10 Steps for Debt Elimination & Financial Peace

Ten Suggested Steps for Debt Elimination and Financial Peace:
From and LDS Perspective.
Don L. Milne-2005 BYU Campus Education Week

Step 1- Pay a full tithe, a generous fast offering, and donate to charities.
*Blessings of tithing - "windows of Heaven" (Malachi 3:10)
*Generous fast offerings - "unto one of the least of these..." (Matthew 25:40)
*Other worthy charities - many good causes

Step 2- Save a $1,000 emergency fund and a one month food storage.
*Make a minimum debt payments until $1,000 emergency fund is saved.
*Set up a monthly zero budget and an envelope system.
*Sell unneeded goods/possessions.
*Temporary extra job, if necessary.

Step 3- Teach your children good financial management.
*Children earn commissions rather than receive allowances (family coupons or money).
*"Teach children to make money decisions in keeping with their capacities to
comprehend...children should earn their money needs through service and appropriate
chores". (Elder Marvin J. Ashton)
*The 20-40-40 Rule for Children's Commission Earnings
a. 20% giving (tithing/charities)
b. 40% savings (open a savings account if parents approve)
c. 40% spending (child decides with parents approval)

Step 4- Pay off consumer debt
*Identify debts from smallest to largest.
*Make minimum payments on all but the smallest debt.
*As soon as this smallest debt is paid off, use all the money you had been applying each month
on this now deceased debt and apply it to the next smallest debt.
*Use this system to work through all of your consumer debt.

Step 5- Be a financial management advocate and example to others
*Be an example to others, let people feel your financial peace and teach them the skills to do
the same.

Step 6- After paying off consumer debt, save 3-6 months of expenses and one year food storage
*"Begin in a small way, and gradually build toward a reasonable objective. Save a little money
regularly, and you will be surprised how it accumulates". (Pres. Gordon B. Hinckley)
*If your financial situation is more stable, you can be closer to a 3 month reserve. If it is less
stable, you should save 6 months worth of expenses.
*Food storage: For every 6 months of savings, set aside 2 months of basic storage. By the
time you have your 3-6 months of emergency savings built up, you will have 6-12 months of
food storage.

Step 7- Save 10-15% of income for retirement/pay for missions
*At this point you have no debt except a house, a year supply of food storage, and a $5,000 to
$10,000 or maybe more sitting in your emergency savings fund.
*Retirement savings-preferably 401k's with high percentage matching from employers. If
you max out what your employer will match, invest the rest in a Roth IRA Mutual Funds.
*Assist in paying for children's missions.

Step 8-Save for children's missions funds and college education
*If you can get to this step early enough, you won't be tempted to cut back on retirement
funding to help out on missions and education. Once you have your 10-15% set up for
retirement funding, you should look at your budget and fit this in.
*If you can start really early, investing $10 a month at an 8% after inflation rate would result
in $4,800 in 18 years.

Step 9- Pay off home mortgage early
*"When I was a young man, my father counseled me to build a modest home, sufficient for the
needs of my family, and make it beautiful and attractive and pleasant and secure. He
counseled me to pay off the mortgage as quickly as I could so that, come what may, there
would be a roof over the heads of my wife and children." (Pres. Gordon B. Hinckley)

Step- 10 Build Wealth and give to others
*Most Latter-Day Saints look forward to the ability to bless the lives of others as a result of
being wise and stewards over the money with which they have been entrusted. We want to be
like the first two servants in the Parable of the Talents and hear the words, "Well done, thou
good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over
many things: enter thou into the joy of they Lord." (Matthew 25"23)

The 3 Little Pigs Guide to Interest and Debt

Our 3 little pigs had a great start. They all graduated from college and got really good jobs making $50,000 per year. But what they did with their earnings made all the difference.

The first little pig built his home out of straw.
-He bought a $300,000 home on a 30 year mortgage that he financed 100% because he didn't have money for a down payment.
-He bought a brand new truck and bought his wife a nice midsize and both were financed.
-They bought new clothes, furniture, vacations and other items all on credit.
-They were only able to pay minimum payments on their credit cards that had interest rates from 12% to 18%.

*After 10 years this little pig was on the brink of financial ruin. He had more than $50,000 in consumer debt. He missed payments on his home, cars, and credit cards. He had almost no equity in his home and no savings. With debt counseling he may be able to dig himself out but foreclosure and bankruptcy are definite possibilities.

