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Should You Donate While In Debt?

By Frugaling 14 Comments

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Colorado State University Endowment Report Donate

I started fundraising and creating an endowment for suicide prevention at Colorado State University in 2010-11. Before I graduated and went to my doctoral program in Iowa, the fund was permanently endowed — reaching $25,000 in about a year. Last week I received my annual “Endowment Report,” which provides the earnings, contributions, and total value of the fund.

As I opened the report, it was hard to stay standing. Today, about 3-4 years since the founding, the scholarship has nearly $34,000 in funds! When the scholarship reaches about $50,000 in savings, it should be able to pay out multiple scholarships each year — or one large check. Ultimately, this can go into the pocket of a college student in need, who hopes to make a difference in the field of mental health.

But back in college, I only had a few hundred dollars in my name. When I got the idea to start a scholarship, I donated nearly everything I could to help seed the fund. I was passionate beyond belief and this cause was everything to me. I remember looking at my bank account, wondering how much more I could give without going broke. It was a delicate financial time, but I had money. And that’s an important point.

When I entered graduate school, I took out massive amounts of student loans, was ignorant about budgeting for the semesters, and irresponsible in spending. Between car, credit, and student loans, I amassed about $40,000 of debt in two years. Throughout this period, I never stopped giving to charity.

Each year, I spent anywhere from $200-500 — small sums in the grand scheme of things — in donations. I kept giving and giving — even when I had nothing. Zilch, nada, zero. Loans were the only thing keeping me afloat.

Even worse, I began to feel the pull of credit debt. This is the particularly nasty kind — an undertow that’ll sweep you out before you know it. With thousands in credit debt, I started engaging in credit balance transfers. These are financial shell games that you can play with yourself and credit companies. You open a new account that provides a 0% balance transfer, and then pay a little fee. Usually, that company provides 0% interest in those funds for about a year. A great deal, if it weren’t for the fact that my spending never stopped.

My spending was out of control and that included charitable spending. I hate writing that line. I hate the idea of cutting back gifts to charity. And I certainly hate the advice I must give today.

I need you to be ruthlessly defensive of your finances when in debt. I need you to ignore your desire to help others, so that you can help yourself. I need you to consider a future where you can help others even more, when you have the savings available.

To those in debt today, you need to put the mask on yourself first — before helping others. Now you may ask, “Why would I do that? Generosity is exceptionally important to me!” In response, I’d say, “I can relate to that feeling. I have given every year of my adult life to charities — in and out of debt.” But it’s time to change our perspective to charitable giving while in debt.

See, when you spend beyond your budget and give to charities when in debt, you’re actually writing a fat check to banks. Those that retain and house your loans — from the federal government to private corporations — receive their own donations when you make this financial mistake. The interest on loans given to you allows banks to realize ever increasing profits and earnings. Worse, it forces you into debt longer than you need be, and prevents you from being able to give more at a later date.

It’s with a pained heart that I must suggest that you stop giving until you’re back in the green (or black). I don’t want banks to make another dime off you, and I’m sure you don’t either. So let’s make a pact to stop giving until we’re done with debt. Then, and only then, let’s consider how we can best help those in need.

Special shoutout to Ben and Stefanie at The Broke and Beautiful Life for an awesome article that inspired this!

Filed Under: Loans, Save Money Tagged With: Cards, Charity, Colorado State University, credit, debt, donate, Giving, poverty, Student Loans

My High School Gambling Problem

By Frugaling 9 Comments

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Poker Table Chips Cards Gambling Problem
Photo: flickr/imagesofmoney

As a Millennial and part of the tech generation, I grew up around computers. I can’t remember much of a time before the Internet. Computers were ever-present by the time I reached middle school. When I was in fourth grade, I learned HTML and began writing code by hand – a geek of the highest order.

In elementary school, my parents bought their first computer. I was glued to the magic of the mouse, keyboard, and screen working together in a confluence of beautiful technology. These integrated zeros and ones seemed to dance before me, and it wasn’t long before I started making money from it all.

