The Economy Is A Fragile Thing

It is time to revisit President Hinckley’s October 1998 General Conference Priesthood Session Talk. The one entitled “To the Boys and to the Men.” He first speaks to the young men and then to the “older men.” To the brethren he first reads from Genesis 41, wherein Joseph interprets Pharaoh’s dreams as seven years of plenty and seven of famine. There has been some speculation that this could mean a real seven years of plenty and seven years of famine in our day, and variations thereof. That is not my focus today.

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.