The European Union might ask for Chinese help to end the ongoing debt crisis. Nicholas Sarkozy has been discussing the sovereign crisis with Chinese president Hu Jintao for quite some time. With Klaus Regling’s (the head of the European Financial Stability Facility — EFSF) visit to Beijing, the speculation has become more intense.

A lot of euro zone countries are trying to persuade China to make investments. It started with Greece and gradually Portugal, Spain and other core members of the euro zone approached China. This reflects the fact that the sovereign debt crisis in the continent is becoming more and more serious.

Renminbi to the rescue?

However, the Chinese have been fairly diplomatic. A lot of encouragement came from their end, but little investment followed.

But the situation is a bit different this time. Previously, investment in the euro zone meant undertaking a lot of risk. But now, China can invest in euro zone debt that is backed by EFSF. This means that China won’t be taking as much risk as the Europeans. However, the Europeans still can’t offer substantial protection in the current situation. China would certainly demand more details before they invest. They would also keep a watch on Greek bond swapping with private creditors.

It is possible that China will join other non-European nations to end this crisis. But will it bargain hard for political advantages for pumping cash into Europe? Not likely. This will make it publicly clear that Europe is not a fit place for investment and China is nothing more than a money machine; the image of Asian big boy will take a hit. Nonetheless, benefits like more representation at the IMF will eventually come because Europe desperately needs Chinese funding, especially for Spanish and Italian debt.

The price of help will also include the recognition of China as a “market economy.” This means that Europe will be vulnerable to cheap Chinese exports in the continent. It is difficult to predict how this will affect the European economy.

The Europeans might also be forced to abolish the export ban of armaments to the Asian economic giant. This might not be safe for world peace, but Europe possibly cannot call off the deal.

Temple Square at General Conference

Last month from January 17-23, Philadelphia became the first city in nearly 50 years to reestablish National Thrift Week. National Thrift Week was an American social movement that was begun in 1916 and continued until 1966, when it was abandoned.

Apparently for many, thrift has been a forgotten virtue for the last few decades but it is now making a comeback. Let’s look at what the original National Thrift Week was trying to accomplish and then follow up with quotes from Mormon Church presidents because for Mormons at least, thrift never went out of style.

National Thrift Week

In 1922, according to the New York Times, the committee in charge of National Thrift Week emphasized:

• Enrolling 500,000 individuals to operate their finances on the budget plan. State Thrift Week committees had quotas.
• Observance of Benjamin Franklin’s birthday in cooperation with schools, patriotic societies and businesses. Franklin was a keen practitioner of thrift.
• Thrift is “common sense applied to spending.”
• Visits by school children to banks and trust companies after school and banking hours.

The National Thrift Week program had a ten-point program such as “work and earn” to increase production; “make a budget” to plan expenditures in advance; “pay your bills promptly” to avoid the curse of debt; “invest in reliable securities” such as Liberty bonds; and “share with others” by giving to the church and other worthy causes.

Mormon Church Presidents Speak on Thrift

While Mormons do not need a National Thrift Week to encourage thrift, nevertheless additional focus on this excellent virtue is welcome. As a Mormon, I have heard thrift and preparedness preached over the pulpit for decades. I suppose that it has been continuously spoken of because not all Mormons have been listening. However, many members have heeded the exhortations of their leaders and have prospered accordingly.

The following are quotes on thrift, self-reliance, and giving by the last eleven presidents of The Church of Jesus Christ of Latter-day Saints from 1901 to the present. These pronouncements carry considerable weight with most members of the Church, even after a president has died.

Joseph F. Smith

6th President, served: 1901–1918

“…I met a brother—I need not call his name, for he is but one among thousands who can bear the same testimony, not only by the word of mouth but by the evidences of thrift, of prosperity, of progress and of improvement which surround him in the midst of the deserts.

This season he has gathered in rich harvests, his farms having produced in abundance, while the farms of many of his neighbors are clogged with weeds, and their harvests have been only one-half or one-third what his has been.

