Law of Consecration: The Faithful who followed

It has been way too long since I have made a post. Finals are not exactly the most relieving events in a persons life. But I do have a special treat. That is, if you believe it to be so. Recently in my "History of Economic Thought" course, I wrote a paper on the Law of Consecration for the Church of Jesus Christ of Latter day Saints. It may not have much to do with finances per say, but it is quite interesting. I am posting it, with the intent that you read, or merely skim through it. It is 12 pages long, but I thought that it flowed quite nicely. PLEASE LEAVE COMMENTS! I love them!

Be Patient:

The Law of Consecration: The faithful who followed

Kurtis Drew Whiteley

Introduction-

The Law of Consecration, the United Order and the Order of Enoch. These titles are among those associated with communism or socialism. Many critics of the Church of Jesus Christ of Latter Day Saints believe that this, often times controlling and sadistic economic theory, benefited the few, and created loss for the remainder. The Mormon Church, as referred to by many due to its religious scripture, The Book of Mormon, introduced the Law of Consecration according to revelation received by the founder and Prophet, Joseph Smith. This is the history and track record associated with this theory amongst these latter saint members.

Church Beginnings-

The Church was founded by Joseph Smith, a young boy searching for the truth. During his time, 1920, in a small New York village, there were various religious revivals occurring. This confusion led his mind to pondering. After much thought and scripture study, he came upon a scripture in James, (Apostle) which promised all with pure intent, the ability to knowledge unfeigned from God.

“If any of you lack wisdom, let him ask of God, that given to all men liberally, and upbraideth not; and it shall be given him.” James 1:5 King James Bible

Joseph Smith, being a young boy of 14, left for the woods to procure the truth. His mission was to know which of the many religious sects he was to join. Many proclaimed the fullness of the Gospel, but each believed different parts and pieces. While he was praying, God the Father and Jesus Christ visited him in vision, and proclaimed that a restoration of all things would begin. Amongst the many restorations, Joseph Smith was proclaimed the latter day prophet, and the church was organized and founded on April 6, 1830. The full and official name of the church was then announced as the Church of Jesus Christ of Latter Day Saints.

Though this was the full name of the church, many referred to the members as Mormons, due in fact, to their holy writ of scripture called the “Book of Mormon”. This book, is described as an ancient record of the early natives of the Americas. Amongst these natives, prophets proclaimed the coming of Christ, his redeeming power and eventual visitation to the Americas.

The Book of Mormon was revealed unto the Prophet as golden plates, written in a foreign and untranslatable language. Through the divine power of God, Joseph Smith translated and published the records later called the Book of Mormon, Mormon being one of the many prophets, yet not the most important, in the record.

Amongst the many teachings of the church, missionary work was one of the most vital works performed. New members, after baptized, often were called to leave their families, land and profession for certain periods of time to proclaim the restoration of God’s Kingdom on the earth. Through this extraordinary work, hundreds of people came to believe the words of this modern prophet by asking God for themselves whether these things were true. With an answer directly from the Lord, each of these new members came with an overwhelming faith that the Kingdom of God was to be established and directed by Joseph Smith.

The Founding of Zion-

To say that the LDS church, once established was purely devoted to the spiritual development of each individual member is lacking. Each member was thought of as a spiritual and temporal need to the church. The church would later have to address, and help both of these needs of the members whether a widow crossing the plains with her children, or the sinner and their repentance process. Both are placed as top priority in the church’s eyes.

Once the church found themselves with hundreds of members, they understood that to gather these saints in one area would be a tremendous task. Where would they go? How would they sustain them? These were issues addressed to Joseph Smith in the beginning. In January of 1831, the church transferred their headquarters to Kirkland, Ohio. Those who were then members, were advised of the transfer, and asked to gather.

This transfer, was understood to be a temporary home, until a later, more permanent, settlement was provided. This permanent place was then later declared to be Jackson County Missouri. This gathering place was referred to as Zion.

No later than a year, hundreds of converts assembled in this land. A community was formed, wherein a general store and printing press were established. Along with these stores, much of the land was planted and cultivated by the members.

The establishment of Zion could be thought of as the “perfect city”. The coordinated efforts of all members is astonishing. Each plot was to be one mile square, whereby each block was ten acres. Each of these blocks contained within them 20 plots of land.  Only one house was permitted on each plot of land. Each house also was not permitted to be within 25 feet of the street. In the middle of the community, they set aside land especially designated for the building of the bishop’s storehouse (later described and explained), churches, temples and schools.

