Pigs feeding

How you’re like Jeff Bezos

But maybe not in a good way. Every third Facebook post or so mentions that ole’ Jeff should give away his billions and that would fix everything. I used to hear this about the Catholic Church, but Bezos is become the new favorite target. Why shouldn’t he—after all, Bill Gates and Warren Buffett give away buckets.

Here’s where you come in. Do you have a nice house? Decent car? Relatively recent wardrobe? Stash of wine, beer, booze, weed? Most of us (reading a personal finance blog) can answer yes to at least some of those. So, let’s say you’re now out of work. Don’t know how that happened. Can you pay the bills with any of that? Write a check off your house (without refinancing)? Pay the utilities with a 24-pack of craft brew? Cash out your 401k with no penalty, no tax, and not losing the employer match? Just how much are you giving to charity?

Truthfully, I don’t know any insider details about Jeff Bezos’ money. But I do know the difference between assets and income. Assets are wealth, and add to your net worth, but they may or may not produce spending money for you.

You can be a little old lady in a paid-off $2 million dollar house (an asset), but be scraping by on Social Security (income) if you don’t have any other income-producing assets like bonds, dividend paying stocks, or stocks you can sell. You would have a high net worth but very little ability to spend.

As far as I can determine, post-divorce Bezos owns about 11% of Amazon’s $1.175 trillion, so we’re not feeling too sorry for him. He also owns the Washington Post and, my guess, one or two shares in other companies. However, like your wine collection, Bezos has to sell Amazon to get money out of that wealth, which he does. He can’t just dump them whenever he feels the need for a $100 billion or so in chump change, because an insider making huge sales is a pretty good way to tank the company. Amazon doesn’t pay any dividends (Microsoft does) so selling stock is his source of income from the company. Sure, they pay him $81k in salary (kind of a joke), but the rest comes from stock grants, some of which he apparently sells each quarter. The market expects those sales, so no big impact, but liquidating and giving away half his wealth would raise an eyebrow or 10,000 on Wall Street.

By the way, it’s somewhat the same with the Catholic Church—an awful lot of the wealth of the Church is in real estate, structures, art works and artifacts, etc. Many of these are not easily sold, although some (real estate) can produce income. Let’s say, for example, you have a grand piano and a house, you have the mini-version of assets that don’t produce income (unless sold). If it’s your mom’s Steinway or your kid’s harp, it might be very difficult for you to countenance turning that to cash.

Bill Gates and Warren Buffett have pledged to give away huge portions of their fortunes, but not all at once and mostly through their foundations. Bezos could certainly do the same, as well as vastly improve treatment of workers. But here’s something overlooked: a publicly traded company has a duty to maximize return to shareholders (of which you are probably one, if you have a 401k). A company is supposed to be run as frugally as possible in order to return the most to its investors.

Business practices can and do change when workers organize themselves in such a way that management must respond to their demands or lose even MORE money than that response would cost—and why most companies fight unionization tooth and nail, until strikes, vandalism, pilferage, etc. start costing more than meeting workers demands. It’s ridiculous to assume management will take care of you or is benevolent: when publicly traded, they have a duty to get you as cheaply as possible.

Another agent for change is government regulation—when those regulations impose costs of doing business that the company can’t evade, and that (hopefully) are imposed on all businesses in the industry evenly. Regulatory agencies such as OSHA, the Consumer Protection Bureau, FINRA, and the EEOC can and sometimes used to strike fear (and produce change) in the hearts of employers.

Finally, the way to get money out of the hands of the company (and CEO, and investors, which also means you if you invest in a 401k) is taxation. Sure, companies howl about this and saber rattle about going somewhere else (which can also be addressed by regulation), but western European corporations still seem able to operate even when taxed.

So if you think Jeff Bezos should be compelled to provide better working conditions, support health care, or re-distribute wealth to his workers and the society that enables his success, appealing to his personal good heart (I don’t know if he has one or not), or trying to shame him in public isn’t the way to go. Why should it be an option? Why should a very few people have the opportunity to amass that level of wealth, then be lauded as heroes if they’re magnanimous enough to give some fraction of it back to charities which mirror their own priorities?

What we should be advocating for is evenly applied government regulation, taxation, and strong partnerships with unionization. These actions might make a company less profitable in the short run, but provide for a healthier, better educated, more fairly treated workforce with a viable safety net not dependent on the largess, or lack thereof, of any smart rich person.

Ten ways to improve your finances over a holiday weekend (or any weekend)

Teachers should assign How I wasted my summer vacation. It’s a topic that more accurately reflects what actually happens. Most of us look forward to a long weekend, and many of us resolve that we’re finally going to do some long put-off project, that will have tremendous benefits.

Me, my resolution is to power wash the house. Phew! luckily, it’s supposed to rain all weekend.