How do you account for it? I account for it in the fact that God has blessed him; and so does he, for he is an intelligent man, a man that not only labors wisely and prudently, but in the fear of God, and in the desire of his heart to obey his laws.”

“Chapter 31: Obedience to the Law of Tithing,” Teachings of Presidents of the Church: Joseph F. Smith

Heber J. Grant

7th President, served: 1918–1945

“Our primary purpose was to set up, in so far as it might be possible, a system under which the curse of idleness would be done away with, the evils of a dole abolished, and independence, industry, thrift, and self-respect be once more established amongst our people.

The aim of the Church is to help the people to help themselves. Work is to be re-enthroned as the ruling principle of the lives of our Church membership.”

Conference Report, October 1936, 3

George Albert Smith

8th President, served: 1945–1951

“The Saints need to give not only of their substance but of themselves. This is the Lord’s work. This is not the work of man. If we desire to be identified with the kingdom of our Lord, the celestial kingdom, this is our opportunity to prepare—with love unfeigned, with industry, with thrift, with perseverance, with a desire to do all that is within our power to bless others, to give—not to be always feeling we must receive, but desire to give, for I say to you: ‘It is more blessed to give than to receive’ (Acts 20:35).

The gospel of Jesus Christ is a gospel of giving, not only of our substance but of ourselves, and I thank my Heavenly Father that I belong to such an organization that has been so instructed.”

Conference Report, October 1934, 52

David O. McKay

9th President, served: 1951–1970

“Giving something for nothing as a grant is contrary to the fundamental teachings of the Church. The real purpose of the Church Security Plan is to produce independence on the part of each individual, to make him self-supporting, to replace idleness with thrift and productivity.”

Pathways to Happiness, David O. McKay, 374

Joseph Fielding Smith

10th President, served: 1970–1972

At a press conference the day following his appointment as president of the Church he had expressed amazement at all the “fuss” being made over him. As the months wore on he had cause to feel even more amazed.

One minor recognition that caught his fancy, however, was that he was the holder of the oldest savings deposit account in the Zion’s Savings Bank (now Zion’s First National Bank). His father had opened an account there in his name when he was born in 1876, just three years after the bank was begun. And the account remained intact until his death in 1972.

President Smith was always a strong believer in thrift and the savings account was symbolic of that thrift.

Life of Joseph Fielding Smith, John J. Stewart

Harold B. Lee

11th President, served: 1972–1973

“In what we might liken unto a great ‘pincer movement’ of enemy forces to encircle us, we are being surfeited with the doctrine that we can get ‘something for nothing.’

When the smoke of the present frenzied social conflict has cleared away and the carnage resulting therefrom carefully counted, we shall have had proved again that we cannot get something for nothing and continue to prosper, and that the habit of giving instead of getting is the way to happiness. Then our faith in those tried and trusted virtues of thrift, self-sacrifice, and frugality will have triumphed over the vices of reckless spending, selfishness, and a disregard for decent standards of common civic virtue and morality.”

Stand Ye In Holy Places, Harold B. Lee, 337

Spencer W. Kimball

12th President, served: 1973–1985

“Now, when I was a little boy in Southern Arizona our Latter-day Saints were the pioneers. They were struggling to get their feet planted in the soil-to establish themselves. They were largely employed by others, often at pitifully low levels of income. They were the post-hole diggers, the hewers of wood and the drawers of water. They were the farm hands, the mill workers, domestic servants in the homes, the railroad section hands.

Now, I would not have you think that such work was dishonorable, nor unholy, nor improper, but it is limiting. But in my short life I have seen this people through education and thrift rise to new planes and become the leaders in the communities and hold high places in government, business, professional, social, and political affairs. I have seen them become the landowners and many of them become independent and financially secure, as well as faithful spiritually.”

