It didn't work for Japan, so why will it work for us?

Another "stimulus" bill is about to be passed, and once again I find myself wondering why they don't just give every tax payer in America a 4-6 thousand dollar bonus on their tax returns this year. That would likely do more to help the little people then a law laced with things like a government healthcare plan that lays the foundation for government controlled "Universal healthcare" that will instruct your doctor as to weather or not you're worth charging your insurance company for a much needed procedure. Not to mention it would give the money to the people who's children are going to have to eventually pay it back one way or another.

Is this stimulous package really even needed? Obama says we are as bad off as it was in during the Great Depression, yet today we have less then a third the unemployment rate as was seen during the 1930s. Though that's still close to as many people (a difference of about 2 million people), it's still only up a few percentage points over what it was a year ago, and still much less then it was in the 1980's. Certainly it's hard for those who have lost their jobs, but its a far cry from the days of the Great Depression; but that information doesn't seem to have reach President Obama's ears as is evident with all his negativity towards the economy.

The vast majority of us are still working hard, doing our jobs, and still wishing the government would, stay out of our lives and let us keep more of our hard earned money to pay for the rising costs of energy, education, and overall general costs of living. This recession we are in, is actually helpful to those of us who are now in a good position to go buy that heavily discounted new car, or to enjoy the bargain shopping we saw at Christmas time.

Will this so called "stimulus" package really help? The New York Times recently published a piece called "Japan’s Big-Works Stimulus Is Lesson" by Martin Fackler who states:

"In total, Japan spent $6.3 trillion on construction-related public investment between 1991 and September of last year, according to the Cabinet Office. The spending peaked in 1995 and remained high until the early 2000s, when it was cut amid growing concerns about ballooning budget deficits. More recently, the governing Liberal Democratic Party has increased spending again to revive the economy and the party’s own flagging popularity.
In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade. This has led many to conclude that spending did little more than sink Japan deeply into debt, leaving an enormous tax burden for future generations."

I agree... Spending money on government social programs will not fix the economic situation we are in, and may actually make it worse via huge government debts and potential inflation if all that money the Federal Reserver is "printing" eventually gets pumped out into the economy.

What will help? How about re-instating may of the Banking regulations un-done under the watch of the Clinton and Bush administrations, and cleaning up the financial mess that de-regulation caused (for which we've already passed a huge spending bill to do - and yet they still haven't used it to do what they originally said they would use it for).

If you gave someone a lot of money to do something you felt would help you, and they went and spent it on something else, would you give them more money just a few months later when they came asking for it? And yet, we the people voted to keep the Democrats in control of Congress (that's right, they have been in control of congress for the last 2 years). Go figure...

- Posted by Seth Hollist

7 Steps to Financilal Freedom.

We live in a society based on consumption and fueled by capitalism. Neither of which are necessarily bad at face value, but can often became enslaving and even destructive when mixed with greed and/or frivolity. Our entire financial system is based on the expectation of inflation: mortgages are designed around the expectation that the properties value will go up; credit cards are given out and limits increased to keep people at the edge of there speeding ability and indebted to their creditors; annual "Cost of Living" raises are expected by employees so the cycle can continue on indefinitely.

What happens when inflation is no longer the constant, and deflation sets in? We start hearing words like "Mortgage Meltdown" and "Financial Crisis". Houses are no longer worth the "100% financing" loans they have on them. Businesses that have leveraged dept to get ahead can no longer sell there products for enough, or in high enough volumes, to pay their lenders. This results in layoffs that cause people to loose their ability to pay their numerous bills. In an attempt to "fix" the perceived "problem" the federal Reserve starts pumping trillions of dollars into the financial markets hoping to regain inflationary momentum; encouraging cheap loans to people who can't afford them. In the mean time, people like you and me, stuffer in the crossfire.

So what do we do about it? Try to play the game with the big boys, the way they want it played, with tax shelters, Limited Liability Business shelters, and other businesses dealings that you can trash when things get tough and they go under - hopefully without trashing your own credit and reputation? Maybe try catching the benefits of a government bailout along the way?

Perhaps what we should do is avoid the quick and easy "got'a have it now" attitude that leads to indebted slavery and despair, and instead follow the council that Modern Prophets have been giving us over the last century:

"Joseph F. Smith advised . . . 'get out of debt and keep out of debt, and then you will be financially as well as spiritually free' (In Conference Report, Oct. 1903, p. 5) . . . there are certain basic principles that we . . . can apply, such as: 1. Live within your income. 2. Prepare and use short- and long-term budgets. 3. Regularly save a part of your income. 4. Use your credit wisely, if it is necessary to use it at all . . . 5. Preserve and utilize your assets through appropriate tax and estate planning." - Franklin D. Richards, “Personal and Family Financial Preparedness,” Ensign, May 1979, 38

I've many times been thought in church about living within our means and staying out of debt, but for some reason I never really got it until I listened to a man who had a very specific and detailed plan: Dave Ramsey. While his plan works extremely well for anyone willing to put in the effort, I find myself wanting to take a slightly different approach, and believe there are people who need a little more flexibility in their planing. Either way many of the same principles apply, and go right along with the council I quoted above.

Here are my steps to financial freedom. The order of these steps is important, but depending on your situation you might find yourself able to skip one or two of them; not because you don't have to do them, but because you're already doing them.

• Step 1: Get caught up
  

Heber J. Grant said, “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, and if there is any one thing that is grinding, and discouraging and disheartening it is to have debts and obligations that one cannot meet” (Relief Society Magazine, May 1932, p. 302).

This mean having a budget. Before you catch up with your finances you must first make a budget. This is essential because if you don't know where your money is, where it's coming from, or were it's going, you'll never know if you're getting ahead or further behind.

I don't care what kind of budget you use, as long as it works well for you, and you can do it consistently, at least once every month, for the rest of your life (Dave Ramsey has a couple of excellent methods for tracking budgets). The first thing I put at the top of my budget is tithing (and other Charitable contributions) that I pay at least every month. As I've done this, I've always had enough to take care of my needs.

See my notes on a speech I gave about paying tithing.

The key to being successful financially relies entirely on budgeting, or in other words, telling your money what to do for you, instead of being a slave to it.

