Debt Free on any Income (L. Shamo)
Lyle and Tracy Shamo

d ï¿½

salt lake city, utah

Portions of "To the Boys and to the Men" by Gordon B. Hinckleyï¿½ Intellectual Reserve, Inc.Previously published in the EnsignUsed by permission

ï¿½ 2004 Lyle and Tracy Shamo

All rights reserved. No part of this book may be reproduced in any form or by any means without permission in writing from the publisher, Deseret Book Company, P.
O. Box 30178, Salt Lake City, Utah 84130. This work is not an official publication of The Church of Jesus Christ of Latter-day Saints. The views expressed herein are
the responsibility of the author and do not necessarily represent the position of the Church or of Deseret Book Company.

Deseret Book is a registered trademark of Deseret Book Company.

Visit us at deseretbook.com

Foreword

Not long ago, I was asked to review the schedules and spreadsheets contained in this book because of my familiarity with the programs used. My review was largely
technical in nature. As I reviewed each chapter and aligned the computer models to match the principles taught, I was impressed with the familiarity of the problems
presented and the clarity and simplicity of the solutions. I was especially impressed with the book's firm foundation in, and practical application of, gospel principles.

If you are like me, there are some tasks that seem insurmountable. Perhaps the monster of debt seems unconquerable, with no hope of liberation; yet, at the same time
you have a desire to follow the commandments communicated through a living prophet. The principles taught in this book will help you on your way to slaying the giant
that stands before you. These principles are built on a foundation of faith and honesty-honesty with the Lord, honesty with yourself, and honesty with your fellowman.

When Moses stood on the banks of the Red Sea with millions of Israelites, his task seemed impossible. Pharaoh and his army were advancing from behind, and the
depths of the Red Sea were in front. There was no way known to man at that instant that he could accomplish what he had been commanded. But a way was revealed,
and Moses took a leap of faith and "stretched out his hand over the sea" (Exodus 14:21). A way was prepared, the sea parted, the Israelites walked through on dry
ground, and the sea swallowed the armies of Pharaoh.

On a smaller scale, Nephi and his brothers tried in vain to obtain the brass plates from Laban. They tried all they knew to do but were unsuccessful. Nephi still had a
desire to fulfill the Lord's commands, but he didn't know how. He too took a leap of faith and returned to Jerusalem "not knowing beforehand the things which [he]
should do" (1 Nephi 4:6). Again the Lord prepared a way to accomplish the impossible.

The prophet Ether taught that the witness (which could also be called the blessing) comes only after a trial of faith-faith that is manifest by your actions. The principles
taught in this book will teach you the steps to take as you exercise your faith in the Lord Jesus Christ and follow the admonitions and commandments of modern-day
prophets to get your house in order.

To the Lord, all things are spiritual. The Lord's laws dealing with finances are inseparably connected with the principle of tithing. The prophet Malachi asks the question,
"Will a man rob God?" (Malachi 3:8). Then he proceeds to clarify by stating, "Yet ye have robbed me. But ye say, wherein have we robbed thee? In tithes and
offerings. Ye are cursed with a curse: for ye have robbed me, even this whole nation. Bring ye all the tithes into the storehouse, that there may be meat in mine house,
and 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
receive it" (Malachi 3:8-10).

In the Doctrine and Covenants 130:20-21 we are taught, "There is a law, irrevocably decreed in heaven before the foundations of this world, upon which all blessings
are predicated-and when we obtain any blessing from God, it is by obedience to that law upon which it is predicated." If we are to receive the outpouring of blessings
promised by Malachi, we must pay our tithing first to the Lord. If we are honest with the Lord, and give back to Him the tenth of what He has given to us with a willing
and cheerful heart, He will bless us in our endeavors to slay the monster of debt that plagues us in these latter days.

The Doctrine and Covenants further teaches, "I, the Lord, am bound when ye do what I say; but when ye do not what I say, ye have no promise" (82:10).

I have seen in my own life, as well as in the lives of others, the blessings that come when tithes are cheerfully and faithfully paid first-even when it appears to be an
impossible request. Throughout this book the authors speak of living within your means and paying your debts as quickly as possible. These principles have been tried
and tested repeatedly, and have been proven to be effective. The effectiveness of the principles is enhanced by being completely honest with the Lord and paying a full
tithing. His promises are sure and will be fulfilled as you, like Moses and Nephi before you, exercise your faith in Him.

The principles in this book are also built on the foundation of honesty with yourself. It has been said that one definition of insanity is to do the same thing as always but
expect different results. Before you can truly make progress in the elimination of debt, you have to honestly assess your situation and recognize that there is a problem.
This can be a difficult self-assessment, but it is necessary in order to build up the motivation to try something different.

Finally, honesty with the Lord and yourself is accompanied by honesty with your fellowman. King David in the thirty-seventh Psalm explains "The wicked borroweth,
and payeth not again" (Psalm 37:21). The shell game of debt transfers to different vehicles (for example, transferring a balance from one low-interest-rate credit card to
another) will only defer the inevitable. In fact, this game can ultimately damage your ability to accomplish the Lord's designs, because as your available credit continues
to grow, the temptation to incur more debt may become irresistible.

The principles set forth in this book are effective. Their effectiveness is enhanced as we exercise our faith and are honest with the Lord, ourselves, and our fellowman. I
hope the tools presented in this book will bring freedom from the bondage of debt to all who implement them. All things are possible to those who place their faith in
our Savior Jesus Christ and follow His commandments.
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-Kraig     (c) 2005-2009, Infobase Media Corp.
       Kuttler                                                                                                                                               Page 1 / 77

CPA, MBA
The principles set forth in this book are effective. Their effectiveness is enhanced as we exercise our faith and are honest with the Lord, ourselves, and our fellowman. I
hope the tools presented in this book will bring freedom from the bondage of debt to all who implement them. All things are possible to those who place their faith in
our Savior Jesus Christ and follow His commandments.

-Kraig Kuttler

CPA, MBA

Preface

In the October 1998 priesthood session of general conference, President Gordon B. Hinckley issued a wake-up call to the members of the Church. After retelling the
account of Pharaoh's dream in the days of Joseph of old, he warned the Church:

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. . . .

. . . I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people. In March 1997 that debt totaled $1.2
trillion, which represented a 7 percent increase over the previous year. . . .

I recognize that it may be necessary to borrow to get a home, of course. But let us buy a home that we can afford and thus ease the payments which will constantly
hang over our heads without mercy or respite for as long as 30 years. . . .

Since the beginnings of the Church, the Lord has spoken on this matter of debt. To Martin Harris through revelation, He said: "Pay the debt thou hast contracted with
the printer. Release thyself from bondage" (D&C 19:35). . . .

What a wonderful feeling it is to be free of debt, to have a little money against a day of emergency put away where it can be retrieved when necessary.

President Faust would not tell you this himself. Perhaps I can tell it, and he can take it out on me afterward. He had a mortgage on his home drawing 4 percent interest.
Many people would have told him he was foolish to pay off that mortgage when it carried so low a rate of interest. But the first opportunity he had to acquire some
means, he and his wife determined they would pay off their mortgage. He has been free of debt since that day. That's why he wears a smile on his face, and that's why
he whistles while he works.

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. ("To the Boys and to the Men," Ensign, November 1998, 52-53; emphasis
added.)

From the moment that talk was given, you and I probably felt an urgency to do something about conquering our debt and controlling our finances. Yet so many of us
feel that being debt-free is an overwhelming and near-impossible task. Where do we begin? How do we do this? Is being free from debt possible? Perhaps, from that
day to the present, you have been earnestly endeavoring to live the counsel of the prophet, yet you are continually discouraged as the ups and downs of life are keeping
your goal constantly just beyond your reach. If this describes your feelings, then this book was written for you.

We hope that this handbook-complete with worksheets and easy-to-use computer software to guide even the novice through the often-confusing maze of family
finance-will offer each reader the peace and tranquility the prophet desires for us. We hope you will learn from it and soon "whistle while you work!"

-Lyle and Tracy Shamo

Making a Case Against Debt

In the time of prosperity, get out of debt. . . . If you desire to prosper, and to be . . . a free people, first meet your obligations to God, and then . . . to your fellowmen.

-Joseph F. Smith

Money! There's a word no one can feel neutral about. There's no denying that the pursuit of money, even if it is just to feed and clothe our families and put a roof over
our heads, consumes more of our time than eating, drinking, or spending time with family. Whether we love it or hate it, acquiring money is an indispensable part of
modern life.

The problem is that, for most of us, there is just simply not enough money to go around. If you often find yourself living from paycheck to paycheck with little left over
for any unexpected expenses, then you're among the norm. That's why even the smallest setback can send so many of us into a near panic.

Even more, our society has created a near fixation on material things and the amassing of wealth. The temptation has become so great that many of us have been drawn
into it, even unawares. So much so that President Spencer W. Kimball was moved to warn the Church:

"The Lord has blessed us as a people with a prosperity unequaled in times past. The resources that have been placed in our power are good, and necessary to our
work here on the earth. But I am afraid that many of us have been surfeited with flocks and herds and acres and barns and wealth and have begun to worship them as
false gods, and they have power over us. Do we have more of these good things than our faith can stand? Many people spend most of their time working in the service
of a self-image that includes sufficient money, stocks, bonds, investment portfolios, property, credit cards, furnishings, automobiles, and the like to guarantee carnal
security throughout, it is hoped, a long and happy life. Forgotten is the fact that our assignment is to use these many resources in our families and quorums to build up
the kingdom of God" ("The False Gods We Worship," Ensign, June 1976, 4).

In short, money, of necessity, may be the means to many of life's greatest opportunities; but it almost never forms the substance of our happiness. In a speech designed
to offer "observations about the constant and fundamental principles which, if followed, will bring financial security and peace of mind under any economic
circumstances," President N. Eldon Tanner quoted from the famed Norwegian playwright Henrik Ibsen: "Money may be the husk of many things, but not the kernel. It
brings you food, but not appetite; medicine, but not health; acquaintances, but not friends; servants, but not faithfulness; days of joy, but not peace or
happiness" (quoted in "Constancy Amid Change," Ensign, November 1979, 80).

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                                                     money and what money can buy. Whether we are blinded by a worldly philos ophy of money management,     Pageenticed
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slick advertisers, mired in circumstances beyond our control, or lack the proper knowledge and skills to improve our financial situation, most of us find ourselves just
getting by until disaster strikes. Then, like all too many Americans, we find ourselves unable to meet even the basic needs of our family. Like it or not, meeting basic
circumstances," President N. Eldon Tanner quoted from the famed Norwegian playwright Henrik Ibsen: "Money may be the husk of many things, but not the kernel. It
brings you food, but not appetite; medicine, but not health; acquaintances, but not friends; servants, but not faithfulness; days of joy, but not peace or
happiness" (quoted in "Constancy Amid Change," Ensign, November 1979, 80).

We live in a society where we are dependent on money and what money can buy. Whether we are blinded by a worldly philos ophy of money management, enticed by
slick advertisers, mired in circumstances beyond our control, or lack the proper knowledge and skills to improve our financial situation, most of us find ourselves just
getting by until disaster strikes. Then, like all too many Americans, we find ourselves unable to meet even the basic needs of our family. Like it or not, meeting basic
needs has nothing to do with poverty and everything to do with how well we manage our money.

The following article, written after the United States Census Bureau released a report on Americans' ability to meet basic financial needs, illustrates this fact:

About one-fifth of all Americans (nearly 48.6 million persons) lived in households that had at least one difficulty in meeting basic needs. This included not paying utility
bills, not paying mortgage or rent, needing to see a doctor or dentist but not going, having telephone or utility service shut off, being evicted, not getting enough to eat,
or otherwise not meeting essential expenses. . . .

One would expect that persons with the lowest incomes would be the most likely to experience problems. . . .

However, . . . 8.1 million persons . . . earning more than $45,700 per year . . . at some point during the year could not meet basic needs. . . . It appears that many
persons did not manage their resources particularly well-failing to control expenditures, getting too far into debt, or neglecting to have reserves on which they could rely
in times of emergency. . . .

This 1995 study also found that more than one-fourth of all children in the U.S. lived in a household that had at least one difficulty meeting basic needs. (In "Meeting
Basic Needs in America," Information Center News [newsletter] July 19, 1999, vol. 9, no. 11, 1-2.)

America-"the land of the free and the home of the brave"-has become a nation in debt. In July 2001, the Lutheran Brotherhood published a survey which discovered
that a full 40 percent of all Americans admitted to living beyond their means, while 46 percent noted their debt was either increasing or staying the same each month. In
short, nearly half of all Americans were unable to pay down their burden of debt. As if this wasn't bad enough, the second finding of this survey was even more
sobering. "Because of their burden of debt, 22 percent of respondents admitted that they had to postpone buying necessities for their families" (In "American Style
Debt," Information Center News, December 21, 2001, vol. 11, no. 20, 2).

Debt is not a new phenomenon in this country. We define ourselves in our society not by title but by the things we own. A successful person has a nice car, a nice
house, nice furnishings, and owns any number of successful accouterments such as recreational vehicles, boats, or vacation property. They go on cruises, buy lavish
presents for their friends, and dress to the nines.

Attempting to appear successful but lacking adequate resources, many people resort to debt. In a long-forgotten age, debtors were imprisoned. How grateful we are
that we have come a long way since then. Even in our present day, however, debt is still a prison with bars made not of steel but of fear, worry, sleepless nights, and
with relentless and abusive calls of creditors.

The urbanization and de-personalization of American society has made acquiring debt all too easy. Just a century ago, buying on installment meant borrowing from the
sewing machine shop owner or the piano maker or the auto dealer-people you knew personally. In those days most of us would not have dreamed of missing a
payment because we knew our creditors. We knew their families and their circumstances and we longed to maintain our respectability. Today our creditors are
nameless, faceless people with addresses very often hundreds, perhaps thousands, of miles away. The stigma associated with not being able to pay a creditor is
dissolved.

Along with this de-personalization came the advent of the credit card. While thirty years ago credit card use was scarce, today few do not possess a credit card. Credit
cards enable us to have capital available whenever or wherever the need arises for business expenses, travel, emergencies, and even for necessities. But it has its perils.
Along with the consumer credit card came a household debt ratio that has soared off the charts. In the nineties alone, consumer debt soared a whopping 123 percent,
and today one in every forty households files for bankruptcy protection each year. Americans owe $700 billion in installment debt, most of which is owed to credit
cards. That is about $10,000 for each family and that amount does not include debt for mortgages or for automobile loans (see Paul J. Lim and Matthew Benjamin,
"Digging Your Way Out of Debt," U.S. News & World Report, March 19, 2001, 52-60).

In an exposï¿½ on American debt, US News & World Report nailed the debt problem in this country on the head:

"Part of the problem with our debt obsession is that, for some, it is close to an addiction. Managing debt isn't like controlling most other compulsions. If you're a
drinker, you can keep alcohol out of your house. If you're a gambler, you can avoid the weekend trips to Vegas. But if you're a chronic debtor, you don't have to do
anything to fall over the precipice because the precipice often comes to you, especially during economic downturns" (Lim, "Digging Your Way Out of Debt," 57).

The evils of debt are not unknown to you. We don't need to convince you. If you've bought this book, then you are convinced that something must be done to reverse
the cycle of debt. What you want to know is "How do I fix it?" The purpose of this book is to provide principles that will allow you to, in Elder Marvin J. Ashton's
words, "Manage [your] money before it manages you" ("One for the Money," Ensign, July 1975, 72).

The sum and substance of the message of the gospel when it comes to matters of personal finance has been unalterable, steady, and true. It is summed up in President
Gordon B. Hinckley's remarks at the priesthood session of general conference in October 1998. It is: "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.

" . . . 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" ("To
the Boys and to the Men," Ensign, November 1998, 53). The principles taught within these pages adhere to gospel principles. The methods we describe are not new,
and the knowledge we offer is not unique, but we can offer hope and peace in matters of money. Our message is simple: You can be in charge, you can be the
conqueror, you can be debt free and secure no matter the size of your paycheck.

Freedom from Debt Beginning

Get out of debt and rid yourself of the terrible bondage that debt brings.

-Gordon B. Hinckley

Ken and Terri were young, married, and in their early thirties. For the first years of their ten-year marriage, Ken went to school. Times were tough and student loans
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                                                   was more of an investment than a liability. They looked upon their first mortgage the same way. They purchased   / 77
little home shortly after Ken's graduation. In quick succession came surprises and sometimes financial reverses. The burden of debt began to mount. There were cars,
medical emergencies, a bout of unemployment, and the addition of three children-all of which placed tremendous strain on their pocketbook. Their initial goal was to
-Gordon B. Hinckley

Ken and Terri were young, married, and in their early thirties. For the first years of their ten-year marriage, Ken went to school. Times were tough and student loans
were a necessity. As they saw it, education debt was more of an investment than a liability. They looked upon their first mortgage the same way. They purchased their
little home shortly after Ken's graduation. In quick succession came surprises and sometimes financial reverses. The burden of debt began to mount. There were cars,
medical emergencies, a bout of unemployment, and the addition of three children-all of which placed tremendous strain on their pocketbook. Their initial goal was to
always live within their means. They knew that to be a principle of the gospel. They tried to live up to their goal, but the challenges of life left them with a discouraging
burden of debt.

When President Gordon B. Hinckley urged Church members to get out of debt, Terri felt overwhelmed and discouraged. She ran to her mother in tears. "Mom," she
sobbed, "I've always tried to be obedient. I want to be obedient now. But how do I do it? I've tried but I just can't do it. It seems that whenever we are able to get a
little ahead, some crisis or another comes along, and we fall deeper into debt. Is there no escape? Can I ever get out of debt?"

"Why, honey," sympathized Terri's mother, "It's not impossible, and you can do it! You just need to learn how."

Terri's mother was right. You know this. You know it instinctively. Whatever the Lord asks is never impossible. It may not always be easy, but with a little know-how,
a sprinkle of elbow grease, a smattering of patience, and a great deal of faith you can conquer your debts and weather the financial storms that come your way.

The problem is that for most of us, even though our trust in the Lord is infinite, our trust in ourselves is a little shaky. Have you ever left a church meeting thoroughly
discouraged after a discussion of finances? You are not alone. Perhaps you even muttered to yourself: "Pay off my debts? Hah! I might as well have been told to eat an
elephant."

It's a good analogy. An old joke began with the question, "How do you eat an elephant? And the answer was, "One bite at a time." The question and the answer are
not necessarily humorous because enormous undertakings are always successfully executed one step at a time. Debt is conquered in exactly the same way.

The road that leads from debt takes us to a brighter future where dreams become reality. That road may not be a super-highway, and the vehicle we travel in will
probably not be a grand prix race car; but the path is sure and the destination not nearly as distant as it might seem. One day, for you and your family, debt will be only
an unpleasant memory.

What Is Debt?

To read the map toward our destination, we must gain an understanding of a few terms. What is debt? Despite the efforts of today's society to confuse us, debt is still
any bill that is overdue or requires more than one month to complete payment. Debt is the rental of money. Is credit different than debt? No, credit is not different from
debt. Credit is a name invented by a slick advertising establishment. It carries none of the negative connotations of debt, but nonetheless it is, in reality, just plain, old
debt.

Debt always carries with it a companion. We call that companion interest.

The biggest problem associated with debt is that the interest is always accumulating. That makes debt an ever-constant drain on your pocketbook. It wastes your hard-
earned dollars, and it limits your freedom to choose how to spend your money. Benjamin Franklin correctly warned the people of his day: "Think what you do when
you run in debt; you give to another power over your liberty" (quoted in Ezra Taft Benson, "Pay Thy Debt, and Live," Ensign, June 1987, 3).

Debt used to carry just those negative connotations, but advertising has changed all that. Years of fast-paced and enticing ads have obscured the obvious and replaced
an aversion to debt with an "I need it now" attitude. No wonder US News & World Report reported in a June 8, 1987 issue: "The old virtues of scrimping and saving
have been replaced with plastic gratification-thanks to the credit card" (Jack Egan, "Sizing Up Your Finances," 52).

We have fallen into a trap-a trap of ease and credit driven by our desires to keep up with our neighbors.

Leaders of the Church from every age have warned members about the pernicious influence of debt. Just over a hundred years ago, President Joseph F. Smith urged:

"In the time of prosperity, which we are now enjoying, it is highly proper for the Latter-day Saints to get out of debt. . . . Wherever I have had the opportunity of
speaking, I have scarcely ever forgotten to hold out to the people the necessity . . . of our settling our obligations and freeing ourselves from debt in the day of
prosperity" (Gospel Doctrine [Salt Lake City: Deseret Book, 1939], 259).

Some twenty years later, President Smith's admonition was followed by this from President Heber J. Grant: "Right here let me warn the Latter-day Saints to buy
automobiles and to buy the ordinary necessities of life when they have the money to buy them, and not to mortgage their future." On another occasion he reminded the
Saints: "There is a peace and a contentment which comes into the heart when we live within our means. There is no question about it" (Gospel Standards, comp. G.
Homer Durham [Salt Lake City: Improvement Era, 1944], 111).

In our own day, President Howard W. Hunter issued these admonitions: "Latter-day Saints have always been known as a frugal people; it is part of our history. We
have been conservative in our actions and we have lived within our means, but what goes on about us often encourages us to live beyond our means and incur debt. . . .
One of the greatest burdens we have had placed upon us and the thing that has taken more of our freedom than any other, perhaps, is indebtedness" (The Teachings of
Howard W. Hunter, comp. Clyde J. Williams [Salt Lake City: Bookcraft, 1997], 159).

"Do not covet what you have or what you do not have. . . . Things eventually work out financially; hang on and have faith" (Teachings, 162).

"This is a materialistic world, and Latter-day Saints must be careful not to confuse luxuries with necessities. . . . There are some who unwisely aspire to self-indulgent
luxuries that often lead them away from complete commitment to the gospel of our Savior" (Teachings, 162).

Credit and her twin sister, debt, have been hanging around for many years. The peril of their influence has never diminished. Read carefully the counsel given by
President Ezra Taft Benson:

Our inspired leaders have always urged us to get out of debt, live within our means, and pay as we go. . . .

Many people do not believe that serious recession will ever come again. Feeling secure in their expectations of continuing employment and a steady flow of wages and
salaries, they obligate their future income without thought of what they would do if they should lose their jobs or if their incomes were stopped for some other reason.
But the best authorities have repeatedly said that we are not yet smart enough to control our economy without downward adjustments. Sooner or later these
 Copyright (c) 2005-2009, Infobase Media Corp.                                                                                                           Page 4 / 77
adjustments will come.