The inner city was considered the residential area, while outside of this was designated farm land. This process was repeated over and over when each area was filled.

One of the many problems the church had with the gathering follows. The church was established in this area on public land that could be purchased for $1.25 an acre. Though s reasonable price to the modern man, this was a higher price for the travelling converts to the church. Many of these converts had given up their previous livelihood for Zion, and arrived in Jackson County with nothing more than the shirts on their backs.

A plan was formulated by church leaders. In order that each family was provided for in a temporal sense, a new “law” was instated in February of 1831. This law is known by various titles, most notably the “Law of Consecration”. In the Great Basin Kingdom it states, “…this supposedly divine system was intended to produce economic equality and assure socialization of surplus incomes.”

Along with the establishment of Zion, persecution pursued. The ideas associated with the Law of Consecration provoked anger amongst non-member community members, politicians and others. The church was then pushed onward into other lands, primarily Nauvoo, where once more they established a city, built a temple, Joseph Smith their founder and prophet was murdered and were pushed out of the land, abandoning their possessions.

With these persecutions, many of the saints began to lose hope that Zion was ever to be fully built. Brigham Young, the eldest apostle of the church, was appointed as leader and prophet of the church, and began the long and treacherous journey westward.

The idea behind this journey was to find a suitable place to found a city unto their people. This idea of colonization is very American. Americans in the East dreamed of better tomorrows on the frontier with the freedom of land and opportunity. This was the same dream of the LDS church, but mainly the establishment, away from persecution, where they could practice their beliefs unchallenged by those around them.

The journey west was a treacherous one, where many gave up their lives for the betterment of the people as a whole. Suddenly and miraculously, they stumbled upon a humble and rather arid land. As far as the eye could see was nothing more than dry desert and sagebrush. But believing in the newly called prophet, Brigham Young, the members laid down their roots.

The land was later to be called Utah, the town was Salt Lake City, named primarily after the large inland salty lake that lay in the valley below. Using many of the first techniques, the people turned this dry and aid place into a bountiful region. Farms were developed, the land was cultivated and the people flourished.

Though, I have described a brief history of the saints, it is easy to comprehend the Saints objective. They believed in religious freedom, the building up of Zion and along with it, economic self-sufficiency through the law of consecration.

The Law-

The most basic belief among the members of the Church is that God created all things. (Gen. 1:1). Under this understanding, it is easy to believe that all things on earth are given unto man for their growth and sustenance on this Earth. Understanding that everything was given unto man, coincides with no private ownership of materials unto any inhabitants of the Earth.

This idea that no man owns anything that he possesses is a key root of this law. Without this knowledge, any person would and will find faults with this manifest. This law is rooted by the faith of those involved, and the belief that the needs of one’s self are no greater than the needs of another. Selflessness and charity are essential to the community of followers. Without such selflessness, jealousy and creed would crush and annihilate the process.

Under this law, members of the church were asked to consecrate all of their property to the Presiding Bishop of the church. After this donation of sorts, the bishop would than supply those members with an inheritance of the material consecrated. Each family’s needs were noted, and such provisions were allotted to them. This allotment given could be anything from farms, workshops or stores. Also, these could be appointments unto offices in the community that were needed such as doctors or teachers.

Unfortunately, the drawbacks associated with this law were large. Many of the members might have found themselves with more than needed according to the churches standards. Maybe some members arrived quite comfortable asset wise. In such an occurrence, the consecrated goods often exceeded the allotment received.

Other situations, involving the poor, would have the exact opposite affect whereby the consecration was small in comparison with the allotment. The ability for bishop to perform large allotments then consecrated by individual was only possible through the larger consecration of the wealthier.

The revelation below demonstrates this principle:

“And let that which belongs to this people be appointed unto this people. And the money which is left unto this people-let there be an agent appointed unto this people, to take the money to provide food and raiment, according to the wants of this people. And let every man deal honestly, and be alike among this people, and receive alike, that ye may be one, even as I have commanded you…And this shall be done through the bishop or the agent, which shall be appointed by the voice of the church. And again, let the bishop appoint a storehouse unto this church; and let all things both in money and in meat, which are more than is needful for the wants of this people, be kept in the hands of the bishop.” D&C 51:7-9, 12-13

As explained in the quote above, along with this first consecration upon arrival, church members were to bring to the storehouse any surplus their received at the end of the year. With this surplus, the bishop would redistribute the wealth among the poorer members of society. These less fortunate members were those who might be ill, or arrived too late in the year to begin the planting.

