Charitable giving vs. the value of compounding and debt reduction—a dilemma and temporary solution

On Saturday, Trent at the Simple Dollar blogged about frugality and social giving. I’ve been pondering something related for a few weeks-giving to charity and getting compound interest. You see, I’m 22 years old. This gives me a tremendous edge with compounding. Starting me investing now can make a big difference compared with investing later.

Let’s just assume that we all know the benefits of compounding. If not, this post by Get Rich Slowly has some good videos of Michael Fisher talking about it along with links to charts.

In my financial life, there are two big issues staring me in the face. One is the importance of starting compounding young because of the difference it makes. The other is Mr. Micah’s student loans of over $100,000 (that’s for getting a PhD).

So Mr. Micah are working on living frugally and putting some of the money towards paying off debt and the rest towards saving and investing.

The problem is that I’d really like to add a third party. I believe that it is right for me to give to others. Particularly organizations which relieve suffering. I see this as a religious issue as well as a part of being a decent human. Therefore, Mr. Micah and I try to give $30-50 per month to a couple places we think make a difference.

But I know that I could be giving more. Even if I didn’t cut out of the debt payments, I could cut out some of the savings. What if I die, for instance, before I start really really giving? (I plan to do so by age 30, at which point we should have paid down a lot of the debt and started a decent savings going-so that I can put some money in it and focus elsewhere.) What if the world really really needed my money now?

I know that I want to leave some of it to worthy groups. But if I die young, there’ll be nothing to leave.

Having been a campus social activist, I know lots of places where I could give. I know what I’d do if someone gave me a million dollars to give away. And I could give of my own, if I didn’t think that compounding was worth so much in the long run.

This is, I suppose, the moral and psychological side of personal finance. It’s emphasized each day as I pass by a number of homeless on the way to work and remember how many are homeless and destitute around the world. How many women could really use a hundred-dollar micro loan to start their own business? What kind of returns in quality of life would that bring?

It’s painful to say “not yet.”

The only way I’ve been able to deal is by making a resolution. Until I can give monetarily, I will be particularly involved in other forms of giving-time, etc. Those little Alzheimer’s Art Quilt Initiative quilts or the ones I make for preemies. The latter won’t save the world, but it will provide comfort. The former might someday help people not die a horrible living death like my dear grandfather did. Earlier this month, I did a post on some ways that one might help others without giving money.

Do I feel like that’s enough? Not really. I could be doing all this and also giving the money. But I also don’t feel like a total failure. I could also ask those who are interested to give to charity instead of giving gifts-since I don’t really need anything.

It’s a start. Life is a process, finance especially. It feels like something to be sorted out. Yet it’s not the kind of thing that can be fully sorted, but the kind where you keep working at it. Like some balls of yarn which are endlessly tangled.

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