Sunday, November 27, 2011

Learning to discern between needs and wants

The news reports of the past few days have been filled with incidents connected with the so-called Black Friday 2011. One interesting observation, I heard on the radio, said that spending was up but savings were down. In other words, people were taking money out of savings to spend on "deals." So what were the mobs of people out buying? TVs, cameras, tablet computers, laptops, games and toys just the things needed for people who are living on savings and out of work. One of the best selling items, that people waited in long lines to buy were different models of the Amazon Kindle. Guess what? They weren't on sale. All of the models sold at the regular price. I could order one today at exactly the same price they sold for on Friday.

It makes me sad to see this, especially when all of the comments are about how good the sales are for our economy! Here is a quote from the website, Provident Living:

We must learn to distinguish between wants and needs. We should be modest in our wants. It takes self-discipline to avoid the “buy now, pay later” philosophy and to adopt the “save now and buy later” practice.
Elder Joseph B. Wirthlin (1917–2008) taught: “All too often a family's spending is governed more by their yearning than by their earning. They somehow believe that their life will be better if they surround themselves with an abundance of things. All too often all they are left with is avoidable anxiety and distress” (“Earthly Debts, Heavenly Debts,Liahona, May 2004, 42).
How many people's lives will be better because of what they bought on Black Friday? Can there be unlimited increases in the amount of consumer credit? The Federal Reserve Statistical Release states that overall consumer credit increased at an annual rate of 1 and 1/2 percent in the third quarter of 2011. Revolving credit has gone down slightly while non-revolving credit has risen.

Friday, November 25, 2011

Who are the poor?

In the U.S., the so-called poverty level is as follows:

The 2011 Poverty Guidelines for the 48 Contiguous States and the District of Columbia Persons in family Poverty guideline
  • 1 person $10,890 
  • 2 people 14,710 
  • 3 people 18,530 
  • 4 people 22,350 
  • 5 people 26,170 
  • 6 people 29,990 
  • 7 people 33,810 
  • 8 people 37,630 
For families with more than 8 persons, add $3,820 for each additional person. If you have a family, like ours, with seven children, you would have to make over $40,000 a year to be above the poverty level. Under these guidelines, I never knew I was poor for many of my working years. I am not making this up. From the U.S. Census Bureau, the median household income in the U.S. in 2009 was $50,221.00, meaning half of the U.S. population was below that figure. The figures for 2009 show 14.3 % of the population below the poverty level.

Let me contrast this with the average annual income of Mozambique, for example, which is estimated to be $900 per year. Their 9 person family would make about $8100 year, less than the poverty level for one person in the U.S. But more than likely, that 9 person family would only have one or perhaps two working people and the real income would be much lower.

Who are the poor? In the U.S. you can get food stamps if your household has less than $2000 in "resources." But not all things you own count, your home does not, your car or truck may not. The requirements generally follow the Temporary Assistance for Needy Families (TANF) guidelines. If you want to know how many different programs you could qualify for if you were defined as poor, look at the

I ask again, who are the poor? Think about this. If I made $10,000 a year as a single adult and managed to live and save $500 a year, I would soon fail to qualify for most federal programs. In other words, if I try to save myself out of poverty, I am penalized by the U.S. Government.

I will come back to this issue again.

Thursday, November 24, 2011

Debt -- the real challenge to freedom

As I watch country after country succumb to overwhelming debt, I am often reminded of the old adage, waste not, want not. Our own country has a crushing level of debt but collectively, we cannot find the moral courage to live within ours means. The way to financial security is simple, spend less than you make. I am always impressed with some trivial, but significant examples of waste and improvident living. Almost every day, I drive by several "convenience" markets. I see cars lined up to purchase huge sugar water drinks and other even more harmful substances. A local thirst buster is about 80 cents. Many people drink two or more a day. Let's say conservatively, they spend $1.60 a day, five days a week. That is $8.00 a week, or $416 a year, almost one full month's payment on a car or house.