Another reason for increase in debt is even deeper and causes greater concern. This is the rise of materialism, as contrasted with commitment to spiritual values. Many
Many people do not believe that serious recession will ever come again. Feeling secure in their expectations of continuing employment and a steady flow of wages and
salaries, they obligate their future income without thought of what they would do if they should lose their jobs or if their incomes were stopped for some other reason.
But the best authorities have repeatedly said that we are not yet smart enough to control our economy without downward adjustments. Sooner or later these
adjustments will come.

Another reason for increase in debt is even deeper and causes greater concern. This is the rise of materialism, as contrasted with commitment to spiritual values. Many
a family, in order to make a "proper showing," will commit itself for a larger and more expensive house than is needed, in an expensive neighborhood. Almost everyone
would, it seems, like to keep up with the Joneses. With the rising standard of living, that temptation increases with each new gadget that comes on the market. The
subtle, carefully planned techniques of modern advertising are aimed at the weakest points of consumer resistance. As a result, there is a growing feeling, unfortunately,
that material things should be had now, without waiting, without saving, without self-denial. ("Pay Thy Debt and Live," Ensign, June 1987, 3-4.)

Debt is a major problem in American society. According to a 2001 Associated Press article, "Americans are spending 14.3 percent of their take-home pay on debts. .
. . Credit card delinquencies-accounts at least 30 days past due-have been hovering at about 5 percent. . . . [And] mortgage delinquencies rose to 4.5 percent of
outstanding loans in the final quarter of 2000" (Eileen Alt Powell, "Consumer Debt Higher Than Ever," South Bend Tribune, June 20, 2001, B8).

The article reported that "Durant Abernathy, president of the National Foundation for Credit Counseling, a nonprofit organization that helps families with debt
problems, said that the number of people seeking assistance is rising rapidly.

" 'Our average client-the policeman, the firefighter, the teacher, the nurse-is carrying more debt than they've ever carried, and they're in trouble,' Abernathy said. 'If their
overtime is cut back or a husband or wife is laid off, they have virtually no savings, so they go over the edge'" (ibid.).

Obviously, being out of debt grants us many more options than remaining in debt. But are there times when we have no other viable option?

Good Debt

Is there ever such a thing as good debt? Yes. Not all debt is bad. Elder Ezra Taft Benson agreed that "sound business debt and reasonable debt for education are
elements of growth. Sound mortgage credit is a real help to a family that must borrow for a home." But, as always, he adds a caveat: "If you must incur debt to meet the
reasonable necessities of life-such as buying a house and furniture-then, I implore you to value your solvency and happiness, buy within your means. So use credit
wisely-to acquire an education, a farm, [or] to own a home" ("The Dangerous Threat of Increasing Indebtedness," The Instructor, May 1962, 159, 162).

President Benson knew that despite the soundness and well-being that comes from acquiring a home, an education, or a new business, there is still risk involved. To
avoid that risk we must plan in advance to pay off any debts as quickly as it is possible, and we must force ourselves to borrow only that which we can reasonably
afford.

Bad Debt

Bad debt is much more plentiful. We all know what bad debt is. It includes borrowing for fleeting impulses. Purchasing things that we think we want but we really don't
need and we can't hope to pay for. These are material things-things like clothes, vacations, and expensive dinners. All of us are guilty at times of spending money to buy
things we can't afford to impress people who don't care.

Interest

We've already talked a little about interest, but let's explore it more thoroughly. All debt-good or bad-comes with a price tag. Let's explain. When a person applies for
a loan he borrows the amount he needs to cover his expenses. The money you receive or are actually advanced by a financial institution (such as the bank, credit union,
savings and loan, department store, or credit card company) is called the principal. The principal of the loan is the actual amount that you borrow.

Financial institutions are not service agencies. They cannot remain in business unless they make a profit. They are not mean, ugly monsters. It's a matter of simple
economics. They have to charge you something to pay their own bills. Therefore, your bank or credit card company charges you a fee for renting their money. This fee
is called interest. Interest is calculated on a percentage of the principal. That percentage is how your lender makes his profit.

Interest is computed on an annual basis and is included in your monthly payment. The monthly payment pays the lender back both principal and interest. Some loans
are set up so that you pay the bulk of the interest at the beginning of your loan period. This ensures that your lender will receive his profit. This isn't a rip-off; it's just
good business.

Payments are spread over a specified period of time-this is called the term of the loan. For example, auto loans are made generally, in three- to five-year terms, while
home mortgages can extend over a fifteen- to thirty-year term. Some loans do not have a term; they charge an annual percentage rate (APR) of interest until the
balance is paid in full.

Some loans, such as a mortgage loan, require a schedule for your monthly payments. That schedule tells you, the borrower, how much of each payment goes toward
paying off the principal and how much goes toward paying off the interest. This is called an amortization table. As you follow an amortization table you will see that at
the very beginning of your payment period, your monthly payment pays almost all interest and very little principal. Gradually, as you follow through the amortization
table, the amount of interest lessens, while the amount of principal increases. Halfway through the term of your loan, you will pay half your monthly payment to principal
and half to interest. At the end of the term, you will pay nearly all the monthly payment toward the principal. If you have been paying on a loan for several years, you
may need to have an amortization table to determine the amount of principal you still owe.

When it comes time to compute real debt, include both the principal and the interest. That is because, whether you like it or not, creditors will not forgive your debts
until you have paid them both. If you make payments on time and never try to speed up the process, by the end of the term on your loan, you would have expended
roughly three and one-half times the original principal. What a waste of good money!

Elder Marvin J. Ashton of the Quorum of the Twelve spoke no truer words than these: "It is a happy day financially when time and interest are working for you and not
against you" ("One for the Money," Ensign, July 1975, 73). Those who understand interest collect it. Those who do not, pay it. President J. Reuben Clark offered us
the clearest visual image of the pernicious nature of interest:

Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no
pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys
no food, it wears no clothes; it is unhoused and without home and so has no repairs, no replacements, no shingling, plumbing, painting, or whitewashing; it has neither
wife, children,
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sympathy, it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it;
you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.
(In Conference Report, April 1938, 103.)
Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no
pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys
no food, it wears no clothes; it is unhoused and without home and so has no repairs, no replacements, no shingling, plumbing, painting, or whitewashing; it has neither
wife, children, father, mother, nor kinfolk to watch over and care for; it has no expense of living; it has neither weddings nor births nor deaths; it has no love, no
sympathy, it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it;
you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.
(In Conference Report, April 1938, 103.)

Debt Management Rules

As you begin your commitment to be debt-free, we suggest setting eight simple rules:

1. I will not incur any additional debt.

2. From this day forward I will pay as I go.

3. I will pay off my debt as quickly as possible to avoid paying huge interest payments.

4. I will avoid impulse buying and I will plan for every penny I spend. (This will ensure that you will have the money necessary to pay your debts.)

5. I will budget carefully and find extra money to apply against my existing debt.

6. I will remain committed to being free from debt for the rest of my life.

7. Once free from debt, I will develop a savings account for future purchases.

8. I will manage my funds, and I will no longer allow them to manage me.

Freedom from debt

We want to end this chapter on a high note. When debts are gone, your dreams can become reality. What are your dreams? Do you want a college education for your
children? Do you want to pay for your children's missions? Would you like to have a little nest egg to help your married children when they face hard times? Do you
want to retire and serve your own mission? Perhaps you dream of a whole string of missions to take you through your sunset years? Perhaps you've always dreamed of
standing on a sunlit beach and feeling the cool seawater beneath your toes, or maybe you'd like to travel the oceans wide and discover the world? Any dream you plan
for can become your reality no matter what your income level. But it begins by earning interest instead of paying it.

You can be rich. Rich is feeling the wind against your face and not feeling afraid. Rich is having the peace of mind that you are prepared. Rich is feeling that it is good to
be alive. It is the kind of richness described by a wise and dear friend: "As my husband and I got out of debt, we found ourselves focusing less on material things and
focusing more on the things that matter most."

Isn't this what life is really about? Wouldn't it be nice to have the time and energy to devote to the things which matter most to you? You can find freedom from the
bondage of debt.

How to Get Out of Debt

Self-reliance cannot be obtained when there is serious debt hanging over a household. One has neither independence nor freedom from bondage when he is obligated
to others.

-Gordon B. Hinckley

There are varying degrees of indebtedness. Some people are living so close to the brink that they spend each day just trying to avoid their creditors and are desperate
for any solution to their indebtedness. Some people are not particularly overwhelmed by their debt yet, but they are frustrated by living paycheck to paycheck and
never getting ahead. These folks never seem to find sufficient funds to completely eliminate their debts. Some people aren't having immediate financial problems and
their debt burden is relatively low compared to those around them, yet they fear a financial reversal because they suspect it could cause them serious problems. And, of
course, there are those few people who earn so much money that they never worry about debt. They are secure and they know that whatever circumstance they find
themselves in, there are always finances sufficient to bail themselves out. This last group is so rare that it may, perhaps, even be nonexistent. No matter the size of our
paychecks, most of us seem to carry a burden of debt.

Determining Your Debt-to-Income Ratio

How much debt is too much? Like everything else, that can be determined only on an individual basis. For some, $2,000 is too much debt; while for others the burden
could run as high as $100,000 or even higher. A common tool to determine whether your debt is unreasonably high is referred to as the debt-to-income ratio. This is a
mathematical calculation that compares your total debt to your total income. If you divide the amount you owe by the amount you make each year, and then multiply
that quotient by 100, you arrive at your ratio. For example, if Meg makes $80,000 a year and has a monthly debt payment of $2,500, she has a debt ratio of 37.5
percent. Generally speaking, if you pay more than 35 percent of your income to debt, then you ought to do something about it. You are in trouble. What is your debt-
to-income ratio?




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Pulling yourself out of debt can be achieved by implementing a variety of options. We'll discuss most of them. Which you choose will depend entirely on your
circumstances and the degree of your indebtedness. We'll start our discussion of these various options by demonstrating the simplest and easiest solution for most
families to pay down their debts.

There is a step-by-step process for getting out of debt. Each step builds momentum for the next. The first step to freedom from debt will be to fill out the computer
worksheets provided on the disk that comes with this book. Once you fill out the worksheets, your computer will automatically calculate your debts and work to
prepare you for each additional step in the process of becoming debt-free. If you don't have Microsoft Excelï¿½ and cannot read the files on the disk, you can use the
PDF images of each worksheet and figure the calculations with a business or financial calculator (these calculators are available for free downloading on most bank and
credit union web sites).

As a side note: The key to success in debt elimination is to involve your family in the process. Husbands and wives must work together as they fill out the worksheets.
Perhaps your arrangement is that one or the other of you worries about the finances and the other just "goes along." To eliminate debt, this will not work. To become
debt-free requires united effort. By designating only one-half of a critical partnership to this primary responsibility, the family is vulnerable to failure and invites money
squabbles into the relationship.

Additionally, older children can and ought to be included in discussions about family financial goals. You'll probably be pleasantly surprised at the enthusiasm your
children will generate in this process. They can assist you in reaching your goals. This will be particularly true when you paint a vision of how exciting it will be when
family dreams are realized.

Of course, not everyone is married. If you live alone then you make all your own financial decisions, which, in some respects, makes the process of getting out of debt
simpler. However, if you need advice or help, don't discount turning to your extended family-your mother and father or your brothers and sisters-for help. Part of
Heavenly Father's plan for families is that we support each other in all things.

Debt Elimination: A Three-Step Process

The process we outline in this book and on the CD-ROM is very simple and can be accomplished in three steps:

Step 1: Identification of Debts. This step will show you exactly where you are with your debts by helping you create a complete list of debts and their interest rates,
monthly payments, balances due, and remaining number of payments on each.

Step 2: How(c)
 Copyright     Far2005-2009,
                   Are You Really   in Debt?
                               Infobase MediaCompleting
                                               Corp.    this step will show you how much you are going to pay in interest in addition to the principal of the
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calculate this, multiply the number of payments due by the monthly payment.

Step 3: How Long for Payoff? This is the most important step of the process. It shows you how quickly your debts will disappear and how long it will be before you
Step 1: Identification of Debts. This step will show you exactly where you are with your debts by helping you create a complete list of debts and their interest rates,
monthly payments, balances due, and remaining number of payments on each.

Step 2: How Far Are You Really in Debt? Completing this step will show you how much you are going to pay in interest in addition to the principal of the debt. To
calculate this, multiply the number of payments due by the monthly payment.

Step 3: How Long for Payoff? This is the most important step of the process. It shows you how quickly your debts will disappear and how long it will be before you
are free from debt forever!

Identification of Debts

The rest of this chapter will teach you how to fill out the worksheets provided on the CD-ROM. As you read, you'll need to examine each worksheet individually to
help you visualize the process. To use the computerized worksheets, place the CD-ROM in the appropriate drive on your computer. Follow the on-screen instructions
to install the program on your hard drive. Whenever you want to work on your debt-elimination plan, click on the Debt-Free folder and start the program. All
worksheets are accessible through the main menu.

Step 1-Identification of Debts-can be completed using the Debt Elimination Worksheet. To access this worksheet, go to the main menu on the CD-ROM and click the
button that says Begin the three-step debt elimination process. (A blank worksheet is also on pages 40-41). List your debts in any order you choose. The program will
later reorder them to show you how to pay them off. If you are doing the worksheet by hand, list your debts from the smallest amount owed to the largest amount
owed. Remember this definition: Debt is any bill that is overdue or requires more than one month to complete payment. Do not confuse debt with cost-of-living
expenses, such as rent or utilities.




Some debt-elimination programs require that you rank your loans by interest rate, beginning with the largest percentage rate and moving to the smallest. Some believe
there is an advantage to paying off the highest interest-bearing loans first. However, the difference between tackling the highest interest-rate loans first versus tackling
the shortest-term loan first is almost negligible. What is more, you can actually decrease the number of your debts faster by paying off the shortest-term loans first. (The
 Copyright (c) 2005-2009, Infobase Media Corp.                                                                                                                Page 8 / 77
computer   program will reorder your debts to do this.) You will find greater personal satisfaction in seeing the number of your debts grow increasingly smaller.

If you are completing this worksheet by hand, the most difficult information to obtain will be the number of payments remaining. If you are using the computer
Some debt-elimination programs require that you rank your loans by interest rate, beginning with the largest percentage rate and moving to the smallest. Some believe
there is an advantage to paying off the highest interest-bearing loans first. However, the difference between tackling the highest interest-rate loans first versus tackling
the shortest-term loan first is almost negligible. What is more, you can actually decrease the number of your debts faster by paying off the shortest-term loans first. (The
computer program will reorder your debts to do this.) You will find greater personal satisfaction in seeing the number of your debts grow increasingly smaller.

If you are completing this worksheet by hand, the most difficult information to obtain will be the number of payments remaining. If you are using the computer
spreadsheet, this number will be calculated automatically for you based on the interest rate, minimum payment, and balance you previously entered. For credit card
debt, the number of payments remaining refers to the number of payments you would have to pay if you paid only the minimum payment each month and did not incur
any additional debt. If you cannot calculate this amount based on any paperwork you have in your immediate possession, then call your lending institution and ask for it.

Example

For each worksheet we will illustrate the process by providing you with an example. That example is drawn from a fictional family we will call the Dixons. (Please note
that the sample shown of Step 1 also includes the total determined in Step 2-How Far Are You Really in Debt?- We will get into those details later.)

Dan and Janet Dixon are an average family, with an average amount of children, earning an average income. Their burden of debt is likewise average in its nature. The
Dixons are not in any way a real family, and the figures we assign to them are drawn for illustration purposes only. Let's introduce you to the Dixons now.

Dan Dixon has a middle-management position in a computer software company. Janet, his wife, works at home doing data entry. They are just two ordinary people
trying to make their paychecks stretch and finding themselves sinking deeper into debt every year despite their best efforts. Their goal has always been to get out of
debt "next year." But nothing goes right, and "next year" seems further and further away.

The Dixons smallest debt is the amount owed their doctor. It is $475, and the doctor is good enough to not charge them interest on it as long as the bill is paid on time
every month. They pay $25 a month.

Their second smallest debt is to the orthodontist for their daughter Jamie's braces. They pay $62.50 a month to the orthodontist and owe $500 to pay it off in full.

Then come their credit cards. The smallest card has a balance of $899.93. They usually try to pay a little more than the minimum payment on all of their cards, yet when
they calculated how long they'd be paying if they could make only the minimum payments, they were astounded to find that it would take four and a half years to pay off
the first one in full-and that was only if they didn't add any additional debt.

The Dixons listed each debt. You can see the results in the example provided on the previous page. They ended the list with their auto loan and their mortgage.

How Far Are You Really in Debt?

After the Dixons listed all their debts, the computer software automatically calculated the amount of their real debt. This was the sum of each monthly payment amount
multiplied by the remaining number of payments. The sum represented the amount the Dixons would spend over the entire term of the debt if they made only the
minimum payments each month. Of course, most people do not make only minimum payments over the term of their loans. In addition, most people never completely
pay a debt in full before a new debt is incurred. For this reason, looking at real debt makes sense. Dollar for dollar, our illustration will be close to or even less than true
amounts owed by people who never climb out of their indebtedness.

From our example worksheet, you can see that the Dixons have borrowed $156,645 in principal, but by the time they have paid off their existing loans, making only
minimum payments each month, they will have actually expended $321,897 in real dollars. Does that leave you flabbergasted? It ought to. The difference between the
principal and the principal-plus-interest is $165,252-that's considerably more than what they had originally borrowed. Can you believe it-$165,252 additional dollars-
just for the rental of money!

This is the reason that debt is so ugly. It is the reason that those who understand interest collect it, those who do not understand interest pay it. Let's look at the gap
between collecting interest through savings and paying it. We'll call it the interest gap.




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When the interest rate gap is 18.5 percent, there is a 185 percent difference over ten years between collecting interest and paying it off in debts.

Let's look at that same gap another way. If the Dixons owe $156,645 in principal on all their debts, and are really in debt $321,897, then at the end of twenty-seven
years, when the debts are fully paid, they would have lost $165,252.

But what if they could retire their debt far earlier and put the combined total of all those minimum payments toward savings and investments? In addition to being debt-
free, in twenty-seven years they would have a tidy little nest egg to spend then on the realization of their dreams or anything that came along before that time could be
realized as it was needed. Remember? Missions, weddings, travel, retirement, education-whatever the Dixons can dream of, they can make reality.

Now do you understand? Those who understand interest collect it, those who do not, pay it. So remain optimistic; wealth lies ahead for you as well-just as soon as you
eliminate those debts.

Now comes the exciting part: Step 3-Determining How Long for Payoff. The next chapter will introduce you to the third step and the actual process of paying off your
debts.




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The Power Payment Plan

Many more people could ride out the storm-tossed waves in their economic lives if they had their year's supply of food and clothing and were debt-free. Today we find
that many have followed this counsel in reverse; they have at least a year's supply of debt and are food-free.

-Thomas S. Monson

Are you ready to kick that monster debt out of your house and home forever? Of course you are. You can do it without having to secure extra employment and
without finding any additional sources of income. The power lies inside of you. It is so simple you will probably wonder why you never thought of it before. In fact, we
predict that by the time you finish this chapter and have figured how long it will take you to pay off your debts, you will be so excited and energized that family finances
will never look so discouraging again.

Every household, no matter the circumstances, wastes a certain amount of money each and every month, and that is the money you will use to get out of debt. In
subsequent chapters we will spend a great deal of time discussing ways to find extra sources of money you did not even realize were available to you. But for now, you
must accept on faith that it is likely that there is between 10 and 15 percent of your income that you can "break free" to "break the back of your debt." We'll call this
money your power payment.

Here's how we'll start. At the beginning of next month, sit down with your family and make out a check for whatever amount of money you reasonably feel you can
save from your monthly expenditures. This will be your power payment. (To find enough savings from your monthly expenses to make a power payment, be sure to
check out the appendix, which lists a number of ways to cut expenses in every category of your budget-from heating bills to mortgage insurance, from entertainment to
wardrobe needs.) You might consider writing out your power payment check immediately after writing out your tithing check. It only seems appropriate that after giving
10 percent to the Lord, that it is time to focus on the percent that will go to your debts. At the bottom of the power payment check, write in big letters: FOR
PRINCIPAL ONLY. Make out your check at the beginning of the month so that you won't be tempted to spend it. Ideally, the amount of this check should be equal
to the 10 percent to 15 percent that most experts agree the average household wastes each month. If this amount seems beyond your grasp, then make out a check for
whatever amount you feel you can spare from your monthly spending plan, whether it be 3 percent or 7 percent or 10 percent. Any amount will get the ball rolling.
However, we believe that as your spending becomes more efficient every month, you will eventually be able to reach at least 10 percent.

Now look at the current monthly statements sent by your creditors. You are going to make minimum monthly payments each month on all your debts except the debt
you are currently concentrating on. This debt payment will include the regular check for the minimum monthly payment plus the power payment check. Continue to pay
what you are paying right now. However, if the creditor requires you to increase a payment, then pay the increased amount. Never pay less but pay more if that is
required. Never fail to meet your obligations.

When your payment becomes due, take the power payment check from its secure location. You didn't spend this money yet because you made out the check at the
first of the month. Add this check to the second check and enclose it in the envelope for the monthly payment of your shortest debt as reordered on the Debt
Elimination Worksheet. Pay this new amount until the shortest debt is paid in full. This should be a matter of just a few months or so-maybe less.




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Let's go back to our sample family for just a moment so you can visualize how exciting it will be to see that first debt being wiped out. Remember, when we finished the
last chapter, we ended with Step 2 on the Debt Elimination Worksheet. Now we move to Step 3. While the Dixons were completing steps 1 and 2 of the worksheet,
they were also thinking about the amount of money they could afford to use as a power payment. They determined that they could come up with $425 a month, which
is 10 percent of their monthly take-home pay. They entered that number in the box labeled "Initial Power Payment" on the worksheet, and the computer automatically
calculated the "revised number of payments remaining" column for them. The computer also automatically renumbered their debts, putting the debt with the shortest
pay-off time first. When the Dixons glanced at the computer calculation they were ecstatic. In just under ten years they would be debt-free. They weren't yet sure how
this was going to work, but it made them feel good. They could hardly believe it! They quickly glanced down the chart and found that all those nagging debts-not
including their mortgage payment-would be eliminated in just a couple of years. What a relief! Instead of a lifetime of debt, they were seeing light at the end of the tunnel
and they felt exhilaration. Becoming debt-free was within their grasp.

