By W. Lyle Stamps
Today’s Wall Street Journal features a front page “editorial” from President Monson. Okay, it isn’t an editorial, but a story on the rising level of debt & bankruptcies in the United States, with a focus on Utah, and particularly, Mormons.
President Monson’s April General Conference address is quoted, regarding the “appalling” practice of home equity second mortgages and that “interest never sleeps nor sickens nor dies.” This has led the WSJ to conclude that Mormons are doing some “soul searching,” as Utah’s bankruptcy rate is twice the national average.
In honor of keeping debt down and y’all not scrambling to buy a WSJ subscription, I’ll excerpt and comment on the Utah and/or Mormon parts of the article.
Why do bankruptcies happen so often in Utah? Economy.com (from neighboring West Chester, PA) says that “Utahns often get married early and have the largest families in the nation on average.” That amounts to “a lot of young parents with modest incomes looking for big homes and cars,” resulting in a median mortgage payment for a Utah family of 45.3% of the families monthly income. Now, take out 10% for tithing, and 25% for taxes, and Utah families have less than 25% of that monthly income available for food, car payments, vacations, education and/or student loan payments, etc.
Perhaps most interesting are the short stories of two Utah families.
First, Benjamin Franklin Baggett leads off with a cautionary tale. Mr. Baggett borrowed heavily on credit cards. This started with paying for his honeymoon and then using the cards to keep up with the “Smiths,” when he bought a house in the pricey Harvard-Yale area of Salt Lake. He filed for bankruptcy, is now divorced and sold this home.
Second, the Jason and Amy Woodworth family. When they graduated from the UofU in 1994, they had two children and $60,000 in combined student loans. Add $15,000 in credit card debt [for a video camera, DVD, stereo, etc.], and they eventually had to move into Amy’s Parent’s basement. Happily, they brought their spending under control, and while 5 years in a parental basement is quite a sacrifice, they now have 4 children, a modest home, and are paying down their remaining $45,000 in student loans and $7,000 in credit card debt. Of course, for better or worse, [for both their children and literature lovers everywhere] this required Amy to start writing Mormon novels to supplement the family finances.
One consistent meme throughout the piece is an argument over whether easily obtained credit is a good or bad thing. Some say it is good because credit is now available to just about everyone; it has become “democratized.” Others feel that this is just another evil empire, this time one of debt, that is keeping down the poor.
What can we learn from this national exposure?
First, you’d better be prepared to talk about this with your neighbors; esp. if you live around a lot of non-LDS folks who read the WSJ.
Second, the Prophets and Apostles have continually emphasized that we must live within our means. Mr. Baggett got in trouble, because he “came to rely upon credit as part of our income,” even though it was actually a drain on his family income.
Third, while we can’t comment on the reasons or propriety of his divorce, mounting debt and bankruptcy should be treated as large flashing signs reading “Warning, you are putting your eternal marriage in extreme danger.
While I could say more, that’s what y’all are for, right? However, I’d like President Monson to get in the last word:
“It is essential for us to live within our means.”
‘Nuff said.
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W. Lyle Stamps received his J.D. from the J. Reuben Clark School of Law at Brigham Young University in 2004. He received a B.A., with honors, in Political Science from BYU in 1999, and a Masters degree in International Relations from BYU in 2001. He was a White House & Senate Judiciary Committee intern and speaks fluent Spanish and Portuguese. He has practiced law in the areas of human rights, antitrust and securities litigation.
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