all day

1. HelloBishop:
AfterreviewingBrotherandSisterHopeful’sfinancesandfinancial recordsI made thisreport
withsome principlesthat will helpthem. Ihave discussedsome of these principleswithBrotherand
SisterHopeful andtheirfamilyalreadybutfeel itnecessarytoinformyouof mythoughtsand goalsfor
thisfamilyandtheirfuture. Iknow it isthere goal to be completelydebtfreeandhave moneyinan
account forretirement. Asamemberof the ward council anda goodfriendof the Hopeful family,here
are the principlesthatIfoundtobe the mostimportant inpeople’slife’swhencomeswithmanaging
money.
Chapter #1: Financial Independence
Principle 1: Personal Financial Planning
Planningwithpersonal will,desire,anddiscipline willhelpanyoneto achieve financial
independenceandbecome personallywealthy. Inordertofullyachieve properfinancial planning,both
husbandandwife needtocombine knowledgeandfocusonwhattheywill be cuttingback onor adding
intotheirbudget.
Brotherand SisterHopeful needtosetaside aspecifictime tohave afamilycouncil anddiscuss
theirfinancial troubleswiththeirchildren. Thiscouncil willhelpthemplanbetterfortheirfamily
financiallyandalsohelpthe childrentolearnaboutfinance inadvance.Leteverybodyinthe familyto
understandthe situationthatthe familyissufferingatthe moment.Make plansto achieve the realistic,
reasonable financial goalsforthe family.
Principle 2: Five Keysto Personal Financial Success
Followingthese fivekeyswill helpyoutoachieve financial independence,moreoveryouwill not
worryabout moneyever. The firstprinciple istopaythe Lord firstand thenpayyourself. Payingtithing

2. isa commandmentof Godand isessential toreceive blessingsfrothe lord. I have learntpaythe lord
firstnot onlyinmychurch, but inmy college classesaswell.We all rememberthe scripture in Galatians
that the lordwill pourdownblessingsfromthe window of heavenenoughthatwe don’thave roomto
receive it.
The secondkeyprinciple istocollectinterestonyourmoney. Itisas simple asitsounds. Put
moneyinthe bank andleave itthere onlywill create asmall amountof interest. Startlearningabout
stocksand othercollectinterestoptions. Allowingmoneytogaininterestwillbe aslow process,butit
will ultimatelybenefityourlife andhelpyoureachfinancial goalsinyourfuture. ThisissomethingthatI
wouldrecommendthe Hopefulsbegintodo. As of rightnow theyare not puttingmoneyintoasavings
account or otherinterestearningfund becauseof the debtamounttheyhave.Butinthe future when
we createda balancedbudgetitwill helpthemtomake theirmoneygrow.
Principle numberthree istonotretire until yourmoneygoestoworkfor you. Itmeansyou
make your moneygoto workby earninginterest,dividendsandappreciation,andwe are not only
dependingonthe moneywe earnthroughemployment.There are three waystodeterminehomuch
interestwill yourmoneyearn?The rate andpercentage youearnonyour savings,the lengthof time
your moneywasinvested,howoftenandhow muchmoneyyoudeposittosavingsorinvestments.Ialso
realizedthatbrotherandsisterhopeful ispayingthere401K.It is verysmart investmentandverygood
ideato dothat. Theywill have lotsof moneybackdependsonthe yearstheypayit.
The fourthprinciple fromthe five keysistonot pay interest. If someone isconstantlyborrowing
moneyor rentingitemstheywill alwaysenduppayingmore thanwhatwasoriginallyspentbecause of
interest. Stopborrowingmoney. Evenif itisfromyour parents,thisshouldbe the firstthingthatthe
Hopefulscutoutof theirlives.Theyneedtocut theirspendingoncreditcardand payof all of their
debtsas soonas possible.