If you follow this plan, when your shortest debt is paid in full, you will be ready to concentrate on the next shortest debt. Your new power payment will be 10 percent
of your take-home pay plus the minimum monthly payment of the first debt. With the elimination of each debt, the power payment will naturally grow larger. Each time,
you will always begin by making out a check for the power payment and a second check for the minimum payment of the subsequent debt. Each time you pay a debt in
full, you will add your original power payment to the sum of each debt that is now fully paid and then to the minimum payment of the next debt. By making additional
payments on your principal you will pay less interest and more principal, thus accelerating the payment of your debt.

The whole process might be easier to visualize if you think of each debt as a stack of building blocks. Each of those blocks represents $100. Let us also assume that
you have five debts-each, therefore, being represented by a building block and each debt carrying a minimum payment of $100. Your power payment is also equal to
$100. Now, stack the power payment of $100 on top of the $100 minimum monthly payment of your lowest debt. You are now spending $200 toward the elimination
of the first debt. When the first debt is eliminated, you will take the first two blocks, now representing $200, and stack them onto the next block. Now you are
spending $300 toward the payment of the second debt. With the elimination of each debt, your power payment increases, and the momentum gathers. By the time you
are ready to tackle the last of the five debts, you will have six $100 blocks stacked on top of each other and pay the entire $600 every month toward the last debt-
$500 will be applied to the principal of the loan and $100 to both the principal and interest.

The Power Payment: Key to Success

Key to the success of this plan is that you always remember to send two checks-one being for principal only-to the creditor of whatever debt you are focusing on.
Some who have tried this system before have found that their creditor becomes confused if they send one big check. This is because the creditor may assume you are
paying minimum payments in advance, and the clerk recording your payment may not properly credit you. You need to ensure that your power payment pays only the
principal of your debt.

Example

Let's show you how this works with real figures. We'll go back to our typical family, the Dixons. As you read our example, look at the chart titled "Power Payment
Plan."

Dan and Janet's take-home pay totals $4,252 every month. This does not include taxes, social security, or insurance payments, which are deducted from their
paychecks every pay period. Ten percent of that amount is $425. In the example chart that follows, this amount became their power payment.

At the beginning of the first month, Dan and Janet made out a power payment check for $425 to Dr. Simpson, their daughter's orthodontist. In the past, they had
typically sent him a check for $62.50 every month; but that month they sent him two checks: one for $425 and the other for $62.50. In other words, they planned to
 Copyright (c) 2005-2009, Infobase Media Corp.
send him $487.50. Since this debt did not include any interest, they did not need to make out two checks. However, if the business office had chargedPage         12 / 77
                                                                                                                                                            them interest,
the first check, with "For Principal Only" written on it, would have alerted the business office that the Dixons wished to pay off their debt and that they were not making
advance minimum payments, which would include both principal and interest. This may seem a little elementary. But sending two checks really helps to avoid confusion
paychecks every pay period. Ten percent of that amount is $425. In the example chart that follows, this amount became their power payment.

At the beginning of the first month, Dan and Janet made out a power payment check for $425 to Dr. Simpson, their daughter's orthodontist. In the past, they had
typically sent him a check for $62.50 every month; but that month they sent him two checks: one for $425 and the other for $62.50. In other words, they planned to
send him $487.50. Since this debt did not include any interest, they did not need to make out two checks. However, if the business office had charged them interest,
the first check, with "For Principal Only" written on it, would have alerted the business office that the Dixons wished to pay off their debt and that they were not making
advance minimum payments, which would include both principal and interest. This may seem a little elementary. But sending two checks really helps to avoid confusion
on the part of office employees. It also never hurts to follow up a power payment check with a phone call to see that the business office is properly crediting your
principal payments. You'd be surprised how easy this seems and how confused some offices get. You are doing something most people don't do!

Because the balance of the Dixons's orthodontist bill was $500, their first debt was retired in just one month. Why? Because as soon as they realized they were within
$12.50 of paying this first debt in full, they chipped in the extra money and included it in their second check. Next month, they planned to take the $425 power
payment plus the $63 (rounded up from $62.50) they were accustomed to paying to the orthodontist and make out a new power payment check to Dr. Barton, their
family doctor. Their new power payment would now total $488. They would then write out a check for $25, which was the minimum monthly payment for the doctor
bill. They soon remembered, however, that they owed only $475 to the doctor. This meant that they could pay the second bill in full and have $38 left to add to their
third debt, which was credit card B. In two months they were two debts shorter and on their way to paying off the third debt.

The third month enabled the Dixons to focus on their third debt. Their power payment was now $513 ($425+$63+$25-the minimum monthly payment for debt 2).
When added to the minimum monthly payment of credit card B ($74.22, which we have rounded down to $74), the total payment going to the third debt became $587
per month. In just over three months, the debt from the orthodontist's bill, the doctor's bill and, credit card B was gone. With debts 1, 2, and 3 eliminated, Dan and
Janet began focusing on the payment of the fourth debt (sending in one check for $587 with "For principal only" written on it and a second check for the minimum
monthly payment of credit card C-$76-every month). Dan and Janet continued to consolidate and roll down their debts until, in just under two years, all that remained
was the mortgage on their house. Now, every month Dan writes out a power payment check for $967, and Janet writes "For principal only" in the corner of that check.
Then Dan writes out the regular mortgage payment of $891, some of which goes to pay interest and some to principal. If they keep on schedule, in less than nine and
one-half years, Dan and Janet will be totally out of debt.

Utilizing the Power Payment Plan

Now it's your turn to see how the Power Payment Plan will work for you. The program you installed will automatically make the mathematical calculations for you. For
initial purposes, calculate 10 percent of your take-home pay and place that amount in the box entitled "Initial Power Payment" on the Debt Elimination Worksheet. (The
box is found in Step 3 of the worksheet.) If you return to the Debt Elimination Menu on the CD-ROM and click the button that says See the "power" behind the Power
Payment Plan, you'll see your own numbers formatted just like the chart on the previous page. This will allow you to see the extra amounts you will be placing toward
each debt as you escalate its repayment. The sole purpose of that chart-the Power Payment Plan worksheet-is simply to give you an idea of how your power payment
will escalate. To actually implement the Power Payment Program, you must follow the plan and write out that monthly power payment check. Soon, like the Dixons,
you'll be able to see your way to becoming debt-free. If you need to, you can always return to the Debt Elimination Worksheet and recalculate your repayment
timetable according to the amount of power payment you are able to comfortably make. Any amount will pay off your debts faster than you are currently doing;
likewise, any amount will get that ball rolling.

Does this seem unbelievable? Test it for yourself. We warn you: The system we are teaching you is the same system many debt-relief companies use to pay down your
debt-and they charge you good money to do it. But you can do it for yourself. Test it. See how easy it is for you to kick debt out of your life.




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Other Methods of Debt Elimination

Pay the debt thou hast contracted. . . . Release thyself from bondage.

-D&C 19:35
 Copyright
For        (c) 2005-2009,
    most families, the PowerInfobase
                             PaymentMedia     Corp. in the previous chapter is the safest and most efficient way to repay debts. This is a tried and true
                                       Plan explained                                                                                                    Page
                                                                                                                                                           system17   / 77
                                                                                                                                                                    that
goes by many different names. It is not an original concept. Most credit counselors use some form of this system to help their clients eliminate their debts, and they
charge them somewhere in the neighborhood of 5 percent of their debt load each month just to manage the power payment formula. Most people do not need to pay
Pay the debt thou hast contracted. . . . Release thyself from bondage.

-D&C 19:35

For most families, the Power Payment Plan explained in the previous chapter is the safest and most efficient way to repay debts. This is a tried and true system that
goes by many different names. It is not an original concept. Most credit counselors use some form of this system to help their clients eliminate their debts, and they
charge them somewhere in the neighborhood of 5 percent of their debt load each month just to manage the power payment formula. Most people do not need to pay
someone else to do what they can do for themselves.

There are great rewards to managing your own debt, repaying it on your own terms, and working at your own pace. First, you will dispatch your debt more quickly.
Why? Because the total amount saved from your monthly budget will be expended toward the elimination of your debt through the power payment. In other words,
you will owe no other institution a fee that would be subtracted from your power payment. In this manner, you will save both years and money. Second, by applying the
system of debt repayment for yourself, you discipline and refine your personal spending habits.

Most important, you will be working as a team-husband, wife, and perhaps even your children-toward a common goal. There is no way to calculate the benefit this will
be to your family. Squabbles over finance are the single most frequent cause of marital instability. But those squabbles disappear when all parties are working on the
same page, with the same values, toward the same ultimate goal. These rewards form a bond that we call self-reliance. That independent, hard-working spirit will
permeate every other aspect of your life. That's what all the prophets have been teaching us since the restoration of the gospel in these latter-days. Self-reliance is a
preeminent tenet of our religion.

Before we leave our discussion of debt, we would be remiss if we didn't provide you with other options of debt elimination. Let's explore a few of these options.

Sell Trade or Cash In an Asset

Let's start with the easiest alternative and work toward some of the harder ones. One of the easiest ways to eliminate at least some of your debt is to sell something and
use the cash to pay off another debt. Look carefully at your assets. Could you sell something you own to pay off any of your debts? Do you own cars, property,
stocks, insurance policies, or other assets? Could you liquidate savings accounts? Do you own jewelry, heirlooms, or any other property assets that could be traded for
the principal of one or more of your debts?

Some debts can be exchanged by selling and replacing your property with something less expensive. Can you get by with a less expensive car or home? Even if you
decide that the Power Payment process looks good to you, it may be well to consider if you are perhaps living above your means. In chapter 8 we'll provide you with a
worksheet that lists your assets and the total amount of your debt on a single page. Such a comparison allows you to see at a glance where additional money is or how
eliminating a debt will significantly improve your financial picture.

Buying, selling, or trading assets for debts may sound like obvious solutions; but sometimes we get so close to our problems that we ignore even the obvious. We all
know of families, strapped for cash, that forget they have money in savings accounts, bonds, or stocks that can be either sold or withdrawn. Some remember but are
stubbornly reluctant to use it. Maybe that is because they determined long ago never to touch that money. Perhaps the thought of selling seems taboo. But isn't it worth
spending these resources to buy a little peace of mind? You, ultimately, are the best judge. These are decisions that must be considered as a family unit. It would not be
fair to unilaterally decide to sell, trade, or cash in an asset without all parties feeling comfortable with the decision.

Balance Transfers

Most credit cards offer a service known as the balance transfer. This is how it works. The balance owed on another card can be transferred to a new account or to an
existing account with a lower rate. Many Americans have taken advantage of this service as a way to dismiss some of their debts.

Doug and Diane were just such a couple. They felt they had discovered a unique and simple way to manage their debt. Credit card offers plugged their mailbox every
day. Some of the offers were for astonishingly low interest rates and many offered the option of transferring their balance for a new, lower rate. For years, Doug and
Diane threw these offers in the trash, and then one particularly depressing day as they struggled to pay their bills, they opened one of those offers. It looked tempting.

"Aha!" Doug thought to himself, "If I transfer the balance of a higher interest credit card to this new one, I will save money. In addition, if I transfer now, I have an
additional month to make payments. This will give me more money next month to spend toward other bills. What a great idea!"

It sounded so exciting that he fairly giggled as he filled out the application. Sure enough, once the application was approved, he was easily able to transfer the balance
of his biggest card to the new one. But the pressure of his finances did not ease and he sought to widen this remedy. With a big enough line of credit, he could do the
same thing for all his credit card debts.

It worked well for a while, but eventually, as is almost always the case, the new cards raised their interest rates. Most of those ridiculously low rates are only
introductory offers. "No problem," thought Doug, "New offers are pouring in every day. I'll just keep transferring balances and move them again before the rates rises
again." There was no end to the credit card applications, and he could constantly transfer the balances before the introductory offers expired and the higher interest
rates kicked in.

Doug and Diane loved this new system. By constantly transferring balances, there were often grace periods where some debts didn't have to be paid. This freed up
money from month to month, buying much-needed time and providing extra cash for additional purchases. With a little extra cash and a whole new line of credit, it
became way too tempting to add to the credit card debt. Doug and Diane looked forward to each new credit card offer, always searching for the best deals.

This went on for quite a while, but the day of reckoning arrived as it always does. Diane found herself at the mall undergoing an embarrassing and humiliating
experience. As she handed her first card to the clerk, she was embarrassed to have the young clerk inform her that her credit had been refused.

"No problem," she thought, "I'll try another one."

Well, Diane pulled out three more cards and each one was refused. They had all been simply "maxed out."

Doug and Diane's options at this point had narrowed significantly. They tried to get a loan to pay off all the credit card debts, only to find that with so many cards and
so many balances bouncing back and forth they had become a poor credit risk. No one would grant them a loan. Doug and Diane learned that transferring balances to
avoid making monthly payments carries with it a high price.

Doug and Diane's situation is deliberately exaggerated to teach a not-so-exaggerated lesson. Transferring balances may seem like a solution to a monthly cash flow
problem,
 Copyrightbut(c)the2005-2009,
                    risks involved are steep.
                               Infobase       Credit
                                          Media      card customers can be lulled into a false sense of security. Too many have discovered that even if they
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payments, and even if they do not "max-out" their lines of credit, at some point life will provide them an economic hurdle and they will stand atop a scary precipice.
With credit cards, even one missed or late payment can mean a high-risk interest rate-not just with that one card but on every other card you own. That is because
credit card companies keep track of one another.
avoid making monthly payments carries with it a high price.

Doug and Diane's situation is deliberately exaggerated to teach a not-so-exaggerated lesson. Transferring balances may seem like a solution to a monthly cash flow
problem, but the risks involved are steep. Credit card customers can be lulled into a false sense of security. Too many have discovered that even if they make prompt
payments, and even if they do not "max-out" their lines of credit, at some point life will provide them an economic hurdle and they will stand atop a scary precipice.
With credit cards, even one missed or late payment can mean a high-risk interest rate-not just with that one card but on every other card you own. That is because
credit card companies keep track of one another.

Just how bad can it get? Well, recently some credit card companies raised their rates to a whopping 29.9 percent annual percentage rate (APR) for their high-risk
customers.

How does this translates into actual cash? If you owe just $1,000 and can afford only minimum monthly payments of about 3 percent the total, it would take you
twenty-four years to pay back that $1,000, and you would have spent $3,655.73 in interest alone. This assumes you incur no additional debt. If that's not bad enough,
consider what happens when that debt is $3,000! How does $13,459 in interest spread over forty-two years sound to you? (see "Card Rates Skyrocket," Deseret
News, February 10, 2002, M1).

There is an additional trap inherent with a credit card that must be mentioned before ending our discussion of balance transfers. When interest rates are falling,
consumers generally shop around for a smaller monthly, minimum payment. But if that shopping occurs too frequently, it makes you look to a potential creditor like a
person eager to take on new debt. It can even affect your credit rating. Every time you make an application for a new credit card, your lender requests a credit report.
A person who jumps from credit card to credit card is not considered a good investment. What this means is that when it comes time to make a major purchase, such
as a home or a car, your credit rating will say that you are not a good risk. You could find yourself being turned down even though you never fell behind on your
monthly payments.

Debt Consolidation Loans

Debt consolidation loans are the most highly advertised and most attractive methods of debt elimination in today's market. For some people they have become the ideal
method of paying off debt while preserving enough income to meet necessary expenses. Despite their popularity, there are traps involved with debt consolidation loans
that you need to be aware of before entering into a binding agreement.

A debt consolidation loan is a loan that combines all of your smaller debts into a larger loan, usually with a lower interest rate and a lower monthly payment. It sounds
like a great idea, but to make it work requires a great deal of self-control and discipline.

Problems arise when some people discover that the lower monthly payment of the consolidated loan has freed up enough income to allow them a "splurge" or two. One
"splurge" almost always leads to two and then three, and, before they know it, they not only have a consolidation loan to pay, but lots of new small debts as well. They
are in worse shape than they were before.

Karen found out the hard way that a debt consolidation loan seems attractive but does not solve her deep-seated problem. Karen took out a debt consolidation loan
just three years ago. She consolidated $42,000 in debt into one loan with a much lower interest rate and a considerably lower monthly payment. She felt relieved the
day her loan closed and she walked away from the bank. She thought she had conquered her problem.

But, unfortunately for Karen, that was not where it ended. She still couldn't control her spending. In three short years she massed a new $59,000 debt outside her
consolidation loan. That left her with the original $42,000 to repay and an additional $59,000. Instead of being $42,000 in debt, she was $101,000 in debt.

Not everyone who takes out a debt consolidation loan finds themselves in Karen's shoes, but many do. Getting out of debt involves changes in habits and in lifestyle.
There are no quick fixes. If you are looking at a debt consolidation loan as a quick and painless solution for your financial woes, then you will likely be disappointed and
could soon find yourself in a worse situation than you are presently in.

In addition, if a debt consolidation loan seems like a good solution to you, be prepared to do a little research and a whole lot of shopping around. You will find that
terms and conditions vary from institution to institution. Some debt consolidation loans have excellent terms and sound, financial backing while others are traps
somewhat akin to loan sharking. Know what you are tackling before you get into it. Consolidation cannot make your debts disappear-you will still pay them and it may
well be that the longer term of the loan means that in the end you will pay far more than if you had paid by the original terms and with the original interest. Inform
yourself and calculate costs before you make a commitment.

Home Equity Loans

Like the debt consolidation loan, you can consolidate all your revolving credit secured by the equity in your home. In fact, some debt consolidation loans are home
equity loans. Because home mortgages carry lower interest rates, a home equity loan becomes an attractive option. The problem with using your equity as collateral on
your loan is that it jeopardizes the roof over your head. This is never a good idea.

A home equity loan works exactly like the debt consolidation loan. It is not a painless, magical pill but a solution that requires a great deal of self-control to make it
work. And there is one additional caution: Some home equity loans, which operate with a line of credit, place an additional and sometimes hidden jeopardy to your
home. Some institutions place an immediate lien against your property not just for the amount you borrow but for the entire line of credit they offer you.

Let's show you what we mean. The Smiths needed to borrow $20,000 to get rid of a few nagging bills and make some remodels on their home at the same time. They
were extended a line of credit for $50,000 but prudently, they thought, borrowed only the $20,000 they figured they'd need. Eventually the Smiths paid the $20,000 in
full. A year went by. The bank with which they'd taken out their home equity loan sent them a bill for their line of credit fee. The Smiths were shocked. They'd paid that
loan off a year ago. They called the bank thinking there was a mistake. "No," they were told, "they owed a fee for the $50,000 line of credit." Then to their horror they
discovered something even worse. The bank had placed a lien on their home for $50,000, the entire line of credit. It mattered not that they did not use that line of
credit, the lien was still there. The Smiths had to go through the painful process of removing the lien. But the Smiths were lucky. Had they discovered this when they
were in the process of selling their house, that $50,000 lien would have been far worse.

It is important to point out that not all lending institutions create such monstrous terms on home equity loans, but the buyer should beware. There are terms on every
loan, and it pays to acquaint yourself with each and every one of them. Loans may seem quick and painless, but they always carry risks. Investigate before you sign on
the dotted line.

Let's talk about an additional risk that you may not even consider when consolidating debts that use the equity in your home as collateral. What if the housing market
dips after you have taken out your loan? If you should need to sell your home in that situation, you may be faced with a huge loss. Randy and Linda had taken out a
 Copyright
loan         (c) 2005-2009,
     for $20,000  against the Infobase   Media
                               equity in their   Corp.
                                               home. Time passed. Randy and Linda needed to sell their home, but the housing market had taken a dip. NowPage their19 / 77
                                                                                                                                                                   home
was worth $20,000 less. But the loan was still there. To recoup the money was impossible and they were faced with a $20,000 loss.
the dotted line.

Let's talk about an additional risk that you may not even consider when consolidating debts that use the equity in your home as collateral. What if the housing market
dips after you have taken out your loan? If you should need to sell your home in that situation, you may be faced with a huge loss. Randy and Linda had taken out a
loan for $20,000 against the equity in their home. Time passed. Randy and Linda needed to sell their home, but the housing market had taken a dip. Now their home
was worth $20,000 less. But the loan was still there. To recoup the money was impossible and they were faced with a $20,000 loss.

Summary

At this point let's do a little summary. Balance transfers, debt consolidation loans, and home equity loans require self-control and discipline to work. Making voluntary
power payments is, therefore, far and away the better option. Why? Because it requires the same kind of self-control and discipline but carries with it none of the
inherent risks. The added advantage is that this method of repayment makes you dependent on no one but yourself. That is a clear advantage.

Options to Those with Greater Need

Up to this point we have discussed methods of debt elimination for people who have not yet missed payments or gotten themselves into serious financial hot water. But
what if you are in more serious trouble? What if the creditors have come calling and your options are running out?

The last two methods of debt elimination-credit counseling and bankruptcy-are for those people who have debts far beyond their control. They are last-attempt
methods and should be taken only when you feel that there is no other way. They are good methods and they are legal; but only those who find no other way out
should take them. They carry with them some additional stigmas that could affect you and your family for many years to come.

Steve Rhode, who co-founded Myvesta.org, a credit counseling service, says: "Bankruptcy is a financial solution for an emotional problem." And, he adds, "debt is
never about money" (in Paul J. Lim, "Digging Your Way Out of Debt," US News & World Report, March 19, 2001, 59). For some people there is no other way out
than these last two methods of debt elimination. For them finances are part of a much larger problem.

Credit Counseling

Whether they are called Consumer Credit Counseling, Debtor's Anonymous, or the National Foundation for Credit Counseling, there are many agencies that deal with
counseling debtors and helping them back on the road to recovery. Some professional debt-relief organizations help the debtor to recover but do not focus on how he
got himself into debt; while other services spend a great deal of time exploring the how and seeking solutions to an emotional problem.

Because there are far too many organizations to adequately cover, we will not attempt to explore or recommend any specific programs. Most of these services operate
on the same principles and do a capable job of helping people out of some desperate situations. But not all organizations that claim to help the debtor are reliable,
licensed, and have the integrity to do so. Many of the more reliable services are associated with what is known as the Association of Independent Consumer Credit
Counseling Agencies (AICCCA). We are grateful for their website, which has provided us with some guidelines to assist you in a search for reliable credit counseling.

Here is a list of what you should look for before you sign on with a credit counseling service; the guidelines were gleaned from a quick review on the Internet:

" They must be a non-profit 501(c)(3) organization.

