Tag Archive | giving

Counting the Cost of Generosity

Perhaps you’ve heard that Warren Buffet calculates the cost of purchases in terms of what that money could yield in the stock market over many years. It’s a different way of thinking that can turn that daily lunch out into a $150,000 proposition. Last we looked at the art of the alternative—the idea that we can often find similar, less expensive options that allow us to have our financial cake and eat it, too.

But this week, let’s count the cost of a different type of spending: giving away money. Most people agree it’s good to be generous. People have widely different approaches to how, where, and what amount to give. But one thing we all ought to do is count the cost of our generosity.

For example, if you give away 10% of your income, how does that deflate your lifestyle? What kind of car could you be driving? What kind of upgrade could you have in your home, what you eat, or your vacation plans?

What might your investments look like after 30 years of an extra 10% monthly contribution? How might your net worth change if channeled that “extra” money into debt payoff? How different might your kids’ college funds looks?

This exercise isn’t meant to be self-congratulatory. Instead, it’s a great way to give wholeheartedly, with eyes and “pocketbooks” wide open. It’s valuable to fully understand what the trade-off is and deem it completely worthwhile to give instead of keeping it all for yourself. Without counting the cost, it’s easy to give rotely, perhaps because it’s the “right” thing to do–which is good, but might fall short of giving cheerfully and enthusiastically.

We’ve counted the cost of our generosity. We know what our giving means in terms of net worth growth or what kind of car we could drive. And our conclusion isn’t to give ourselves a pat on the back, but to affirm what a good investment we are making through giving. It’s a way of resolutely calculating that the potential lifestyle or net worth inflation is garbage compared with sharing what God has given us.

I encourage you to count the cost of your generosity. Perhaps you’ll even find yourself wanting to give more as you face the alternative destinations for your money and realize they pale in comparison. I share this because it hasn’t made us feel deprived, greedy, or self-righteous, but only more determined, excited, and blessed.

The Cost of Keeping

While you’re already calculating, why not consider the cost of keeping it all for yourself? Sure, you’d save more, invest more, or live larger. But what would you miss out on?

You won’t get to inflate the lifestyle of those who actually need it.

You won’t get to increase your real worth.

You’d miss out on the well-documented psychological benefits that come from giving, particularly those who give at least 10% of their income.

You’ll never see the surprising ripple effect a gift can set in motion.

You won’t get to partner with organizations and causes you care about.

You’ll miss out on an important and much-needed way to be an agent of change in the world.

You won’t get to experience the joy of entrusting your resources back to their Source.

You’ll likely leave the most important factor in your finances—your heart—untouched.

You won’t learn the financial discipline that consistent generosity can teach.

You leave your heart vulnerable to greed.

You could reinforce entitlement in yourself and your children.

Counting the cost of giving vs. keeping is a powerful way to make informed decisions about your money. Maybe the exercise will even motivate more generosity. We won’t know the full impact of our gifts in this life, but we can be confident that when we give wisely, both the giver and receiver will benefit:

Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.” (Luke 6:38)

What do you think of counting the cost of generosity? What other benefits might we miss out on if we don’t practice generousity?

What Seeing Real Poverty Showed Me About Pretending to Be Poor

IMG_5055

A few weeks ago I shared my Thoughts From India and Lessons Learned In India (my first guest post). But as my henna fades, I’m afraid my convictions from my trip will, too. One insight I desperately want to remember is how seeing real poverty left me more motivated than ever to “pretend to be poor” in order to share more resources. Witnessing wide economic disparities firsthand was a poignant reminder that I’m just pretending; our lifestyle is truly luxurious by global standards. It was also a good reminder of why I’m pretending, and an encouragement to continue, so I can help those who aren’t just pretending.

By pretending to be poor, I mean living below our means so that we can have extra to give and save. We would never claim to actually be poor or deprived in any sense, and we’re quite content with our lifestyle. Our tongue-in-cheek title comes from a proverb and one of our main goals goals of financial flexibility is to help the destitute. In fact, I believe generosity can be a more effective motivator for wise financial habits than early retirement, financial independence, or even debt payoff. (Read why in the post Get Rich With Generosity.)

