Transcript Buying a Home - Brigham Young University

BYU Management Society
St. Louis Chapter
Increasing
Personal Freedom
through
Wise Money Management
July 11, 2014
Bryan Sudweeks, Ph.D., CFA
From the BYU Marriott School of Management website on
Personal Finance
at http://personalfinance.byu.net
1
Who I Am
• Motto: “Learn, Do, Become”
• Previously managed $3bn in financial assets in
emerging markets
• Took a professional track position at the
Marriott School
• Teach asset management, modeling and
valuation, international finance, and personal
finance
2
2
Increasing Personal Freedom
• I met a Church leader from the Philippines
• He is concerned because the Philippine Saints are
losing their personal freedom through poor money
management due to
• Poor spending habits
• Excessive debt
• Lack of saving for missions and retirement
• Lack on knowledge by Church leaders on what
to teach members
• We have those same challenges here
3
3
Abstract
• Leaders and parents should be learning,
living and teaching the doctrines (“whys”),
principles (“whats”), and applications
(“hows”) of personal finance. This way
they can help themselves, their families,
their ward members and others become
more free and to be better followers of Jesus
Christ through managing their finances
wisely.
4
4
Objectives
A.
B.
C.
D.
E.
F.
Our perspective
The “why’s” (doctrines)
The “what’s” (principles)
The “how’s” (application)
Ideas to learn it and live it
Blessings for those who live it
5
5
A. Our Perspective
• What is perspective?
• Wikipedia.org defines perspective as “one’s point
of view, the choice of a context for opinions,
beliefs, and experiences” (“perspective,” May 1,
2007).
• While points of view can be different, the historian
Will Durant put it into clearer perspective. He
wrote of the human need “to seize the value and
perspective of passing things. . . . we want to see
things now as they will seem forever—‘in the light
of eternity’” (The Story of Philosophy, New York:
Simon and Schuster, 1927, p. 1).
6
6
Perspective (continued)
• Our perspective is that “personal finance” is
simply part of the gospel of Jesus Christ
• It is putting Christ first in our hearts and lives
• It is knowing the true value of things, not what the
world is trying to sell you
• It is using our resources carefully and wisely
7
7
B. The “Whys” (Doctrines)
• Why does God want us to learn personal
finance?
• The “why” questions are the really important
questions in life--the questions of the heart
• It is important that we view different
perspectives as we seek to answer this question:
• Spiritual
• Temporal
• Family
• Individual
8
8
Why (continued)
• 1. Spiritual: To bring us to Christ
• Whatever the problem may be in a person’s life—
failure to pay tithing, breaking the Word of
Wisdom, casual church attendance, [or I add - poor
financial habits, the]—real issue is faith in Jesus
Christ. If we can help people obtain the gift of faith
in Christ, good works will follow. The end purpose
of any law of God is to bring us to Christ. And how
well will the law work? It depends on what we
think of the Author of the law (Elder C. Max
Caldwell, “What Think Ye of Christ?,” Ensign, Feb
1984).
9
9
Why
(continued)
• 2. Temporal: to help us become wiser stewards
over our resources and blessings
• Our resources are a stewardship, not our
possessions. I am confident that we will literally be
called upon to make an accounting before God
concerning how we have used them to bless lives
and build the kingdom (Elder Joe J. Christensen,
“Greed, Selfishness, and Overindulgence,” Ensign,
May 1999).
10
10
Why
(continued)
• 3. Family: To help us return with our families
back to Heavenly Father’s presence
• It helps us keep our priorities in order
• President Harold B. Lee said, “The most
important work you will do will be within the
walls of your own home” (Teachings of
Presidents of the Church: Harold B. Lee [2000],
134).
• President David O. McKay stated: “No other
success can compensate for failure in the home”
(quoted from J. E. McCulloch, Home: The
Savior of Civilization (1924), 42; in Conference
11
Report, Apr. 1935, 116).
11
Why
(continued)
• 4. Individual: To help us learn and accomplish
our divine missions for which were sent here to
earth
• I bear testimony of the fact that if you keep the
commandments, He nourishes you, strengthens
you, and provides you means for accomplishing all
things necessary to faithfully finish your divine
mission here on earth. May the Lord bless you in
your decisions at this important time in your lives
(Elder Gene R. Cook, “Trust in the Lord”, Ensign,
Mar. 1986).