• Step 2: Sell and dispose of vices


". . . people are heavily in debt for things that are not entirely necessary . . . build a modest home . . . pay off the mortgage as quickly as [you can] so that, come what may, there [will] be a roof over the heads of [your] wife and children. I urge you . . . to get free of debt where possible and to have a little laid aside against a rainy day." - Gordon B. Hinckley, “The Times in Which We Live,” Ensign, Nov 2001, 72

This step sometimes needs to be done before step 1 can be fully completed, but you likely will not understand what your vices are until you've at least started step 1; in fact it may take a few months or more of working hard at step 1 before you truly understand what needs to be done in step 2 so that step 1 can start working for you.

So what is your vice? For some it's a big expensive house. For others it's a nice car, a boat, or even credit and consumer cards used for shopping any time one feels a little down or thinks they "need" that new pair of overly expensive shoes. What ever it may be, you need to shelf it long enough to get a grip on reality and get to where you can be more responsible about it.

I would even go so far as to say, anything you cannot get paid off in the next few of years needs to be sold; excluding any real-estate - unless that real-estate is just too expensive for your budget. Any credit cards you cannot pay off every month, without fail, need to be cut up. If you do not have the discipline to use credit cards appropriately, they need to be closed; ALL of them. Try using a debit card instead, but if you really have a hard time keeping track of expenditures, you may need to go to an all cash basis; Just as Dave would advise. And I don't care who told you credit cards are safer, if you can't handle the, they are extremely dangerous to your finances.

• Step 3: Emergency fund
  

This step should be completed as soon as possible; however, it's listed 3rd because it usually requires steps 1 and 2 to be done before one can get a good enough handle on things to be able to complete step 3. In fact the first three steps can be done simultaneously if you like, but its usually best to take things one step at a time.

Setting aside a little for a rainy day can bring more peace to you financial perspective then just about anything else you can do. Plus, once you're able to set aside some money and save it, you start to find saving money comes much easier. The amount you should save should be significant enough to cover any insurance deductibles or co-payments and/or unexpected repairs or other expenses that might come your way.

However, don't save up so much that it unnecessarily delays moving on to step 4. A thousand dollars is probably a good place to start, and I would recommend at least this much, but no more then a few thousand, even if you can save it quickly. If you end up using this fund, you'll need to come back to this step until you replenish it, so be sure to budge wisely enough that your emergency fund is only used for true emergencies; not something you just forgot to budget for, or think you "need".

• Step 4: Dept Pay-off
  

Some people spend all kinds of time trying to figure out how best to minimize how much they will end up paying in interest, or find fancy ways to pay of a mortgage faster by paying extra or paying early. The problem with all this is that it gets very complex, and usually ends up not helping very much if at all. In fact focusing on the highest interest rate loans first, is rarely the fastest way to get out of debt for one main reason: most loans have a minimum payment amount that includes some principle as well as the interest.

Eliminating that principle payment as quickly as possible, by starting with loans with the smallest balances first, frees up extra money in your budget much faster so it can then be re-applied sooner to other loans, and of course the sooner you pay of a debt, the less interest you end up paying on it. It also helps you gain a quick win which can be very motivating.

Personally, I like Dave Ramsey's theory of Focused Intensity were you start with the smallest balance and work your way up to the largest. It start with finding as much extra money as you can from your budget, by living on as little as possible, to use exclusively for paying extra on your smallest debt. The more you do without extras, luxuries, entertainment, etc. the more extra money you'll have to pay things off with. Once that smallest debt is paid off, move onto the next smallest debt using the extra money from your budget, and the money you are no longer paying to the debt you've paid off. Continue this cycle until you have everything paid off, except your house (and any other real-estate you own that is paying for its self - if it's not paying for itself you might consider it as part of step 2). By the end of this step you may find yourself paying a thousand dollars or more a month on you highest balance, high interest rate, loan.

• Step 5: Security Blanket(s)
  

When many of us were little kids, we had a blanket that as we got older we didn't want to give up. Often called a Security Blanket because it helps you feel safe. So how much money would you need saved up to feel safe from a catastrophic event, such as loosing your job? How much do you need to survive for a year?

That's right, how much would you need to pay for basic necessities for an entire year? If you have a lot of debt and monthly obligations, this is probably a full years salary for you; however, if you are out of debt, no "same as cash" obligations, or other monthly subscriptions/installments, you'll find you can survive off of very little, and very little for an entire year isn't all that much. I'd suggest saving 20-40% of your annual pay in an easily accessible money market or savings account (with a decent rate of return of course). You don't have to do it all at once, but if you start saving the money from your debt snowball, you'll have it faster then you might think. This should help you realize how quickly the money (not over night, or get rich quick of course) can build up just by using your income from you're regular job; with no gimmicks or risky investments needed.

"'. . . Plan to build up your food supply just as you would a savings account. Save a little for storage each paycheck . . . Make your storage a part of your budget . . . If you are saving and planning for a second car or a TV set or some item which merely adds to your comfort or pleasure, you may need to change your priorities. We urge you to do this prayerfully and do it now.' (Ensign, Nov. 1980, p. 33.) . . . One of the important keys of home production and storage is the acquisition of skills. Sometimes we may be able to buy food inexpensively, but the skills and intuitive wisdom gained through gardening and other home production projects are worth more than the time and effort they require. In a sustained emergency, basic gardening, sewing, repair, construction, and production know-how are invaluable. Provident living helps us develop these skills—and build family unity by doing it—before an emergency." - “Catching the Vision of Self-Reliance,” Ensign, May 1986, 89

This safety blanket doesn't have to be just money, but it does have to be something that you can use to survive with, such as food storage, or even a garden. If you have enough food storage to last a year, then you don't need as much money saved up to last for a year without any income. Some say Gold, sliver and other precious metals are also good insurance against monitory problems (I have some myself); however, keep in mind that gold (or cash) isn't very tasty or nutritious. If I could choose between gold (or cash) and food when both were hard to come by, I'd stick with the food.

• Step 6: Invest
  

To truly grow wealth, you have to make your money work for you, so that you don't end up working your whole life for your money. Still the best way for anyone to grow wealth is with the income they will earn over your life time of work. All I can really suggest here is to be wise in your investments, and look for investments with good track records of longevity and stead returns.

Get to a point were you are saving at least 10% of your income, which shouldn't be hard at this point if you've done all the steps in order. Certainly the more you can save and invest the more money you will have working hard for you. However, I must give a warning: don't try to save every last penny and turn yourself into Scrooge. Just as being in debt causes you to be a slave to your money, so can wealth if you get too greedy.

