debt management 2-3-10

8/14/2019 Debt Management 2-3-10

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Charles Dickens’ David Copperfield :

1. Never do tomorrow what you can do today – Procrastination is the thief of time.

2. Annual income, £20 pounds; annual expenditure, £19.96 pounds;result… HAPPINESS .

Annual income, £20 pounds; annual expenditure, £20.06 pounds;result… MISERY .

That pretty much sums up today’s message...

Spend less than you earn—don’t wait for tomorrow—start doing it today!



MALACHI 3: 7-12 7 …Return unto me, and I will return unto you, saith the LORD of hosts. But ye said,Wherein shall we return?8 ¶ Will a man rob God? Yet ye have robbed me. But ye say, Wherein have we robbed thee?In tithes and offerings.9 Ye are cursed with a curse: for ye have robbed me, even this whole nation.10 Bring ye all the tithes into the storehouse, that there may be meat in mine house, andprove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing , that there shall not be room enough to receive it. 11 And I will rebuke the devourer for your sakes, and he shall not destroy the fruits of your ground; neither shall your vine cast her fruit before the time in the field, saith the LORD of hosts.12 And all nations shall call you blessed: for ye shall be a delightsome land, saith the LORDof hosts.

(I Count 7 promises from the Lord)

Pay Tithes andOfferings

Who is most important? Pay Him first.

http://scriptures.lds.org/en/mal/3/7c

http://scriptures.lds.org/en/mal/3/8a

http://scriptures.lds.org/en/mal/3/8b






http://scriptures.lds.org/en/mal/3/10d

http://scriptures.lds.org/en/mal/3/10e

http://scriptures.lds.org/en/mal/3/10f





http://scriptures.lds.org/en/mal/3/10f

http://scriptures.lds.org/en/mal/3/10e

http://scriptures.lds.org/en/mal/3/10d











Dallin H. Oaks, "Tithing," Ensign, May 1994, 33–35.

– During World War II, my widowed mother supportedher three young children on a schoolteacher’s salarythat was meager. When I became conscious that wewent without some desirable things because we didn’thave enough money, I asked my mother why she paidso much of her salary as tithing. I have never

forgotten her explanation: “Dallin, there might besome people who can get along without payingtithing, but we can’t. The Lord has chosen to takeyour father and leave me to raise you children. Icannot do that without the blessings of the Lord, and Iobtain those blessings by paying an honest tithing.When I pay my tithing, I have the Lord’s promise thathe will bless us, and we must have those blessings if we are to get along.”



Jeffrey R. Holland, "Like a Watered Garden," Ensign, Nov. 2001, 33–35.

Pay your tithing as a declaration that possession of material goods and the accumulation of worldlywealth are not the uppermost goals of your existence. As one young husband and father, livingon a student budget, recently told me, “Perhaps our most pivotal moments as Latter-day Saints come

when we have to swim directly against the current of the culture in which we live. Tithing provides justsuch a moment. Living in a world that emphasizesmaterial acquisition and cultivates distrust for anyone or anything that has designs on our money,we shed that self-absorption to give freely,trustingly, and generously. By this act, we say—indeed—we are different, that we are God’s peculiar people. In a society that tells us money is our most

important asset, we declare emphatically it is not.”



President J. Reuben Clark Jr., who many years ago was amember of the First Presidency said:

“It is a rule of our financial and economic life in all the world thatinterest is to be paid on borrowed money. …“Interest never sleeps nor sickens nor dies; it never goes to the

hospital; it works on Sundays and holidays; it never takes avacation; it never visits nor travels; it takes no pleasure; it is

never laid off work nor discharged from employment; it never works on reduced hours. … Once in debt, interest is your companion every minute of the day and night; you cannot shunit or slip away from it; you cannot dismiss it; it yields neither toentreaties, demands, or orders; and whenever you get in itsway or cross its course or fail to meet its demands, it crushesyou.”

AVOID DEBT



WHEN IS DEBT OKAY?

"With the exception of buying a home , paying for education , or making other vital investments ,avoid debt and the resulting finance charges. Buy consumer durables and vacations with cash.Avoid installment credit, and be careful with your use of credit cards... Buy used items until youhave saved sufficiently to purchase quality new items.“ Elder Marvin J. Ashton

So these are the exceptions:1. Buying a home;2. Paying for an education;3. Making other vital investments.

What are other vital investments? President N. Eldon Tanner, a former member of the FirstPresidency, stated that such “investment debt should be fully secured so as not to encumber afamily’s security.”

Some simple questions may help us determine if it is appropriate to borrow to make a purchase(including purchases made using credit cards):

1. Will the item for which I am borrowing still be usable after I have finished making thepayments?

2. Have I discussed this purchase with my spouse? Asking this question will eliminate mostimpulse purchases.3. Does the purchase qualify as a “vital investment;” and could it be sold at any time to pay off the full amount of the indebtedness if our situation changes?

