Edwin Alan Aguirre Gonzalez

FIN 101 Personal Finance

August 10, 2015
Final Assignment Part A

Chapter 1
Principle #1: Independent wealth
This principle means that you have accumulated enough funds to live comfortably and do not
need to work. As a LDS member I have the opportunity to receive financial assistance in a case
of emergency, but this is only a temporal solution. For this reason, the bishop needs to explain
the importance of correct financial decisions with the family Hopeful because they have a big
amount of debts. For example, they can make a plan for future financial decisions to avoid
unnecessary purchases or expenses.
Principle #2: Pay the Lord first, and then yourself
This principle is crucial to receive the many blessings in our lives because these are waiting in
the Heaven. If the family Hopeful is paying an honest tithing, the bishop has the responsibility to
give orientation and help. This is a commandment of our Heavenly Father and we need to gain a
testimony of that principle to accomplish them with a humble heart. In addition, we will have
challenges in our lives but with the company of the Holy Ghost we will overcome anything. This
family needs revelation and inspiration to avoid wrong financial decisions.
Principle #3: Personal Financial Planning
If they have goals, a clear plan makes a difference on the success of these goals because with that
principle we can be focus in our objectives. They have current payments and payment remaining
to finish their debts. For this reason, they need to create an effective plan with a great strategy
because they have a total debt of $216,915.80. However, they cannot make all the payments

because they dont have a clear plan. In other words, they need to prioritize the most important
debts and attack these weaknesses.

Chapter 2
Principle #1: Building a Strong Financial Position
A clear purpose of financial decisions is to build net worth and a sound relationship of assets and
liabilities. This family needs analyze their assets and liabilities to get their equity. They can
improve their economy with correct investments, saving money, and paying their debts. For this
reason, this principle is fundamental to get their financial wealth. In addition, build a strong
financial position is also an advice of the church because they teach in many general conferences
the importance of that principle.
Principle #2: Budgeting
In my opinion, they dont have a clear budget because if they know the amount of their debts
they can avoid unnecessary expenses. The bishop can explain the importance to create a budget.
With this they can make a plan because they are investing too much money in the music classes
for their children. In addition, they can create a strategy to save money and to pay quickly their
debts.
Principle #3: Financial Records
Financial records is important to have an order of all the transactions. The bishop needs to teach
this principle to the family because they have a lack of knowledge with their financial situation.
They need to track every daily purchase to understand where their money is going. In addition,
they need to have in their system the next:

Financial management records

Tax records

 Transaction records
Investment records
Property records
Personal records
Credit records
Insurance records

Chapter 3
Principle #1: Stocks or Equity Investments
This family needs apply in their life the principle of avoiding debt. In the business world the
stock market is an attractive path to invest money. For this reason, the bishop can suggest a long
term goal with the stock market. In this strategy, the family has the opportunity to invest money
in a small part of the company. In other words, they have a tool to grow their money for a future
retirement. Finally, they need to analyze the market and the best companies to invest.
Principle #2: Earnings Per Share
As a owner of a share in any company, I have the opportunity to increase or reduce my
investment. The earnings per share are the revenue that I can receive for my company's shares.
For this reason, I need to diversify my money in many different stocks to reduce the risks. That is
the most wisely way to invest in the stock market. In addition, we have the choice to sell our
shares or hold with a future vision. This kind of investment gives a better chance to save for
money for our retirement and the opportunity to make more money comparing with a bank
account.

Principle #3: Stock Investment Strategies

A good strategy makes a difference in our financial decisions. For this we can make an advantage
in the market and find a better financial situation. The business world is very competitive and the
bishop can suggest to the family the opportunity of the stock market. He need explain the risks
but he can teach strategies to make a great investment. In addition, this family needs an
orientation to make an financial strategy and to overcome their debts. For this reason, a stock
market strategy is a good path to start the financial freedom.

Chapter 4
Principle #1: Run The Numbers
In my opinion, this principle is crucial in any financial situation. The numbers has a relationship
with the money and we need to develop the talent to run the numbers effectively. This family has
different amount of debts and they need understand the rule of the numbers to avoid future debts.
The bishop can teach tools like a budget, office excel, phone apps and computer programs to
have a better knowledge of our capital. Also, he can teach principles like future value, monthly
payments, interests, present value and others to analyze the rule of this principle.

Principle #2: The Miracle of Compound Interest

As a business student, I have the great advantage to start investing now. The time has an
important rule in the investment world because we can make the miracle of compound interest.
The interest can be our friend or our enemy but we need to make wisely decisions. For this
reason, the bishop can teach another opportunity to increase their economy. If we invest in our

youngest life, we have the advantage to use the miracle of compound interest. In addition, this
family can teach this principle for their children and they can avoid future financial struggles.
Principle #3: Future Value
The future value has a relationship with the number of payments, rates, and amount of monthly
payment. If we have a loan for the bank, the debt can increase for the cause of the rate. For this
reason, the bishop can teach this principle to the family. Also, he can teach the tool of excel to
make math operations and to get an estimate of the future value of their debt. This family can
learn the importance to make this operation before to accept a loan.

