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December 18, 2009


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I'm not wealthy yet, but I've saved more than my peer group by being frugal. I've never made a lot of money, but I've been frugal for the past 10 years, and it's making a difference for me financially. It's not something that takes a few months, it's pretty much a lifestyle. Often time people let "lifestyle creep" eat up extra money they might make from raises, and side jobs.

Christmas is a time that I'm not as frugal though, I like supporting my local businesses, and contributing small amounts to charity. While the amounts I contribute are small right now, they will grow.

I cannot get enough of posts like this one! I want to be at that point in my life so bad, I can almost taste it! Slowly but surely, the ratio between what we make and what we spend is changing for the better...

Thanks for the post! Keep up the great job!

Everybody have a good weekend!

I just don't understand why some people think that the true test of being wealthy is that you have to give loads of money to those that are less fortunate. That only really happens when your net worth becomes so high that, unless you form a Charitable Foundation, inheritance taxes will eat up 45% when you die. That's why the wealthiest people in the USA have set up charitable foundations.

It seems to me that the cutoff for the start of being wealthy, for a married couple, is right around $7,000,000 when, providing that you have the right legal trusts set up, inheritance taxes start to kick in.

Don't we have enough welfare programs already in place to provide for the truly needy? How about Medicaid, Unemployment insurance, Food stamps, subsidized housing, homeless shelters, hospitals for those that can't pay etc. etc. etc. That's where a large percentage of our state and federal taxes already go.

One's first responsibility is to provide for one's own family and to ensure that they won't become a burden for others. By my own definition, fortunately I am now wealthy, but I am not so wealthy that I feel a pressing urge to start giving it away. For one thing, how does one determine whether a very needy person is in their predicament because of circumstances totally outside of their control, or just because of their own stupidity, ignorance, laziness, or mismanagement of their money.

Am I the only one seeing a double post?

Old Limey - You make a decent point, but I don't fully agree with it. Although my first responsiblity is to provide for my family, I do think we have a responsbility to help others. The help may come in the form of time, service or money. I guess I would rather choose where my charity donations are going rather than the government create more welfare programs to help the "needy". Because, it seems to me that's the direction that we are going; bigger and bigger government. Governments mentality is that if there's a need lets create a new program and throw some money at it.

I don't agree. Just to pick an extreme case, do you really want to help someone that got into a position of need because when they were making lots of money they lived high on the hog, way above their income, ran up lots of debt, and now that they have lost their job and their home has been foreclosed upon they (and possibly their family) are living in their car and eating at food kichens. I'm sorry but I don't shed a single tear when I read those stories in my newspaper or on the Internet. When you give to the majority of charities, after their executives have been paid and also the rent for their nice offices, you don't have a clue who gets your donation and the percentage of it going to overhead expenses is often unbelievably high. I am a Democrat and strongly believe in programs such as Welfare, Food stamps, and Medicaid and I also believe that FDR and LBJ were two great presidents for what they accomplished by the reforms they were instrumental in attempting to create "The Great Society" and "The War on Hunger", but I do not have a bleeding heart.
Some of the most blatant scams are from the boiler rooms of telephone soliciters that call you, asking for donations in the name of your local Police and Fire Dept. charities. Practically all of the proceeds go to the telephone solicitors.
I do agree with you that our political system needs a drastic overhaul - just to cite one abuse currently in the news - Earmarks have become totally out of control and the President can do nothing about it.

So how can poor people do great things without financial room?

Old Limey said:

Don't we have enough welfare programs already in place to provide for the truly needy? How about Medicaid, Unemployment insurance, Food stamps, subsidized housing, homeless shelters, hospitals for those that can't pay etc. etc. etc. That's where a large percentage of our state and federal taxes already go.

Actually, demand for subsidized rental housing far exceeds the supply in the U.S. Section 8 has long waiting lists and these lists are closed 98 percent of the time. (Wait several years, and the list opens briefly, but you have to sign up for a lottery to determine who gets on the waiting list.)

I live on 98 percent of the federal poverty level and did not win the last local Section 8 lottery in 2007.

Last year I was paying 73 percent of my income to rent a room in a house with nine people and received $25/mo in food stamps; when I moved to a cheaper room, my food stamps (based on "excess shelter costs" went away.

Other than food stamps and (if you're lucky enough to win the subsidized housing lottery), there is very little "welfare" for childless adults, who typically become ineligible for Medicaid around 50 percent of poverty level.

I have the optimism to keep me perky and the cynicism to donate my time more than anything. I will donate to charity, but I prefer to give directly to a need. That's why I help animals by fostering. That's also why I give directly to people once in a while.

