Pay It Forward

Other people have credit card debt -- not you. The personal bankruptcy rate is skyrocketing, but as far as you know you've never even met anyone who's filed for it. You cover your monthly bills without a second thought and are confident that you'll be financially ready to retire as scheduled.

If the surveys of those most likely to visit a financial website are accurate, I know a thing or two about you. You're upwardly mobile -- close to or in the highest tax bracket, you actively seek to improve your investments and are perfectly comfortable setting a budget that's to the closest hundredth or even thousandth dollar, not dime. You are above-average looking, have no problem picking out a decent bottle of red wine, and use your turn signal 83.6% of the time. (No, flipping it while making the turn does not count.) I'm just guessing on those last three. However, when it comes to managing day-to-day money decisions, you are a take-control, take-charge, in-front-of-the-eight-ball kind of person.

So why on these pages for the past decade have we harped on the topic of credit card debt? Why waste cyberspace preaching the value of a single dollar saved over a lifetime? Why detract from the stock news and analysis with budgeting lessons, retirement basics, and beginner investing coaching -- stuff that's rudimentary to you and your ilk?

Why? While credit card debt may be a burden you've already conquered or one you will never face, many of the people you see day-to-day aren't as lucky. Your retirement might already be in the bag, but look around your office and try to figure out which half of your co-workers has yet to contribute one dime to the company 401(k). You're set when it comes to college savings for the kids and can comfortably cover the costs of the annual family cruise. What about your poker buddies? Your neighbors? Your best pal from college?

Moneywise, you've got it goin' on. But chances are high, statistically speaking, that you know someone who's not so lucky.

Want to know what the other half is facing? Here's a list of cold, hard financial facts that illustrate the plight of the average American:

  • Three-fourths of workers age 55 to 64 have less than $56,000 saved for retirement.
  • Twenty percent of credit cards are maxed out.
  • Forty-two percent of workers cash out their 401(k)s rather than transfer (or "roll over") the assets to an IRA or a new employer's retirement plan.
  • One-third of "millennials" (those born after 1979) do not contribute a single dollar to their work-sponsored retirement savings plan.
  • Last year the average household paid $1,000 in interest on the money it borrowed.
  • One out of every 73 U.S. households files for bankruptcy.

You and I may be comfortable with our financial situations, but we're in the minority.

I can type about our nation's money maladies until my fingers go numb. I can think of catchy new ways to make the money medicine go down more smoothly (how about the Lazy Girl's Guide to Budgeting?) or riff on a Who song (The Kids Aren't Alright) to get youngsters (or their parents) to click the headline and stop frittering away their greatest asset -- time.

My colleagues have brilliantly whittled down retirement planning to its essence and sounded the alarm about "hot" stock tips that are anything but. We've run the numbers to show how we're a nation living a lifestyle we can't afford on borrowed dollars at insanely high interest rates, and we talk until we're hoarse about how to amass a fortress against financial ruin -- a simple cash cushion.

Sure, preaching to the fiscally converted reinforces lessons that are easily forgotten. We could all use a refresher course on calculating a price-to-earnings ratio and projecting our retirement withdrawal rate. We're like a weekly Weight Watchers meeting: We all know the rules we should follow. But with so many daily temptations, a regular reminder or two helps us stay the path.

Too bad it's not enough.

If that's all we do -- preach to the fiscally converted -- it's pointless. You're already here looking for answers, ideas, support. You already get it. So how about paying it forward?

"Pay it forward" may sound like some pyramid scheme, and in a way, it is. But the rewards for the giver and receiver are far greater than commissions on lotions, potions, soap on a rope, and Swiffer knockoffs. The idea is based on a movie of the same name where a young boy's answer to a lofty social studies assignment -- to better mankind in some way -- is to perform an act of selfless kindness for three people. Instead of returning the favor as is customary, the recipients pay it forward. If his six-degrees-of-Kevin Bacon theory works (where any actor is just six connections away from the Footloose star), then kindness gets paid forward ad infinitum. Simple. And brilliant.

Of course, it's not that simple. In the pay-it-forward movement I propose, writing a check to a charity or letting someone have that primo parking spot for a big shoe sale doesn't count. The "it" must be something that a recipient cannot do for themselves (or thinks he cannot) and something that will truly improve the recipient's life. It's not always a cakewalk for the giver to deliver, either.

So how can you pay it forward? I won't ask you to give away your Jaguar or write a letter of forgiveness to a longtime nemesis. That's between you, your mechanic, and your therapist. But there's a lot you can do to help someone get their financial footing. How about paying forward your financial knowledge by helping a friend plot out a retirement savings plan? Or how about paying forward your time by tutoring junior high school students in basic money math skills?

You don't even have to come up with a way to pay it forward on your own. Ask a worthy recipient what you could do to lessen their financial worries. Again, writing a check is the easy way out for both the giver and receiver. (See also the "teach a man to fish and he'll eat for a lifetime" adage.)

  • Offer to review a co-worker's 401(k) choices and help select an appropriate place to invest their pre-tax dollars.

  • If it's debt that's got someone down, show them the fastest way to pay it off, and offer to lend a sympathetic ear whenever the urge to splurge strikes. Introduce them to the online community of Fools who freely share advice, insights, support, and war stories about paying off mountains of debt and struggling with the plastic demons daily.

  • Over takeout dinner, help someone figure out where their money's going and why there are always more days than paychecks at the end of the month.

  • Is there a young person in your life headed for college or already on campus? If you haven't already had "the talk," or if their parents feel ill-equipped to do so, show them the money reality they are facing. Email this article to them and say, "It's not because I have all the answers. It's because I already made these bone-headed mistakes and I know you'll be much smarter than I was."

Have that thoughtful and frank conversation with someone you know is struggling with financial issues. Do more listening than talking, and make it clear that you are not judging them. Trot out that list of sad statistics that shows how they are actually doing better than the average American. Simply sharing their struggles will begin to lift those nagging financial burdens. Offer your emotional support when times are tough. (Suggest dinner in, instead of dinner and a movie out, or exchanging chores for the holidays rather than knickknacks.)

If a face-to-face discussion is too daunting or inappropriate, there's a link at the top of this page for you to email it.

Do you know someone who has resigned themselves to always carrying that $5,000 balance on their credit card? Email them.

Is there a family member who isn't sure whether it makes sense to refinance their home? Email them.

Sending this article along is not a judgment or pronouncement to the recipient that you've got all the answers. It simply says that you care. And it asks them to pay it forward, too.

Dayana Yochim owes mankind countless favors based on the generosity of Motley Fool readers who teach her money lessons every day. The Fool's disclosure policy has no pay-it-forward provisions. Yet.


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