12
12
C. The “Whats” (Principles)
• Elder Richard G. Scott commented:
• Joseph Smith’s inspired statement, “I teach them
correct principles, and they govern themselves,”
still applies. The Lord uses that pattern with us.
You will find correct principles in the teachings of
the Savior, His prophets, and the scriptures—
especially the Book of Mormon. . . Your consistent
adherence to principle overcomes the alluring yet
false life-styles that surround you. Your faithful
compliance to correct principles will generate
criticism and ridicule from others, yet the results are
so eternally worthwhile that they warrant your
every sacrifice (Richard G. Scott, “The Power of 13
Correct Principles,” Ensign, May 1993, 32).
13
Whats
(continued)
1. Ownership: Everything we have is the Lord’s
• The Psalmist wrote:
• The earth is the Lord’s, and the fullness thereof;
the world, and they that dwell therein (Psalms
24:1).
• The Lord is the creator of the earth (1 Nephi 17:36),
the creator of worlds, men, and all things (D&C
93:10), the preserver of our life and then supplier of
our breath (Mosiah 2:21), the giver of our
knowledge (Moses 7:32) the grantor of our life
(Mosiah 2:26), and the giver of all we have and are
(Mosiah 2:21).
14
14
Whats
(continued)
2. Stewardship: We are stewards over all that
the Lord has, is, or will share with us
• The Lord through the Prophet Joseph Smith
stated:
• It is expedient that I, the Lord, should make
every man accountable, as a steward over
earthly blessings, which I have made and
prepared for my creatures. (D&C 104:13)
• Thou shalt be diligent in preserving what thou
hast, that thou mayest be a wise steward; for it
is the free gift of the Lord thy God, and thou
art his steward (D&C 136:27).
15
15
Whats
(continued)
3. Agency: The gift of “choice” is man’s most
precious inheritance
• President David O. McKay wrote:
• Next to the bestowal of life itself, the right to
direct that life is God’s greatest gift to man.…
Freedom of choice is more to be treasured than
any possession earth can give (Conference
Report, Apr. 1950, p. 32; italics added).
16
16
Whats
(continued)
4. Accountability: We are accountable for every
choice we make
• The Lord stated:
• Verily I say, men should be anxiously engaged in
a good cause, and do many things of their own
free will, and bring to pass much righteousness.
For the power is in them, wherein they are agents
unto themselves. (D&C 58: 27-28)
• For it is required of the Lord, at the hand of every
steward, to render an account of his stewardship,
both in time and in eternity (D&C 72:3).
17
17
Whats
(continued)
• On the questions of what is really ours, Elder Neal
A. Maxwell stated:
• The submission of one’s will is really the only
uniquely personal thing we have to place on
God’s altar. The many other things we “give,”
brothers and sisters, are actually the things He
has already given or loaned to us. However,
when you and I finally submit ourselves, by
letting our individual wills be swallowed up in
God’s will, then we are really giving something
to Him! It is the only possession which is truly
ours to give! (italics added, “Swallowed Up in
the Will of the Father,” Ensign, Nov. 1995, 22).
18
18
D. The “Hows” (Application)
• The final step is the “how’s” of personal
finance. hat are the things we have been
counseled to do
• Let me just share a few of them from Church
leaders and the scriptures
19
19
Hows
(continued)
• 1. Communicate
• Communication on financial matters is critical
• Key areas of communication are:
• 1. Personal and family goals
• What do you want to accomplish and
what are you working toward?
• 2. Key financial milestones:
• Emergency fund: 3-6 months income
• Budgets: Weekly, monthly and annual
• Short-term savings: vacations, autos, etc.
• Long-term savings: retirement, missions,20
and education
20
Hows
(continued)
• Family finances are a shared responsibility
• Management of family finances should be full and
equal, and mutual between a husband and a wife.
Control of the money by one spouse as a source of
power and authority causes inequality in a marriage
and is inappropriate. Conversely, if a marriage
partner voluntarily removes himself or herself from
family financial management, that is an abdication
of necessary responsibility (Elder Marvin J.
Ashton, One for the Money, Intellectual Reserve,
2006, p. 3).
21
Hows
(continued)
• 2. Pay the Lord First
• When we pay tithes and offerings we are only
giving Him what is rightfully His (we get to keep
90%)
• Tithing is the law upon which financial
blessings are predicated. Pay a full tithing and
be generous with offerings, and the windows of
heaven will be opened.
