A Tithing Experiment

April 15 has come and gone.  Did you get your taxes filed on time?  Have you received your refund yet?  In the past, I would get really excited about how our tax return refund was going to be spent.  We would purchase some fun items or go out for a special dinner and then use the remaining amount to bump up different savings goals.

This year I got excited that the refund amount would be approximately enough to cover our property taxes.  I write approximately because I do not yet know the exact amount of our 2015 property tax bill.  However, based on our 2013 bill, it should be enough, if not more than enough.  (You may recall from a different post that the tax return we received last year was saved for our 2014 property tax bill, a bill that we will receive later this Spring.)  You might be thinking, in a sarcastic tone, oh wow, how exciting.  Well, I truly do feel overjoyed because it means that I get to continue staying home.

Preparing your tax return may provide you with the opportunity to review your year.  If you’ve seen the Turbo Tax commercial, you may know what I’m talking about.  Did I get married?  Did I have a baby?  Where did I work?  How much money did I give to charity?  When I filed our taxes this year, I noticed something really interesting.  This past year, 2014, was the first full calendar year that I did not work.  Wait, let me rephrase that.  It was the first calendar year that I did not work outside the home.  We all know it’s hard work staying home with young children!!  (If it’s not hard work, you’re doing something wrong or you have a screw loose.)  But, I digress…

What did I observe while I was doing our tax return?  From 2013 to 2014, our income decreased by 30%, due to my exit from the workforce in November 2013.  Obviously that decrease was no surprise.  The surprise came when I compiled our information for the charitable contributions section of our filing and I observed that we gave more in 2014 than we did in 2013.  In fact, the amount we gave in 2014 was almost DOUBLE the amount we gave in 2013.  We had less money, but we gave more.  How could that be?  We were more generous when we had less to give.  I was stunned at this beautiful truth.

That little observation encouraged me to open my heart to something that had been weighing on my mind for quite some time; TITHING.  As I understand it, in its simplest terms, tithing is giving back 10% of what you have been given.  Most priests and other religious people would suggest that you break up the 10% into three parts.  Give 5% of your income to your church, 1% to your diocese and 4% to any charities or causes that you choose to support.  (Little side note: I assume that “income” means your take-home-pay.  Someone let me know in the comments if that’s not the case!)

I admit, we have not been tithing the full 10%.  Do we give to our church on a weekly basis?  Of course.  Do we give to different charities?  Yup.  However, I don’t think that the amount we’ve given in the past couple years would amount to 5% of our income.  In our first year living on one income, I was too scared to give that much away.  We had already cut our income by so much, doing what I thought was God’s will, that I just didn’t think we had any more to give.  I expressed these concerns to one of my small groups during a retreat.  One of the men in my group told me that he thought we were already tithing enough by giving up one income and having me stay home.  Of course, this man is not the authority on tithing, but it did make me feel better.  Is he right?  I’m not sure.  Perhaps it was enough at that time.

A couple of weeks ago, our parish hosted a four-day evening retreat that they called our Parish Mission.  A very vibrant and engaging priest, named Father Larry Richards, gave some very interesting talks.  The topic of one of his messages was sin.  He literally stood up and rattled off a list of sins.  As he went down the list, there were really no surprises, just reminders.  Then he started talking about something that I hadn’t really thought of as a sin before: “not giving to the poor and the Church.”  Now, I believe the sin comes into play when you give away nothing.  I’m not sure if giving less than 10% is sinful, but it is certainly recommended that you give away at least 10% of what you are given.  (Once again, someone please let me know if I do not have the correct understanding.)  Father Larry went on to challenge our congregation to start tithing 10% of our income if we were not already doing so.  He suggested that we merely set a goal to tithe for just six months as a sort of experiment and just see what happens.  He, not so gently, reminded us that God would not be outdone in his generosity.

God will not be outdone in his generosity…

When we got home from the mission that night, I told my husband that the talk about tithing had really made me start considering whether or not we were being generous enough.  I told him that it had actually been weighing on me for a while, but I thought that maybe we just didn’t NEED to tithe since I wasn’t working.  But, in my heart, I just knew that this wasn’t true anymore.  Perhaps in the beginning, when living on less was brand new, we had a grace period in regards to true tithing.  But, with more than a year under our belt, I thought it was time to try this tithing experiment.  He agreed that it was something that was weighing on him as well.

That evening I set up a little tithing spreadsheet to help me calculate what we would be giving each month.  My husband’s income fluctuates because of the nature of his work.  As such, the amount that we give will vary from month to month.  I was strangely excited to move forward with this experiment.  I decided that on each payday, I would immediately take 10% of that income and put it into a checking account that we don’t use daily.  Essentially, it would be almost as if we never had the money in the first place.  Then, any donations that we would make that month would come out of that separate checking account.