Today, I have a secret to share with you all: in high school, I had a gambling problem. In 2004, I started playing poker with my friends. It started out pretty casual and fun; lighthearted, even. Large groups of people would coalesce at one person’s house every couple weeks, and a doable $5 buy-in would be advertised. Texts and phone calls would be sent out, and the get-togethers were great.

Poker Cards Chips Texas Hold Em Gambling Problem
Photo: flickr/deutero

The buy-ins (the amount to play in tournament-style texas hold ’em poker) grew, too. What was $5 soon became $10, $20, and there were even re-buys (to buy back in for extra if you had lost once) at another $20. The shared prizes were amounting to hundreds and hundreds of dollars. If you won, you could easily walk away with an extra $100-200+ in your pockets. The infusion of funds was electrifying. I was hooked and loving it.

Some people were inspired by the statistical underpinnings. Behind it all, poker between friends was a stats-based game of skill and chance. But if you mastered the art of stats, your chances became stronger. Poker wasn’t pure gambling, as the same winners would be on the leaderboard week-to-week. They were doing something right.

The mathematics never appealed to me; instead, I loved the interpersonal dynamics – the play, candor, and fight between personalities at the table. Give me 8 other opponents, and I believed strongly that I could understand their style, bets, and choices. This was exciting and enticing. Unfortunately, at the end of every tournament, the game would be done for a couple weeks. I’d have to put my earnings and love for poker on hold.

I was looking to fill that gap, and that’s when I found online poker. The world of online poker is complicated to explain in the space and time I have today. Basically, the in-person life I was experiencing every couple weeks could happen every day – at any time. There were hundreds of thousands of players worldwide. Money was flowing – some would say overflowing. A growing mass of amateurs were joining, dropping $100, $200, $1,000 into online accounts. Frankly, they were suckers and I was ready to take advantage of their inexperience.

In 2005-2006, I was playing regularly online through two websites. I entered a couple tournaments and made nearly $2,000 in a couple weeks. When I played “cash games” (no buy-in and not in a tournament style), I was averaging anywhere from $7-10 per hour. Mind you, I was a sophomore/junior in high school, and this kind of money was astronomical to me.

Unfortunately, I had one major problem: I couldn’t stop. The money was so powerful and my earnings were ridiculously lucrative. I lost respect for money, and that’s where things got troublesome.

I was only 16 years old, had made thousands of dollars off of poker, and I was getting bored. Better said, I wanted to raise the stakes and make more money. $2,000 here and there was no longer enough – I wanted the $50,000 prizes and $50 an hour average pay. Amidst this mix of greed and boredom was a toxic combination. I started playing one-on-one (colloquially: “heads-up”) for hundreds of dollars at a time.

The numbers didn’t really mean anything, and it all began to feel pretty surreal. Once, I continually bet $100 against someone – over and over again – until I lost about $400. My heart was racing. I didn’t know whether to laugh or cry. Within seconds, I had lost hundreds, and all without care. I had been gambling for entertainment, and this was never the intention.

Off and on, I struggled to stop or curtail it – a telltale sign of addiction. The rush was calling and I itched to play more – in time and money. As my winnings disappeared, I saw my savings account go back down to near-zero. In addiction parlance, I had hit rock bottom, and began selling off dvds, books, and anything I could get my hands on to keep funding the rush. When I ran out of that, I used credit cards. When I ran out of that, I realized I had lost everything.

I’m about 5-6 years “sober” from poker/gambling problem. I haven’t touched a deck of cards to teach or play texas hold ’em. I blocked and closed all online accounts. Like all dependencies, I know this itch is eager to get back out there and play another hand. Instead, I’m writing this article and saving my precious pennies. Now, my life is changing and it has nothing to do with the cards I’ve been dealt.

Filed Under: Social Justice Tagged With: Cards, cash, Gambling, Games, Greed, money, Online, Poker, Texas Hold Em

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