In early December, I read a short article on Marketwatch.com that stated that US household debt decreased for the 13th consecutive quarter. I read another story on that same day that stated that US household debt was almost equal to the US Gross Domestic Product (GDP)! In pulling together the single message that I got from reading both articles I reasoned that in the US, individuals like you and me collectively have a high amount of debt but we’ve been working since November 2008 to decrease this debt and actually pay some of it off.
A debt is an obligation owed by one individual to another. A debt is created when a lender (creditor) agrees to lend one or more assets to an individual (debtor). This agreement includes terms for repayment which is likely to consist of a payment schedule and interest. A debt can also refer to moral and/or other non-financial conditions.
A key point to note as you start to wrap your mind around this subject is that debt is created as a part of an agreement between two or more parties. It is not forced or entered into without our consent. Debt doesn't just happen to us, we must be willing participants to enter into debt. For this reason, it is important to understand what the biblical principles communicate to us on this topic so that we can govern ourselves accordingly.
The bible instructs us to avoid debt. Are you not aware that this instruction is in the Holy Bible? Do you have questions on where these instructions are located in God's word? Let's reVerse!
Let's establish and agree upon one thing: The Lord loves his people and has a desire for us to live a prosperous life. Principles in the Holy Bible support this fact. I've written about this earlier. Click here to read my blog post on this topic. It is important to establish this as a truth and keep this fact in hour heart and mind as we review what the scriptures say about debt.
Debt is slavery. Jesus died for our freedom and we should not enter into slavery with man.
The rich ruleth over the poor, and the borrower is servant to the lender. Proverbs 22:7 KJV
Ye are bought with a price; be not ye the servants of men. 1 Corinthians 7:23 KJV
To be in slavery is to operate under the control of another. When we are in debt, we financially operate under the control of those to whom we owe money. The bible clearly notes that this is a curse that will overtake those that do not obey the Lord.
By following God’s commandments, the people of God will be lenders to and rulers over many nations.
if only you fully obey the LORD your God and are careful to follow all these commands I am giving you today. For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you. Deuteronomy 15:5-6 NIV
Positive results for following the word of God, will include the heavens being opened, prosperity in the land and the people of God will not be borrowers.
If you fully obey the LORD your God and carefully follow all his commands I give you today, the LORD your God will set you high above all the nations on earth. All these blessings will come on you and accompany you if you obey the LORD your God: The LORD will open the heavens, the storehouse of his bounty, to send rain on your land in season and to bless all the work of your hands. You will lend to many nations but will borrow from none. The LORD will make you the head, not the tail. If you pay attention to the commands of the LORD your God that I give you this day and carefully follow them, you will always be at the top, never at the bottom. Deuteronomy 28: 1, 2, 12, 13 NIVThere are negative consequences for failing to follow the word of God, one of them is to be enslaved by debt.
However, if you do not obey the LORD your God and do not carefully follow all his commands and decrees I am giving you today, all these curses will come on you and overtake you: … The foreigners who reside among you will rise above you higher and higher, but you will sink lower and lower. They will lend to you, but you will not lend to them. They will be the head, but you will be the tail. Deuteronomy 28:15, 43-44 NIV
Does this mean that we should never borrow anything? I personally interpret this to me mean that we should not live a lifestyle of debt. A lifestyle of debt is one in which the way that one gets through their daily survival is by borrowing and accumulating debt.
Accounts in the Christian Holy Bible indicate that the people of God borrowed for different reasons. They borrowed so that they would have food to eat (Nehemiah 5:3), tools to do work (2 Kings 6:5) and they borrowed as instructed by the prophet to come out of debt (2 Kings 4:3). In these example of borrowing, the instance where debt was being accumulated to cover daily food needs was discouraged.
In Nehemiah Chapter 5, the people of God were hungry and there was a famine. Families in lack were borrowing and being charged high amounts of interest for their everyday food needs and to pay their taxes by those with abundance. This is an example of the rich ruling over the poor and the borrower being servant to the lender. Nehemiah, knowing the word of God, was angered by this and delt with the community on this issue. The Lord honored his word and Nehemiah's prayers.
Debt is discouraged. The people of God are to know and live by the fact that the Lord is the owner of the earth and everything that is in it and that He is our source for getting our needs met.