• “Prove me now herewith, saith the Lord of
hosts, if I will not open you the windows of
heaven, and pour you out a blessing,
that there shall not be room enough to
22
receive it (Mal. 3:10).
22
Hows
(continued)
• The Lord requires the heart
• He requires the first 10%, not the last
• Paying tithes and offerings first shows we put God
first in our lives
• “And when we obtain any blessing from God, it
is by obedience to that law upon which it is
predicated” (D&C 130:21).
23
Hows
(continued)
• 3. Manage Your Money and Use a Budget
• A budget is the single most important tool in helping
families achieve their financial goals
• It is giving, as Dave Ramsey says, “every dollar a
name”
• It is planning where your money goes, instead of
wondering where your money goals
• It is the “spiritual creation” before the “physical
creation”, planning before spending, and it
teaches learning, choices, prioritization, and
accountability
24
24
Hows
(continued)
President Spencer W. Kimball counseled:
• “Every family should have a budget. Why, we
would not think of going one day without a budget
in this Church or our businesses. We have to know
approximately what we may receive, and we
certainly must know what we are going to spend.
And one of the successes of the Church would have
to be that the Brethren watch these things very
carefully, and we do not spend that which we do not
have” (Spencer W. Kimball, April Conference,
1975, pp. 166-167).
25
25
Hows
(continued)
• 4. Pay Off and Get Out of Consumer and
(eventually) Mortgage Debt
• We have been commanded to stay out of debt for
only the past 6,000 years (ever since 2 Kings 4:7).
• Can the truth of God go forth “boldly, nobly and
independent” by people who are in debt to
others and can’t control their spending?
• When we go into debt, we give others power over
us
• “The borrower is servant to the lender (Prov.
22:7).
26
26
Hows
(continued)
• President Ezra Taft Benson shared:
• “The Lord desires his Saints to be free and
independent in the critical days ahead. But no
man is truly free who is in financial bondage”
(Ezra Taft Benson, “Prepare Ye,” Ensign, Jan.
1974, p. 69).
27
Hows
(continued)
• 5. Prepare for Emergencies and Build a
Reserve
• The principle is to “be prepared,” and covers both
financial and temporal preparedness
• “If ye are prepared ye shall not fear” (D&C
38:30)
• Financial preparedness should start with a cushion
for rough times of roughly 3 to 6 months’ worth of
living expenses be set aside in a liquid account
• Emergency funds are for very specific
purposes—lost job, hospital or medical bills,
major home or car repairs, or other unexpected 28
events (which always happen)
28
Hows
(continued)
• Temporal preparedness would include many
different areas including:
• Appropriate food storage
• Other emergency essentials in case of need
• Continuing job training to keep job skills current
to stay ahead of job needs
• Increased learning in other skills to make to
reduce cash expenses around the home
29
Hows
(continued)
• 6. Save for Long-term Goals
• Begin saving now for long-term goals
• Home and education
• It is appropriate to borrow as necessary for
education and home, but limit debt for both.
A mortgage is the likely largest financial
obligation you will take on, and it will be a
burden on your shoulders until the day it is
paid.
• Follow President Hinckley’s advice to “get a
modest home and pay off the mortgage”
(Ensign, May 1998).
30
30
Hows
(continued)
• Other goals may include:
• Retirement
• Understand your options and use them wisely
• Save for retirement—get the company match
• Let time be your ally by starting early
• Children’s education and missions
• If you choose, begin saving for your children’s
missions and education
• Save for other long-term goals
• Starting early beats starting late every time
31
Hows
(continued)
• 7. Protect Yourself and Family Through
Adequate Insurance
• Elder Marvin J. Ashton counseled:
• “Appropriately involve yourself in an insurance
program. It is most important to have sufficient
medical, automobile, and homeowner’s
insurance and an adequate life insurance
program. Costs associated with illness, accident,
and death may be so large that uninsured
families can be financially burdened for many
years” (Marvin J. Ashton, “Guide to Family
Finance,” Liahona, Apr. 2000, 42).
