What is debt?
A debt occurs when you borrow from another with the intent of repaying them at a later date. This includes loans, credit cards, and financing. People often have very strong feelings for or against debt. I feel that there is both good and bad debt.
This is debt incurred to buy an item that will depreciate in value. Examples: vehicle, stereo, clothes, etc. With this type of debt, not only is your purchase losing value, but you are also paying interest each payment. This type of debt can be useful in critical times. For instance, if your tires need to be replaced and you don’t have enough money to buy new ones, you could purchase these on credit. Isn’t that better than risking a blow-out and potentially having a serious accident? The key is to use common sense. This situation can normally be avoided by planning and systematically putting money aside “for a rainy day.”
I consider “good” debt to be borrowing in order to purchase something that will appreciate in value. I would rather call this an investment. Examples: home, education, business, etc. This debt is only good, however, if you have carefully planned and estimated costs. There is no such thing as a good debt if the balance causes personal frustration, spiritual discomfort, or is difficult to repay.
How Does Debt Affect Us?
The Bible does not teach us that debt is prohibited. It does, however, teach us that it is better to be debt free so that we can align ourselves to receive God’s blessings. “The rich rule over the poor, and the borrower is servant to the lender.” Proverbs 22:5. In other words, debt is not a sin, but in most cases, it is just plain dumb!
A person’s intent is what can make debt dangerous. Credit cards and loans make it “easy” for us get the things we want. It is very dangerous when we allow ourselves to borrow other people’s money just so that we can have our desires. All too often, we allow ourselves to make frivolous purchases without praying about God’s will with His money. After all, we are only stewards of His possessions (“Let a man regard us in this manner, as servants of Christ and stewards of the mysteries of God” 1 Corinthians 4:1). The following are consequences that can come from getting into debt:
- Stress: Financial matters are the #1 cause for divorce in America. Actually, it is the stress and resentment that can build from different opinions and beliefs on financial matters. Debt can compound this problem greatly. Being debt-free helps provide peace of mind.
- Failure to Reach Future Goals: With rising costs and growing life expectancies, we need to start saving for our goals sooner than ever. Debt makes it all but impossible to adequately save for things like retirement, college education for the kids, or other goals. If you have a credit card charging 19%, it doesn’t make sense to put any money into investments. First, you should pay off the debt. The longer you are in debt, the harder it will be to reach your goals. Unfortunately, many wait until it is too late. According to Barna Research, “33% of born again Christians say it is impossible for them to get ahead in life because of the financial debt they have incurred (1997).” I imagine this problem has grown significantly since then.
- Restriction of Spiritual Growth: This is the most critical impact debt can arouse. God calls us to live a good testimony for Him and be able to help others in their times of need. If we are heavy in debt, we remove ourselves from these callings and blessings. “As the Scriptures say, ‘Godly people give generously to the poor. Their good deeds will never be forgotten.'” 2 Corinthians 9:9.
While the Bible does not determine that debt is wrong, it does teach that repayment of a debt is required. “The wicked borrow and do not repay, but the righteous give generously,” Psalm 37:21. Never enter into a debt you may not be able to repay. In conclusion, there are certain kinds of debt that can hurt you financially, mentally, and most of all – spiritually. Being debt-free helps align us to receive the blessings of God.