Meeting Arunachalam made child sponsorship come alive for me.

I didn’t visit the streets of Calcutta, but I saw one of the world’s largest slums, the massive encampment spanning the outskirts of the Mumbai airport grounds, described in Behind the Beautiful Forevers. I was comfortably bubbled behind the airplane window and can’t imagine what it would’ve been like to walk through its paths, but the sea of blue tarps that is home to one million people left an impression.

On our way to visit a village church we drove through narrow dirt alleys crowded by small, low-roofed homes. These are the real tiny homes, without the high-tech innovations to make them comfortable.

IMG_5096

Visiting a village church.

At a children’s home, I met hoards of kids whose parents can’t afford to take care of them. They are well cared for in the homes, but they still live in conditions we’d consider sub-par for our children—twelve to a room in bunks, with a small cubby for their personal belongings.

IMG_4823

Another team from our church visited a remote village that our church sponsors. Before the sponsorship program began, they had so little food that at times meals would consist of starchy water leftover from cooking.

In the streets, beggars, often with small children, knocked on our van’s windows. You want to help but you don’t know if they are being exploited, or if a small handout would do much good anyway. And you certainly can’t help everyone in this situation.

We all know this level of disparity exists, and you don’t have to travel the globe to see it. A few years ago I volunteered at an inner city after school program where many of the elementary-aged kids went home to empty houses and no dinner. But in everyday life we are largely sheltered from these extreme conditions. We don’t have time in our busy schedules to enter into the mess we know exists. So instead we simply feel sad when it comes up in conversation.

Evoking guilt is the furthest goal from my mind. I believe contemplating inequity and doing something about it can inspire us to resist our culture’s tide of lifestyle inflation like nothing else. As we deflate our lifestyle we aim to inflate our usefulness, in part by helping others. I wrote about how to Get Rich With Generosity & have experienced that giving away money is one of the best ways to become more disciplined with money. However, it’s not really about getting rich or poor, and certainly not about inflating my ego instead of my lifestyle.

Before my trip, I’d occasionally receive a letter from a charity we donate to, outlining a need and requesting additional funds. For the most part I viewed these letters as annoying. “I’m already giving what I want to give to this group,” I’d think and trash the letter without even reading it.

I just received a letter from the organization I traveled with, explaining their fundraising needs for a special training conference. Now that I’ve seen their ministry firsthand, I understand why supporting the conference is so important. Many of the pastors live on a very small stipend, provided by their own congregation after two years of outside sponsorship, and may lack basics such as electricity, shoes, or access to transportation. Far from an annoyance, this letter became a welcome opportunity to practice noblisse oblige and participate in God’s work across the world.

IMG_5108

Tribal group dancing before a conference.

I can’t respond to every letter by sending money, but I’m now equipped to make better decisions about these requests. I have a whole new schema for the realities in developing areas. More than ever I see sharing with others as a way of striving toward equality:  “Our desire is not that others might be relieved while you are hard pressed, but that there might be equality”  (2 Corinthians 8:13).

No one can eliminate poverty, but we can help improve the life of one person. Or maybe two or three or ten. I encourage you to consider sponsoring a child in poverty. Many charities have a program for child sponsorship because the need is vast, as is the potential for impact. If you’re looking for a trustworthy group, I witnessed India Gospel League in action this summer, and friends of mine highly recommended Compassion International after seeing their work firsthand. Both are doing balanced, legitimate, cost-effective, holistic ministry to truly impoverished people.

Do you think helping others can be a financial motivator?

Thoughts from India

india sunset

I just returned from India this weekend, and while my jet-lagged brain is struggling to form coherent thoughts, I wanted to share some highlights.

I loved the overall experience. The people we met were warm and interesting, the food was amazing, and our itinerary included many powerful experiences. Much of what I learned is more personal than personal finance, but I’ll try to share the most relevant bits here.