" They should be licensed to operate in the state in which you reside.

" They should maintain a satisfactory rating with the Better Business Bureau.

" They must begin resolution of client complaints within 10 days of notification.

" They must have an independent board of directors, the majority of which cannot be compensated employees of the agency or related by blood or marriage to other
board members or employees.

" They must have operated continuously in the state in which they are organized for at least one year.

" They must maintain a permanent physical business location and not operate solely out of a post office box.

" They must meet all state licensing, registration, bonding, and statutory requirements.

" They must be open during normal business hours.

" They must provide counseling to anyone who desires it.

" They must employ only counselors certified by an AICCCA-accepted body within one year of completing their six month "in agency" training program.

" Compensation for counselors cannot be based on the outcome of the counseling process.

" Service is provided to the public regardless of ability to pay.

" Fees will not exceed a maximum set-up fee of $75 or exceed $50 per month for maintenance of an account. Other fees for additional services must be reasonable.

" No fee can be charged for credit repair.

" All deposits made by clients should be dispatched to creditors in a timely manner.

" Consult www.aiccca.org for more details.

Independent credit counselors work in a similar manner. The client pays a monthly fee or deposit. From that deposit the credit counselor pays the client's creditors at
lower monthly payments and reduced interest charges. Late fees are waived. Counselors are available twenty-four hours a day, seven days a week. All counselors are
licensed and certified by the state in which you reside.
Copyright (c) 2005-2009, Infobase Media Corp.                                                                                                           Page 20 / 77
The drawback of most credit counseling services is that they will only work for you after you have exhausted most other avenues of debt elimination. Those who are in
over their heads but have not yet missed a payment may not be eligible for this recourse. Some counseling services will not take clients until they can no longer meet
minimum payments.
Independent credit counselors work in a similar manner. The client pays a monthly fee or deposit. From that deposit the credit counselor pays the client's creditors at
lower monthly payments and reduced interest charges. Late fees are waived. Counselors are available twenty-four hours a day, seven days a week. All counselors are
licensed and certified by the state in which you reside.

The drawback of most credit counseling services is that they will only work for you after you have exhausted most other avenues of debt elimination. Those who are in
over their heads but have not yet missed a payment may not be eligible for this recourse. Some counseling services will not take clients until they can no longer meet
minimum payments.

There is another caution to this method that bears discussing. Though client's accounts are confidential, the very fact that credit counselors contact creditors casts a pall
over your reputation. This is not a step to be taken hastily or lightly. Think this through before you act. On the other hand, if this is something you truly need to handle
your problem, then do not hesitate to take this step. Always remember, having a debt problem does not make you a bad person; you risk your reputation only if you do
not act and act soon enough.

Bankruptcy

This form of debt elimination is the ultimate in "last resort" methods. It is the atomic bomb of debt elimination because it carries with it such lasting repercussions. It is
legal and it is often necessary. Many families have been forced to take this step through no real fault of their own; others have found it to be a convenient way of
dodging their debts. But beware. There is good reason why so many experts have labeled bankruptcy as the "ten-year mistake."

There are, for the most part, two kinds of bankruptcy protection available to the consumer: Chapter 7 and Chapter 13. A Chapter 7 bankruptcy absolves you of all
your debts except back child support, student loans, taxes, or withdrawals in excess of $1,000 made within twenty days of the declared bankruptcy. Your goods will
be taken and sold at auction to pay your creditors. You are allowed to keep only some of the equity in your home and in your car, some household goods, and any
trade tools you may possess. This form of bankruptcy carries a stain on your credit report for ten years and you are not allowed to file again for another six years.

A Chapter 13 bankruptcy allows you to keep all of your assets, but the court orders a plan for you to pay a certain portion of your debt over a period of time and the
creditors are expected to take what you are ordered to pay as payment in full. The court determines the amount based upon your ability to pay. The period of time is
anywhere from three to five years.

A word to the wise: Although bankruptcy stains your credit record for only ten years, forever after whenever you apply for a loan or a job, you may be asked if you
ever filed for bankruptcy and you will be forced to disclose it again. This can happen for the rest of your life. In addition, though bankruptcy protection is not a matter
of public record, those who have filed may be required to pay their loss through their wages. This makes your employer aware of your situation. An employer, even
though aware, cannot legally discriminate against you because of bankruptcy, but you must know that it could be potentially embarrassing.

In addition, do not let anyone tell you that you must file for bankruptcy protection because your debts exceed a certain amount. Find an expert, someone you can trust
whom you know to be a person of integrity and good sense and ask them honestly to counsel your special situation. Bankruptcy is your legal right and is provided for
your protection; but it is not a step to be taken lightly.

Also, be aware that the following debts are not erased with bankruptcy:

" taxes

" spousal and child support

" debts arising out of willful or malicious conduct

" liability from driving under the influence of alcohol

" debts from any prior bankruptcy

" most student loans

" criminal fines and penalties

" attorney's fees

If you are one of those unfortunate few who have found themselves in this kind of financial distress, you need to remember that you are not alone and that your financial
problems do not make you a terrible person. There are many good, well-intentioned, and compassionate people who have found themselves in this extreme distress.
Bankruptcy does not in and of itself jeopardize your standing in the Church. Restoring your self-confidence after a bankruptcy is paramount in importance. For that
reason alone, read on. Sensible spending will restore your feelings of self-worth and you will learn whatever is necessary to make yourself self-reliant one day in the
near future.

Chapter 6
Debt-Free: A Philosophy

If there is any one thing that will bring peace and contentment into the human heart, and into the family, it is to live within our means.

-President Heber J. Grant

We have begun our instruction on becoming debt-free with five chapters on basic debt elimination. We've made a case against debt and given you some options on just
how you might eliminate it from your life. We could end here. We realize, however, that what we have provided thus far is simply not enough. How do you find money
to make a power payment from an already stretched budget? How do you keep up with the demand of your growing family and their expanding needs? How do you
pay for the constant bombardment of crises that life hands you on an almost daily basis without going right back into debt? It isn't easy.

It goes without saying that one of our primary goals is to be completely self-reliant. Self-reliance is basic to the doctrine and practice of our religion. From the beginning
of time, mortals have been counseled by God and his prophets to be self-reliant, to earn their own way, to be independent, and to avoid temporal or spiritual bondage.
Why does God expect his children to become self-reliant? Elder Alexander B. Morrison in his book Visions of Zion has provided us with the answer. "Self-reliance is
 Copyright
closely tied (c) 2005-2009,
             to freedom.       Infobase
                         . . . We  cannotMedia  Corp.
                                          be free if we are not self-reliant. Put another way, self-reliance is a prerequisite for freedom, and dependence Page        21 / of
                                                                                                                                                              is the enemy  77
freedom. . . . Independence and self-reliance thus are critical keys to spiritual growth. Whenever we are in a situation that threatens self-reliance, we will find that
freedom is threatened too" (Salt Lake City: Deseret Book, 1993, 111).
It goes without saying that one of our primary goals is to be completely self-reliant. Self-reliance is basic to the doctrine and practice of our religion. From the beginning
of time, mortals have been counseled by God and his prophets to be self-reliant, to earn their own way, to be independent, and to avoid temporal or spiritual bondage.
Why does God expect his children to become self-reliant? Elder Alexander B. Morrison in his book Visions of Zion has provided us with the answer. "Self-reliance is
closely tied to freedom. . . . We cannot be free if we are not self-reliant. Put another way, self-reliance is a prerequisite for freedom, and dependence is the enemy of
freedom. . . . Independence and self-reliance thus are critical keys to spiritual growth. Whenever we are in a situation that threatens self-reliance, we will find that
freedom is threatened too" (Salt Lake City: Deseret Book, 1993, 111).

In the early days of the restored gospel of Christ, the counsel was the same. Brigham Young taught the Saints of his own day the importance of this principle:

We want you henceforth to be a self-sustaining people. Hear it, O Israel! hear it, neighbors, friends, and enemies, this is what the Lord requires of this people.

Ye Latter-day Saints, learn to sustain yourselves . . . if you cannot obtain all you wish for today, learn to do without that which you cannot purchase and pay for; and
bring your minds into subjection that you must and will live within your means.

Who are deserving of praise? The persons who take care of themselves or the ones who always trust in the great mercies of the Lord to take care of them? It is just as
consistent to expect that the Lord will supply us with fruit when we do not plant the trees; or that when we do not plow and sow and are saved the labor of harvesting,
we should cry to the Lord to save us from want, as to ask him to save us from the consequences of our own, folly, disobedience and waste. . . .

Brethren, learn. You have learned a good deal, it is true; but learn more; learn to sustain yourselves . . . save . . . against a day of scarcity. . . .

Instead of searching after what the Lord is going to do for us, let us inquire what we can do for ourselves. (In John A. Widtsoe, comp., Discourses of Brigham Young
[Salt Lake City: Deseret Book, 1954], 293.)

To really achieve that self-reliance we have to learn how to manage our day-to-day spending, provide for our future, and pay for our emergencies. This requires careful
planning. Planning may not solve all those unforeseen financial woes that are sure to come your way, but it certainly can minimize their effects. No matter what your
income or how financially secure you think you are, you must have a plan for spending your money. Fighting, worrying, even panicking over money will only cause
instability and will not contribute to the peace and security of family life.

President Gordon B. Hinckley has counseled: "I am satisfied that money is the root of more trouble in marriage than all other causes combined. . . . There would be
fewer rash decisions, fewer unwise investments, fewer consequent losses, fewer bankruptcies if husbands and wives would counsel together on such matters and
unitedly seek counsel from others" (Cornerstones of a Happy Home, pamphlet [Salt Lake City: Intellectual Reserve, Inc., 1984], 8, 9).

Many people are embarrassed to admit that they need help with how to spend their money more sensibly. You are not alone. We are all in much the same boat. We've
all spent foolishly at some time or another. We've all regretted some financial decisions wemade. But we can all improve. No matter what stage of life you now find
yourself in, it is never too late to back up and begin again. Your dreams are almost within reach.

So let's begin at the beginning. Let's discover where you are. Take this little assessment quiz and be on your way to being truly debt free. If you are married, fulfill this
little assignment together. The quiz is designed to help you assess your goals and jointly solidify them, to allow you to discover your weaknesses, and to provide a
foundation of consensus on basic money management issues. In the next few chapters we will help you learn to plan your spending more efficiently so that you might
truly be debt-free. In other words, we hope you will soon be able to manage your money before it manages you.
Pre-Assessment Quiz

Circle yes if you agree with the statement, no if you disagree with the statement, or N/A if it does not apply to your situation. Be as honest as possible.

Philosophy

Yes No N/A 1. Becoming wealthy is not one of our top priorities. There are more important things than making a living.

Yes No N/A 2. We find it easy to handle money but are eager to find better ways to manage it.

Yes No N/A 3. We do not engage in ruthless business dealings. We do not think such practices are smart business.

Yes No N/A 4. When money is tight, we still donate to worthy causes.

Yes No N/A 5. We enjoy our vocations. To us they are more than just a way to make a good living.

Principles and General Rules

Yes No N/A 6. We are able to make our income exceed our expenses.

Yes No N/A 7. We live within our means.

Yes No N/A 8. We are good at planning our spending.

Yes No N/A 9. We use a budget.

Yes No N/A 10. We have a detailed record-keeping system.

Yes No N/A 11. We are honest in all our financial dealings.

Yes No N/A 12. We have a scheduled time to review budgets and expenses each week.

Yes No N/A 13. We are out of debt.

Yes No N/A 14. We discuss and know the difference between our wants and our needs.

Yes No N/A(c)15.2005-2009,
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                              we workMedia
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Planning
Yes No N/A 13. We are out of debt.

Yes No N/A 14. We discuss and know the difference between our wants and our needs.

Yes No N/A 15. As a couple we work together on our financial plans.

Planning

Yes No N/A 16. At the end of the month, we always have money left over.

Yes No N/A 17. We buy only that which we have planned to buy, even if there's something we want on sale.

Yes No N/A 18. We have credit cards but we pay them in full each month.

Yes No N/A 19. We know where every penny went and can give an accurate account of all our expenditures.

Yes No N/A 20. We avoid carrying much cash.

Yes No N/A 21. We set aside funds for anticipated future purchases.

Yes No N/A 22. We always have the money on hand to pay cash for items.

Yes No N/A 23. We understand how interest works and make it work for us.

Yes No N/A 24. We never live on next week's check.

Yes No N/A 25. We have both an accessible and a long-term savings program.

Yes No N/A 26. We have a "rainy day" fund for emergencies.

Yes No N/A 27. We have adequate health and life insurance coverage for our family.

Yes No N/A 28. Our home/apartment is insured against disasters.

Yes No N/A 29. We avoid risky investments that could jeopardize our living expenses.

Yes No N/A 30. We have a family organization to provide financial support in time of crisis.

Inventory

Yes No N/A 31. We know what our income is.

Yes No N/A 32. We know our total cash assets.

Yes No N/A 33. We know our total financial worth.

Yes No N/A 34. We know when insurance and taxes come due and are prepared with funds on hand. We have put aside funds for high expense periods such as
Christmas, back-to-school clothing, and vacations.

Yes No N/A 35. We use times of peak income to balance peak expense periods. We save our bonuses and extra checks to balance for those months when our
expenses will be greater.

Goals

Yes No N/A 36. We have prioritized our financial needs in writing.

Yes No N/A 37. We do not allow our hobbies to jeopardize money used for our basic needs.

Yes No N/A 38. We know what our lifetime financial goals are.

Yes No N/A 39. We know what our year's financial goals are.

Yes No N/A 40. We know what our next month's financial goals are.

Debt Management

Yes No N/A 41. We are good at avoiding debt.

Yes No N/A 42. We have a listing of all our debts and know when they will be paid off.

Yes No N/A 43. We understand exactly how much interest we will pay on our debts.

Yes No N/A 44. We are working to get out of debt as fast as possible.

Yes No N/A 45. We are serious about reducing our debt.

Savings
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Yes No N/A 46. We save at least 10 percent of our take-home pay.

Yes No N/A 47. We have a savings account for large upcoming purchases.
Yes No N/A 45. We are serious about reducing our debt.

Savings

Yes No N/A 46. We save at least 10 percent of our take-home pay.

Yes No N/A 47. We have a savings account for large upcoming purchases.

Yes No N/A 48. We are saving for our retirement.

Yes No N/A 49. We do not withdraw from our savings unless it is an emergency or a planned purchase.

Yes No N/A 50. We understand the wisdom of "a penny saved is a penny earned."

Cutting Costs

Yes No N/A 51. We work as hard at spending our money as we do earning it.

Yes No N/A 52. We have analyzed where we spend money and have found ways to reduce expenses.

Yes No N/A 53. We set aside "mad money." This allows us some freedom to spend without accountability.

Yes No N/A 54. We go to the library or request publications to study ways to cut expenses.

Yes No N/A 55. We feel that our lifestyle and standard of living fit well within our income.

Yearly Strategy

Yes No N/A 56. We keep a yearly history of actual expenses for which future budgets can be based.

Yes No N/A 57. We are aware of seasonal best buys and plan yearly for them.

Yes No N/A 58. We like to look at the whole picture of a year's expenses so that we can be flexible in planning.

Yes No N/A 59. We keep yearly records of expenses for at least three years in case of a tax audit.

Yes No N/A 60. Debt elimination is part of our yearly strategy.

Monthly Strategy

Yes No N/A 61. We think of budgets as a positive plan for financial success rather than a hardship.

Yes No N/A 62. We are willing to make the time commitment necessary to plan financial strategies.

Yes No N/A 63. We adhere to a detailed budget, instead of just balancing our checkbook.

Yes No N/A 64. We avoid stress by making it a practice to never argue about how money was used or to assess blame when it comes time to figure finances.

Yes No N/A 65. We realize that expenses and budgets must change with each season of our life. Transitions from being single to married, to raising a growing family,
and to retirement are all accounted for and we can adjust to the financial challenges each aspect of life brings.

Scoring the Quiz

If you have taken this quiz, you have already passed it with flying colors. You are a winner. Use the concepts presented to begin a discussion and build a consensus of
your family's philosophy toward spending. This exercise was not meant to frighten or embarrass you. There is not an individual or a couple on this planet who would not
benefit from taking an opportunity now and again to assess where they are and how efficient they are at managing their money.

Debt-Free Planning

Wherefore, do not spend money for that which is of no worth, nor your labor for that which cannot satisfy. . . . Feast upon that which perisheth not, . . . and let your
soul delight in fatness.

-2 Nephi 9:51

Where does managing your money fit on your list of priorities? Does being debt-free really matter to you? How does your desire for wealth work together with your
values and goals in life? What would you do with more money if you had it? What changes would you expect in your character and the way you live if you had enough
money and you no longer had to worry about funds? To what ends would you go to obtain wealth?

Three Keys to Financial Success

The answers to these questions determine your philosophy of spending money. To begin to control your day-to-day spending habits without marital discord, it is best to
start by developing a plan you can both agree upon. Here are three sound suggestions:

1. Be honest in all your financial dealings. Honesty solves problems; it never creates them. We need to pay our bills promptly and completely. Honesty establishes a
foundation of trust in all our relationships. It allows us a clean reputation and a good credit history.

2. Schedule time for and keep an accurate record of finances, including income, expenses, and a budget. You must know how you spent your money before you can
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assess where to make changes. In addition, you'll only be guessing your true financial picture if you don't have a system for tracking your purchases and for paying
bills. A good record-keeping system is worth its weight in gold. There is no possible way for you to get ahead unless you have something to analyze and assess, to
know how and where to save money and pay off your debt.
1. Be honest in all your financial dealings. Honesty solves problems; it never creates them. We need to pay our bills promptly and completely. Honesty establishes a
foundation of trust in all our relationships. It allows us a clean reputation and a good credit history.

2. Schedule time for and keep an accurate record of finances, including income, expenses, and a budget. You must know how you spent your money before you can
assess where to make changes. In addition, you'll only be guessing your true financial picture if you don't have a system for tracking your purchases and for paying your
bills. A good record-keeping system is worth its weight in gold. There is no possible way for you to get ahead unless you have something to analyze and assess, to
know how and where to save money and pay off your debt.

Obviously an initial meeting will take some time. You will have to spend some time gathering records and old bills before you meet. You might consider scheduling an
entire family home evening to begin your planning process. Once certain specific decisions have been made and a plan put into place, you will find that the amount of
time it takes to manage your finances will decrease significantly. Most experts will tell you that it will take at least three months before you really develop a feel for your
budget, and then your efforts will become second nature.

From that time forward you can establish a set time each week to record and analyze income and expenses. These sessions will take only a minimum amount of time
which will lessen with each passing month as your planning methods improve. Some families find Saturday morning convenient because they know they spend more
money on Saturday than any other day of the week. Whatever day you choose, make the time and place consistent. That way, the time you spend is cut to a minimum.
It should never take more than half an hour to work on your finances if you are committed.

Planning how to spend your money is the key to financial management. Some families' ideas of financial management is just to record their purchases. Obviously, that is
not enough. You'll never get a grip on your dollar-never get ahead financially-if all you do is record your purchases and hope somehow that there will be money to
cover it all at the end of every month. You must plan before you spend. You must utilize the time with your family to make a detailed plan. You must listen to everyone's
needs and you must assess and assign specific amounts to each category of your financial plan. Only then can you go back and look at your actual expenditures and
make any reasonable assessment of your success.

Think of your home as a business. A successful business would not think of trying to function without a plan, and neither should a home. Many people without a
spending plan think they are maintaining their finances adequately until they suddenly find themselves caught in a monetary fiscal crisis. At that point it will probably
require more than financial Band-Aids; it will probably require financial surgery. With a plan, you can anticipate surprises and avoid catastrophe.

Involve children in planning your spending so they can learn how to spend more sensibly. Talk about plans for spending and ask their opinions. In the future, your
children will become better-prepared adults. They will be more realistic and responsible in planning their own monetary goals.

Think of your planning time as a game. Make it fun and exciting. Correct planning can provide hundreds of additional dollars for every hour you spend. Today's society
is far too complex to allow you to exist without a plan.

3. Learn to distinguish between wants and needs and then prioritize your spending accordingly. When wants replace needs, the family budget soon runs into deep
trouble. Advertisements stimulate consumer appetites. Luxuries and convenience all too often displace genuine need. Many young married people try to get too many of
their wants too soon. Overindulgence leads to an overabundance of consumer debt, which jeopardizes future earnings and financial stability.

Careful analysis of needs and wants is an important step in wise personal money management. You might think that you and your spouse always agree on which
expenditures in your monthly spending plan pay for needs and which pay for wants. But each individual perceives things from a different perspective. You have to know
what your spouse thinks are needs and you must listen and understand. You have to know what your children think are needs and you must listen and understand. This
is an essential discussion. If your spouse has a need that you consider only a frivolous expense, then it's time to reassess. Mutual understanding and compromise can
overcome almost every disagreement.

What Are Needs and What Are Wants?

Needs are essential expenses. Needs include housing, electricity, heat, food, and medical expenses. Additional family needs might include fuel and service to your
automobile, tithes and offerings, clothing, and household maintenance. Many of our vocations carry with them specific needs. Farmers need basic farm equipment and
they must keep that equipment in good, working order. Businesses need computers. Musicians need musical instruments. Salespeople need reliable automobiles if they
are required to travel to and from their clientele. Needs are basic and generally easy to determine, but sometimes the line between needs and wants becomes clouded.

Sherri was anxious to replace the air-conditioning system in her home. The old system was unreliable and created for her a miserable working environment. Her
husband, Bill, felt that a new air-conditioning unit was too costly and beyond the reach of the family budget. To Sherri air-conditioning was a need; to Bill it was only a
want. Sherri pointed out that Bill left home every day for an air-conditioned office, while she worked at home suffering from the heat. By the time he returned, the
outside temperature had cooled sufficiently so that he did not notice how unbearable the temperature of the house could become.

But at the same time, Sherri also knew that Bill was right about the family budget being stretched. Together they determined that if Sherri could endure just one more
miserable summer, they could set aside enough money every month to purchase a new air-conditioning system the following summer. Bill and Sherri learned a basic rule
of fulfilling needs and wants and the importance of working together.

Satisfying Both Needs and Wants

Becoming debt-free requires careful planning. We've spent a lot of time, thus far, making this case. As you plan that spending you must really make not one, but three,
different plans.