Try putting some of your savings aside to invest in your kids education. Give a little extra to charities, and even save up for a new car or house (see how much fun it is to pay for it with cash) or some other vice that you've had to do without for the few short years it took you to get to this point (that's right, Dave has testimonials from people who get to this point within a couple of years when they are truly focused on it). Just make sure you keep your expenditures within your budget without compromising your ability to continue giving and saving at least 20-30% of your income.

• Step 7: Pay Off the house
  

It may take many years to get to this point, depending on how dedicated you are to getting out of debt, but once you are here, it shouldn't be too difficult to complete this step. If you do find it difficult, then you haven't learn anything from completing the previous steps.

You'll hear a lot of people talk about how you "need" to have a mortgage to save on taxes, or to keep a good credit score. These statements have some truth to them, but if you take a closer look at the amount you'll save on taxes you'll likely find it's only a fraction of what you are paying in interest charges on the mortgage. Not to mention the extra risk, obligation, and financial bondage you are in any time you finance anything - including a house.

What about a credit score? If you've gotten to this point, you might find that really don't need one because you'll never buy anything with credit again! At least that's how truly rich people do it (read the Millionaire Next Door). The only problem I've found with this is that some employers want to see a good credit score before they will trust you. (Some bussnesses do the same, but they aren't impossible to avoid). However, it really doesn't take much to keep your credit score looking half way decent, and can be done without compromising your financial freedom; or having a large risky mortgage payment (take out a small loan every few years and pay it off after six to nine months, keep a credit card open that you never use, and keept your bank or credit union happy with you, and you'll be just fine).

Also check out my list of money related scriptures.

- Posted by S.J. Hollist

My letter to Obama

Although I do worry about some of the things Obama has on his agenda, that most Democrats (who now have majority control of congress) will likely support, I actually have found myself felling better about him then Mr. McCain. I never liked McCain (even being a moderately-conservative republican-leaning voter) as a presidential Candidate and never thought he had a chance at wining.

I actually ended up doing a protest vote for Baldwin (Constitution party) to express my dislike for the options (and wish more people would do this instead of voting out of "fear of the other guy" or simply not voting) as I fell my voice is heard more clearly this way.

I think Obama will actually turn out to be more moderate then some are painting him to be, but I'm also sure I'll find plenty to disagree with him on.

My suggestion is to all of you is to go to his website http://change.gov/page/s/yourstory and tell him your story. Be polite and honest, and you may be surprised at the kind of influence you can have towards affecting the kind of change you want to see. You likely won’t get exactly what you want but you’ll be much closer to it then what you'll get just sitting around and complaining about it.

Here is the letter I wrote:

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I've always believed that life is hard. By this I don't mean malicious, but rather challenging. I've also learned that the things that are most worth living for are the things we must work hardest to archive, or that require the most work; such as faith, family, good friendships, and a prosperous career (yes in order of importance). For this nation to be great, the people in it need to be great, and that means a willingness to work hard to earn the things that are most worth having. Our society today feels too entitled to things they need to learn to work harder for, and then get rewarded generously for their hard work. The greatest generation in the country (40's & 60s), came out of the hardest times this country has ever seen; because they learned to work hard for what they had.

The roll I'd like my federal government to play in this, is simple yet effective regulation to insure that not only corporations are prevented from taking advantage and usurping power from the people, but that governments are also prevented from interfering with our ability to work hard to earn and keep the tings we work for.

I'd also like my government to focus more on the nations infrastructure, national defense (not necessarily foreign defense) and basic standards related to commerce and business; in such a way that it enables the individual to do a better job at archiving the goals they see best for themselves. I believe that as our government steps back, leaving behind opportunity, the people of this nation will find their ability to stand up and fill those opportunities; while having minimal government assistance to insure the people can take those opportunities they are not taken advantage of, through simple but affective regulations.

I believe the constitution of this great country has enabled this country to be great, so long as the people in it are willing to be great; however, it has been walked all over in the last few decades by both sides of the isle, judges who misinterpret it based on their own agendas, and the people who have willingly accepted laws that aspire to regulate and control our freedoms. From this has come some of the biggest problems this country faces today. Basically I see the main problem as an oversize federal government controlled by bureaucrats, special interests, and over-sized monopolistic corporations, that usurps powers that according to the 10th amendment belong to the individual states and the people. I believe our gun regulations and criminal laws are already stricter then is necessary to discourage criminal activity and may even contribute to the delinquency of otherwise law abiding people. This not to diminish the federal governments responsibility towards oversight, but certainly this oversight needs to not be so overly intrusive. The real answer to our social problems is not more regulations and laws, but to untie our hands and enable the people to step up and do what's right for their families and their communities.

Fiscal responsibility is also a big concern of mine, and I strongly disagree with the "Bailout" loans that have been given over the last few months; especially because it's causing a nearly 1 trillion dollar spending deficit - the highest in history - even when accounting for inflation. If there's one thing that I believe will dis-stabilize an economy and cause increasingly larger fluctuations in inflation/deflation and prosperity/poverty it is an economy fueled by debt with the unreasonable expectation of consistent future inflation; usually forced upon us by huge increases in the money supply through deficit spending, international borrowing, and printing of new money. This benefits the rich and the large corporations, but tends to only hurts the people this government is supposed to protect.

I must admit, President-Elect Obama, I did not vote for you, but I also did not vote for McCain, as I feel both parties have lost touch with the "average Joe". I truly hope that the change you endeavor to bring to this country will help enable an improvement in the life and livelihood of the "average Joe".

- Posted By Seth Hollist

The Answer to Financial Problems, the Banks, and Everything

"When the people find that they can vote themselves money, that will herald the end of the republic. Sell not liberty to purchase power." -- Benjamin Franklin

Thanks to U.S. Citizens speaking out against the purposed 700 Billion dollar bailout for banks stuck with bad mortgages, at the cost of the tax payers, the bill has failed. Unfortunately, Congress is at it again thanks to the fear and hast that some in the financial world are trying to poor out into the minds our representatives and leaders. Congress is now trying for a 850 Billion dollar bill full of pork belly spending and once again making the taxpayers reasonable for all the risky mortgages that banks were all but forced into, thanks to bad laws.

Is a 700 or 850 Billion in new liabilities to the already trillions of dollars in U.S. taxpayer liabilities really the answer?

That is basically the equivalent of around $6,000 dollars per U.S. income-tax payer.

I think I have a better answer. One that will cost the U.S. tax payer a lot less, directly help every U.S. tax-payer, and give the people who are hurting the most the most help. Not to mention this is a simple four point plan with no pork, nor complex long term obligations requiring a new bureaucratic entity to manage it for us.

