[cinepro]

I don’t know where you guys are living, but I’ve never lived in a ward where there was a problem with people not going into enough debt.

And I’ve never known any LDS who had a problem taking out “positive” debt. I’ve never heard of anyone not taking out debt to start a small business, or get an education.

And we need to acknowledge this view on debt isn’t just an “LDS” thing either. Popular (Christian) financial advice giver Dave Ramsey has this to say:

Quote:

Myth: Debt is a tool and should be used to help create prosperity.

Truth: Debt isn’t used by wealthy people nearly as much as we are led to believe.

Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you’re in debt, then you’re a slave because you do not have the freedom to use your money to help change your family tree.

According to a USA Today article about debt, 78% of Baby Boomers have mortgage debt, 59% have credit card debt, and 56% have car payments. It takes a lot of will, discipline, courage and help to slay the debt monster. But it can be done. Imagine how much you could put toward retirement if you just didn’t have a stinking car payment? This is how the wealthy really build their wealth. Debt is dumb. Welcome to the real world!

When training for my first career in real estate, I was told that debt was a tool. “Debt is like a fulcrum and lever,” allowing us to lift what we otherwise could not lift. We can buy a home, a car, start a business, or go out to eat and not be bothered with having to wait. I remember a finance professor telling us that debt was a two-edged sword, which would cut for you like a tool but could also cut into you and bring harm.

The myth has been sold that we should use OPM (other people’s money) to prosper. The academic garbage is spread really thick on this issue. We are told with sufficient snobbery and noses in the air that sophisticated and disciplined financiers use debt to their advantage. Careful there, you’ll get a sunburn on your upper lip.

Consider the Risk

My contention is that debt brings on enough risk to offset any advantage that could be gained through leverage of debt. Given time—a lifetime—risk will destroy the perceived returns purported by the myth-sayers. I once was a myth-sayer myself and could repeat the myths very convincingly. I was especially good with the “debt is a tool” myth. I even sold rental property that was losing money to investors by showing them, with very sophisticated internal rates of return, how they would actually make money!

Boy, what a reach. I could spout the myth with enthusiasm, but life and God had some lessons to teach me. Only after losing everything I owned and finding myself bankrupt did I think that risk should be factored in, even mathematically. It took my waking up in “intensive care” to realize how dumb and dangerous this myth is. Life hit me hard enough to get my attention and teach me.

http://www.daveramsey.com/article/the-truth-about-debt/

Keep in mind that LDS Church leaders and Dave Ramsey are forming their opinions from interactions with many, many different people from all over the country (and world), and their perceptions are strongly influenced by this. And given the choice between what we have now (with consumer debt and the problems many Church members have) and having a Church where the member have absolutely no debt (not even mortgages and student loans), I would choose the latter.

[cinepro]

I think we may be making a lot of assumptions about what Church leaders have actually said when it comes to debt.

Does anyone dare brave the Church website and see what they’ve been saying? I suspect almost every instance of counsel against “debt” is referring to consumer debt and spending more than you make, not leveraged investments.

Here’s my favorite bit of advice. From President Monson in 2006, they heyday of the housing bubble:

Quote:

The final [trap] I wish to mention today is one which can crush our self-esteem, ruin relationships, and leave us in desperate circumstances. It is the [trap] of excessive debt. It is a human tendency to want the things which will give us prominence and prestige. We live in a time when borrowing is easy. We can purchase almost anything we could ever want just by using a credit card or obtaining a loan. Extremely popular are home equity loans, where one can borrow an amount of money equal to the equity he has in his home. What we may not realize is that a home equity loan is equivalent to a second mortgage. The day of reckoning will come if we have continually lived beyond our means.

My brothers and sisters, avoid the philosophy that yesterday’s luxuries have become today’s necessities. They aren’t necessities unless we make them so. Many enter into long-term debt only to find that changes occur: people become ill or incapacitated, companies fail or downsize, jobs are lost, natural disasters befall us. For many reasons, payments on large amounts of debt can no longer be made. Our debt becomes as a Damocles sword hanging over our heads and threatening to destroy us.

I urge you to live within your means. One cannot spend more than one earns and remain solvent. I promise you that you will then be happier than you would be if you were constantly worrying about how to make the next payment on nonessential debt. In the Doctrine and Covenants we read: “Pay the debt thou hast contracted. … Release thyself from bondage.” 7

Thomas S. Monson, “True to the Faith”

http://www.lds.org/general-conference/2006/04/true-to-the-faith?lang=eng

How many countless LDS (including a few in my own ward) would have been so much better off if they had only listened to him?

[cinepro]

Yesterday we had the Elder’s quorum administer the sacrament, and a recent adult convert blessed the water. The writing on the card was a little too small, and he had a hard time getting through it. It got the point where he was getting really frustrated and saying “Oh man!” and laughing out of exasperation and embarrassment when he messed up. He finally got through the prayer but even then made at least three noticeable mistakes (but none of them “doctrinally” objectionable). The Bishop let it go and we carried on.

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