Our society’s attitude to debt has changed over the last 50 years. Debt used to be used for purchasing a house or a business, but the introduction of the credit card and personal loans has seen people borrowing for the latest gadgets or fads, motor vehicles, holidays and even expenses for living. This attitude has arisen from the ‘must have and want” mindset rather than the “necessary or useful” approach.
The Western world has a massive problem with debt as reflected in our unprecedented debt levels. But how does God feel about debt? The Bible is generally negative about debt. Romans 13:8 says “Let no debt remain outstanding except the continuing debt to love one another, for whoever love others fulfils the law.”
Our heart and mental attitude about borrowing is crucial. Is the debt incurred for purchasing long term assets such as a home which is used to raise a family and be used for Christian hospitality? Or is the debt incurred through greed or a lack of personal contentment to get the latest “stuff” or experience that you don’t really need?
Christians should aim to live a low debt or debt free life. It is simply a matter of choice, discipline and time. The Bible is very clear that debt leads to slavery. Proverbs 22:7 says “The rich rules over the poor, and the borrower becomes the lenders slave.” The Bible’s messages about debt are warning messages. We can still achieve the purposes God has for our lives, without getting ourselves into a mountain of debt. Avoiding or using debt wisely is a good way to ensure financial freedom.
Here are a few essential verses in the Bible to help you manage or eliminate debt.
Trust God: “And my God will meet all your needs according to the riches of his glory in Christ Jesus.” Phillipians 4:19. Pray and wait for God to direct your decisions and provide for your needs.
Be Content: “But Godliness with contentment is great gain. For we brought nothing into the world and we can take nothing out of it. But if we have food and clothing, we will be content with that.” 1 Timothy 6:6-8. Be content with starting small. Don’t end up in debt because you want more than you have and can manage to repay. Prioritise your needs rather than your wants.
Work Diligently: “All hard work brings a profit, but mere talk only leads to poverty.” Proverbs 14:23. Keep working hard and learning new ways of doing things and improving. Stop dwelling on the problems – do something.
Plan. Budget. Save. “The wise store up choice food and olive oil, but fools gulp theirs’ down.” Proverbs 21:20. Daily planning, budgeting, spending and saving assisting in reducing any new borrowings or paying off existing debt quicker.
Be Generous: “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” 2 Corinthians 9:7. Giving is a condition of the heart, so even if there are financial difficulties, be generous to those who need your help. Debt can stop us living a life of extravagant generosity.
So that now that we know and understand what God is saying about borrowing and debt, here are some practical examples and advice to handle this area of financial management.
- What is your motive for and attitude to borrowing? Is the debt “good” or “bad”? “Good debt” is for purchasing long term assets such as a home or a business. The principal and interest on this debt should be repaid regularly and not just paid as interest only. “Bad debt” is for living or operational expenses which should always be paid from salaries or operational income.
- Don’t get trapped into working harder or longer or at a higher income level in order to meet debt repayments. Consider making serious life style changes.
- Don’t let debt repayments prevent you from meeting the needs of your family and others. Is debt preventing you from doing work for God’s purpose?
- Prepare a comprehensive list of all your debts, including type, balance, monthly repayments and interest rate.
- Pay off the highest interest rate and smaller debts first. This will give you a sense of achievement as you begin eliminating your debts.
- Consider debt consolidation of your debts into one account at the lowest rate.
- Review your list of assets eg property, motor vehicles, life style assets such as boats, caravans and determine if anything can be sold.
- Prepare a budget so that you can review all expenditure and eliminate unnecessary expense that you don’t need.
- Always pay off any credit card purchases in the month after purchase so that no high rate interest is ever charged. Alternatively, switch from a credit card to a debit card to eliminate future credit card debt immediately.
- Debt is one of the greatest financial pressure and stress problems. By eliminating debt, the tension can be reduced and financial freedom experienced.
- Avoid lending money to family and friends – consider giving them a gift instead of a loan. Lending to others is a form of debt that makes one person a slave to another. Presenting a gift with no thought of receiving anything in return is a true blessing.
- Seek advice from a financial counsellor, financial planner or a pastor.
Above all Pray! Commit yourself to God in prayer. Debt does not just affect you. It affects all the members of your household, your relationships with them, your level of stress and your health. Ask God for His wisdom, His blessing and peace as you begin this process. If you have not been able to fulfil your debt repayment commitments or the call to generosity, then ask God for forgiveness. He is loving and merciful and wants you to live a life of financial freedom.
Prepared by Mel Zerner.
Christian Money Management 