Also, these surpluses were used to purchase land for the church, or to construct temples and church houses. 

According to this revelation it is clear that by the means of the whole, all shall be one, equal in wealth. This idea that none shall prevail over the other, presents complications.  Along with this idea, the church believed in being self-sustaining. This meaning, all needs of each member of the community must be met only through the production and output of that specific society.

Often times, the church met much scrutiny on the matter of consecration, with good reason. When the church was established in Jackson County, the idea of self-sufficiency amongst non-members in the area caused much turmoil. As stated in the Great Basin Kingdom,

“The goal of colonization, of the settle village, and of resource development was complete regional economic independence. The Latter-day Saint commonwealth was to be financially and economically self-sufficient.” (Arrington, 1958)

Self-sufficiency for these members, though understood by many modern economists to be less sufficient, was thought to be the most effective way of establishing a colony along the journey westward. The belief amongst members revealed that God created each region with the goods and provisions necessary to provide for his people.

Though this idea of consecration of ones goods seems strange and lacks the incentives necessary to direct people’s desires toward the common good of all, it provided the ability of the members to provide one for another humbly.

Conflicts-

Though a member of the church, analysis of these ideals sends flashing red lights. I find myself believing in the more hands off methodology in economic theory. I believe that efficiency in a system comes through incentives. Incentives along with private property laws, drive an individual to compete with their competitors for the lowest price, thereby providing the consumer individuals with the lowest price.

In the law of consecration, it lacks only one part in my opinion. The other part I will discussion in the latter section. Private property, as I argued above, provides each individual with incentive to produce to the best of their ability. For example, a rich man who holds 100 acres of potato property must consecrate half of his land to the church for a new convert just arriving. This rich man has years of experience in the potato growing industry, but now can only grow 50 acres of potatoes to provide for the community. The new convert, on the other hand has never run a farm in his life. The inefficiencies in this make for less production in the society, and consequently higher prices for the individuals.

Along with the lack of private property, comes the idea of consecrating one’s surplus to the church at the end of every year. If I were a farmer during this period, I would have no incentive to produce anything over what was needed every year. For at the end of the year, that surplus would have gone in vain. No profit would be received for the consecrated surplus at the end of the year. More inefficiencies are inevitable.

Conclusion-

As a member of the church, I have a greater understanding of the underlying responsiveness to this economic theory. Though, no longer practiced, the law of tithing is in its place.

“Heavenly Father will help us provide for our daily needs of food, clothes, and shelter. Speaking to Latter-day Saints in the Philippines, President Gordon B. Hinckley said that if people “will accept the gospel and live it, pay their tithes and offerings, even though those be meager, the Lord will keep His ancient promise in their behalf, and they will have rice in their bowls and clothing on their backs and shelter over their heads.” (The Church of Jesus Christ of Latter Day Saints, 2009)

This law, though difficult at times, is mainly focused on the faith of an individual and their ability to follow God. Sacrifice is proceeded by blessings. Without sacrifice, no blessing can be unleashed from heaven. We believe that every blessing received from the Lord God, is directly connected to the obedience of God’s commandments.

With this understanding, it is easy to see that members of the church, who trust and have faith unto these laws, will be under the belief that the blessings of heaven both emotional and physical will be bestowed upon them for their obedience.

The law of consecration worked because all believed in it. The coordinated efforts of church members for the betterment of the whole church provided for the efficiency to occur.

Though not a scholarly argument, I would like to add that the spiritual nature of this law is potent. This law was determined as directly revealed unto a prophet of God. Believing that God is the keeper of all things on this Earth leaves the believer content. If God is the creator and knows all things, then no doubt about efficiency should occur among the followers.

God would never place a person at the head of a farm that could not perform the duties at hand. Though the common man would believe that not all things are possible, the Lord provides opportunities to those whom he knows will be able to perform them. He never commands the impossible. Therefore, all that is commanded is possible and for the better of that man or people.