For example, this year our maid is having trouble making ends meet since everyone cancelled their cleaning service when they started cutting back expenses. She's originally from England and is too proud to ask her family for help. I've been baking the day before she comes every two weeks and leaving her food to take home. I also doubled her pay as a Christmas gift. I see it as helping someone might not be a charity, but she needs to eat too. She literally cried in relief when she saw her check since her car apparently had been in the shop and she was having to choose between eating and paying rent. It felt good to help and I don't have to worry about half the money going to charity administrators.

In college I gave a $350 loan (1/3 of my bank account at the time, so it was a big deal) to a new coworker since she needed to pay rent but her paychecks hadn't started coming in yet. I was the assistant to our boss, so I heard about her problem while filing the paperwork. She was so surprised when I wrote her the check. :) She paid me back two weeks later when her paychecks started up and we smiled at each other around campus for the next 3 might not have been life changing for her, but I think I became a better person that day.

In short, give how you see fit, but please give if you can. Time, money, or just advice can make someone else's life easier and I guarantee you will feel real good too!

@J in FL
Nope, I see the double post too.

Why not walk dogs, petsit, or do manual labor for extra cash? Hanging Christmas lights pays like $100-$200 a house. Or get a bus ticket or hitch a ride to a lower cost city...I can guarantee you won't pay as much in Houston to live with 9 other people.

I've seen several places on Craigslist in my area that are sharing apartments or a house for $200-$300 a person per room...and those are just the places I'd be willing to live since I'd want my own room. You can probably get even cheaper if you can find 4-8 people to share with! At $7 an hour, 40 hours a week, a $280 room would only be 25% of what you would make instead of 75% you're paying now. If you could get more than 40 hours by working at a couple of places, you might be able to save your way out of poverty.

Anyway, my point is that you have options, but you seem to have settled and enjoy complaining. I see two main options, either 1) give up and accept your life or 2) change it by moving/finding a better job/getting another job/getting married/etc...seriously, I'd pick Option #2.

But, that's just my two cents...

As bad as things may seem in the USA, it's nothing compared with other countries. My 21 year old granddaughter, like her mother, is a strong Christian. We helped her financially when she very recently went with a church group to Haitii which is the poorest country in the Western hemisphere. They installed concrete floors in some of the people's shacks because sleeping on a dirt floor is very unhealthy since in that climate there are plenty of bugs both above and below ground that not only bite but can get into your ears. They also distributed shoes to children that were unable to go to school without owning a pair. In Peru and Ecuador I was apalled to see people with missing limbs and other terrible deformities, unable to walk, crawling around in the street begging. There were also plenty of very poor mothers, breastfeeding their babies on the sidewalk while begging for money. In Nepal, my wife and I have had starving children come into restaurants and snatch food from the tables. On the way back to our hotel in the evenings we would see groups of homeless small children sleeping in shop doorways. Let's not even talk about Africa, that's far, far worse. It really takes your appetite away when you are sitting in a restaurant eating and there are starving children watching you through the window. This is the way it is in much of the 3rd. world that does not have the multitude of assistance programs that we have in the USA.
The countries where I see none of that whatsoever are the Socialist countries of Europe such as the UK, France, Germany, Austria, Switzerland, and Italy. However they pay far higher taxes than Americans - that's what it all boils down to in the end - taxes. In the USA now, the rich are getting richer and the poor are getting poorer.

FMF, for what it's worth, I really do admire your strong advocacy in charity.

Regardless of our subtle difference in philosophy or logistics, in the end, we need more people like yourself. Especially since we are suppose to be in a season of giving, it's good to at least make sure our heart is at least in the right place.

After that, we can debate all the minutae we want.

Its funny that when the topic of giving comes up on personal finance blogs, the toe of the conversations turns very defensive. People want to give every reason in the world why they don't give ie. I need to take care of my family first, or my taxes already go towards welfare, or whatever the reason might be.

Americans, as a whole, are very wealthy and stingy bunch of folks. Reasearch proves that, based on percentages, as people in America's income rises, percentage of money given actually decreases. The wealthiest Americans, on average, give away less than 1% of their incomes each year.

So that means that most Americans, on average, as they become blssed more and more with worldly wealth, choose to share less and less.

Keep in mind that the vast majority of the world survives on less than $2US per day. Yes, per day.

Next time folks try to defend why they are not helping others, at least be honest with others and yourself. The real reason is you love your money, you believe you are solely responsible for your success, and you think you are better than others who don't have as much money and are too proud to help out.

We as Americans are so d*mn lucky. To be born in the USA is the equivalent of winning the gene pool lottery at birth. No matter how wealthy you are...the biggest factor is that you were lucky at birth, no because you are the greatest at whatever it is you do.

