1 education week 2011 debt-free and loving it: how to get and stay out of debt august 18, 2011 bryan...

Download 1 Education Week 2011 Debt-free and Loving It: How to Get and Stay Out of Debt August 18, 2011 Bryan Sudweeks, Ph.D., CFA. From the Marriott School of

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  • Abstract

    Getting into debt is amazingly easy--getting out is much more difficult. Sadly, there is no silver bullet and no press this button and all your problems will all go away. We all are accountable for our spending. But there are simple methods and tools, which, if followed, can help us follow the Lords counsel and get and stay out of debt. The key is to learn the lessons the Lord is trying to teach us from managing our finances (perhaps it is even about ourselves) and then to take the steps necessary, with His help, to get and stay out of debt. We got into debt by ourselves, but God will help us get out of debt if we do it His way and with His help. There is light at the end of the tunnel--and it is not a train!

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  • ObjectivesUnderstand key thoughts on personal financeKnow what our leaders have said about debtC. Understand the Debt Cycle and why we go into debtD. Know how to develop and use debt reduction strategiesE.Apply what we have learned to a real case study

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    A. Five Key Thoughts on Personal FinanceFive things are important that we understand about financial management or personal finance1. Financial management (personal finance) is not separate from the gospel of Jesus Christ, it is the gospelIt encompasses three of the four-fold missions of the church:To preach the gospelTo perfect the saints, and To take care of the poor and needy.

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    Thoughts on Personal Finance (continued)2. Financial management is just as much a part of the gospel as is family history, food storage, employment, welfare, and other areas.The key is to learn as much as we can and to be a wise steward:For it is expedient that I, the Lord, should make every man accountable, as a steward over earthly blessings, which I have made and prepared for my creatures (D&C 104: 13).And verily in this thing ye have done wisely, for it is required of the Lord, at the hand of every steward, to render an account of his stewardship, both in time and in eternity (D&C 72:3).

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    Thoughts on Personal Finance (continued)3. It is critical that financial management be part of a Christ-centered lifeBut if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel (1 Timothy 5:8)And again, verily I say unto you, that every man who is obliged to provide for his own family, let him provide, and he shall in nowise lose his crown; and let him labor in the church. Let every man be diligent in all things. And the idler shall not have place in the church, except he repent and mend his ways (D&C 75: 28-29)

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    Thoughts on Personal Finance (continued)4. It is critical that we feast upon the words of Christ and live worthy of the Holy Ghost which shall tell us and who show us all things we should doFeast upon the words of Christ, for behold, the words of Christ will tell you all things that you should do (2 Nephi 32:3). For again, I say unto you that if ye will enter in by the way and receive the Hold Ghost, it will show unto you all things that ye should do (2 Nephi 32: 5).

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    5. The only things that are truly ours are our minds and our will. Elder Neal Maxwell said:The submission of ones will is really the only uniquely personal thing we have to place on Gods altar. The many other things we give, brothers and sisters, are actually the things He has already given or loaned to us. However, when you and I finally submit ourselves, by letting our individual wills be swallowed up in Gods will, then we are really giving something to Him! It is the only possession which is truly ours to give! (italics added, Swallowed Up in the Will of the Father, Ensign, Nov. 1995, 22.)

    Thoughts on Personal Finance (continued)

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    B. Our Leaders Counsel on DebtIt is a rule of our financial and economic life in all the world that interest is to be paid on borrowed money. . . Interest never sleeps nor sickens nor dies; it never goes to the hospital; . . it never visits nor travels; it is never laid off work; it never works on reduced hours; it never pays taxes; it buys no food, it wears no clothes. . . Once in debt, interest is your constant companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it;. . .and whenever you get in its way or cross its course or fail to meet its demands it crushes you. So much for the interest we pay. Whoever borrows should understand what interest is, it is with them every minute of the day and night (J. Reuben Clark, conference address, April 6, 1938).

