The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: RocksRock on August 24, 2017, 01:34:17 AM
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Okay, I feel like a bad person for asking this.. At what point, and which amount do you give to charities when you are not yet FI?
I am now giving away around $130 per month to various charities, proven efficient organizations (but not on the top list of charities previously suggested in the MMM blog), for example Doctors Without Borders.
Am also able to save around $750 per month - to go towards extra payments on our flat mortgage, in addition to paying off my student loans in less than half the time, and paying the mortgage of our 750 sq ft (quite expensive) flat in 20 years instead of 25/30. Interest is approximately 2,3% for both loans - so not bad! With the extra payments we are debt-free, but not FI, in 10 years, when I am 40 and he is 44.
So, the situation is quite good in my opinion, and that is why I feel bad for asking. The charity $130 could go towards either loans to lose them faster.. What Would MMM Do?
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Invest rather than paying off low interest loans?
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Yes, good thinking, but with "charity money"? All of the money? All of it except the "charity money" - because they continue to go to the charities?
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You don't have consumer debt, so your hair is not on fire.
If I remember correctly from one of the blog posts, MMM mentions that you are not really in a position to give away money to charity as long as you are not FI. After FI, when you are bathing in money, you can start giving away the big sums.
But it is eventually up to you. Do you think it is worth becoming FI several years later by supporting charities? You could run the numbers for yourself, compounding over 10 years and see what a difference the choice would make.
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Thanks Linda! (and UKstache of course)
I am in Norway like yourself and feel very un-norwegian by thinking of not donating to charities. But it seems like the MMM approach.
I'll join you in the Norway forum in a while!
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The siding on your house is busted. Do you wait until FI to fix it or do you try to fix it now? If you delay, the damage accumulates and is more expensive to repair. If you delay, you can FI earlier. Perhaps you balance those two opposing concerns by doing a cheaper DIY patch yourself or spending some money for a partial repair.
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Torn between this being an answer to something else, or thinking about it in the charity way.
Last way would be you telling me to invest my time, not that much money, in charities? Getting my money now compared to a bigger chunk in 10 years is probably worth more to the charities themselves also, I get that. Which is why I am still paying..
If I may try another question then, if you are not FI and you are donating to charities, how many percent of your non-fixed-expenses goes towards charities?
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Linda, where does MMM say one should not donate to charity until FI? I interpret his writings on this topic as encouraging donations when there is a surplus beyond what is needed to live a comfortable Mustachian life.
We give $300/month to charity in addition to volunteering our time with a few organizations. Yes, it will delay our goals some, but it is an important priority for us. We have been blessed with so much and I am happy to be able to give back.
Edited to add: it is about 18% of our discretionary spending but a much smaller percentage of income.
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Linda, where does MMM say one should not donate to charity until FI? I interpret his writings on this topic as encouraging donations when there is a surplus beyond what is needed to live a comfortable Mustachian life.
We give $300/month to charity in addition to volunteering our time with a few organizations. Yes, it will delay our goals some, but it is an important priority for us. We have been blessed with so much and I am happy to be able to give back.
Edited to add: it is about 18% of our discretionary spending but a much smaller percentage of income.
I have been searching for it, but cannot find it. It is just something I remember. But I could be wrong of course.
It is up to the poster to prioritize.
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Charity begins at home.
That isn't my saying but it rings true.
Take care of YOU first so you never have to rely on the charity of others.
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Charity begins at home.
That isn't my saying but it rings true.
Take care of YOU first so you never have to rely on the charity of others.
I suppose this is good advice for some people, but I don't see how it applies to the OP.
I second the poster who said you should invest instead of paying the 2.3% loan. General inflation and inflation in your salaries will make those payments seem small in time, but you don't want to miss out on market gains.
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First, don't feel bad for asking. Charity and FI have had an uneasy relationship, and the more financially responsible tend to hate on charity (at least in the US, and, ironically, the Rebublican based, bible-belt I come from). Accordingly, charitable giving tends to get a bad rap on this site. To feel pushed that direction here, despite your personal values, is only natural. And you're not alone.
To address the question you actually asked: What would MMM do?
MMM would continue to give to efficient charities. You should do the same. The MMM approach places people into 2 camps, although both are a spectrum: You are either moving toward Financial Independence or Finanacial Slavery. The spectrum just measures how fast you're moving in either direction.
Case: Fianancial Slavery
If you're headed toward Financial Slavery, MMM recomends wartime rations and wartime spending. At this point luxuries go, necessities stay. The debate is whether charity is a necessity or a luxury (clearly a luxury for the giver, but a necessity for the recipient). This isn't the debate here though.
Case: Fianancial Independence
This is where you are. You're moving toward FI, and at a pace that enables you and your family to live a content, happy, yet luxurious life. Yea, you could go faster, but even MMM acknowleges that a huge chunk of his budget (about 1/3 each year) is unnecessary, luxury spending. But he's still growing the 'Stache. This is your camp: you're certainly entitled to your luxury, even though it'd be hard to say that charity comes with the same emotional pitfalls and baggage that pursuing other luxury can.
The real MMM or Arebelspy can pipe in on if I'm wrong, but based on reading MMM's blogs, this is the answer I believe you'd get from him.
A Last Note
People change over time, including MMM. If you read his blogs chronologically, you see that over the years he develops a greater priority for charity. I think that came with the free mental space. Once he quit worrying about how to care for his family, he had more mental space to consider how to care for humanity overall. Age 25 MMM probably didn't do much charity. Age 35 MMM, would probably facepunch his early self in this area.
Since this is getting long, I'll do a second reply to the question I want you to have asked (and that you indirectly did ask). What would I do?
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What about time? Can you give more time when you are FI? As an example, I know someone who took on a fairly large preservation/environmental project post ER... they were very satisfied and exhausted, so didn't do any charitable work for a while.
Big Box charities teach you that you need to give their administrative machines a smooth cash flow via monthly giving. But really bumpy giving can be just as good.
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There are a couple approaches to take.
Option 1: Donate to charity as you go along, take longer to reach FI.
Option 2: Save like mad and invest, donate once you're rich.