The second little pig built his house of sticks.
-He was wiser about his house choice. He saved for 6 months while living in an apartment and put 3% down on a $200,000 house on a 30 year mortgage.
-He bought 2 used cars for himself and his wife and put a little money down.
-He bought some furniture and clothing and ate out occasionally.
-They saved a couple hundred dollars a month in savings account.

*This little pig was in better shape than the first little pig after 5 years. He was even saving something each month but the interest was not much and he still had a little debt and very little equity in his home.

The third little pig built his house of bricks.
-This little pig saved and saved for 3 years. He let his wife drive the junky car they'd had in college and he rode his bike to work, he rented a modest apartment, ate out very rarely and bought very few unessential things.
-He immediately starting saving for retirement $5,000 a year in a really good IRA at 8%.
-He also started saving for a house putting $10,000 per year into CD's.
-He bought a $150,000 house after 3 years and put 20% down on a 15 year mortgage.
-He saves a couple hundred each month for future needs and wants.

*This little pig is in awesome shape. After 5 years his retirement will have almost $39,333. When he retires if he stays on his current schedule he will have $1,295,000! He already has about $40,000 of equity in his home. And he will have it completely paid off in only 13 years. He and his wife are now able to buy a new car with cash and will slowly buy furniture for their home and take a nice vacation every couple years.

LEARN A LESSON FROM THE PIGS!
*Always live within your monthly income and take out tithing and savings FIRST.

*Think before you buy ANYTHING! Do not make impulse buys. Do you need the item? Do you have room for the item? Can you afford to pay cash for the item? If the answer is no to any of these questions you probably shouldn't buy it.

*Start early to save for the future-make interest work for you not against you.

*Learn about financial savings programs and choose the one that serves your needs best-keep in mind that a traditional savings account usually doesn't even keep up with inflation.

*Avoid buying anything on credit that you can't pay off immediately and entirely.

*Buy unessential items only when you can afford to pay cash for them. This includes vacations, clothing, furniture, and probably cars. Try not to finance anything that is not absolutely necessary. The interest will HURT!

*If you must finance a car for transportation needs, remember functionality and low cost, not comfort or style are the key concerns.

*Wait to buy a home if possible until you have money for a down payment. Ideally 10% or more.

*Make guidelines for spending with your spouse and make sure you both have the same financial goals and commitment to your budget.

Little Tips & Tricks

How to Waterproof Matches

Chuck Plaudis (Midwest City II Ward, Oklahoma City South, OK Stake) is his wards' Disaster Preparedness Coordinator. He said a good way to waterproof the strike-anywhere matches is to coat/paint them with clear nail polish. After they dry, the matches can still be lit by striking them just about anywhere, but they will repel water.

"I have used this with our scouts and it works!" Plaudis said. Thanks Chuck for your info!

Backup Your Data

In the event of a disaster, your computer may be destroyed. If you don’t backup all of your data, you’re going to lose all of that too. That’s why data backup is such an important part of the disaster planning process.

When you backup your data, make sure that you make more than one copy and keep them in separate locations. This way, if one copy gets destroyed, you’ll have another one to fall back on.

Maintenance IS Necessary

One of the most important and quite overlooked aspects of a fire extinguisher involves getting your fire extinguisher tested annually. A fire extinguisher won’t do you any good if you go to use it and it no longer works.

Local fire companies will usually certify your fire extinguisher. It is a good idea to get your extinguisher certified once per year so that you can be sure it will be able to perform in the event of an emergency.

Your Family Disaster Plan

Disaster can strike quickly and without warning. It can force you to evacuate your neighborhood or confine you to your home. What would you do if basic services-water, gas, electricity or telephones-were cut off? Local officials and relief workers will be on the scene after a disaster, but they cannot reach everyone right away.
Families can-and do-cope with disaster by preparing in advance and working together as a team. Follow the steps listed to create your family's disaster plan. Knowing what to do is your best protection and your responsibility.

1. Make a map of your home.
-Label every exit, including doors, windows, and hallways, which may become a potential escape.
-In every room, label the primary exit and a secondary exit in case the primary is blocked.
-Label every room where a family member sleeps.
-Label the locations of any escape ladders, or other special equipment.
-Label the locations of fire extinguishers, smoke detectors, first aid kits, and 72-hr kits.
-Label the locations of shutoffs for gas, water, and electricity.
-For people with medical conditions or disabilities, label their location as well as the location of any special equipment they will immediately need.

