path to being debt free, then I would feel that it’s important to donate some but put everything you CAN towards your debt. Once you have paid it off, then up your donation.
I donate but not as much as I would like because MY HOUSE IS NOT IN ORDER.
Why donate money that you don’t have? Donations to others can always resume once you have your own house in order.
A friend of mine once proclaimed that he doesn’t hand out change to people on the streets because he’s a student, and is actually in the red a ridiculous amount due to his student loans and credit card debt.
His statement: “They’re at ZERO - they’re actually higher up in financial status than I am technically” struck a chord in my mind that actually made me understand my financial situation at that given time.
Although the book “Richest Man in Babylon” and Robert Kiyosaki condone donations at all times (giving to Religious uses, or the 3 piggy bank method) It’s all about structuring cash flow in the end. As an ending note, I usually give food instead of cash, seeing as their lack of understanding cash flow is probably what brought them to their current situation in the first place.
Leave a Comment