I had the privilege of meeting a child we sponsor, and his mother. I didn’t know his mother was coming, or that she was his mother at first. She spoke a little English and was translating for us. Since they send translators from the children’s homes, I thought she was a caretaker there. She was blatantly mothering him throughout the meeting, and at some point I asked if she was his mother. When she said yes, the meeting suddenly became even more emotional. As a mom, I can’t imagine how difficult it would be find yourself unable to provide your child’s basic needs. She kept saying “very thank you” over and over. Rather than feeling like I’m so great for helping out this family, I felt very humbled. I don’t deserve the many blessings and advantages that allow me to help them. And although I don’t know the exact circumstances of their family, it’s safe to assume that forces outside of their control have contributed to their financial situation.

Meeting my sponsored child. Literally a hot mess.

I was able to tell women that they are valuable in God’s sight. This is not a predominant message in many of their homes. We spoke to groups of 100-250 women, mostly from rural villages. We also got to hear a few of the women’s testimonies. Some recounted tragic stories, but the overall theme was one of overcoming through faith.

Since becoming a mother, I’ve been trying to imagine a more global and historical perspective on marriage and motherhood than what I’m immersed in here in suburban America. While we can barely keep up with ever-changing car seat laws, Indians pile a family of five onto a small motor scooter and zoom off into traffic that looks like anarchy to the Western eye. I adhere to my children’s nap time almost religiously, but saw Indian kids sleeping on said scooters, and floors or tables anywhere. The heat must help—I could have passed out on the floor, too! Contemplating the arranged marriage tradition and hearing the stories of traveling pastor’s wives also shed light on how cultural my notion of marriage is.

Women's Conference

Women’s Conference

I didn’t miss much from home, except maybe toilet paper in public restrooms and being able to drink tap water. And there were a couple days that our schedule didn’t allow for a decent dose of after lunch caffeine. Turns out it’s really hard to stay awake while sitting for 10 hours in 95 degree heat! But I’ve returned with little taste for American food, and tried to recreate an Indian dish last night. I also didn’t miss Facebook, texting, or email. I’m sure the short-lived nature of the trip made it easier to get on without these. Of course, I missed my family and friends, though I never got homesick. I was able to call my family three times, including on my son’s birthday.

I also noticed that things didn’t have to be perfect. India is extremely diverse so I don’t want to over-generalize, but in the circles we were with, people didn’t seem to mind if the music wasn’t perfect, if the conference got off schedule, or if their clothes and sandals match or fit perfectly, for example. I’m sure a lot of this arises out of not having the option for perfection. They are used to the electricity going out regularly for brief periods (which is rough when your only cooling comes from ceiling fans). They are used to their kids wearing too small clothes we wouldn’t think of putting our children in, because we don’t have to. It struck me that I spend too much time trying to make my living room look perfect or my teachings for India perfect, when no one but me even cares. Striving to match our lives with the sleek, immaculate images of edited advertisements only wastes time and frustrates us as we fail to comply with impossible standards. I hope to take our principle that Life is Not About Your Preferences to a new level with this insight.

Yum!

We were completely pampered. I don’t think I opened a car door or poured a cup of coffee for myself while there. We experienced a much more service-oriented culture, which was sometimes hard for us self-reliant American to take. However, I also feel pretty triumphant for having flown on 13 planes in 15 days, survived two weeks away from my family, conquered the squatty potty, feasted on spicy foreign cuisine without digestive distress, and taught large groups through a translator in significant heat & humidity. Venturing outside my comfort zone built my faith and confidence, and I believe this experience has increased my flexibility and usefulness in many ways.

Seeing real poverty has only increased my desire to pretend to be poor, (tongue-in-cheek a la Proverbs 13:7) so that I can have more to share with the truly poor. And it’s given me new vantage points on living with contentment, defining necessity, and the depths of human creativity for making do, or doing without.

What have you learned from traveling? How do you strive for perfection in unnecessary ways?

Are Short-term Missions Trips a Scam?

Neil meeting our sponsored child.

Neil meeting our sponsored child 2 years ago.

I’ve already alluded to my upcoming  short-term missions trip to India this summer. While staying in India is relatively inexpensive, flying an open jaw there in late August is not, and we’ll also do a fair amount of flying in-country, which also hikes the price. Friends and family have generously donated toward my trip, and I cannot express my gratitude enough. In addition to taking the edge off the $3500 price-tag, knowing that a host of comrades are behind me offers inexpressible moral support.

