June 2017 Money Diary: Freedom

The Origami Life - June 2017 Money Diary


First Half Results

  • June spending was $3,360.25, including a $650 CFA examination fee and a $250 donation to GiveDirectly.

  • Jennie and I have spent $18,573 in the first half of 2017, or an average of $3,095 per month. Subtract the $500 donated to charity and this puts us on pace for $36,000 a year.

  • Of the $36,000 projected spend, only $30,000 is core living expenses. The remainder goes into a discretionary fund to be used for travel, luxury items, and life emergencies.

  • Assuming joint filing and California tax rates, Jennie and I could theoretically get by on a $34,000 salary before tax. We wouldn’t be comfortable - but we could definitely make it work, seeing as how we’re not currently pinching pennies.

  • We view this $34,000 salary as the price of freedom, beyond which we can pretty much do whatever we want. This number should decline 25-50% as we move from a high cost of living city (i.e. Los Angeles) to lower cost locales during our round the world trip. 90% of the planet is less expensive than LA. All air travel will be funded via points.

The Case For GiveDirectly

From my years interacting with a number of bureaucracies, I’ve developed a deep distrust of middlemen.

I’m talking, of course, about groups that exist in almost every industry, comprised of parasites who don’t create any value, and whose very survival is dependent upon inefficient and outdated systems.

But as technology reduces information asymmetries, allowing us to redistribute wealth at only a fraction of the cost, I find myself wondering (sometimes out loud and within earshot): Why do I need you again?

This is the way I feel about a large number of non-profits operating today. It seems like every bleeding heart has their own pet project that needs fundraising, and almost a quarter of the money raised gets wasted paying developed-world salaries and overhead.  

GiveDirectly's impact per $1,000. Source: GiveDirectly

If only there was a way I could transfer 91 cents on the dollar through a mobile linked payment system directly to families in need, while incurring only 7 cents in transaction costs (plus overhead) and 2 cents to enroll and monitor those families.

That’s precisely what GiveDirectly does.

In the non-profit world, the burden of proof shouldn’t be on GiveDirectly’s innovative model. In fact, I think the opposite should be true:

All anti-poverty programs should be measured against the efficacy of a direct cash transfer, and the programs that fail this test probably shouldn’t exist anymore.

Of course when it comes to designing and monitoring such transfer programs, there’s a lot more nuance involved, which I won’t go into here.

I will however, take some time to address the classic “they’ll just spend it on alcohol and drugs” argument that gets conveniently trotted out whenever the issue of spending on the poor comes up (or when we pass a homeless person on the street and would rather spend the dollar in our pocket on something we don’t really need).

Here’s my rebuttal: either give money or don’t, but whatever happens after the cash changes hands is none of your fucking business. I highly doubt my own judgment would be infallible if the shoe were on the other foot. Maybe a drink is exactly what I’d need if every stranger on the street has his/her own opinion on what’s best for me.

Transferring money to another human being means empowering them to succeed or fail on their own terms.

To me that’s what freedom is about: the power to make our own mistakes and either learn from them (or not).

There is nothing so radical about the GiveDirectly model. It’s just common sense, and I think the non-profit world would be a much more innovative place if we can learn to forgive in others what we would easily forgive in ourselves.