Although debt seems to be a way of life in the West today, it should never be the norm for Christians. In the Scriptures, there are more than two dozen references to being in debt, and all are negative. The Bible does not say it is a sin to borrow money, but it does talk about the consequences of doing so. Here are seven biblical principles about indebtedness:
1. Debt is a form of bondage. “The borrower is slave to the lender” (Proverbs 22:7, NIV). During the time of the patriarchs, more often than not, an individual became a slave precisely because he or she was a debtor. Not much has changed, in 4,000 years. Admittedly, we are no longer thrown into physical bondage, but too often we have become slaves to material possessions through the over extension of credit “Many, very many, have not so educated themselves that they can keep their expenditures within the limit of their income. They do not learn to adapt themselves to circumstances, and they borrow and borrow again and again, and become overwhelmed in debt, and consequently they become discouraged and disheartened.”1 The best advice to avoid the bondage of borrowing is to follow these three rules:
- Borrow only on items that appreciate in value.
- Borrow with a short-term loan.
- Borrow at the best interest rate available.
2. Debt is a lack of contentment. “I have learned in whatever state I am, to be content” (Philippians 4:11).2 A lack of financial contentment is often reflected in the attitudes we have toward debt. ‘Keeping up with the Joneses,’ desiring what others have (covetousness) or wanting more than we already have (greediness) frequently causes people to go into debt.
3. Debt presumes on the future. “Now listen, you who say, ‘Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.’ Why, you do not even know what will happen tomorrow” ( James 4:13, 14, NIV). Here is a good working definition for debt: living today on the money you expect to earn in the future. Until World War II, few Americans carried loans over an extended period. In the 1930s, Congress enacted a law allowing the general public to procure home mortgages of 25 years. Previously, the longest home loans were around 10 years, and car loans were no longer than 1 year. In America, we can now get home loans for up to 50 years. Only the Japanese “outloan” us with 100-year mortgages. Despite this, many do not know whether they can make their next payment.
4. Avoid get-rich-quick schemes. “Those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition. For the love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows” (1 Timothy 6:9, 10). Get-rich-quick schemes flourish when two elements are present: (1) people who wish to profit financially from the ignorance, naivete, or greed of others, and (2) the desire on the part of a person to strike it rich with little effort and big dreams. When these meet, many people are hurt emotionally and financially. An additional tragedy with these devious plans is that, in most cases, the individuals have to borrow money to become involved. And when the scheme fails, they not only lose the money borrowed, but they often have to pay it back at high interest, putting the family under even greater financial strain.
5. Refuse to be surety for others (cosigning). The Bible is clear that we should not become responsible for the debt obligations of others. Solomon, the inspired wise man, warned, “He who is surety for a stranger will suffer, / But one who hates being surety is secure” (Proverbs 11:15). And again, “a man devoid of understanding shakes hands in a pledge, / And becomes surety for his friend” (Proverbs 17:18).
Surety usually occurs when a person with poor credit seeks a loan from a lending institution but does not qualify for the loan. The loan officer will tell the unqualified person that if he or she gets someone with good credit to cosign the loan, the institution will grant the loan and hold the cosigner responsible in the event of default. Sometimes a fellow church member will come and ask you to cosign for him or her. Parents are often asked by teenagers to cosign for the purchase of their first car. Adult children may ask their parents to cosign for a business loan. In each case, your response should be, “The Bible says I should never do that.”
According to the Federal Trade Commission, 75 percent of those who cosigned for loans ended up making the payments. Please understand that the Bible encourages us to be helpful to those in need, but we should not become responsible for their debts. It is appropriate to help others if you see a real need, but do not become surety for the debts of others. Remember, if you cosign for someone, that debt is on your credit report until the loan is paid in full.
6. Debt can erode our Christian witness. “The wicked borrow and do not repay” (Psalm 37:21, NIV). “It is nearly impossible to convince your landlord that Jesus loves him and is the answer to all of his problems when he is thinking why your Jesus hasn’t convicted you to pay last month’s rent.”