32
32
Hows
(continued)
• Key insurance types:
• Auto and homeowners insurance
• Both required by law
• Make sure liability limits are sufficient
• Life insurance
• Have sufficient to take care of your family
• You do not need the most expensive insurance
• Disability and long-term care insurance
• Be careful here and consider costs and benefits
33
Hows
(continued)
• 8. Teach your children and family these
principles
• Teach family members why we want to be
financially responsible
• Honest and integrity are part of the gospel plan
• Teach the principles of personal finance early
• Emphasize hard work, frugality, and saving
• Involve them in creating personal budgets and in
contributing to the family budget as well
34
34
Hows
(continued)
• Stress the importance of education
• Education is the key that unlocks the door to
opportunity
• Stress the importance of obtaining as much
education as possible
35
E. Ideas to Learn It and Live It
• How do to you learn to be wise financially?
• There are many sources of good information
• It just takes time to sort them out
• Let me add two other sources to your list:
• 1. The LDS Provident Living Website
• www.providentliving.org, then Family
Finances
• 2. The BYU Marriott School of Management’s
Personal Finance website
• http://personalfinance.byu.net
36
36
Education Week 2013
Learn It: LDS Provident Living Website
37
Learn It: Provident Living Website (continued)
38
Learn It: The MSM Personal Finance Website
www.personalfinance.byu.edu
39
Learn It: The MSM Website (continued)
40
Learn It: The MSM Website (continued)
41
Ideas to Live It
• Following are ideas to help live the gospel
• 1. Understand doctrines
• Elder Packer said:
• True doctrine, understood, changes attitudes
and behavior. The study of the doctrines of
the gospel will improve behavior quicker
than a study of behavior will improve
behavior (Boyd K. Packer, “Little Children,”
Ensign, Nov. 1986, 16).
42
42
Live It (continued)
• Living wisely is simply part of the gospel of
Jesus Christ
• These are not just nice things to do, but are
commandments of God
• It changes the perspective
• Obeying is no longer a question of money,
but a question of faith and duty
• These are not temporal commandments (D&C
29:35)
• There is no separation between the temporal
and spiritual
43
43
Live it (continued)
• 2. Catch the vision
• A. Of who you are
• You are a child of God with great potential (Gal.
3:26).
• “No doctrine is more basic, no doctrine
embraces a greater incentive to personal
righteousness . . . as does the wondrous
concept that man can be as his Maker”
(Bruce R. McConkie, The Promised
Messiah: The First Coming of Christ (Salt
Lake City: Deseret Book, 1978), 133).
44
44
Live it (continued)
• B. Of what you want
• Do you know what you want?
• Have you written down your goals?
• What does God want you to do or be?
• What is you mission for why you are here on
earth?
• What does your patriarchal blessing say?
45
Live it (continued)
• C. Of what you can do
• “With increased vision comes increased
motivation” (Ted R. Callister, “The Power in the
Priesthood in the Boy,” Ensign, May 2013).
• “Once a person is determined to help
themselves, there is nothing that can stop them “
(Nelson Mandela).
46
Live it (continued)
• 3. Decide to decide
• Make the decisions now and commit to them!
• Decide now what you will and will not do, and be
done with decision once and for all
• Follow a prophet who said to “decide to
decide”
• Seek the Lord’s help in making these decisions
• There is no one who loves you more
• Commit and follow through
• “Commit thy way unto the Lord; trust also in
him; and he shall bring it to pass” (Psalms
47
37:5)
47
Live it (continued)
• President Spencer W. Kimball said:
• We hope we can help our young men and young
women to realize, even sooner than they do now,
that they need to make certain decisions only once.
. . . We can push some things away from us once
and have done with them! We can make a single
decision about certain things that we will
incorporate in our lives and then make them ours—
without having to brood and re-decide a hundred
times what it is we will do and what we will not do.
. . . My young brothers [and sisters], if you have not
done so yet, decide to decide! (Spencer W.
Kimball, “Boys Need Heroes Close By,” Ensign, 48
May 1976, 45).
Live it (continued)
• 4. Do it willingly (because we have to)
• The prophet Joseph Smith, on his way to Carthage,
knew that he would not return. ”I am going like a
lamb to the slaughter, but I am calm as a summer’s
morning; I have a conscience void of offense
towards God, and towards all men. . . . And it shall
yet be said of me—he was murdered in cold blood
(D&C 135:4).
• He brought his will in subjection to the will of
Heavenly Father
49
Live It (continued)
• Isn’t that a purpose of life, to bring our wills in
line with the will of the Father?
