Barefoot Investor: Unholy row over church tithing
AN UNHOLY row has broken out after a struggling single mum told Barefoot Investor that a tithe to her church was non-negotiable, writes Scott Pape.
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AN UNHOLY row has broken out after a struggling single mum told the Barefoot Investor that a tithe to her church was non-negotiable.
God doesn’t charge a 10 per cent toll on your wages.
But one of the fastest ways to break the curse of materialism and Kardashian-ism is to support a worthy cause that you believe in, writes Scott Pape.
Just don’t be guilted to putting your children’s basic needs before it.
EDWARD WRITES: I read with interest your recent answer to a question from a woman who said that tithing was “not negotiable” at her church.
As a Christian, it sickens me that the church would do such a thing. It is between you and God — not you and your pastor. The apostle Paul says to give according to what you have been given (1 Corinthians 16:2).
Personally, I choose to tithe, as I have been convicted by the Lord and can easily afford it (though I could pay off my house quicker if I did not). But it is NOT mandatory.
BAREFOOT REPLIES: actually had a lot of readers respond to last week’s tithing question, and they all agreed with you.
God doesn’t charge a 10 per cent toll on your wages before he’ll open heaven’s boomgates (I chose your comment because you quoted scripture. So, on behalf of all my fellow sinners, thank you for the Sunday school lesson).
That being said, one of the fastest ways to break the curse of entitlement, materialism and Kardashian-ism is to support a worthy cause that you truly believe in.
Better yet, studies repeatedly show that we get more pleasure from spending money on other people than on ourselves.
Still, no one should be guilted into doing it, nor should they put their children’s basic needs before it.
TOO GOOD TO BE TRUE?
ALISON ASKS: A friend has signed up with an investment company where they have set up a self-managed super fund (SMSF).
This group uses this money to buy him investment properties, which they buy and then run. It has not cost him a cent other than his super. He thinks this is a great retirement plan.
We are middle aged and trying to get ahead for retirement. We have a big house (in a “povvo postcode”), a blended family of five kids, and a huge mortgage — and we feel trapped! Is my friend’s experience too good to be true? Help!
BAREFOOT REPLIES: Well this sounds like a thoroughly bad idea. He claims “it has not cost a cent other than super”.
Well, unless his super consists of cans of Pal Meaty Bites, I’d suggest it is in fact a nest egg that he needs to grow to a sufficient level by the time he retires ... so he doesn’t end up eating dog food in his golden years.
And if he’s investing in a scheme like this, it’s highly likely he’ll end up eating home-brand dog food (the stuff even my sheepdog rejects because it gives her gas). Okay, enough of the dog jokes.
Alison, I want you to call your friend and invite him over. Boil the kettle, pour yourselves a cuppa and, together, read the next question.
ROBBED WITH A PEN
DAVE ASKS: Five years ago we were advised to start up an SMSF and buy a property within it.
We bought a unit for $400,000, for which we had to borrow $275,000. Since then the value of the unit has dropped by more than 30 per cent — it is now valued at $260,000! Our monthly super contributions are sucked into the property as the monthly rent does not cover the mortgage and expenses.
Should we continue as we are and hope the property value increases over the next few years, or sell and start rebuilding our superannuation from scratch?
BAREFOOT REPLIES: You got robbed with a pen, you poor bastard.
If someone walked into your home and stole $40,000 off your kitchen table, they’d be locked up for larceny.
Yet most of the spivs that market these SMSF schemes trouser up to $40,000 in commissions. They know the apartments they’re flogging are horribly overpriced, and that they’ll eventually blow up their client (which is why they often advise their clients to “never, ever, sell” — because if you never, ever, sell, you’ll hopefully never, ever work out you’ve been ripped off).
But these guys don’t go to jail, they go to Italy — first class.
Research firm Rainmaker says the true cost of fraud over the last decade from SMSFs is a staggering $103 billion, once you include the loss of investment returns from no longer having the money to invest.
And that’s precisely where you are right now. Your new super contributions are being eaten up by a loss-making property that you hope will come good. But hope isn’t a strategy, Dave. Besides, in all the years I’ve been doing this, I’ve never seen time turn a bad property into a good one.
So let’s deal with the facts: you were flogged an overpriced property that was never worth the $400,000 you paid.
If I were in your shoes, I’d sell the property, and begin again — this time in an ultra-low-cost industry super fund.
The clock is ticking, Dave. It’s time for action.
MORTGAGE OR SUPER?
KIRSTEN ASKS: On page 156 of your book it says: “So with your home deposit saved and your house bought, it’s time to give your super contributions a boost.”
Could you please settle an argument for my husband and me? Do you mean house bought as in mortgage paid off, or do you mean purchased but still paying off the mortgage?
BAREFOOT REPLIES: After you buy your home, you boost your super.
As the little girl on the taco ad says, “Why not do both?”.
To clarify, here are the relevant Barefoot steps:
Step 4: Buy your home.
Step 5: Increase your super to 15 per cent.
Step 6: Boost your Mojo to three months of living expenses.
Step 7: Get the banker off your back.
Now, there are three reasons you should follow the steps and the little Mexican girl:
First, for the average wage slave, super is still the best tax dodge going round.
Second, you’re diversifying your nest egg ‒ most people end up retiring with too much home and not enough super.
Third, it puts your retirement savings program on autopilot. The current compulsory employer contribution of 9.5 per cent isn’t enough ‒ you need 15 per cent if you want to spend your golden years swilling sangria in Spain rather than necking a stubby in Shepparton.
Finally, if you follow the Barefoot Steps, you’ll use your ‘fire extinguisher’ account to eventually hose down your home loan quicker (Step 7), which will have you livin’ La Vida Loca sooner.
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.
Originally published as Barefoot Investor: Unholy row over church tithing