Treasures New and Old

Christian Convictions: Finances – Eliminating Debt

-Author unknown

Is Debt Bad or Good?

Generally, debt is binding and a bondage at a certain level.

One of the most controversial issues among Christians is related to money and, in particular, to debt. On one end of the spectrum there are those who believe any debt is wrong, and on the opposite end are those who have collected a lot of debt and use credit cards to get whatever they want. There is a number of verses regarding debt that the Bible provides, and frankly, debt is not treated as a good thing. For example, consider the following verse:

Romans 13:7-8: “Render therefore to all their dues: tribute to whom tribute is due; custom to whom custom; fear to whom fear; honor to whom honor. Own no man any thing but to love one another: for he that loveth another hath fulfilled the law.”

Owe no man clearly implies being debt free, and rendering to those to whom there is due also implies being debt free. Yet today large ticket items, homes, cars, large appliances, etc. are sold by vendors with the expectation that a majority of people will do so by “owing” them a significant portion of the cost of the item and will be making monthly payments. Some even (depending on the current financial environment) will “loan” you the money with terms of “12 months free interest”, or “no payments until 6 months”, or I recently saw a car dealer offer “no interest financing”.

But we really need to look back a couple of articles and remember that God uses money to direct our steps, and if we ignore His direction and incur debt to get something that He may not want us to have yet, we thwart His direction and will for our financial lives. Also consider this verse:

Proverbs 22:7: “The rich ruleth over the poor, and the borrower is servant to the lender.”

The Hebrew word servant is ebed and is a strong word that literally means “a bond servant or slave” (Brown, Driver, & Briggs H5650; Strong’s H5650). When I borrow from another, I willingly become their bondslave in the area I have borrowed for. Cars are often repossessed because of lack of payment, homes foreclosed, and black marks placed on one’s credit ratings all for missing even one payment.

A lot of other verses exist regarding debt in the Bible, but most of them relate to the proper attitude and handling of the lender towards those who are in debt because God knows that there will always be those in debt. We will examine some of those later in this short article.

I would refer you to Dave Ramsey for a much better treatment about debt and how to become financially free.

Is Debt Ever Good?

I’d like to answer that with a simple “NO”, but I can’t. Consider the following situations we incur in our lives:

• I pay a monthly phone bill that covers the phone usage I had for last month – so I do own this bill to the phone company. A  “mild” and acceptable form of debt.
• So too with my electric bill.
• So too with my water, gas, Internet, and other “service” bills.

These are accepted means of doing business for most of these utilities and service companies.

What about Investments and What Is a Good Investment?

An investment is putting money into a project, event, or item (like real estate) with the expectation of realizing gain whenever we sell or dispose of the thing we invested in. Obviously, some investments turn out to be a mistake, and we lose the gain, and sometimes, even the principles we placed in that item. Consider the following situations:

1. A man buys a car on time every two years. He accumulates a lot of mileage as he has a lot of miles to drive to do his job daily as a service man of certain kinds of office machines. He is reimbursed monthly by the company for the miles he legitimately raked up driving his many routes (which he carefully logs daily). The “need” for a new car every two years, he is convinced, is so that he has a reliable car that won’t incur maintenance bills. As it turns out, at the end of the two years, his trade-in value is only a few hundred dollars less than what he calculates he “made” in reimbursements from the company after subtracting his gas bills. Wise Investment?

2. There are those who buy large items on time with free interest for twelve months and then on that last month pay off the item. Wise investment?

3. Buying a house in a neighborhood that has a history of modest value increases every year and holding it for multiple years. The interest is calculated by what the banking industry calls the “rule of 78s” which means as each payment is made, interest calculated for the entire loan period is heavily loaded up front so that in three to five years, the buyer has paid far more interest than principle. Wise investment?

4. A family uses credit cards to do most of their purchases and pays off the amounts each mouth. (They haven’t incurred an interest fee in over forty years). Doing so allows them to keep better records of their purchases and is much more convenient. They admit that there are times that the cards make it easier to do an occasional “impulse buy”, but so far, they believe their impulses to be at a minimum. Wise financial behavior?

5. A stay-at-home mom has decided to become a photographer and make money for the family by taking family photos. She has had to slowly buy a lot of equipment and after three years has not yet broke even on her costs, let alone giving herself a “salary” for the hours she puts in prepping the photos for delivery to the customers. Is this a wise investment?

6. After their family car had twelve years and over 200,000 miles, and after they had saved the money to buy a new car with cash (and after trying to make the best deal they could) – they bought a new car. They did look at a few used cars that were only a couple of years old and had relatively low mileage, but decided the extra $6,000 was worth having the new car that came with two years free maintenance and 100,000 mile drive train warranty. Good investment?