For two extreme examples, let's first consider Warren Buffet. He went from essentially $0 up to around $80 billion. Obviously he's done well with his money. For every $1000 he could have given to charity 20 years ago, he's probably got $10,000 (or more) to give to them now. He's pledged the majority of his wealth to charity, so there you go. If I were a long term charity, I'd rather get 2017 Warren's donations than 1997 Warren's donations, as his investments have beaten inflation by a healthy margin.
For the second example, consider my Uncle Bob. He saves no money, and any money he accidentally saves probably sits in a savings account until he buys a car with it. If he waits until he's 70 years old and donates his net worth to charity, they'll get approximately $0. Another option is for him to donate $50/month to some charity. That's money that otherwise would go toward infomercial products or restaurant owners. If I were a charity, I'd rather get his money now than wait for it.
The question is, which one are you like? Will your investment returns be greater than inflation, and therefore have a greater overall impact on a charity than if you donated today? Or are you a bit like Bob, and the donations will come out of a "fun" budget that you might otherwise spend on frivolous things? Maybe you're somewhere in the middle and want to give a little bit now for that "feel good" factor, and to not feel guilty when talking about it with friends or family, even if it's not the most optimal solution.
My thought has always been this: If my life turns out great and I have more money than expected I can always donate more. If something goes wrong and I need some extra money (medical bills, investments tank, whatever), I can't ask for the money back. With that said, I still do donate occasionally. Our family does donations instead of gifts at Christmas for the most part.
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Charity begins at home.
That isn't my saying but it rings true.
Take care of YOU first so you never have to rely on the charity of others.
I suppose this is good advice for some people, but I don't see how it applies to the OP.
I second the poster who said you should invest instead of paying the 2.3% loan. General inflation and inflation in your salaries will make those payments seem small in time, but you don't want to miss out on market gains.
It applies to everyone. Taking care of yourself first means getting out of debt, building an emergency fund and preparing for your future.
Once you have done that, you have "extra". Until then, you don't.
When asked if I have any "spare change" I usually respond "none of my change is spare".
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To me, I think that we need to remember that we are all very rich to the rest of the world. In fact, here in Canada, even being in the bottom 1% of income, puts us in something like the top 15% of world wide income.
Having said this, I think that it is important to give to charity. I give what would be $1000's of dollars a month, if I were to run a side hustle with the time. I also make a point to purchase 50/50 tickets, or to buy something from my local charities in support.
Right now, the majority of what I give is time. As my net worth increases, I will give more money. I only give to local charities, that support causes that I believe in and am very involved in.
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I've always given to charity, and will still be FI rather early in life. They don't have to be mutually exclusive. I also frankly have an issue with the idea that you should have SO MUCH MONEY THAT YOU NEVER HAVE TO WORK AGAIN FOR THE REST OF YOUR LIFE before you should help others have, you know, clean water or access to basic medical care.
Every one of us who are considering putting personal fulfillment or happiness at the core of our lives over the more basic needs many deal with like personal safety, access to food, and daily shelter, are EXTREMELY privileged. So yeah, I think we should acknowledge how lucky we are and use our excess to improve things where we can.
And as far as giving time, that would work great for me after FI. Beforehand, I have much more money than time.
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And as far as giving time, that would work great for me after FI. Beforehand, I have much more money than time.
But if you had more money, you'd be FI sooner and be able to give more time. That's the give/take.
To take it to an extreme, you could work forever and give your salary totally to charity after FI. Or donate a huge chunk of your money so that you never reach FI.
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I've always given to charity, and will still be FI rather early in life. They don't have to be mutually exclusive. I also frankly have an issue with the idea that you should have SO MUCH MONEY THAT YOU NEVER HAVE TO WORK AGAIN FOR THE REST OF YOUR LIFE before you should help others have, you know, clean water or access to basic medical care.
I agree with this to a certain extent. But...
When I got my first "real corporate" job, I felt bad about not providing real service or volunteering any more (my first job was very service-oriented, and paid little). I still had some student loan debt and low-interest credit card debt. I donated around 20-25% of my paycheck and felt really good about it.
Then I got sick and was looking at an extended period off work. I got into more problematic debt around that time, and could have really used the money that I'd given away. I don't regret the giving entirely, but it would have been smarter for me to save up more first, and then give more generously.
I agree that waiting until you are FI feels too late to me; but waiting until you have a chunk of savings is entirely reasonable. Along the lines of "fit your own oxygen mask first". Initially make sure that you won't be burden to the charity sector (or enrich the predatory lending sector), then give generously after that.
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It might be interesting to watch the movie Poverty Inc. and see that (dramatized) take on effective altruism. Didn't MMM only make his $100K donation after his blog was on auto-pilot and making $500K a year? Then there are non-profit employees, effectively donating half of their earning potential to work in a mission-driven environment. Then there are people who gravitate toward assisting far-flung populations with specific issues, and those working to improve their neighbors' situations. I don't think there's a "wrong way" to be altruistic, you need to follow how you "help" the best, be it diffuse and sustained, intense and concentrated, taking care of others first or yourself first. Whatever you practice let it give you satisfaction.
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The promised followup: What would I do?
My advice comes from a very different perspective than most on this site, and from the US in general (I know there are others on this site, but I can only speak to my own experience).
The situation We're basically trained to follow an every man for himself model. From elementary school up, we're taught that every person following their individual interest is The American Way and The Right Way. You can see the pervasiveness of this line of thinking in Drifterrider's comments, "Charity begins at home" and "never have to rely on the charity of others." He's not an outsider on the issue. This is the predominant line of thinking in our country, almost a virtue even.
The Alternative I posit that we're better off caring for and relying on one another. For me that start's with Jesus' teaching. But if you don't buy that, even economists and historians will both tell you that the aggregate is better off when everyone cooperates. Ex.: The fault's in early communist countries wasn't that everyone in the country wouldn't work to support one another. The problem was they said as a country they'd do make everything they needed themselves, and not trade with other countries. The countries floundered (starvation level) when they closed themselves off economically from the support of other nations. North Korea has continued to suffer as the holdout independent economy, and would be a failed state if not for accepting aid from China. We're better off setting up systems, and patterns where we rely on one another, rather than insisting on being self-sufficient.
