Shelby Gonzales

Fin 101

The Hopeful Family

Wherefore, there must be faith; and if there must be faith there must also be hope; and if there
must be hope there must also be charity.
-Moroni 10:20
Bishop, I have finished the financial plan for the hopeful family and would like to run it
past you. Thank you for this opportunity to serve.
Chapter 1
1. Pay the Lord First: Hopeful Family, what an opportunity you have to bring your last
name to life. One thing that I want you to know, coming right out of the gates, that will
allow you to live up to your last name is of something you are already doing. After
looking over your finances, I saw something that comforted me inside. No matter what
debt you have found yourself in you have always paid your tithing. As you pay the Lord
first he will make all things possible for you to achieve. One blessing that you will
receive as you continue to pay your tithing is the attribute of discipline. With knowledge
of this principle, you can pull yourself out of any financial pit.
2. Collect Interest: You have two choices when it comes to finance. These two choices are
either to collect interest or to pay interest. One works for you and is your best friend and
the other hates you and works against you every minute of every day. One way you can
collect interest is by saving your money and allowing interest to add upon it. There are
many ways to collect interest. The simplest way is by opening a savings account in the
bank, which will allow slow but steady growth. Be creative on thinking of ways to collect
interest but be aware of the risk as well.

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Fin 101

3. You cannot retire until your money goes to work! : A few months back I had the great
pleasure to read a book entitled The Richest Man in Babylon. In this book, many sound
financial principles are taught in a story format. One analogy the author uses is one that
teaches how our money needs to work for us! He teaches when you put your gold to work
eventually your gold will have children, those children will have children, and they will
all be slaves working for you. Your money works for you, you do not work for money.
One way I plan to do this is by investing in real estate. I will rent out these apartments or
whatever they may be to pay off my mortgage, which will allow me to acquire equity at
no cost to me. There many other ways your money can work for you.
Chapter 2

4. Cash Flow Statement: After looking at your financial records, I have an assumption that
I feel confident to make. At this point in your life, I am sure you do not keep track of the
money that comes into your pocket and the money that leaves your pocket. I must admit
that I too was guilty of ignorant spending of my money in my past. In my finance class a
few months back, we had an assignment to make a budget and while doing this I set a
goal to write down every dollar I spent and every dollar I earned. As I started doing this,
it became obvious that I did not have the most responsible spending habits. I would
encourage you to begin writing down every dollar you earn and spend and as you do so,
you too will see what you can cut out.
5. Budgeting: If you could only take one principle from this guidance, I would most likely
encourage it to be this. Simply put a budget is a forecast of your cash flow for a period of
time. It is deciding how you will spend your money in the future. For example, I set aside

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Fin 101

$30 a week to spend on groceries. This $30 is my budget and I will not go over. You can
apply a budget to your current financial situation and in time, you will be out of it. If you
decide from this point on to set aside a certain amount of money per month to pay off
your debt eventually you would be free.
6. Budgeting Methods: There are a few different ways to budget your money. For myself, I
am a hard copy, paper kind of a guy. Since I am this way, I use what is called the
Envelope method. What it is, you simply get a few different envelopes and write a
name on each one for different expenses. You then put the set percentage or amount in the
envelope when you get paid so you know that money will always be there when you need
it. My envelopes are Tithing, 15% Savings, Rent and Groceries. I would suggest for your
family creating similar ones but be sure to make a debt envelope and be especially
generous when putting money into that one.

Chapter 3/9
7. Mutual Funds: Putting your money to work can be a little scary at times especially when
you are not familiar with investing. Another intimidating factor is not thinking you have
enough to invest. Both these problems are solved with mutual funds. A mutual fund is an
investment with money pooled together by many small investors managed by a
professional. They can invest in all sorts of thing but it generally is safe because of the
diversified investments. For your family this would be a great opportunity to have your
money work for you.
8. Basic Investment Strategy Rules: Be in it for the long run. Some investors are just out
there to make an easy buck. This often ends in failure because of a lack of patience.
When investing in anything allow time for your stock to grow and dont constantly watch

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Fin 101

it unless you want to go crazy. Also, dont be swayed by current events or radical
economic conditions sway your strategy. Be consistent.
9. Buy and Hold: There has never been a scenario in the history of the stock market when
an investor has lost money when theyve held there stock for at least five years. What an
amazing fact that is. Brother and Sister Hopeful, when stocks are bought and patience is
practiced, money will be made. Im not suggesting you go out and invest everything you
have but once your financial position starts to turn this is an amazing opportunity for the
future.
Chapter 5
10. Paying Cash: Looking into your monthly payments I see that there are few examples of
purchases that you werent able to afford out right so you took out a loan. When you take
out a loan on anything, we allow interest to become an enemy and to work against us. I
know paying cash upfront is a difficult thing to do but it will SAVE YOU THOUSANDS!
A rule that I live my life by is simply; if you cannot afford it do not buy it. Please adopt
this as one of your rules as well.
11. Advantages of Credit: I know I just went on a whole rampage about how you should
pay everything in cash but I wish to adapt a strategy to it. Weve all heard in the world
that credit cards are evil. Yes, to some degree, they can be but ONLY when used
inappropriately. If a credit card is used to make a purchase knowing you have the cash to
pay it off immediately then a good credit score can be built up which can benefit you in
many ways in life.
12. Disadvantages of Credit: No disrespect to you Brother and Sister Hopeful but you fall
more into the disadvantage category than you do in the advantage category. You currently
have three credit card loans that youre paying off all with high interest rates. When

