Appropriate Use of Debt and Credit
Spending less money than you make is essential to your financial security. Avoid debt, with the exception of buying a modest home or paying for education or other vital needs.
Distinguish between Needs and Wants
We must learn to distinguish between wants and needs. We should be modest in our wants. It takes self-discipline to avoid the “buy now, pay later” philosophy and to adopt the “save now and buy later” practice.
Elder Joseph B. Wirthlin taught: “All too often a family's spending is governed more by their yearning than by their earning. They somehow believe that their life will be better if they surround themselves with an abundance of things. All too often all they are left with is avoidable anxiety and distress” ("Earthly Debts, Heavenly Debts," Ensign, May 2004, 42)
Since the early days of the Church, the Lord's prophets have repeatedly warned against the bondage of debt. One of the great dangers of debt is the interest that accompanies it. When it is necessary to incur debt, such as a reasonable amount to purchase a modest home or to complete one's education, the debt should be repaid as quickly as possible.
True to the Faith, a Church publication, gives the following additional counsel regarding debt:
“Some forms of credit, such as credit cards, have particularly high interest rates. Once you are in debt, you find that interest has no mercy. It continues to accumulate, regardless of your situation—whether you are employed or jobless, healthy or sick. It never goes away until the debt is paid. Do not be deceived by credit offers, even if they make debt seem attractive by promising low interest rates or no interest for a certain period of time.
”Look to the condition of your finances. Discipline yourself in your purchases, avoiding debt to the extent you can. In most cases, you can avoid debt by managing your resources wisely. If you do incur debt, such as a reasonable amount in order to purchase a modest home or complete your education, work to repay it as quickly as possible and free yourself from bondage. When you have paid your debts and accumulated some savings, you will be prepared for financial storms that may come your way. You will have shelter for your family and peace in your heart“ (49).
—See True to the Faith (2004), 48-49