Neil also “raised” a portion of the cost by flipping a car. With fairly minimal effort, he turned an $1800 profit on a car a co-worker sold him at a killer friend price. More on this soon.

But short-term missions trips invariably raise questions about the best use of funds, and as this is a fair objection I’ve wrestled with myself, I hope this post will provide some answers. The trip may also raise an eyebrow from a personal finance perspective and here I’ll address why it’s worth the money to us.

Couldn’t that money be better used over there?

Could the $3500 cost of the trip feed a lot of hungry kids, dig some clean-water wells, or fund many micro-loans? Absolutely. I care about those causes, and we donate monthly toward poverty relief and church-planting in India & Ethiopia. In fact, generosity is one of our goals for pretending to be poor. You can read about why to give away money in these posts:

I also believe this trip will change my sense of agency and urgency regarding these causes. Neil’s (somewhat less expensive) trip to India two years ago spurred him to help raise the awareness and funding to sponsor an entire rural village, bringing in food, clean water, hygiene education, agricultural development, education for children, skills training for adults, and spiritual leadership for those interested. The Adopt-a-Village program is a $75,000 total commitment over five years. This far exceeds what it cost Neil to witness the stark needs in a rural village first-hand, though it was certainly not a poverty tourism trip.

Who is this guy?

Who is this guy?

I’m hoping the trip will change not only my commitment as a donor and an advocate for people in need, but also bring some perspective to my admittedly cushy life. I know I shouldn’t complain when the store is out of the exact type of milk I want; I know I shouldn’t bemoan the “heat” when my thermostat reads 82 degrees and I “have to” decide whether to turn on the air conditioning. Friends who have visited  testify that nothing puts our first-world problems into their proper place like visiting a developing area.

Another reason I consider it worthwhile to go is that the organization, India Gospel League, invites people to “come and see.” They operate on a streamlined budget, with relatively little spent on overhead, administration, staff, etc. They know the needs firsthand and what our trip costs could accomplish if spent elsewhere. Yet they invite us because:

  1. They invite sponsors to see where their money goes each month. Visiting overseas is by no means requisite to entrusting an organization with money. However, IGL’s value of eyewitness trips indicates a level of transparency.
  2. They invite sponsors to meet their sponsored children and/or villages. Neil’s trip highlight was meeting our sponsored child. I’m hoping to meet him as well, and imagine this will impart a new passion for praying for him and writing him. We’ve certainly sent him a lot more gifts and letters since Neil met him.
  3. They invite foreigners to teach the Bible, for a couple reasons:
    1. People like to hear those from other countries speak. We’re the same way, right? Maybe they achieve better conference attendance by bringing in cross-cultural speakers.
    2. As an American, I’ve had more ready access to Bible teaching than the average village woman in India. This doesn’t make me more qualified; I’ve simply been blessed with advantages like literacy, Bible classes, and other resources.
  4. They understand these trips strengthen partnership and interdependence, which is IGL’s vision for their relationship with foreign churches. They are very emphatic about outside financial support being temporary, and using funds effectively. For example, “barefoot pastors” receive outside support for two years, at which time their church takes over financial support. Programs like vocational training, elementary through post-secondary education, and micro-loans all “teach people to fish” rather than simply giving hand-outs.

There are many other things we could do with the money I’ll spend on the trip. However, it is for opportunities like these that we want to be financially flexible.

Can I really do anything useful in two weeks?

Along with my team, I’ll teach two women’s conferences of 50-100 women who pass the knowledge and convictions to the women in their villages. So while teaching a couple times through a translator seems like a pittance compared with the world’s needs, there is potential for a ripple effect. Again, I don’t feel qualified as a great speaker, but I trust that IGL understands how to leverage our efforts, and God certainly does.

We’ll also visit two house churches and do a song and dance (literally) for the children’s home at the mission base. We’ll play with kids, meet our sponsored children, tour IGL’s facilities, and interact with adults. Neil served lepers lunch while there; others prayed with cancer patients. The main reason I don’t think this trip is a scam or waste of time is that the Indian leaders have ongoing, established work there through local churches. We are just partnering by bringing our resource of Bible teaching at their request.

