Saturday, July 25, 2009

So, Did You Get Your House in Order?

Recent estimates have pegged our National Debt at $11 trillion (that’s the number 11 followed by 12 zeros!). Our interest payment to service this enormous debt now stands at $26 billion…per month. That’s over $300 billion a year that will be sent (mostly overseas) to our creditors instead of being used to upgrade our schools, roads, or national defense. If this were happening in your house, you’d put a stop to it, right? Rational thinking dictates that if it doesn’t work in your house, it won’t work in the White House.

Recently, the Wall Street Journal reported the following:

The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.” (emphasis added)

Now, our current administration is contemplating yet another trillion dollar stimulus package and the largest tax ever levied upon the American people in the form of Cap and Trade legislation. What is more, we are apparently rushing forward to pass a universal health care plan that will undoubtedly bankrupt our system. Thomas Jefferson once said that “[t]he principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” If that weren’t clear enough, he also said that politicians should consider themselves “unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves…

What is going on here? The recent and ongoing economic turmoil is taking a visible toll on most everyone. I believe each of us know someone, if not yourself, who has been directly affected by it.

So, were you prepared?

In the October, 1998 General Conference President Hinckley warned us about todays events by admonishing the “older men” concerning “temporal matters.” His talk, entitled “To the Boys and to the Men,” can be found here. As you may recall, a good portion of Genesis 41 was quoted, which treats Joseph’s interpretation of Pharaoh’s iconic dream of seven years of plenty followed by seven years of famine. Under the direction of Pharaoh, during the seven years of plenty Joseph gathered up food “as the sand of the sea, very much, until he left numbering; for it was without number” (Gen. 41:49).

Thus, heeding the wisdom of an inspired man, Pharaoh undertook an immense preparation for the oncoming storm – in fact, they stored so much food and provisions that they lost count. That same food eventually fed Jacob’s family when they were forced to flee the famine that “was over all the face of the earth” (Gen. 41:56).

Upon concluding Joseph’s story, Pres. Hinckley then uttered these prophetic words:

Now, brethren, I want to make it very clear that I am not prophesying, that I am not predicting years of famine in the future. But 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 incomes. 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” (emphasis added).

I remember hearing those words. I recently returned from my mission and I was sitting in a chapel in Pleasant Grove, UT, with my father. At the time I had no debt, I was living at home in my parent’s basement, and couldn’t fathom that his counsel would ever affect me.

In my opinion, we eventually saw our symbolic “seven years of plenty” as the U.S. experienced record highs in both the stock and housing markets. Things were looking good up until around the end of 2007, almost 9 years after the prophet counseled us to prepare for this “portent of stormy weather” of which we are currently undergoing.

Our beloved prophet concluded his talk by saying:

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.

This is a part of the temporal gospel in which we believe. May the Lord bless you, my beloved brethren, to set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your wives and children and peace in your hearts. That’s all I have to say about it, but
I wish to say it with all the emphasis of which I am capable” (emphasis added).

Clearly, storms are howling about our heads today, and there does not seem to be an end in sight. You may have your job and some sense of security now, but where will you turn if your situation changes and you are left in an unprepared state? Will the government step in? In light of its present actions, one wonders whether the government will have the means to. And if so, at what cost? The uncertainty of how that would work alone is enough of a motivator for me to change my habits. Unfortunately, getting out of debt takes time and discipline.

Are our houses in order? Is it too late to change our current situation, or can we start now and heed an inspired man’s advice and fortify ourselves against this raging storm?


Floyd the Wonderdog said...

I am 50% Jewish and 50% Scottish, so I am 100% cheap. Isn't family history great? We've always lived frugally. When we were first married 30 years ago, we agreed that we would not spend more than $5 without consulting the other. Because we set up the budget together, we did not have to consult over rent, groceries, gas, utilities, etc. because we had already discussed those.

We paid off our house in 16 years and almost have my wife's car paid off. Then, we will be totally debt free.

We have 6 months of expenses in the bank, and CD's that mature every month. That way, if I loose my job, we have money to cover our needs.

We have no credit card debt. We pay it off every month. And yes, you read it right, we only have one credit card and are thinking of getting rid of it in favor of a debit card. You see, studies have shown that people spend 20% more when they use a credit card.

Living frugally requires one to subjegate the natural man and his needs to satisfy appetites, pride, and lust.

We have never bought a new car, they've all been used. If you can't stand driving a used car ask yourself if you don't need to work on pride (or fear of germs).

You've got to be willing to sacrifice. I saw people drop out of college because they couldn't be poor. But now that I make 2 to 3 times what they make, they call me "lucky". Funny how the harder I work, the luckier I get.

I recommend Dave Ramsey's Financial Peace University to people. He teaches the principles we live by.

Jeremy said...


It's funny you mentioned Dave Ramsey. Two of my brothers recently talked to me about him and how he's helped their financial situations.

I'm a lot like you, though. I refuse to carry credit card debt, and do not purchase anything that I can't pay for in cash (obviously excluding major purchases such as a home, car, and student loans).

I am recently out of school and anxiously look forward to the day when I pay off my student loan debt. Until then, I envy you for having 6mo of expenses saved in the bank. What a relief it must be to know you can always fall back on that.

Thanks for stopping by.

Floyd the wonderdog said...

It's been great to have the funds to help others. By keeping my house in order, living frugally, and staying out of debt, I've freed up funds to help others who are struggling.

The month we paid off our house, my daughter aanounced that she wanted to go on a mission. With the house paid off, we can divert some of the money that used to go to the mortgage payment to her mission and some to increase our retirement fund to pay for our mission.

If you can, take Dave Ramsey's Financial Peace University course. You can retake it any time you want for free.

Nate said...

Unfortanately, for many people (myself included) it takes actually seeing these bad times to understand the wisdom of GBH's words. I think this economic downturn will have changed many peoples attitudes (similar to how the older generations which lived through the depression never saw finances the same again).

I don't think it is too late to get our houses in order for most people. How to come by the discipline to do it is the problem. For me, looking around at people going through hard times has been a motivator.

Jeremy said...

You're right Nate. We are the generation that has been given everything. Through blood and sacrifice we have been given this precious gift of self-rule and freedom. But because this gift was simply handed to us, we don't think twice about it. Many today are selling out for the perceived securty of "free" govt housing, or corporate or personal welfare dependency.

Getting our houses in order today includes living within our means, and preparing for tomorrow. It is not a matter of if bad things are going to happen, it's when.

Evgenii said...


Just out of curiousity, what do you mean by corporate dependency?

Jeremy said...

I'm talking about trophy kids - the kids that enter the corporate world and believe that all things must be given to them because from a young age they were given all things and never told that they failed.

These are the kids that got 15th place trophies because parents didn't want to hurt their feelings. The same kids whose teachers changed from a red correction pen to a purple pen because red was too harsh and purple was a calmer color.

Trophy kids are basically what the French workforce consists of today. They sponge off the corporate welfare and are more a liability than an asset.

Hope that helped.

Evgenii said...

thanks, that makes more sense.

Russ said...

I am still in economic disarray, but we have gotten out of credit card debt so I guess we are headed in the right direction. Our problem is my job does not pay enough for the area we have to live in. :(

Jeremy said...

Come to Texas, Russ. Did you know that Texas created more jobs in 2008 than all other states...COMBINED!! This is truly God's country here.

Thanks for stopping by.

Evgenii said...

I agree that it is easier to find a jobin Tejas, but I beg to differ on the God's country part.