1. U.S. treasury to send out tax vouchers to every U.S. taxpayer according to 2007 tax returns. These vouchers would not be directly redeemable by the tax payers them selves, but would essentially be a blank check with a maximum value of $6,000 payable to their mortgage lender. If the tax payer has not mortgage, they can get some benefit from it as described in section 4.

2. The Voucher would be filled out by the person it was issued to (non-transferable) for an amount of either:
a) 1 months mortgage payment for one mortgage (most likely their highest monthly payment),
b) if they are two or more months behind on their payments, for the amount required to become current on their mortgage payments (up to $6,000).
c) Those with adjustable rate mortgages can use it towards the cost of refinancing to a fixed rate mortgage (up to $6,000).

3. These vouchers would be required to be accepted by their mortgage lenders as payment towards the respective mortgage, as described in section 2. The payee would then attach these vouchers to supporting documentation that proves the amount the voucher was filled out for is accurate, or showing why it is not accurate and what the correct amount should be.

4. The vouchers and the supporting documents would then be filed as an addendum to the mortgage lenders 2008 tax returns, and counted towards an equal amount in tax credits; up to an amount not exceeding their total tax liability. If Voucher was not eligible to be given to a mortgage lender, it could instead be used by the tax-payer as an addendum to their 2008 tax returns for a tax credit of $300 per person listed on the tax return (i.e. dependants or married persons filing jointly).

This plan would help lenders get payment for mortgages that are behind, allow those who are behind on their mortgages to catch up, and free up some spending money for everyone else to help boost the economy. The poorly managed mortgage companies who truly deserve to go under still would because of liquidity problems (but the Federal Reserve could certainly provide them with short term low interest loans to cover them until they file their tax returns), as this is not an instant fix (any more so than the 850 billion dollar bailout). It however would bring some added relief to the concerns of many big bankers who have tightened up on lending thus allowing the money to start flowing once again between banks and financial institutions.

To follow up on this, congress would also have to cut back on spending, and get rid of a lot of non-critical programs so they can balance the budget and make up for the loss in tax revenues that would inevitably follow. As I tried to point out in my last post, a balanced budget, for the federal government, state government, local governments, and personal households, is essential to a fighting inflation and stabilizing the economy.

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P.S.:
Congress also needs to re-instate the regulations that had been in place since the passage of the Banking Act of 1933; as they were undone with the financial reformation law in 1999 (no thanks to Clinton and the members of congress that passed the bill). We also need to rethink the "Community Reinvestment Act" (passed in 1977 and revised in 1995, and 2005) as it promotes risky lending practices.

I also received an e-mail from a relative of mine with another interesting solution to the financial problems that really doesn't require much of a bailout at all, and has some good ideas in it; however, but I am a little skeptical of the math and some of the claims presented with this idea:

I. INSURANCE
a. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.
b. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps under performing executives from being paid when they don’t do their jobs.

c. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET
a. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
b. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX
a. Remove the capital gains tax completely. Investors will flood the real estate and stockmarket in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
b. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.

I have a few problems with this plan, but I also like a few things about it:

1. Government backed insurance would most likely cost less then a full on bailout, then but it's also part of the problem that created this whole mess, and insurance companies (like AIG) are hurting too. On the other hand, if this doesn't help, the insurance could end up costing even more then the bailout would, with no assets to recover any of the cost.

2. I agree with the two points that mortgage companies need to do. I would hope they would do them without any government incentives, as they would help these company avoid a lot of losses through foreclosures and high payrolls for employees that aren't giving much back in return.

3. Mark To Market needs to be done away with permanently, not temporarily.

4. Removing the capital gains tax completely would save some tax payer some money, but it would reduce the income tax revenue, making it harder for congress to balance the budget, especially if they have to come up with $50 to $850 Billion to insure bad loans. What we really need are better and simpler regulations on wall street to better insure that company stocks are actually worth something, and not just another way of creating funny money for companies that don't really produce anything worthwhile.

---

P.S.S:

“True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late.”
-- Ludwig von Mises (HT: Matt Kibbe)

Right after the bailout passed, they finally told the truth about it...

Republican presidential candidate John McCain said Friday that the financial rescue package is a "tourniquet,"

On Friday, Obama called it "culmination of a sorry period in our history."

Yet even today, Obama seems to be ignorant as to how his own parties leaders were greatly responsible for creating the environment that allow all this to happen.

Hold on to your wallets folks, inflation is on it's way up again, maybe not today, but certainly sometime soon in the future.

Find out who the primary benefactors of this huge bail out are by clicking here.

According to Downsize D.C. 91 (out of 199 - or 45%) of Republicans in the house and 172 (out of 235 or 73%) of Democrats in the house voted for the bill dubbed as the "Wall-Street Bailout"  (The Democratically controlled Senate was about 3/4 in favor of the bill over all). However, according to Hillary Clinton, you'd think the Republicans were somehow entirely responsible for it, despite Democrats having a majority in congress for the last two years. (I heard her say it myself on the radio - I'm looking for an actual link to her speech and will post it if I can find it - which I can't because nobody in the mainstream media will publish it).

- Posted By Seth Hollist

Bailouts R us vs. Inflation

“At this point, Congress is being asked to support an uncertain entity, costing an uncertain amount of dollars, for an uncertain duration – a decision that will have implications for generations to come and requires absolute certainty.”
– Congressman Jeb Hensarling, TX, and Chair of the House Republican Study Committee

To truly understand what is going on with the financial problems of the U.S., you must first have an understanding of where it all started. Hopefully I will do justice to this complex problem in such a relatively short explanation. Be sure to follow the links for more detailed information. The most important factor to help determine where it started requires a lesson on how the value of the U.S. monetary system has changed over the years; which can easily be seen by looking at inflation trends.

According to http://www.westegg.com/inflation/:

What cost $1 in 1800 would cost $0.58 in 1913.
If you were to buy exactly the same products in 1913 and 1800,
they would cost you $1 and $1.76 respectively.
That's an average of -0.51% inflation per year.

Money at this time was based on precious metals, so a dollar in gold was by definition, a dollar in gold, according to Congressional standards (see the U.S. Constitution, Article 1, Section 8, Clause 5). The negative inflation was due to technological advancements that allow products to be made more efficiently.

Historic Gold value was at or near $19.3939 from 1800-1833 and $20.67 from 1879-1932.

