What to do with generous gift
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| Tue, 07-26-2005 - 7:52pm |
Well, my very generous aunt has done it again. She has sent us a check for $1000, unasked for, for no particular occasion. Just out of generousity. There is no chance of refusing the gift, as she has already begged me not to cost her the additional expense of purchasing a cashier's check. Anyway, her gifts are always appreciated, and she likes doing it, so we thank her profusely and cash the checks. :)
We always put 10% of any money we receive toward charity (although we're not at 10% of our salary yet--we're working our way up, and will bring it fully to 10% as soon as our debts are paid), and 10% into an opportunity fund.
As for the rest, I thought about splitting the money in half and putting $400 each into the boys's college funds. That's one option.
I also thought about using it to pay for much-needed new floors. We want to replace our very dirty, very stained, gross carpet with hardwood. Dh however is reluctant to do so until the youngest has passed the stage of frequently drawing on floors with whatever he can get his hands on.
The other, obvious option, is to pay extra debt with it. Here is my dilemma: we have one credit card left (woo-hoo!) on which the interest rate is 0%. We also owe my dad about $8000, on which we pay 7.5% interest. Then we owe my parents another $2500 interest-free (from our wedding--much to my shame that was nine years ago and still not paid--but it will be within the next two years). Finally, we owe dh's parents another $2500 which they have already told us they will not accept repayment for--instead, we are going to treat the entire extended family on that side to Christmas in the mountains together (or maybe the beach--beach houses are cheap at Christmas, right?).
Temptingly, I also have money set aside from my business that, combined with the money from my aunt, would completely pay off that one last credit card.
So, my question is, where do I apply the money? Of course, the highest interest is to my dad. But it's tempting to wipe that last card out entirely, even if I'm not paying interest on it. If we pay the money to my dad, I will probably *not* send as much as I would to the credit card--not logical, I know, but it's the satisfaction of wiping out an entire debt, and the last one that shows on our credit report, that would drive me to spend my business money on our debts (btw, it's a sole proprietorship, so legally there is no difference between it and me, and there are no legal or tax ramifications of doing this).
What do you think? What would you do?
Thanks!
Heather

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Ok, I would wipe out the little cc. Then take a 0% offer and right your dad a check. (Two reasons, 1.interest, 2.borrowing from family) I know its really tempting to put the money in their college funds, but by the time they go to school you will be out of debt, growing money, and you will be able to pay cash along the way...
HTH,
SHannon
Edited 7/27/2005 6:17 am ET ET by shannoninmd
Shannon
I'm just curious why you donate 10% to charity.
I am happily going to contribute money when I truly have money, at the moment I just donate my time working a hotline for victims of sexual assualt ( I can do that from the cell phone I already pay for and I do at the weekends so it doesn't hamper my minutes) and I help Toys for Tots at Christmas.
I don't down on charitable donations, but I think if you have needs that are a priority a charity can wait. I actually had the lady at the pet store I go to let me know that the animal charities receive a lot of money, and in my current financial position I shouldn't worry about contributing. So I stopped. My animals are my charity. I have a rescued cat, and a dog and they cost me a lot to keep.
Just my 2 cents.
I think it's great to give to charity no matter if it's with your time or money! I don't see how one way is better. Although I know our local animal shelter would never turn down a donation ~ because it is so expensive to care for all of those animals.
Now back to the original question~ I haven't borrowed from family, but I know that is something that would eat at me, so I know I would pay that back as soon as I could. There are always going to be student loans if there's not enough in their funds.
That's great that your aunt cares so much for you Heather and it would hurt her if you didn't take the money.
My parents actually just got an inheritance for over $100K and always have been in good financial shape (no debt - paid off mortgage a long time ago.) THey spent the inheritance money on an ATV, new SUV, new windows and put the rest in a roth ira.
THis is all great for them~~~ but they keep bragging about it to me..... hello... I don't want to hear about it!!!!--- I am their only child and thought maybe they would help a little (just $1000 would be great) since they know we are saving so hard for a new house and they push us to get out of town for the kids sake~~and I've never asked for a penny from them. I wasn't upset at first, but why are they rubbing it in my face when they know we are trying so hard to save. I would absolutely help my kids if it were me! Okay, I'm done being a selfish brat now!
Nicki
Gees, my family is the same way, except the inheritance was even bigger.
