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3 Financial Quandries–What Do You Think?

3 Financial Quandries–What Do You Think?

A few years ago, when I was aggressively paying off debt, I would listen to Dave Ramsey’s podcast in my car as I drove to and from work. As you might be aware, Los Angeles is not the most god-fearingly Christian of cities, and we tend to stick our noses up at both the thought of saving money and of taking advice on spending money from a Southerner. Maybe that’s just me, actually–but in any case, Dave wasn’t on the radio here, and I liked to listen to his show both to keep myself on track and also to get answers to those nitpicky questions about staying on a debt recovery plan. Not every scenario is covered by any one plan, which is why I think you ultimately have to come up with your own personal financial philosophy to meet your own needs. But still, when I read personal finance blogs, I do see these kinds of questions coming up again and again, so I thought I would address some of these here and see what you guys think.

  1. Should you tithe while getting out of debt?
    This is an easy one for me, because I don’t tithe. I don’t practice any form of organized religion, in fact, so tithing has never been an issue for me. However, I figure that for agnostics, the question might be, “Do you give to charities when trying to get out of debt?” My answer has been, “No,” in the past. However, I do wonder about this. A cornerstone of the Dave Ramsey program involves giving even when you are in debt–this is based on tithing in Christianity, but you might also think of it as a Law of Attraction kind of thing. The theory is that you get back more than what you put out. I don’t know, though. I tend to think that you should apply all that money to debt repayment.
  2. Does your budget each month allow for annual payments?
    Some people budget fifty dollars or whatever each month toward payments that are due annually, like life insurance and homeowners insurance premiums. This tends to create too many different things to keep track of for me, and I forget how much money I’ve put aside or where it is, unless I make up a new account for every single payment, which is just crazy. So what I have taken to doing is putting money in a “sinking fund” for that kind of stuff. I put money into the sinking fund as it is needed, and then write checks out of that when these kinds of payments are due.
  3. Pay off student loans before putting 15% toward retirement?
    Dave Ramsey is pretty adamant about being completely out of debt (other than the mortgage) before you start putting money toward retirement. Once you do start, though, it is supposed to be 15% of your income, which is higher than many people save. The thing is, if you have advanced degrees, and/or if you have anyone who went to a private school, your student loans probably total more than a house does in some parts of the country. In these cases, I tend to think you should save toward retirement while you’re paying off your student loan debt, so that you get the benefit of savings in the early years, even if your student loans are not paid off as aggressively.

Now it’s your turn. What are your financial quandries? How have you decided to handle them?

Comments (4)

  1. weezy
    Apr 13, 2009

    I can see both sides of the argument for contributing to charities/tithing to your church while working out of debt. Maybe not the full 10% if you’re in a deep, deep hole. But, you have to keep in mind that you are not just giving back to your community or causes you believe in, but you’re also getting some tax savings in addition to good will and internal satisfaction from that gift. I don’t give much because I have been on a tight budget for several, but I do give some money to a couple of organizations that I feel make my community a better place in which to live. And I always declare it on my taxes….and that makes me feel good about it all over again.

  2. Snakey
    Apr 13, 2009

    Yeah, it doesn’t have to be an all-or-nothing proposition. Maybe you cut your tithing in half, or tweak the schedule. A big charity may not particularly notice a change; a smaller animal shelter or church may be operating on a wing and a prayer and would prefer $5
    now vs. $45 come christmas. I guess one could ask?

    My waffling is over saving (general, retirement) vs. home improvements. There’s dueling thoughts of “if you were to put the house on sale, you’d want those things done so you can get the best offer” vs. “well, hell, if I’d do it to sell, why not do it now and at least enjoy the upgrade” vs. “great time to negotiate with contractors, they are hungry!” vs. “the revolution cometh, save! Save! And jot down some raccoon and squirrel recipes while the internet is still up.” So, it ends up leaning towards savings via paralysis.

  3. Apr 13, 2009

    The Christian tradition is supposed to be 10% of gross to tithing (operational costs). Then render Caesar what is Caesar’s (taxes). On top of that, you leave your margins “unharvested” for widows and children (pay for specific ministries). Tithing isn’t strictly a Christian tradition and every culture has some notion of karma. If you don’t have money to give, I would strongly recommend the gift of time.

  4. Apr 14, 2009

    Yes, 10% pre-tax, I know. I don’t want to denigrate anybody’s belief system, but suffice to say I find that little provision awfully convenient. I do think giving is a good tradition, and I think it’s good for people in churches because they have kind of a ready-made charity to give to. On the other hand, I see the wealth of the Catholic church and truthfully it sickens me when I think of all the poor people giving 10% of their pretax income to that. That would be the subject of an ABDPBT Spiritual, But Not Religious post, though.

    I think there is a moral issue here (should you give? Is it morally acceptable not to give?) as well as a personal financial one (can you give, right now? And if not, when?). I try to steer clear of moral imperatives because I’m not part of a religion or trying to construct a morality system here–I’m trying to frame it as a purely personal financial question. And I still keep going back to the idea that if you are very strapped for money, trying to climb out of debt, I don’t see why you should give to charity *unless* you strongly believe that it has something to do with getting something back or the fate of your eternal soul. And even that, I have some problems with. I really feel like people who are struggling should not have to tithe. But maybe that’s why I’m not religious.

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