Do the Bogleheads here tithe based on net or gross salary?

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Do the Bogleheads here tithe based on net or gross salary?

Postby Dulocracy » Thu May 02, 2013 11:14 am

First, let me say that after discussion with moderators, I got a lot of helpful direction about asking this question and keeping it within the guidelines of the group. I am looking for information. Much of what I say is not exactly how I would word it, but since the moderators gave me examples of what would be ok (including the title), I copied and pasted that and kept the rest short, so I don't mess it up. :D I also moved this from theory to personal finance, since the nature of the question changed a bit.

A) My goal is to give 10% to my place of worship.

B) Because some of the things which were once provided by religious organizations are now provided through other means for which I also pay, I was planning on paying based off of net income.

C) Should a tithe be on gross or net income? What do bogleheads do?

I wanted to get the thoughts of other educated people who also gave to see what their thoughts were, which is why I am posting this on this forum. I would request that answers be limited to general discussion about the financial side of things, and that no specific place or style of worship be referenced so that we can keep this within what has been approved by the moderators review committee. Thank you for your help and input. :sharebeer
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby frugaltype » Thu May 02, 2013 11:28 am

I donate about 10% of my gross income to charity, including my local church. Most of it actually does not go to the church, because I don't feel my local church is fiscally responsible.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby cheese_breath » Thu May 02, 2013 11:39 am

When I was working I used to tithe on take-home pay. Now that I'm retired I include 10% of my IRA withdrawals in my tithe too. I fell off a little during the first decade of this century by excluding medical insurance and tax commitments from my tithing requirement, but am going back to gross income this year.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby gkaplan » Thu May 02, 2013 11:45 am

My take home pay is about $500 biweekly. Can you guess how much I tithe?
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby kenyan » Thu May 02, 2013 11:46 am

We don't tithe. However, in my "thought experiments" of increasing our giving rates, I've used net. The reason (again, in my head) is that we don't itemize deductions. Of course, if we actually tithed, then we'd itemize...so I'm not sure. I think I would probably use net, but aspire to eventually do gross pay. At this point our first goal is to get back to regularly attending, since we haven't been since the arrival of baby #2.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby prudent » Thu May 02, 2013 11:49 am

Our tithing is in between gross and net but much closer to net.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby nodenuff2 » Thu May 02, 2013 11:53 am

I give 10% net to my local church. I also give to other projects in the church and others as I see fit.Total giving is close but not gross 10%.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Random Poster » Thu May 02, 2013 11:56 am

I don't tithe, in the sense of giving 1/10 of something.

That being said, I do give to my place of worship, although my donations are in the form of cash and, as such, I don't take any sort of tax credit for them (or for any other charitable donations to any other party or person for that matter).
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby bengal22 » Thu May 02, 2013 11:59 am

I tithe based on gross income. The fact that government has taken over role of support has no bearing on my actions. But the real caveat is that if you base it on net or gross your still doing better than 90% of everybody else. The important thing for me was to continually grow in my giving - both of time, talents and monies.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby jennypenny » Thu May 02, 2013 11:59 am

Net. I guess I've always interpreted it as 10% of what we receive. Someday we'll be living off of the retirement funds, and we'll tithe based on what we withdraw from them annually. We'll then give 10% of our estate (covering any leftover money).
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Savvy » Thu May 02, 2013 12:02 pm

We base our giving on gross. We do not give more than 10% but someday would like to. I don't think 10% is the min or max.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby bottlecap » Thu May 02, 2013 12:04 pm

I think net is reasonable. However, the questions you raise also call into the necessity of the 10% figure. Not to make your decision any harder than it already is...

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Re: Do the Bogleheads here tithe based on net or gross salar

Postby ThePrune » Thu May 02, 2013 12:06 pm

Dulocracy wrote:C) Should a tithe be on gross or net income? What do bogleheads do?

My wife and I tithe on our gross income. We also give to charities beyond our local house of worship. But in the retirement class we teach, we suggest tithing on just the net income as a target, since for many people that is truly a stretch goal ! We have no objection to either approach, or even to people whose economic situation prevents them from giving even that much. For those who are cash-strapped but time-rich, they can be encouraged to give their time!
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Grt2bOutdoors » Thu May 02, 2013 12:06 pm

I don't tithe (my local church doesn't know how to properly manage its finances even though they have a "financial counsel" board :oops: ), instead we concentrate our charitable contributions to organizations that have very low overhead and are based on net dollars. I get paid in net dollars, therefore I pay out of net dollars. I can't use or give something I never had to begin with. I guess you could say the same for taxable investments - those are made on an after-tax basis, you could save a percentage of gross but then that would just result in a much greater level of deferred consumption on a net basis.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby cheese_breath » Thu May 02, 2013 12:08 pm

gkaplan wrote:My take home pay is about $500 biweekly. Can you guess how much I tithe?

