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