On my way to work this morning I was listening to an old episode of the Dave Ramsey Show (side note with some of my favorite podcasts to check out: This American Life, The Bobby Bones Show, The Dave Ramsey Show, Science Friday, and Serial).
I was listening to a Millionaire Theme Hour. Those, along with the standard Debt-Free calls, are my favorite segments of The Dave Ramsey Show! Anywho, I was listening as Dave talked to all these normal people about how they’d managed to acquire a net worth of $1million+. One of the questions Dave asks everyone is, “What part did giving play in your journey?” His theory is that most millionaires are incredibly generous people. Contrary to what many people think, the average millionaire is NOT a stingy money-grubbing old scrooge.
As I listened, I started to think about the role that giving has played in our family along our journey to become debt-free. The topic of giving while in debt has come up before on the blog and has proven to be a pretty controversial subject. For the first two years of our journey, we scaled WAY back on our giving! We probably gave less than $100 to charitable organizations in all of 2014. However, we soon realized that in our area we could make tax credit donations. As a quickie for anyone without the program (I’m originally from Texas where there are no state income taxes so I’d never heard of it!), donations to specific approved organizations can be made instead of paying state income taxes directly to the state (this is obviously a very simplified statement – see here for more details). It’s not the same thing as a deduction, in which any charitable donation is deducted from your income for tax purposes. Instead, let’s say that I owed $600 in Arizona state taxes. Instead of writing a $600 check to the state of Arizona, I can literally split up that $600 and send $200 here or there (to approved organizations only) and deduct an equal amount (dollar-for-dollar) from what I owe the state. So if I donate all $600 to qualified organizations of my choice, I don’t owe the state a penny. So this is not additional money being donated. This is money I would already have to spend one way or another (for taxes), that, instead, I’m sending to an organization (or organizations) that I support.
In 2015 we took advantage of our state’s tax credit program for the first time to donate to two organizations that were important to us: 1. the preschool our kids attend, and 2. the local Wings on Words program for children with speech/language delays or disabilities. The former for obvious reasons and the latter because we have a long history of working with and supporting our local WoW program.
In 2016 we still took advantage of our state’s tax credit program (we owed more that year, so we were able to expand our donations). We donated to: 1. kid’s current preschool, 2. kid’s future elementary school, 3. local Wings on Words program, and 4. local foster care organization. In addition to maxing out all of our tax credit donations, we also expanded our giving to include a few additional places that don’t qualify for our state’s tax credit program. We donated to March of Dimes, the Autism Society of America, and our local church. The total of the non-tax credit donations for the year was $200. Still not a ton, but up from the giving of the previous two years (again, keeping in mind that all of the tax-credit donations were money that we had to spend anyway in taxes).
This year (2017), we haven’t done a ton of giving yet. Most of our big giving is still in the form of tax credit donations and we typically do that giving toward the end of the year. However, I’ve already made small donations (under $100, combined) to March of Dimes, the Autism Society of America, and the Leukemia & Lymphoma Society.
Thinking about our family’s giving, I feel a little bit torn. On one hand, money is extra-tight this summer and in general given that hubs has stopped working/gone back to school and that we have such huge financial goals for our family this year! At the same time, all of our “extra” (non tax-credit) giving has been in small quantities and has gone toward organizations that we have personal connections with. For instance, March of Dimes is huge because it funds so much research for premature birth! Our twins were born 8 weeks early, spent a month in the NICU, and would not have survived if they were born 20 years ago because the life-saving technology had literally not been invented yet at that time. So that’s an organization very near and dear to our family. The same is true of all the other organizations we support as well. There’s always some personal connection or reason why we support a cause. So even though I know we really can’t afford to be giving in large quantities at this time, I would hate to eliminate our giving entirely. And I cannot wait until we’re completely debt-free and giving can be a larger part of our financial picture. Probably still a couple years out on that though.
What do you think about giving while in debt? Did/Do you donate to any charitable organizations while working on getting out of debt? Why or why not? What role has giving played in your financial picture, in general?