debt free is the way to be

We paid off our Honda Pilot!  Yeah it feels good not to have to pay 25 dollars extra a month on a car loan and only get 0.05 a month in our savings account.  It was a little lopsided there.  So it feels good to be completely DEBT free! I am so grateful for my parents for helping with college, so I didn't have to take out a college loan - I know I am a lucky girl!  Anywho, read the below sections on debt, they are really awesome!



From the PFIN 070 class:
http://personalfinance.byu.edu/?q=node/416

Understand What Church Leaders Have Said Regarding Debt

Inspired leaders of The Church of Jesus Christ of Latter-day Saints have always counseled Latter-day Saints to get out of debt and live within their means.
President Ezra Taft Benson counseled:

Pride is a sin that can readily be seen in others but is rarely admitted in ourselves. Most of us consider pride to be a sin of those on the top, such as the rich and the learned, looking down at the rest of us (see 2 Nephi 9:42). There is, however, a far more common ailment among us—and that is pride from the bottom looking up. It is manifest in so many ways, such as faultfinding, gossiping, backbiting, murmuring, living beyond our means(“The Faces of Pride,” New Era, Oct. 2003, p. 40; italics added).

President Ezra Taft Benson quoted a portion of 2 Kings 4:7 when he said, “Pay thy debt, and live. What wise counsel these words are for us today!” (“Pay Thy Debt, and Live,” Ensign, Jun. 1987, 3)
President J. Reuben Clark Jr. emphasized how burdensome debt can become when he said:

It 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 works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment. . . . It has no expense of living; it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you (J. Reuben Clark, Improvement Era, Jun. 1938, p. 328).

In the October 1998 general conference, President Gordon B. Hinckley encouraged Latter-day Saints to get out of debt and live within their means:

I am suggesting that 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 hope we will never again see such a depression [as in 1932]. But 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 for a home, of course. But let us buy a home that we can afford and thus ease the payments which will constantly hang over our heads without mercy or respite for as long as 30 years. No one knows when emergencies will strike [and we could be] helpless before creditors. 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 (Gordon B. Hinckley, "To the Boys and Men,"Ensign, Nov. 1998, 52–54).

Excessive debt can be a form of bondage, limiting both temporal and spiritual freedom. To help Latter-day Saints avoid this bondage, President Joseph F. Smith advised: "Get out of debt and keep out of debt, and then you will be financially as well as spiritually free" (Conference Report, October 1903, 5).
While some might argue that their financial situation has nothing to do with their spirituality, President Marion G. Romney pointed out that self-reliance, our ability to provide for our temporal needs, is essential for spiritual growth to continue:

The Doctrine and Covenants 29:34–35 tells us there is no such thing as a temporal commandment, that all commandments are spiritual. It also tells us that man is to be “an agent unto himself.” Man cannot be an agent unto himself if he is not self-reliant. Herein we see that independence and self-reliance are critical keys to our spiritual growth. Whenever we get into a situation which threatens our self-reliance, we will find our freedom threatened as well. If we increase our dependence, we will find an immediate decrease in our freedom to act (“The Celestial Nature of Self-Reliance,” Ensign, Jun. 1984, 3).

When we are in debt, our freedom to act and our ability to grow spiritually are reduced. Staying out of debt is not just a temporal commandment, as some suppose; it is also a spiritual commandment. President Ezra Taft Benson wrote, “The Lord desires his Saints to be free and independent in the critical days ahead. But no man is truly free who is in financial bondage” (Ezra Taft Benson, “Prepare Ye,” Ensign, Jan. 1974, p. 69).
President Heber J. Grant further illustrated how debt can affect our lives when he said:

If there is any one thing that will bring peace and contentment into the human heart, and into the family, it is to live within our means. And if there is any one thing that is grinding and discouraging and disheartening, it is to have debts and obligations that one cannot meet (Gospel Standards, comp. G. Homer Durham [1941], 111).

When we follow the counsel of Church leaders regarding debt, we can experience the peace referred to by President Grant.

Is there Reasonable Debt?

Although Church leaders counsel against debt, they also realize that a family may need to borrow for some goals that might otherwise be impossible to achieve. For example, President Gordon B. Hinckley has explicitly stated that it is acceptable to go into debt for a modest home and an education. He commented:

Reasonable debt for the purchase of an affordable home and perhaps for a few other necessary things is acceptable. But from where I sit, I see in a very vivid way the terrible tragedies of many who have unwisely borrowed for things they really do not need (“I Believe,” Ensign, Aug. 1992, 6).

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, Aug. 1984, 41).
Even if you are going into debt for a home or an education, you should still use prayer and wisdom to make good decisions about debt. If you do go into debt, you should pay your debts off as soon as you can.
But what about business debt? While beyond the scope of this section, President N. Eldon Tanner has outlined some conditions under which business debt is acceptable. He said:

For most of us there are two kinds of financial debt – consumer debt and investment or business debt…Investment debt should be fully secured so as to not encumber a family’s security. Don’t invest in speculative ventures.  The spirit of speculation can become intoxicating. Many fortunes have been wiped out by the uncontrolled appetite to accumulate more and more. Let us learn from the sorrow of the past and avoid enslaving our time, energy, and general health to a gluttonous appetite to acquire increased material goods (N. Eldon Tanner, “Constancy Amid Change,” Ensign, Nov. 1979, 80).

Debt that is incurred to undertake a business endeavor is acceptable under the following general conditions: First, the debt must not jeopardize the personal or family finances of the business owners or managers. The family's security should not be put at risk should the venture fail. Second, the debt must be used for a valid business purpose or investment opportunity. Speculative ventures and consumption, under the guise of investment, should not be undertaken. Using debt to finance a speculative venture serves only to magnify the risk of the investment and is simply leverage. Clearly, just as speculation is against the counsel of Church leaders, debt for speculation is also against the counsel of Church leaders. Third, business debt must be incurred with an honest heart and with a full commitment to repay the money. D&C 104:78 counsels "And again, verily I say unto you, concerning your debts--behold it is my will that you shall pay all your debts." Failure to repay any debt--business debt included--is a form of dishonesty. With these principles in mind we will be better able to discern when debt may be appropriate for a business investment or not.