As I mentioned earlier, I felt a weight lifted off of me after my husband and I agreed on this plan.  If you’ve been reading this blog from the beginning, you know that I recently had a baby.  I’m working at getting that baby weight to go away little by little.  (I have a long way to go!)  I weigh myself weekly as part of an online Weight Watchers adventure.  Coincidentally, the day that I created my tithing excel spreadsheet was a “weigh-in” day.  Soon after explaining to my husband that I had felt a weight lifted, I stepped on the scale and found that a weight really had been lifted off of me in the literal sense.  After having some slow weight loss weeks, I had a huge loss.  And the same thing happened the following week.  It was kind of wild.  Was God’s generosity coming in the form of weight loss so that I would be able to start fitting into more of my old clothes and avoid buying new clothes?  Perhaps…

I will admit…I had already made another plan for how God would outdo our generosity.  And, that was a mistake.  Why do I always forget that God makes the plans, not me?  My husband was up for a promotion and competing against 13 others to get it.  I figured that since we were now tithing, he would of course get this promotion, right?  I mean, this was certainly how God was going to outdo our generosity.  Well, as you may have already guessed, my husband did not get the job.  It was disappointing, to say the least.  The “old me” might have thrown in the towel on this whole tithing experiment since God had not shown me his generosity in the way I would have expected.  Instead, I decided that perhaps this was a good thing.  Maybe the job was really not the right fit for my husband and our family as a whole.   Who knows!   And in the end, tithing is about GIVING without worrying what we’ll get in return.  Plus, my family and I have already been given so much.

About a month has passed since we decided to accept Father Larry’s tithing challenge.  So far, so good!  Really, it’s not as hard as I thought it would be.  Once again, I have to remind myself to “be not afraid”.  Abandoning fear certainly has been a reoccurring theme in my life.   Have you picked up on that?

I’ll keep you posted on how our tithing experiment goes in about 5 months.   In the meantime, let me know what you think about tithing.  Are you starting your own tithing experiment?  Do you already tithe?  Are you a little scared to give that much like I was?  Let me know!

God bless!

SmartyPig

I’d like to deviate a little from the topic of faith and talk about a financial tool that my family uses.  A little practical advice is always helpful, right? In addition to using a normal savings account at a bank, we also use an account at a website called http://www.SmartyPig.com.  (I’m writing on this topic in an effort to distract me from the fact that I am in fact still pregnant, a couple days from my due date, and having a hard time being patient and trusting in God’s plan.  I’m attempting to “happily struggle” through these last days.  Wink wink!)

So, what’s SmartyPig?

Essentially, SmartyPig.com is an online piggy bank.  By using SmartyPig, you can start one account to help you save toward multiple savings goals.  Your goals may be big, small, long term, or short term. The best part is that you will earn a higher interest rate at SmartyPig than you would at your regular bricks and mortar bank. Currently the APY is 1%, which is not huge of course, but it’s a lot higher than the 0.03% APY that most of us earn on a savings account at a regular bank.

How does it work?

Perhaps you’d like to save for a vacation. First, you must determine how much you will need to save for this getaway and by when you will need the funds to pay for it. Next, you decide whether you would like to schedule automatic transfers or just make periodic transfers at your leisure.  SmartyPig will even suggest an amount to save per period if you choose the automatic transfer option.  Once you have all of those details in place, the last thing to do is make an initial minimum transfer of $25 from your checking or savings account to your new SmartyPig account.  Going forward, the minimum amount for future transfers is only $5.  Don’t worry, SmartyPig will walk you through this whole process.

It’s now months or perhaps years later.  You have reached your savings goal and have a couple of options. You may close the goal and transfer the money directly to your checking or savings account.  OR you may transfer your SmartyPig savings to a retailer gift card and earn up to an extra 11% in what SmartyPig calls a “cash boost”.   So, let’s say you have saved $1,000 for a weekend getaway and you know that you’re going to use Orbitz to book it.  The cash boost amount for Orbitz is 3%.  You can transfer the $1,000 to an Orbitz gift card and SmartyPig will add an additional $30.

How have we used SmartyPig in real life?

We use SmartyPig for several types of savings goals, including those pesky unavoidable expenses incurred when you own a home: property taxes and homeowners insurance.  Instead of putting our property tax and homeowners insurance into an escrow account and including these amounts with our mortgage payment, we transfer money periodically into SmartyPig accounts.  Monthly, we transfer 1/12 of our previous homeowners insurance bill to a SmartyPig goal account.  In the past, we also made monthly transfers to a property tax goal account.  Now, in an effort to reduce our monthly expenses (see Does Not Work Out On Paper), we annually transfer our income tax return funds to a property tax savings goal.  For example, this year, once we receive our 2014 tax return, we will transfer those funds directly into a SmartyPig goal account. We will not touch this money until 2016 when we pay our 2015 property tax bill.  Make sense?  I prefer using a SmartyPig account rather than using an escrow account because we ultimately have control of when we make transfers and we actually earn a little interest. (Every little bit counts, right?)