3. The verylast principle forthe five keysistoprepare financialgoalsandmake wise financial
decisions. Financial goals needtobe specific,realistic,andmeasurable,butstill challenging.AsI
suggestedhave familycouncil eachweekandmake financial goalsforthe familyandalsoindividual
goalsfor themselves.
Brotherand Sisterdoesverywell onthe firstprinciple theypaytheirfull Tithingandtheyalsodo
charityas well.Howevertheyreallyneedtolearntonot payinterestsandthat comeswithmany
principles,andIwill helpthemdiscussthose more indepthInthe laterchapters.
Principle 3: A LifelongFinancial Plan
Lifelongfinancial plansincludelearningthe skillsof saving,accounting,budgeting,managing
risks,investing,retirementplanning,makingmajorpurchases,andusingcreditandfinancial services.
Alongwithmakingpersonal financial plansandanoverall familyfinancial plan,the Hopefulsneedto
implementall of theirplansforthe restof theirlives. Thiswill helpthemtostayout of debtand remind
themof where theywere atone pointin time. Hopefullythe memoryof how harditis goingtobe to
getout of debtandremembernevergetintodebtthattheycannotpay again.
Chapter #2: Show me the Money
Principle 1: Financial Records
Alwayskeepfinancial records. Keepthemorganizedtogetherandinthe same place, Excel tools
are greatwithfinancinganditmakesfinance easier. Includethese areasof documentsinyourfinancial
record library; financial managementrecords,tax records,transactionrecords,investmentrecords,
propertyrecords,personal records,creditrecords,andinsurance records. Youshouldalsokeepany
legal documentsyoumayhave ina safe depositbox orfire proof safe. Keepingtheserecordsandtaking
as much precautionasyoucan will helpyoube preparedforanyfinancial disasterorproblemthatmay
arise. It will alsohelpyoube knowledgeable abouthow youare spendingmoneyandwhatyoucan do
to possiblychange. The Hopeful familyshouldstart,if theyhave notalready,savingandcollectingthese

4. documentssotheycan reviewthemwithafinancial agentorotherfinancial personnel. Theyshould
alsolearnabouteach documentsothat if somethingdoeshappentheywill know exactlywhich
documenttheyneedtopull andwhatthe relevance of thatdocumentisfor the specificsituation.
Principle 2: Assets
Basic categoriesof whatyouownand how you are beingbenefited. The fourbasiccategories
are liquidassets,investments,personal property,andreal estate. Everythingthatyouphysicallyown
and can sell fora profitisconsideredanassetinyourlife. Liquidassetsandpersonal propertyassetsare
the easiesttounderstandbecause theyinvolveitemsthatcan be easilysoldforcash. Althoughthere
are multiple waystogainextramoney,one of the simplestformsistosell some of the unnecessary
itemsthatyou mayhave in yourpossession. IsuggestBrotherand SisterHopeful cansell some of the
thingstheyownthat isnot necessaryforthemtomake some extracash
Principle 3: Cash FlowStatement
Cash flowstatementsare veryimportantbecauseyouhave toknow where the cashisflowing
to. These statementsmeasurewhatishappeningtoyourincome andexpenseswithinthe selectedtime
period. Havinga cash flowstatementandmeasuringwhere all of theirmoneyisgoingwill reallyhelp
the Hopefulsto realize the waytheyare livingisnothelpingthemtosave moneyandthat’sthe reason
theyhave negative amountof money.
Chapter #3/9: Putting your Moneyto Work
Principle 1: Stocks or Equity Investments
Stocksrepresentownershipinacorporationandstockholderscanreceive dividendsfromthat
corporationwhichisa portionof theirearnings. Stockholdersalsogainapercentage of theirmoney
back everyyearbecause of the change inthe stockmarket. However, since the stockmarketisvery
unstable mostof the time,itishard to keepa steadygrowthforyour investment. AlthoughIdonot
thinkthisisa wise investmentforbrotherandsisterhopeful atthistime,howeverafterwe payall the

5. debtsandhave some extramoneyto invest,itwill be goodforthemtolookinto.AlsosisterHopeful is
not workingatthe momentshe canprobably start doingresearchandfollow the market,She canput
intoreal practice withmoneyonce theypayoff the debt.
Principle 2: Mutual Funds
Mutual fundsare investment companies;itisthe bestwayto diversifyyourinvestments.
Investorscanbuy formstocks,bonds,or otherkindsof securities.Itisaverysmart way to invest,
howeverBrotherandSisterHopeful still probablyshouldnotlookintotoomuchat thismoment.They
needtohave the rightmindsightof investmentandnormallyyoudon’thave thatwhenyouare indebt.
Principle 3: Bonds or Debt Investments
Bondsand debtinvestmentsmeanyouare loaningyourmoneytothe companysellingthe
bonds. Bondsare a promise made bythe issuerto repaythe face value,atmaturity,plusthe stated
interestrate,until the entire bondisrepaid. Bondsandotherformsof debtinvestmentare alwaysa
goodideabecause youare neverlosingmoney. All of the moneythatyouputin to yourbondor debt
investmentwill eventuallymake itswaybackto youat a largeramount. It isa verysmart way to invest
but youwon’thave as much as opportunitiestopurchase thislike stocks. BrotherandSisterHopeful
shouldlookintothisonce theyhave free moneytoputintowork.
Chapter #5: Save Now-BuyLater
Principle 1: ConsumerCredit
Buyingthingsincash forconsumerproductis alwaysthe betterwayto finance ratherthan
buyingnowandpayinglaterso youhave to pay a ridiculesamountof interestrate.Ithinkashumanwe
oftenhave thatideathat we want stuff now.We needtorememberitisalwaysbettersave andcollect
interestratherthanspendandpay interest.BrotherandSisterHopefulispurchasinglotsof thingswith
creditcard and it hasa veryhighamountof interestrate. Like creditcard#3. They charge about 15% of
the interestrate.BrotherandSisterHopeful shouldlearntonotjust spendwhenevertheywantand