2. Find out what could happen to you. Contact your local emergency management or civil defense office and American Red Cross chapter-be prepared to take notes:

-Ask what types of disasters are most likely to happen. Request information on how to prepare for each.
-Learn about your community's warning signals: what they sound like and what you should do when you hear them.
-Ask about animal care after disaster. Animals may not be allowed inside emergency shelters due to health regulations.
-Find out how to help elderly or disabled persons, if needed.
-Next, find out about the disaster plans at your workplace, your children's school or daycare center, and other places when your family spends time.

3. Create a disaster plan. Meet with your family and discuss why you need to prepare for disaster. Explain the dangers of fire, severe weather and earthquakes to children. Plan to share responsibilities and work together as a team.

-Discuss the types of disasters that are most likely to happen. Explain what to do in each case.
-Pick two places to meet.
1. Right outside your home in case of a sudden emergency, like a fire.
2. Outside your neighborhood in case you can't return home. Everyone must know the address and phone number
-Ask an out-of-state friend to be your "family contact". After a disaster, it's often easier to call long distance. Other family members should call this person and tell them where they are. Everyone must know your contact's phone number.
-Discuss what to do in an evacuation. Plan how to take care of your pets.

4. Complete this checklist:

-Post emergency numbers by phones
-Teach children how and when to call 911
-Show each family member how and when to turn off water, gas, and electricity at the main switches.
-Check if you have adequate insurance coverage.
-Teach each family member how to use the fire extinguisher and show them where it's kept.
-Install smoke detectors on each level of your home especially near bedrooms.
-Conduct a home hazard hunt.
-Stock emergency supplies, 72 hr. kits, and proper food storage.
-Take a Red Cross first aid and CPR class.
-Determine the best escape routes from your house. Find two ways out of each room.
-Find the safe spots in your home for each type of disaster.

5. Practice and Maintain Your Plan.

-Quiz your kids every six months so they remember what to do.
-Conduct fire and emergency evacuation drills, and document them.
-Replace stored water every three months and rotate food storage out.
-Test and recharge your fire extinguishers according to manufacturer's instructions.
-Change your batteries on the same date annually.

72 Hour Emergency Packs

What EACH pack should contain:

1. Water
For three days:
* 2 qt./liter canteen or water bottle w/fresh water
*water purification tablets/liquid or filter/purifier to treat 1 gallon per day

2. Food
For nine meals:
*6 fruit bars/rollups/ or small bags of dried fruit
*6 sticks of Jerky
*3 bags of instant oatmeal cereal
*3 instant noodle soup mixes
*6 bags of instant cocoa mix
*salt, pepper, sugar, or honey as desired

For Quick Energy
*3 Energy bars
*hard candy
*gum

3. Clothing
*2 pair of socks
*1 set of underwear/garments
*Sweatshirt or light jacket with a hood or cap
*sweatpants or jeans
*gloves
*poncho or waterproof jacket with hood
*2 handkerchiefs
*small sewing kit (1 per family)

4. Shelter
*Mylar or foil emergency blanket
*20 ft. of small 1/4" nylon rope or line
*small wool or synthetic blanket (optional)

5. Sanitation:
*roll of toilet paper in ziplock bag
*bar of soap in ziplock bag
*Toothbrush, toothpaste, and floss
*small towel & washcloth
*travel size shampoo/conditioner, nail file
*comb or brush
*sunscreen, lip gloss, insect repellant
*wet wipes in ziplock bag
*plastic sanitary shovel and garbage bag
*feminine hygiene items as needed
*baby items as needed

6. Cooking & Heat
*1 large (2 hr.) sterno-type canned heat
*1 box waterproof/windproof matches
*6 fire starter balls
*mess kit (with cup and utensils)
*military style canteen cup or small metal pan for heating water
*can opener

7. Security, communication, medical, and ID
*plastic whistle
*metal signal mirror
*4 quarters & cash in small bills
*pocket knife
*small flashlight w/ fresh batteries
*name tag for children
*liquid filled compass (1 per family)
*small am/fm/sw battery powered radio w/ fresh batteries
*1 all inclusive first aid kit (1 per family)
*Emergency binder (see other for list of items to include)

Emergency Grab-N-Go Binder

Identification
*Current family photo
*Individual photos w/ list of spouse and childrens name, birthdate, SSN, height, weight, eye color, hair color, and unique marks, address, phone #, an out-of-state contact, allergies/medications, insurance and employer info
*Copies of birth certificates, fingerprints, copy of DL, and SS card

Financial
*List of all bank accts, routing #'s, account #'s, internet log-in info, billing/payment address, and contact info.
*List of all credit cards, account #'s, internet log-in info, billing/payment address, and contact info.
*List of all loans, account #'s, billing/payment address, and contact info.
*List of all other monthly bills (phone bills, power bills, mortgage/rent, insurance, etc.)
*5 years of tax records
*stocks, bonds, cd's, and safety deposit box info.

