Sometimes the article that you feel compelled to write is not the article that you’re qualified to write. This is one of those articles. With that in mind, I hope we can engage these topics on level ground and that I can learn as much from you as you can from me. Please, please, leave a comment so we can expand the conversation. Also, this is looong. It takes me about twenty minutes to read through so make sure you set aside some time for reading and reflecting. Thanks!
Many of the folks that know me well consider me to be a cheapskate. Personally, I prefer the term “thrifty”—I think it’s a better representation—because it’s not so much that I won’t part with my money, it’s just that I don’t like spending it on things. So on one hand, when I owned a company I paid my workers well, but on the other, we’ve needed a new dishwasher for about eight months and I would rather complain about doing the dishes by hand every other night than fork over the $300 for a bare-bones model since, let’s be real, Kelsey and I ain’t getting a “BLAKESLEE”. But, if you must, “cheapskate” works too.
I want to establish that from the beginning so that you know with certainty that my propensity toward thriftiness is not because of some superior morality or spirituality. If anything, it’s just a part of my DNA, similar to my abnormally small ears (now your thinking about my ears, trying to recall just how small they actually are). For as long as I have thought about these kinds of things, I’ve always instinctively reacted against spending and hoarding and much-ness. Simplicity, saving, and fasting have always come rather easily to me. But that doesn’t mean that I’ve got it right when it comes to money. In fact, there’s still a really long distance between where I’m at and where I want to be in terms of my relationship with personal finances.
There are two phenomena currently taking place in our country that warrant further exanimation. I want to look at 1) income inequality and 2) how people think and dialogue about income inequality. But before we do, you have to promise that whether you lean conservative or liberal, you’ll hang with me until the end. Promise?
Income inequality as at its highest level since the 1920’s. Some people are fond of citing a statistic that says something to the effect of, “The twenty wealthiest Americans control as much money in the United States as the bottom 50%.” And while that’s a pretty jarring statistic, the economist in me says that it’s not a particularly useful statistic. Sure, Bill Gates has a lot of money. So does Mark Zuckerberg. But that doesn’t really say that America has income inequality as much as it says that America loves Facebook and Microsoft (well, it did at least). A more practical statistic, for our purposes, is that the top 1% of income earners earn somewhere between 14 and 20% of all U.S. pre-tax income, depending on your source. Further, the United States ranks as the 96th least equal country out of 156 countries as measured by its Gini coefficient.
Now, there are a lot of reasons for this like the decline of labor unions, globalization, technological advancement, and the “superstar hypothesis” (if you win at business, like a Gates or a Zuckerberg, you make way more money than the second place guy, namely Tom from MySpace). Brilliant economists have studied these things at great depth. And the important thing to note is that these aren’t moral reasons. The wealthy are not successful businesspeople because they are jerks and greedy and selfish. Rather, in simple economic terms, they produced a commodity that a lot of people wanted at a cheaper cost than their competition. There is no good and evil here. Economists can cite a number of reasons why a doctor makes more money than a cashier—barriers to entry, education costs, consumer demand for, you know, staying alive over having a new pair of jeans…there are fairly straightforward explanations that are agnostic to any moral system. Insofar as the conversation remains about people earning more money than other people, it remains an unproductive one.
But just because you earn ten times as much as someone else does not mean that you have to live ten times as extravagantly as someone else. I want to be clear: I believe that wealthy Americans have every right to spend their money however they wish. But just because something is within your rights doesn’t mean it is the right thing to do.
Let’s put aside the numbers for a second because numbers have a tendency to take the focus off of personal responsibility and what you and I can and should do.
Perhaps I should frame it this way: this house, which is located exactly one mile from my home, is up for sale for $8,450,000. This house is 1.3 miles from me and the list price for it is $80,000. These two listings are 2.1 miles apart from one another. And if you take some time to think about it you might wonder: “How comfortable can it possibly be for the person in that eight million dollar house to rub shoulders with that guy in the eighty thousand dollar house? Like, doesn’t he feel at least a little bit guilty or insecure when they’re at the grocery store and Mr. 8 Mil is buying a bottle of wine that costs more than Mr. 80 Thou’s mortgage payment?”
But that’s just it. You see, in all likelihood the family in the big house doesn’t brush shoulders with the folks in the little house. I’ll bet they shop in different grocery stores. They go to different restaurants. They spend their Friday nights being entertained in different ways and their kids go to different schools. In fact, you could make a fair argument that a good portion of American civil life is set up precisely so that 8 Mil doesn’t have to cross paths with 80 Thou. It might be under the pretense of “living in a better school district” or “moving to a safer neighborhood” but the fact of the matter is that the rich and poor really don’t live in the same communities.
Is it a sin to buy a second Lexus when someone living 2.3 miles away is having a hard time putting a meal on the table, or at least a healthy meal on the table? At what point do we say, “I have enough. I am content with these possessions and the rest of my disposable income can go to helping others.” What is it that drives us to hold so tightly onto our possessions and our money, kind of like Gollum from Lord of the Rings: “Mine, my precious, mine.”
