What constitutes necessary debt, and how do we follow counsel from Church leaders to avoid unnecessary debt?

by Max W. Brown, “I Have a Question,” Ensign, Dec. 1997, 62

Since the early days of the restored Church, Latter-day Saints have been counseled to live within their means, to avoid debt, and to get out of debt. Elder L. Tom Perry of the Quorum of the Twelve Apostles reiterated this counsel:

“Avoid excessive debt. Necessary debt should be incurred only after careful, thoughtful prayer and after obtaining the best possible advice. We need the discipline to stay well within our ability to pay. Wisely we have been counseled to avoid debt as we would avoid the plague. …

“ ‘Live within your means. Get out of debt. Keep out of debt. Lay by for a rainy day which has always come and will come again. Practice and increase your habits of thrift, industry, economy, and frugality’ ” (“If Ye Are Prepared Ye Shall Not Fear,” Ensign, Nov. 1995, 36).

Some necessities such as a home and an education may require that we incur long-term debt. But the relative ease with which we may qualify to secure a loan should not be an excuse to live beyond our means.

“I do not mean to say that all debt is bad,” Elder Ezra Taft Benson said in 1962. “Of course not. Sound business debt and reasonable debt for education are elements of growth. Sound mortgage credit is a real help to a family that must borrow for a home. …

“If you must incur debt to meet the reasonable necessities of life—such as buying a house and furniture—then, I implore you as you value your solvency and happiness, buy within your means.
“So, use credit wisely—to acquire an education, a farm, to own a home.

“But resist the temptation to plunge into a property far more pretentious or spacious than you really need” (“The Dangerous Threat of Increasing Indebtedness,” The Instructor, May 1962, 159, 162).

The following principles can help us avoid, or at least limit, unnecessary debt:

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