How Should Christians Utilize Debt?

In this series of teaching on stewardship, John Cole revised and taught from a published course made available without copyright by local church pastors shared for churches like ours. Read the handout notes here...

KNOWING THE FUTURE

God’s  Knowledge vs.  Man’s  Knowledge

Making Decisions About the Future

Proverbs 10:4 He becometh poor that dealeth with a slack hand: But the hand of the diligent maketh rich.

First, consider the source.

Second, consider the content. 

Third, consider the limitations. 

Proverbs 27:1 Boast not thyself of to morrow; For thou knowest not what a day may bring forth.

MORTGAGING THE FUTURE

Does God Forbid Borrowing?

Luke 6:35 But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.

While we can  borrow  without sinning, we can also sin by  borrowing . 

It may mean that we’re sinfully attempting to  obligate God  to pay for our debt. 

Wrongly  presuming upon God  for our debt is to ignore God’s sovereignty over the future. 

The Wisdom of Borrowing

Although borrowing isn’t always sin, it can be a form of  servitude . 

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

Having to borrow was a sign of God’s  judgment .

Debt also mortgages the  future .

Debt is not something to  enter into lightly .

Making Decisions About Borrowing

Why do you  need it ?

Can you  afford it ?

Have you assessed  the risks  associated with a loan? 

Have you sought  counsel ?

Proverbs 15:22 Without counsel purposes are disappointed: But in the multitude of counsellers they are established.

Debt can be servitude, but the degree of servitude depends on our ability to  undo  the obligation. 

Wisdom would lead us to limit most or all our debt to either appreciating or slowly depreciating assets that bring  lasting value .

Another sort of debt that can be wise is debt that has high probability of  increasing returns  well beyond the debt. 

Usually, the first step before utilizing this sort of debt is establishing a stable  positive cashflow , healthy  emergency savings , and a viable  exit strategy  that will not leave you in a place of poverty.

A common unwise use of debt is unnecessarily using it for things that cannot  pay back our debt . 

Considerations before using credit for consumer expenses:

1.Have at least a couple months of living expenses in  emergency savings .

2. Pay off  the statement balances each month (preferably automated).

3.Have viable  budget and actuals  that either have a positive net cash flow or a true plan to get there.

4.Only use credit lines for regular budget expenses as “delayed debt cards” under the previous three conditions to (a) have added protection of bank accounts, (b) maintain a healthy credit score, and (c) reap the perk of card rewards.

5.You will stop using credit for consumer expenses if you stop meeting the previous criteria.

Living In Debt

The quick answer is to  pay it back . 

Romans 13:7–8 Render therefore to all their dues: tribute to whom tribute is due; custom to whom custom; fear to whom fear; honour to whom honour. Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.

Psalm 37:21 The wicked borroweth, and payeth not again: But the righteous sheweth mercy, and giveth.

The long answer gets into  how  and  when .

It is possible that the debt you have is  strategic  and  wisely calculated  with the help of wise counselors and financial advisors.

Paying your owed debts means to make your  agreed upon payments .

Our society at large has too much debt because of unwise, and possibly  sinful , choices—choices that stem from greed, impatience, or materialism.

Matthew 5:25–26 Agree with thine adversary quickly, whiles thou art in the way with him; lest at any time the adversary deliver thee to the judge, and the judge deliver thee to the officer, and thou be cast into prison. Verily I say unto thee, Thou shalt by no means come out thence, till thou hast paid the uttermost farthing.

In light of these principles, how might we pay down our debt?

1.With  direct communication  with your lenders.

2.With  urgency  and yet without hast, unbelief, or abandonment of God-given stewardship.

3.With  prudence  in prioritizing either higher interest rates first or small-to-big loans as you implement what some call a “debt snowball.”

THE DEBT WE COULD NOT PAY