It’s a zero-sum game. Every dollar that I give away is one less dollar that I have to spend on myself, or on my family and my kids. “What if I can’t afford private school for them? Or college? What if I can’t get that job promotion with this second-rate suit? What if I never see Paris in the fall? What if? What if?” And we are suffocating in doubts and insecurities.
But let’s stop for a second right there. Because, just maybe, when I started talking about the eight million dollar house you had an easy time picking a side. Right away you identified with Mr. 80 Thou. You’re frustrated with the exuberant lifestyles of the rich, the one-percenters, the Wall Street folk who don’t understand wait it’s like for people on Main Street. Fair enough.
So what about your pocketbook and my pocketbook? If you’re anything like me there are several thousand dollars there—a modest savings. And there’s that college diploma from a $50,000 a year school and the first-time-buyer house. There’s the Toyota Corolla that’s free and clear—not a fancy thing but it sure runs fine. And a new weedeater for Christmas and a new shed that mom bought to store a few things in since the 725 square foot house wasn’t quite big enough for all of our possessions. Do you fit into that category?
The Gross National Income (GNI) of Bangladesh is five hundred billion dollars. About 180 million people live in that country. That means that the average income for a Bangladeshi is about $1000 a year. Let’s look at it another way: the United States has roughly twice as many people as Bangladesh. Its GNI is 110 times larger.
In popular political discourse, many are quick to assert that the one-percenters should be giving away more of their money. They should “pay their fair share”, to borrow the vernacular of a couple presidential candidates.
Well, then, how come you and I aren’t giving away our money? Why are we quick to identify the one-percenters in our own country while forgetting that we’re the one-percenters on a global scale? We’re the lucky ones, even if you are only making the supposedly inhumane federal minimum wage of $7.25 an hour. We’re the ones who have earned far more money than our talents deserve. If the global sum of money was meted out on a worldwide scale according to how hard you’ve worked, would you have more or less than you currently have? I, for one, know that I’d have less. Much, much less. But we don’t spend much time thinking about this because, as was pointed out above, we’re not brushing shoulders with the global poor on a daily basis.
I want to be clear: I believe that in one sense, wealthy people absolutely deserve what they have earned. They have worked hard, they have played by the rules and laws that govern a free market economy and, in many cases, they have paid their employees far more than a well-functioning labor market would have required. When I look at it like this, I certainly don’t think that I’ve earned more than I deserve. But then I think about the people I’ve met in countries like Nepal. Quick story: I was hiking with some friends from church around rural Nepal and we made it to the top of this fairly lengthy climb. When we got there, we met a man carrying an enormous load of pots, pans, and other cookware with this kind of combination headband/backpack. After talking with him for a while, we learned that he was 75-years-old and that for $20 he carried this load about twenty miles. One of my friends asked if he could try the load on to see just how heavy it was because it certainly looked heavy. The man obliged. My friend almost fell over from the weight. He estimated that it must have weighed over 100 pounds. A 75-year-old man, carrying 100 pounds twenty miles for twenty bucks. Was this guy getting the wages that he deserved?
Insofar as we identify with the ninety-nine percent in our own country, we feel justified in advocating for a more progressive tax structure. Why? Because we know that we benefit from it. It’s easy to see the unfairness behind it all when it means that the one-percenters would basically be writing a check to you. But what about when you’re the one percent? How come we haven’t advocated for a direct transfer of wealth from our pocketbooks to those around the world?
I am not in favor of higher taxes on the wealthy for a number of reasons, but chief among them is that I believe that the government is a very inefficient entity. I would much rather that those with means, like me, make it incumbent upon ourselves to cheerfully distribute our surpluses to those specific places of need that we see throughout our community during the course of everyday life. That’s the hope, the dream.
But there’s a catch. This means that we need to deliberately plant ourselves in places in society where people who have less than us congregate. It might mean purposefully choosing to live in a less-perfect neighborhood than the one we can afford. Or it might mean sending our kids to a different school, attending a different church, or shopping at different stores. I feel like almost all of the wealthy people I know would be more than happy to share with families and children who have less if only they spent more time getting to know them. And I count myself amongst those who, to some extent, remain willfully ignorant of the economic plight of people (who live less than a mile away from me!) because it is inconvenient. When I’m driving home from work each day, I see neighbors with broken-down cars and faded shutters and kids playing with basketballs where all the rubber has just about peeled off. But because I haven’t taken the time to get to know them, I can’t say with any certainty if they could use some help.
As a Christian, I believe that what ultimately matters is the condition of your heart. Your heart is the rudder of your ship and will determine how much money you spend on yourself and how much you happily give to others. Without a transformation of heart, it is near impossible to become a cheerful giver, if you aren’t already one.