What cost $1 in 1913 would cost $4.09 in 1971.
If you were to buy exactly the same products in 1971 and 1913,
they would cost you $1 and $0.25 respectively.
That's an average of 7.05% inflation per year.

Historic Gold value was at $35 in 1934 and 44.2 in 1971.

What cost $1 in 1971 would cost $5.07 in 2007.
If you were to buy exactly the same products in 2007 and 1971,
they would cost you $1 and $0.19 respectively.
That's an average of 14.08% inflation per year.

Historic Gold value was at $126.3 in 1973 dollars and over $900 in 2008 dollars.

So what happened in 1913 and 1971?

In 1913 U.S. Congress passed the Federal Reserve Act, on the heels of the 16th and 17th amendments. All three of these go hand in hand, but those who may have orchestrated this would have made sure history only thought it was the latter of the two that go together (along with the 18th and 19th amendments as part of the "progressive area"). In fact most people I've talked to, think the Federal Reserve wasn't created until the Great Depression possibly as part of the Banking Act of 1933. This is simply not true. The U.S. Congress even investigated the Federal Reserve for causing Black Tuesday, which stared the Great Depression; Instead of admitting guilt, and blaming government intervention, for flooding the market with paper money (ultimately causing artificial inflating stock values), the leaders of the Federal Reserve took the opportunity to grab more power through additional legislation and regulations that they hoped would allow them to stabilize this new system of paper money. For more information on this I suggest a book called The Creature from Jekyll Island.

Before 1971, the U.S. dollar had for the majority of its existence, been backed by precious metals, with only a few brief periods when this policy was suspend. After WWII, the U.S. had the largest gold reserves in the world thanks to European nations being highly in debt and transferring large amounts of gold into the United States. From that time on, the U.S. treasury would give one ounce of Gold for every $35 dollars as a foreign exchange rate to other nations, (as part of the Bretton Woods Agreements). Private ownership of Gold, in the U.S., was also outlawed during this time. On August 15, 1971 President Nixon, because The Federal Reserve had printed too many dollars for which there was not enough gold - at $35 per ounce - to back it up with, Nixon put an end to the Gold Standard. Of course the reasons given had to do with the Vietnam war that was currently going on, and the need to raise funds for the war; however, with Gold reserves down to 22% of the outstanding dollars (the dollar was tremendously overvalued with respect to gold), and Nixon wanting more dollar bills printed, one or the other had to be done away with.

For more information on this history and why it caused inflation rates to dramatically increase, see:

http://www.house.gov/paul/congrec/congrec2006/cr021506.htm

(please note: I'm not a die-hard "Ron Paul supporter", but he has some good information and ideas).

In the 1970's the cost of oil skyrocketed, most likely because the U.S. dollar was no longer backed by Gold. The overseas oil producers obviously wanted more dollars for their oil since they could no longer get gold in exchange. The Federal Reserve had printed too much paper money, and as we all know, thanks to natural laws of supply and demand, the more you have of something the less it's valued. This, according to some, has forced the U.S. government into doing drastic things to protect its supply of Oil, as well as to hide the true cost of inflation. Technological advancements have made some things much less expensive, but real commodities, like those made with real metals and other natural resources continue to become increasingly more expensive as inflation goes up.

If it wasn't for trade deficits sending much of the newly printed U.S. Dollars overseas were it gets saved up and taken out of circulation, the inflation within the U.S. would definitely be much higher, due to more money saturating the U.S. economy.

Over the last few decades, the Federal Reserve has simply printed more money every time the U.S. government runs a deficit on spending. This all works by the U.S. congress authorizing the creation of Bonds, which are then sold to investors, many of whom are overseas, but many of the bonds are given to the Federal Reserve as a way to back the dollars they print for the government. In other words, our monetary system, since 1971, has no longer been based on something of real value, but rather on the future obligations of Taxpayers (thanks to the 16th amendment) to pay back those debts. In short, our monetary system is based on usury.

This new ability to more freely print money allowed our government to more easily pay for all sorts of things, including wars, and huge bailouts of failing financial institution, corporations, pork belly spending, earmarks, and even foreign entities; essentially making the government for the government and for the corporations who get the bailout and make money off the wars. If it was truly for the people, they wouldn't be putting financial obligations on us as tax payers and would be providing laws and policies that help us keep our individual wealth instead of having it confiscated through taxation and inflation.

Here are some examples that help further explain our current "crisis":

Congress passed something called the "Community Reinvestment Act" in 1977, resulting in the creation of bureaucratic regulations designed to encourage, or even compel, financial institutions to make loans to people with lower incomes. In the 1980's, thanks to the massive devaluation of the dollar, and past deregulation that allowed Savings and Loans to make consumer and commercial loans and to issue transaction accounts, the savings and loan crisis occurred. This essentially ended up in a bailout by the U.S. government and the Federal Reserve to the tune of about $124.6 billion (more then twice that when adjusted for inflation) directly paid for by the U.S. government (meaning tax payers), which contributed to the large budget deficits of the early 1990s. Proponents advocated that without these bailouts the U.S. monetary system and economy would have collapsed, but what it did instead was put more money into the money supply, creating more inflation; and it did nothing to stop the recession of the 1980's).

Unfortunately we didn't learn our lesson, and the 1977 lending regulations were amended in 1995 to encourage further lending. Then in 1999 Clinton signed into law what essentially equated to a deregulation on banks and financial institutions that undid much of the Banking Act of 1933; allowing banks to own other financial companies including insurance and investment firms (Practices that had been outlawed because they were believed to be big contributors to the stock market crash on Black Tuesday). This, along with the ability to greatly inflate the money supply, setup the beginnings of the financial crisis the U.S. is facing today.

In the early 2000's, after the events of September 11, 2001, the U.S. bailed out the Airlines with justification that it was necessary to maintain our ability to move goods and people throughout the nation, so that our economy could keep moving, and we could keep paying our debts. Once again this money came primarily from the government in the form of more budget deficits, and the inflation of the money supply. Other corporations, like Bowing, were also bailed out in the process. However, the airlines still haven't fully recovered, and we likely would be better off with lower inflation, and having the poorly run airlines go out of business; allowing the stronger airline companies to be much better off than they are today.

In efforts to further boost the economy and simulate growth (code for inflation), once again in 2005, the 1977 mortgage regulations were amended to create different rules for institutions of different sizes, so that various kinds of institutions would be better able to meet the government's goals for fostering home ownership in lower income communities. To make it easier, the Federal Reserve starting making loans available to the banking systems at extremely low interest rates which also encouraged inflation due to the easy at which money can be re-let, essentially creating more money (and inflation) based on the "assets" these loans created for the banks.