Take my advice with that difference in mind. My primary perspective is not: what is the best life I can live given my resource status?. Instead my question is: what is the best set of live's lived across humanity given my resource status?. My advice won't make sense to the first question askers, just as FI principles don't make sense to the spendypants public.
Here's my adivce by phase.
While accumulating debt: give to charity.
While paying off debt: give to charity.
While saving for FI: give a lot to charity.
When FI: give all income above 'Stache maintenence to charity.
That's is my advice, and I practice what I preach.
While accumulating debt: In college, I lived off student loans. I took summer work to earn money to give.
While paying off debt: After college, I married into more student debt: $90k total. We slowed giving and hit this hard over 2 years and wiped it out.
While saving for FI / out of debt: give a lot to charity. We switched the total of out money from loan payments straight into charities. We surveyed groups, met with CEO's of charities, and commited to a couple. Last year our charitable giving was about 2x our spending. (That tax return though....) And we have no savings. At times, we only had $400 in our checking account.
When FI: We are and aren't FI. We don't have savings with passive income, but I or my wife will always individually be able to earn double our annual expenses.
Why Now that we've said it's best to consider how to benefit the whole of people, what does that whole of people look like. 3 Realities. 1. If you're reading this forum, you are incredibly wealthy. 2. Much of the world is incomprehensibly poor by relative and absolute standards. 3. I minor decrease in out consumption can fund a disproportinaely massive improvement in the lives of many of the world's poor.
The first thing to realize is that global incomes don't exist on the levels of percentage differences. They exist on the level of orders of magnitude differences.
We sort of get that. We talk on this forum of people like Buffet and Bogle, and other phenominal investers far wealthier than we can imagine. What we fail to see often though is that we are orders of magnitude wealthier than most human beings. If you earn $30k / yr. That puts you at the 96th percentile of income. You're better off than 96% of human beings and and only 3.8% of people stand between you and WARREN BUFFET in terms of income. At $80k per year, you're in the top 0.3%. I pick those levels because, they seem normal to us, but they're excessively large. That's MMM's entire point. We can live excessive, lavish, spendipants, comforable lives on $30k/yr.
We're not just a little wealthier though. Just like Buffet is way above us, the world is comparably below us. Now that we know $30k is high, everyone else is probably in the $20k-$25k range, right? Not even close. Let's not skip to poor. We'll start with average. Average is: $1375 / yr. Imagine what it would be like to life off of $1375 / year. Imagine what you couldn't afford. You're might be about right. You'd own a set or two of clothes, live in a basic house you built with your family from local raw materials, without common ammenities (no plumbing, maybe 1 electric cable, certainly no appliances, no car, a family bike is a luxury not a cost-saver). But you could buy basic food (rice with every meal) most days (unless someone gets sick and needs antibiotics that week), your kids could get probably an elementary school education or so. But you're doing well. Food, water, shelter, family: most likly covered. The essentials you can cover. That's how far from average we are, not a few grand here or there, we're 20x-50x better off than an average person.
Now let's consider what poverty looks like. Let's go with $550/yr. That still covers 20% of people or about 1.5 billion people (about 4 entire United States). Lots of people. What could you buy for $550/yr? Imagine being that mustacian? Not a good idea. At that point, you're a few tiers away from buying clothes or soap. At that point, you almost exclusively buy food. You work enough to get your kids a meal once a day, and yourself 5-7 meals a week. Things like sanitary water or antibitics aren't even one the radar. All this common level, things like mosquito bites and diarhea are leading causes of death. Clean water or basic antibiotics to the 20% are like that Tesla or a Mansion on a hill to us. Unaffordable luxeries that we never intend to own, but know are out there. Can these people improve their lives on their own though? Yes, if you live long enough, and make it through school, work hard, be responsible, you could get your family up from $500/yr. to that $1375/yr average. described above. Then you've made it. But that's about all your country has to offer. (No wonder the west is struggling with immigration).
In America, we don't really realize the world's income are scaled this way. The places are too far away. It's hard to really believe that places like Kazakhstan or Mali actually exist, but they do. And the living standard I discribed is not an anomaly there. It's the status quo. It's not a few unlucky people. It's almost everyone.
So now what You can say this sucks. Yes, it does. But it's also amazing how much good we can do. We like to fantasize about how much good we could do if we had Buffet level money. The thing is, to 50+% of the world's people you are crazy rich like buffet, and you can do crazy things to make lives better. Remember that family eating one meal a day? For $1.36/day you can double their entire families annual budget. Imagine that you can double a families entire budget simply by cutting your cable! That's doubling the number of meals those children get. For $10,000 you can build a well to provide sanitary water to 400 people for 20 years! That's $1.25 to provide non-poisonous water to a person for an entire year! My water bill is like $40 month. $1.25 / yr. is a crazy bargain. And it goes on acroos food, health, and water. When our income is 50-fold another families income, the impact of our giving is multiplied 50-fold. To these people, we are crazy rich, and a small donation on our part, will have a massive impact.
Why am I saying this I assume most of us don't know this. I'm not trying to argue. I'm trying to present reality to people perhaps for the first time, and let them have a chance to respond appropriately, to their knew knowlege. We're too sheltered. Do some research. Maybe, do some traveling, but not to the resorts. Learn what the world is like, then decide.
Each of us must decide We are super rich. Not enough to fix everything (at least not alone). So do we live our lives in luxury, and ignore the plight of others because we can never give enough. Or do we ask what's the least I need? And is it worth trading the extra so that 1000's of others can have food, water, and basic healthcare. Most people here will say no. I only hope I can recruit a few more to say yes. For me, the right answer is yes, to give what I can, because Jesus has given to me. I'm convinced that he'll one day reckognize all people based on what they've done for others and the poor. I know that doesn't work for everyone here, so I've tried to make a compelling case, on other items. But that's where I stand. I know, I'm on the losing side of a few arguments here, but I figured this is the right type of question to stake a case in this community.
If you want to talk more, send me a PM.
A couple charts are attached, and a good set of links below to explore.
https://www.gatesnotes.com/2017-Annual-Letter
https://www.givingwhatwecan.org/get-involved/how-rich-am-i/?country=USA&income=50000&adults=1&children=0
http://www.pewglobal.org/interactives/global-population-by-income/
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I'm with the camp that it is very reasonable to donate now. Like Zinnie said, we are very privileged. I give occasionally, but not as often or as much as I would like. I do say I will give more later, when I'm FI, but I also give now, because I can.
