A donated teddy bear, and the story that accompanies it, sits on display in the eBay Pavilion located in the Union Pacific Depot at the Gateway December 30, 2009. The doll is just one of many items donated to the eBay It Forward program. eBay It Forward is a new tradition, focused on \"re-gifting\" the items and stories that meant the most to people in 2009. (Keith Johnson, Deseret News)
Weíre debt-free except for our house, and thatís on a 15-year, fixed-rate mortgage. We also have an emergency fund in place. Weíd 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?
My advice would be to wait until you finish Baby Step 3, which it sounds like youíve done. That way, youíve 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 Iíll cite the Scripture that says he who doesnít take care of his family is worse than an unbeliever. Iím 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, youíre beginning to build wealth and you can really help others while knowing those closest to you arenít 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 donít want one of those areas to hinder the others.
Do you have any advice for deciding which charities to give money to during the holidays?
There are so many great organizations out there. Itís virtually impossible to pick three or four and say with any certainty theyíre 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 youíre giving. Thereís no reason to spend hours in exhaustive study over a $20 donation. However, youíd want to put some time and thought into research if the amount is $2,000.
In situations like this, Iíd want to see full disclosure. Iíd 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 donít want overhead to eat up 90 percent of every dollar donated.
Helping a good cause is wonderful, but youíve got to be reasonable and wise about these things. Donít feel bad about asking to visit a site and take a tour. Lots of times you can get a feel for whatís 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 Ramsey is Americaís trusted voice on money and business. Heís authored fourNew York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com .