If you’re interested in sponsoring a child, pastor, micro-loan, or otherwise donating to India Gospel League, check out their web site to learn more. It’s a great way to inflate your usefulness instead of your lifestyle by improving someone else’s life significantly.

What do you think of short-term missions trips? Or spending on travel in general?

Get Rich With Generosity

I received these napkins as a gift 9 years ago.

If you want to be richer, give away more money. I’m not talking about richer in love or happiness or any of those lovely nouns we’re all after. Giving away money really can make you financially wealthier. A proverb proclaims this unlikely principle:

Give freely and become more wealthy; be stingy and lose everything.
The generous will prosper; those who refresh others will themselves be refreshed.
People curse those who hoard their grain, but they bless the one who sells in time of need. (Proverbs 11:24-26*)

Generosity is one of our goals of “pretending to be poor,” but sometimes frugal people get lumped with the stingy since it’s assumed that we’re all cutting costs at the expense of others.** Quite to the contrary, this proverb states that stinginess can lead to financial loss, and the generous can become wealthy while incurring the costs of helping others.  Taken together with our title proverb, the prescription for those wishing to become wealthy is to be somewhat tight-fisted toward themselves (“pretend to be poor”) but not toward others (“give freely”).

Just to clarify, by generosity I don’t mean contributing to your kids’ college funds or giving really nice wedding gifts. Helping your kids and friends is a great way to use money, but for our purposes generosity refers to helping causes bigger than the people closest to you, such as a church or charity.

So how can giving money away make you richer? In the smaller marketplace of ancient times, reputation was a bigger factor in business success. But there are plenty of other reasons why being generous can increase your wealth:

  1. Generosity reflects a proper attitude about where money comes from.
  2. Generosity is part of what money is for.
  3. Generosity is the best long-term motivator for improving your financial habits.
  4. Generosity is a habit of the wealthy.

1. Gratitude. When we realize how much we’ve been given that we don’t deserve, we’ll want to share with others.  Whether it’s your intelligence, talents, family background, or opportunities, you’ve received some type of advantage you didn’t earn for yourself. The fact that you’re reading a blog means you won the lottery of life–because you’re literate, have access to a computer, and are doing something besides searching for your next meal. These unearned privileges should logically lead into grateful giving to those who weren’t born into the same boon.

Under the grateful approach to generosity, people don’t feel deprived if they pass on buying new clothes or eating at a restaurant. Instead they feel thankful for all they have, and for the opportunity to share God-given resources with those in need. When we consider how much of the world lives in deep poverty and injustice , it’s clear we can’t afford not to give. It’s the only sane response.

2. Purpose. Generosity brings in the bigger picture of money’s purpose: to meet needs, now and in the future, for yourself and others. If we forget about others, we’ll inflate our bank accounts instead of our lifestyles and miss out on much of life’s meaning. Real world finance is not The Game of Life. The person with the most at the end doesn’t win; the stingy may “lose everything.”

Generosity is one of the best ways to inflate your usefulness instead of your lifestyle. Helping others is refreshing, as the proverb points out. It connects us with humanity and helps us experience much of what it means to be human: to rise above survival instincts and sacrifice for others.

3. Motivation. Good financial habits are sustained through solid motivation. Trying to live frugally out of guilt or just because it’s the “right thing to do” only incites rebellion. (Ever started a crazy diet or sworn you’d never swear again? How long did that last?) Without the proper motivation people feel deprived and give in to the temptation to over-spend. When my money is all for me, it’s easier to justify doing whatever feels good at the time. On the other hand, generosity creates a lasting, worthy reason for challenging your spending and resisting lifestyle inflation.

Objection: “I have a good motivation: I want to retire early. Or save for emergencies. Or get out of debt.” There is nothing wrong with these goals, but they are just goals. They aren’t a purpose, a life direction. Think of your purpose as whatever fills this blank: I want my life to be about ________. Goals are motivating but purpose will give you the stamina to handle money wisely over the long haul of life. In addition to providing a more stable impetus for change, pursuing a purpose is also much more satisfying.