OP, is there $130 someplace else, besides charity expense, that you could let go and put towards investments/debt? Or if not $130, some other amount? $8? Say, a netflix subscription or a lunch out? If want to give to charity and still work towards FI, you can probably do both, assuming your expenses are a mustachian average, and not a complete barebones situation.
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Great comment dpc.
Here's what I'm doing:
I'm trying to max out all my tax advantaged accounts (401k, HSA, Roth IRA) and I consider that enough progress towards FI. Doing that consistently will mean my mandatory working career is around 10-15 years. I'm trying to steadily increase my charitable contributions. Last year I gave 3% of my salary, this year I am targeting 5%, next year I'll increase that again. As my salary increases I can continue increasing my charitable contributions.
I think it's a good idea to donate *something* as long as you are out of the "hair on fire" debt emergency. It's okay to have a 45% savings rate instead of a 50% savings rate. Donating to charity can have positive impacts on the donor as well as the beneficiaries of the charity.
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My advice is to avoid letting Pete, or the gestalt of the MMM forum dictate the amount you choose to donate to charity. It's like asking the forum if you should go to church. You'll get (occasionally vehement) answers on either side, when the real answer for you personally must come from your own moral instructions.
I made that mistake of becoming so invested in the MMM ideal, that I started to violate my own moral instructions about charity. It really torqued me around the axle, but it was all unnecessary suffering, and in the end I managed to sort it all out. I give because I want to, and I think it's right for me. If you stop giving, stop because you want to, and it's right for you. Not because this forum tells you so.
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Thank you all for such excellent advice, especially to dpc who gave me a real perspective. My family really is exceptionally lucky (and rich), and with all the charity work and donations I have made previously, as a student, as a single-person household, it is really just greedy to give less when I am in my best financial situation ever. Thank you all, again.
I will revise my charities to see where I should give more, and register with the local Red Cross that I previously have spent a lot of time with.
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Thank you all for such excellent advice, especially to dpc who gave me a real perspective. My family really is exceptionally lucky (and rich), and with all the charity work and donations I have made previously, as a student, as a single-person household, it is really just greedy to give less when I am in my best financial situation ever. Thank you all, again.
I will revise my charities to see where I should give more, and register with the local Red Cross that I previously have spent a lot of time with.
Take a look at the tax rules. Maybe you can withdraw the donations from your pretax income.
http://www.skatteetaten.no/no/Tabeller-og-satser/Gaver-til-frivillige-organisasjoner/
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I am one of the wealthiest people who has ever lived on this planet.
I am still one of the wealthiest people on the planet currently, purely by virtue of living in a country where material wealth is absurd.
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When I budget, I try to keep to a 50 30 20 rule as much as possible.
50% of gross to savings
30% of gross to spending
20% of gross to taxes (real breakdown is probably getting closer to 25/25, as income rises and I dont track sales tax)
So where do you categorize charity? Its not savings, since I'll never see it again, and its not taxes, so it must be spending. So just like any other frugal endeavor, if I want to give, it comes at the expense of other spending, not savings. And, just like other goods or experiences I could buy, if I can DIY (volunteer) to get more out of my charity budget without allocating more funds, all the better.
It will always be about priorities. To me, charity isn't worth it if I have to move away from 50% savings to do it. But there is always something in my 30% spending that can be cut to make room for charity.
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Amen to DPC and Sailor Sam.
We are in a season of life that involves a lot of expenses--childcare, mortgage, student loan. But we have made it nonnegotiable to give 15% of our gross income away. Most years we give more than that. Last year it was 18%. As our expenses go down over the next decades, we will increase the percentage. Our idea is to have a baseline number that encompasses what we would like to live on, and then the rest is given away.
Freedom of Simplicity by Richard Foster influenced us a lot. Also, thinking like DPC's post is what keeps us giving in a non-negotiable way. We are fantastically wealthy. We manage to save 20% of our income every year. We have no interest in early retirement, although financial independence is something we see as an obvious goal. Both of us will continue to be gainfully employed until we are no longer physically able to do so--that's part of our purpose in life, we believe.
Nice to see so many with the same philosophy.
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dpc, right on!
I haven't given much compared to my lifetime earnings. I always planned to give all my money to charity after I died, which excused my small, infrequent donations and massive personal savings. (No kids, no intention for kids, and even if I did, leaving giant sums to my children wouldn't be the best use of my money.)
With the recent changes in US government, I've started giving more to both political causes and charity. I intend to keep working after FI, so I'll have a lot of excess money to give away. I can start now. Don't need to wait until my will gets executed.
I could give up one cab ride and provide food for a month for someone. Or buy 6 mosquito nets to prevent malaria. That is insane.
My budget is already crazy low, so most of my donations will cut into savings. That's fine. I've got more than enough.
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When I budget, I try to keep to a 50 30 20 rule as much as possible.
50% of gross to savings
30% of gross to spending
20% of gross to taxes (real breakdown is probably getting closer to 25/25, as income rises and I dont track sales tax)
So where do you categorize charity? Its not savings, since I'll never see it again, and its not taxes, so it must be spending. So just like any other frugal endeavor, if I want to give, it comes at the expense of other spending, not savings. And, just like other goods or experiences I could buy, if I can DIY (volunteer) to get more out of my charity budget without allocating more funds, all the better.
It will always be about priorities. To me, charity isn't worth it if I have to move away from 50% savings to do it. But there is always something in my 30% spending that can be cut to make room for charity.
The bolded is the exact thing that started to make me all upset about donations. I'm pretty competitive, and I wasn't winning the MMM gaaaaaaame. No fair!
In the end, I started tracking the % of net pay I live on. As long as that stays below 50%, I'm still winning the game. Competitive brain mollified, charity still accomplished, personal moral code challenged but surer for the challenge.
Not saying you need do follow my philosophy, SHARP_00. I'm just globally posting something that worked for me, cued off something you said.
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Like some others here, I think it REALLY depends on what you would do with the money if you did not not give it to charity. If you REALLY used it to accelerate your FIRE date it may make sense to stop giving to charities to accelerate FIRE and give more then. You can look at the numbers and see how $1500/year would change your financial situation, and your ability to give to charities later.