The logic from some leading money people (to answer the pp's question about why to give to charity) is that when you give your first and best part of any incoming money away you will get that much more back to you. This is a great concept but hard to wrap my mind around but i believe it is true, look at you, you got an unexpected $1000 so it must work!!!! My vote is to pay off the little credit card b/c i'm all about instant gratification, then use the payment you were using for that to pay your father extra each month. Lucky you to have such a nice aunt!!! I hope someday i can do that for my kids when they are grown, just give them extra money here and there when they least expect it, b/c i know how much it would mean to me now if my parents could afford to do that for me!!!!
Shannon
I would pay off the cc, and then write a check to your dad with another 0% offer.
All my best,
Danni
Wow! What a great thing to get! Before I say what I would do...I just wanted to tell you how awesome this is to see. Not so long ago, this $1000 would have been what got you through the month, not 'extra' money. It is so thrilling to see how far you've come. It's also way cool that you have the freedom to even be able to MAKE the choice of where the money should go. Amazing, simply amazing!
Ok, that said...
Yup. I agree with the 10% to charity. It's always good to keep the good energy flowing, and by being able to let go of some of this unexpected windfall, it keeps the wheel turning.
For your option one-putting some into the boys' college fund-once you are completely debt free, you will be able to save some for them. Financial aid, in the form of grants or scholarships should be encouraged!
For option 2-although hardwood floors would be beautiful, perhaps now isn't the time. Unless you LIKE having an art gallery on the floor, LOL.
So, that leaves door #3-paying off/down debts. Now, you asked what I would do, so this is it:
I'd pay off the credit card. Yes, indeedy. If you're that close, well then, no time like the present to grab that gold ring!
So then you'd be left with: $8000 @ 7.5%; $2500 @ 0%; and $2500 to be repaid in kind (pretty much anyway). After K.O.ing that credit card, you could either do what Shannon & Danni suggested and 'surf' the $8000 to another 0%, or really go after that $2500 that you owe for your wedding. Or you could do both! It sounds like that money you owe for your wedding is *really* bugging you, so that's what I'd focus on next.
That's what I'd do.
Again, congratulations!
Lisa
Thank you all so much for all the replies! I always get such great advice and so much food for thought on this board. I really appreciate it. I'll post a few individual replies if I get a chance, but wanted to answer the big questions that several people asked, and let you all know what we've decided to do with the money (i.e., that we've basically decided to follow the prevailing advice here).
We're going to do the 10% to charity, 10% to savings like we always do, then pay off the credit card. After that we will pay the extra each month to my dad for the loan with interest. At the same time, we are going to ask dh's parents whether this Christmas, next, or the one after is best for them to spend in the mountains (or at the beach--I found out we can get an oceanfront house at Christmas for all of us for less than we owe them, leaving money to buy food and perhaps some entertainment for everyone). Then we will arrange our finances to ensure we are able to "repay" them at whichever time they choose.
The reason I'm not going to write a 0% offer check to my dad is that he wouldn't accept it--he would probably instead offer to lower my interest on his loan to 0%, which is, frankly, unacceptable to me. When he loaned us the money, it was for a business I was running at the time (related to, but not the same as, the one that I run now). We wrote up an agreement, including interest, etc., and have treated it always as a business loan. Yes, I will be glad when it is gone, and I will feel proud to have repaid it. But it does not feel like a burden to me any more so than the burdens of the credit card debts, because I know that Dad is getting a good return on his money, probably better than it would be getting elsewhere in other investments (which is where it would be if he hadn't loaned it to me). So I feel pretty good about that transaction. If at some point they are pressed for money and need to cash it out, I can write them a credit card check at that time, though I doubt it will happen or that they would accept it even if it did.
Which leaves us with the $2500 I owe my parents interest-free which is, as several of you astutely pointed out, the debt which weighs most heavily on my mind because it is so old, and because it is interest-free, and because it represents a long period of relative irresponsibility. Unfortunately, I don't think my parents will let me repay it before I repay the interest-bearing loan. I may suggest it, as I would like to have it paid, but they will probably tell me I'm being silly.
Perhaps instead, when I have paid off all the loans including what we owe dh's parents, I will do something similar to what we're doing for dh's parents to represent the "interest" on the $2500. That would feel pretty good.
Anyway, the one other point I wanted to address is why we do the charity. When we were in the depths of our financial nightmare, we stopped contributing for a couple years, feeling like we needed to pay our rent before we gave money away. But when we started to pull things together (by which I mean, started making hard decisions like moving to a cheap apartment, and me getting a night job, and selling things for the cash to get caught up, and so on), I also began reading. I read Mary Hunt, and her philosophy on charity made so much sense to me. When you let go of things, you clear up the energy to let new things flow into your life. She talks about it in Christian terms, of giving of the first of your fruits so that God may shower more blessings on you. But it's actually a basic tenet of many spiritual beliefs, and for good reason. We have seen the blessings rebound and rebound since we started doing it. And it feels good, and it makes us feel like we are wealthy, even when the bills are barely scraping by--I mean, if we have enough and to spare, then we aren't poor, right?