Policies
*Medical, life, car, house/renters insurance information

Records
*Marriage license
*Immuniczation records
*Resumes
*Mititary records, discharge papers
*diplomas

Personal
*Power of Attorney
*Adoption papers
*Geneology records
*Sealing certificates
*Patriarchal Blessings
*Ordination/Baby Blessing Certificates
*Baptism/Confirmation Certificates

Property
*At least 2 calling cards
*$20 in spare cash
*spare keys for house/cars/safe deposit box, etc.
*mortgage info/land ownership papers, etc.
*Car and RV titles, etc.

Contacts
*Friends & family info, include address, phone, cell phone, work phone, email, etc.
*Employer info, fire/paramedics/police info, physicians info, hospital info.
*Ward info, High Priest/Elders Quorum contact info, bishop, stake pres, visiting teachers, home teachers info, etc.

*THESE ARE JUST SOME IDEAS TO GET YOU STARTED! YOU'LL BE ABLE TO GRAB THIS BOOK AND RUN IN AN EMERGENCY, BE ORGANIZED IN CASE SOMEONE ELSE NEEDS TO TAKE OVER YOUR AFFAIRS, OR IF NOTHING ELSE, TO JUST EVERYTHING HANDY IN ONE LITTLE BOOK!

Alternate Heating and Cooking

HEATING:

Portable Kerosene Heater:
Burns kerosene which is clean
Small and portable, lightweight
May only store for 1-2 years. Because of fuel, must be kept in cool,
Dark place and rotated heats a large area
May double as a cooking stove

Woodstove:
Burns wood, fuel may be kept for several years if kept dry
Stove is economical and heats a large area
May also double as a cooking stove.

Fire (camp or pit):
Same as a wood stove
May use a large metal dish for pit or build a fire proof wall around pit
May cook over a fire

Fire or chiminia:
Fire place must be in the design of your home, of course
Chiminia’s are portable fireplaces that may be placed out on deck,
Patios or the ground
Burns wood for fuel (last for several years)
Economical and easy to store

COOKING:
(Wood stoves, fire (camp/pits), and kerosene stone from above)

Propane or gas camp stoves:
Small and portable
Burns efficiently, use little fuel
Fuel must be stored in cool, dry place, away from the house

Sterno stove:
Small and portable
Fuel must be kept dry and cool
Purchase fuel from outdoor equipment stores

Back pack “tablet” or ethanol or gellied stoves:
Very compact and lightweight
Burns alchohol based fuel only
Handmade models easy to assemble with “cheap” items

Any and all of these heating and cooking items. Fuel and assembly ideas may be found on numerous sites on the internet (too numerous to list). Find the perfect one for you to pack, sore, and use then prepare for your whole family (space and amount).

FUEL: If possible, a reserve of fuel such as wood, coal, charcoal or oil should be part or a storage plan. When you are deciding what fuel to store in what amounts, remember that wood stores for several years. Coal and charcoal slowly oxidize and should be stored under ground away from the house. Oil and petroleum will slowly oxidize as well. Kerosene will store well, but must be used after 1-2 years. Remember to keep paper and matches for fire starter on hand.

Emergency Water Storage

1 gallon of water per person per day = 2 quarts for drinking and 2 quarts for cooking and sanitation. Pregnant or nursing mothers, children, and ill people will need more. Hot environments and intense physical activity can double hydration needs.
In most emergency situations, fresh drinking water is the most important item that you can store. The church recommends storing at least 14 gallons of water per person for a two week supply. It is recommended to have both portable and stationary emergency water storage.

STORAGE CONTAINERS

*Airtight
*Resistant to breakage
*Heavy enough to hold water
*A lining that will not rust or affect the flavor of the water
*Food grade plastic-sanitary
*Opaque-reduce algae & bacteria promoting light/warmth (ideal)
*Seal-able

Commonly Used Containers

*Clear PETE plastic containers (2-liter soda bottles)
*Commercially bottled water
*Plastic buckets or drums (heavy-duty, thick, polyethylene food grade plastic barrels)
*Boxed water kits
*Enamel-lined containers

DO NOT USE These Containers

*Glass jars or jugs
*Bleach containers (or any container that held chemicals)
*Metal containers
*Plastic Milk Jugs

Storage Conditions

-Clearly label all water containers "drinking water" with the date and rotate 6-12 months.
-Store close to ground level - secure to prevent breakage or injury in the event of earthquake.
-Store in a cool, dry place away from direct sunlight and heat sources, to prevent algae growth.
-Store in areas where leakage will not cause damage to home.
-Store away from harmful chemicals. Do not store it near gasoline, kerosene, pesticides, etc.