Would this theory of faith hold up as an argument in the court of law? Of course not, but my argument is not fully understood or believed by those in the higher courts. This is where I stand. Faith is the driving force of all things in the church. Without such faith, none of this would prevail, but with it, come empowerment and divine blessings.

Works Cited:

Apostle, J. t. (n.d.). Bible. In James, The Epistle of James. King James.

Arrington, L. J. (1958). Great Basin Kingdom: An Economic History of Latter Day Saints 1830-1900. Salt Lake City, UT: University of Utah.

Joseph Smith. (n.d.). Doctrine & Covenants. In J. Smith, Section 51. The Church Of Jesus Christ of Latter Day Saints.

The Church of Jesus Christ of Latter Day Saints. (1996). Our Legacy. Salt Lake City, UT: The Church of Jesus Christ of Latter Day Saints.

The Church of Jesus Christ of Latter Day Saints. (2004). True to the Faith. Salt Lake City, UT: The Church of Jesus Christ of Latter Day Saints.

The Church of Jesus Christ of Latter Day Saints. (2009). Gospel Principles (p. 188). Salt Lake City, UT: The Church of Jesus Christ of Latter Day Saints.

Undercover Millionaires

What is a millionaire? Well, you might not know it, but they are all around you. Some of them you might know very well actually. A millionaire is someone that has a net worth over $1 million. Maybe I should back it up a bit.
Net worth is just a term used in the financial world that means a persons assets minus their liabilities. For example, let us assume that you have a paid off home worth $200,000, but on the side you have a truck worth $30,000, a corvette worth $60,000 and a total of other debts totaling $50,000. the truck, corvette and other debts are your liabilities. We are assuming that you still owe on the car and truck. That would mean that you have $200,000 in assets and $140,000 in liabilities or debts. When we subtract the liabilities from your assets you have your net worth of $60,000. Understand?
Now back to the our previous discussion of millionaires, particularly the millionaire you possibly live right by. This probably shocks you, unless you live in some uptown community. But let's make an analysis. What signs are associated with millionaires? Most will assume that a person driving a corvette, in a fancy black suit who lives uptown fits such a description. But as we discussed earlier, does that fit the description of such an individual. Probably not. Why not?
A millionaire has a net worth of $1 million. Remember what net worth means? A person's assets minus their liabilities. This person may look rich, but are they rich? Let us assume that this person does in fact make $150,000 a year, a modest salary. (nudge nudge, wink wink) I am going to make a very crude rough estimate of about $9,000 a month. Along with this estimate, I will make other assumptions. His home mortgage is $2300 a month, his car payments total $1200 a month, $600 for one car, and $600 for another. Along with that he has student loan debt of $100,000, and credit card debt of $50,000. On this modest income, does it necessarily mean that he is wealthy. Sure, according to society he has everything he could ever dream of, but overall, he possibly has negative net worth with all of that debt and nothing else to show for it.
This brings us to the possible millionaire among you in your life. For further understanding of net worth, and all of the ways that real millionaires make it to where they are, check out the book "The millionaire next door". It is a fascinating read. In this book they take data from 100s of millionaires throughout the nation, and compare the data. They find outrageous stuff. Millionaires are not who we believe them to be.
I won't go into much detail, but I would like to take a few examples. First, let's look at cars. Cars are wonderful pieces of machinery. No man in the world will detest my statement. The sound of a roaring sports car, or the massive lift and tires on a gorgeous truck make a man shiver with envy. But of course, with want, comes a price. These cars can be quite expensive, and lead often to large loans at high interest rates.