First comes maintenance planning. We often refer to this maintenance planning as the family budget. When President Gordon B. Hinckley asks us to "be modest in
[our] expenditures" and to "discipline [ourselves] in [our] purchases," we feel that this refers to a maintenance plan, a plan for our day-to-day spending-a family budget
("To the Boys and to the Men," Ensign, November 1998, 54).

Budgets are never consistent every month. That is because life is never static, and neither are your spending needs. As economic inflation shrinks your family budget or
as your family grows and expands, so do your financial demands.

To be truly debt-free, your family must also make a future plan. There are specific and certain costs that come into each of our lives: missions, college education, new
cars, weddings, and so on. These certain and known costs are part of what we call the future plan. Future needs can be planned for and achieved. The way is really not
as difficult as it sometimes seems. As President Hinckley wisely counseled: "Save a little money regularly, and you will be surprised how it accumulates" ("To Men of
the Priesthood," Ensign, November 2002, 58).

The third plan
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emergencies are a contributing factor to debt. To be debt-free you have to be in control during emergencies and have money put aside to pay for them so you don't
have to run to the bank or expand your lines of credit.
cars, weddings, and so on. These certain and known costs are part of what we call the future plan. Future needs can be planned for and achieved. The way is really not
as difficult as it sometimes seems. As President Hinckley wisely counseled: "Save a little money regularly, and you will be surprised how it accumulates" ("To Men of
the Priesthood," Ensign, November 2002, 58).

The third plan is called the crisis plan. Into each life come sudden, unexpected expenses. Tragedy and disaster can strike at any moment; no one is immune. Such
emergencies are a contributing factor to debt. To be debt-free you have to be in control during emergencies and have money put aside to pay for them so you don't
have to run to the bank or expand your lines of credit.

President Hinckley said: "No one knows when emergencies will strike. I am somewhat familiar with the case of a man who was highly successful in his profession. He
lived in comfort. He built a large home. Then one day he was suddenly involved in a serious accident. Instantly, without warning, he almost lost his life. He was left a
cripple. Destroyed was his earning power. He faced huge medical bills. He had other payments to make. He was helpless before his creditors. One moment he was
rich, the next he was broke." ("To the Boys and to the Men," 53).

Whether you are planning for the present, the future, or for a crisis, you can achieve your needs, goals, and even your dreams with a little planning. Before you go on to
the next chapter, fill out the Survey of Needs and Wants. Each spouse should fill out the survey separately and then come together to analyze differing responses.
Reach a consensus before the initial planning session. Print out the survey from the CD-ROM or use the one that follows.




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A Maintenance Plan

Learning to live within our means should be a continuing process. We need to work constantly toward keeping ourselves free of financial difficulties.

-Marvin J. Ashton

The reason for having a maintenance plan is to support or provide support for yourself and those for whom you are responsible. In this day, it is becoming more and
more difficult to provide adequately for our families. What seemed like a high salary a few years ago is no longer adequate. Too many people feel like their pockets are
empty and that someone else's hands are constantly reaching in.

Outsmarting Debt

The key to maintenance is to be able to outsmart all those who want to take the money you worked so hard to earn. To stay on sound financial footing requires that
you follow certain basic principles: keep your expenses at a lower level than your income, avoid impulse spending, pay as you go, and keep money evaporation at a
minimum. Let's show you what we mean.

Expenses Must Be Less than Income

Spending less than you earn will be your key to financial freedom. This will bring financial independence and provide you with control of your own life. Living on less
than you earn proves you are smarter than a banker. You learn to beat the banks at their own game. It is not only key to independence and freedom from debt but
essential to future planning.

Avoid Impulse Spending

Work as hard at spending your money as you do earning it. Some people look upon shopping as a form of recreation, but recreational shopping can be almost as
dangerous as gambling. Don't become a shopaholic. This is a disease of the impulse spender. Learn to know what you are going to buy before you leave the house.
Estimate the cost of the items you are going to buy. You may try using the Internet to check prices before going to the stores. Many sites offer comparative pricing,
which allows you to get a better idea of quality and price and avoids the impulse to buy just to regret the purchase later. Then when it comes time to make your
purchase, stay within the limits you have set. Work at spending your money! Planning is the only way you can spend yourself rich.

Too rigid a budget will probably drive you crazy. Avoid being too rigid. Always keep a slush fund, provide a specific and known amount of money for some amount of
impulse buying. Otherwise, what will you do when that once-in-a-lifetime sale comes along and you haven't the funds to take advantage of the savings, or what if you
need a break both physically and emotionally and you haven't the funds to cover it? But keep this impulsive buying controlled! A mutually agreed upon amount of
money with no accountability can limit your impulses and satisfy your needs. By limiting this amount you'll find both freedom and controlled restraint.

Pay As You Go

You want to get out of debt, right? That's the reason you bought this book. Being debt-free must be instilled within you. You must pay for every expense as it comes
and you must pay it in full. What if you haven't got the money, you haven't planned for it, but the occasion comes along when you are tempted to buy? Remember that
there is a certain amount of joy that comes when your family plans for and anticipates a purchase. You can often find the money in unexpected places.

The Williams children wanted a new basketball standard. It was beyond the family budget. So Brother Williams made a suggestion to his four children. If they could
save enough money from their utility bill over the next few months they could probably afford a new basketball standard. The Williams children went to work. Little
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elves        (c) 2005-2009,
      went behind            Infobase
                   each person  turning Media    Corp.
                                         off lights                                                                                                          Page
                                                    and appliances when not in use. The children started limiting their television watching when the bill didn't come30 / 77
                                                                                                                                                                      down
fast enough. Within a few months, the money was raised, the basketball standard was purchased, and, most exciting of all, the family developed new and more efficient
habits that stuck with them for a long time thereafter.
there is a certain amount of joy that comes when your family plans for and anticipates a purchase. You can often find the money in unexpected places.

The Williams children wanted a new basketball standard. It was beyond the family budget. So Brother Williams made a suggestion to his four children. If they could
save enough money from their utility bill over the next few months they could probably afford a new basketball standard. The Williams children went to work. Little
elves went behind each person turning off lights and appliances when not in use. The children started limiting their television watching when the bill didn't come down
fast enough. Within a few months, the money was raised, the basketball standard was purchased, and, most exciting of all, the family developed new and more efficient
habits that stuck with them for a long time thereafter.

Living within your means provides your family with the only sure safety net in an insecure world.

Keep Money "Evaporation" to a Minimum

A problem with money management is the inability to account for money spent. This is especially true of cash. When you carry a large amount of cash it becomes
extremely difficult if not impossible to recollect where it was spent and for what it was spent. The money just evaporates.

In addition, carrying cash offers an almost constant temptation to spend for unplanned items. Try to make all your purchases with checks issued for the exact amount
and resist the temptation to make them out for a few dollars more. This offers you a record of your expenditures. New systems in some retail outlets, such as discount
stores, grocery stores, or gas stations, make it convenient to use a credit card or debit card-another invitation to "evaporation." Keep receipts and deduct them from
your budget as soon as is possible.

It doesn't matter how you keep record of your spending, just keep a record. This keeps "evaporation" at a minimum.

Building a Maintenance Plan

Now that you know the principles behind building a maintenance plan, it is time to design your plan. The first step is to use your previous month's spending as a sample.
Use the worksheet titled "Last Month's Income and Spending" to help you. To access this worksheet, and all other worksheets in this chapter, go to the main menu and
click on Build a maintenance plan. Worksheets are also available at the end of the chapter. The computer will automatically calculate your subtotals and totals for you.
If you simply fill out the form with a pencil, make sure you have a calculator nearby. As you fill out the worksheet, don't be alarmed if you can't determine exact
amounts for last month's expenses; most people can't. If you are not sure of the amount spent in each category, try to estimate to the best of your ability. (Many people
will not have to make most of the entries under the Insurance or Taxes columns because those expenditures are automatically deducted from a paycheck. If you're self-
employed, though, make sure you get good estimates for those numbers.)

Peak Expenses

Once you have determined your previous month's spending, remember that the precise amount of money you need to meet your monthly expenses will actually vary
from month to month. One way you can gain control over your budget is to know which months carry with them the largest expenses. Some months you will spend less
than you earn, and other months you will spend far more. We all know that there are big expenses at Christmastime, or when income taxes come due, or when your
children go back to school. Once you identify your peak expense periods you can match them with your peak income periods. Use the worksheet titled "Identification
of Yearly Peak Expenses" at the end of this chapter or on the CD-ROM to determine these expenses.

Peak Income

Just as expenses vary from month to month, so does your income. We all love those times when we get a bonus from work, or when we get back a hefty tax refund. If
you get paid on a bi-weekly basis, there will be at least two months of the year when you will have an extra paycheck. If you work on a commission basis or are self-
employed, you are already acutely aware of the reality of fluctuating income. The key to controlling your money is to balance your peak income against your peak
expenses, even if that means putting money aside in savings for those expensive months. Once you stop using your peak income to go on impulsive buying sprees, you
will be well on the road to becoming a master of your finances. Use the worksheet titled "Identification of Yearly Peak Income" to determine the months that your
income peaks. This worksheet follows the "Identification of Yearly Peak Expenses" form at the end of this chapter and on the CD-ROM.

Total Worth

Your total worth is a compilation of all your assets. Everything from savings accounts to real estate make up the total of all you are worth. You can't determine your
overall financial picture until you know your total worth. You will undoubtedly have more assets than you realize. Some of the items you may consider debts, such as
your house, are really assets. They are assets with an increasing value. Automobiles, clothing, appliances, and furniture are also assets, but they are assets that
depreciate in value. The value of your automobile today is not the value of that same automobile a year from now. Everything you own has a value. Listing your assets
helps you to evaluate and prioritize your expenses and plan for future needs. The worksheet titled Much Are You Worth?" will help you determine your total worth.

The next chapter will help you finish your plan by creating a tally of your yearly expenses and showing you how to use the computer to crunch your numbers and come
up with a budget that works for you.




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A Yearly and Monthly Plan

The rich ruleth over the poor, and the borrower is servant to the lender.

-Proverbs 22:7

A maintenance plan is established after determining exactly how you spend your money every month. Finding yourself debt-free depends not so much on what you earn
as it does on what you spend. Keeping your spending in established and planned boundaries necessitates living by a family budget.

A research organization was hired to poll a small town to find out how families spent their money. One elderly lady told the young researcher that she spent about 30
percent for shelter, 30 percent for clothing, 40 percent for food, and 20 percent for everything else. "But that adds up to 120 percent," the young man protested. "I
know," she replied. "And it seems to get worse every year."

The thinking of this woman would be laughable if she didn't represent so many of us. We all know how to make money; we just don't know how to spend it.

There are some people who feel that making a plan to spend their money restricts their freedom. They refuse to make a plan. They set off on no particular path with no
particular place to go and with no way of knowing when they will get there. They'd never follow this same course in other pursuits; yet when it comes to spending
money, they seem to think this is all right. This thinking does not represent you, does it?

Taking the time to plan your yearly and monthly strategy and to tally the results will reap big benefits. It will save you hundreds of dollars each year and it will make and
keep you debt-free. But, be patient: With any new skill, your first attempts may not be easy to stick to. With each succeeding month and year, your skills will improve.
Don't become discouraged. As you grow in experience, you will make all the adjustments necessary to your success. The principles you have learned will become so
ingrained that you will no longer have to think through so many details as you plan each month's spending. Soon it will become second nature to you. How many details
you will need to successfully develop a family spending plan will depend entirely on your own personality and your own method of doing things.

A spending plan is an individual thing. We have not written this book to dictate how your family ought to spend its money. We are only here to teach you some proven
money management skills and then let you and your family make all the decisions as to how to spend it. You are in charge. You are in control. You are free to make all
the decisions when it comes to spending your money. Only you can assess your own needs and wants. Over the years you will undoubtedly develop your own
procedures. They will be specifically tailored to fit your own lifestyle and your own goals. Even if you've never been able to successfully budget before, this time can be
different. Make it a mind-set. You can do it!

Last of all-always include some flexibility in your budget. The mistake some novices, and even the more experienced budgeters, make is that they fail to include any
flexibility in their monthly plan. When a budget is too rigid, it is an invitation to disaster. No one can survive forever on an inflexible and joyless budget. Allow a cushion
for unplanned expenses, as most months will have just a few; give yourself what we call Mad Money to spend any way you choose, and always allow your companion
the same sort of flexibility you give yourself. Budgets are not weapons; they are guides to assist you in spending your money wisely.

Your Yearly Financial Plan

We suggest that you base your spending plan on last year's expenses and then look at the coming year in advance. Why? Because looking at an entire year in advance
allows you to see periods of peak income and peak expenses and to plan for those times well in advance. This, in turn, assures that your yearly spending does not
exceed your yearly income. Looking at just one month at a time is inefficient because it doesn't allow you to see that there will be months when you spend more than
you earn. These months can be planned by setting aside funds in the months where you earn more than you spend. Not preparing for these months could very well
mean that you find yourself in debt again. And you're trying to be debt-free, right?

Once you have established this precedent and have a year's history to reflect back on, you will be able to more easily plan next year's budget. In fact, your first year of
becoming debt-free and instituting the Yearly Financial Plan outlined in this book will probably be the year with the least accurate budgeting. Once you've done this for
a year, and then another year, and then another year, your yearly plan will become more and more accurate.

Additionally, there will always be expenses you did not anticipate, but generally you will know, at least a year in advance, what manner of expenses you might
encounter. Write these expenses down now! Even if you don't know exact amounts, your best estimate will, at the very least, put you on the right track. As you look
ahead, anticipate things like maintenance, repairs, and unusual household expenses. For example, an automobile with high mileage will probably break down once or
twice in the coming year, so expect some repair costs. A fourteen-year-old washing machine might soon need to be replaced-better figure on that. Maybe this is the
year to take that dream vacation, or maybe the walls of your house could use a little new paint. Even a new baby will allow you nine months to make financial
preparations. Here is your chance to anticipate the needs of the upcoming year. Be sure you remember when your insurance premiums come due and when it is time to
pay property and income taxes. Plan for Christmas, birthdays, and holidays. A worksheet just for this purpose is called "Things to Remember" and is included on pages
114-15 as well as on the CD-ROM. The worksheets in the previous chapter will prove very useful in identifying periods of peak income and expenses. The remaining
worksheets in this chapter will provide a solid base from which you can later plan your monthly strategies.

By anticipating months in advance and building a yearly budget before your monthly plan, you will find the entire process less stressful. Planning a year in advance will
keep you focused on long-range goals and eliminate the distraction and temptation of impulse buying. You will come to know that the money you have left over from
one month's budget must be used to pay next month's expenses. Therefore, you will know you cannot spend it impulsively; it must be planned for.

The Dixons' Yearly Plan

Let's go back and look at how the Dixon family developed their plan. Dan and Janet began setting up a yearly strategy in December. Since this was the first time they
had planned a yearly strategy, they collected information for two weeks. This included filling out the forms titled "Last Month's Income and Spending," "Identification of
Yearly Peak Income," and "Identification of Yearly Peak Expenses" from the previous chapter and recording a variety of important extra details on the "Things to
Remember" worksheet included in this chapter and on the CD-ROM. After collecting the needed information, the Dixons were ready for a family council. They met just
before the start of the new year.
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The first thing they did was to anticipate their income for the coming year. On the form titled "Yearly Financial Plan," they input their income for each month  the/year.
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Then, they worked to identify periods of peak income for the coming year. Dan received two $550 profit-sharing checks last year and a $1,500 income tax refund.
Dan wasn't sure if the amounts would be the same for the next year, but he anticipated they would be close. The months in which he received the profit-sharing checks
Yearly Peak Income," and "Identification of Yearly Peak Expenses" from the previous chapter and recording a variety of important extra details on the "Things to
Remember" worksheet included in this chapter and on the CD-ROM. After collecting the needed information, the Dixons were ready for a family council. They met just
before the start of the new year.

The first thing they did was to anticipate their income for the coming year. On the form titled "Yearly Financial Plan," they input their income for each month of the year.
Then, they worked to identify periods of peak income for the coming year. Dan received two $550 profit-sharing checks last year and a $1,500 income tax refund.
Dan wasn't sure if the amounts would be the same for the next year, but he anticipated they would be close. The months in which he received the profit-sharing checks
(May and October) and the tax refund (June) were his peak-income months.

Janet input her income as well. She didn't have any peak income months, but her supervisor had told her she would be getting a nice raise this year-somewhere in the
neighborhood of $50 a month. Janet remembered that they needed to plan for a crisis if they wanted to remain debt-free, so she offered to put the amount of her raise
into a rainy-day fund for unexpected expenses. By itself it wasn't much, but Janet knew it would add up nicely as each month went by, and it would be there whenever
the family truly needed it. This was part of a crisis plan.

After considering their income for the year, the family began to identify their peak expenses. These included a small vacation, back-to-school funds, and an annual
check up with the dentist. They penciled in the corresponding amounts on the "Things to Remember" worksheet and decided that their profit-sharing checks and
perhaps some of their income tax refund could be used for those expenses.

They also considered peak expenses that would occur years down the road. In doing so, they decided to open a mission savings account and determined that this year
they could safely contribute $25 each month. Next year they hoped to increase the amount. In addition, Dan knew of at least two major expenses that could easily land
them right back in debt: Christmas and a new car. The family discussed these two items for a while and decided to open two more "set-aside" savings accounts. They
agreed to set aside $100 each month to split between Christmas money and a new car fund. The Dixons entered the total of all their savings ($175 per month) in the
Savings/Investment row at the bottom of the "Yearly Financial Plan" form. With each number entered, the computer automatically adjusted their totals and helped them
know whether or not they were using too much of their projected income.

They then used the "Things to Remember" and "Last Month's Income and Spending" forms to fill out the Projected Expenses area of the "Yearly Financial Plan." In
March, for example, the Dixons came up with a total for the Auto/Transportation category by adding last month's total expenses for that category ($282) with the $135
they knew they would have to pay to register one of their cars. This made total spending for Auto/Transportation $417 in March. They put that number in the correct
column on the form. They did this with every category and month on the chart. Each time, the computer adjusted the numbers to show them how much they would be
spending that month. The very last row on the "Yearly Financial Plan" form showed the balance for the month. (Numbers in parentheses are amounts for which the
Dixons would potentially overspend. This, however, would be okay, as long as other months helped them to balance out.)

As they developed their plan, they discovered that the money they would receive during peak-income periods left them with additional money to set aside for peak-
expense periods. In June, for example, they decided they would place $700 of their estimated $1,500 tax return in their savings account. They would use $300 of that
amount on Christmas expenses in December. (When added to the $50 a month they planned to save for Christmas, this gave them $900 to spend for the holiday. In
December, they would move $900 into their checking account and list it as income for the month. This way, when they listed the $900 in the projected expenses
column for December, it would balance out.) The remaining $400 could be split between their rainy-day funds and their mission fund. They'd keep the rest of their
income tax refund ($800) in their checking account to use against a vacation and school clothes later that summer.

Even after earmarking these savings and expenses, they discovered that they would often have additional funds left over at the end of the month. These funds, which
would equal approximately $650 by the year's end, would serve as a cushion for unexpected expenses. If they didn't need the $650 by year's end, they decided they
would take whatever remained and also set that aside into savings. This was a part of their future plan. Once all the numbers were input, the Dixons looked over the
plan. Had they had enough for a power payment? You bet they had. Look at the "Dixon Family Yearly Financial Plan" on pages 102-3. You will discover that the
Dixons were able to put 10 percent of their take-home pay, $425, into a power payment to retire their debts. (You'll find this amount listed in the Debts and Credit
Cards row-it has been added to the regular monthly payments of their credit cards.) They understood the wisdom of this process and were eager to get started. They
knew that some of their debts would be quickly eliminated-at least five within the first year and all but their mortgage in their second year. They also knew that as each
debt was paid off, the amount they were paying monthly on that debt would be added to the power payment and be applied to the next debt. (Note that the exact
amounts of the Dixons' car debt, medical debt, and homeowner's debt is included in the separate rows for those categories and not listed in the Debts and Credit Cards
row. Also, the amount listed in the Debts and Credit Cards row stays the same each month-even though some of the credit cards will be paid off before the end of the
year-because the total amount of money paid toward all debts will be the same every month if they follow the Power Payment Plan.) Not only could they plan for today
but they could also plan for tomorrow and for a crisis and still have enough income to pay off their debts. It wasn't unrealistic; it was now their reality.

You can set up a yearly strategy just as Janet and Dan did. To access the "Yearly Financial Plan" worksheet, go to the main menu, click on Create a yearly and monthly
budget plan, then click on the icon next to Yearly Financial Plan. The computer will total your numbers for you.

Keep expenses low enough to save that 10 to 15 percent needed to put toward the elimination
of your debts. Give yourself a cushion against unexpected expenses. If you have kept last year's checks look them over. Do you see any expenses you didn't anticipate
Boy Scout Registration PTA fund




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Your Monthly Plan

Once you've established a plan for spending your money a year in advance, it will be a little easier to establish a monthly plan. You will remember that some months will
be more expensive and that other months will be less; yet you will know that the money will be available when you need it to meet all your needs and to eliminate your
debts. As you plan for each month's spending, refer back to your year's plan and follow the guidelines you have established. We'll go back to the Dixon family to show
you how a typical monthly planning session would work.

The Dixons' Monthly Plan
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Dan and Janet brought their whole family together to set up their monthly budget. It was the second day of the month, so they were getting a head start. They didn't
want to start spending the month's money without first establishing a plan. It was their goal to meet in a family council within the first three days of the month. To get
ready, Janet put all the bills in an envelope and wrote down any known expenses before they met. Dan looked over the yearly plan to see if any expenses had been
you how a typical monthly planning session would work.

The Dixons' Monthly Plan

Dan and Janet brought their whole family together to set up their monthly budget. It was the second day of the month, so they were getting a head start. They didn't
want to start spending the month's money without first establishing a plan. It was their goal to meet in a family council within the first three days of the month. To get
ready, Janet put all the bills in an envelope and wrote down any known expenses before they met. Dan looked over the yearly plan to see if any expenses had been
overlooked. It was then that he remembered that their home insurance needed to be accounted for so he decided to budget $40 a month to cover it when it came due.
Now Dan and Janet were ready to include their children in their plan.