Over the last few years, the U.S. Federal Government has been spending money as if it was going out of style, and incurring the highest deficits in history. This of course has caused more inflation that almost everyone is now starting to notice in a big way. Just as in the 1970s, oil prices are skyrocketing, gold prices are rising fast (and have hit historic highs - not adjusted for inflation), and are expected to go higher. Food and other commodities have also been affected, and it's become increasingly harder for families and businesses alike to balance their budgets and to pay their mortgages. Of course this trend has been going on in a big way since the 1970's when a single family income was the norm. Today it takes most families two income to live the same lifestyle their parents did, and we could certainly debate the effect that has on the kinds.

With cheap housing loans available, financial institutions had been lending money to people who couldn't afford it. It caused an increased demand for housing that sent home prices spiraling upward. The Fed's policy of easy money, and laws forcing lending institutions into risky loans, falsely inflated the value of all real estate, especially in places like California, Nevada, Florida and others, were the housing problems are extremely difficult. This means that good mortgages could not be used to manage the risk involved in questionable mortgages, because the value of all homes are falsely inflated. All of this is coupled with banks spreading their investments too thin, artificially inflating stock prices, and a booming economy based primarily on an unsustainable housing boom. With banks also involved in insurance and financial dealings, other financial sectors have also made risky investments while competitively pushing insurance prices down thanks to the cheap loans; greatly reducing the companies cash flows. This has once again forced tax payers to bailout even more financial institutions or the economy would supposedly crash and burn like it did on Black Tuesday.

"It started with the $60 billion Bear Stearns bailout, followed quickly by the $300 billion bailout of government’s big mortgage/banker buddies last month. September started with the massive Freddie/Fannie bailout that will end up costing taxpayers somewhere between $500 billion to $1 trillion. On Monday, the Federal Reserve brokered the Bank of America buyout of Merrill Lynch. Then just the other night, the fed announced the $85 billion bailout of AIG insurance" - Chuck Baldwin

In the mean time Congress snuck through an additional $25 billion bailout of Detroit automakers, and today Washington Mutual was just ceased by the government to then be sold off, seemingly in the same day, with the likelihood of more government expenditures threw the FDIC. Today we are talking about another huge bailout to the tune of 700 Billion Dollars threw the creation of a new government entity control by the U.S. treasury to buy up bad debts. Sure they are making promises today that they will eventually regain much of the dept this would incur on the Taxpayers, but even if we do get the money back, will it really do anything to fix an economic problem that has been around for decades? All the other bailouts don't seem to have helped prevent this, so why should we believe that another bailout will?

For more information on how got here, into this mess, see: http://www.downsizedc.org/blog/what_you%27re_not_being_told_918


Will this "crisis" destroy the U.S. Economy? In the Great Depression 40% of homes went into foreclosure. Today the foreclosure rate is only 6%, and the trend is toward fewer foreclosures not more. The fact is that some politicians, bureaucrats, and various hysteria mongers, are misleading us. They tell us that the market is frozen, but the fact is that commercial loans are at an all-time high, and even the number of real estate loans may be higher than they were last year! Further expanding the money supply (creating more inflation) through all these bailout "loans" - causing the largest spending deficient in U.S. history - will only make it more difficult, in the long run, to get the whole situation under control. Sure they might help in the short term, but what’s the real solution to "fixing" this "crisis"?

From http://www.downsizedc.org/blog/this-would-be-simpler-than-a-bailout:

Financial Accounting Standard 157 is a regulation imposed on businesses by the quasi-private Financial Accounting Standards Board (FAS). This rule is also incorporated into the regulations of the IRS and is further enforced by the SEC and the FDIC. FAS 157 requires businesses to mark down assets to the lowest price for which similar assets have been sold in the market. The jargon term for this regulation is "mark-to-market." Mark-to-market forces good securities to be valued at the same price as bad securities.

Another solution might be for the greedy banking system to accept some losses and work with the lendees they allowed to barrow more than they could afford, to reduce their rates, put some of the interest already paid towards lowering the principle owed on the loan, and essentially giving them an affordable mortgage payment.

Others have suggested that we simply let these banks go under or rely on already existing mortgage insurances that were required in the first place on many of these high risk loans. Or are those insurance companies failing as well because they invested all their reserves into these high risk loans? Certainly the Insurance companies have some responsibility in this matter. They've made billions from people who have been forced by law to pay them. AIG just got an $85 billion bailout loan, hopefully so they could cover their obligations in this matter. Has it helped? It doesn't seem to have. On the other hand, the banks can't really make an insurance claim until they've foreclosed and auctioned off the property, and know what their actual losses are. Also many of these loans didn't even have PMI to begin with as they got around it with 80/20 loans. In the mean time the bank's and mortgage lender's cash flow has becomes limited, and the whole banking system in the U.S. relies heavily on the ability for banks to barrow from each other all day long, "keeping the cash flowing" so to speak; because they don't have enough reserves on hand to pay their expenses. It all comes back to being spread to thin while at the same time getting involved in risky business.


Do I want us to give up our current economic system and go back to a gold or precious metals standard? Not necessarily, as I don't think it's the tools we use that matters, but how we use them that counts. However, I do believe our current monetary system in the U.S. (and many throughout the world) is very susceptible to greed and corruption much more so then gold would be. On the other hand using a gold standard has been proven to have its problems as well; especially when one country is able to hoard all of the precious metals through trade surpluses. The real problem that I see is one of failing integrity and moral values throughout the world, and government leaders who don't understand the consequences that deficit spending and poor regulations have on our economy; particularly with how inflation creates instability.

I also have a short term solution of my own, but what I believe will truly make a different - not immediately but in the long run - would be for people to be more responsible, for corporations and financial institutions to not be so greedy, and for simple yet effective government regulations to be in place and enforced. The real issues I have are with the politicians who allowed laws to be changed to encourage irresponsible lending and investment practices. We need to vote every one of them out, even the "good ones" because they too have been tainted by association with the greed, corruption, and convoluted practices of our current government officials (The truly good ones that truly love this country will support us in this effort by resigning and helping us find replacements who have high values and integrity).

The best thing that Bill Clinton ever did for the U.S. was to balance the Federal Government's budget. The worst thing he did was to sign the financial reformation law in 1999; allowing the same kinds of activities to occur that greatly contributed to Black Tuesday. His indiscretions also created an attitude of non-enforcement of laws (i.e. immigration laws) to permeate the country and prevent good regulations form being enforced.