7. A young couple bought a “fixer-upper”, lived in it for seven years, and did numerous repairs and upgrades (almost all the labor was theirs). Their selling price will be roughly $135,000 over their current principle due on their mortgage. Add in the costs of materials over the seven years, and the interest on the loan of the house, principle paid thus far, they believe they will realize roughly $75,000 profit. The husband admits that their hours were into the hundreds for labor (even thousands) and can’t imagine what labor costs would have been if they “paid” themselves. Wise investment of time and money?

All of these situations are real (some details may be changed) and I know those involved. Let’s examine each one and see if “good investment” qualifies for them:

1. My dad was a service man for a major office machine company and had a large territory in which he worked. He had so many spread-out customers that he carried loaner machines and took many of the broken machines home to repair at night. The mileage would approach 100,000 a year of which the vast majority was work related. Dad did not have the time to fix cars and certainly could not afford his car in the shop (lost business and wages), therefore, he reasoned that even with the loss of a couple hundred dollars every two years in lost trade-in value, it was worth it to have a reliable car. I agree with Dad. He had hit upon a wise course to conduct business for his time.

2. To those who buy on time with interest-free payments for six or twelve months, I wonder if  they have acted wisely. Did they wait for significant sales and price drop as well? Did they really need the item? What if something happened and they were unable to even make the interest-free payments (an accident and lost work weeks)? What was the item? These are all factors that may make their actions wise, but may also mean that they have purchased items that, perhaps, God had another plan for them. I would applaud them for paying it off before they incurred interest, but it was still a debt that was owned and might have resulted in a loss. None of us should presume on the future.

3. As I understand it, a break even point on mortgage loans is around five years. That is, finally, you’re really starting to pay down the principle. Without any significant improvements, repairs and other expenses, a seven year or longer holding of the house with modest gains in value could turn out to be a good investment. If unable to buy or build a home outright, the alternative is to rent. Rent money is never seen again. Seven years rent versus seven years payment (let’s say they are equal) and the difference is the new selling price yields a small or modest profit for the homeowner. Do this enough times, and eventually you end up with a debt free home. People we know did.

4. Guilty as charged. We use credit cards. I had to travel a lot with my company, and as we were expected to pay for airfare, rental car, room, meals, etc. and then get reimbursed after the trip was over, credit cards became a must. We agreed a long time ago to never buy on credit unless we also have the money already in the bank. Never buy anything that was over one hundred dollars unless we prayed about it and only if it fit our allowances that we had in our budget. Have I bought a few things I shouldn’t? Yeah, I have and watched those items sit in the garage or attic to gather dust and rust. After almost fifty years together, we are debt free (except for those pesky monthly utility bills) and are careful about and agree together before we buy online or with credit cards. Wise financial behavior? Most of the time . . . .

5. The stay-at-home mom is close to starting to make a profit with her business. Most of those items she needs she now has, has taken classes and is getting good at what she does. She has a website and will, as her son gets older, be able to accept more appointments and, thus, make greater profits (even pay herself one day for her hours!). Good long-term plan and investment.

6. Yes, we brought a new car instead of a used one. At plus seventy, the money already in the bank, we decided a reliable car and warranty and free maintenance for two years met our situation better that a used car with low mileage. We bargained the best we could, used a company discount available to us, and bought a top-rated car for safety, maintenance, operating costs, gas mileage, etc. Unless some accident damages the car significantly, this is most likely the last car we will buy. It is not the most expensive by any means, but it is not the cheapest either. A good, reliable, comfortable car that is debt free – we think we did OK.

7. Ever been involved in “flipping houses”? Lots of people do it. In fact, a couple I know, their second house yielded some eighty thousand dollars that they used to buy a used van and most of the material to build their current home debt free. Lots of equity sweat was expended, and I am sure they were glad that their family members were old enough to help! Since then, I have met many couples that have done the same thing so that by the time they finally built their dream home, they either built or bought it debt free. A very good financial strategy if you have the skill sets.

More Verses about Debt and Money and Lending . . .

Exodus 22:22-25: “Ye shall not afflict any widow, or fatherless child. If thou afflict them in any wise, and they cry at all unto me, I will surely hear their cry; And my wrath shall wax hot, and I will kill you with the sword; and your wives shall be widows, and your children fatherless. If thou lend money to any of my people that is poor by thee, thou shalt not be to him as a usurer, neither shalt thou lay upon him usury.”

Deuteronomy 8:18: “But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he swore unto thy fathers, as it is this day.”

Proverbs 15:27: “He that is greedy of gain troubleth his own house; but he that hateth gifts shall live.”

Deuteronomy 23:19: “Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.”

Deuteronomy 24:20: “When thou beatest thine olive tree, thou shalt not go over the boughs again: it shall be for the stranger, for the fatherless, and for the widow.”