Dan and Janet used the form titled "The Plan," which is at the end of this chapter and on the CD-ROM, as the base for their monthly budget. As they came to each
category on the form, they asked their children if they knew of any expenses they would have in that category. Justin needed new notebook paper for school. They
added the cost of that under education. Jason, who was in the third grade, wanted to buy some books in his next "book order" from the school. He wanted $10 worth
of books, but they allowed him $5. He wasn't happy, but he lived with it. It was Jamie's birthday that month, and to meet their power payment they allowed a $30 limit
for her gifts as they would do with all their children when their birthdays came around. Dan agreed to sacrifice by taking the bus to work every day, saving the money
that would have been spent on fuel for his car. The give and take went on as Dan and Janet, along with their children, adjusted their monthly expenses to meet their
income.

The Plan and the Tally

At the end of the chapter and on the CD-ROM you will find charts to assist you and your family as you plan and tally your monthly expenses.

The worksheet titled "The Plan" allows you to project or budget for each upcoming month. Always begin by consulting your yearly strategy and actual results from the
month before. Record the amounts of your projected bills and consult your calendar to see if upcoming events may carry expenses with them. For example, an
upcoming trip to visit your parents in another city will carry with it some expenses, which you can anticipate and plan for in advance.

If you use the computer program, subtotals from "The Plan" worksheet will be automatically carried over to the appropriate line on "The Tally" worksheet. With
projected budgets in each category, you will have a weekly tally to assess where you are with your spending. "The Tally" worksheet is designed to deduct your actual
expenses from your projected budget so that you always know how much remains in each budgeted category.

"The Plan"

The categories we have designed for planning your budget are based on a mnemonic system. Each category starts with a letter of the alphabet to make it easier for you
to remember and to track. Here are the categories we will use to set up your monthly plan:

A =3D Auto and Transportation

C =3D Charity and Contributions

D =3D Debt and Credit Cards

E =3D Education

F =3D Food

G =3D Gifts

H =3D Home and Shelter

I =3D Insurance

L =3D Leisure and Recreation

M =3D Medical

O =3D Other/Miscellaneous

P =3D Personals

S =3D Savings and Investments

T =3D Taxes

U =3D Utilities

V =3D Vacation/Travel

W =3D Wardrobe/Clothing

Monthly plans are a day-to-day philosophy. It will probably take you three months before you start seeing any real success. The first month must allow for failure time.
You are embarking on something new and different. You will likely fall short of your goals to some extent, because you will be getting a bearing on your finances. This
is the time for you to remember to not be discouraged. You'll improve with each passing month. The second month is likely to be an adjustment time. You will still be a
little soft in adjusting to your budget from the month before, but control will come. The third month will mark your successful beginning. By the third month most
people's budgets will be fairly accurate. Of course, there will always be surprises, but you will learn to adjust for them. Remember to take it a day at a time. Everyone
fails now and again-even months down the road you'll make mistakes, but you will also learn to deal with your failures and to make adjustments for them.

Instructions
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You may use "The Plan" worksheet at the end of the chapter or you may use the computer template included on the CD-ROM. Either choice will work; however, the
computer program will do all the calculations for you. Remember that in order to pay off your debts, your original goal, you should include in your plan a 10 to 15
fails now and again-even months down the road you'll make mistakes, but you will also learn to deal with your failures and to make adjustments for them.

Instructions

You may use "The Plan" worksheet at the end of the chapter or you may use the computer template included on the CD-ROM. Either choice will work; however, the
computer program will do all the calculations for you. Remember that in order to pay off your debts, your original goal, you should include in your plan a 10 to 15
percent power payment. This is one of the first figures you will want to compute into your monthly plan. To access a worksheet for each month, go to the main menu,
click on Create a yearly and monthly budget plan, then select the month you'd like to budget.

"The Plan" should be developed within the first three days of the month. It does little good to plan after the fact. Be sure to consult the yearly financial plan and record
any pertinent data.

Try to achieve your financial objectives in small doses. Try to find a dollar here and a dollar there.

The first step will be to fill in your projected income. This amount is fixed if you receive a standard paycheck, but for some, your income may vary from month to month
because you are self-employed or have an occupation with fluctuations in pay. If you fall into this variable category you can estimate your income to the best of your
ability. Records from previous years can give you a fairly good idea of what you might reasonably expect. Do the best you can. After a year of working with your
monthly plan, you will probably get fairly accurate at predicting income.

Now, fill in the projected expenses. There are two kinds of expenses: fixed expenses and discretionary expenses. Fixed expenses are known and easy to anticipate.
They include car payments, mortgage payments, debt payments of any kind, taxes, and utility bills. Yet, even some fixed expenses can be trimmed. At the end of this
book we've listed simple ways to save in every budget category-including those that seem to be fixed. "Discretionary expenses" vary from month to month. These
expenses offer you the most flexibility in your budget. Use the "Last Month's Income and Spending" worksheet (pages 89-92) to assist you in finding reasonable totals.

The Tally

"The Tally" worksheet will help you keep track of your actual expenses. "The Tally" should be done each week, preferably on the same day and at the same time.
Being consistent is the key to success. We've told you that many families use Saturday mornings to tally their expenses. More money is spent on weekends than any
other time. Saturday may be the best time for a family just beginning to plan for their expenses. However, you may find that some other day works better for you. The
time you choose is not as important as the principle of establishing a scheduled time. This should take you only about a half hour per week and it may be the most vital
half hour you spend. Married couples should do their tally together. They need to remain united to be successful at not only managing money but at becoming debt-free.
Single parents with children might consider having their older children help them. But single or married, parents need the support of children to make their plan work.
Children need not necessarily be involved with every tally session, but they should be involved in the planning and ought to see the ending tally to assess how well their
family is doing. When families are committed to being debt-free, squabbles over money diminish and may even disappear.

That brings us to our most important point. Tallying time is not a time to bicker. When mistakes are made, and they will be, don't affix blame, just admit the mistake, try
to do better, and move on. Next week will be different. There is always a period of adjustment before you'll reach anticipated results.

Instructions

Each week, as you meet to record your tally, follow these instructions. To access The Tally, go to the main menu, click on Create a tally of your daily activity, then
select the month for which you'd like to record your data.

Record actual expenses under the appropriate category and day of the month. To make this easier you will find the expense categories are listed in mnemonics
(alphabetical codes): "A" for auto, "W" for wardrobe, and so on. The days of the month are listed 1 through 31.

Record cash, check, and credit card purchases.

When you have input your purchases, the template will automatically deduct it from your budget totals. The template will tell you how much remains in each budget
category.

If you start to run over in a category, go back and look carefully at your spending. Try to assess where you are having problems. Adjust expenses for next week. When
it's impossible to adjust weekly expenses, make notes on the "Things to Remember" worksheet and adjust next month's or next year's budget.

Amounts left at the end of the month can be carried over to meet peak expenses in upcoming months, or they can be set aside into savings accounts.

Yearly Record

There is one more worksheet needed to complete the maintenance plan. This is the yearly record. Here is how it works: At the end of each month, transfer the total
expenses of each category from your tally to the "Yearly Record of Finances." Be sure to remember to record any unplanned expenses. This history will form the basis
of next year's budget, so transferring this information is essential. If you're using the computerized worksheets, you won't have to transfer any numbers. As you fill out
The Tally, the numbers will be transferred automatically.

For the Dixons, the yearly record allowed them to see how well they were doing. They were surprised at how successful they had been. At first it had been difficult to
stick with their plan, but as the year wore on, Janet and Dan were surprised at how much further their money stretched. When the car broke down in June, they only
had to withdraw $150 from the rainy-day fund to cover the $350 repair. They were doing even better than they expected. Janet and Dan found that with proper
planning, peak income could cover periods of peak expense. Their key was to keep the cash flow as level as possible. In fact, after just six months of adhering to their
plan, Janet told Dan that she could not even detect a change in their lifestyle. She had thought they were tightening their belts when they started, but she found that they
were living just as well as they had the year previous- except that they were no longer sinking deeper in debt and they never fought about money anymore.




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Future Planning and Crisis Planning

The secret to financial success is to spend what you have left after saving. Instead of saving what you have left after you spend.

-Anonymous

It is time to set some goals for your future and for times of crisis. We've separated the two because where you put your funds for the future and your funds for a crisis-
and how you handle them-may be very different.

Begin as you did with your maintenance plan-evaluate your needs and your wants and set priorities. Most important, learn to appreciate what you have. A plan for
future spending must also stay within established bounds. Don't let temptation run amok and thwart your good plan. And above all, don't pay any heed to what
neighbors and friends may be doing. Many people spend far too much time and money buying things they don't need to impress people who don't care. If the
temptation ever gets too great, take the time to list ten things you are grateful for and, by the time you finish your list, you will have forgotten all the things you don't
have.

Above all, keep in mind that you are among the top 10 percent of the world's wealthiest people if you can answer yes to the following questions:
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Do I have more than one pair of shoes?
have.

Above all, keep in mind that you are among the top 10 percent of the world's wealthiest people if you can answer yes to the following questions:

Do I have a choice of what I can eat today?

Do I have more than one pair of shoes?

Do I have a means of transportation?

Do I have a change of underwear?

The Wisdom of Savings

A very vital part of living within your means is to plan adequately for the future and set aside money for a crisis. In this chapter we will discuss some of the strategies
involved in these very important plans. Anticipating and saving for future expenses and emergencies is the best insurance you can have for keeping yourself free from the
bondage of debt.

Because planning both for future spending and for future crises involve the establishment of savings plans, let's spend a few minutes discussing the wisdom of savings.

Probably the best reason for saving money is control: You will control your future, your security, and your standard of living. Others will not determine control of your
money; you will! The road to riches is the same as the road to elimination of debt: It stretches ahead a day at a time, a dollar at a time.

Even though we know that money cannot provide happiness, it can provide security and fewer worries. A nest egg can get you through difficult periods that could strain
your marriage, health, and emotional well-being. A savings account is a wise investment.

You should have two forms of savings. First, you need savings that can be easily accessed for needed purchases. Remember the word needed. Second, you need
savings that are quite inaccessible. These are the savings that can remain untouched for years so the value can build and support future and crisis plans. If you're
tempted to mix these two savings accounts, be sure to place the funds in different accounts, and perhaps even in different banks. Savings is the lifeblood of wise
financial planning and responsibility.

How Do You Save?

In saving money there are three factors that affect your earnings:

The amount saved

The length of time of the investment

The interest rate obtained

Start early to save. Time is one of the greatest assets you have. Have your children open a savings account at an early age.

Making interest work for you is the key. The speed at which savings can grow is illustrated by what economists refer to as the "Rule of 72." They are referring to
compound interest. The formula is: 72 divided by the interest rate equals the number of years needed for your savings to double. For example, if you deposited $1,000
in a long-term savings certificate with a yield of 10 percent compound interest, you would divide 72 by 10, which means that your savings will double to $2,000 in
approximately 7.2 years.

The following chart will give you an idea of the different interest rates:

Interest Rate Time to Double

72 divided by 5% =3D 14.4 years

72 divided by 6% =3D 12 years

72 divided by 7% =3D 10.29 years

72 divided by 8% =3D 9 years

72 divided by 9% =3D 8 years

72 divided by 10% =3D 7.2 years

72 divided by 11% =3D 6.55 years

72 divided by 12% =3D 6 years

Use Set-Asides

You can use specialized savings accounts, appendages, or suffixes to your bank account to save for specific needs and goals. These are not permanent savings
accounts and can even be closed down when the purpose for their existence has passed. Technically, you cannot even refer to these accounts as savings accounts,
even though they will accrue interest for the period of time that money is placed into them. You will be putting money into these accounts and drawing it out as needed,
depending on the purpose of each individual account. It will give you security to know that for the period of time that you place savings into these accounts you will be
earning interest. Your bank or credit union can help you to set up these accounts. You may need to make a visit to their nearest office and ask them what options are
available to you.

Let's show you
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was anticipated dread. They knew the season was approaching, but each year they seemed to have a longer list of people to buy gifts for with a shrinking pocketbook
to pay for it. One day Matt and Julie decided to take control of the Christmas nightmare. They took advantage of a service provided by their bank. They opened a
Christmas account. Matt and Julie sat down, took out the checkbook and started to total. Last Christmas they spent $500 for presents. It was $500 they didn't have
depending on the purpose of each individual account. It will give you security to know that for the period of time that you place savings into these accounts you will be
earning interest. Your bank or credit union can help you to set up these accounts. You may need to make a visit to their nearest office and ask them what options are
available to you.

Let's show you how these accounts can be used. Matt and Julie were young and newly married. Each Christmas season should have been anticipated delight; instead it
was anticipated dread. They knew the season was approaching, but each year they seemed to have a longer list of people to buy gifts for with a shrinking pocketbook
to pay for it. One day Matt and Julie decided to take control of the Christmas nightmare. They took advantage of a service provided by their bank. They opened a
Christmas account. Matt and Julie sat down, took out the checkbook and started to total. Last Christmas they spent $500 for presents. It was $500 they didn't have
last December. But Matt and Julie were not going to go into debt for Christmas as they had last year.

To save $500, would require that they set aside $42 every month. If they began in January by putting $42 into a Christmas account, by next December they would
have their $500 and they would be debt-free. Matt was paid every two weeks. He knew that his employer offered some options on his direct deposits. He decided to
use them. He filled out the proper paperwork, and every two weeks $21 was deposited in his account. He and Julie never even noticed that it was gone. Because there
were twenty-six payment periods in a year, he actually saved $542 in a year's time. What's more, the money put into the account had accumulated interest. When
Christmas arrived the next year, there were no anxieties and no debts.

Most everyone has learned the value of a Christmas account. That's why we offered it as our first example. Did you ever stop to think that you could do the same thing
with every other future financial goal? Did you know that you could save money to realize nearly all your future needs-perhaps even all your future dreams? Let's
illustrate.

Dave and Yvonne knew that their car was wearing out. Their present car was bought and paid for. This was good. It allowed them more options. They opened a
money market account at their credit union and directly deposited a car payment into it each month. Three years later they had saved enough money, plus interest, to
buy a car they were both really excited about and they had cash to pay for it.

Are you beginning to visualize the possibilities? Can you see that it is possible to be debt-free and to remain debt-free? How about recreational vehicles? Have you
ever dreamed of one? Or maybe there is some dream vacation, a college education for each of your children, missions for yourself and your children? Dreams know no
bounds; and you can afford them when they are planned and saved for.

In addition, you can use set-aside accounts, like your Christmas account, to pay annual peak expenses. We're speaking of those annual budget-busters like taxes,
insurance, new appliances, and car maintenance.

Crisis Planning

Just like set-aside accounts can be established for savings, they also work well for crisis planning. A rainy-day account can be set aside for meeting emergency
expenses. How big should such an account be? That is up to you, but most experts tell us that as little as 3 percent of your annual take home income will soon build a
nice nest egg for an emergency. Whatever you choose to set aside for a rainy day becomes money you won't have to raise when the need arises. You can decide how
much you want to contribute and how often you want to contribute and how large you want the account to become. A good rule of thumb suggests having three months
of take-home pay set aside for emergencies. This creates a nice little hedge against disaster.

Begin now to be debt-free by establishing specialized savings accounts. Sit down with your family and determine your future goals and designate funds to be put aside
for any crisis, a "rainy day fund." Go to your bank or credit union and ask an account representative what options they offer to set aside money in each of your
predetermined savings categories. Then, return to your family and set a plan.

Insurance As a Part of Crisis Planning

No discussion of crisis planning would be complete without some mention of the most widely used method of crisis planning-insurance. Insurance is sometimes
considered to be one of the least understood and most uninteresting topics of personal finance; yet, who among us can afford to live without it? Whether it be accident,
automobile, life, or disability insurance, we all need it. Listen to the counsel of President N. Eldon Tanner:

"Nothing seems so certain as the unexpected in our lives. With rising medical costs, health insurance is the only way most families can meet serious accident, illness, or
maternity costs, particularly those for premature births. Life insurance provides income continuation when the provider prematurely dies. Every family should make
provision for proper health and life insurance" ("Constancy Amid Change," Ensign, November 1979, 82).

Though most of us know we need insurance, many of us are all too often at a loss to understand just how to save money on our insurance needs. Can we have too
much insurance, too little, can we waste money by not buying it properly? Here are a few hints if you are in the market for insurance.

Remember that the most beneficial insurance covers the most disastrous of circumstances. Someone once observed that every one of us is within a hair's breath of
bankruptcy-all we need to fall over the precipice is a medical catastrophe, a sudden loss of income, or a natural or personal disaster. Therefore, rule number one is
insure for the most catastrophic of circumstances. Insure yourself from any disaster that might send your family into personal bankruptcy. Insure against disability,
against liability for accidents occurring with your car or home, against major medical costs, and against a major lawsuit if you own your own business. In short, insure
anything that could completely wipe out everything you own.

Next, always buy the broadest coverage possible. Instead of flight insurance, cancer insurance, and accidental death insurance, buy into a good health insurance plan
that covers a broad spectrum of major medical needs. Get broad-coverage automobile insurance to cover collision, liability, and personal injury. Obtain a good, solid
life insurance policy that will cover you no matter how you happen to die.

Before you buy, shop! shop! shop! Comparing insurance can be like comparing apples and oranges, but a few simple rules cover all policies: Only buy from highly
rated companies with proven track records. Take any quote to the Internet and find a consumer organization that allows you to compare prices with other agencies.
One such consumer organization is the National Insurance Consumer Organization (NICO). The Internet will probably provide you with more such groups. It would
undoubtedly be a mistake to try to list them all, as these organizations come and go. The Internet can provide you with a current list.

Raise your deductible to the highest level you can afford to pay. Raising the deductible will lower the premiums and you can always save the price of the deductible in
your rainy-day fund. Just how high should you raise your deductible? That depends on your income and your ability to save. Talk it over with your insurance agent and
then decide together how high that level can safely be. Raising the deductible lowers the number of claims you will be tempted to file, so insurance companies like this
too. It will keep your insurance rates more affordable.

Last of all, don't overinsure and don't underinsure. Make sure you have adequate coverage but don't waste your money on insurance premiums for coverage you don't
need. As we(c)
 Copyright    cover  the different
                2005-2009,         areas of
                               Infobase     insurance
                                         Media   Corp.in the Appendix, we'll discuss unnecessary coverage versus necessary coverage.            Page 65 / 77
Saving in a Debt-Free World
too. It will keep your insurance rates more affordable.

Last of all, don't overinsure and don't underinsure. Make sure you have adequate coverage but don't waste your money on insurance premiums for coverage you don't
need. As we cover the different areas of insurance in the Appendix, we'll discuss unnecessary coverage versus necessary coverage.

Saving in a Debt-Free World

It is obvious that the most productive time to save will be when you are completely out of debt. It is only then that dreams will begin to be realized. It is only then that
future and crisis plans will take full effect and you will begin to feel completely secure. Once your debt is under control, you can guarantee your own financial future.

To illustrate the power of savings, suppose, starting at age twenty, you deposited $2,000 a year (or $500 quarterly) for five years into a long-term savings certificate
that earns 10 percent interest, compounded quarterly. Then, let's suppose that you leave this money alone without making any further deposits until you reach the age of
sixty-five. At the time of your retirement, your original savings investment would be worth $663,878.48. Just the interest alone would be worth $66,387.85 per year for
the rest of your life. Now that's a nice little salary to add to your pension and/or your social security.

Let's further illustrate this concept. Let's show what the power of savings could mean for you. We'll return to our examination of our fictional family, the Dixons.
Remember, they once were $156,645 in debt, not including the interest they would have owed if they had continued to make only the minimum, monthly payments.
Over a period of nearly twenty-eight years, they would have expended $321,897 in principal and interest payments. This amount includes a whopping $165,251 of
interest alone. At the end of those twenty-eight years, their savings balance would have been $0.00. They would have saved absolutely nothing and would, only then,
be at the break-even point. But Dan and Janet stayed on task with their debt-elimination program and were able to pay off all their debts in 9.46 years. With the
accelerated retirement of their debt, they realized a savings of $111,054 . That was nice, but it didn't stop there. Dan and Janet went one step further. They began to
set aside funds for all their future needs. They took the money they had been using every month as their final power payment-$1,857 a month-and they put it into an
interest-bearing account that earned them 6.5 percent interest. In the eighteen and one-half years remaining of the original debt-retirement schedule, they would be able
to accumulate a savings of $788,579. Then comes the astounding number. If you add the money saved by retiring their debt early to the amount of money saved over
the intervening seventeen years, Dan and Janet Dixon would realize a total turnaround (accumulated savings plus savings on interest) of $899,633. Not bad!

Look at the bottom of the form titled "The Power of Savings-Sample." Dan and Janet estimated how much money they would save in increments of five years. By the
time they were ready to retire in twenty years, assuming they did not withdraw any savings over that period, they would have saved $911,202-that's just under a million
dollars! Is retiring debt early worth it? You be the judge. But keep in mind that 6.5 percent interest may actually be a pretty low figure. With a good, reliable financial
planner, Dan and Janet Dixon could do even better than this. Think of the educations, missions, weddings, vacations, and retirement living they will now be able to
afford! Dan and Janet's dream can be yours as well.

Are you interested in knowing what the future holds for you? Go to the worksheet titled "The Power of Savings." Access it through the main menu. Take a few minutes
and fill in your own figures gleaned from the Debt Elimination Worksheet. Now see how secure your future can be.




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Appendix
Debt-Free Savings

Once you begin this game of saving money, you'll be surprised how fun and easy it is. As you look over these ideas and try them out, you will find that your ability to
save will grow and grow. You're not becoming a tightwad; you're becoming a sensible spender.

It's always best to begin with some overall rules, and here are some good ones to help you get started saving money.

1.Copyright
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                                               Corp.mean that you're good at saving money. We knew a woman once who lived for the ads to come out       every67
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She'd look them over and run for an entire day of shopping pleasure. She had stacks of towels, pillowcases, sheets, and blankets that she'd never use. She had cereals
on her shelves piled three deep that usually went stale or were full of bugs before she could use them. She had every gadget known to man, and every member of her
family had drawers full of "things" they wondered how they would ever use. What we're saying is that some people think they save money by buying things because
save will grow and grow. You're not becoming a tightwad; you're becoming a sensible spender.

It's always best to begin with some overall rules, and here are some good ones to help you get started saving money.

1. Just because you buy everything on sale doesn't mean that you're good at saving money. We knew a woman once who lived for the ads to come out every week.
She'd look them over and run for an entire day of shopping pleasure. She had stacks of towels, pillowcases, sheets, and blankets that she'd never use. She had cereals
on her shelves piled three deep that usually went stale or were full of bugs before she could use them. She had every gadget known to man, and every member of her
family had drawers full of "things" they wondered how they would ever use. What we're saying is that some people think they save money by buying things because
they are on sale; but if they can't use them they are not saving money.