As I mentioned before, I often hear the 99% crowd vilifying the one-percent crowd as if they are somehow morally inferior because they have earned a lot of money. Yet I have no doubt that if the majority of these people were placed in the shoes of the 1%, they would live the exact same lifestyle: same car, same houses, same ski trips to Aspen. You and I have never faced the temptation of extreme wealth so we shouldn’t be so quick to judge those who have. And, again, if you use a global measure of wealth, have you and I given as freely to those below us and we expect those above us to?
If you’ve ever been to a church service when the pastor was giving the ol’ money talk—it’s a classic go-to for preachers during a church fundraising campaign—then you probably know how this is supposed to end. I’m supposed to recap the story of the rich, young ruler and remind the congregation that it’s harder for a rich man to get into heaven than it is to pass through the eye of a needle. But I’m also supposed to tell the congregation that the Greek word for needle actually meant a small opening in a gate, an opening so small that a literal camel had to get on his literal knees and literally crawl through the “needle” of the gate. And the obvious parallel is that if you’re rich, you’ll do just fine as long as you’re on your metaphorical knees. And I’m also supposed to say that just because Jesus asked the rich, young ruler for everything doesn’t mean he’s asking you for everything, and that Jesus doesn’t dislike Lexuses or fancy restaurants, he just doesn’t want you to be greedy. And those that consider themselves rich (far fewer than there actually are) walk off feeling concerned but not anxious, and those that consider themselves middle-class or poor are feeling just a tinge self-righteousness.
But that’s not how I’m going to end. Instead, I’m simply going to share a few reflections about my life and my relationship with money. My hope is that you’ll be able to locate yourself amongst these thoughts and then you would spend some time reflecting on your own relationship with money. If you’re a Christian, I would hope that you might chat with God about your finances—maybe start off by asking Him why He decided to entrust you with so much wealth. And if you’re not a Christian, but perhaps you believe in some kind of afterlife or heaven, I would humbly ask you to spend some time thinking about if you believe there is some minimum standard of generosity required to go to heaven, and if you think that you would surpass that threshold, and if God’s threshold would be the same as yours. Just so you know, the Christian worldview is that there is a minimum standard required but that no one is capable of reaching that standard. However, Jesus has surpassed that standard and when a person puts their trust in him, they share in the eternal life he secured through his life, death, and resurrection. One of the verses in the Bible puts it like this (I’m paraphrasing): When Jesus, who was perfect, became imperfect by taking on the repercussions of the sins of the world, he enabled each of us to become the adopted sons of God. So, with that being said, here are some things I’ve been thinking about:
–As I mentioned earlier, my wife Kelsey and I gave away about 9% of our money last year. We gave $500 to our local church, $800 to two children we sponsor through World Vision and Compassion International, and about $2000 to various people and causes throughout the year. In one of his letters to a local church Paul writes, “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” With the exception of the $800, I did not give this money away very cheerfully. Kelsey’s a much more cheerful giver. I wonder: how much is the right amount to give away given that a) our savings account negligibly grew in the last year and b) we took on $30,000 in loans for Kelsey to attend medical school. I wish that I was less concerned about dollars and cents and more in touch with God’s voice so that I could hear his wisdom above all the anxiety and noise.
–Kelsey and I squabble about money more than any other thing. Probably once every three weeks we have some version of the money talk. Usually it’s because I’m badgering her about something that she bought, which, if I’m being honest, is probably a real nuisance since in the last year she bought two articles of clothing, I bought a couples rafts and paddles for outdoor adventures, and that’s about it. We go out to eat once every couple weeks and spend some money on vacations. I want Kelsey and I to find that balance between me not being such a cheapskate that I become a real piece of work but also being able to give an account for how we spent our money if God should ever ask.
–With the exception of one strata, households that earn around $50,000/year give away the highest percentage of their income, averaging 4 percent. The percentage of income gradually decreases as one’s income increases, such that those making between $200,000 and $250,000 give away 2.4% of their income. Those that make more than $10,000,000/year give away the most, at 5.9%. Kelsey and I have both decided that it’s really important to get in the practice of holding onto our money lightly when we’re making $40,000 so that we can be well practiced should we ever be making $400,000. I imagine it’s a lot easier to write a check for $5,000 than $50,000.
–There’s a church in Simi Valley, CA—one of the wealthiest locales in the United States—where a fair number of families, including the pastor’s, have committed to living at the median household income for a family of their family’s size and then giving away the rest to charity. I hope that Kelsey and I are able to be a part of something like that. Is that something that you, reader, would ever consider?
–My financial role model is my mom. I feel like she has really found the balance between being generous with her money without being consumed by dollars and cents like me. Her heart controls her money; her money does not control her heart. In fact, I’m really thankful for the generosity that I’ve seen firsthand from so many of my family members. Who, reader, is your financial role model?
I want to close with a simple quotation from Saint Augustine that succinctly states the kind of heart I hope to have. Augustine writes, “All plenty that is not my God is poverty to me.”