The value of these cars is also important to remember. Many of us do not realize or even think about the value of these vehicles until it is too late. How many of us have bought a vehicle, and later when we wanted to upgrade, found ourselves owing more than the sell value? I believe that most of us have been in that situation a time or two. The reason for this is depreciation. Depreciation is simple enough to understand. Over time, many things that we own lose value. A car is one of the worst things we can buy. Cars lose value quickly. Why? Because we drive them. A car only has so much life before major repairs are needed. Basic supply and demand dictate that an individual will only buy a vehicle if the pros exceed the cons. Why would an individual buy a 2005 Ferrari for $120,000, if they could buy a 2007 for the same price? The answer, they wouldn't at least most people.
As you drive your car, it loses value. As it sits, it loses value. In all, it loses value. That is why, when buying a vehicle, it is important to remember that cars go down in value. Some faster than others. One particular thing I would like to discuss is buy used vs new. Why would anyone buy used when they could buy new? Because of depreciation.
It is said that buying a new vehicle loses 3-4 thousand dollars, the minute it pulls off the lot. This is true. A new car gaining the used car status, even if it only has 1/2 mile on it, is detrimental on its value. Why do this, when you can get a steal of a deal on a perfectly good and sufficient 2 year old car?  You might as well carry $100 in your dashboard to throw out the window every time you drive it. So, in conclusion, statistically speaking, millionaires buy used and not new!
Millionaires also are not quite as fond to the idea of debt as much of America seems to be. They also did not get to where they were by the use of credit cards, nor loans. They used the common sense of saving to get what they want. Really? Yes really! This old fashion train of thought comes into play quite often with millionaires. Save to buy what you want. Budget your income. Save for a rainy day. All of these often times, old fashioned beliefs, are used by almost 90% of millionaires in today's society.
Many believe millionaires to be big spenders, but in reality, they are light spenders and heavy savers. Remember what we stated at the beginning. Net worth is your assets minus your liabilities. What does this mean? If you want to increase your net worth, you do so by minimizing your liabilities (paying off debts), and increasing your assets (saving). Wow, serious? That is it? I thought that the only way I could be a millionaire is by winning the lottery, or being a doctor or NBA star. No. Many of today's millionaires generally earn between $45,000 and $150,000. Can you believe that? Becoming a millionaire is more about behavior and less about income. Learn to control your money, and you will find yourself a millionaire in the long run. Notice I said the long run. This blog is not a quick and easy way of becoming rich. It is a simple, but long process that always has a good track record!
In conclusion, who is a millionaire? Not who you think. How do I become one? Simply save your money and reduce your debt. Bet that was the simplest way to become a millionaire you have ever heard.

A chocolate stock market!

