Sunday, December 28, 2008

Interest never sleeps

There is a much quoted saying which has long since passed into our collective folklore but it was first given by President J. Reuben Clark in a Conference talk for The Church of Jesus Christ of Latter-day Saints in April of 1938. The saying is more relevant today than it was in 1938. The complete quote is as follows:
It is a rule of our financial and economic life in all the world that interest is to be paid on borrowed money. May I say something about interest? 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 or travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys no food; it wears no clothes; it is unhoused and without home and so has no repairs, no replacements, no shingling, plumbing, painting, or white-washing; it has neither wife, children, father, mother, nor kinfolk to watch over and care for; 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 Jr., in Conference Report, Apr. 1938, 103).
In a previous year, President Clark stated: "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" (J. Reuben Clark Jr., in Conference Report, Apr. 1937, 26).

In today's world credit has become a god, worshiped as a solution to all of life's problems. I have had people come to me as an attorney, about to lose their home, who are more worried about their credit rating than they are where they will live. But credit comes with a price and that price is the payment of interest. It is not unusual for credit cards to carry interest at 18% or higher and rates as high as 28% are not uncommon. Payday loan companies, in some states, can legally charge interest as high as 300% or even up to 700% per year. Presently, there is an attempt to limit the rates to 36% per year.

If we live within our means and learn to save for the things we need and want, we can avoid paying a penalty for a lack of self denial. As President Gordon B. Hinckley said,
“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.

Of course, more later.

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