4. Who am I fooling? If this isn’t a house or an education then it is probably a “consumer durable” (such as a car, appliance, or furniture) and should be purchased with cash, not credit.Buy a used one or do without until you save enough to purchase a new one.



DEBT MANAGEMENT

Where are you… on the “Mountain of debt”???

Debt Free

Fallen off the cliff ?

Barely holding on ?



MAKING TOUGH FINANCIAL DECISIONS

Can you relate to these statements?

• We are barely making it each month!• My Home is worth less than I owe to the bank!• At this rate, we will never be able to retire!

Options frequently discussed in today’s economy:• Bankruptcy• Short sale• Foreclosure• Deed in lue of foreclosure

What is the Church’s counsel?Provident Living website at www.LDS.org:

“Honor your debts. We are a people of integrity. We believe in honoring our debts and being honest in our dealings with our fellow men.”



10 Simple Steps to Pay Your Debts and Become Debt-Freeby Clark B. Hinckley (President Hinckley’s son—currently serving as the Spain Barcelona Mission President)

BACKGROUND: This plan will work for almost everyone, even if you think you are hopelessly in debt. It takes discipline and

perseverance, but so does everything that is worthwhile. It may seem hard, almost impossible, at first. Livingthe Word of Wisdom may seem impossible for a life-long smoker, but do you doubt that he can do it, or that heshould, or that he will be blessed? You can pay your debts. You should. And you will be blessed.

But first, a word about why . In a world filled with voices that encourage us to spend more than we earn (thinkunsolicited credit card offers, 100% loan-to-value home equity lines of credit, adjustable rate or option-ARMmortgages, 5-year car loans, auto leases with nothing down, etc.), sometimes sacrificing to pay our debtsdoesn’t seem to make a lot of sense. As with any Gospel principle, understanding the doctrine helps us realizethat the Lord’s ways are different from man’s ways.

• What the Scriptures Say

– Mosiah 4:28 "And I would that ye should remember, that whosoever among you borroweth of his neighborshould return the thing that he borroweth, according as he doth agree, or else thou shalt commit sin."– D&C 19:35 "Pay the debt thou hast contracted with the printer. Release thyself from bondage."– D&C 64:27 "It is said in my laws, or forbidden, to get in debt with thine enemies."– D&C 104:78 "It is my will that you shall pay all your debts."

• What the Prophets Say– Brigham Young: “Pay your debts…do not run into debt any more.”– Joseph F. Smith: "If there is anyone here who is in debt, I would advise that when he goes home, and when

I go home, too, that we will begin with a determination that we will pay our debts and meet all of ourobligations just as quickly as the Lord will enable us to do it."– Gordon B. Hinckley: “I urge you as members of this Church to get free of debt.– The First Presidency (Feb 2008): "We are concerned that some Church members ignore the oft-repeated

direction to ... avoid consumer debt."– Thomas S. Monson: Debt can “crush our self-esteem, ruin relationships, and leave us in desperate

circumstances.”– Thomas S. Monson: "Changes occur: people become ill or incapacitated, companies fail or downsize, jobs

are lost, natural disasters befall us. For many reasons, payments on large amounts of debt can no longerbe made.”



h h f l b



More thoughts from… 10 Simple Steps to Become Debt-Free…

• For most people, one of the larger debts they have is a car loan. When youget this debt paid off, you have made real progress. You should also havesome money in your emergency fund. Your goal now is to make that car lastuntil you have saved enough to purchase a car with cash. That’s right, cash.Remember your mantra, “No new debt.” That means no car loans and nocar leases. It also means you’ll be buying used cars, not new, at least unlessyou have a financial windfall. And in doing so, 1) you will have thesatisfaction of knowing that you have successfully withstood millions of dollars and years of indoctrination by automotive companies designed toseduce you into thinking you need or deserve that new car smell (which is a$4,000 option), and 2) you will have the peace of mind of knowing that evenin the face of an unexpected financial setback, you will still have a car.

• Ultimately, the last debt you will probably tackle is your home mortgage.Somewhere over the last decade, the idea of actually owning a home freeand clear was lost in the myth that a home was a financial investment. It isnot. It is your home. In fact, as an investment, homes have been nothingmore than an inflation hedge – for most of the past 50 years, homeappreciation has averaged less than ½ of 1% a year over inflation. Fewthings in your temporal affairs can bring greater peace than knowing thatyou and your family own a home – no bank can foreclose on it, no landlordcan serve an eviction notice. Except in the very most dire of circumstances,you will never be homeless.



“The most powerful force in theuniverse is compound interest ”.