I personally plan to donate time (plan is ATM to donate almost no financial resources) after I FIRE. I think a lot of things could benefit from my efforts.
Granted I'm not going to be helping those overseas as much, and I do agree that the US is one of the most wealthy countries, but I worry (a lot) about how money is truly used. I don't expect charities or non-profits to not have paid employees, but I often feel the overhead is absurd. I also think a lot of times economics, governments, and even local warlords, help keep people in poverty, so my donation doesn't help the root of the problem. This may be a naive viewpoint, and I will research and learn more when I am FIRE to become more informed about where my efforts are best spend.
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dpc, right on!
I haven't given much compared to my lifetime earnings. I always planned to give all my money to charity after I died, which excused my small, infrequent donations and massive personal savings. (No kids, no intention for kids, and even if I did, leaving giant sums to my children wouldn't be the best use of my money.)
With the recent changes in US government, I've started giving more to both political causes and charity. I intend to keep working after FI, so I'll have a lot of excess money to give away. I can start now. Don't need to wait until my will gets executed.
I could give up one cab ride and provide food for a month for someone. Or buy 6 mosquito nets to prevent malaria. That is insane.
My budget is already crazy low, so most of my donations will cut into savings. That's fine. I've got more than enough.
This is awesome. I just hoped to be a voice on the other side of the aisle. I didn't expect people to move to my side. But I'm pumped to hear you feel comfortable giving sooner! Welcome to the team!
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Like some others here, I think it REALLY depends on what you would do with the money if you did not not give it to charity. If you REALLY used it to accelerate your FIRE date it may make sense to stop giving to charities to accelerate FIRE and give more then. You can look at the numbers and see how $1500/year would change your financial situation, and your ability to give to charities later.
I personally plan to donate time (plan is ATM to donate almost no financial resources) after I FIRE. I think a lot of things could benefit from my efforts.
Granted I'm not going to be helping those overseas as much, and I do agree that the US is one of the most wealthy countries, but I worry (a lot) about how money is truly used. I don't expect charities or non-profits to not have paid employees, but I often feel the overhead is absurd. I also think a lot of times economics, governments, and even local warlords, help keep people in poverty, so my donation doesn't help the root of the problem. This may be a naive viewpoint, and I will research and learn more when I am FIRE to become more informed about where my efforts are best spend.
Jo, I definitely feel the same way about giving overseas. It's a mess. Doing you reasearch is a good idea. I'd definitely push you to start researching now though. You'll at least have a better hea start down the road. I'm a skeptic too, but I've found a couple groups I trust.
Also, a story: Last Christmas, I had the opportunity to meet a college student. The kid was a brilliant and compassionate Kenyan kid studying at Duke. He was from a medium size, Kenyan town, and we enjoyed a long evening conversation. He showed me his house on google maps, and the slums a couple hundred yards down the street. Here was an insider. Until he came to college the only white people he'd met were the myriads of aid and non-profit workers that cycled through his town. Here was an insider to this mysterious non-profit world.
I asked him what the charities did and if they were helpful. He told his story. Over and over he said "it's never enough", but "they really help alot of people". He said they "help a lot" and "he was so grateful" over and over until he almost started crying. This was a 20 year old man sitting in the living room nearly crying. He came from a wealthy (by comparison) family and he was still immensely grateful for the non-profits opperating in his home-town.
It's hard knowing that charity is worth it, with the places most in need being so far away, but for me this conversation was a huge confidence boost, and reassured me that I was doing the right thing.
(And you're right, the economic and politcal climate is horendous. I asked the Kenyan kid what he wanted to do after college. He said he's considering running for president to help fix his country. BUT, he said, he was hesitent to risk having his family assasinated, and wasn't sure he'd be willing to kill people to get into power. This was from a 20 year old college kid sitting next to me on a couch who really, really just wants to help alleviate poverty in his country.)
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I assume most of us don't know this.
But a lot of us do. We just need a reminder. Thanks for reminding me, dpc. :)
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This is something I haven't really nailed down for myself, but after my annual raise this year, I did some budget re-assessment, and as part of that, I started some small re-occuring donations and started budgeting for donations, both deductible and otherwise. I'm still working out where I want to be with explicit donations vs. making small ""loans"" to similar friends to get them through rough patches vs everything else in the world vs exactly how much I allocate for such purposes. For me, it is going to be a long-term dialogue with myself about what is important to me and how I'm getting there. But at this point, I don't feel right not donating anything or waiting till I'm older or whatever.
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Pre FI, it was 10% of my budget. Post FI, it's still 10% of my budget. Sometimes I end up under, sometimes over, but usually pretty close. I also donate some time here and there. RE may change things though when I finally pull the trigger on it. I intend on moving more towards time donations and scaling back the monetary donations at a calculated hourly rate to give me more of a monetary safety buffer.
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One way to help the world's poor indirectly is by reducing one's carbon footprint, and thereby contribute less to the global climate change effects of carbon pollution.
The reason this helps is because global climate change is increasing extreme weather changes, greater droughts in sub-Saharan Africa, more extreme hurricanes in the Caribbean, and other places. These weather events increase famine, water shortages, and devastation of homes.
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This is such an interesting question. I really like everyone's perspectives, especially the ones that truly put things in perspective :) Personally I feel good when donating money and I usually do to the tune of a few thousand per year. I also have a yearly new years resolution for volunteer hours. I was aiming for 350 hours this year which I passed awhile ago and I'm now on my way to 500, #crushedit :). Volunteering at a charity makes me feel as good or better than giving them money. So I think for me both are important. But could I be donating more money instead of saving for FIRE? Yes. Do I feel bad about that? Sometimes... :/
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One way to help the world's poor indirectly is by reducing one's carbon footprint, and thereby contribute less to the global climate change effects of carbon pollution.
The reason this helps is because global climate change is increasing extreme weather changes, greater droughts in sub-Saharan Africa, more extreme hurricanes in the Caribbean, and other places. These weather events increase famine, water shortages, and devastation of homes.
This is a nice way of looking at it, and it's what I do right now.
On top of that, I support some people in my own community who otherwise would have had to rely on actual charities.