Teachings of Spencer W. Kimball, Spencer W. Kimball, 381

Ezra Taft Benson

13th President, served: 1985–1994

“A sterling virtue which builds manliness and independence is frugality of thrift. ‘Waste not, want not’ has long been the clarion call.

In more recent years, however, this maxim has given way to so-called ‘deficit spending.’ Many have been teaching that we must spend our way into prosperity. How do you regard this philosophy? Have you stopped to analyze its effect upon the independence, self-reliance, and character of the individual? And what of its possible effect upon the very existence of this nation as a haven for freedom-loving men and women?

No man in debt is truly free. He who has not learned thrift and economy is constantly beset with problems and misgivings about the future. His own freedom and peace of mind are endangered. Those dependent upon him are likewise jeopardized in their self-respect and freedom.

So Shall Ye Reap, Ezra Taft Benson, 165

Howard W. Hunter

14th President, served: 1994–1995

“The basic virtues of thrift, self-reliance, independence, enterprise, diligence, integrity, morality, faith in God and in His Son, Jesus Christ, were the principles upon which this, the greatest nation in the world, has been built.

We must not sell this priceless, divine heritage which was largely paid for by the blood of patriots and prophets for a mess of pottage, for a counterfeit, a false doctrine parading under the cloak of love and compassion, of humanitarianism, even of Christianity.”

“The Law of the Harvest: As a Man Sows, So Shall He Reap”, Howard W. Hunter, BYU Devotional, March 8, 1966

Gordon B. Hinckley

15th President, served: 1995–2008

“I commend to you the virtues of thrift and industry. In doing so, I do not wish you to be a ‘tightwad,’ if you will pardon that expression, or to be a freeloader, or anything of the kind.

But it is the labor and the thrift of people that make a nation strong. It is work and thrift that make the family independent.

Debt can be a terrible thing. It is so easy to incur and so difficult to repay. Borrowed money is had only at a price, and that price can be burdensome. Bankruptcy generally is the bitter fruit of debt. It is a tragic fulfillment of a simple process.”

“Thou Shalt Not Covet,” Ensign, March 1990, 4

Thomas S. Monson

16th President, served: 2008-

“Industry, thrift, self-reliance continue as guiding principles of this effort. As a people, we should avoid unreasonable debt.”

Thomas S. Monson, “Goal beyond Victory“, Ensign, Nov. 1988, 44

“Many more people could ride out the storm-tossed waves in their economic lives if they had their year’s supply of food and clothing and were debt-free. Today we find that many have followed this counsel in reverse: they have at least a year’s supply of debt and are food-free.”

President Thomas S. Monson, “That Noble Gift—Love at Home,” Church News, May 12, 2001, 7

Sources

• General Conference photograph: Aaron Goodwin
• “National Thrift Week,” E. A. Hungerford, New York Times. January 15, 1922, 74
• Bring Back Thrift Week
• New Thrift
• Biographical sketches of the Presidents of The Church of Jesus Christ of Latter-day Saints
• Hat tip to Get Rich Slowly for giving me the idea for this post.

Some economies with similar financial problems, often notably the United Kingdom, are arbitrarily excluded. European Union member states are obliged to ensure their debt does not exceed 60 percent of their GDP.

It will be interesting to examine the debt levels of the PIIGS compared with other countries in the European Union (EU). For this I am using Google Public Data Explorer with the Eurostat dataset. First the PIIGS government debt as a percentage of GDP:

PIIGS general government debt as a percentage of GDP (click to enlarge)

Government debt is not supposed to exceed 60% of GDP. The PIIGS all exceed this except for Spain. But what of the EU as a whole? Observe:

PIIGS and EU general government debt as a percentage of GDP (click to enlarge)

The EU weighs in with a hefty 73.6%, worse than Ireland and Spain. Methinks there are more PIIGS in the sty.