Albert EinsteinThe Power of Compound Interest

0

5

10

15

20

25

30

Years

$ V a

l u e

$

201 40

$ 1

$ 5

$ 24.27

1st 20 years of growth = $ 4

2nd

20 years of growth = $ 19.27

The growth of $1 compounded monthly at 8%



Compound Interest can be used for good or bad (savings or debt)…How are you using it???

“Thems that understands interest receives it, thems that don’t pays it.” -- L. TomPerry, Ensign, November 1995

“We have often heard that interest is a good servant but a terrible master” -- Joseph B.Wirthlin, Ensign, May 2004

In Robert Kiyosaki's book “Rich Dad, Poor Dad”, each dollar saved is referred to as your ownsoldier or employee… one that gets up and goes to work for you everyday. Combine thatidea with interest’s work ethic as described by President J. Reuben Clark and you get a

soldier or employee who goes out to work for you everyday and… – Never gets sick – Never dies – Never goes to the hospital – Works weekends and holidays – Never takes vacation or travels – Takes no pleasures – Is never laid off, nor discharged from employment – Never works on reduced hours



Fixed Budget Percentages Tithing: 10%

Savings: 10% minimum

Soc. Sec. & Medicare: 7.65%

Self Employment Tax: 7.65%

Fed Income Tax (net of deductions): 8%State Income Tax (net of deductions): 2%

Total Taxes: 25.3%Housing (PITI): 28%

Other: ?? 26.7% ??

Use a BudgetDiscipline yourself to live within your budget plan.

28% Housing 25.3% taxes

26.7% Other

(based on self employed family of 5 earning $75k year)

10% Tithing

10% Savings



Build a Reserve

If God is the person we choose to pay

FIRST – before any other bill or obligation… what then, is our SECOND most important obligation?

Our Family Savings!



The same program…

10 Simple Steps to Become Debt-Free…

Contains a formula to “BUILD A RESERVE”including:

1) Emergency Savings2) Retirement Savings



EMERGENCY SAVINGS CALCULATOR

Emergency ExpensesEmergency MedicalEmergency Auto Repair Emergency Legal

Emergency Property DamageEmergency Other Total

Living Expenses

Monthly Living Expensesx Months of UnemploymentTotal

Insurance DeductiblesInsurance Deductible MedicalInsurance Deductible AutoInsurance Deductible Property

Insurance Deductible Other Total

Total Emergency Expenses

Total Insurance DeductiblesTotal Living Expenses

TOTAL EMERGENCY SAVINGS

See detailed instructions for emergency savings calculator at www.360financialliteracy.org

http://www.360financialliteracy.org/

http://www.360financialliteracy.org/



RETIREMENT SAVINGS ENEMY

Inf la t ion ' s Im pa ct on P urch as in

0

0 .5

1

1 .5

2

2 .5

3

3 .5

1 3 5 7 9 1 1 1 3 1 5 1 7 1 9 2 1 2 3 2 5 2 7 2 9 3 1 3 3 3 5 3 7 3 9

Ye a r

$ D o l l a r s

$



Teach Family Members

Teach family members the principles of financialmanagement.

1. Involve them in creating a budget and settingfamily financial goals.

2. Teach the principles of hard work, frugality, andsaving.

3. Stress the importance of obtaining as mucheducation as possible.



Motivational Wisdom

• If you think you can do a thing, or think you can't do a thing, you'reright. (Henry Ford)

• When you sow an action, you reap a habit; when you sow a habit, youreap a character; and when you sow a character, you reap a destiny.(Zig Ziglar)

• Habit is a cable; we weave a thread of it each day until it becomes toostrong to break… Then the strength of that habit cable takes us to theTop -- or ties us to the bottom, depending on whether it is a good habitor a bad one. (Zig Ziglar)

• All bad habits start slowly and gradually and before you know you havethe habit, the habit has you. (Zig Ziglar)

• Mark 9: 23 – all things are possible to him that believeth. Mark 9: 24 –Lord, I believe: help thou mine unbelief.



You Can Do Anything You Must DoBy Vaughn J. Featherstone

If you want a thing bad enoughTo go out and fight for it,Work day and night for it,Give up your time and your peace and your sleep for it;If only desire of itMakes your aim strong enoughNever to tire of it,If life seems all empty and useless without it

And all that you scheme and you dream is about it,If gladly you’ll sweat for it,Fret for it,Plan for it,Pray with all your strength for it,If you’ll simply go after the thing that you want,With all your capacity,Strength and sagacity,Faith, hope, and confidence; stern pertinacity,If neither cold or poverty, famished and gaunt,Nor sickness, nor pain,Of body or brain,Can turn you away from the aim that you want,If dogged and grim you besiege and beset it,You’ll get it.

debt management 2-3-10

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