On top of that, I'm active in my local union and help (mainly) low-income workers with their income tax. I have a law degree and help out people with minor legal issues. I don't take on cases, but I tell them in plain English what the problem is and refer them to the right people.
I don't really donate to actual charities on a regular basis. I do give €50 here and there. I am thinking about giving more regularly, but I'm still deciding which charities are most important to me. What I am doing though is putting in time and effort to try to make the world at least a little bit better. I think it's good for everyone to do charitable work, even if it's only one day a year. It's easy to only see the world from your own perspective. You need to confront yourself with people in less fortunate conditions. Through my income tax work, I'm not just trying to help people file their taxes, I'm mostly trying to make them more financially literate. For us Mustachians it might be funny to encounter financially illiterate people, but it's no laughing matter. When I have more time on my hands I really want to put more time into improving financial literacy, especially for low education, low income workers.
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Amen to DPC and Sailor Sam.
We are in a season of life that involves a lot of expenses--childcare, mortgage, student loan. But we have made it nonnegotiable to give 15% of our gross income away. Most years we give more than that. Last year it was 18%. As our expenses go down over the next decades, we will increase the percentage. Our idea is to have a baseline number that encompasses what we would like to live on, and then the rest is given away.
Freedom of Simplicity by Richard Foster influenced us a lot. Also, thinking like DPC's post is what keeps us giving in a non-negotiable way. We are fantastically wealthy. We manage to save 20% of our income every year. We have no interest in early retirement, although financial independence is something we see as an obvious goal. Both of us will continue to be gainfully employed until we are no longer physically able to do so--that's part of our purpose in life, we believe.
Nice to see so many with the same philosophy.
+1. Said so well. And I love the Richard Foster recommendation. I found myself very challenged by that (in a peaceful, encouraging way).
Another one for me that I appreciated (both for the encouragement and practicality) was Rich Christians in an Age of Hunger by Ron Sider. The concept of graduated giving, for one... and thinking through sustainability and character. And I LOVE that the updated editions since he first wrote it show there has been so much progression and improvement in fighting global poverty since he first wrote it.
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I am not where I need to be financially, so I have only been giving about $50 a month.
My life has not really been blessed, but compared to many I have it easy. When I was younger I got the odd helping hand, and now that I am older I give a little bit where I think I should. Because some people need help NOW!
I do not give to Unicef: I prefer to vet the charities myself. Since I give so little, I want it to count.
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I met a guy yesterday who said he was politically involved with "Food not Bombs" - which is a collective group that provides free meals to those in need.
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Amen to DPC and Sailor Sam.
We are in a season of life that involves a lot of expenses--childcare, mortgage, student loan. But we have made it nonnegotiable to give 15% of our gross income away. Most years we give more than that. Last year it was 18%. As our expenses go down over the next decades, we will increase the percentage. Our idea is to have a baseline number that encompasses what we would like to live on, and then the rest is given away.
Freedom of Simplicity by Richard Foster influenced us a lot. Also, thinking like DPC's post is what keeps us giving in a non-negotiable way. We are fantastically wealthy. We manage to save 20% of our income every year. We have no interest in early retirement, although financial independence is something we see as an obvious goal. Both of us will continue to be gainfully employed until we are no longer physically able to do so--that's part of our purpose in life, we believe.
Nice to see so many with the same philosophy.
+1. Said so well. And I love the Richard Foster recommendation. I found myself very challenged by that (in a peaceful, encouraging way).
Another one for me that I appreciated (both for the encouragement and practicality) was Rich Christians in an Age of Hunger by Ron Sider. The concept of graduated giving, for one... and thinking through sustainability and character. And I LOVE that the updated editions since he first wrote it show there has been so much progression and improvement in fighting global poverty since he first wrote it.
NICE! A new book to read! Thanks so much!
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I take a hard look at my "fun" or optional expenses.... I ask myself, if I can afford to spend X on clothes, eating out, entertainment, etc, why can't I share some of that with someone who has so little opportunity in life?
I think I ended up donating 20% of my variable discretionary spending on charities... (rather than equating it to my income, I equated it to my spending).
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Granted I'm not going to be helping those overseas as much, and I do agree that the US is one of the most wealthy countries, but I worry (a lot) about how money is truly used. I don't expect charities or non-profits to not have paid employees, but I often feel the overhead is absurd. I also think a lot of times economics, governments, and even local warlords, help keep people in poverty, so my donation doesn't help the root of the problem. This may be a naive viewpoint, and I will research and learn more when I am FIRE to become more informed about where my efforts are best spend.
I'd like to recommend GiveWell as an organization that directly addresses these concerns. They try to measure the effectiveness of various international charities. It is an imperfect process, but they take it extremely seriously and their measurements are well respected by economists and other social scientists. They clearly miss many charities that are effective in ways that are difficult to measure, but I am confident that their recommended charities are an effective use of money.
For the broader question of whether it's better to give money now or become FI and give more money later, I would say that we should all be looking for charities whose rate of return is better than the market. In other words, I could give away $100 now or I could keep that money in the market, and I would expect to be able to give away about $140 in five years. A functional charity should be able to do more good with $100 now than it would with $140 in five years.
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I've found a donor advised charitable fund has been very compatible with our FIRE goals and charitable giving, worked out nicely from a tax benefit (http://www.fi35.com/giving-until-it-hurts-the-taxman/) perspective as well.
The nice thing is that it is "forced" giving, so it gets us over analysis paralysis, and fights procrastination. It may also jive with many people's desire to invest: we allocated $25k to a fund with Vanguard Charitable in our second last working year, and set it to be invested automatically. We've been distributing about $500 - $1,000 anually to charities form that fund, and the balance is still higher than we started thanks to the stock market performance the last few years. It's gone up to almost $29k now, even with us distributing funds, so we might increase our rate of giving from the fund.
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dpc, right on!
I haven't given much compared to my lifetime earnings. I always planned to give all my money to charity after I died, which excused my small, infrequent donations and massive personal savings. (No kids, no intention for kids, and even if I did, leaving giant sums to my children wouldn't be the best use of my money.)
With the recent changes in US government, I've started giving more to both political causes and charity. I intend to keep working after FI, so I'll have a lot of excess money to give away. I can start now. Don't need to wait until my will gets executed.
