The Christian’s Understanding of Debt

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The Christian’s understanding of debt is often distorted by the fact that debt has become culturally acceptable at every level in society. The United States government has borrowed over 16 trillion dollars to date. Each year it spends more than it receives in taxes and makes up the difference by borrowing and adding it to the debt. Credit has been used in this country to the extent that the USA, the richest country in the world, is now the biggest debtor among all nations.

Instead of seeking a “word from the Lord” concerning this matter, many Christians simply look around and take their cues from others. As a result, they have become accustomed to debt, and feel no resistance to getting a loan for a new car, new furniture, or even a much desired vacation, as long as they feel they can make the monthly payments.

What does the Bible say about debt? Psalm 112:5, “A good man sheweth favour, and lendeth.” Lending and borrowing is biblical. You cannot lend without someone to borrow.

Luke 6:34, “And if ye lend to them of whom ye hope to receive, what thank have ye? for sinners also lend to sinners, to receive as much again.” The phrase, “and if ye lend,” implies that it is an acceptable practice. The phrase, “sinners also lend,” implies that Christians do the same.

Proverbs 22:7, “The rich ruleth over the poor, and the borrower is servant to the lender.” When we borrow, we become servant to the lender. The degree to which we borrow is the degree to which we become servants. Servants are by nature limited in freedom. Borrowing = servanthood = bondage. For that reason, we should get out of debt as soon as possible.

Although the Bible offers many warnings concerning debt, nowhere does it say that it violates God’s commandments. In some cases it would be unwise, but in other cases it is a way out of poverty. Micro finance loans offered to people in developing countries have been popular among Christian charities for some time. The SALT program (Shared Accountability Lending & Teaching) of Christian Aid Ministries was established to provide a path out of the cycle of poverty that grips so many in undeveloped countries. Instead of just giving financial aid (which produces dependency), small loans along with an accountability program are used to enable natives to start small businesses, which provides a source of revenue that is used to provide for their families. (It is better to teach people how to fish than to give them fish.) Similarly, here in the USA, careful borrowing for business purposes can be beneficial.

On the domestic side, borrowing for a house can also be beneficial. It has been my observation that families that commit themselves to mortgage payments will have their houses paid for in 25 years, whereas those that spend $500 less per month by paying rent do not increase their savings account by that same $500 per month. People without loan commitments tend to save less.

What about the use of credit cards? Credit cards can serve a useful purpose. When used as a method of convenience, they are beneficial. They can also be a means of establishing a good credit score, which may be helpful in the future to obtain a mortgage to purchase a house. In today’s society, failure to have a credit card is an indication that you are a poor credit risk. That is why it is difficult to rent a car without a credit card, even if you have the cash to pay for the rental. A credit card establishes a payment and address history, which is used to score your credit risk. If you have an unblemished credit card history, you are trusted much more than a person that has always paid cash for transactions. Additionally, many credit cards offer a cash rebate of 1 or 2%. Credit cards are safer than cash. In the event you lose your wallet, a simple phone call prevents others from using your card. However, when the credit card charges for the month cannot be paid off in full at the end of the month, then the credit card is being used as a form of borrowing, which may be extremely dangerous and expensive. Why do credit card companies make it so easy to pay the minimum payment? That is how they make most of their profit. Unpaid balances on credit cards generally carry monthly interest rates of upward to 25% APR. If you have a $2,000 outstanding balance on a credit card and you pay only the monthly minimum payment, it will take you 32 years to pay off that $2,000 obligation. Besides that, you will have paid an enormous sum of $10,000 to buy something that only cost $2,000.

What about the offers of “six months interest free credit cards”? Why would credit card companies offer you the use of money for six months interest free? They are not dumb. They have learned that most people that take the bait and use this “easy credit” to accumulate so much debt that when the six months period is ended, they will resort to making minimum payments for years to come. The bait turns into a trap.

Credit card borrowing is one of the worst ways to borrow money. It is too easy, too accessible, and too extortionate. If you cannot pay your entire credit card bill at the end of each month, stop using it, until the day you have reached a level of financial stability that allows you to do so.

Understanding consumer debt
Most debt can be classified as home mortgage debt, business debt, or consumer debt. Consumer debt is debt that is the result of purchasing consumable items or other discretionary non-business purchases.

What is the driving force that causes people to become burdened with consumer debt? I believe the Bible gives us the answer in Galatians 5:22-23, “But the fruit of the Spirit is love, joy, peace, longsuffering, gentleness, goodness, faith, meekness, temperance: against such there is no law.” Temperance is “self-control.” Our natural tendency is to feed the desires of the flesh, getting what you what when you want it. Many times debts are the direct result of a lack of self-control.

Americans are a covetous people who always want more and more stuff. Influenced by the multitude of advertisements, they think they must have the latest and the best, and it must be state of the art. For many, this leads them into financial disaster. Unfortunately, many Christians are doing the same.

If we would follow the rule of waiting to make a discretionary purchase until we have the money, it is altogether possible that we will discover we did not need that item quite as badly as we initially thought we did. Waiting also tends to dampen the amount of the expenditure, since we do not have enough money yet. Besides that, we have saved ourselves that problem of having “spent” money before we have earned it.

It is important for Christians to understand debt. Excessive debt can cause Christians to rob from God when the offering plate is passed. Money that should be given for kingdom purposes has already been committed to debt payments for less important things. Excessive debt can also cause one to lose sleep.

If you find yourself burdened with consumer debt, admit it. Be honest. Seek counsel. Pray for heavenly wisdom. Seek first the kingdom of God. Set up a realistic budget. Stop buying on credit. You may not be able to increase your income; however, you can adjust your lifestyle and spending to enable you to get out of debt as soon as possible.

~ Myerstown, PA
March 2013