Chapter 5
Principle #1: Credit Capacity
A credit capacity means the full amount that we have to use the credit. For example a credit card,
home mortgage and car loan. For this reason, the bishop can suggest the ability to run the
numbers and understand the credit capacity. This family has struggles with their credit card and
they need techniques to overcome these issues. Also, they can start use phone apps and computer
programs to verify their credit capacity.
Principle #2: Calculating the Cost of Credit
This principle is crucial to avoid future debts because the cost of credit is the revenue of the
lender. When the family received the credit, they saw the percent of the rate. For this reason, they
need to analyze and calculate the cost of credit. In addition, they need take better financial
decisions in relationship with the cost of credit. They have all the time the opportunity to decide
what credit use or not use. If the want to get a car, always the banks make a revenue. That

revenue or income is the cost of credit. This family has many debts with different lenders and
they need to make a strategy to finish their debts.

Principle #3: The Cost of Making Minimum Monthly Payments

This a great technique of the lenders because a minimum monthly payment gives more income
to the banks. The number of payment, rate and amount of payments make a difference with the
cost of credit. If this family give an high amount comparing with the normal monthly payment,
they can finish their debt quickly. The bishop needs to encourage this family to avoid
unnecessary expenses to save that money and to pay mor quick their debts.

Chapter 6
Principle #1: Transportation Alternatives
A great path to save money is with this principle because they can avoid unnecessary expenses to
pay their debts. A good example of transportation is the train and bus. These can make a
difference in the budget because they can avoid insurance, gas and car repairs. This is a great
solution for the family because they need understand their situation and make decisions. Also,
they can have just one car and the husband can use the public transportation. This gives an
opportunity to save money and to pay their debts.
Principle #2: Purchasing New Versus Used Vehicles
In this moment of their life, the family don't have the best time to buy a car. This can be a long
term goal to avoid future debts and to prepare a better path for their life. They can buy a used
vehicle with a better performance of miles for gas because for this way they can save money.

They don't need a big truck or a expensive car because they are passing for financial issues. Also,
as a family the best option for them is buy a new vehicle after to pay their debts.

Principle #3: Negotiating the Deal

The seller always want to take advantage of the transactions. For this reason, this family need
learn strategies to make better negotiations. They can make these kind of negotiations with the
banks, private lenders, car agencies, hospitals and others. The point is to resolve any debt and
make a great negotiation. For this reason, the bishop can encourage the family to start looking
solutions for their debts.

Chapter 7
Principle #1: Renting Versus Home Ownership
The church always encourage their families to get a patrimony. A home is a good investment for
future generations and this family has the necessity to get into their lives this principle. Renting
can be a good option but if we analyze the market each normal rent has an amount of $800 per
month plus utilities. With a good decision analyzing the rate, cost of credit he number of
payments and amount of monthly payment; this family will have their own home.

Principle #2: Types of Mortgages

Each bank or lender has different rates, payment conditions, contracts and others. For this reason,
this family has the principal rule to analyze every single rate. The point is avoid future debts and
get the best mortgage rate. Every family has the dream of have a patrimony but the rates make a
difference with that goal. A home mortgage is the most popular loan in the market because it is

hard get the big amount to pay a home in one exhibition. Also, the bishop can give a orientation
for this family to get a low mortgage rate.

Principle #3: Selecting a Home

The price of the home has a relationship with the city, state or county where we want to buy. For
this reason, this family need to be diligent with their decision because they can analyze the future
projects for that area. Also, they can analyze the distance for their jobs to make an estimate of the
gas expenses. Selecting home is crucial because this will be a patrimony for future generations
and they need to live in a right environment.

Chapter 8
Principle #1: Automobile Insurance
This insurance is the most important because it is a law of the state. In my opinion, if this family
wants to have a great protection a full cover is a great investment because they are preventing
future debts. They are not excuses for future accidents and this principle is a great tool to be
protected. Also, the church is always encouraging our diligence with that principle because the
risks are always latent.
Principle #2: Health Insurance
A health debt can be catastrophic because the expenses in any hospital are higher. For this
reason, I good advice from the bishop can be the importance of health insurance. With that tool,
this family is protecting their children and themselves. In addition, this is an smart insurance

because we are not excepted to get a sickness. Health insurance is a great path to avoid future
debts for this family. In other words, it is an amazing investment.
Principle #3: Life Insurance
This principle can be important for this family because they can prepare a better path for their
generations. This can be a long term goal after to overcome their debts. For this reason, the
bishop can suggest to the family the great tool of that insurance. In these time the funerary costs
can be a future debt for their children and they can avoid with that insurance. In addition, this
family has their free agency but it is always a good decision be prepared for future issues.