Dealing with Debt

With interest rates rising, debt at record levels and the costs of everyday living also going up, many families are feeling financial pressure. Almost every indicator suggests consumers are overindebted, relative to their income and earning prospects.

So what can we do about it? Does the Bible have wisdom to offer on such a practical aspect of our lives?

reasons for financial problems

In 15 years of financial counselling and teaching biblical stewardship, I've found three primary reasons people get into financial difficulty. These are:

Ignorance: Many people, even college graduates, are financially illiterate. They were simply never exposed to the biblical or even secular principles of money management. But there is hope for these people! The bulk of this article will provide a simple outline of these principles and how to apply them.

Selfishness: The second reason for financial difficulties is greed or selfishness. In response to advertising and personal wants, people simply live beyond their means. They aren't willing to live in, drive or wear what they can really afford. There's hope for these people also but it requires a change of heart—and the reception of a gift from God called contentment. Paul exhorts, “Now godliness with contentment is great gain. For we brought nothing into this world, and it is certain we can carry nothing out. And having food and clothing, with these we shall be content. But 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” (1 Timothy 6:6-9).

Hard times: The third reason people find themselves in financial difficulty is due to experiencing an unfortunate tragedy. They may have had a serious illness, which causes significant financial struggles. They may have been abandoned by a spendthrift marriage partner. A natural disaster may have wiped out their possessions, or they may have been born and raised in abject poverty. There is hope for all of these people. Though their path is more difficult, it can be overcome.

Change may come in the support of Christian friends, the assistance of godly counsellors, hard work coupled with a good education, and the blessing of God. the Bible and debt elimination But enough about the problems. Let's focus on what you can do to experience financial freedom.

The Bible says, “The rich rules over the poor, and the borrower is servant to the lender” (Proverbs 22:7). Some Bible translations say “slave” here instead of “servant.” Few people need to be told debt is bad. It's almost like telling someone who smokes that smoking is harmful.

The person already knows that. What he or she needs is help. What can be done to insulate your family from this unfortunate phenomenon? Is there anything that a family can do to prevent the embarrassment and stress of unmanageable debt? The answer is a resounding “yes!” If you are not in 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. It has a basic premise and three steps.

The basic premise is a commitment to God to be faithful in returning His holy tithe to access His wisdom and blessing (see Proverbs 3; Deuteronomy 28; Malachi 3; Matthew 6, 25). Noone could honestly expect God's blessing while robbing Him. He is eager to bless those who obey Him.

Step 1: stop credit spending

Declare a moratorium on additional debt: no more credit spending! If you don't borrow money, you can't get into debt. If you don't borrow any more money, you can't get further into debt.

Step 2: step-up debt repayment

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 for being debt-free. When God blesses you financially, use the money to reduce debt—not to purchase more things. This step is probably the most critical. When most folks receive unexpected money, they simply spend it.

But if you've made a covenant with God, you'll then know what to do with the extra money. You'll apply it to your debt-reduction plan.

Some time ago, a man came up to me and remarked, “How true this covenant business is! We received $2500 that we weren't expecting, so I told my wife, ‘How did God know that we needed a ride-on lawn mower?' Then I promptly went out and bought one. Now I realise I should have put the money toward my debts.”

Step 3: write it down, pay it off

Make a list of all your debts from the largest to the smallest in descending order. For most families, the 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 your payments on the debt on the bottom of the list. You'll be happily surprised 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 debt as you work your way up the list. As you eliminate your smaller high-interest debts, you'll free up a surprising amount of money to place on the larger debts.

God clearly doesn't want us to be in debt. Once the covenant is made, many families find that God blesses them in unexpected ways and the debt is reduced faster than they anticipated.

Once 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.

By following these three simple steps, many families have become debt free. You can, too! By putting God first, you'll receive His wisdom and blessing for managing what He has entrusted to you. By eliminating debt, we are free to participate in advancing the cause of God and in helping others, thereby storing up treasures in heaven.

seven biblical principles

I've discovered seven biblical principles that give practical guidance about how to get peace and freedom in your financial world.

God is the owner of everything.

As Christians, we understand that we brought nothing into this world and are taking nothing out. While we live on this earth, we are simply managers of what God has entrusted to us. Faithfulness is all that matters (see Psalms 24:1; 50:12; 1 Chronicles 29:13, 14).

God's wisdom comes first.

God can see our lives from the beginning to the end. He knows what is best for us and desires that we prosper. This means more than the simplistic question, “What would Jesus do?” We ask instead, “What is His counsel in this area of my life?” (see Proverbs 3:5-9; Matthew 6:33).

Your life-purpose is to glorify God.

So many people seek prosperity in order to spend and accumulate. The Christian seeks prosperity in order to provide for personal needs, the needs of others, and to help advance the cause of God. The Christian is God's ambassador (see Matthew 5:16; 1 Corinthians 10:31)

Prosperity is having what you need.

God has not promised us that if we become Christians, we will become wealthy by the world's standards. But He has promised that if we serve Him, He will provide for our needs, be with us wherever we go and give us peace in our hearts (see Philippians 4:19; Matthew 28:20; Isaiah 26:3).

Debt is bad.

Recognising and following this single principle would do more than anything else to bring peace to our families and prosperity to the cause of God. Debt causes strife in families and stress in individual lives (see Proverbs 22:7; Deuteronomy 28:15-68; Romans 13:8; Psalms 37:21).

Tithe is the minimum commitment.

From the perspective of one who reads through the Bible each year to review the big picture, I can tell you that nowhere in the Bible does God suggest that less than a tenth is His. Failure to recognise and practice this principle cuts us off from God's wisdom and blessing (see Deuteronomy 28, Genesis 14:20; 28:20-22; Leviticus 27:30; Malachi 3:6-11).

God holds us accountable.

Nothing is more certain in Scripture than the fact that we must all face the judgment of God. When settling accounts with those who are faithful, God says, “Well done, good and faithful servant; you were faithful over a few things, I will make you ruler over many things. Enter into the joy of your lord” (Matthew 25:21; see also Matthew 25:19; 2 Corinthians 5:10; Revelation 22:12).

*Bible texts are from the New King James Version. Reprinted, with permission, from Adventist Review.