6. howevertheywant,andcreditcard isnot helpingthem.There goal shouldbe tospendlessthanwhat
theyearn and lettheirinvestmentgotowork forthemto make more money.
Principle 2: Calculatingthe Costof Credit
The 1969 lendinglawrequiresall lenderstoprovide the borrowerwiththe exactcostof credit.
Thiswill letyouknowandcompare the differentoptionsof the credit. Calculatingthe overall costof
creditisnot hard to do whenyouare able to know the exactprice of everythingyouare investingin.
Brotherand SisterHopeful shouldbecome more knowledgeable aboutcalculating the costof their
investmentsandtheircreditaccounts. Duringthe worksheetwe made forthem, theycansee clearly
howmuch interesttheyare paying,andwe can teachthemhow to calculate the cost of credit.
Principle 3: IncreasingYour FICO Score
Regularlycheckforerrorson your creditreportandthencorrect themimmediately. Paythe
lowestpaymentpossibleinordertomake sure that youare neverlate ona payment because 35%of
the score isyour paymenthistory. Reducingdebtwill alsohelpincreaseyourFICOscore because you
will notowe moneytoothers. By understandingthese principlesanddoingitshouldhelpthe hopefuls
to increase theircreditscore.Itcan helpthe hopefulstogetlessinterestrate sotheycan pay less
interest.
Chapter #6: You Are Not Your Car
Principle 1: Transportation Alternatives
You can spenda loton transportation,oryoucan minimizethisexpensebysellingavehicleor
choosingtowalk,ride a bike,ortake publictransportation. The trade-offsfortransportation are
significantbecausetheyinvolvetradingtime,image,andconvenience forcost. I know that the Hopefuls
have twocars and I thinktheycanlive withjustone car by the otherpersontake publictransportations
or carpoolingwith neighbors.
Principle 2: WhatCan YouAfford?

7. You shouldalwaysconsiderthe total costof owninga car before youbuyit. Keepinminda
numberforwhat youcan afford,and before youpurchase acar calculate how muchwill itcost foryou
to run it. AlthoughIdo not thinkthe Hopefulsshouldbuyany newercarsat the moment,itisalways
goodto understandhowto purchase things. Trulyunderstandthe principle will helpthemlateronin
theirlife inall kindsof purchasing’s.
Principle 3: Negotiatingthe Deal
Many people purchase vehiclesata fixedprice establishedbythe dealerinsteadof negotiating
the purchase price whichisthe commonpractice. Before yougo intothe dealershipdoresearchonline
or shoparound,so you knowinmindhow much doesthe car worth andwhat isa fairprice to buyit.
Have a price inmindthat youwant to buyit forand thinkof a price youwill be happytoendup with.
Chapter #7: Location, Location, Location
Principle 1: RentingVersusHome Ownership
Leasinggivesmore adaptability,lessmoneyupfront,andcostslesstomaintain thanhome
possession. Inthe same time,home ownership givestax cutsand increasingequitythroughthe
appreciatinginvalue anddecreasingthe loanprincipal.Leasingismuchbetter forshorttimeframes
while owningahouse isbetterfor a longertime.Since the Hopefulsofficiallyowntheirhome Iwould
not suggestthatthey move intoa rental,yetitis constantlygreatto rememberthe advantagesand
disadvantages forthe future if theymove toa differentplace.
Principle 2: Home Ownership
Home ownerslike BrotherandSisterHopeful whohastopay mortgages,will be requiredtopay
insurances,taxesandmaintenancefortheirhomes.Maintenance isanongoingexpense because of
landscaping,painting,decorating,fixingandrepairing,andanyotherprojectthatneedstobe done in
orderto keepthe home lookinggood.Soasto guarantee that youare settlingonafinanciallywise
choice,buya home that isin goodconditionsothere isnexttozero maintenance costsinthe first

