Dave Says Give Wisely at the Holidays

Townhall.com ^ | December 18, 2012 | Dave Ramsey

[Kaslin]

Dear Dave,

We’re debt-free except for our house, and that’s on a 15-year, fixed-rate mortgage. We also have an emergency fund in place. We’d like to give back this year, and do some Secret Santa things and a little extra giving. At what point should we start giving over and above what we tithe?

Jeremy

Dear Jeremy,

My advice would be to wait until you finish Baby Step 3, which it sounds like you’ve done. That way, you’ve paid off all of your debt, except the house, plus you have a fully-funded emergency fund of three to six months of expenses.

You mentioned tithing, so I’ll cite the Scripture that says he who doesn’t take care of his family is worse than an unbeliever. I’m paraphrasing, of course, but in my mind, from a financial point of view, taking care of your family means having your emergency fund in place and being out of debt, except for your house. At that stage, you’re beginning to build wealth and you can really help others while knowing those closest to you aren’t going without.

My wife and I made the decision a long time ago to live on a certain amount of money. We apply a formula to everything above that figure for tithing and taxes. The rest we allocate for giving, saving and spending. It works great for us, but be responsible and realistic with what you have. You don’t want one of those areas to hinder the others.

—Dave

Dear Dave,

Do you have any advice for deciding which charities to give money to during the holidays?

Danny

Dear Danny,

There are so many great organizations out there. It’s virtually impossible to pick three or four and say with any certainty they’re the best.

When it comes to choosing, I think the amount of diligence you put into the decision-making process should correspond directly to the amount of money you’re giving. There’s no reason to spend hours in exhaustive study over a $20 donation. However, you’d want to put some time and thought into research if the amount is $2,000.

In situations like this, I’d want to see full disclosure. I’d like to know the expense ratios of the organization and how much money goes toward administrative costs. Every organization has bills to pay and salaries to consider, but you don’t want overhead to eat up 90 percent of every dollar donated.

Helping a good cause is wonderful, but you’ve got to be reasonable and wise about these things. Don’t feel bad about asking to visit a site and take a tour. Lots of times you can get a feel for what’s going on by just walking around and gauging the people you encounter. Regardless, the bigger the gift, the more time you should spend investigating!

—Dave

[GnL]

Yesterday I gave to the Second Amendment Foundation and the NY State Rifle & Pistol Association.

FUBO

[RightOnline]

In terms of giving to charities....I’ve given liberally to the Salvation Army for many reasons, not the least of which is the fact that the overwhelming majority of what you give actually goes to those you intend to help. Their overhead is ridiculously low; great organization.

[memyselfandi59]

Ditto...we usually give through the Salvation Army. The heads of the organization aren’t the ones raking in the dough, like in many charities.

Plus my great grandparents and grandparents were full time Salvation Army officers, and I know they gave of themselves sacrificially, as I assume many of those in the “Army” do today.

Samaritan’s Purse also seems to be a worthy charity. Our church sends crews out to help after a natural disaster, and it is organized and coordinated through Samaritan’s Purse.

[bgill]

Give to someone you know is in need. If you don’t know of someone then give to a local organization. The closer you keep it to home, the better for your area.

There’s a neighbor who is constantly asking for donations to fly to some foreign country to do charity work. I keep telling him he’s wasting good money buying plane tickets and hotel rooms when people on his own block need the help. His response is to get mad.

[Altariel]

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