7. Debt imperils one’s giving. “Every man shall give as he is able, according to the blessing of the LORD your God which He has given you” (Deuteronomy 16:17). Looking at the annual statistics regarding charitable contributions in our society, it should surprise you that the giving pattern between Christians and Non-Christians is approximately the same amount—about 2.5 percent. Perhaps the biggest reason why the average American Christian does not return the 10 percent that God asks is that he or she is drowning in debt.
achieving financial freedom
Many families make a reasonably good income but do not know where the money goes. By making a simple budget, they can see where it all went. Make a record of all expenditures for three months, then identify and eliminate any unnecessary items. Set goals for your family: Pay off some debt by a set date, or save up cash to purchase your next car.
Credit cards are one of the major causes of family indebtedness. If you find that you are not paying off the cards in total each month or that you are using them to purchase items that you would not have otherwise purchased, you should destroy your credit cards rather than let them destroy you or your family.
Many folks find that they spend less when they use cash for their purchases. When you save up for an item, you are more likely to make sure you get the best deal available when you purchase it.
Watch the small things. Take utilities, for example. Just keeping your thermostat a little higher in summer and a little lower in winter and turning out the lights in rooms not being used can save a significant amount over the course of a year.
Take inventory of all of your possessions, and sell off what you do not absolutely need. Why not collect all this stuff, have a yard sale, and apply the proceeds toward your debt?
three steps to eliminate debt
Most people don’t need to be told that debt is bad. They already know that. What they need is help. What can be done to insulate your family from this unfortunate circumstance? Is there anything that a family can do to eliminate the embarrassment and stress of unmanageable debt? The resounding answer is yes!
If you are out of debt, thank the Lord and those who trained you. If you are in debt, the following outline will help you begin a debt-elimination process that will bring financial freedom to your family. The plan is simple. The basic premise is a commitment to God. Be faithful in returning His holy tithe to access His wisdom and blessing (Proverbs 3; Deuteronomy 28; Malachi 3). He is eager to bless those who obey Him.
1. Declare a moratorium on additional debt. No more credit spending! If you do not borrow money, you cannot get further into debt. “Be determined never to incur another debt. Deny yourself a thousand things rather than run in debt. This has been the curse of your life, getting into debt. Avoid it as you would the smallpox.”3
2. Make a covenant (a promise or agreement) with God that, from this point on, as He blesses, you will pay off your debts as quickly as possible. Set a target date to be debt-free. When God blesses you financially, use the money to reduce your debt, not purchase more things. This step is probably the most critical. When people receive unexpected money, they often spend it. But if you have made a covenant with God, you will then know what to do with the extra money. You will apply it to your debt-reduction plan.
3. Pay off your debts from the smallest to the largest in ascending order. For most families, their home mortgage is at the top of the list, and a credit card or personal debt is at the bottom. Begin by making at least the minimum payment due on each of your debts on a monthly basis. Next, double up or increase, in any way you can, your payments on the smallest debt on the list. You will be pleasantly surprised at how quickly you can eliminate that smallest debt. Then use the money that you were paying on the bottom debt to add to the basic payment on the next smallest debt as you work your way up the list. As you eliminate your smaller high-interest debts, you will free up a surprising amount of money to place on the higher debts.
When you reach the home mortgage at the top of your debt list, you can begin to make additional payments on the principal of your loan, thereby saving considerable interest that you would have had to pay. Of course, you also reduce the length of the loan as well.
By following these three simple steps, many families have become debt-free. You can too! By putting God first, you will receive His wisdom and blessing for managing what He has entrusted to you. By eliminating debt, you are freer to participate in advancing the cause of God and in helping others, thereby storing up treasure in heaven.
Ed Reid is an ordained minister and a licensed attorney. He has written a number of books, including It’s Your Money! Isn’t It? and Sunday’s Coming.
1. Ellen G. White, Counsels on Stewardship (Washington, DC: Review and Herald®, 1940), 249.
2. Unless otherwise noted, Bible quotations in this article are from the New King James Version.
3. White, Counsels on Stewardship, 257.