Debt, or no Debt, that is the Question
Spiritual Lesson – Debt
“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” President Heber J. Grant, May 1932
Discuss when it is acceptable to go into debt. Discuss some of the negative and positive effects of debt.
Activity – Would you give yourself a loan?
Congratulations! you just started a new credit union. Its time to apply the members helping members mentality! Credit Unions loan out members savings in order to help other members!
Cut out player cards, and pass them out. Each player must convince the rest of the group to approve their loan. The Credit Union can loan out up to $250,000, meaning you can’t approve everyone. After approving, or denying all of the players read the outcome sheet, and see how you did!
Credit Score: 726
Debt: Student Loans-$30,000 Car Loan-$10,000
Requesting: 20,000 to start a Business
Credit Score: 632
Debt: Student Loans- 12,000 Credit Card-1,750
Requesting: $15,000 for a car
Credit Score: 702
Debt: Mortgage- $208,000
Requesting: $30,000 for 15 cattle
Credit Score: 650
Debt: Student Loans- 190,000. Credit Card- 10,000 Requesting: 4,300 for a wedding
Credit Score: None
Requesting: $2,000 for new camera
Job: Fast Food
Credit Score: 602
Debt: Car Loan- $3,000 Credit Card-$500
Requesting: $1,700 for a four-wheeler
Job: Computer Programmer
Credit Score: 730
Debt: Student Loans- $40,000 Credit Card- $2,000
Requesting: 190,000 to buy a home
Credit Score: 640
Debt: Credit Card- $10,150 Requesting: $3,000 for a personal loan
Larry: Should be Approved for his loan. This is due to his credit score, and his current income would be able to support his current debt plus, his new business loan.
Tami: Should be denied for her auto loan. This is because of a low credit score, and her auto loan is to large for her income and current debt levels.
Robert: Should be approved for his Loan. This is due to a very high debt to income ratio, and decent credit score.
James: Surprisingly enough James would be approved for his loan. This is mainly due to him having a very high income.
Sarah: Depends on the situation. The credit union would have to use alternative methods to determine Sarah’s payment history, such as talking to her landlord, or utility company. If she has paid on time with them then she could be approved.
Melissa: She Should be approved. She has a very good credit score, and a good income.
Nathan: He should be denied. This is due to his income level, current debt and credit score. He could be approved if he paid a very large portion down, and had a cosigner.
Debra: Should be denied, this is due to her credit card debt being more than 1/3rd of her income.
Good Job running your first credit union! One of the great things that credit unions offer over banks are better interest rates, because of this you can save a lot of money over the long run! That being said debt is unforgiving.
Remember, just because you are approved for a loan doesn’t mean that you should get it!