Let us assume that you are looking to retire some day. Wow, imagine that... A lot of people believe that this day will never come, and therefore never prepare for it. Recently, I said that preparation is how one with anticipated risk, organizes their current situation to eliminate this upcoming risk. Well, simply put, retirement is an anticipated risk, and therefore needs preparation.
Saving for retirement is quite easy. I can already hear the sighs all around. This guy is a joke. No really, it is a simple process. But understanding the process can be complex, and therefore needs explanations.
We will keep it simple for now, but I need to start somewhere. The best place that I can start is with stocks. What is a stock? When I say the word stock, I'm sure many of you are already diverting your attention to Youtube, or Facebook, but stick with me. I will keep this simple, and try my best to keep it interesting.
A stock is simply ownership in a company. Let's say that you bought a candy bar. This chocolaty delight has 10 easily breakable squares. After you buy the candy bar, you return to school and begin to break up those pieces. While you are examining this brown gold, people around you begin to eye your source of wealth. You watch this, and being the nice person you are, you tell everyone around that you are willing to share. You begin to think in your head of the price of the candy bar, let's say it was $1.00. According to this, you decide that each piece is worth 10 cents.
You still with me? $1.00 divided by 10 is 10 cents, therefore each piece you break off should be worth 10 cents. Everyone that is hungry for chocolate must pay 10 cents for that chocolate. Understand? Now let's back off for a minute. This same process is followed by companies. Every company is always in need of money. There are a couple ways that a company can obtain this money. First, they can take out a loan with a bank or a bond. Another, is to sell ownership in the company, or pieces of the chocolate, to investors. The benefits of selling stock in a company are that these funds never need to be repaid. This provides the company with free money in a sense to expand their business and hopefully make it more profitable. The disadvantages are that the company will lose it's primary ownership. Those who purchase stock, gain a percentage share of whatever the company is worth.
Lets analyze this for a moment. Back to the chocolate bar. You have decided that you will sell each piece of chocolate for 10 cents. But you also decide that you will keep 1/2 of the bar for yourself, because in fact you are hungry. Inside your head, you decided that by selling half of the squares you will get 50 cents and then buy a can of Pepsi to wash down the chocolate. Those around you have each gained a piece of chocolate, and each enjoy those benefits.
Let's expand a little bit. So these 5 people who purchased a piece of chocolate each decided to save that piece of chocolate til lunch time. Meanwhile, a very hot sunny day has melted all chocolate candy bars within miles of the school. What implications does this have on the people who purchased a piece of chocolate from you?
I want to take a side step to briefly explain how supply and demand works. Most of us understand it intuitively since we perhaps live it daily. The theory of supply and demand dictates prices. We will keep it simple so that each of us may stay tuned into our chocolate example. Let's suppose that before the crazy meltdown of March 2011, there were 100 candy bars within 2 miles of the school. In this example each price was $1.00. After the meltdown, only 10 candy bars remain intact. What affect will this have on prices?
Each individual candy bar holder will understand the situation. Out of the usual demand of 100 candy bars, only 10 remain intact. The chocaholics nearby will need their fix of chocolate but only 10 of them will be able to fully satisfy it. This creates a dilema. In order to get a candy bar, you will have to be willing to pay more for that candy bar then the other person. This creates a universal price increase on all candy bars. The opposite will follow accordingly in an increase of the supply of candy bars.
Back to our situation. So the chocolate piece holders, who had sense enough to place their candy bars in the refrigerator, now each hold one piece of chocolate. Originally, they bought it for 10 cents, but now everyone who knows they have the chocolate wants to buy their pieces. The supply and demand theory explains that these pieces of chocolate will sell for much more than they bought them for. Let's say that now, each piece is worth $1. That would be an increase of 900%. Or in other words, each person that purchased a piece of chocolate will make 900% off of their 10 cent investment.
This same thing follows in real life. One purchases stock in a company, which contains a valued portion of the whole. That stock will be a small portion of the entire cost of the company, just as the piece of chocolate valued at 10 cents is 1/10 of the entire value of the chocolate bar which is $1. A person buys a stock with the anticipation that that company will increase in value. A company increases in value when they gain new bids, hire more people, build new factories etc. But there is a trick. You need to understand the theory behind buying low and selling high. A lot of people do not understand this theory.
Let's say that when you sold the pieces of chocolate, you were quite creedy and crafty. You decided that you were going to sell the pieces of chocolate for 50 cents each rather than 10 cents (which is the actual worth of each piece). Let's say that you did this, and later when the pieces were selling for $1.00 they sell the same way as before. Their gain will only be 100%. That is a huge difference in return. Rather than making 900% they make 100%. Which would you rather have?
When purchasing stock it can be quite complex. A lot of analyzing can be done to determine the exact value or worth of a stock, and whether or not that stock is selling above or below it's value. Understanding this is key to making a gain. This is exactly how people lose their money. They jump on the rollercoaster when it is at the top, and then, hoping that it will continue to rise, realize that it was over valued and ride it all the way to the bottom. If stocks are overvalued, eventually someone will notice and supply and demand effects will rearrange this inefficiency to the real value.
Let's do an overview. Stocks are nothing more than ownership in a company. In order to gain a return, you must invest in companies that you believe will be profitable in the future. At the same time, remember to analyze the value of a company and the equivalent value per stock. Only purchase those stocks which you believe are at value or below value. These stocks, will generally be the ones that increase in value, consequently increasing the return you receive from purchasing them.
Remember that this is a simple overview of the what a stock is. There are many different types of investments in the market that you can invest in, along with other ways to purchase or sell them. I will go into these details later, but only after you have the general idea behind what a stock is.
PLEASE LEAVE ME COMMENTS WITH WHAT I CAN DO BETTER TO SERVE YOU!

Velociraptors Kill!

So, you are walking down the road, minding your own business, when out of nowhere a velociraptor enters your line of sight. Now, this seems quite unusual to you. Why on earth would a raptor be in these parts. Course it is night, and the walk that you thought would be relaxing suddenly turns into a chaotic nightmare. your skin begins to crawl when the raptor crane's it's neck in your direction. It's teeth, large and razor sharp, drip saliva in anticipation of its next meal, you.
Now, generally, your first thought would be to run. But, for some reason, running doesn't seem like the best plan. It's weird because, you just watched Jurassic Park the other day, but never thought that you would be living it. You can't quite remember whether they said that raptors sensed motion, or was that T-Rex. "Oh darn, I knew should have stayed awake during that informational section!", you think to yourself. Either way, running is not the right idea. You are a gonner and you know it.
Your life then passes before you very own eyes with a flash. All of the moments you had with your children, all the time you spent just sitting with your wife chatting about your future. But now, your future is over. It will never come to pass. Quickly, you begin to process your successes and failures. One by one you count them and finally you realize something traumatic. You have failed in one sense that you will never be forgiven for. Something so huge, but so small, you wonder how you could have neglected it. You never purchased life insurance.
Now, don't get me wrong, you will probably never run into a Velociraptor in your life time. But other incidents will indeed happen. I do not wish to discuss all the possible methods of our dear friend Death, but I do wish to discuss the prevention steps that we can take. Death is a depressing subject, which I will treat very lightly. I like to add a little zing to a dull and daunt principal. Please forgive me if you are offended in anyway.
Death comes at anytime or place. No one knows exactly when it is going to happen. For this reason, we must be prepared before hand. Preparation is a means by which we as individuals with anticipated risk, may avoid the destructive causes of a future event. This can be anything from emergency funds, food storage or our topic today, life insurance.
A life insurance policy is bought from a financial adviser, or insurance agent, and protects against the consequences of death. These consequences come in many styles. They can be any of the following.