And while we don't do it as an "investment," we have seen returns on our charity again and again. For instance, the first budget I worked out in which I included charity, I had to cut back groceries, and gas money, and really scrape around to "find" the money in the budget for it. I set aside $60 in that first little budget. The next time dh's paycheck came, I discovered that I had miscalculated his income (his benefits package had changed), and that we had an extra $60 coming to us each month. Coincidence? Possibly. And certainly the return doesn't always work out so neatly, but as someone already pointed out, ever since we've been doing it religiously and without fail, we have watched the blessings rebound on us--dh has gotten two significant raises since then, we've purchased a gorgeous house that we are in love with for an excellent price, my aunt has become very involved in our lives (it's never occurred to me before, but while she has always been generous, her generousity has become a LOT more frequent and large in the past two or three years), dh has received several large bonuses, our tax returns have been large, and so on and on and on.
Hunt explains it this way: she once saw parrots for sale in an open-air market. They were all on perches, but none of them tied down. She asked the seller why they didn't just fly away. He said that they trained them to view the perch as "safety" and everywhere else as "danger." She says most of us are that way with our money--we cling so tightly to it because it feels safe. But if we will just let go by a bit, we can fly to freedom. That makes a lot of sense to me.
Of course, we do that in concert with carefully stewarding the remainder of our money so that it grows and multiplies, and that's a big part of our financial growth too. But I wouldn't stop giving to charity for all the world. It's my favorite part of the budget. :)
Now, I'll step off my soap box for a moment. The comments about giving of time have hit home with me, because I haven't been very generous with my time lately. I have clung to my time like the parrots in the market to their perches, feeling overwhelmed and like I have far too many important things to do to set time aside for charity. I'll bet if I do like many of you have been, and make the time in my schedule for charity, I'll see it returned to me manyfold. And if not, at least I will have done some good in the world. So, thanks for reminding me that sometimes the most precious gift we can give is of ourselves.
And, thank you again for all the excellent thoughts and advice. Ya'll rock.
Blessings,
Heather
Isn't that frustrating? I know when we were struggling to pay our bills, I would sit in the kitchen of my friend whose husband made a six-digit income and sometimes just wish she would shut up about his upcoming raise and how it would mean an extra $1000 a month they could use to do this that or the other, but how money was still going to be tight because of something else--and all this while eating her very expensive fresh dates and exotic fruits (yes, I know--ungrateful of me to be eating her expensive foods and wishing she wouldn't talk about how much money they had, but that's how I felt for better or worse) while my kitchen sat almost completely bare.
Now that things have really turned around for us, I try to be really sensitive to others, especially good friends who are having a hard time financially. It's hard, though--I get really excited about our financial blessings, and I like to talk about them! LOL
Anyway, I'm sorry you have to listen to the bragging. That's pretty hard to swallow.
And thanks for your feedback. It's much appreciated. :)
Heather
Thanks, Shannon, I totally agree.
And I, too, hope to be able to be generous with my kids and my nieces and nephew(s?) when they're grown. In fact, I was just talking to a friend about this the other day. Her dh makes way less than we do, but they have always been very frugal with their money and so are doing very well for themselves.
But one thing they don't do is buy the junky toys and stuff for their kids that show up at every event--like the free concerts in the park they go to in the summer. But, of course, they have relatives who insist the kids are being deprived and buy them even though they don't have the money. Anyway, we were just saying how sad it is, and that the best antidote to that is to keep reminding ourselves that every $3 piece of junk we buy them now is a piece of their future we've just sold for a piece of junk.
And one of the best things we can do for our children's futures is not, as some have already pointed out in this thread, to save for their college expenses. Rather, it's to take care of our own financial household so that we will not have to depend on them in our old age, and sap their finances to support us. (Of course, I'm an advocate for saving for college when you're able, but it's not at the top of our priorities).
Of course, the other big thing we can do is to train them up so that they will know how to take care of their households when they are grown (including, in my opinion, being generous with their money). I recently read Mary Hunt's "Debt Proof Your Kids." Only about three or four chapters were useful--the rest was rehashed philosophy and so on--so I wouldn't buy the book, but it was worth checking out from the library. She outlines in the three or four useful chapters the financial plan she used with her kids, and it's a great plan and one I plan to use with mine when they reach an appropriate age.
Anyway, thanks for the feedback, and many blessings to you,
Heather
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