• We will either “bend the knee” willingly of our
own free will and choice, or we will be compelled
to do it when He comes again (Mosiah 27:31)
• Either way, we will come to recognize Christ
• How much better it is to do these things
willingly because we have faith in Christ and are
seeking to obey His commandments
50
Live it (continued)
• 5. Share your goals
• Let others know what you are doing
• Embarrassment sometimes is more powerful
than guilt in motivating us to accomplish more
• Share your goals with family and friends
• Let them know of your successes and
failures
• As we let others know what we desire to
accomplish, they can help us to accomplish our
goals
51
F. Blessings of Living the Gospel
• As we do the things we have been commanded,
the Lord has given wonderful promises:
• The Lord will stand by you (D&C 68:6)
• None shall stay you (D&C 1:5)
• The Savior will go with you and be in your midst
(D&C 49:27)
• Nothing shall prevail against you (D&C 32:3)
• Power shall rest upon you (D&C 39:21)
• He will uphold you (D&C 93:51)
• You shall have greater treasures that the treasures
of the earth (D&C 19:37-38)
• He will take care of your flocks (D&C 88:72)
52
52
Blessings (continued)
• Other blessings:
• He will send you the Comforter (D&C 79:2)
• He will go before your face. He will be on your
right hand and on your left (D&C 84:88)
• His angels will be round about you (D&C 84:88)
• You shall have great faith (D&C 39:12)
• You will be able to keep God’s laws (D&C 44:5)
• You shall have revelations ((D&C 28:8)
• Your sins will be forgiven 31:5, 36:1, 60:7, 62:3)
• You shall have eternal life (D&C 14:7)
• You shall be made truly rich--he that hath eternal
life is rich (D&C 11:7)
53
53
Education Week 2013
Conclusions
• Personal Finance is simply living the gospel
of Jesus Christ
• It is like learning charity, attending church,
serving others, or doing missionary work.
• Leaders and parents should be learning, doing,
and teaching the “whys”, “whats”, and “hows” of
personal finance to their ward members and
families, the doctrines, principles and application
54
54
Conclusions (continued)
• Why does God want us to learn personal
finance? It is important that we understand why
(the doctrines)
• The key is to take different perspectives to answer
this critical “why” question
1. Spiritual: To bring us to Christ
2. Temporal: To help us become wiser stewards
3. Family: To help us return with our families to
Heavenly Father’s presence
4. Individual: To help us accomplish our divine
missions for which we each were sent here to earth
55
55
Conclusions (continued)
• There are four “what” or principles on which
our perspective is based:
• 1. Ownership: Everything is the Lords
• 2. Stewardship: We are stewards over all the Lord
has, is, or will bless us with
• 3. Agency: The right to choose is one of God’s
greatest gifts to man
• 4. Accountability: While we are free to make our
choices, we will be held accountable for those
choices and should choose wisely
56
56
Conclusions (continued)
• There are 8 different “hows” that we should
emphasize, the application. They are:
•
•
•
•
•
•
•
•
1. Communicate
2. Pay the Lord first
3. Manage your money and use a budget
4. Pay off and get out of consumer and mortgage
debt
5. Prepare for emergencies and build a reserve
6. Save for long-term goals
7. Protect yourself and your family through
adequate insurance
8. Teach your children and family
57
57
Conclusions (continued)
• Our responsibility first is to learn about
personal finance
• There are a number of very good resources to help
bishops, individuals and families
• The LDS Provident Living website
• The Marriott School Personal Finance website
58
58
Conclusions (continued)
• Our responsibility then is to live it
• We shared some ideas to help you get motivated to
follow the doctrines, principles, and applications of
personal finance
• 1. Understand doctrine
• 2. Increase your vision
• 3. Decide to decide
• 4. Do it willingly
• 5. Share your goals
• Finally, we shared the promised blessings. They
are numerous and are only accessed through
obedience to the commandments of the Jesus Christ59
59
Conclusions (continued)
• Although times are tough, a prophet has said:
• I testify to you that our promised blessings are
beyond measure. Though the storm clouds may
gather, though the rains may pour down upon us,
our knowledge of the gospel and our love of our
Heavenly Father and of our Savior will comfort and
sustain us and bring joy to our hearts as we walk
uprightly and keep the commandments. There will
be nothing in this world that can defeat us. My
beloved brothers and sisters, fear not. Be of good
cheer. The future is as bright as your faith (italics
added, Thomas S. Monson, “Be of Good Cheer,”
Ensign, May 2009, 92).
60
60