Filling Containers

Store-bought, factory sealed, food grade containers (drums) need not to be prepared. Alternative food grade containers purchased from sporting goods stores, etc., need to be thoroughly washed with dish soap, sanitized by swishing a solution of 1 tsp. liquid household chlorine bleach to a qt. of water on all interior surfaces/lid. Rinse thoroughly with hot, clean water. Once container is clean, fill with potable (safe) drinking water. All public water supplies are treated already and free of harmful bacteria. However, as an additional precaution, it is recommended to add 8 drops of bleach per gallon of water stored to protect against any lingering organisms.

Rotation

When potable water is properly stored, it should have an indefinite shelf life; however, it's a good idea to use and replace the stored water. Rotating water this way provides you with an opportunity to experiment and check the amount of stored water against what you require. It also serves as an additional precaution against bacteria or viruses growing in containers which may not have been thoroughly or properly cleaned and sanitized and would otherwise go unnoticed. Check water drums yearly and rotate the water in all other containers every 6-12 months. The best way to ensure fresh and safe drinking water is to rotate.

Emergency Alternative Water Sources

-Water heaters
-Melted ice cubes
-Liquid from canned foods
-Pipes (shut-off main first)
-Water beds (DO NOT DRINK)
-Reservoir tank in your toilet (DO NOT DRINK)
-Hot tubs & swimming pools (DO NOT DRINK)
-Locate water source - utilize filters and purification techniques

Methods of Purification

Obtaining water during a crisis: If water is not pure, use one or more of the following treatments prior to consumption. Remember the only way to know if your water is pure, is to test it in a lab.

*Boiling: is the safest method of purifying water-disease causing microorganisms cannot survive the heat of a sterilizing boil. Bring water to a rolling boil for 3-5 minutes, depending on elevation. Add 1 minute per 1000 feet of elevation, keeping in mind that some water will evaporate. Let the water cool before drinking. Boiled water will taste better if you put oxygen back into it by pouring it back and forth between two containers. This will also improve the taste of stored water. Be aware that boiling water will kill microorganisms, however, the water will still have particulate substances in it that can be filtered out using a clean handkerchief, before drinking. Boiling water does not eliminate pollutants, poor taste or foul odors.

*Chemical Disinfection - Chlorination: using liquid chlorine bleach to kill microorganisms. Pre-use treatment of properly stored water - LIQUID household chlorine bleach can be used to purify water provided it contains 5.25% sodium hypochlorite as the ONLY ACTIVE ingredient. Granular or powdered forms of bleach are poisonous, as are scented, color-safe bleaches or those with added cleaners. Liquid bleach has an effective shelf life for about 6 months. Add 2 drops of bleach per quart of water (8 drops per gallon) to a clean container, thoroughly mix by stirring or shaking and let stand for 30 minutes. After disinfection, it should have a slight odor of chlorine. If the odor is not present, add another dose and let stand another 15 minutes. Always double the dose for cloudy water. Bleach is totally ineffective against GIARDIA and other hardy forms of protozoa found in streams and lakes. Use Boiling instead.

*Chemical Disinfection-Iodine & Chlorine tablets: In addition to chlorination, other good treatment chemicals can be acquired from most outdoor supply stores. Purification tablets release chlorine or iodine to purify water. They have a short shelf life, losing effectiveness in just 6 months, they are sensitive to heat and light and quickly become less potent. Iodine disinfection (2% solution) has been found to be very effective against viruses, bacteria, and protozoa with the exception of cryptosporidium. Using iodine has disadvantages. Colder water requires more time for disinfecting. Dosages vary since iodine can be absorbed into dirt and debris found in water. It is not safe for pregnant women and people with thyroid conditions. Iodine is a short term water-purification solution and should not be used regularly for more than 3 months. Red Cross does not recommend.

*Filtration: water filtration simply means to strain out the impurities from a water source. The larger the impurity particulate the easier it is to filter. The opposite is true also. There are many good water filters on the market. The activated charcoal type can also remove bad tastes. Some models also add chemicals to kill bacteria.

*Distilling: This is the most effective method of water purification. However, it is slow and the required equipment is expensive. If you plan to use this method, advanced preparation will be necessary. Distillation will remove microbes, heavy metals, salts, most other chemicals and radioactive dust and dirt.