Goals may fit into your purpose. But if your motivation is no larger than your current goal, where do you fit in the proverb? No one wants to identify as stingy. But too often people wait until their finances are “in order” and giving is comfortable. The danger of postponing generosity is the calloused heart you could develop while waiting. Saying no to people’s needs has a lasting effect on the soul. If we care more about racing toward a financial finish line than living with a purpose, I doubt financial independence will bring us true freedom. (Read about The Secret to Financial Freedom here.)

4. Habit of the wealthy. We all love to read about the habits of the wealthy. What time do they wake up? What kind of car do they drive? What books do they read? As it turns out, generosity, while by no means practiced by all, is a common habit of the very rich. According to Forbes, “93 of the super-wealthy have signed the Giving Pledge initiated by Bill Gates and Warren Buffet and pledged to give away at least half of their wealth over the course of their lifetimes.” From Rockefeller to Zuckerberg, philanthropy has always been recognized as something rich people should do. The proverb says it’s something those who want to become rich should also do, in part because it helps you become the right kind of rich person.

This verse sums it up nicely: “You will be made rich in every way so that you can be generous in every way. Such generosity produces thanksgiving to God through us.” (2 Corinthians 9:11)

Do you believe generosity can make you richer? Who is the most generous person you know?

 

*Proverbs are meant to be interpreted as general principles which typically hold true. When you follow the rules of life, things tend to go better. Of course we live in an imperfect world where there are unjust exceptions.

**People do avoid costs at others’ expense in an institutional sense that is largely outside of an individual’s control, even though we can try to be socially responsible consumers.

Everything You Ever Wanted To Know About Money

money question

In an effort to think through my philosophy and theology of money, I recently read Money, Possessions, and Eternity by Randy Alcorn. It’s about what [the author thinks] the Bible says about every possible financial topic you could imagine and then some. This book is so incredibly thorough that it should be called Everything You Ever Wanted to Know (and some things you didn’t) about Money, Possessions, and Eternity.

To save you 400 pages of reading, here’s my review. Despite being comprehensive, it’s not about a 7-step financial plan or any other specific guidelines except tithing. I should warn you, this book could really shake up your financial plans. It led to me think through our goals in a different light and makes me want to be more generous. I recommended the book to a friend and it motivated her to broach a very difficult financial topic with her family and make some major (and good) changes. This is a powerful book; handle with caution!

“Materialism is Stupid”

Critiquing our consumer culture, Alcorn keeps it real: “We must understand that materialism is not simply wrong. It is stupid” because “you’ll never see a hearse pulling a U-haul.” Jesus made the same point a little more eloquently: “What good will it be for a man if he gains the whole world, yet forfeits his soul? Or what can a man give in exchange for his soul?” (Matthew 16:26).

The second part is probably the most unique compared to other books about money. Alcorn makes an interesting case for viewing money and possessions in light of eternity (hence the title). Basically, if you believe in the afterlife then why not invest your money in whatever you can take with you? Mainly this means helping people by caring for others’ spiritual and material needs. He also describes a pilgrim’s mentality because it navigates the “in but not of the world” balance well: “Material things are valuable to pilgrims, but only as they facilitate their mission….We must cultivate the pilgrim mentality of detachment, the traveler’s utilitarian philosophy concerning things.” If you’ve ever felt bogged down by the clutter in your home, I think you understand his meaning. Stuff can be a burden. Contentment is key.

The Hot Tithe Debate

The third section is about generosity. He calls tithing the “training wheels of giving” and makes a strong appeal for why believers should give 10% at the very minimum. I come from the rare church that doesn’t teach the tithe; he goes on at length about why you can’t write off the tithe by calling it legalistic or Old Testament. He makes some good points and, rules aside, I agree it would be good to give at least 10% of your income and that grace should lead to greater generosity than the law. But the figure is from the Old Testament; New Testament believers gave more than this in some examples but we don’t read about any requirements.

