Before you think that I’m some type of tightwad or scrooge, let me say that I believe that giving is a wonderful thing. In fact, it is my heart’s desire that we all build a solid financial foundation so that one day we can give our time, talent and treasure to people and charitable causes that we believe in. However, I believe in giving when it helps not when it hurts.


Warning to those of you who are working hard, sacrificing, and doing without in order to save money for emergencies and futures goals: You’ll inevitably have to deal with money vampires—friends and family members that always seem to be having a money crisis and seeking to suck the money out of your wallet. It’s unavoidable. As a result, you’re going to quickly have to learn when you’re in a position to give and if the gift is truly helping or enabling.

Recently, a friend of mine asked me if he could borrow $20. I responded with a jokingly, yet serious comment, “I don’t lend money.” He snapped back, “Well, give me $20.” When you ask me for money, you invite me into your business. I began to probe. I asked, “What’s up? What do you need $20 for?” He explained to me that he needed money for gas. “Need money for gas,” I asked? “Why don’t you have gas money?” My line of questioning apparently irritated him. He stated, “You’re coming at me like this over a measly $20. You’re acting like I’m asking you for $200. I responded, “my point exactly. You’re asking me for a measly $20. We need to check this before your next request turns into $200 or more.”

You may think that I was a little harsh with my friend. I’m not going to give money away for the sake of giving. There has to be a noble worthwhile cause. It has to help the person or entity that I’m giving money to. The gift has to be from disposable income and cannot negatively impact my family’s well-being. When you give a person something without addressing the core issues, you may be enabling a person to overlook their spendthrift ways as opposed to helping them get from under a temporary financial setback.

I believe in giving a person a hand up—not a handout. We all face tough times. A person who’s experiencing tough luck is entitled to a gift from me—if I have it. A person experiencing dumb luck gets nothing from me. Why should I sacrifice my hard earned dollars so that some character can go blow my money on their out of control lifestyle? I told my friend that $20 may seem measly to you but the same $20 is a day at Chuck E. Cheese for my sons. The same $20 is a half of tank of gas for my car. The same $20 can purchase two movie tickets for my wife and me. After listening to me rant, he shared that his household income had been reduced and lately it’s been hard trying to make ends meet. I shared with him that when our household income was reduced we had to cut various expenses. I asked, “What expenses did you cut?” He and his family did not reduce any expenses. If I didn’t check him, it would have been $40 here, $60 there and over time this could grow to a lot of money. I gave him $20 but he now knows what his problem is and he’ll think twice before asking me for money again.

I have an elderly client whom I’ll refer to as Tim. Tim retired over five years ago. Tim contacted me because he was afraid that he would outlive his retirement savings. He wanted to know how to preserve the income from his nest egg. When he retired, he received a large lump sum that he rolled over into an individual retirement account. This was a very wise decision on his part. Immediately he began to take monthly distributions from this retirement account to help meet his expenses. Upon reviewing his retirement account it was apparent that his investment adviser did a good job allocating his money inside the investment account with solid stock and bond oriented mutual funds. Everything looked well except for one thing, the value of his account dropped by 75 percent over a five-year period of time. Dumbfounded by the reduction in value I asked where did the money go? I learned that over the years, he pulled out chunks of money in addition to his monthly distribution to help out various friends and relatives who were in need.

Unfortunately, Tim did not realize that his financial foundation was not strong enough to give. Each gift he gave, he sacrificed his retirement nest egg. Even if Tim was in a position to give, he was not helping the people he was giving to. He was enabling them. They’re still struggling and begging Tim for money. I had to break the bad news to Tim that at his current withdrawal rate, his nest egg will be depleted in the next six to eight years. Considering the circumstances, the best advice I could give Tim was that over the next two to three years, he should consider selling his house and moving into a low cost retirement community.

Now that Tim’s having a tough time, do you think those broke, out of control spending family members and friends are in position to help him? NO!

(Mortgage and Money Coach Damon Carr is the owner of ACE Financial. Sign up for Damon’s FREE online “Ask Damon” e-Newsletter @ Damon can be reached @ 412-856-1183.)

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