I could give up one cab ride and provide food for a month for someone. Or buy 6 mosquito nets to prevent malaria. That is insane.
My budget is already crazy low, so most of my donations will cut into savings. That's fine. I've got more than enough.
This is awesome. I just hoped to be a voice on the other side of the aisle. I didn't expect people to move to my side. But I'm pumped to hear you feel comfortable giving sooner! Welcome to the team!
You convinced me too! I've been donating small amounts monthly and also volunteer weekly at a local parrot rescue but I realize this is not enough, your post pushed me to really look into it. These poor birds are just as intelligent as toddlers, this rescue is helping educate people on their needs and hopefully will help prevent more breeding of them in the future. I also try to minimize my environmental footprint by leading a vegan lifestyle and not excessively using water, electricity, etc. I don't want kids either, so my money is going to go to some sort of charity when I die. But now I'm going to add donations for clean water as well. I'm not 100% out of debt, but the amount I have left is minimal (plus I have a net worth of >0) so there's no reason I can't donate more.
Is anyone else bothered by how people only want to help locally and say things like, "We have to help ourselves first before others!" I've always thought this was pretty twisted... Many other countries are in so much worse shape. We should help both. Why not give your time locally but your money internationally? This seems the best of both worlds, since it's not always possible for someone to just move overseas to help in another country.
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I've found a donor advised charitable fund has been very compatible with our FIRE goals and charitable giving, worked out nicely from a tax benefit (http://www.fi35.com/giving-until-it-hurts-the-taxman/) perspective as well.
The nice thing is that it is "forced" giving, so it gets us over analysis paralysis, and fights procrastination. It may also jive with many people's desire to invest: we allocated $25k to a fund with Vanguard Charitable in our second last working year, and set it to be invested automatically. We've been distributing about $500 - $1,000 anually to charities form that fund, and the balance is still higher than we started thanks to the stock market performance the last few years. It's gone up to almost $29k now, even with us distributing funds, so we might increase our rate of giving from the fund.
Bookmarked. Donating zilch in our accumulation years, but this will come handy later. I look forward to obsessing over a silly fund name.
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Is anyone else bothered by how people only want to help locally and say things like, "We have to help ourselves first before others!" I've always thought this was pretty twisted... Many other countries are in so much worse shape. We should help both. Why not give your time locally but your money internationally? This seems the best of both worlds, since it's not always possible for someone to just move overseas to help in another country.
I understand the urge to be doing donations 'correctly.' I used to believe that volunteering wasn't really donation, and snorted derisively when people said it was on par with monetary donations. Then I decided I was being a dick, and probably I should stop. There's no simple answer to giving, and we should all make space for each other instead of deciding that our own chosen path is the one right, true, and conscientious path.
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Amen Sailor Sam. One way I assuage my conscience about all the things I don't give to is by telling myself that I'm helping the starfish I'm helping, and thankfully other people will feel called to help the other starfish.
You know, because of the starfish story? The beach that was full of stranded starfish, and a guy is throwing them back into the water one by one while they dry out in the sun? And another guy asks, why bother, you'll never save them all, and the original guy says he was able to save that one, which made a difference the particular starfish he was able to save?
Not very eloquent here this morning...
Anyway, the list of things I don't give to despite my awareness of them as worthy causes is quite long. I generally also do not give to things that are presented as emotional, guilt-based generosity, because my money is already tied up in charities that I intentionally give to in a percentage-of-my-income based way.
We do set aside $200/month for spontaneous generosity to charities, but this money also encompasses gift-giving to friends and family, and hospitality (having people over for dinner, parties, etc.). It's a large part of our budget and is what generally bumps us over the 15% we already earmark for charity.
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Agreed, giving anywhere you can is better than not giving at all. I want to give both locally and internationally. What I don't like is the "us vs. them" attitude some people have which a lot of times leads to no one being helped at all, especially if that person thinks everyone in their country has it made or just needs to work harder to improve their life. I don't mind people only giving locally (that's what I did for a long time, and for a cause that many may not even sympathize with which is parrots). But when it's a result of feeling that people outside of your country aren't worthy then that's problematic. I think this is a minority view though, but for some it's a subconscious decision. I'm even guilty of this, we all like to donate time/money somewhere that we feel like we make a difference (or even actually see the difference, receive thank yous, etc), and we don't get that feeling when we donate to a cause thousands of miles away.
It's hard for me especially because I see things in a very logical way. If I have $10k to donate, I could help 100 people I don't know in one place versus 10 in another place where I get to see the results or help someone I know. I struggle with this constantly and I'm sure it's quite controversial. That said, no one is perfect and I waste money on things I don't need just like anyone else. It's difficult to not beat myself up for buying a $10 restaurant meal when $10 is someone's weekly family food budget. And sure, I can blame the "system" on this problem...but that's not me. Just because I didn't cause the problem doesn't mean I feel morally excused to live a life of wasteful luxury. I think I will work on upping my charitable contributions, but I don't know how much is enough or if any amount would ever feel enough in my mind. I think it will help if I remind myself that all my money post-death will be given to a good cause since I don't have kids, so either way my money is going to charity whether it's now or later.
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I live by the below rules. It has worked for me for years
Spend some -because you need to enjoy life today
save some - in case of life's many emergencies
invest some -in case your ass lives to be old
give some away - for those who are less fortunate.
My donations are setup just like by automatic savings. Because I am animal lover, I have donated to aspca monthly for years. Now that I am debt free, I will up my automatic contributions.
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I live by the below rules. It has worked for me for years
Spend some -because you need to enjoy life today
save some - in case of life's many emergencies
invest some -in case your ass lives to be old
give some away - for those who are less fortunate.
I really love this. It's so simple, but makes so much sense.
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If you're looking for a mostly-rational way to look at whether, when and how much to give to charity, I'll throw out some thoughts.
1. Give to charities because it is important to you and part of your ethos.
MMM is about frugality-- which is spending your money efficiently on what is important to you in life, and giving up unnecessary things. It's not about stinginess-- which is giving up important things in life for money. If FIRE as soon as possible were the only goal, we should all give up our homes, adopt out our kids, move into the cheapest roommate situations possible, and eat only the necessary to keep alive. No entertainment. Cheat and steal whenever safely possible. But no, this is not the way of happiness. Drop the unnecessary, but don't let go of the essentials-- such as family, enjoyment of life, health, kindness, and honor.