Debate aside, this book made me want to be more generous. But I have to point out that he wants it both ways when it comes to Old Testament financial advice. He preaches the tithe but dismisses the Proverbs statement about leaving your children’s children an inheritance, saying it no longer applies in part because we don’t follow all the OT laws about leaving a double portion to the firstborn male and yada yada yada.

His Take on Typical Money Topics

The final section deals with common financial topics like his thoughts on debt, saving, retiring, insuring, investing, and leaving an inheritance. See Ramsey vs. Alcorn Throw Down for a summary. About investing vs. giving he asks, “Are we truly obeying the command to love our neighbor as ourselves if we’re storing up money for potential future needs when our neighbor is laboring today under actual present needs?” This is a real tension, but he tends to overlook Bible passages about being a shrewd money manager. Plus a big advantage to pretending to be poor is that you don’t need nearly as much to retire because you maintain a low-cost lifestyle regardless of income.

Practical Take-away

He critiques financial dependence on grounds similar to ours, but he is also a pastor who loves his work and has no desire to retire early.

He’s got good stuff on choosing a lifestyle below your means, giving generously, and practical ideas for battling materialism and teaching children about handling wealth well. He suggests determining “to live on a certain amount of money each year, an amount that allows some room for discretionary or recreational spending. All income beyond that I will give to God’s kingdom purposes.” This sounds great but again, where do saving for retirement or college funds fit in? He paid off his mortgage early, has a retirement account, and helped his daughters with college costs, so he clearly doesn’t give away literally every dollar that he doesn’t spend on his immediate needs.

The Appendix “Practical guidelines to control spending” had some really good tips. My favorite was to “pray before you spend.” If you want to buy something, especially if it’s outside of your routine expenses, why not pray about it? Maybe God will answer by providing the item for free and at a lower cost from an unlikely source. Maybe He will show you that you don’t really need or want it, especially since praying will delay impulse buying. Maybe nothing will happen and you can proceed with whatever you see fit. But why not ask? This approach could get weirdly super-spiritual, but that isn’t his meaning. I’ve seen certain provisions come in just as I wanted or needed them.

Overall, I’d recommend this book to anyone who believes in heaven and wants to think more deeply about why to resist materialism, pursue financial goals, and be generous.

What do you think about giving away money? What’s the best financial book you’ve read?

Ramsey vs. Alcorn Throw Down

ramsey

Ramsey  vs.  Alcorn

Randy_Alcorn_2011

It’s about to get real.

Should I leave an inheritance or give away most of my money during my lifetime?

Should I pay off the mortgage early or invest that money in retirement accounts and college funds?

How much life insurance is enough?

How much retirement savings is enough?

How much money should I give away?

These are hot topics for those who are living below their means and have income to work with. We’re such money nerds we’ve even been known to discuss these topics during our monthly date nights. Once you get your spending under control, have a yearly budget, and have implemented some practical thrifty ideas, it’s time to start thinking about building and sharing wealth. As I mentioned in Resolve Your Reasons This Year, I recently read Money, Possessions, and Eternity by Randy Alcorn (2004) and chased it with Dave Ramsey’s latest, The Legacy Journey (2014). Both authors are Christians and wrote these books at least in part to share what they believe the Bible says about money. Their messages are strikingly similar in some areas while very different in others. Reading them back-to-back was challenging and thought-provoking, which is why I’m comparing and contrasting their views for you.

Before getting into the details, I want to fairly convey the purpose of each book. Alcorn’s book is not a how-to book. He is a full-time pastor with some thoughts on practical financial principles, but the book is mainly a treatment of the Scriptures on money-related topics. The subtitle of Ramsey’s book is “a radical view of Biblical wealth and generosity.” This is the famous financial adviser’s first book to delve into the Scripture’s teaching on money, but he only deals with a few passages he believes are often misunderstood. The main topics of his book are leaving an inheritance and giving generously. His book is A LOT shorter!

Ramsey’s book aims to counter the “toxic messages” that rich people are evil, their wealth always takes away from others’ fortune, and that they should be judged for enjoying their wealth while also giving generously. He provides practical examples of what to do with “extra income” beyond a set amount one agrees to live on. He suggests setting ratios on the overflow for giving, (taxes), investing, and “lifestyle” (= fun). Basically, his book is for people with money. Normal people who are approaching steps 6 (early mortgage pay off) and 7 (build wealth and give) will benefit from his book and it may help them make decisions about investments, budgeting extra income, giving, and leaving an inheritance.