I am certain that that is not all they spend in convenience markets. If you tracked every penny that you spent for a whole month, you would probably find similar expenditures. But the interest on debt is even more insidious than purchasing junk food at a convenience market. You have nothing at all, not even sugar water, to show for your payment. We hear a lot about a housing crisis, there is no housing crisis, houses are fairly reasonably priced right now. What we have is a debt crisis. People who purchased a home and then dutifully paid the interest year after year without thinking twice about losing all that money to interest, now find themselves unwilling or unable to pay for a house that is worth less than they originally paid, and usually less than the balance due on the their long term mortgage.

Clear back in 1998, President Gordon B. Hinckley, a prophet of God, said, “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 went on to say, So many of our people are living on the very edge of their incomes. In fact, some are living on borrowings. … I am troubled by the huge consumer debt which hangs over the people.”

President Hinckley quoted President J. Reuben Clark Jr., in the April 1938 general conference, said from this pulpit: “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” (in Conference Report, Apr. 1938, 103).

The first step in provident living is to live within your means.

Wednesday, November 23, 2011

Self Reliance does not mean a handout

Maybe only those who have faced serious hard times during their lives and had to "go it alone" can really understand the principle of self reliance. Many of our country's older people understand this principle, but in the face of the "me" generation, it is doubtful that younger people have even a passing understanding of the concept. Listening to the requests from charity food banks on the radio reminds me of how many people feel that they are entitled to support from the community or the government.

Bishop Keith McMullin, of Presiding Bishopric of The Church of Jesus Christ of Latter-day Saints said it well,
Many members live in cultures where it can be said that they live in a consumer age. When something wears out or breaks, many of us tend to throw the item away. When we want something we cannot afford, many of us tend to buy it on credit. A surprising number of young homemakers are not adequately skilled at cooking, sewing, gardening, and processing and storing food at home. Also, a surprising number of young breadwinners are not learning to save for the future and are allowing their family units to take on excessive debt. In a time of plenty, when one should consider laying up in store for potentially hard times, many of us consume everything we have—and more!
I heard an interview on the radio of a lady who had lived in her home for over 30 years and was now losing it to a mortgage foreclosure. How sad that she did not know or have the experience necessary to make decisions during those 30 years of home ownership to pay off her mortgage. 

Quoting further from Bishop McMullin,

Modern-day leaders have given specific, inspired guidance for our day about subjects ranging from home storage to debt. President Spencer W. Kimball was very clear about our duty to be self-reliant: “The responsibility for each person’s social, emotional, spiritual, physical, or economic well-being rests first upon himself, second upon his family, and third upon the Church if he is a faithful member thereof.
“No true Latter-day Saint, while physically or emotionally able, will voluntarily shift the burden of his own or his family’s well-being to someone else. So long as he can, under the inspiration of the Lord and with his own labors, he will supply himself and his family with the spiritual and temporal necessities of life” (Ensign, Nov. 1977, pp. 77–78).
Although these comments were directed at members of the Church, there is no reason that this principles cannot apply to everyone, no matter what their church affiliation. 

Here is another quote, this one from President Marion G. Romney, of the First Presidency back in 1982,

Since the beginning of time man has been counseled to earn his own way, thereby becoming self-reliant. It is easy to understand the reason why the Lord places so much emphasis on this principle when we come to understand that it is tied very closely to freedom itself.
On this subject, Elder Albert E. Bowen said, “The Lord must want and intend that His people shall be free of constraint whether enforceable or only arising out of the bindings of conscience. … That is why the Church is not satisfied with any system which leaves able people permanently dependent, and insists, on the contrary, that the true function and office of giving, is to help people [get] into a position where they can help themselves and thus be free.” (The Church Welfare Plan, Gospel Doctrine manual, 1946, p. 77.)
Many programs have been set up by well-meaning individuals to aid those who are in need. However, many of these programs are designed with the shortsighted objective of “helping people,” as opposed to “helping people help themselves.” Our efforts must always be directed toward making able-bodied people self-reliant.
 If you need a helping hand, look at the end of your arm.