PIIGS and EU general government debt over 60% of GDP in 2009 (click to enlarge)

We see that there are 12 EU countries over the 60% limit at the end of 2009. Spain, one of the PIIGS, is lower than them all and hence is not labelled. There are some large non-PIIGS economies in the top 12, namely France, Germany, and the United Kingdom. Notice that Belgium, Hungary, and France are at a higher percentage than PIIGS Portugal. Germany, Malta, the United Kingdom, and Austria also weigh in higher than PIIGS Ireland.

Is it any wonder that the Euro is dropping in value? The whole Eurozone is practically one gigantic PIIGS sty. But the EU is not alone — the U.S. gross debt is 87% of GDP.

Play with the numbers yourself at Google Public Data Explorer. I have set it up to start with the PIIGS economies but you can add in more of the EU countries.

The nearer my balance approaches zero the slower my spending.

Zero was that grand guardian against excess. The magical cipher to hold one solvent. Admittedly, I did the work. I was the one who was disciplined to keep myself from falling into the abyss of interest payments. There was nothing to it really. Of course with any simple plan there are pragmatic principles present on the periphery. The power of zero is bolstered by these simple truths:

• Borrow only for home, health, and education.
• Debt is worse than the plague.
• Be charitable.
• A bargain is not a bargain if you don’t need it.

Once you absorb this power into your life be careful to always be true to zero. I once went against my own rule of borrowing by getting a loan to take my family to Disney World. I borrowed thousands of dollars that then had to be laboriously paid back over several years, with interest. This is where I learned that once the zero barrier is broken, there is no resistance to further spending.

There is only one zero, nothing else has the power of nil. Fortunately I came to my senses, paid back the loan, and got on the positive side of zero again.

No, there is naught like the power of zero.

Start saving for the "rainy day"

There is a crunch in the American economy and times are hard now. How is it possible to survive in this financial crisis? It is about time that you start saving for the “rainy day”.

Every family has an individual lifestyle to maintain. Here are a few tips, which can help you to save money, without compromising on the living standards.

1. Do not waste food. Serve leftovers the next day. This will help in resisting the temptations of eating out.
2. Tired of wearing the same old clothes? Instead of buying new ones, swap your wardrobe with close friends. This will freshen up your wardrobe to an extent.
3. In case of errands, plan an efficient route so that all your tasks are done and you save money on gas too.
4. Looking for some entertainment? Swap DVDs with friends or rent a movie. You can also go for a bargain matinee show.
5. Prioritize your debts, if any. Pay off bills promptly. This will help you to maintain a positive credit score. Not paying off debts on time would hamper your credit scores. In the long run, if you ever accumulate debt, it will become difficult for you to consolidate debt with a bad credit record.
6. Try to increase your incomes by pursuing your hobbies, or renting your garage.

There are various ways of saving money. All you need is the knowledge about what and how you are spending on. Once you know that, you will know where to cut your expenses as well. Saving money requires determination as you need to change some old habits, and also reconsideration of your priorities. Once you start saving, it is going to act as a boost. You would want your savings to grow and thus would start saving more.

Photo Credit: argo_72

But there is still the outstanding debt of trillions of dollars. Congress in a display of unparalleled common sense tackles this by treating the debt as if it was a 30 year mortgage. In my scenario (sadly imaginary) Congress is able to secure a 3% fixed interest rate for 30 years. In the table below is the schedule of payments. I have included other rates of interest in the event that you think 3% is unrealistic.

The dollar amount of the debt is obtained from Treasury Direct’s Debt to the Penny, which I have rounded to the nearest billion dollars. The date in the top right-hand corner is the day the debt reading was taken. The highlighted figures are the yearly amounts paid (the sum of 12 monthly payments), depending on the interest rate. All dollar amounts are in billions. So for example, $13,616 billion, which is $13.6 trillion, just add nine zeros like so: $13,616,000,000,000.

I have been periodically updating the debt reading. It is scary how much this debt is rising. Truly we should avoid debt as we would avoid a plague. The sooner we start paying our mortgage the better. Default is not an option. Refinance now while interest rates are low.