Somewhere between $0 - $500 every other week?
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby lavenchy » Thu May 02, 2013 12:22 pm

My wife and I tithe based on our gross and have not regretted the decision. The tithe (plus a little extra) goes to our local place of worship. Beyond the tithe, we give to other organizations so at the end of the year our charity giving is on the order of over 15%. It's exhilarating to give, especially to a good cause! We plan on increasing our giving as we are blessed with more.

With that said, I think what is more important is that you give something back, regardless of the amount or percentage.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Cosmo » Thu May 02, 2013 12:23 pm

I am struggling with this. Could someone give the significance of 10%?
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby cheese_breath » Thu May 02, 2013 12:28 pm

Cosmo wrote:I am struggling with this. Could someone give the significance of 10%?

It was specified in the Old Testament law. Some people and churches believe it still applies. Others don't. Can't say any more without turning this into a religious discussion.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby leonard » Thu May 02, 2013 12:36 pm

Determine a dollar amount that is acceptable and then let the percentage be whatever it is.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby ILnative » Thu May 02, 2013 12:38 pm

We do between 10-15% of our gross income. We do a budget at the end of each year (looking forward to the next year) so that our giving is planned and not a reaction to an event, etc. This also allows us time to actually investigate and vet the organizations we give to and see if they still warrant our ongoing support. We used to do about half of our giving to religious organizations (mainly our church) but have decreased that in past years given our concern about how the money is being used (or the efficiency of the use). Our main concern is the "mother" church getting a portion of it (we belong to a large (maybe largest) mainline protestant denomination) - too much bureaucracy at the top levels....
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Khanmots » Thu May 02, 2013 12:45 pm

I would ask yourself what the purpose of tithing is for; to what use *should* the funds be used. As other's have noted it may be useful to determine if your church is using it's funds for that purpose. Sad to say but I've seen many churches that IMO don't live up to their responsibilities and misuse funds. This may factor into your decision (perhaps you'll make charitable donations elsewhere instead.)

As to how much to tithe and if that determination should be pre or post tax... well... I'd suggest coming to your own conclusion based on your own reading and research. For example, some would note that the old testament calls out different contributions that should be made that when summed are far more than 10% (20-25%) whereas the new testament gives very little guidance other than that one should give as they are able... a very socialistic viewpoint ;) If you want to look at history, there's been times and places where a tithe was a tax which would imply that historically the view has been that one should tithe on pretax income. Some religions will tithe based on accumulated wealth as well as income too.

Point is that this is a very personal decision that you'll have to decide what your beliefs are. That said my personal beliefs are likely so widely divergent from yours that what I do and what I believe would likely be of no help.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Cosmo » Thu May 02, 2013 12:54 pm

cheese_breath wrote:
Cosmo wrote:I am struggling with this. Could someone give the significance of 10%?

It was specified in the Old Testament law. Some people and churches believe it still applies. Others don't. Can't say any more without turning this into a religious discussion.



Ah. Gotcha. I was not aware of that. :oops:
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Default User BR » Thu May 02, 2013 1:12 pm

Cosmo wrote:I am struggling with this. Could someone give the significance of 10%?

http://en.wikipedia.org/wiki/Tithe


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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Random Musings » Thu May 02, 2013 1:23 pm

I've talked to a few people who were on boards of churches to see what percent of people tithe. From the (small) sample size I got, one church was around 5% and the other one was a little bit higher than that. It appears that a popular amount is around the 2-3% level. The 2% level is like putting $20 in every week for a $50K household gross income. Besides the money, that still does not consider the time and talents put toward church endeavors.

Of course, the data compiled assumes that the incomes provided are actual, and not by creative accounting. This information is supposed to be tightly guarded, but it tends to slip out via certain reports.

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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Grt2bOutdoors » Thu May 02, 2013 1:40 pm

Random Musings wrote:I've talked to a few people who were on boards of churches to see what percent of people tithe. From the (small) sample size I got, one church was around 5% and the other one was a little bit higher than that. It appears that a popular amount is around the 2-3% level. The 2% level is like putting $20 in every week for a $50K household gross income. Besides the money, that still does not consider the time and talents put toward church endeavors.

Of course, the data compiled assumes that the incomes provided are actual, and not by creative accounting. This information is supposed to be tightly guarded, but it tends to slip out via certain reports.

RM


My local church does provide an accounting of the actual cash collections and method of collection (ACH vs. basket collection). A number of congregants don't wish to be tracked, hence the collection basket. That said, the amounts given are woefully inadequate, a function of the local economic conditions and as I mentioned in a previous post - the notion of mismanagement and misallocation of past resources has led to reduced attendance and consequently, contributions.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby deathb4disco » Thu May 02, 2013 2:10 pm

Gross.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby SPG8 » Thu May 02, 2013 2:20 pm

I give what I can manage.

