Avoiding Debt

May 16th, 2007  |  Published in Finances, Mormonism

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The second step of our Family Finance Overview is to avoid debt. This might sound like an oversimplification, but avoiding debt is all about spending less than you earn. The key here is that you must have a plan for your money. If you are in debt, set up a timeline to move out of debt, such as a debt-elimination calendar. Regardless of your debt situation, you should also have a family budget so that you can measure your progress toward becoming debt free and saving what you earn.

Determine your needs and wants

When you are paying of debt, you can’t afford to buy everything you want. Train yourself to tell the difference between your needs and wants. Basic needs include shelter (your rent or mortgage payment), food, and transportation. Wants can sometimes sneak their way in to these categories when we want to rent or buy houses beyond our needs, eat out at restaurants, or drive fancy cars, especially if they are leased. It’s not wrong to have these things, but they can turn our wants into needs in our mind.

Getting and Staying out of debt

From Provident Living:

We should avoid debt. There is nothing that will cause greater tensions in life than grinding debt, which will make the debtor a slave to creditors. A specific goal, careful planning, and determined self-discipline are required to accomplish this.

President N. Eldon Tanner taught: “Those who structure their standard of living to allow a little surplus, control their circumstances. Those who spend a little more than they earn are controlled by their circumstances. They are in bondage” (”Constancy Amid Change,” Ensign, Nov. 1979, 81).

Staying in control

Debt has a way of causing rifts in marriages and enslaving us. If we do not control our debt, it will easily take over and control us. In the May 2004 Ensign, Elder Joseph B. Wirthlin states:

Remember this: debt is a form of bondage. It is a financial termite. When we make purchases on credit, they give us only an illusion of prosperity. We think we own things, but the reality is, our things own us.

Some debt—such as for a modest home, expenses for education, perhaps for a needed first car—may be necessary. But never should we enter into financial bondage through consumer debt without carefully weighing the costs.

Avoiding debt is the second step in the Family Finances Overview series.

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