We like using SmartyPig for “fun saving”, too.  When we got married, over 5 years ago, I started two vacation goals.  The first was to save for a 25th wedding anniversary trip back to Hawaii, our honeymoon destination.  (Yes, Hawaii was expensive, but remember, I was working full time back then.)  We decided we’d “go big” since it would probably be a while until we would go on a week long vacation together again.  Realistically, we assumed that we would not be going on many vacations after our honeymoon since we would be saving our money to help raise a family and buy a house.  However, our hope was that we would at least go on some big anniversary trip in 25 years.  If we just put a little aside each month, then in 25 years we would have a nice little vacation fund.  (Delayed gratification is a sign of maturity, right?)

As I mentioned in another post, I also have a Disney family vacation goal account.  At the time, when I was newly married, I figured that our trip would take place in about ten years (little over four years from present day), when our oldest hypothetical child was about 8 or 9 years old and the youngest was 4 or 5 years old.  (I didn’t want to take a big trip to Disney World until everyone was totally potty trained.)  I am a total geek and did a little research and determined the cost for a family of five to spend about a week at Disney World. (Obviously I didn’t really know how many kids we would be blessed with, but I thought three was a good number to use for planning.)  The figures I found assumed that we would be staying at one of the economical Disney Parks resorts and using 5-day Hopper tickets.  I looked up airfare for five people and added that amount to the Disney prices.  Next, I took that total cost and multiplied it by some sort of inflation value and came up with approximately $7,000.

Now honestly, I don’t know if this is too much to save or too little.  But if we had $7,000 to spend on a nice family vacation, that would be great no matter what. SmartyPig did the math for me and showed that if I wanted $7,000 at the end of 10 years, I would need to contribute approximately $58 monthly.  (I believe the figure SmartyPig determined was a little less then that because their calculations factored in the interest that I was going to earn.)

When I quit my job we did have to stop contributing to our vacation goals for a while and I adjusted our Disney goal down to $6,000.  Although it was a little sad, we at least still had the money we had saved for four years sitting in the SmartyPig account.   Luckily, SmartyPig does not lock you into any sort of permanent payment schedule, so it was easy to put a halt on the monthly transfers.  As my husband started to increase his income, we were able to start contributing to these goals again.  We just contribute much less than we used to for now and we put other gifts of money from family into this account, when we can, to help offset the decrease.  Even if we don’t reach our exact goal by the time we want to take the trip, we will still have more money saved for a vacation than we would have if we’d never started the SmartyPig account in the first place.

There have been times when we started a goal for a certain purpose and then ended up needing to use it for something else. When we bought a house three years ago, I had started a goal to save towards kitchen updates.  My plan was to have enough money within two years to purchase and install granite countertops.  A year and a half later, we almost had enough to make my kitchen look shiny and new. But, alas, I had also just quit my job.  And, I knew at least one of my savings goals needed to go away in order to help pay down our car loan.  My husband and I decided that creating family memories with a fun trip was more important than granite countertops.  We left the Disney goal untouched, liquidated the kitchen savings goal and put those funds toward our car loan.  This was another way that we shuffled things around to help decrease our monthly expenses.  (Granite countertops will always be waiting for me, but my children will not always be little children.)

What would you use SmartyPig for?

I hope that I have given you some good ideas for practical applications of this tool. Perhaps you’re already thinking of ways in which SmartyPig could help your family.  Truly, the possibilities are endless! You could start a goal account to save for new appliances, BEFORE they break.  Or you could also start a Christmas spending savings goal. If you put aside a little each month, starting in January, then you would not feel some of the financial stress once the holidays roll around. It’s so much better to be able pay for something outright than going on a payment plan or using a credit card.

Are there any disadvantages to using SmartyPig?

There are a couple of things that I should note.  First, any transfer in and out of the SmartyPig account will take at least a day or two to go through.  It’s not an instant transaction. (Although this might be a bit of a nuisance, it is also beneficial to not be able to access your money immediately.  It could prevent you from making a rash decision.)  Second, you have to actually close a goal to be able to transfer the money out.  There are no partial withdrawals.  I have found this to be a little annoying at times, but not totally prohibitive.  Luckily, you may close a goal or an entire account at any time. You are never locked in to a certain time period or required to carry a minimum balance.  Aside from a couple minor inconveniences, SmartyPig is a wonderful tool to use when saving for specific financial goals.

Happy Saving!  Please post any questions you have in the comments section.

Please note: I have no affiliation with SmartyPig.