Hypothetical:[fn1] Alex and Pat both want a Kindle Fire.[fn2] Alex goes to the local brick-and-mortar[fn3] Amazon store, pays $200 cash, and takes a Kindle Fire home. Pat goes to the bank, gets a loan for $200, goes to the local brick-and-mortar Amazon store, pays the $200, and takes a Kindle Fire home. Who made the better decision?[fn4]<\/p>\n
***<\/p>\n
In the Church, we’re suspicious of debt. Sure, we get a pass on student loans, a modest house, a first car, but, as a general rule, our leaders discourage<\/a> incurring consumer debt, and celebrate those who have escaped debt’s clutches. Having grown up a member of the Church, and having heard the various talks and lessons, I suspect most members would say that Alex made the better decision;Alex has the Fire and no debt. Pat, on the other hand, has both the Fire and the debt.<\/p>\n ***<\/p>\n Assuming you agree with my intuition that, in general, Mormons would think that Alex made the better decision, I want to push that intuition a little:<\/p>\n (1) Let’s suppose, first, that Alex bought with cash because he has $200 just lying around. Pat, on the other hand, doesn’t, and the only way she can afford a Kindle is by borrowing. But assume Pat has a steady, if low-paying, job with amazing job security, while Alex, though making more money,has a 70% chance of losing his job in the next three months, with an uncertain outlook for getting another job in the foreseeable future. Does that change your (Mormon) intuition?<\/p>\n (2) Or what if Alex leaves all of his money in a checking account that doesn’t pay any interest, while Pat borrows at a low 3% rate, while she earns a 10% return on her money, which has all been wisely invested?[fn5]<\/p>\n (3) Or what if Pat isn’t just paying a low interest rate, but no (or a negative) interest rate?<\/p>\n ***<\/p>\n What I’m trying to get at is the underlying why<\/em>\u00a0of our discomfort with debt. I understand for financial purposes why consumer debt is often a bad idea. Even in a (2) situation, most people don’t invest their unborrowed money; they just leave it in their checking accounts, so the fact that they could<\/em>\u00a0earn a higher return in theory doesn’t mean anything in practice.<\/p>\n And maybe our discomfort is purely a practical one, borne out of speculative investing in Kirtland and several generations of General Authorities who lived through the Depression.[fn6] But is there a religious explanation? Like we don’t like consumerism\/worldliness? (But didn’t both Alex and Pat buy a Kindle Fire?) We’re theologically opposed to risk? Interest (at least its payment) is spiritually harmful?<\/p>\n ***<\/p>\n Even if the avoidance of consumer debt is purely a practical consideration, we can see better today why it’s a good idea than we’ve seen in 80 years or so. But I’m interested in your take on whether it might be something more.<\/p>\n —<\/p>\n [fn1] Note that it’s exam season, so I’m kind of in exam \u00a0mode. Oh, and good luck to all of the T&S-reading students on your finals!<\/p>\n [fn2] Actually, they both want an iPad, but it’s priced way out of their league, and they figure a Kindle Fire is good enough<\/a>.<\/p>\n [fn3] ;)<\/p>\n [fn4] Yes, I’m asking you to judge Alex and Pat, without knowing their hearts or their genders. If it makes you feel any better, they’re fictional, anyway: this is just a thought experiment.<\/p>\n [fn5] FWIW, Pres. Hinckley wouldn’t have changed his mind<\/a>.<\/p>\n