Psalm 55:22: “Cast thy burden upon the LORD, and he shall sustain thee: he shall never suffer the righteous to be moved.”

Proverbs 10:22: “The blessing of the LORD, it maketh rich, and he addeth no sorrow with it.”

Proverbs 11:14: “Where no counsel is, the people fall: but in the multitude of counselors there is safety.”

Proverbs 13:11: “Wealth gotten by vanity shall be diminished: but he that gathereth by labor shall increase.”

Proverbs 22:1: “A good name is rather to be chosen than great riches, and loving favor rather than silver and gold.”

Proverbs 23:4-5: “Labor not to be rich: cease from thine own wisdom. Wilt thou set thine eyes upon that which is not? for riches certainly make themselves wings; they fly away as an eagle toward heaven.”

Ecclesiastes: 5:10: “He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity.”

Malachi 3:5: “And I will come near to you to judgement; and I will be a swift witness against the sorcerers, and against the adulterers, and against false swearers, and against those that oppress the hireling in his wages, the widow, and the fatherless, and that turn aside the stranger from his right, and fear not me, saith the LORD of hosts.”

Matthew 6:19-21: “Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: For where your treasure is, there will your heart be also.”

Mark 8:36: “For what shall it profit a man, if he shall gain the whole world, and lose his own soul?“

Luke 3:14: “And the soldiers likewise demanded of him, saying, And what shall we do? And he said unto them, Do violence to no man, neither accuse any falsely; and be content with your wages.”

Luke 12:33: “Sell that ye have, and give alms; provide yourselves bags which wax not old, a treasure in the heavens that faileth not, where no thief approacheth, neither moth corrupteth.”

Luke 16:10-12: “He that is faithful in that which is least is faithful also in much: and he that is unjust in the least is unjust also in much. If therefore ye have not been faithful in the unrighteous mammon, who will commit to your trust the true riches? And if ye have not been faithful in that which is another man’s, who shall give you that which is your own?”

Acts 20:35: “I have showed you all things, how that so laboring ye ought to support the weak, and to remember the words of the Lord Jesus, how he said, It is more blessed to give than to receive.”

Colossians 3:5: “Mortify therefore your members which are upon the earth; fornication, uncleanness, inordinate affection, evil concupiscence, and covetousness, which is idolatry.”

 1 Timothy 5:3-10:

Honor widows that are widows indeed. But if any widow have children or nephews, let them learn first to show piety at home, and to requite their parents: for that is good and acceptable before God. Now she that is a widow indeed, and desolate, trusteth in God, and continueth in supplications and prayers night and day. But she that liveth in pleasure is dead while she liveth. And these things give in charge, that they may be blameless. But if any provide not for his own, and especially for those of his own house, he hath denied the faith, and is worse than an infidel. Let not a widow be taken into the number under threescore years old, having been the wife of one man, Well reported of for good works; if she have brought up children, if she have lodge strangers, if she have washed the saints’ feet, if she have relieved the afflicted, if she have diligently followed every good work.

1 Timothy 6:17-19: “Charge them that are rich in this world, that they be not highminded; nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy; That they do good, that they be rich in good works, ready to distribute, willing to communicate; Laying up in store for themselves a good foundation against the time to come, that they may lay hold on eternal life.”

Hebrews 13:5-6: “Let your conversation be without covetousness; and be content with such things as ye have: for he hath said, I will never leave thee, nor forsake thee. So that we may boldly say, The Lord is my helper, and I will not fear what man shall do unto me.”

James 1:27: “Pure religion and undefiled before God and the Father is this, To visit the fatherless and widows in their affliction, and to keep himself unspotted from the world.”

James 5:1-6:

Go to now, ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted, and your garments are motheaten. Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days. Behold, the hire of the laborers who have reaped down your fields, which is of you kept back by fraud, crieth: and the cries of them which have reaped are entered into the ears of the Lord of Sabaoth. Ye have lived in pleasure on the earth, and been wanton; ye have nourished your hearts, as in a day of slaughter. Ye have condemned and killed the just; and he doth not resist you.

1 John 2:15-17: “Love not the world, neither the things that are in the world. If any man love the world, the love of the Father is not in him. For all that is in the world, the lust of the flesh, and the lust of the eyes, and the pride of life, is not of the Father, but is of the world. And the world passeth away, and the lust thereof: but he that doeth the will of God abideth forever.”

Maranatha!

May God bless you all!

Bro. Joe

Brown, F. Driver, S., & Briggs, C. Brown-Drivers-Briggs’ Hebrew Definitions. Meyers, R. (2005). e-Sword. [computer software] . Franklin, TN: Equipping Ministries Foundation.

Strong, J. Strong's Hebrew and Greek Dictionaries. Meyers, R. (2005). e-Sword. [computer software] . Franklin, TN: Equipping Ministries Foundation. (Original work published 1539)

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