2. Give to charities as an investment in the future and world around you.
MMM takes the long view. Care of the earth and our society is beneficial to the stability necessary to make a long, happy, early retirement. Also, better to invest in charity earlier than later.
3. Choose your charities as carefully as you would an investment vehicle.
You have limited time and resources-- make them count. This is a very tricky piece of optimization and will need occasional recalibration. Will $10 donated directly to a homeless family be as well spent as $10 donated to a food bank? How much money or time should you donate?
It's a very personal calculation. We all have financial goals on different timelines that require a certain level of saving. Once we have removed our essential payments (housing, food, taxes, utilities) and our savings payments, we have some money left over. Also, once we have done everything we need to for the day, we have some time left over. These excesses we divide between investment for the future, recreation and charity.
If you are not able to give to charity without staying in debt or extending your timeline, and you can't bear to extend your timeline for some reason, your recreational/charity budget will be very small. But it probably won't be zero unless you can live with yourself as a human being that way. Basically, if you can spend $5 on something stupid like a latte, you can donate that much too.
But perhaps you can give some time to charity because few people can work all their waking hours. The time you donate would be best spent using your skill set, unless you need a break from your expertise, in which case it could be seen as part recreation or even training.
How about investment vs. charity? If you are certain that you will eventually donate that money, and not end up keeping all the money for yourself... and that the investment gain is greater than loss to the charity by not receiving the money earlier... okay, I guess. But when I am tempted by selfishness to withhold charity, I often think of the following poem.
https://www.poetrynook.com/poem/legend-northland
Choosing the most efficient use of charity dollars is not easy to do objectively. Sites like Guidestar and Charity Navigator help, but can be gamed. As for what sector to choose, it's difficult. I used to believe that education and the environment were most important, but lately I've come to think that income inequality plays a great role too in all the striving that causes people to over-consume. That's off-topic, but at any rate it was driving me crazy until I decided the best thing is not to be paralyzed, but for everybody to work as hard as they can on the essentials and all the shared goals, and improve when we see an improvement to be made.
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Found the link to the other discussion: https://forum.mrmoneymustache.com/ask-a-mustachian/what-charities-do-you-give-to/
This was a good question, OP! I look forward to learning from all the interesting resources posted like Freedom of Simplicity, When Helping Hurts, and Give Until it Hurts (The Taxman) and enjoyed reading all the thoughtful responses. Lots of food for thought.
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I thought whether to write or not, decided to - I cringed when I read the question and also when I read many of the postings so full of judgement. The whole charity as in write a check and buy and indulgence (https://en.wikipedia.org/wiki/Indulgence) which somehow makes you the person to judge others approach just sits wrong with me.
if you want to be charitable - act!
There are kids going to schools within 20 minutes of you that need mentors and role models, today!
There is a neighboring women's shelter for abused and endangered spouses that would love your help right now (and old cell phones), not the credit card number.
There are elderly that would love volunteer tax assistance and other help (even as simple as a ride to Walmart which they can not do)
There are new immigrants that would love to be helped in both English and getting settled
There are actual refugees escaping large portions of the world that need place to stay, something to eat, and someone to guide them
There are very low means and income people right around you, no matter where you live that need help
There are habitat for humanity building a house near you that you can help with
Now , if you can not do any of this and help people directly, it is ok - as others said put your own oxygen mask first.
If you can get, what goes around comes around, and pass it forward when possible.
in no case, doing it or not doing it, or doing some of it, gives you any grounds to look down, look up, look sideways on others who do or don't... There is more than one way to help, there are infinite ways to help out.
"Is anyone else bothered by how people only want to help locally and say things like, "We have to help ourselves first before others!" I've always thought this was pretty twisted..."
this phrase of 'twisted' smacks of judgement and attitude ...
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I thought whether to write or not, decided to - I cringed when I read the question and also when I read many of the postings so full of judgement. The whole charity as in write a check and buy and indulgence (https://en.wikipedia.org/wiki/Indulgence) which somehow makes you the person to judge others approach just sits wrong with me.
if you want to be charitable - act!
There are kids going to schools within 20 minutes of you that need mentors and role models, today!
There is a neighboring women's shelter for abused and endangered spouses that would love your help right now (and old cell phones), not the credit card number.
There are elderly that would love volunteer tax assistance and other help (even as simple as a ride to Walmart which they can not do)
There are new immigrants that would love to be helped in both English and getting settled
There are actual refugees escaping large portions of the world that need place to stay, something to eat, and someone to guide them
There are very low means and income people right around you, no matter where you live that need help
There are habitat for humanity building a house near you that you can help with
Now , if you can not do any of this and help people directly, it is ok - as others said put your own oxygen mask first.
If you can get, what goes around comes around, and pass it forward when possible.
in no case, doing it or not doing it, or doing some of it, gives you any grounds to look down, look up, look sideways on others who do or don't... There is more than one way to help, there are infinite ways to help out.
"Is anyone else bothered by how people only want to help locally and say things like, "We have to help ourselves first before others!" I've always thought this was pretty twisted..."
this phrase of 'twisted' smacks of judgement and attitude ...
I give because I can't act. I have a job that includes a ton of last minute business travel. With the exception of giving old cell phones to the women's shelter, I cannot commit to any of your suggestions. But I can give money to feeding America, the same place my parents give their time. Giving money to charity = an indulgence talk about judgment and attitude.
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"I give because I can't act. I have a job that includes a ton of last minute business travel. "
and I commend and praise you for that ! do something (even if it is a monetary donation). Now, on the next step for a lot of us - stop judging others ;). there are many ways to help, and mine (or yours, or next guy/gal) is only one of them - just because she/he does not give to your church/temple/mosque/charity/cause/whatever does not mean they are wrong/bad/evil/twisted. live (fully) and let (others) live.
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Phenomenal posts in this thread, dpc!
I couldn't agree more.
Anyone interested in this should read The Life You Can Save. Terrific book with lots of info like what dpc laid out. Definitely changed my thinking on a lot of things.