• Loss of income
• Medical Expenses
• Debt
• Funeral Costs
• Business

When you die, your loved ones will "hopefully" mourn your loss. You may not be able to ease their pain, but you will be able to provide a more comfortable environment for them. I do not know anyone who wishes to leave their family in a mess. If such a person exists, I condone them. You love your family and wish the best for them. But in these situations, a mess is created. Your death leaves your family vulnerable to medical expenses and debts that they will have trouble paying. This will only be worse if you are the primary income provider in your home. Leaving your family with the means to pay off the home, medical expenses, funeral costs and other debts will help them stay on their feet til the waves subside. At which time, they will be able to slowly process the next steps to follow.
There are many types of life insurance, but mainly the most used and purchased are term and whole life. A term life insurance policy has a set limit of coverage. For example, a 20 year term life insurance policy will grant you, the purchaser, a determined amount of life insurance upon your death. Meanwhile, you pay a small fee each month to hold the policy current.
If you happen to run into T-Rex during those 20 years, you will receive that determined amount. When I say determined amount, I mean an amount you decide is feasible for your means. This can be $100,000, $400,000, $15,000. or even millions. There are many amounts that you can choose, but I will leave them at these simple at these numbers.
On the other hand, if you do not die during those 20 years, heaven forbid, your policy will end and you will either have to renew at a new rate, or drop it all together. The amount lost is minor, but the amount that could have been gained both in dollars and the security of knowing your loved ones are taken care of is tremendous.
The other common type is Whole Life. Whole life holds true to term in certain aspects. The unique part of this type is its investment characteristics. A person may purchase this policy, making equal payments throughout their whole life. Meanwhile, a part of their payment will go to cover actual insurance costs, and another will be placed in a savings account where it will accumulate more wealth. During this time, if a person happens to kick the can, a determined amount will be awarded to the beneficiary or generally family member. Along with this, an individual may be allowed to borrow against or withdraw part of those funds. If you do not die, then at the end you will be able to withdraw the amount in the account.
These are the two most common types that I will discuss. There are drawbacks and benefits to both of them. The drawback for term is that it will eventually end, and premiums paid into it will be lost by the payer. On the other hand, term is quite in expensive and allows an individual the right to invest more of their income into sound investments, thereby increasing their wealth. The drawbacks of whole life include how expensive it is, and softly put, the amount of profit that a company makes off of your money. Of course, the benefits are the return on some of the money invested in the account, and a longer term of coverage.
I do not wish to discuss the pros and cons to either, because I have a very biased opinion. I leave this up to you guys to decide. I am but the means of knowledge.
Determining the amount of life insurance to buy is done by determining the life style by which you or your spouse wish to live. A general rule, is to have the ability to pay off the home, and other debts, leaving them debt free, along with the ability to pay off medical costs and funeral costs.
Another factor to remember when purchasing insurance, is who it is for. For example, my wife is a stay at home mom. If she were to pass away my life would be hard. But income-wise I would be no worse off. For her, I would factor in my debts and future costs of her funeral. $50,000 would be enough to cover that for her. If I were to pass away, she would be without income. Therefore, my policy might be a lot higher than hers. You get the picture. Along the way, your life will change. Make sure that when these changes occur, you meet with your adviser to adjust the amount that you have. Purchases such as homes or income rises or drops are such factors to keep in mind. I do not mean 50 cent raises, but major increases in salary or even major drops in income from taking that dream job you wish to have! Keep these in mind!
I have gone over only a small percentage of the big picture, but I believe that this will suffice a lot of the common public. If you have any further questions, please send me either an email or comment, and I will get right back to you.
If you take anything away from this, I hope it is that life insurance is important, and that dinosaurs don't really exist!   

