Isn't it refreshing to see a story about someone giving back?
Not every wealthy person is Ebenezer Scrooge, clutching every penny for himself. Some of the wealthiest people on Earth also realize how fortunate they are to have been so blessed, so they share the wealth. When they open their pocketbooks, they aren't stingy.
Just look at Jeff Bezos, who recently announced he was donating $100 million to food banks to help America get through the coronavirus. Wow! That's so much money, and he's just giving it away! It's way more than you or I or several families put together are likely to earn in our entire lifetimes! It's more money than you could fit in your fridge in stacks of $100 bills—unless you're Nancy Pelosi.
If you had that much money in a bank account with just 1% interest compounding annually, you and me and those several families could easily live off that interest without ever touching the principal! Forever! Come to think of it, it's kind of more money than any one person could ever need or even spend on anything reasonable.
Sure, if you want your own private jet to shuttle you around the world eating dinner off the naked bodies of a series of celebrities, you could spend that much pretty easily, but if you just want to have a good, satisfying life, $100 million in the banks isn't much better than an $80,000 salary—depending on factors like your debt burden and the cost of living where you live.
So why don't any one of these mega-billionaires like Mark Zuckerberg, Bill Gates, Elon Musk, and Michael Bloomberg—if they really are as generous as they seem—just give away their riches and secure a place in history as the person who personally ended world hunger or homelessness in America? They could even keep a few hundred million to continue living like kings (or at least like Warren Buffett).
Surely it must not be that simple? Because if this was just a matter of private greed preventing that kind of transformational change, governments would surely have used their ability to levy taxes for the public good to seize that fallow wealth and make the world a better place. There has to be some reasonable explanation for why they don't just give it all away. Surely...
In this series we'll look at myths around philanthropy, including the notions that it's possible for billionaires to be generous, that their "wealth" is substantially different than money, that their private foundations do a lot of good, and that they are patrons of the arts.
But to start things off, let's look at one of the simplest explanations for this disconnect.
Myth: Charity Is Actually Better Than Taxation
What you'll hear
Government intervention is a blunt instrument, and charity is a scalpel.
The government is okay at helping people, but charity is really the way to go. Private individuals aren't hampered by government bureaucracy and can respond more efficiently and directly to needs as they occur. Over time we should try to shift toward a more voluntary charity-based model of social assistance, rather than relying on big government.
Why It's wrong
Actually the opposite is true.
During economic downturns, when the need is greatest, government assistance like unemployment, food stamps, and welfare kick in automatically to help those in need. They're called automatic stabilizers, and they help to mitigate the impact of these crises and make it easier to shift toward recovery.
Automatic stabilizers | National income and price determination | AP Macroeconomics | Khan Academy www.youtube.com
Meanwhile the wealthy are often anxiously tending to their own floundering finances or businesses amid the tumult and aren't as likely to open their checkbooks for charity. What this means is that charitable giving actually declines when people need it the most.
On top of that, as bad as politicians often are at being responsive to the needs of their constituents, at least they have constituents. By contrast, there's nothing to stop the wealthy from holing up in their gated compounds, beholden to no one and only responsive to the needs of the rarefied elites they know—donating to foundations developing a cure for gout or gene therapy to treat Habsburg Jaw.
To the extent that they are aware of the plight of others, it's often connected to their religious affiliation, which is why religious charities—that often spend money on churches and missionary work and who proselytize to the needy—are among the largest charities in the US.
If you don't mind someone else's idea of God determining which causes are important and who gets helped, then charity is a great way to go. For the rest of us, higher taxes on the wealthy—and reducing the amount they can dodge those taxes through, say "charity"—would be better.
In this sense, a blunt instrument is often exactly what we need—just a flood of money going to everyone who might realistically need it. And while government bureaucracy is annoying and should be cut where possible—particular when it comes to overzealous means testing—the fact that the federal government deals with such massive sums of money actually makes it possible to consolidate administrative overhead.
All this means that the government can actually use its resources for the public good far more efficiently than a bunch of disparate charitable foundations. In other words: Taxation and government handouts are (generally) much better than charity.
Charity: how effective is giving? | The Economist www.youtube.com
While charitable donations have the added value of making rich people feel good and earning them some good PR, they aren't actually better for the world—or even nearly as good—as a robust social safety net. That means we should really limit the amount of taxes that can be written off through charitable donations.
Of course, without that tax incentive a lot of charities might receive substantially less in donations from the ultra-wealthy. But in that case we would have to ask: Are Billionaires really that generous? Check out our next installment to find out.
- Charities You Can Donate to During COVID-19 - Liberty Project ›
- The Most Overlooked Tax Deductions - PayPath ›
- No Good Billionaires—Myth 2: But They're So Generous! - PayPath ›
- How Much Money Do US Politicians Make? - PayPath ›
As anyone who has ever sold a house will tell you, you must prioritize curb appeal. Before a potential buyer even considers looking inside your house, they notice the outside first. Does it attract the right kind of attention? Does it take away from the feel you're going for? If you plan to sell sometime soon, you must think about these things. Here are some landscaping options to increase your home's curb appeal, so you can get the best price on your home.