Money Photo Credit: Andrew Magill

With the Dow barely recovering off a twelve year low it will be profitable to hear what a prophet (though he was not prophesying) was saying back in 1998.

We have witnessed in recent weeks wide and fearsome swings in the markets of the world. The economy is a fragile thing. A stumble in the economy in Jakarta or Moscow can immediately affect the entire world. It can eventually reach down to each of us as individuals. There is a portent of stormy weather ahead to which we had better give heed.

He had concerns about debt, bankruptcies, and advertising:

I repeat, I hope we will never again see such a depression. But I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people….Everyone knows that every dollar borrowed carries with it the penalty of paying interest. When money cannot be repaid, then bankruptcy follows….We are beguiled by seductive advertising. Television carries the enticing invitation to borrow up to 125 percent of the value of one’s home. But no mention is made of interest.

He has just mentioned borrowing against the value of one’s home and continues to advise about homes and emergencies:

I recognize that it may be necessary to borrow to get 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. I am somewhat familiar with the case of a man who was highly successful in his profession. He lived in comfort. He built a large home. Then one day he was suddenly involved in a serious accident. Instantly, without warning, he almost lost his life. He was left a cripple. Destroyed was his earning power. He faced huge medical bills. He had other payments to make. He was helpless before his creditors. One moment he was rich, the next he was broke.

Now he tells a story about President Faust which I actually used in making a decision three years ago:

What a wonderful feeling it is to be free of debt, to have a little money against a day of emergency put away where it can be retrieved when necessary.

President Faust would not tell you this himself. Perhaps I can tell it, and he can take it out on me afterward. He had a mortgage on his home drawing 4 percent interest. Many people would have told him he was foolish to pay off that mortgage when it carried so low a rate of interest. But the first opportunity he had to acquire some means, he and his wife determined they would pay off their mortgage. He has been free of debt since that day. That’s why he wears a smile on his face, and that’s why he whistles while he works.

Three years ago I had $31,000 left to pay on my mortgage. The interest rate was a fixed 4.9%. I had saved all of the $31,000 with the intent of paying off my home. In making the decision I remembered President Hinckley telling the story about President Faust which convinced me to go ahead. So why would you pay off a debt with such low interest? Because if the debt isn’t paid promptly the money could be spent on luxuries. Then the debt is still left to pay when your financial situation could turn for the worse. And yes, I wanted to whistle while I worked.

And finally:

I urge you, brethren, 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.

1. What advice would you give for teaching young children and teenagers these principles?

First we need to identify the principles mentioned in the post. They are:

1. Debt is worse than the plague.
2. Never pay credit card interest.
3. Borrow only for home, health, and education.
4. Pay tithes and offerings.
5. Be charitable.
6. Never co-sign for a loan.
7. A bargain is not a bargain if you don’t need it.

Obviously some of these principles would be lost on young children. The easiest principles to teach them would be tithes and offerings. When offerings such as for the Fast are made this is being charitable to the poor or those in temporary need. Number seven on our list can be taught by allowing safe but unwise purchases so that children can learn by their own experience what is and isn’t a bargain.

In our home we kept a small box that contained change in a small can and dollars in an envelope. It also contained tithing slips and envelopes. When the children received their allowance my wife and I would help them figure their tithing and write out the slip. We had change on hand (in the small can) so that they could submit the correct amount. By the time they were teenagers they took care of their tithes and offerings by themselves.

When the children reached twelve or thirteen I would open a credit union account for them complete with checks and a Visa debit card. Around eighteen I would make sure they got a credit card. That way they could start building a credit rating without me having to co-sign for a car. The credit card had a $200 limit which was raised over time.

Was it successful? The children know how to handle credit cards without incurring debt. They automatically pay tithes and offerings. They are very good savers.

