Sunday, November 16, 2008

"If ye are prepared, ye shall not fear"


"Self-reliance is a principle of life. We ought to provide for ourselves and take care of our own needs. I encourage you to have something set aside, to plan ahead, to keep a little food on hand, establish a savings account, if possible, against a rainy day. Catastrophes come to people sometimes when least expected----unemployment, sickness, things of that kind. The individual ought to do for himself all that he can. Only when he has exhausted his resources should he look to others and to the Church."- Gordon B. Hinckley

This is a great article my cousin sent me. I agree with the article 100%; it is so important to get prepared, get out of debt, spend less, etc. As I was told at a stake Relief Society meeting: If you haven't started yet, it is NOT too late to get started YET, "stick your stake in the ground" make goals - strive to do these things and the Lord will bless your efforts. - I have a feeling things in the economy are only going to get worse, so we can't put this off. As we prepare ourselves, we will also be able to help and bless the lives of others.

Excerpts from an article from: By Thom K. Hall Certified Financial Planner found at:
http://www.ldsmag.com/moneywise/081113storm.html

"Few would argue we face significant problems in our country. The recent headlines describing one financial crisis after another have sent shock waves throughout our economy. While many feel helpless to do anything other than watch events unfold, I find that having a perspective of where we are, and more importantly, where me may be headed, can help us in making appropriate decisions.

A series of events began to unfold in the 1990's that ultimately led to the global financial turmoil we have just witnessed – particularly over the past year. ...

... An important question to ask now is, “what's next?” and “what should I do about it?” Lou Gerstner, former CEO of IBM was once quoted as having said,

"You don't get points for predicting rain . You get points for building arks."

I believe an economic ‘perfect storm' may be approaching us in coming years. If this turns out to be true, then this is our opportunity to get our own ‘arks' in order to enable us to weather those times as they come. ...

We have been benefiting from an economic ‘tailwind' of almost uninterrupted increased spending in the past. We just received news this week that consumer spending in 3rd quarter 2008 decreased for the first time since 1991. We face the prospect of a significant ‘headwind' in the future if that spending continues to drop. Demographic research suggests that overall spending is about to do just that, and may not increase again until the 2020's.

The impact of a sustained slowing in spending cannot be underestimated. 70% of our economy's spending can be attributed to consumers (government and business spending being the remainder). ...

... Another front is the impact of decades of over-spending by our government. The total US debt has risen from about 6 trillion to over 9 trillion just since the year 2000. In short, we cannot fulfill the promises we have made with out significant change. ...

... So how do we fix these problems? Our government has 4 tools at their disposal to help address these problems:

1. Decrease spending
2. Reduce benefits promised
3. Go into more debt
4. Increase taxes

#3 seems to have been the recent popular favorite, while #1… not so much. Our highest marginal tax rates are currently near 50 year lows. I expect taxes to increase dramatically in the next decade to attempt to hedge the shortfall.

What can we take away as individuals and families from this information?

First, we are told that if we are prepared, we need not fear.


We are warned and have been warned to get our ‘year's supply' ready. Make sure this includes food, fuel, and as much cash as can be reasonably set aside.

Second, this is the time to cut unnecessary spending.

President Hinckley spoke about how ‘yesterday's luxuries have become today's necessities.' Sit down as families and discuss how you would respond if wages decreased, or employment was unexpectedly lost. As you plan for holiday spending this year, consider carefully what is appropriate for your needs.

Third, review your investment portfolios.

Many have increased the risk levels in retirement accounts after years of high returns. You may find these risk levels are no longer appropriate. Look for investment strategies that can safely protect your expected income in the future. If we enter a sustained downturn in our economy, guaranteed and fixed investments should provide the best protection.

Fourth, review your tax structure.

Far too few are taking advantage of benefits offered by Roth IRA's and Roth 401(k)'s. Retirement plan and tax expert Ed Slott, CPA, calls the Roth IRA, “the best present politicians ever gave the U.S. taxpayer.” Look for opportunities to pay taxes at lower rates today to insulate yourself from potential increases in the future.

Fifth, look for any opportunity to reduce debt.

If we face a time of rising unemployment and lower real wages, debt becomes more expensive every month. Make every effort to accelerate debt payments, starting with the highest interest debts.

We have so much to be thankful for, and this time of year reminds us of the abundance we are blessed with in our lives. Let us be good stewards of our blessings so that we may better serve Him."

----------------------------------------------------------------------------------
About the author: Thom K. Hall, is a financial professional who has been quoted in numerous local & national publications including The New York Times, Newsweek, Registered Rep, Journal of Financial Planning , Deseret Morning News and MSN Money, and has been a regular guest on live national television for CNBC's Power Lunch & Squawk on the Street. He has also had numerous appearances on KSL 5 News & Fox 13 News in Salt Lake City.