Furthermore, sales are not always what they seem to be. Comparison-shopping will show you that the sale price at one store may be the everyday price at another
store. What's more, many items in an ad only appear because the store wishes to feature them, not because they have placed them on sale. Do you know the
difference? Sometimes retailers sell their goods when they are about to be discontinued. A discontinued item can be bought at quite a discount; yet, if those items do
not carry a full warranty or if parts will no longer be available, your discount will seem mighty puny. A word to the wise: Buy only that which is legitimately on sale, buy
only that which is good quality, and above all, buy only that which you can use.

2. When it comes to major purchases, research before you buy. It may take you a little longer, but it never hurts to go from store to store. Take the time to listen to
each store's sales pitch on its brand and its good qualities and specifications. Each clerk will provide you with at least one more bit of criteria to consider in your
decision process. Listen and write down each and every specification. Consider what the clerk has to say about why his or her store's product is the best. Always ask,
"Why should I buy your store's product over another's?" This will help you narrow your search and settle on one particular purchase. Then establish your own set of
criteria based on your need and your budget.

Be careful. Just because one product has more bells and whistles than another, it isn't automatically the best product on the market. Take audio speakers for an
example. Each clerk will tell you why a particular brand is better than the competitor's. What they won't tell you is that the amps, the decibel levels, and the frequencies
of the woofers and the tweeters might be beyond what the human ear is even capable of detecting. Or, perhaps the speakers they are pushing have the capacity to be
heard in an entire parking lot, but since you don't live in a parking lot, their capacity exceeds your requirements. Speakers are designed to perform different functions in
different settings. Why buy a speaker that has capabilities you will never use?

You might consider a trip to the library to consult buying guides and product evaluations. You need all the help you can get to make wise financial decisions.When the
research phase ends, it's time to go to work. Sit down with paper and pencil in hand and prepare to make a decision. If you have a family, be sure to include them if
this is a major purchase. Think through all the criteria you have gathered in your research and then decide for yourself. Decide which, out of all the products you've
looked at, is the best buy and which will best fit your circumstances at the price you can afford to pay.

3. Check out the retailer. This rule applies to any major purchase. When it comes to groceries or small purchases, such a step is unnecessary, but in major purchases it
is wise to know the retailer you are dealing with. Ask other people what experience they have had with a particular retailer or service provider. For more information,
call the Better Business Bureau about the store you wish to buy from. This is especially true if it is a small retailer with an unknown reputation. If you have made
previous purchases from this retailer, you'll have the benefit of your own personal experience.

What do you look for? Well, do you know anything about the return policy of the store? How about its service record? Can you get fast and efficient repair if the
store's merchandise breaks down or does not meet the quality standard they advertised? If you are contracting services, have you asked for references so you can
check with someone who has done business with the store before? Be safe, not sorry.

4. Refuse gimmicks. When retailers push their prices down, they have to find a way to make more of a profit some other way. They could do this by offering service
contracts, extended warranties, or other little extras that you really don't need. Don't automatically refuse service contracts, extended warranties, or little extras; but
remember that sometimes these services aren't worth the extra money. Call someone who provides repairs for this item to see if the price of the contract is worth the
extra money. Don't take the contract until you do a little research. Be sure that what is offered you is worth the extra money. It might be that the retailer is making up for
the loss on the product price by pushing the service contract.

5. Barter on price. Some retailers may not allow bargaining on price, but you will be surprised how many do. Test the waters by asking first, "Is this a firm price?" If
you are given any wiggle room, take it. In addition, it is often good to come with documentation or competitor ads that show the same product for a lower price. You
might also consider checking the Internet for pricing. Retailers want your business; that is why so many will match or beat the prices of their competitors.

6. Don't buy anything on impulse. The more data you can collect before you make a purchase, the better you'll be. Most of the wasted money in your budget is from
impulsive purchases. There are times when you may need to act quickly to take advantage of a once-in-a-lifetime price, particularly when quantities are limited, but this
is generally not the case. Even in those rare cases you will find that you could have the leeway of a few hours before you need to make your decision.

Take the time to know before you buy.

Carefully consider every purchase you make, no matter how small. Sometimes even a split-second thought is all it takes to keep from making a mistake.

Little impulse purchases add up. Buying lunch out every day instead of brown bagging could cost you as little as $5 a day. But that adds up to $100 a month. Drinking
two sodas from a vending machine could cost $30 a month. A magazine or newspaper bought from a newsstand could add up to $100 a year or more. All that money
could be put toward your debt and would help you be debt-free. It's a small sacrifice that reaps huge savings.

7. Don't waste your money on a brand name. Sometimes a brand name denotes quality, but ofttimes it means little to nothing when it comes to quality and price. Let us
give you an example. Not long ago we happened across a buying guide at our local library. The headline of an article caught our eye. It was an article evaluating polo
shirts. What did we learn? Well, the evaluations surprised us. According to research, the best quality, workmanship, and lasting value was the brand of polo shirts sold
at a local discount store. Were we surprised? You bet.

This appendix is full of ideas to help you save money-money that can be used against your debt as a power payment and money that can help you build a savings
account for future and emergency needs so you remain debt-free. We have included some ideas for saving money in each category of your monthly spending. Look
over each section and see how you might be able to save.

Auto and Transportation

" Use public transportation whenever it is feasible.

"Copyright
  Assess your
           (c)needs before you
               2005-2009,      buy extras
                           Infobase Media forCorp.
                                              your car.                                                                                                   Page 68 / 77
" Buy and maintain as few vehicles as your family can get by with.
Auto and Transportation

" Use public transportation whenever it is feasible.

" Assess your needs before you buy extras for your car.

" Buy and maintain as few vehicles as your family can get by with.

" Hang on to that old car. Today's cars last longer than cars built in the past.

" Buy a safe and comfortable vehicle that accommodates your family's needs without breaking your budget.

" Keep up the maintenance on your vehicle to avoid costly repairs later.

" Drive at a safe and reasonable speed and avoid fast starts and stops. You can save as much as 50 percent of the energy needed to run your car.

" If your car is stationary for an indefinite period of time, stop the engine.

" Always fill up in the early morning, particularly during the summer months, because gas expands in the heat of the day.

" If you need to run an errand, consider waiting until you can run several errands in one trip and then plot your journey to expend the smallest amount of fuel possible by
traveling the fewest miles.

" Keep your car cleaned and your trunk clear. Reducing the weight lowers the consumption of fuel.

" Maintain your car regularly. Under-inflated tires can reduce fuel efficiency by 2 percent for each pound they are under the recommended pressure, plus they wear
faster. An engine that has not been tuned up for some time or a clogged air filter can increase fuel needs by 20 percent.

" Running the air conditioner is more fuel efficient than driving with the windows down.

" Fill up with regular unleaded gas unless your owner's manual specifies something else. Regular gas is always cheaper, and higher octane gasoline does your car and
your fuel efficiency no extra favors. You're just wasting your money on higher priced gasoline.

" Slow down! Did you know that just by reducing your speed from 70 mph to 65 mph will save you $5 for each hour of driving and about $10 if you are driving a truck
or an SUV.

" When you need a mechanic, don't hesitate to shop around and ask for estimates. A reliable, inexpensive mechanic can become your-and your car's-best friend. Find
someone who is honest.

" Opt for the monthly rates on parking fares if you need to park on a regular basis. These are much less expensive than daily passes.

" Carpool with four other people. It will cut your driving to once a week and your commuting costs by four-fifths.

" Watch for warranties that are "time prorated." These sort of warranties are offered for tires, batteries, mufflers, shock absorbers, and brakes. Work with companies
you can trust. Shop around before you buy and learn from your past mistakes.

" Before buying a recreational vehicle, consider the strength of your commitment to use it. Too many people own RVs that sit idle for fifty weeks a year. If you don't
intend to use a recreational vehicle frequently, rent one.

Charity and Contributions

" Remember that the payment of tithes and offerings is part of successful financial management: "Successful financial management in every LDS home begins with the
payment of an honest tithe. If our tithing and fast offerings are the first obligations met following the receipt of each paycheck, our commitment to this important gospel
principle will be strengthened and the likelihood of financial mismanagement will be reduced. Paying tithing promptly to Him who does not come to check up each
month will teach us and our children to be more honest with those physically closer at hand" "Marvin J. Ashton, "Guide to Family Finance," Liahona, April 2000, 42).

" Consider giving generously to the United Way. One of the advantages of giving to a conglomerate charity such as the United Way is that it reduces the amount you
expend in individual, door-to-door contributions. Your local United Way consolidates payments to a variety of charities and it has a proven track record.

" Always give to known and well-respected charities. Be leery of charities you have never heard of. Listen carefully to telephone solicitations or for solicitors who give
names similar to well-known and well-respected charities. Unscrupulous vendors often adopt names that sound similar to known entities. So if it sounds similar but isn't
the same-don't give.

" Ask the solicitor what percentage of your donation will actually go to its intended recipients. Unscrupulous charities have high overhead and pay overly large and
unusual wages to their leadership. If the overhead exceeds the money received by the recipient, stay away.

" Allot yourself a set amount of money you can afford to donate every month. There are many worthy charities, and you are not required to give to them all. Decide
which charities to give to before they come asking.

" Be wary of any charity that sells low-quality goods at inflated prices. Such items are probably not things you need or will use. Both you and your charity may better
benefit by a direct donation than from a purchase sold at an inflated price.

" Donate your excess goods to secondhand thrift stores that benefit the needy and provide them with employment opportunities. Such stores include Deseret Industries-
operated by The Church of Jesus Christ of Latter-day Saints-Goodwill Industries, or the Salvation Army.

" Ask for receipts for any time, money, or goods that you have donated. Determine the value of your donation by comparing it to similar goods sold at the local thrift
store. Such donations can be deducted from your income taxes, but be sure to check the tax law before you take any deduction.
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" When you need a service, hire people in need that you know personally or come highly recommended, then both of you will benefit.

Debit and Credit Cards
operated by The Church of Jesus Christ of Latter-day Saints-Goodwill Industries, or the Salvation Army.

" Ask for receipts for any time, money, or goods that you have donated. Determine the value of your donation by comparing it to similar goods sold at the local thrift
store. Such donations can be deducted from your income taxes, but be sure to check the tax law before you take any deduction.

" When you need a service, hire people in need that you know personally or come highly recommended, then both of you will benefit.

Debit and Credit Cards

" Avoid those cards that carry a balance with interest. Use only those cards that are paid in full at the end of every month, or debit cards that are deducted directly from
your bank account much like a plastic check, but without the cost of a printed check.

" If you should need a card with a credit balance, make it a practice to pay your balance in plenty of time to avoid late fees or additional interest.

" There are some cards that offer "cash back" advantages if they are paid before a certain date. Such cards can be advantageous to you if you are good at discipline
and self-control. Pay these bills as soon after you receive them as you can to maximize your savings.

" If you can't keep your monthly credit balance at zero and control your spending on credit cards, then cut them up, nuke them in your microwave, or freeze them in a
block of ice so they have to be unthawed before using so that you can control your spending.

" If you do a lot of business travel, ask your business to provide you with a credit card for your business travel needs. Never expend personal funds for business needs.

" Prevent identity theft and erroneous charges. Carefully and thoroughly review your credit card statements every month and verify each purchase. Look for hidden
costs you didn't anticipate. Dispute any erroneous charges. Be aware of every charge and report anything that looks like identity theft or credit card fraud.

" Pay your credit card bills on time. If you find yourself in a situation where you absolutely need to get a loan, consult your life insurance policies, your retirement plan,
or an IRA and try to borrow from your own resources. Better to owe yourself than to owe others.

" If you do need to take out a loan, pay it back as quickly as you can. Even small debts are too much debt when it drains the interest from your budget. Once you are
out of debt, never return.

" Save for big purchases. There is joy in anticipation. Cash always affords you dealing power, and that equates with greater savings.

Education

" Use your local library. The public library is an excellent place to read any number of valuable books. Not only do libraries offer books, but they offer audiocassettes,
CDs, books on tape, videos, artwork, and duplication equipment. Owning a library card is one of the best cost-saving investments you can make. Before you spend,
consult your library.

" Look for book exchanges if you want to own books. Libraries, bookstores, the Internet, and shopping malls can offer places to trade used books for ones you want
to acquire.

" Be selective if there is a fee associated with belonging to a club, organization, or extra-curricular activity that interests you. Evaluate both the time and cost
commitment to determine if your money is well spent. Some activities enhance education while others detract. Spend when the investment value is the greatest and
never spend more than you can afford.

" Newspapers can be cost effective and timely information sources. But never buy at the newsstand; take a subscription. It costs much less than buying at the rack, and
coupons are not usually offered with newsstand copies of a newspaper.

" If you subscribe to a magazine, do not resubmit your payment the first time they ask for a renewal. By taking your time, you often are offered substantial discounts to
keep your subscription. You can oversubscribe to magazines and newspapers, so only buy what you can afford and what will offer you the maximum savings. Ask
about two-year and three-year subscription rates; such rates are often deeply discounted.

" If your child wants to play a musical instrument, start with a rental to see if he or she enjoys it or will stay committed to it before you purchase. If possible, rent an
instrument with an option to buy, or check garage sales for used instruments rather than investing in a new one.

" Shop before you commit to lessons for your children. Ask your friends for the names of competent instructors. Inquire about rates before you make a commitment.

" Pianos can be found in classified ads, and often for a lower price than when purchased from a dealer. But if you buy this way, make sure that you are paying a fair
price and that the instrument is in good shape. It pays to take an experienced musician with you to make the best choice.

" Make saving for your children's college education a top priority in your family. Put money aside into long-term savings. This qualifies as a worthy "future" plan. Private
school tuition and college costs can be saved. Check with a tax preparation expert for tax-sheltered savings plans.

" Good grades translate into cost savings in the form of scholarships. Help and encourage your student to work hard and perform to the best of his or her ability.

" Paper, pencils, and supplies are offered for lower prices at discount stores. Watch for sales, especially seasonal sales, and buy enough to last the school year where
possible.

" Take advantage of free tests offered by state institutions to find areas of interest or aptitude.

" Watch for government publications, extension service classes, and other publications that can add to your education. The government encourages education and
offers any variety of wonderful publications to aid you in your educational pursuits.

" Keep an eye open for business-sponsored workshops, seminars, conventions, special schooling, and so forth. You can often transfer these added credentials into
added income to your budget.

"Copyright
  Become educated  in your areas
           (c) 2005-2009,        of interest
                           Infobase   Mediaor hobbies. Hobbies and pastimes can be converted into secondary income.
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" Community education classes are offered in local school districts and libraries. Brochures are often mailed to your home offering these free or low-cost classes.
" Keep an eye open for business-sponsored workshops, seminars, conventions, special schooling, and so forth. You can often transfer these added credentials into
added income to your budget.

" Become educated in your areas of interest or hobbies. Hobbies and pastimes can be converted into secondary income.

" Community education classes are offered in local school districts and libraries. Brochures are often mailed to your home offering these free or low-cost classes.

" Without the growing edge of advanced education, you can end up as the low man on the totem pole when promotions at work come along. Management teams like
new ideas, abilities, and initiative. Take advantage of educational opportunities. These may be as attractive as offers of cash.

Food

" Carefully plan your meals.

" Keep your eye out for the weekly grocery specials and savings.

" Get a little exercise at the supermarket. Look more than just at the shelves at eye level. Those shelves above and below eye level often contain the best deals.

" Sales on food items are cyclical. Eventually, every grocery item you are accustomed to purchasing will go on sale. Buying food at its lowest, cyclical price and buying
enough to last until the price goes down again saves you a great deal of money in your monthly food budget. This can be done without abandoning your favorite stores
or your favorite brands.

" Be aware that not everything mentioned in the weekly ad is a sale item.

" Perishable foods that can be purchased only on a weekly basis should be consumed when they are "in season" and plentiful.

" Can or freeze perishables for greater longevity. Purchase canned goods, meat, and frozen items in large enough quantities to last for quite a while.

" Know how much to purchase without going past the expiration date. A good way to discover how much food will be adequate for your food storage is to mark your
package with a date of purchase. Then when the item is fully consumed, you can easily assess how many of that particular item you will use in a year's time.

" Use your computer as another asset in your search for lower food prices. Use the Sunday newspaper to acquaint yourself with the coupons offered for the week; then
match the coupons with the sale items listed on the website of your favorite store. Most of the major grocery chains maintain a website, and many independent
supermarkets form co-ops.

" Look for "loss leaders," weekly specials your grocery store offers to entice shoppers inside. The retailer hopes you will come into his store to buy these special items,
some of which may even be offered at prices lower than his own costs, then purchase many more items at regular prices. If you buy enough, the retailer can make up
for his loss on those few featured items. When your budget is tight and you live close to several different markets, you could use this to your advantage by shopping
more than one store for "loss leaders." This will save you significantly as long as the stores are close. If the price of gasoline exceeds the amount you save at the grocery
store, try sticking closer to home.

" Keep your pantry fully stocked. A fully stocked pantry of food purchased at its lowest price allows you the flexibility to still serve your family delicious meals while
continuing to purchase only weekly sales items. This strategy could cut your grocery bill nearly in half and increase your food storage.

" When you must purchase something that is not on sale, look and compare price and quality on different brands. You can often find little-known brands with
comparable quality and taste to the more well-known brand names. Store brands are, for the most part, less expensive than national brands.

" Take advantage of unit pricing. Most stores list a unit price next to the sticker price. Unit pricing helps you compare prices for different brands packaged in different
sized containers.

" Remember that items placed in displays at the end of aisles are not necessarily items on sale.

" Don't buy on impulse. Plan what you will buy before you enter the store. Work from a list.

" If you tend to be distracted in the grocery store, leave the distractions at home. Small children lose patience and make you start buying things you didn't intend to.

" Remember that shopping on an empty stomach can be as big a distraction to you as chubby little hands. You'll put many more items in your cart when you are hungry
than when you have a full stomach.

" Use coupons. But be aware that some retailers will raise the price of the coupon item to make up the shortfall. Have a good head for prices.

" Limit your trips to the store to once a week. Even better, try to limit your trips to every other week or even once a month where that is possible.

" Non-food items are sometimes less expensive when purchased at stores other than the supermarket.

" Don't be loyal to anything but price.

Gifts

" Use your yearly financial plan to anticipate when and whom you might be required to buy a gift for each month.

" Set aside money each month for all your gift expenses.

" Use special savings to purchase gift items as you discover them on sale. Or buy them in bulk to keep on hand when gift-giving opportunities arise.

" Adopt the philosophy that a wedding anniversary does not have to be an expensive celebration. Wedding anniversaries can be observed by traditions that your family
budget can accommodate.
 Copyright  (c) 2005-2009,Establish
                            Infobasetraditions that are thoughtful and romantic without needless expense. A husband could surprise his wife with breakfast
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wife could serve a candlelight dinner for two. One or two roses or a whole bouquet of flowers from the local supermarket may be just as welcome as an expensive
present. A thoughtful and heartfelt card expressing your feelings for your spouse might be more appreciated and treasured than a costly anniversary present.
" Use special savings to purchase gift items as you discover them on sale. Or buy them in bulk to keep on hand when gift-giving opportunities arise.

" Adopt the philosophy that a wedding anniversary does not have to be an expensive celebration. Wedding anniversaries can be observed by traditions that your family
budget can accommodate. Establish traditions that are thoughtful and romantic without needless expense. A husband could surprise his wife with breakfast in bed. A
wife could serve a candlelight dinner for two. One or two roses or a whole bouquet of flowers from the local supermarket may be just as welcome as an expensive
present. A thoughtful and heartfelt card expressing your feelings for your spouse might be more appreciated and treasured than a costly anniversary present.

" Look for closeouts on wrapping paper and bows. After Christmas is always a good occasion. Look for plain, non-seasonal type paper that you can use
inexpensively. Save your wrapping paper and bows in a big drawer, if you have the room, and get more than one use out of it. In addition, make a trip periodically to a
printing establishment in your town and purchase roll-ends to use as gift wrap.

" Become familiar with "sales seasons." Keep those "seasons" in mind as you budget. A year's experience with your budget can teach you when to find items at their
lowest price. Plan to spend money in the month you anticipate a sale. You can even make your purchases a year in advance if the price just happens to be right.

" Knickknacks, figurines, perfumes, socks, and earrings are small items that close out periodically and are so small they may not even be advertised. You might run into
such a sale on a routine outing. Watch for closeouts. Being in the right place, at the right time, with money in the bank can help you save money.

" Don't overlook homemade gifts. Those gifts made by you come from your heart and can be treasured long after the store-bought gifts break or fade away.

" Buy small gifts at the dollar store.

" Establish a set-aside or a Christmas account to save for Christmas purchases.

" Consider an office fund where everyone is asked to pool a few dollars every month for get-well gifts or flowers for births, weddings, and deaths. Such office funds
can cost very little and save the whole office a great deal.

" Try neighborhood or group gift-buying pools to save money for wedding gifts.

" Be creative. One woman makes and gives thank-you notes as gifts at wedding showers and birth announcements to give at baby showers. Scrapbook pages,
attractively wrapped baskets of small, inexpensive useful items, baskets of food supplies, and useful, homemade gifts can be made into attractive, inexpensive, and
greatly appreciated gifts for friends and family.

Home and Shelter

" Be happy with what you have. We waste an incredible amount of time and money trying to impress people who don't really care. "Use it up, wear it out, make it do,
or do without."

" When an appliance breaks down, don't be foolish enough to think that this entitles you to a brand new appliance. Always check to see if the appliance can be
repaired first before you go out and make a new purchase. Ask the repairman to estimate how much it would cost to fix your appliance. If the cost of the repair is
neither close to nor exceeds the cost of a new appliance, then, by all means, fix your old appliance first.

" Look for good used appliances, perhaps from a neighbor or friend who is moving. In addition, check the classified ads or look for good garage or estate sales. One
family we are acquainted with bought a refrigerator for a third of what a new refrigerator would have cost, and has now had that same refrigerator for the last fifteen
years. They made a wise choice. But always carefully inspect used appliances and make certain they are in good working order. If you can't afford new, buy used.

" As with all purchases, whether it be new or used, buy it to last. Check durability records from consumer advocacy groups either at the library or on the Internet.

" When you've made a purchase, be sure to save the receipts and the warranties. We cannot tell you how many times the warranty on an appliance and the receipt of
purchase saved us from having to buy a new appliance. The repairs were covered by the warranty and the cost to us was minimal.