Right now it's less than 10%. Hopefully someday it will be more than 10%.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby AE81 » Thu May 02, 2013 2:25 pm

Gross.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby kenyan » Thu May 02, 2013 3:29 pm

Random Musings wrote:I've talked to a few people who were on boards of churches to see what percent of people tithe. From the (small) sample size I got, one church was around 5% and the other one was a little bit higher than that. It appears that a popular amount is around the 2-3% level. The 2% level is like putting $20 in every week for a $50K household gross income. Besides the money, that still does not consider the time and talents put toward church endeavors.

Of course, the data compiled assumes that the incomes provided are actual, and not by creative accounting. This information is supposed to be tightly guarded, but it tends to slip out via certain reports.

RM


That is consistent with a discussion I had with a pastor at my church - he would've been more than fine with 10% of net rather than gross, because the average giving rate was around 2%.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby LadyGeek » Thu May 02, 2013 4:59 pm

cheese_breath wrote:
Cosmo wrote:I am struggling with this. Could someone give the significance of 10%?

It was specified in the Old Testament law. Some people and churches believe it still applies. Others don't. Can't say any more without turning this into a religious discussion.

Dulocracy has indeed worked the moderators to address this topic. This was also coordinated with the Advisory Board.

Religion is a very personal and sensitive subject. To address this topic objectively, please don't quote any religious source material or mention a specific religion.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby mephistophles » Thu May 02, 2013 5:03 pm

I do not tithe to any religious organization. Instead, I go direct to the source for spiritual needs and do not use middlemen. I have found that my source does not want money. In fact, the source would be offended by offering of money. I do give money to charity and help others with financial needs.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby schuyler74 » Thu May 02, 2013 5:23 pm

Dulocracy wrote:C) Should a tithe be on gross or net income? What do bogleheads do?

Historically, the concept was based on an agricultural society where they'd give from their "first fruits" (the first lot of the harvest) in anticipation/trust of the full harvest to come. To that end, it would make sense to give from your Gross. Similarly, "give to [religious quote removed by admin LadyGeek]..." implies a hard distinction or separation between obligatory giving to government versus voluntary charitable donations. On the other hand, the societies that were tithing were also essentially giving it to the ruling authorities as they initially had no King, per se. So in that sense, the religious class collecting the tithe was also, in effect, the government.

Today, I hear some say you should give at least enough to where you feel the pain. I tithe roughly on my Net, but don't take a hard line either way. In any case, you should probably give at least an amount that you feel you should be giving per your conscience.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby AustenNut » Thu May 02, 2013 5:58 pm

We give based on our net. As others in the thread mentioned, we would also give out of our retirement distributions (once those start...in a few decades).
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby enderland » Thu May 02, 2013 6:22 pm

Gross.

Plus it makes the math way easier - (yearly salary) * (0.10) / 52 = amount per week.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby cheesepep » Thu May 02, 2013 7:11 pm

I don't tithe at all. My money is my own money.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby PS241 » Thu May 02, 2013 7:53 pm

We don't tithe but rather give as we feel led. That being said I do roughly monitor giving to be around 10% of gross. I think last year on taxes we reported 11 -12% actual with cash probably closer to 14%.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby DoWahDaddy » Thu May 02, 2013 8:12 pm

LadyGeek wrote:
cheese_breath wrote:
Cosmo wrote:I am struggling with this. Could someone give the significance of 10%?

It was specified in the Old Testament law. Some people and churches believe it still applies. Others don't. Can't say any more without turning this into a religious discussion.

Dulocracy has indeed worked the moderators to address this topic. This was also coordinated with the Advisory Board.

Religion is a very personal and sensitive subject. To address this topic objectively, please don't quote any religious source material or mention a specific religion.


Was hoping someone else would ask if i scrolled down a bit. I learned something today. thank you Bogleheads.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Equitius » Thu May 02, 2013 8:14 pm

[Religious content removed by admin LadyGeek], I was taught 10% was to tithe. [Religious content removed by admin LadyGeek] then give 10% of the remainder to your church.

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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Archie Sinclair » Thu May 02, 2013 8:24 pm

Dulocracy wrote:C) Should a tithe be on gross or net income? What do bogleheads do?

An investing forum cannot usefully advise you on your religious obligations to your deity.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Default User BR » Thu May 02, 2013 8:27 pm

I'm not sure why people keep answering different questions than the one that was asked. It seemed the instructions and the moderator follow-up were pretty specific.