2. What works better than conventional strategies?

One thing I did when the children were young was to open a savings account at the bank. This was no ordinary account. It was a Black Hole Account. This meant that money deposited into the account could never be withdrawn, except for a mission. I set up the accounts so that two signatures were needed for withdrawals, mine and the child’s. At first I mandated that the children deposit half their earnings in the bank but I later left it up to them. Sarah was exempt but nevertheless saved a substantial sum with which she was able to tour Europe and later to buy a car.

Was it successful? Our first three missionaries saved their entire mission cost (currently $9,600) plus were able to buy everything they needed for their mission. Our youngest boy is preparing to go on his mission.

3. What have you done with your children to teach them?

Our children probably noticed that we paid our tithes and offerings, that we saved, and that we never paid credit card interest. So a good example is the best teacher. If you have learned sound financial principles then your life teaches your children. They probably heard us talk about a new couch or other item and also heard us decide that we had to save for it. They learned that they may have to wait for their birthday or Christmas to get what they wanted, or to save over an extended period.

We tried all sorts of work schemes. Chores were expected but then some were paid. We never seemed to hit on a formula that worked. For a time we had an allowance that was part free and part earned. When the children got outside jobs I let them keep all their earnings. I wanted the connection between working and earnings to be very strong. Besides, they saved most of their money and a good percentage went into the Black Hole Account.

Was it successful? I would say mixed. We never did get the allowance thing right. However, the children are great at earning a living and can hold down a job.

4. What would you have changed (concerning teaching important financial principles) if you could raise your children again?

When it came to cars my wife and I paid for the running of them and retained ownership. Three of the children now own their own cars. By my calculations it would be very difficult to save for a mission and purchase a car as well as pick up college expenses for the year that some of the boys had before their missions. If they had bought cars then I would have had to pay for their missions. By absorbing the car expense it left the mission and college costs to the children. That would make mission and college more meaningful for them because they contributed substantially. However, I sometimes wonder if I should have had the children get into car ownership earlier.

One thing I would change is having the children contribute to the mission of their older sibling. Once Sarah asked me if she should help with paying for Steven’s mission. I said, “No, your mother and I will take care of it. You save your money.” Wrong answer but there you go.

Was it successful? Yes. As children reach college and mission age this is no time to scale back on your financial commitments to them.

Conclusion

There is a lot more I could write about. What worked for me as a parent may not work for you. I might mention that what we were teaching at home was being reinforced at Church. Many of the principles mentioned here I learned over the pulpit and then taught my children. I very seldom look back and question how I raised my five children. I am just grateful I was given the opportunity to be their father.

How did you learn about finances? What have you taught your children?

Provide physically and spiritually for your family.

I realize that most of you want a little more detail so I have prepared the following.

Get a Job

If you already have a job that’s great. A woman needs the security of a revenue stream. In college and elsewhere you may have heard people say “Work at a job you are interested in,” or “Be employed in an area that you have a passion for.” I have often thought this is like saying, “Never get sick,” or “Always be happy.” The reality is that your job will be hard, stressful, and dull. Walk around the office and see how many married men have a photograph of their family pinned up in front of them. That’s what keeps you going when all you really want to do is to pick up the computer monitor and chuck it through the window. That is, if you are lucky enough to have a window close to you.

Get Religion

There is an undeniable spiritual dimension to life. You need to be exposed to the great teachings in the scriptures and to regularly attend church. There you will be reminded to be kind and generous, to work hard and to give service, to treasure your wife and to love your children. Of course the religion I recommend is my own. You will need to know what to teach your children about their Heavenly Father. You will be able to tune in to your spiritual nature to help you find answers for yourself and your family. Your wife will appreciate your sensitivity borne of your closeness to the spirit.

Get a Home

As soon as you are able you need to purchase a home. If you are still in college you should finish your studies first. Every crop of young home buyers envy the low home prices and interest rates available to the previous generation. Once you own a home with a fixed rate mortgage the ever present inflation now begins to work for you. Each year the fixed mortgage payment becomes relatively cheaper compared to your income. Surprisingly, you even get a tax deduction which seems a little ridiculous in my opinion.