The best thing that George Bush did for this country was to stand up to a man that Bill Clinton failed to imprison despite having the opportunity to do so (Osama Ben Laden). The worst thing he's done for the U.S. is created the biggest U.S. government entity in history in the name of "homeland security", and incur the highest deficit spending in U.S. history, which of course creates a great deal of inflation; further endangering the integrity and stability of the financial markets.

I also believe the Federal Reserve's monopoly on the monetary systems in America today is unconstitutional, because of the laws that force us to accept Federal Reserve Notes as legal tender violating the fact that congress is constitutionally responsible for setting standards and coining money, not the Federal Reserve. I don't have a problem with Federal Reserve Notes (i.e. dollars), but I'd like to see the U.S. treasury also creating coins that contain real Gold, Silver, and copper that would then be allowed to also be used as legal tender based on intrinsic value; off-setting the monopoly of the Federal Reserve (after all competition is essential to a truly capitalistic economy). Ron Paul introduced a bill that would do just that.

The real problem, when it comes right down to it, is really all about integrity and stability. If we want a stable financial system, we have to expect slower growth, more moderate interest rates, and to have basic but effective regulations that actually get enforced. We also need leaders who have the highest levels of integrity and knowhow. We need everyone to be careful, wise and thrifty with their money (which was the law of the land before the 1970s). We have to save up for the things we want to buy, not buy them with fake money called "credit", which increases the money supply and causes inflation. We need to expect borrowers to put down 10-20% of the cost of what ever they are borrowing to insure that the lenders can easily get their money back should the borrower default on the loan. In the end, however, it's all about the moral behavior of all those involved in the system that makes the system behave in a manor full of integrity and stability.

For a more "entertaining" perspective on this issue see:

http://www.jimdemint.com/blog/2008/09/what-caused-the-economic-crisis-watch-this/

- Posted By Seth Hollist

The 6 accounts to good credit

First of all, what's the whole point to having a good credit score? To borrow money of course. It may also help with setting up other accounts such as for TV or utilities, but they will just require a deposit if you don't have good credit. The only real reason is to get good rates on loans, but if you have too many loans that's not good either. It's really and balancing act, and despite popular belief it really is optional. If you're good enough with your money to never need a loan, then there's really no need for credit or a good credit score.

For those of you who insist on having good credit, here's a good six account formula that I've come up with from reading about credit and from personal experience that I believe will help anyone maintain an excellent credit score while still allowing you to achieve financial peace and freedom. Please keep in mind that I'm not a financial expert or financial counselor, and I really do believe that the ultimate goal should NOT be to get perfect credit, but rather to achieve financial peace and ultimately financial freedom and independence.

First of all, the basics: Don't make late payments, avoid bankruptcy and judgments at all cost, have 2 major credit accounts, don't even come close to maxing anything out, make regular monthly mortgage or rental payments, and check your credit reports at least once a year to make sure they are accurate. If you don't plan to use your credit history any time soon, you should contact the credit reporting agencies and have them put a freeze on your credit report so that you (or anyone else) cannot use it on a whim. Every time you allow a potential lender to look up your credit, it shows up on your credit history, and too many of these will hurt your score. Freezing you credit history can also prevent a lot of those annoying letters for pre-approved credit cards, as well as help to prevent identity theft and fraud.

If you don't have all of these accounts right now, don't feel rushed to go out and get them right away. If you are just starting out, be patient, as building really good credit takes a long time and very careful planning. If you have too many open accounts start closing them, but one at a time until you get a good feel for what you truly need. You don't want to close the one's you've had the longest either (unless you have a poor history with them), as a long stable relationship with your creditors will actually help your credit score.

Remember, you really only need a good credit score if you plan to finance something, so if you're going to an all cash basis, as Dave Ramsey suggests, you really only need the first two or three accounts. With that in mind, here's the 5 to 6 accounts I recommend (in order of importance):

1 - Savings.

We all need to save money, and this account will help you get started with that. This will give you a safety net for when emergencies come up. It should not be used for anything else. It doesn't need to be huge either, in fact once you've saved the enough to cover a year's worth of basic necessities, you probably have way more than enough, and should be already be investing into higher yield investments such as mutual funds (Investment funds are not included here because they don't affect your credit score, though they can help when taking out large loans such as a mortgage).

Just about any lender will lend you as much money as you have saved regardless of your credit, because they at least have some collateral that can be used to pay back the loan. Of course I wouldn't recommend buying anything on credit in the manner as you'll probably end up with a very high interest rate for something you could have just as easily pay cash for.

2 - Checking.

If you have a long standing checking account in good standing this will help your credit. You'll want to keep a minimum balance in it (some banks require this to avoid maintenance fees), and you'll want to manage it well so that you never bounce checks or incur overdraft fees. The more money you keep in this account as a minimum balance, the better it looks, but don't keep so much that you're losing out what could be well invested money (not to mention safety issues). I'd suggest between $1,000 to $10,000 for a minimum balance, depending on your situation, plus however much you need to cover what you're paying for with it.

3 - Mortgage or Rent (or any long term high dollar loan).

Certainly an affordable mortgage is going to help your credit, if you make your payments on time religiously every month. On the other hand if you are upside down on your house, paying more for it then anywhere close to what you can really afford, or not making payments on time, this will very likely destroy your credit. Be wise when buying a house, save up a good down payment, and buy something that's much less (not more) then what you can afford.

What if you are a Renter? Many rental facilities will report your payment history to the credit reporting agencies, but even if they don't they should at least be willing to give you good reference letters stating that you've made your payments on-time every month; as well as how much you were paying. Make sure you understand the landlords policies on this matter before renting from them. Any good lending institution with a good underwriter should be able to use these letter effectively, especially when you are applying for a mortgage.

4 - Line of Credit.

To truly have good credit you need at least one revolving credit line, such as a major credit card; though many credit consolers will recommend two major credit cards to obtain perfect credit, but I think having financial peace and decent credit, is far better than being constantly tempted by your credit cards in an effort to obtain perfect credit (Personally, I've never had perfect credit, but I've also never had trouble getting excellent loan rates). This account is not needed to show that you can make payments, but rather that you are responsible with credit, and aren't the kind of person who pushes their available credit to its limits. I would suggest a small line of credit of no more than $1000.