8. couple yearsof of the house.The Hopefulshave amagnificenthome anddon'tneedtostressmuchover
maintenance and repairs, butitisgood torememberthere will be some expensesinthe future along
the way.
Principle 3: AmortizationSchedule
Thisis a keyto improve yourpersonal wealth. Afterpurchasingahome,whichthe Hopeful
familyhasdone,youwill wanttostart payingextraeachmonthon your mortgage payment. Thisextra
money will helptoreduce the principal anddecreasingthe costof credit. Inorder to keeptrackof all of
thisspendingIsuggestusinganamortizationschedule. Itwill helpthe Hopefulssee the benefitsof extra
principal paymentsandhelpthemalsomake the decisiontoeithercontinue owningahome or go to
rentinga home instead.
Chapter #8: Risk
Principle 1: FewCertaintiesinLife
Life iscan be verydangeroussometimes.There are somanythingsthat can happensuddenly
make us to be lesshappy,howeverthere are ways topreventit.Justlike how heavenlyfatheralways
give usopportunitiestoprepare ourselvesbefore achallenge come.Insurance isagreat wayto prevent
financial dangerafteratraumaticeventhappened.Atthisyoungage itisa verygoodtime to investin
insurance. Iam not aware of any securitymeasuresthatthe Hopefulshave inplace intheirhome or
lives,butIwoulddefinitelyrecommendthattheypurchase andinstall orcome upwithsecurity
measuresinorderto protecttheirhome,family,andassetsandultimatelyreduce riskthroughoutevery
aspectof theirlives.
Principle 2: Home and PropertyInsurance
Your home and itscontentsare among yourmajor assetsandshould be insured because of that.
Homeownersinsurance includescoverageagainst theft,damage,orlossandit alsocoversliving
expensesforlivingelsewhere whileyourhome isbeingrepaired. There varioustypes of home and

9. propertyinsurance andthe Hopefulswouldhave todosome researchandfindoutwhichone would
workbestfor themand theircurrentfinancial situationbefore purchasingtoensure thattheyare
gettingthe mostcoverage forwhat theywouldbe spending.
Principle 3: Life Insurance
The two majorriskswithlife insurance are thatyoumay die toosoon or live toolong.
Purchasinglife insuranceismainlyforthe purpose of providingforthe people thatare dependenton
youand wouldsufferagreat financial lossif youwere topassaway. However,if youdolive fora long
time itcan lowerthe amountof insurance requiredwhichwillloweryourcostas well. Since mostof
theirchildrenare still very young, andBrotherHopeful isthe onlyone thatisworkinginthe family. the
Hopefulsshouldpurchase lifeinsurance forBrotherHopefuljustincase of an emergencyandtheylose
theirsource of income.
Chapter #10: IndependentWealth
Principle 1: EmployerPlans
There are twotypesof employerretirementplans,adefinedbenefitplanora defined
contributionplan. The first one youremployerspaysaspecificamountmonthly foryourlife after
retirementandthisisdependingonyoursalaryandthe place youworkedat.The seconddefined-
contributionplan,youremployerstill will payitbutno specificbenefitisdefined,andyouwill receive
howeveramountthere isone youretire and401K planisone of them.I know Brotherhopeful’sworkis
payingthe 401K for himand itis greatthat theyare doingthatto helpthemonce theyretired.
Principle 2: Personal RetirementPlans
You shouldalwayssetupa personal retirementplaninadditiontosocial securityandemployer
benefitplans,anditisall foryou to nothave to workand justlive of interestorsavingsafterretirement.
There are manydifferentsortof programsyoucan do dependsonyourincome.IhighlysuggestBrother
and SisterHopeful startdothis.It isa great investmentjustlike insurance.

10. Principle 3: The Importance of Starting Early in Life
You will receivemore moneythroughcompoundinterestbystartsavingand planningearlyin
life. The Hopeful’sapparentlydidnotdothatbefore,buttheycan still startsavingbyput moneyinall
kindsof fundsto make themgrowlike IRA.The principle behinditisstill savingismore importantthan
spendingmostof the times.
If the Hopeful familycan start livingthese 10principlesintheir life, Itrulybelieve thattheywill
experience the greatjoyandrelief thatcomesfromthe financial independencethe will have. AlthoughI
have discussedthese principleswiththe Hopefuls.Itisalwaysgoodtoremindspeople these principles.I
trulybelievethe hopeful’swillone daylive withcompletedebtfree,andhave manysavingsandachieve
goodwealthif theyunderstandall these priciples.
Bestregards,
Daniel Guo
Ward Council Member