Pay me in TVs!

Here is a deep question for you. What in the world is money? Have you ever held that green dollar bill in your hand (I say dollar because the possibility of me holding a $20 in my hands is very slim), and thought to yourself why it is so valuable to everyone around you? After all, it is just paper. If that were the case I have plenty of paper at my house and consider myself wealthy.

Money today is quite different than it was centuries ago. Currently, most of us hold plastic cards, that if traced, only have numbers to back it. The bigger the number recorded in the computer, the richer that individual. How has society become so withdrawn from the physicality of money? Why does green paper with a number in the corner hold a value to another? This is a big question to consider, but I find it fascinating.

Imagine for a moment. When you arrive at a bank to deposit a check from work, what happens to that “paper”? They run it through a machine which identifies the account from which the money should be withdrawn (or shall I say, they minus numbers off of the account), then they add numbers to the account of the person who is “cashing” the check. If you do not find this strange, then maybe you were not paying attention.

Let’s talk history. Anciently, it was common for individuals to barter, or trade goods with another. I’ll make a modern day example. Let’s say that you need milk for your cereal in the morning. In order to obtain this milk from the local market, you must bring something of value to the person whom you wish to trade with. Let’s assume that you heard that John (the milk salesman) has wanted an LCD tv to watch March Madeness. Now depending on how desperate you are for that milk in your cereal, which for me is a must, you will take the TV in your living room down to the market and begin the bartering process. In reality, no one in their right mind would trade a TV for a gallon of milk. But of course, you could possibly set a future determined amount of milk you wish to receive over the next 2 yrs from John.  The deal is made if both individuals determine that they will gain from this trade. Hope you enjoy that milk in your cereal.

Now you understand that bartering is two individuals trading ownership of items which both consider to hold a determined value.

Eventually people determined that currency could hold this notion of value. These were anything from cowry, rocks, and eventually the use of silver and gold. Understanding that a measure of value must be obtained, it became common belief that all members of certain societies deduced value from these coins. Today we believe the same. Although the dollar bills in your pocket are just paper, society as a whole believes that this paper can be exchanged for goods at your local grocery store. No longer is there a need to carry your LCD tv down to the grocery store and work out a deal for a supply of milk 2 or even 3 years in the future. Instead, that grocer has calculated the price of milk using dollars.

Although this seems simple, it still boggles my mind. Everyone in the world believes that the dollar contains a determined value. Who determined this? How did they determine it? These are question that I may answer in some future blog. But for now let’s move on to the most modern way of exchange, digital money.

When I say digital money, it is hard to grasp. How can something digital be of value to another? It is simple in our minds to determine that the larger the number, the larger the amount of purchasable goods. Yes, indeed the higher the number, the more you can buy. But why does a number determine a value to society.

It would be easy to add six zeros to the end of my accounting balance. Wouldn’t that allow me to buy more than I could possibly dream? How does society control how this system works? Banks seem to be fairly responsible with this aspect of their functions. When money is deposited in a bank, that bank increases the amount in your account by the same amount deposited with them. By using your card to buy a TV, the merchant believes that those numbers in your account will transfer over into their account, thereby increasing their buying power as well.

Why does this work? Because, once more, society as a whole believes that more numbers in their bank account results in a larger buying power. If everyone in society understands and believes that something has a value, it can be used as a medium of exchange, or currency.

Let’s assume that everyone believed that LCD TVs were valuable, and again assume that they converted each LCD tv into $100. Then, simply put, everyone would be walking around with LCD tvs in their pockets to purchase the things they need. Value is determined by society. When an item is believed to be valuable, it will have a medium of exchange.

Now, we all understand the reality of everyone walking around town with TVs in their back pocket would be absolutely chaotic. But it would lower pick pocketing crimes. Could you imagine the effort it would take to slyly steal a 60 inch TV from someone’s back pocket?

Money has been determined a valuable medium of exchange. If that someday changes, we as a society would determine a new medium of exchange. All I can say is that I hope it will not be TVs.