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Re: Do the Bogleheads here tithe based on net or gross salar

Postby abuss368 » Thu May 02, 2013 8:40 pm

All the questions above are excellent. That is what makes this forum the best source on the Internet to further the mission of our mentor Jack Bogle.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Saving$ » Thu May 02, 2013 8:55 pm

I do donate to charity, give to my religious institution, and give to my alma mater and high school. However,If you are asking about tithing in it's strictest sense, I would have to say I don't.

I have to agree with the this:
Grt2bOutdoors wrote: I get paid in net dollars, therefore I pay out of net dollars. I can't use or give something I never had to begin with.

I probably overthink it a few steps too far. I figure any savings to pretax or after tax retirement accounts is going in there slated to be lived off of later. Thus, if I calculated my charitable giving percentage off of an income number that included the income I save, I will already have donated on the saved money. That would mean when I retire I would only donate on the earnings from savings, which I don't like. Both I and the charities benefit by compounding.

I figure the amount I will donate based on my yearly expenses/spending, not including savings or income based taxes. My total donations probably average about 15%+ of that. Some years it is less, recently it was about 66%. I look for opportunities to make a difference, so might make a large donation one year, and scale back the next year. I also make large donations in the form of appreciated securities so the charitable organization can net more money. I have increased my level of giving as I age.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Hilda » Thu May 02, 2013 10:18 pm

Gross. I don't think the source needs my money but the practice of tithing has been good for me.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby abuss368 » Thu May 02, 2013 10:26 pm

Hilda wrote:Gross. I don't think the source needs my money but the practice of tithing has been good for me.



+1
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby bengal22 » Thu May 02, 2013 10:42 pm

Definition of tithing is 10% of your annual income(before taxes). Tithing is not a synonym for giving. One can give 10% of net income if one chooses and that is great but it is not tithing.
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby BruceM » Thu May 02, 2013 11:40 pm

Hopefully, we will hear from a spokesperson for the [religion removed --admin LadyGeek], who are the experts for a questions like this.

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Re: Do the Bogleheads here tithe based on net or gross salar

Postby EmergDoc » Fri May 03, 2013 12:11 am

The [religion removed --admin LadyGeek] guideline is that it's between you and God.

This stance is extremely wise because once you delve into this, you realize that if you are going to give guidelines, they will soon be the equivalent of the IRS regulations. Just a few examples:

How about retirement funds? Do you tithe as you put the money in and then tithe on the increase, or not tithe on any of it as it goes in and just tithe when you pull it out?

What about capital gains? The IRS (IMHO wrongly) tithes on the nominal gains. Shouldn't you inflation-adjust the gains prior to tithing on them? What about equity you rollover from one house to the next? Should you tithe on it in the year you roll it over?

How about credit card rewards points? Are they a discount on the purchase of the item, or tithable income?

Adding another 10% on to your marginal rate might make working more less palatable. It can also change when you might choose to go to muni bonds (are those just tax free, or tax and tithing free?)

It gets even more complicated once you're self-employed? Do you tithe on money used to pay the employer half of SS? What about your health insurance? How about other "business expenses" that you couldn't deduct as an employee?

What if you live in Scandinavia where tax rates are really high? Why should you have to tithe such a larger chunk of your disposable income than someone living in the US?

I think the [religious guideline removed --admin LadyGeek] got this one exactly right. It's between you and God (or whatever else you believe in). If you feel right about it, then do it. I don't think there's any right or wrong answer.

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Re: Do the Bogleheads here tithe based on net or gross salar

Postby EmergDoc » Fri May 03, 2013 12:15 am

cheese_breath wrote:
Cosmo wrote:I am struggling with this. Could someone give the significance of 10%?

It was specified in the Old Testament law. Some people and churches believe it still applies. Others don't. Can't say any more without turning this into a religious discussion.


....

A tithe is by definition a tenth, or 10%.

I hope that gives context rather than turning it into a religious discussion. If not, I'm sure LadyGeek will be by to correct it. For some of us, this is a huge financial issue with a big impact on our personal finance and investing habits and certainly worthy of discussion here.

Edit: After reading a few of the other posts I'm positive this one will get edited, so I'll do it myself. [Religion removed --admin LadyGeek] was quoted above. [Thank you -- admin LadyGeek]
Last edited by EmergDoc on Fri May 03, 2013 12:22 am, edited 2 times in total.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby zebrafish » Fri May 03, 2013 12:16 am

Thread locked or massive red pen in 3... 2... 1...
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Re: Do the Bogleheads here tithe based on net or gross salar

Postby Mel Lindauer » Fri May 03, 2013 1:36 am

This thread is locked for multiple reasons.
1. We're getting religious mentions comments/posts.
2. The thread has run its course and the op has more than enough responses.
3. We probably shouldn't have allowed this previously-removed topic to be reopened under even tightly controlled guidelines.
Best Regards - Mel | | Semper Fi
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