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    Counsel on Debt (continued)

    President Gordon B. Hinckley said:The time has come to get our houses in order. So many of our people are living on the very edge of their income. In fact, some are living on borrowings. The economy is a fragile thing There is a portent of stormy weather ahead to which we had better give heed. . . I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people. I recognize that it may be necessary to borrow a home, of course. But let us buy a home that we can afford. . . We are carrying a message of self-reliance throughout the Church. Self-reliance cannot be obtained when there is serious debt hanging over a household. One has neither independence nor freedom from bondage when he is obligated to others. . . I urge you to look to the condition of your finances. I urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage. This is a part of the temporal gospel in which we believe. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about our head, you will have shelter and peace in your hearts. Thats all I have to say about it, but I wish to say it with all the emphasis of which I am capable. (To the Boys and to the Men, Ensign, Nov. 1998, 5254.)

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    Is there Reasonable Debt?President James E. Faust stated:Over the years the wise counsel of our leaders has been to avoid debt except for the purchase of a home or to pay for an education. I have not heard any of the prophets change this counsel (Doing the Best Things in the Worst Times, Ensign, August 1984, 41).

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    C. Understand the Debt Cycle and Why People go into DebtWe start by going into a little debtWe take on more debt to keep up our lifestyleWe continue taking on debt, until our balances are so high we cannot get any additional debtWe suffer the consequences of that debt

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    The Debt Cycle: Why?IgnoranceWe dont understand interest and its costs CarelessnessWe understand its costs, but we become lazyCompulsivenessWe lack the self-control to discipline our selves PrideHow we look to others is more important than how we look to God (John 12:43)NecessityWe truly cannot feed our families.

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    Stopping the Debt CycleIgnorance gives way to wisdomWe begin to understand interest and its costs. We realize we will have to change our habits. The Lord said:Let him that is ignorant learn wisdom by humbling himself and calling upon the Lord his God, that his eyes may be opened that he may see (D&C 136:32)Alma explained true wisdom when he said:O, remember, my son, and learn wisdom in thy youth; yea, learn in thy youth to keep the commandments of God (Alma 37:35).

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    Stopping the Debt Cycle (continued)Carelessness gives way to exactness As we understand the dangers of the debt cycleWe realize the danger we put ourselves in We become like the armies of Helaman:Yea, and they did obey and observe to perform every word of command with exactness, yea, and even according to their faith it was done unto them. . . Yea, they had been taught by their mothers, that if they did not doubt, God would deliver them. (Alma 56:21,47).

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    Stopping the Debt Cycle (continued)Compulsiveness gives way to diligenceWe develop the self-control to be diligent in our financial mattersWe get on a budget and spend only on our goalsWe realize the spiritual importance of living within our meansWe remember what the Lords words when he said:And inasmuch as you are diligent and humble, and exercise the prayer of faith, behold, I will soften the hearts of those to whom you are in debt, until I shall send means unto you for your deliverance (D&C 104: 80).

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    Stopping the Debt Cycle (continued)Pride gives way to humilityWe remember that how we look to God is more important than how we look to others. We put Heavenly Father first in our lives and realize everything is His We remember the loving counsel to the prophet where he states:And again, verily I say unto you, concerning your debtsbehold, it is my will that you shall pay all your debts. And it is my will that you shall humble yourselves before me, and obtain this blessing by your diligence and humility and the prayer of faith (D&C 104: 78-79).

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    Stopping the Debt Cycle (continued)Necessity gives way to self-relianceWe gain the skills to become self-reliant, and then we use those skills to help othersWe humbly receive help from othersThe Lord Promised: And if men come unto me I will show unto them their weakness. I give unto men weakness that they may be humble; and my grace is sufficient for all men that humble themselves before me; for if they humble themselves before me, and have faith in me, then will I make weak things become strong unto them (Ether 12:27).

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    Stopping the Debt Cycle (continued)The Lord will take us from where we are to where we need to be. President Ezra Taft Benson said:The Lord works from the inside out. The world works from the outside in. The world would take people out of the slums. Christ takes the slums out of the people, and then they take themselves out

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