Want to Get out of Debt? Give!

Here's an interesting piece from Money Central on giving in the U.S. I found several things interesting about this article, starting with the following:

I noticed something interesting while interviewing people for an earlier column, "Huge debts, paid off fast." Several people who had retired big debts did so while also giving -- big time -- to charity.

This is the same experience I've had in coaching people in their finances for 15 years or so. It seems like the givers are always better off, able to get back on track easier, etc. Is it because they're disciplined? Is it because they are used to spending less than they earn, so it's easy for them to spend a bit less to pay off debt? Is it that giving somehow brings more financial resources back their way? I'm not sure myself, but I certainly noticed that the author and I had seen the same sort of pattern.

Next, she talks about how much Americans give each year:

Average charitable contributions per household in 2005, according to Giving USA, equaled 2.2% of after-tax income. All that benevolence added up to $260 billion in charitable giving, a 6% increase from 2004. Not bad.

Yes, it's hard to argue with $260 billion as a total number, but 2.2% is paltry. Plus, it's 2.2% AFTER taxes. That seems weak to me for the richest country in the world. Yes, you could consider taxes as your "gift" towards helping others, but that's not what we're talking about here. We're talking about generosity above and beyond what you're compelled by law to do.

Finally, here's the part I found most interesting:

"Giving is the antidote for greed, which I believe is at the heart of the problem we have in this country with consumer debt," says Hunt, author of several books. including "Live Your Life for Half the Price." "We just want more than we can afford and the more we get, the more we want. Pretty soon even more isn't enough."

Holy cow, she hit this nail right on the head! A few comments:

• "Giving is the antidote for greed" - I agree. Start to give and think of others and you immediately start to think about your own "wants" much less.

• "greed, which I believe is at the heart of the problem we have in this country with consumer debt" - Is there any doubt to this? It's the "I need" mentality that racks up tons of consumer debt in this country every year.

• "We just want more than we can afford and the more we get, the more we want. Pretty soon even more isn't enough." - Yep. We want, then we spend. Then we want more, so we spend more. Then that's not enough, and we want more -- so we spend even more. And on and on.

In summary, there certainly is something about giving that breaks the hold "things" can have on all of us. Has anyone else experienced this? If so, let me know in the comments below.

Comments

[English Major]

I wasn't going to call it "greed" but I totally agree. I think the people who give on a regular basis are also the people who are capable of looking beyond the materialism that permeates our lives and considering long-term, large-picture goals, whether those goals are charitable or personal.

[Katy Raymond]

Your post does raise another question. If a person currently gives on a regular basis, but has incurred debt which needs to be dealt with ASAP, should he temporarily forego giving and put all his enery into debt payoff? I know some advisors would say to temporarily stop adding to retirement funds to pay off debt, but what about not giving?

I know how I view this subject, but would love to get your opinion, as well. Thanks!

[FMF]

Here's what I would do personally:

I would pay my tithe (10% to my church) before anything including debt. I detailed my thoughts on this here:

http://www.freemoneyfinance.com/2006/06/tithe_or_pay_of.html

After that, I would pay off my debt, then increase my giving above my tithe.

[Katy Raymond]

Thanks, FMF. I appreciate your input. And agree with it! :)