"Praise him from whom all blessings flow."

Old Limey sounds like an interesting fella. I agree with Todd that I think we should feel an obligation to help our fellow man. This can happen whether or not you are wealthy. You have more options with wealth but providing service to people and organizations can be just as valuable. I think that kind of humane attitude is our only insurance for our future. That's not to say that you aren't particular about where you spend your time or money because there are plenty of disreputable organizations. But, after our family and ourselves, it should lead to helping others. Those are my beliefs.

Right again! You have to live where you can afford to live, not where you would like to live.
I lucked out - the San Francisco Bay Area was very reasonable when we arrived in 1960. We rented a brand new Duplex for $95/month when I was earning $173/week. Then this was an agricultural area and Lockheed was the largest company around. Now the orchards have disappeared, Lockheed has shrunk, and the Hi-Tech industries have taken over the whole valley. The home I bought in 1963 for $26,950 is now appraised at $734,500 and the one I bought in 1977 for $107,000 is now appraised at $1,008,500 which is why our street is full of retirees, very quiet and not lined with parked cars. Thank goodness for Proposition 13, passed in 1976, that limits property tax increases to 2%/year otherwise my taxes would more than 5 times higher.
Our unemployment rate is over 12% so this would not be a good place for newcomers. However, if you move 80 miles away to Stockton, it's an agricultural area and you can buy a nice home between $50K and $75K but the jobs are mainly low paid agricultural ones.

So Limey, why should someone who can't afford to buy as home be socked with ever-increasing property taxes because their landlords milk the property and then sell to the next landlord (at which time the property gets reassessed and the taxes soar again)?

Is it okay to tax renters out of their homes while not okay to tax homeowners out of their homes? Talk about regressive taxation.

Where is the equity in that?

The first lesson to learn in life is that "Life isn't Fair".
1) The country where you were born is the biggest factor.
2) Second, is probably your skin color.
3) Third is what kind of income group your parents were in.
4) Fourth is the genetics you inherited from your parents.

If you had been born in India there's a high probability that you would be living without electricity and earning $2/day doing some miserable work.

You were educated in the USA and graduated from college, that alone puts you in a very elite group in the world. If you had obtained a degree in Criminal Justice instead of Liberal Arts you might now be a young policeman like the one that my glamorous 21 year old granddaughter who is a paralegal, making a very good salary, just started dating. He has already bought a home and is in a career that provides great opportunities for advancement and a very nice retirement pension. It just shows that sometimes getting pulled over by a Cop can have a happy ending!
It really helps a lot when you can decide early on what career path you want and start heading down that path as soon as possible. I knew what I wanted to be when I was in high school.

Old Limey, off topic here.. but, he pulled her over and then asked her on a date?! And she said yes?!

Also off topic, but if the cop was hot or funny enough (and I was single), I would have said yes too. :-)

Actually she had been introduced to him about a week previously, out of uniform, and he recognized her and her white VW Jetta, and this was his way of meeting her again. When she saw the red lights flashing in her rear view mirror it was quite a scare and at first she didn't recognize him in full uniform and with a gun holster and night stick but everything turned out fine and they have had two dates. I told her to get me his business card so that I could use it if I get pulled over for an infraction.

lol totally off topic but that's an interesting way to date :D

Eugene --

Thanks for your note. I appreciate your kind thoughts.

All --

I was away from the computer much of yesterday and didn't get a chance to join this discussion. But I did leave a comment on giving and charity on the other post that pretty sums up my position on the topic. You can find it in the comments here:

BTW, I also deleted the second/double post.

Old Limey - You note that there are less social issues of hunger and homelessness in some of the European countries, but you readily acknowledge that they need to pay higher taxes to do this. I would suggest that we could (the private sector) take it upon ourselves to help the needy without forced taxation. I don't ever get a good feeling when paying my taxes to government, but I sure do when I help some one in need. I am not saying that there aren't charities that don't have ridiculous admin and executive fees, but with just a little research it's very easy to find good charities that are "frugal" with my donation, and I am just talking money at this point. Time is also a great way to contribute, and that wont even disrupt your bank account.

The concept of how much to give to charity is a fascinating one. FMF has set the benchmark I think. I give about 3% of my income and try to do it in a way to maximize the value of it, this often means giving to people directly but to do it in a way that respects the person and doesn't treat them like a 'charity' case. Everyone deserves respect and you can give to people directly without taking any respect away.


Old Limey,

You mention being born and educated in the US is a unique advantage... Ok it's above average when looking across the world but there are lots of places to be born now where you can have a great chance at life.

Travelling in downtown Bangkok and downtown Shanghai I see many more Mercedes & BMW's than in New York City, San Francisco and in Orange County.