Projects that don’t get done are generally too big. So, I’m asking you to break it down into something that can be accomplished in less than an hour, and you’ll take a small but significant step forward in your financial life. DO NOT do all 10; plenty of other weekends are coming up.

  1. Find a financial software program you might actually use and install it. I’ve used Quicken for 20 years now, so I’m a little biased. Other people report they like Mint. Neither of these? Try searching Personal Financial Software and you’ll find quite a few. Don’t think to long—just make one work.For the future: Watch or read one quick start guide. Download one account into it.
  1. Find out how to access Morningstar online. Many articles and a lot of information is free. In order to (eventually) access deeper analysis, check out whether your library offers access to premium content through your library card. Read at least one personal finance article or watch a video.
  2. Pull out a statement from your 401k or IRA. Go to Morningstar and read what the analyst has to say about it (“premium” content).
  3. Read a blog. Don’t believe everything you read, but start somewhere. Don’t get lost, okay? I said one hour. I like:

Mr. Money Mustache

Chris Guillebeau: The Art of Nonconformity

Get Rich Slowly

I Will Teach You to Be Rich

Kiplinger

 

  1. Clean out a file. Notice I didn’t say file drawer, closet, or room. I recently cleaned out a file box (ouch!) of records from my dad that’s been sitting under my desk since 2010, when he died. I found nearly $200 in it, squirreled away among Medicare statements. You’ll be amazed at all the stuff you don’t need.
  2. Install a password manager on your computer. I use the free LastPass and it really improves cybersecurity. Change any of your passwords that are the name of your children, dog, or your birth date.
  3. Take 15 minutes to identify what good causes you really care about. Instead of giving 10 bucks to everyone who asks, choose half a dozen or less that you really care about and resolve to give to fewer, but more green. It saves them processing and fundraising. Like their Facebook page so you have some idea where your money is going.
  4. If you’re going shopping over the weekend, resolve not to buy anything major until next weekend, when you’ve had time to think about it. In the meantime, do a little online price comparison.
  5. You know all those travel points you don’t use? Check out Award Wallet, which (for free) will consolidate and update all your programs on one page. Then make a plan to use them—earn and burn!
  6. Learn about travel hacking. If you like to travel, you’ll earn more per hour spending a few hours learning how to do this than at most really good jobs. A real money saver, and really—not too hard. Here’s where I started, but there are many sites that can teach you.

Ripping off charities

It can be hard to do good.  From each client payment, I set aside a specific percentage of the check and put it in a savings account. I’ve found this far easier than coming up with a lump sum at the end of the year. I can fund things throughout the year, rather than in a blitz in December. And, I know exactly how much I have to give—whatever the account balance is.

However, like all of us, I get multiple appeals from GoFundMe, Facebook friends, etc. I also just had a rather odd experience with a donation on Giving Tuesday (note to self: always write thank you notes when someone does something for you). I started to wonder about how this all works, and whether it was the best way to donate the maximum amount. Here’s what I found.

Donate your bag credit at Whole Foods?

Unless someone convinces me differently, I think this is a scam. Apparently, Whole Foods takes this as THEIR charitable deduction, not yours, so you’re actually funding a giant tax deduction for them. Also, you have no receipt. Keep your bag credit, put it in a jar, and give it to an actual charity at the end of the year. For me, 8 bags a week ($0.80) x  (say) 48 weeks would be a $38.40 donation.

Petsmart?

This turns out to be an actual donation to Petsmart Charities and you should save your receipts showing this if you do so. However, according to my research the deduction will be reduced by whatever the merchant credit card fees are, if you use a card.

GoFundMe?

Not only is this not deductible, since it’s considered a personal gift not a charitable donation, but the recipient is charged 5% by GoFundMe as well as 2.9% by payment processors. This is an outright waste in my mind, and I recommend never donating in this way. Just send the person a check if you really do care.

Facebook?

These donations are deductible if the organization is a 501(c)3. However, FB charges the charity 5% to sign up. FB did match the amount if you donated on Giving Tuesday—but only up to $7 million, a pittance which was gone in minutes, as far as I can determine. For all my kind friends who have been induced by FB to post donation requests on their birthday—maybe think again? I suppose 95% of something is better than 0% of something but again, a direct contribution would be better.

Credit card, Paypal, or Square payment?

Once upon a time, some credit cards did not charge charities for donations put on cards. As far as I can determine, this is no longer the case, and charities are charged whatever the merchant fee is for the card. Pay through Paypal and they’ll be charged 2.2% + 30 cents per donation. Square rips them off at 2.75% if there’s an actual credit card to swipe through their reader. It’s an even more whopping 3.5% + 15 cents if the number is manually entered.

Sure, it’s easier to give a charity request a credit card, but for most charities, especially small or local ones, every cent really counts. Many people tell me they no longer have checks, but here’s the ideal place to use them if you have them—or learn to send one directly online from your bank if you don’t use this service.

For more information, check out this site:

How to Maximize Your Online Donation to Charity