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Fin 101

credit is not handled wisely, it can become a snowball pulling more and more of your
money into it. My advice to you comes from a prophet and that is to reverse the snowball.
Begin making high payments on your smallest debt which will allow you to eliminate
those debts along with their interest rates. Eventually you will be rid of the debt!
Chapter 6
13. Purchasing New versus Used: How has that new car been for you? Has it been
everything you ever wanted? Do you love it as much now as you did when you bought it?
Or better yet, is it worth as much now as it was when you first bought it. Im going to
guess the answer to all those questions is a big fat no! The shiny look and the fresh smell
of a new car isnt worth the money. Let someone else buy it new; lose all their equity in it
and then you can but it from them. In the future, never buy a new car unless you strike oil
or gold.
14. Buy vs Lease: Buying a car is paying money to eventually own the vehicle and leasing is
paying money to borrow the vehicle. Yes, there are some pros and cons to both but let me
tell you theres a heck of a lot more cons to leasing. It must be a terrible feeling knowing
that you just paid thousands of dollars into this vehicle and in a blink of an eye, its no
longer yours. Buying, used that is, is the safest because you own the vehicle and can turn
around and sell it if youd like. So Hopeful family, never lease a car unless youre
wealthy and want a new car every few years.
15. Negotiating the Deal: When you find yourself in an auto dealership just remember those
arent friendly sales clerks youre talking to, those are hungry wolves looking for their
next kill. Their ultimate task is to make you pay as much money as possible for a car not
worth the price. One piece of advice I will give you is never let them know that you
like or even worse love a car. Once you convey that info they have you in the death

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Fin 101

grip. Also make sure they know youre shopping around to multiple dealerships. These
tips will help you find a price that fits you.
Chapter 7
16. Location, Location, Location: If you cant tell, location is really important when it
comes to the housing market, no matter how nice. With your current financial situation it
may be a wise decision to sell your home to receive the cash for your equity and to
downsize. When purchasing your new home remember that it doesnt matter how nice the
house is, if its in a bad location, its as good as garbage.
17. Renting vs Home Ownership: Unlike leasing a car in my opinion, renting a home does
have some financial benefit. Renting provides more flexibility, low maintenance and
much less upfront cash. I would advise that you choose to downsize to home and to rent it
out. Youre in no financial situation to take out another mortgage and buy a home. This
will allow you and your wife to save money; pay off debt and to get back on your feet.
Once your debts are paid and your credit scores have risen then we can worry about
purchasing a home.
18. Real Estate Agent: Coming from someone who is obsessed with the show House
Hunters, I know all about Real Estate agents. These agents can be super helpful when
looking for a home. They have access to multiple listing services and will also find a
home in your budget. I believe the main plus of an agent is they will negotiate the price to
get you the best sell and the seller usually pays them. Why wouldnt you get one? If you
do decide to move which I advise I would highly consider hiring one of these
professionals.
Chapter 8

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Fin 101

19. Insurance: If you think youre in a pickle now, think about how terrible it would be if a
medical issue popped up or your car was totaled and you had to insurance coverage over
it? Insurance is a helpful and necessary tool in life. How it works is you pay a set amount
every month and if an accident happens the company pays for whatever damage
occurred. Its a safe way to go. In your situation and anyones for that matter I would
always encourage you to have insurance.
20. Life Insurance: Life insurance is key. Brother Hopeful, if you were to die at the position
that youre in now, your family would not only have no money but they would still be in
debt. Life insurance would fix that. Life insurance is a set amount paid monthly for a
designated amount of time and interest is paid on it. If you were to die your family would
receive the allotted amount over time to help them get by. Two risks that come with life
insurance are living too long (exhausting the funds) or dying too fast. If you want to have
a steady retirement then I would suggest opening one of these policies.
21. Automobile Insurance: Looking over your finance information sheet I noticed that you
have two vehicles, one paid off and one still making payments towards. Theres not much
wiggle room in this situation because insurance is necessary to be legal to drive but we do
have a couple options. I own a 1994 Lexus with 170,000 miles on it and I purchased the
car for $2,500. To be honest I dont want to pay an extra $50 every month for collision
coverage which would fix my vehicle if an accident were my fault. Its just not worth it
for me because my car is a beater anyway. Im not sure what kind of vehicle you own but
if youre willing to minimize your payments to save money this is one way to consider.
Chapter 10
22. Retirement: Its estimated that current middle aged Americans will only receive 70% of
the social security they were promised. Knowing this it would be an excellent idea to start

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Fin 101

preparing for our retirement now. The quicker you start the better because time will be on
your side and thats your best friend when it comes to compounding interest. The best
option to secure a stable retirement is to invest in an IRA account. This account
compounds over time and taxes are only taken out when the money is received. So that
would be tax money turns into money working for you.
23. Starting Early: The quicker you begin preparing for retirement the better. The reason I
say that is because while young you still have time on your side. When you put money
away now it has a longer period of time to gather compound interest. In my finance class
we did a sample problem that showed us a man who put away $10,000 away from ages
twenty-five to thirty-five and by the time he was 59 he had nearly $600,000 saved for
retirement. It would be wise Hopeful family to start preparing now so it doesnt become
too late.
24. Mortgage: When in retirement you will obviously need a place to live. This is why its
so important to pay your home off and to own it out right. Making house payments in
retirement will take a large amount of any savings or social security and will make it
difficult to provide for other necessities

Shelby Gonzales
Fin 101