Extensive Plants and Greenery
A barren front yard won't get you the price you want on your home. So, invest in at least a little bit of greenery to keep the surrounding area from looking too dead. Shrubs and bushes tie the house to the lawn that precedes it, and flower beds bring a pop of color to an otherwise drab structure. You can also strategically plant some trees to improve the overall feel of your home's exterior.
As we mentioned, your lawn is one of the most prominent features of your home's exterior. A patchy, dried-up lawn will quickly drive your home's price way down. Some of the best landscaping options for your home's curb appeal involve improving your lawn for the next inhabitant. Overall fertilization, ground aeration, underbrush removal, proper mowing—all of these lawn care tasks contribute to a greener and more lively area that invites people to see your house, rather than stay away from it.
There's nothing like a broken and disheveled pathway to make someone think twice about buying a property. Just as you want the entryway in your house to be welcoming, so too should the pathway leading up to the house be inviting. The pathway from the street to your front door provides plenty of real estate to get creative with. You don't have to settle for a boring concrete pathway. Consider something more eye catching, like a cobblestone path or intermittent brick patterns, as a way to better welcome potential buyers.
Usable Outdoor Furniture
Landscaping doesn't just involve the ground you walk on; also included are the items you use as extras to the overall look. Outdoor furniture is one such extra that you don't necessarily need but can look quite attractive if done correctly. Staging is important with outdoor furniture. Old, broken-down pieces will only look like more work to the potential buyer. A few comfortable chairs, a bench, or a table with an umbrella really go a long way to improving your outdoor aesthetics.
A good tip for deciding on curb appeal items is to decide what you personally would want to see as a part of a welcoming home's exterior. You don't need to go overboard, but a little bit of forethought could net you quite a lot of extra cash in the sale.
Many people strive to support their community by donating their time or their money. When you find a meaningful cause, you might be quick to cut a donation check. Though it's admirable to be quick to act charitably, you should be wary of several common mistakes made when giving to charity. Being mindful of these mistakes and learning tips for making informed charitable choices can help you make the most out of your generous check.
Acting Quickly Out of Emotion
Mission statements are meant to be compelling. If you're an emotionally driven individual, it's natural to pull out your wallet at the sight of a sad puppy on TV or when informed about food insecurity over the phone. Unfortunately, not all charities are as effective or official as they may seem.
Take your passion for helping others one step further by making sure your chosen charity is legit. Speaking with a representative, reviewing their website and social media accounts, and looking at testaments online can give you a better idea of whether the organization is worth your donation.
Forgetting to Keep Record of the Donation
Don't forget that you can reap some financial perks from giving back! With the proper documentation of your donation, you can acquire a better tax deductible.
If you donate more than $12,400 as a single filer or $24,800 as one of two joint filers, you're eligible to deduct that amount from your taxes. So, when a charity asks if you'd like a receipt of donation, always answer yes.
Donating Unusable Materials
Most charities can utilize a monetary donation—it's the physical donations that usually cause some issues. Providing a local nonprofit with irrelevant materials or gifting them with unusable products are surprisingly common mistakes made when giving to charity.
Always check your intended charity's website for a list of things they do and do not accept. The majority of places will provide a guideline to donating or offer contact information to clarify any questions.
Strictly Giving at Year's End
As more and more people get into the holiday spirit at the end of the year, nonprofit organizations see an influx of donations. While it's great to spread holiday cheer via a monetary donation, it's important to keep that spirit going year-round.
With regular donations, charities can more effectively allocate their annual budget. Setting up an automatic monthly donation with the charity of your choosing can maximize your impact. You can account for a monthly donation by foregoing a costly coffee every once in a while.
Knowing how much you should spend on home maintenance each year is hard to figure out and may be preventing you from buying your first home. The types of costs you'll incur depend on the house you buy and its location. The one certainty is that you should start saving now. Read on to figure out how much to start setting aside based on the home you own.
The Age of Your House
Consider several factors when budgeting for home repairs. If you've purchased a new home, your house likely won't require as much maintenance for a few years. Homes built 20 or more years ago are likely to require more maintenance, including replacing and keeping your windows clean. Further, depending on your home's location, weather can cause additional strain over time, so you may need to budget for more repairs.
The One-Percent Rule
An easy way to budget for home repairs is to follow the one-percent rule. Set aside one percent of your home's purchase price each year to cover maintenance costs. For instance, if you paid $200,000 for your home, you would set aside $2,000 each year. This plan is not foolproof. If you bought your home for a good deal during a buyer's market, your home could require more repairs than you've budgeted for.
The Square-Foot Rule
Easy to calculate, you can also budget for home maintenance by saving one dollar for every square foot of your home. This pricing method is more consistent than pricing it by how much you paid because the rate relies on the objective size of your home. Unfortunately, it does not consider inflation for the area where you live, so make sure you also budget for increased taxes and labor costs if you live in or near a city.
The Mix and Match Method
Since there is no infallible rule for how much you should spend on home maintenance, you can combine both methods to get an idea for a budget. Average your results from the square-foot rule and the one-percent rule to arrive at a budget that works for you. You should also increase your savings by 10 percent for each risk factor that affects your home, such as weather and age.
Holding on to savings is easier in theory than practice. Once you know how much you should spend on home maintenance, you'll know what to aim for and be more prepared for an emergency. If you are having trouble securing funds for home repairs, consider taking out a home equity loan, borrowing money from friends or family, or applying for funds through a home repair program through your local government for low-income individuals.