Alcorn’s book basically assumes the reader will not become wealthy since he advocates giving away most extra income immediately, after investing something for retirement, children’s college, and leaving room for modest discretionary spending. With the exception of the tithe he avoids specific, numeric advice to leave room for personal decision-making. He says he struggles all the time with the tension of how much to save for retirement vs. how much to give away now. Clearly he prefers to err on the side of generosity. He critiques “financial independence” on some of the same grounds we do, which is why we’ve coined financial flexibility. We’re managers, not owners, of the wealth God’s given us, and we always want to depend on God financially and otherwise. And we want to use money to help others as well as meeting our needs.

Here’s the throw down of their positions on different financial topics, with my two cents, too:

Ramsey Alcorn Pretend to Be Poor
Debt No consumer debt.Get rid of student debt ASAP.

15-year mortgages recommended; pay off early after steps 1-5.

“We shouldn’t normally borrow and should always pay off debt as soon as possible”

“Not all debt is the same” e.g. mortgages can be reasonable. He paid his off early.

No consumer debt, including cars.

Get rid of student debt ASAP by living like a student.

15-year mortgage; pay off early if possible.

Insurance Get term, not whole life insurance. Most Americans are over-insured.Life insurance should meet family’s needs for a period of time but not indefinitely.

Don’t replace depending on God & Christian community with insurance.

Get term, not whole life insurance.
Investing for retirement Once consumer debt is paid and 3-6 emergency savings funded, invest 15% of income in retirement accounts. People think they need enough to live a high-expense lifestyle indefinitely to retire.

Don’t replace depending on God & Christian community with retirement account.

Tension between meeting others’ present needs and our future needs; seek the Lord.

Get your employer match.

Invest 15% after consumer debt paid & emergency fund in place.

Conflicted about investing more vs. paying off house early.

Investing makes more sense mathematically but we like the flexibility of no debt.

Giving 10% minimum.

Not over 10% until out of consumer debt.

Occasional extra giving after out of consumer debt.Set an amt to live on & set a giving ratio for “overflow.”

“Go crazy” with giving once you get to step 6 or 7 (see above).

Leave a golden goose (principle) that will continue to lay eggs.

10% minimum.

Set an amt to live on that includes some recreational/discretionary spending, and investing for retirement/college funds, and give away the rest.

Your lifetime is your opportunity to give; leaving isn’t giving; aim to leave as little as possible beyond small gift amounts.

10% or more recommended.

Live on less without being miserly.

Extra giving: prayerfully respond to needs as they arise.

Time is also an important resource; therefore, we do not plan to build wealth at the expense of spending time to help others now.

Inheritance A good man leaves an inheritance to his children’s children.

Only to be given to children who are following the Lord & agree on how to use the money for God’s kingdom.

The golden goose should be kept to lay eggs to give away.

Only leave small gift amounts.

You don’t know what your children will do with wealth; it is more likely to ruin than to help.

Don’t set up a foundation; how can you tell God the principle is untouchable?

??? Not there yet in our financial journey.

As of now we’d leave money for our children’s care since they are young.

Overall, the normal income person could come away from the books with very similar applications. Give at least 10%, and more when you can (I don’t believe there’s anything magical about 10% but it’s a decent baseline). Get out of debt and stay out. Don’t over-insure. Plan for retirement and kids’ college. The big difference is their take on investments for building wealth and giving. I can see why, as a pastor, Alcorn has a different take on these issues than Ramsey, who has advised very wealthy people. I tend to agree with Alcorn’s interpretations of challenging money’s passages, but don’t like how he explains away Ramsey’s key verse about leaving an inheritance to your children’s children. I’ll post a more in-depth review of Alcorn’s book next since he deals with a lot of interesting principles that don’t fall into these categories.

Which author do you tend to agree with more? What financial questions do you wrestle with? Have you thought about leaving an inheritance?