You may not want to take on such a large financial responsibility but it is a necessary step in the evolution of your family. Your wife needs a home that is her own to beautify and to welcome relatives and neighbors to. It adds to her sense of stability.

Get out of Debt

With a home you have the mother of all debts that can take a lifetime to pay off. For a modest home it is considered a justifiable debt. As would be health care expenses and education. Keep away from all other debt and if you ever refinance your mortgage do not add any new money to it for home improvement. Also consider reading this post on debt.

Get Children

At an early point in your marriage introduce children into your family. You may think that you cannot possibly support children at this time. I thought the same too, as do almost all fathers. But it all works out and years from now as your hair is graying you will be eternally grateful that you were unselfish enough to allow children to share your life.

This verse sums up my attitude towards my children:

As arrows are in the hand of a mighty man; so are children of the youth. Happy is the man that hath his quiver full of them. (Psalms 127:4-5)

This is the most advice I have given in years and most of it I learned from listening to wise old men over the pulpit. And I have proven its validity over a lifetime of experience.

Plague

All I want you to do to begin with is to learn about plague. President J. Reuben Clark, Jr., advised:

“Let us avoid debt as we would avoid a plague; where we are now in debt let us get out of debt; if not today, then tomorrow. Let us straitly and strictly live within our incomes, and save a little.” (Conference Report, Apr. 1937, p. 26.)

After reading this I wondered what the plague was like. Knowing that would give me some measure of how bad debt can be. The Black Death struck in the fourteenth century killing an estimated 75-200 million people worldwide and killed 50% of the European population during a four-year period.

The classic sign of bubonic plague was the appearance of buboes in the groin, the neck and armpits, which oozed pus and bled. These buboes were caused by internal bleeding. Victims underwent damage to the skin and underlying tissue, until they were covered in dark blotches. Most victims died within four to seven days after infection. There was mortality rates of thirty to seventy-five percent and symptoms including fever of 101-105 °F, headaches, painful aching joints, nausea and vomiting, and a general feeling of malaise. Of those who contracted the bubonic plague, 4 out of 5 died within eight days. New research suggests Black Death is lying dormant. (See Wikipedia, Black Death)

In summary, debt is worse than the bubonic plague.

Credit Cards

Plan to never pay interest on credit cards or other high rate loans. Although I use credit cards, I have never paid interest. Not because I obtained a 0% loan but because I always pay off the balance.

Essentials

I have heard this preached over the pulpit for thirty-five years: If you must, borrow only for home, health, and education. Lest you feel alone, I will document some of my follies. In the past I have borrowed for a car and paid it back one or two years ahead of schedule. Now I pay cash for my vehicles. Against my better judgment I once borrowed for a vacation. It took me a long time to repay the loan which taught me better sense. Another time I borrowed to play the stock market. I got a margin call and although I was able to cover it by selling other stock, I liquidated all my remaining stocks and paid off my loans, managing to break even.

Charitable

If you are a Latter-day Saint you know well that you will not make any headway without paying your tithes and offerings. For others, find some money to help those with less. You will feel better and be more willing to sacrifice to pay debts.

Works for Me

The following are rules I use to guide me in my finances that haven’t already been mentioned.

• When I refinanced my mortgage I didn’t add to it more debt, even though my payments would have remained the same.
• When I had money saved that was sufficient to pay off my mortgage, I did so even if though the interest rate on my savings was higher than my mortgage.
• I never co-signed on a loan.
• I view a bargain as no bargain if I don’t need it.
• I never quit a job until I had other employment.
• I pay my bills as soon as they arrive.
• Driving an old rickety Mazda saved me enough money to become a home owner.

Questions

What works for you when it comes to money? Any debt stories? How successful have you been at teaching your children about money and debt?