This line of credit should be tied to a debit card threw your checking account as an overdraft protection. The Debit card should also be tied to a major credit card company so it can be used as a credit card with all the protections that come with it. The thing you want to watch out for is that you never actually use the line of credit, but if you end up doing so only do it because it's an emergency and with the determination to immediately pay it off using your emergency funds in your savings account.

If you bank doesn't provide this type of product or protect, find a good Credit Union that does. My Credit Union actually lets me setup it up so that it pulls from my savings first before hitting the Line of Credit.

5 - The payment history loan.

This loan can be almost anything. It is where you get your secondary payment history from (after rent and mortgage payments, but if you still live at home or in a collage dorm, this may be your primary payment history). It could be a student loan, a car loan, a credit card or credit at your favorite store.

Be sure to use this account very responsibly. The key to having this load without destroying financial peace is to be conservative. If it's a line of credit, religiously pay it of every month, and do some research to find a good credit card that you feel comfortable sticking with for the long term. If it's a structured loan, don't borrow anywhere near to more than you can afford, or even more then you can pay off quickly and easily should the need arise. Also, be sure to find the best interest rate you can, as this could save you thousands over the life of the loan.

You actually only need to have this loan open for a minimum of six months (the longer the better), and you only need one of these loans every few years for it to show up on your credit report and improve your score. Make sure you close these accounts when you are done with them, as having a too many open accounts will hurt your credit score, even if you never use them.

6 - The Optional accounts

Having as many savings, checking and/or investment accounts as you want is probably ok so long as you can actively manage all of them responsibly, so they really don't apply here. However, some of you may want an additional credit card or store card, and you'll probably find that responsibly using one or two of these additional credit accounts will further improve your credit score. My suggestion to you is to use them wisely, and don't have more than one or two of them open at a time. Pay them off every month, and make sure you get good rates (less than 10% interest) on any balances.

Some credit councilors actually recommend carrying a balance of about 10-25% of your after tax income on credit accounts, but that sounds like slavery to me. Remember every bit of money you pay to interest charges, is that much less money you have to purchase with or save. On the other hand, ever bit of interest you make on your savings and investments brings you that much closer to true wealth. If you truly want to build wealth you'll need to stop borrowing, and start making your money work for you as hard as it can; instead of going towards making someone else rich.

P.S. Yes, co-signing also counts toward these accounts. I would suggest that the only reason to co-sign is so that you and your spouse are both on the loan so there's no confusion as to who the assets go to in the event of a tragedy. On the other hand, if you want to keep your finances separate, and still want everyone to have good credit, then you and your spouse should each have these five to six accounts. In such cases one of you can replace #3 with an additional #6 type account, but #3 is likely to be the one you'll both want to be on. Likewise, you can share some of them, and have others be separate, so long as each person only has their name on 5 or 6 accounts.

-Posted By S.J. Hollist

Tithing: A talk I gave in church

I was asked to speak in church this sunday with the topic being on Tithing.  Here are my notes from that talk:

Sacrifice:

Tithing is a fundamental principle to the personal happiness and well-being of Church members both rich and poor. It is a sacrifice that the lord expects us to make.

In old Testament times the Lords people were command to make Sacrifices. Back then these Sacrifices were in the form of . . .

In “Lectures on Faith (1985), 69–70.” The Prophet Joseph Smith is quoted as saying, “A religion that does not require the sacrifice of all things never has power sufficient to produce the faith necessary unto life and salvation. Those who do not make the sacrifice cannot enjoy this faith, because men are dependent upon this sacrifice in order to obtain this faith.”

Talk by James E Faust:

Jame E. Faust, The Second Counselor in the First Presidency commented on this in the Oct. 1998 Sunday morning session of conference saying:

“If something can be had cheaply, without exertion or sacrifice, people do not mind having a little bit of it. In contrast, the blessings of membership in The Church of Jesus Christ of Latter-day Saints require both exertion and sacrifice. Receiving the blessings requires the payment of tithes and offerings.”

To expand on his topic President Faust gave this story:

“As a boy I learned a great lesson of faith and sacrifice as I worked on my grandfather’s farm during the terrible economic depression of the 1930s. The taxes on the farm were delinquent, and Grandfather, like so many, had no money. There was a drought in the land, and some cows and horses were dying for lack of grass and hay. One day when we were harvesting what little hay there was in the field, Grandfather told us to take the wagon to the corner of the field where the best stand of hay stood and fill the wagon as full as we could and take it to the tithing yard as payment of his tithing in kind.
I wondered how Grandfather could use the hay to pay tithing when some of the cows that we were depending upon to sustain us might starve. I even questioned if the Lord expected that much sacrifice from him. Ultimately, I marveled at his great faith that somehow the Lord would provide. The legacy of faith he passed on to his posterity was far greater than money, because he established in the minds of his children and grandchildren that above all he loved the Lord and His holy work over other earthly things. He never became wealthy, but he died at peace with the Lord and with himself.”

How much tithing are we command to pay?

D&C 119:4 - And after that, those who have thus been tithed shall pay one-tenth of all their interest annually

Very little other counsel is giving in this respect. It is between us and the lord the decide the actual dollar amount, and each year around this time we have the great blessings to meet with the bishop and report on our tithing. All he asks is if you weather or not you have paid a full tithe or not. Although he may give you a receipt, he’s not going act like an IRS agent and ask for your pay stubs or check your accounting methods. It’s not even necessary to make sure we have made all our contributions we plan to make for the year. He’s know it’s between you and the lord and is merely their to help as servant of the Lord. If you haven’t been paying your tithing this is the perfect opportunity to repent, and to start anew. Don’t feel like you have to catch up, the Lord doesn’t collect back taxes, but he does want to be able to bless you for your obedience going forward.

Let us not be like the men spoken of in:

MALACHI 3:8 “Will a man rob God? Yet ye have robbed me. But ye say, Wherein have we robbed thee? In tithes and offerings.”

President Joseph F. Smith (1838–1918) put it very boldly in saying: “By this principle it shall be known who is for the kingdom of God and who is against it. … By it it shall be known whether we are faithful or unfaithful” (Teachings of Presidents of the Church: Joseph F. Smith [1998], 276).

Tithing may seem difficult at to pay at times, but God has promised us that he will not give a commandment without provide a way for us to full fill it.

1st Nephi 3:7 “. . . the Lord giveth no commandments unto the children of men, save he shall prepare a way for them that they may accomplish the thing which he commandeth them.”

- Posted by S.J. Hollist