The US is a nice place if you are wealthy but a burgeoning underclass is being created very quickly- now that's change I can believe in!


I actually think there is MORE WEALTH than you can ever imagine!

The kid walking around in a raggidity T-shirt and jeans herein San Fran could be a $100 millionaire for example.

There's tons of wealth all over and saying the wealthy aren't who you think they are, is just a way to make yourself feel better about your own situation.

Human nature to compare down to make yourself feel better. I get it.

I couldn't agree more! Many people in the USA are not ready to admit it but the USA is in decline and there are other countries that are advancing fast - China being the most obvious. The Chinese don't have to suffer because of two factions in their government that are diametrically opposed in policy resulting in stalemate much of the time. They are able to act in a concerted manner and make whatever changes they feel is the best for the future of their country as a whole. All the great empires throughout history have risen, then fallen, and it's still going on and will continue to go on. China is now the world's largest auto producer and has the world's largest auto sales, in addition they already produce the vast majority of items that are for sale in the USA with the exception of food and automobiles.
The future upper class in the USA will reside in fields such as Finance, Medicine, Pharmaceuticals, and Hi-Tech and we still have the majority of the best universities in the world. We have lost the companies that basically just require lots of "pairs of hands" since the Chinese have proven that a pair of their hands can produce a very complicated and high quality item cheaper than anyone else. China has been producing very high quality items since the days of Marco Polo and the Silk trade over 700 years ago. What we are left with are the companies that require the people with the best brains and the best education.
I am on the distribution list for lots of very lengthy articles generated by some of the leading economists and experts that study all the data being generated worldwide about not just our economy but the economies of all the other countries that can affect us - the future doesn't look good but the news that makes it to the general population is filtered by the media in an attempt to keep people feeling optimistic. If the USA doesn't get its national budget under control very soon it will not be able to avoid some calamitous outcomes. The only thing keeping the country afloat right now is massive government spending, without it we would already be in a depression.

Limey -

Life isn't fair but government should be or else lacks moral legitimacy.

Government Fair? You have to be joking. In the USA politics is all about lobbyists, special interests and exorbitant fund raising. That's why we have two parties that are diametrically opposed on almost every issue.

The UK, by comparison, has the toughest reporting regulations of all for fund raising. In a general election any political party is only allowed, by law, to raise a TOTAL of 15 million pounds, or 24 million dollars and election campaigns are very fast indeed.

In 2004 winning senators in large states spent about $30M each.
There have been numerous attempts to curb these practices but the lobbyists for the huge industries are still a very powerful force in our electoral system, so don't hold your breath waiting for it to change any time soon.

Old Limey,

Isn't massive gov't spending, financed by taking more debt, the wrong path to be taking now? Because we will still face the long term contraction but will also have the burden of paying the interest on this massive debt and this combination would certainly break our back.

Wouldn't it be better to take the pain now and make the structural adjustments that will allow us to sustain a future level of economic output?

Guess I'd never make it in political office- too much of a realist. However it's a good mentality to have when running your own company!


Massive government spending using money that is not budgeted just increased the national debt and lowers the value of our currency. Just compare the value of the dollar against the Pound and the Euro, it has dropped a lot since the recession started.
What the government is actually doing is taking away money from people that are wealthy enough to have some, and give to the people that have been hit the hardest by the recession, many of whom have a negative net worth because of debts and mortgages that are under water.
I see this as a form of forced, compulsory, mandatory charity that we as citizens have no voice in whatsoever. It appears that unemployment insurance benefits are going to get extended forever and ever. This was never the intention of them, it rewards failure. The huge budget deficits are locked in for many years into the future, this is what has the economists so worried, especially when we start getting into the years when the unfunded liabilities of medicare and social security start consuming larger and larger hunks of the budget. My wife and I are 76 and 75 so we won't feel the pain nearly as much as the young people whose whole life lies ahead of them, that's the group I feel sorry for.
I sometimes think about just how different things might have been if the Bush/Gore election had gone the other way - that was a major turning point in American history, and not a good one.

Old Limey,
I take objection to the comment, that somebody being born in India would lead a miserable life(no electricity). My dad made $80 per month and all through my life I had scholarships(not Loans) to educate myself and propel higher. I speak 8 languages including French(won a scholarship to study in France fully paid by French Government) and Spanish.
I have 2 masters(one from US and from India). I work in Hitech field. It is very easy to generalize about a country when you have not lived there, by your comments, it looks to me the media did a good job of filtering information and presented it in a very biased manner.
If you like to know, I made a million dollars before I was forty and I gladly donate to causes that are dear to my heart.
I value and agree with your comments(makes sense most of time) But not the India one.

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