" Cleaners don't have to be expensive. Check your library for books on cleaning solutions that can be made at home. Sometimes vinegar and ammonia, which can be
purchased inexpensively, will clean as well as an expensive formula cleaner.

" Use the library as a good resource for books on house-cleaning shortcuts. Shortcuts can save both time and money as well as the maintenance and repair of your
household possessions.

Insurance

" If your employer offers accident insurance as part of your benefits package, you'd be foolish to opt out. But if you have to buy it yourself, don't. If you die, your death
is just as valuable to your survivors whether you die from cancer and heart attack or whether you die in an accident. There is no additional benefit from accidental death
insurance.

" Disability insurance is vital. The ability to bring home a paycheck is more valuable to your family than any other single thing. The most important type of insurance is
not auto, health, or homeowners; it is a disability policy. Many employers not only offer disability insurance, they also pay the premiums for you. If you don't have a
disability policy now, go out and purchase one.

" Most states require that you carry an insurance policy on your automobile. Any number of companies provide automobile insurance, and many offer discounts if you
have a homeowner's policy with them. When looking for automobile insurance, price should not be the only consideration. Check the company's claim record.

" Avoid vehicles that require higher than average insurance premiums. Check the insurance premium before you buy a new car.

" Ask the agent about discounts for auto insurance. Are there "good student" rates? "Non-drinker" rates? "Good driver" rates? Ask what discounts are available and
which you qualify for.

" Remember that your car insurance is no better than your agent. A warm, friendly, compassionate insurance agent is worth his or her weight in gold. Find someone
who will be an advocate for you and fight in your behalf.

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insurance, it would not be wise to take maximum coverage. But, before dropping any area of coverage, make sure that liability, personal injury, and theft are adequately
covered. Your agent can best advise you what level of coverage your specific car should require.
" Remember that your car insurance is no better than your agent. A warm, friendly, compassionate insurance agent is worth his or her weight in gold. Find someone
who will be an advocate for you and fight in your behalf.

" The age of your vehicle should determine the amount of insurance coverage you have. If there is little difference between the value of the car and the deductible on the
insurance, it would not be wise to take maximum coverage. But, before dropping any area of coverage, make sure that liability, personal injury, and theft are adequately
covered. Your agent can best advise you what level of coverage your specific car should require.

" Make sure you carry a homeowner's policy that adequately covers your home and your possessions. Does the policy offer full replacement value?

" If you are renting, buy a rental insurance policy. It will offer you the same sort of coverage offered to homeowners and will protect you from major catastrophes.

" To avoid a hassle should you need to file a claim, it is a good idea to videotape each room of your home, showing all your personal belongings. Your memory is not
as good as you think. In addition, record serial numbers on expensive belongings such as computers, televisions, major appliances, and so on. Then put these
inventories somewhere off the premises, preferably in a safety deposit box, where they can be retrieved in an emergency.

" If an accident or damage occurs to your home or rental unit, check the policy to see if the cost of your damages is covered. Many homeowners pay premiums for
years, and then when shingles blow off the roof in a storm or the children spill red punch on the brand new carpet, they fail to realize that their homeowner's policy
covers the damages.

" Most families cannot get by without adequate health insurance coverage. If you are self-employed and cannot afford insurance, then just purchase major medical
insurance and be sure that it includes some sort of maternity benefits if you are in your childbearing years. Check the deductibles and keep a savings where possible to
meet the deductible expenses which sometimes can be fairly large.

" Work through an insurance broker if you don't have access to group rates. A broker works for several different companies and can, therefore, find you the best rates
available.

" Don't be afraid of HMOs or PPOs. HMO plans require that you see only their physicians, PPO plans allow you to see other physicians but at a reduced rate of
coverage.

" Don't buy any health plan that carries a lifetime maximum benefit. Some plans with a lifetime maximum of $1,000,000 seem adequate enough on the surface, but with
today's rising medical costs, that amount is quickly consumed when there is a real emergency.

" Life insurance is an absolute necessity. How much do you need? You can estimate that by multiplying your gross income by 80 percent if you are a low-income
earner, by 70 percent if you are a middle-income earner, and by 60 percent if you are a high-income earner. To that figure add the cost of college educations and the
mortgage on your home.

" Always buy term insurance rather than cash value life insurance. Term insurance is less costly on the whole and much more beneficial. Whole-life policies are often
encouraged for their money-saving value, but you could save far more than their value by investing the premiums you would have placed in the cash value policy into a
moderate, secure investment-even a CD has a better yield than a whole-life policy.

" If the down payment on your home is less than 20 percent, your mortgage company will require mortgage insurance. You must pay the premium until your equity in
the home reaches 20 percent. Be sure to cancel your mortgage insurance when your equity reaches this point. Federal regulations require your lender to notify you
when your equity reaches 22 percent. But you can save months of premiums by taking the initiative and contacting your leader before it reaches this point. You can also
use your life insurance policy to protect your mortgage.

" Don't buy travel insurance. If you buy your plane tickets using credit cards that offer automatic travel insurance, or by purchasing traveler's checks that automatically
offer insurance, you are covered. Some travel agencies also provide automatic travel insurance when you book through them.

" Never be a sucker for the hard-sell sales pitch. Don't be frightened into buying policies because the insurance salesman is trying to clinch a sale and you do not
understand what you are buying.

Leisure and Recreation

" If you have cable or satellite television, sit down with your family and determine which package of channels best suits your family's tastes and budget. Limiting the
number of channels reduces your monthly bill. Watch for specials and discounts on installation and take advantage of "special package" offerings.

" If your family watches too much television, doesn't watch it much at all, or if your budget cannot afford pay television, then unhook this costly expense. You can
always rent an occasional videotape or DVD for entertainment instead.

" If you and your family enjoy regular trips to the gym, shop for a facility that is near to your home and has the lowest fees and the best options to suit your family's
needs and tastes. But beware of sign-up fees and fine print that mandates the length of your commitment. Some gyms appear to have lower monthly rates but when
factoring in their sign-up fees, you actually expend far more money. Many gyms in corporate areas offer discounts that make working out near work instead of home a
much better deal. And remember, sometimes buying your own home fitness equipment may be a good investment over the lifetime of your fitness commitment.

" Take advantage of public facilities and community recreation centers.

" Participate in sports that don't require expensive gear.

" Rent or borrow sports equipment that you use only occasionally.

" Buy sports equipment at yard sales, or watch for good buys in the classified section of your newspaper.

" Join a local sports group for enthusiasts of bicycling, rafting, running, and so on. These groups sponsor competitions and keep you informed of upcoming activities
(many of which are at little or no cost), and they often rent or sell equipment at discounted rates.

" Develop interests in things that are low-cost and provide family fun. These could include visiting public parks, hiking, writing, painting, woodcarving, scrapbooking,
and so on. Keep
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" Check your community schools for inexpensive classes that teach skills or provide a recreation experience.
(many of which are at little or no cost), and they often rent or sell equipment at discounted rates.

" Develop interests in things that are low-cost and provide family fun. These could include visiting public parks, hiking, writing, painting, woodcarving, scrapbooking,
and so on. Keep the amount reasonable, flexible, and well within your price range.

" Check your community schools for inexpensive classes that teach skills or provide a recreation experience.

" Attend discount matinees or buy discount tickets at your bank, credit union, or grocery customer service center.

" Watch for $1 or $2 movie theaters where movies play at the end of their theatrical runs. You may have to wait longer to see them, but the price might better suit your
family's budget.

" Don't be afraid to use the pay-per-view feature of your cable or satellite network. This will allow you video prices before release dates.

" Wait for the video release on some movies. Watching movies from the safety of your home can also help you screen the violence and sexual content of some PG and
PG-13 rated movies.

" Never waste money on a movie that embarrasses you or is not enjoyable. Read newspaper reviews, talk to trusted friends, and check out sites on the Internet that
give thorough reviews of film content.

" Use the library. Public libraries also rent videotapes and DVDs. The cost is nothing and the rental time is extended for a week at a time.

" Get a copy of your community activity calendar. Take advantage of free or discounted concerts, art museums, lectures, and other special activities.

" If eating out gets too expensive, pack a picnic and eat in the park.

" Search for deals. Scan the newspaper for coupons and discount nights at local restaurants.

" Ask for a children's menu or dine out on family discount nights. Restaurants have enticements to bring in diners.

" Check the appetizer menu. A soup or salad with an appetizer could be a great meal and it could cut your dining-out budget by 10 percent or more.

" If the restaurant is known for its huge portions, consider buying one meal and sharing it.

" Buy quality toys that children will use and wear out. Check for durability and safety. Avoid toys with detachable pieces that can be lost or swallowed.

" Give up any kind of recreation where the costs are more excessive than your income allows. But don't give up things your family can do and enjoy together. Those
days and hours of fun will be the moments your children will cherish for a lifetime.

Medical

" Remember that preventative dental care will save you more than any other thing when it comes to caring for your teeth.

" Check your bills and ask about any charges that seem excessive.

" Be prudent about when and how often you visit your doctor. Don't be guilty of either not going often enough or going too often.

" Develop a regular exercise program to make you more disease-resistant and healthy. Don't give up exercise for the sake of money. Find ways to incorporate it within
your lifestyle. For example, if you are accustomed to buying lunch at the office every day, try packing your own lunch and working out during your lunch hour. Even a
walk through a mall every day at lunch time will keep you fit.

" If it is not a medical emergency, before having tests or surgery, get a second opinion, and contact your insurance company. Use your insurance company's contract
physicians whenever possible.

" Find a doctor you can trust, and if you don't like the particular doctor you've chosen, don't be afraid to ask around and find another one.

" Don't use the emergency room unless it's an emergency. Wait until regular office hours or use an after-hours medical center. Many health care providers are
associated with such emergency centers.

" Always review a hospital bill. Dispute any excessive charges or services you did not receive. Don't count on your insurance company doing this for you. When you
catch an error they are always grateful.

" When purchasing prescription drugs, use a pharmacy that regularly substitutes lower-cost generics for brand-name prescription drugs. Use mail order pharmacies
where you can buy a three-month supply of any long-term prescription need. Don't be shy about asking your doctor for samples, particularly if you are in a financial
crunch or the prescription is costly. Pharmaceutical companies frequently leave samples of their products with physicians.

" If your pharmaceutical company sends you literature about any diagnosed illness that requires prescription medication, read them thoroughly and follow their advice to
keep your future medical costs lower.

" Take advantage of any health programs or evaluations offered by your employer or given through special community clinics or health evaluations. Flu shots,
mammograms, and cholesterol and diabetes testing are often provided at reduced rates.

Other/Miscellaneous

" Trade baby-sitting duties with another parent who has children of similar ages.

" If you are going out for the evening and need in-home baby-sitting, be effective with your time. Shorten the time you are gone to lessen the expense of childcare.
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" Be extremely careful when selecting a daycare provider. Cheaper is rarely better. If, however, you are going through a university's childcare service, you'll likely get
both cheaper rates and higher quality. Don't be hesitant to check out the local university for preschool/daycare needs, even if you and your spouse are not affiliated with
" Trade baby-sitting duties with another parent who has children of similar ages.

" If you are going out for the evening and need in-home baby-sitting, be effective with your time. Shorten the time you are gone to lessen the expense of childcare.

" Be extremely careful when selecting a daycare provider. Cheaper is rarely better. If, however, you are going through a university's childcare service, you'll likely get
both cheaper rates and higher quality. Don't be hesitant to check out the local university for preschool/daycare needs, even if you and your spouse are not affiliated with
the university. Most offer reduced rates because some of their providers are students in training and because government programs provide subsidies to university
preschools and daycares that help parents attend school while their children are cared for. Almost all programs are open first to students, but then open to the general
population at a low rate. Shop for quality, distance from home, and friendliness of the environment for your children.

" Analyze your financial situation. Sometimes the cost of daycare eats up such a large percentage of your second paycheck that it hardly pays to work.

" Teach your children money management skills by setting an allowance for your children. Let it be within your ability to pay.

" Having a pet to take care of can be a good opportunity for a child to learn money management. Pets and pet care give children good opportunities for growth and for
caring for someone or something other than themselves.

" When looking for a pet, check local animal shelters and classified ads, as well as pet stores. Remember, however, that some pets are very high maintenance in spite of
their initial price. Only maintain a pet you can reasonably afford.

" Remember that letters and e-mails are less expensive than long-distance phone calls.

" When sending packages, investigate several alternatives for shipment. Rates vary.

" Do not buy books on how to save money. Instead, borrow them from the library.

" Avoid buying from door-to-door salesmen or from phone solicitors. Such salespeople cannot be easily checked for references.

" Use the "Board of Directors approach" to handling high-pressure sales pitches, especially for big purchases. That is just our term for checking things out with your
family first. Any purchase over an established amount, like say $50 to $100, must be approved with your spouse and perhaps even the family as a whole. Also, time is
on your side; don't ever rush into a purchase.

" Consider purchasing some items cooperatively with family, friends, or neighbors. So long as such cooperative purchases do not threaten your relationships, they can
save you a lot of money. Group buys of camping equipment, boats or recreational vehicles, snow-blowers, and so on could save you some money.

" Send for government publications on how to save money. You can obtain a catalog on-line or from Consumer Information Center-D, P.O. Box 100, Pueblo,
Colorado 81002.

Personals

" If you have the skill and talent, you could learn how to cut your children's hair. If you lack the skill and know-how, take your family to a competent cosmetology
school where students provide hair care for minimal prices.

" Consider buying your shampoo in bulk from a beauty supply house that allows sales to the public. Or make it a practice to only buy shampoo and other hair care
needs when they go on sale.

" Cleanliness and neatness are more important than expensive clothing, makeup, or hairstyles. Proper care costs little money. Don't skimp on hygiene.

" Remember that all products-be they toothpaste, deodorant, soap, mouthwash, or first-aid supplies-go on sale. Remember that the best buys are often found at
discount and warehouse stores.

Savings and Investments

" Find a good financial counselor. Keep shopping until you find the right one for you. Then, follow his or her advice to manage your savings and investments.

" If your employer offers savings, investment plans, or retirement savings where they pick up a portion of the cost or match funds, always take advantage of it.

" Remember that markets are volatile. Be safe and sure in your investment choices.

" Money Market Certificates are higher-yielding savings accounts than passbook savings. Compare options.

" Consult with the Social Security Administration for a report on your benefit status in order to prepare for your retirement. Each year the Social Security
Administration is required to send you a report of your Social Security earnings.

" Do not count on Social Security to provide all your retirement needs. Social Security needs supplemental savings to provide adequate retirement coverage. How
much more will you need? Consult your investment counselor or search the Internet for retirement calculators that can assist you in determining an amount.

Taxes

" Always be honest when it comes to paying taxes. Taxes are the price we pay for citizenship. Pay your taxes honestly and cheerily. Keep good records so that your
tax deductions are fair and accurate.

" Keep records and receipts. Itemizing deductions will usually save more money than taking standard deductions.

" Take time to accurately fill out the W-4 form that you file with your employer. Periodically check this form to see if it is still accurate. Neither have too much money
withheld nor too little. Try to get as small a refund as you can. You are better served to save money in passbook savings than use your tax refund like a savings
account.
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" If possible, consider doing your own taxes or purchasing tax software to help you calculate the amount of your taxes. Self-employed individuals or others who have
complicated returns need the help of a tax professional and you should not hesitate to use a professional. The money is well spent. Accountant's fees are deductible
" Keep records and receipts. Itemizing deductions will usually save more money than taking standard deductions.

" Take time to accurately fill out the W-4 form that you file with your employer. Periodically check this form to see if it is still accurate. Neither have too much money
withheld nor too little. Try to get as small a refund as you can. You are better served to save money in passbook savings than use your tax refund like a savings
account.

" If possible, consider doing your own taxes or purchasing tax software to help you calculate the amount of your taxes. Self-employed individuals or others who have
complicated returns need the help of a tax professional and you should not hesitate to use a professional. The money is well spent. Accountant's fees are deductible
from your taxes.

" Send for publications from the IRS to help you find ways to save money on next year's taxes. Tax laws change almost yearly. Keep current.

" Keep all your records for at least five years in case of an audit. This will save you money and avoid penalties.

" Don't go into debt to save money on taxes or to pay taxes. Remember that you'll always save money by putting your taxes into a savings account rather than an
escrow account.

" Report any earnings such as interest or money paid to you for which you did not receive a W-2. Keep good records so that you can honestly report any additional
income and to verify income if you are audited.

" If you have questions, ask a tax professional or call the IRS.

" Don't use your tax refunds unwisely. Plan for their usage just as you do any other additional income.

Utilities

" Unplug idle appliances when not in use and when feasible. TVs, VCRs, CD players, microwave ovens, and so on will continue to use small amounts of electricity
when not in use and cost consumers about $3 billion annually.

" Keep your laundry room door shut when the dryer is in use-particularly in air-conditioning season. A dryer uses air to dry the clothes inside. You will force your dryer
to work harder-not to mention your air-conditioning system-when the door to the laundry is left open.

" Since 85 percent of the energy used to wash clothes goes to heating the water, use cold water and cold-water detergents to wash clothes. Switching from hot water
to cold will cut your energy consumption in half.

" Switch to compact fluorescent lighting. Bulbs cost more, but they expend only one-fourth of the energy and last ten times longer. Just replacing four 100-watt bulbs
with four 23-watt compact fluorescent bulbs will save $80 over three years.

" Ask your gas and electric companies for a comparison analysis of your yearly expenses and usage. This may enable you to find where you can find waste and
inefficiency.

" Check with your local utility company for pamphlets on money-saving ideas.

" Turn your water heater down to 110ï¿½ F. to save on heating water.

" Clean furnace filters about every two months. Consider cleaning your heating ducts.

" Invest in a programmable thermostat and adjust your heating and cooling temperatures automatically. Turn temperatures higher or lower, depending on the season, the
time you are home versus not at home, and the times you are asleep.

" Keep your home properly insulated and properly caulked for air leaks that add to heating and cooling costs.

" Before buying furnace or air-conditioning units, check the Seasonal Energy Efficiency Ratio (SEER) for air conditioning and the equivalent for furnaces. An increase of
each rating point results in 10 percent more efficiency.

" Get the right furnace and air conditioner for your home. One that is too powerful will reduce efficiency as will one that is not powerful enough.

" Shop for long-distance telephone service.

" Avoid impulsive long-distance calls; these add up fast.

" Consider using a cell phone for long distance calls if you can save money by doing so.

" Review the options charged to your telephone bill. Eliminate any unnecessary extras and consult your phone company for package discounts.

" Take short showers instead of baths. You'll use less water.

" Don't overwater your lawns and gardens.

" Install drip irrigation systems for gardens. You'll cut water usage and weed growth.

" Never water in the heat of the day. Watering your lawn between 10 a.m. and 6 p.m. just invites more water evaporation than water seeping into the soil.

Vacations and Travel

" Prepare a grub box to take on a trip. You can make sandwiches and snacks, store them safely in a cooler, and avoid unnecessary stops at stores or at expensive
restaurants and cafï¿½s.
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" Check for discount booklets, coupons, or group pricing for hotel services. When checking prices, be sure you ask about taxes or hidden fees.

" Look through online travel services for good deals.
Vacations and Travel

" Prepare a grub box to take on a trip. You can make sandwiches and snacks, store them safely in a cooler, and avoid unnecessary stops at stores or at expensive
restaurants and cafï¿½s.

" Check for discount booklets, coupons, or group pricing for hotel services. When checking prices, be sure you ask about taxes or hidden fees.

" Look through online travel services for good deals.

" Camp out. Camping is much less expensive than motels and hotels.

" Book online and save.

" Take several short vacations-short in terms of time and distance. Check out nearby national and state parks where visits are inexpensive and sights are breathtaking.

" Rent rather than own recreational vehicles unless you plan on using them extensively.

" Book with a tour instead of individually. Look for low-cost fares far in advance; be patient and be flexible.

" If not in a hurry, travel standby or agree to give up your seat if the flight is overbooked. If you are bumped you are usually given hotel and even the price of another
ticket for your future use.

" Take advantage of frequent flyer miles. Keep your records and receipts.

" Visit an area during its off-season for discount rates and smaller crowds.

" Shop around for prices of tickets and other amusements in the area you plan to visit.

" Get help from travel clubs for maps and lodging rates. It may cost you a fee to join, but could save money in the long run.

" Write or visit the area Chamber of Commerce online for tourist information.

Wardrobe

" Watch for special sales. But avoid temptation by only checking the clothing ads when you are in the market for something.

" Buy at the end of the season for next year's clothing.

" Look for seconds, blemishes, or irregulars. These items are often generously discounted. Retailers are prohibited by law from selling you a second with an irregularity
that will affect its wear.

" Don't be afraid to ask for a discount on the price.

" Never go to a clothing sale without a spending limit.

" Take advantage of hand-me-downs. Trade with neighbors and friends.

" Shop at thrift or consignment stores for quality used clothing.

" Invest in a sewing machine. Making your own clothing can be fun as well as useful.

" Check catalog sales. You can often purchase brand name clothing much cheaper through the catalog.

Now that you have completed this book, it is time to apply the principles, get rid of that debt, and become financially secure. We have provided you with a certificate
of achievement on the CD-ROM to print out as soon as your goal of being debt-free has been met. Print it out, have it framed, and place your Declaration of Financial
Independence in a prominent place in your home. It will not only provide satisfaction to you but establish you as a role-model for your children to carry on this tradition
from generation to generation.

About the Authors

Lyle and Tracy Shamo have made a hobby of debt management and stretching household dollars. Lyle has been a frequent lecturer on this subject to bank and credit
union clientele, church groups, and community gatherings throughout Utah and Idaho. Tracy spent a year discussing household finances on a Salt Lake City radio
station. Both adhere to the belief that you can be debt-free, regardless of income.

Lyle is managing director of the Audiovisual Department of The Church of Jesus Christ of Latter-day Saints. He has a master's degree in instructional science and
media and a bachelor's degree in speech and public address. Both degrees are from Brigham Young University. In addition to serving in four stake presidencies and
twice as a bishop, Lyle has been a high councilor, Young Men president, elders quorum president, and many times a teacher.

Tracy is a homemaker, mother of eight, and grandmother of six. She has a bachelor's degree in speech and dramatic arts from Brigham Young University. She has
served in many church callings but most enjoys those that involve teaching. She has written numerous scripts for Church movies and videos and currently serves with
Spence Kinard as co-host of "Concerts from Temple Square," a radio program of music produced by The Church of Jesus Christ of Latter-day Saints.




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