The earth is the LORD’s, and everything in it, the world, and all who live in it. Psalm 24:1 NIV
So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first his kingdom and his righteousness, and all these things will be given to you as well. Matthew 6:31-33 NIV
When you truly take this truth to heart, you will see a dramatic lifestyle change if you now operate in a debt lifestyle. Knowing that God owns everything and that He knows what you need and that His timing is perfect, we feel less of a need to have things "right now" and go into debt getting them.
Does this mean that we should not have a desire for nice and new things? Absolutely not! I love having nice things - and I do have some nice stuff if I must say so myself! The point here is that I have not been burdened by debt to get them. Many were blessings from the Lord that cost me no money! I will share some of these testimonies as a part of this blog and I know that some of you will think that I'm fabricating the truth in some instances. I'd love to get your feedback in the comments section of this blog when that time comes. These will be great discussions!
Note that the Holy Bible states that we have not because we ask not of God (James 4:2). James chapter 4 continues on in verse 3 to state that if you ask and don't receive you should check your motives. If we seek ye first the kingdom of God and His righteousness we should trust that He knows our needs and the perfect timing for us. When you feel need to borrow for your needs - and I emphasize needs - honestly ask yourself ' from where is this desire originating?'
You desire but do not have, so you kill. You covet but you cannot get what you want, so you quarrel and fight. You do not have because you do not ask God. When you ask, you do not receive, because you ask with wrong motives, that you may spend what you get on your pleasures. James 4:2-3 NIV
The first time that I took an honest look at my financial obligations was about 2 years after I completed college. At the age of 22, I was working for a large Information Technology Services firm and I was young, energetic and worked dilligently to ensure that I was producing quality deliverables for my computer services customers.
One day, there was a problem in the system that I was assigned to resolve and one deliverable from this fix was a printed report to my customers. I committed to have the report in their hands by noon. I completed the software programming changes, tested the changes and confirmed that the system issue was resolved to my satisfaction. I viewed the report on the terminal screen and again confirmed that my work was completed. Wow - As I type this I remember now what a great feeling that was then! OK... back to the story... The last thing to do to wrap-up this assignment up was to get the printed report so that I could hand deliver it to my customers. This is where the problems began.
Being in a large scale Information Technology processing center, we had no printers in our personal work areas. Our printing needs were being served by regular scheduled print deliveries from a centralized print operations center that was several suburbs away. To make a long story short, I tried 3 times to get the report in my hand to no avail. It missed the delivery truck, it was lost in shuffle of many large reports, the delivery truck was making rounds to other buildings – you name the excuse and it happened! My third attempt at 1 PM (one hour after the report was promised to my customers) was comprised of me driving to the print operations center to personally pick up the report only to find that it was mistakenly put on the delivery truck ignoring my telephone instructions to hold it for my pick up. You can guess the next account – drive back to the office – no printed report.
It now sounds like a Chevy Chase movie but then it sounded like rhythmic drums in my ears. As I angered, I could feel my muscles tightening and I could hear my quickening heartbeats audibly as my blood pressure elevated. After making a few unprofessional and unholy phone calls and sharing words of frustrations with my team members, I stormed out the office for the day. I arrived home just before 3 PM with my blood pressure so elevated that all I could do was to rest on my sofa. As I lay there and heard and felt the thumps of my increased heartrate, I decided that this job wasn’t worth it and that I was going to quit. There! That’s what I’ll do… Problem solved! I continued to rest and think. I realized that I had bills to pay and even though the bills were not stretching me financially, I could not quit my job until I paid off the debts and garnered some savings. I would need to do this in case I didn't land another job right away. I remember thinking…”I can do that… Instead of quitting I will have to go back to work tomorrow but I will work to get in a better financial position by saving more and paying my current debts so that I then would able to quit if I wanted to.” Like magic, personal fiscal responsibility became a part of my life. Silly way to get there but the thoughts and actions of our youth are not always sound but in this case it worked.
From that point forward, I purposefully avoided charging on credit cards and creating debt without first saving for the purchase and having a reasonable plan for paying off most obligations in 12 months or less. I still had debt and charged on credit cards but I did this in a more conscious way. I wasn’t debt free but debt payments didn’t consume a large amount of my income either. I did not have any personal financial managment education from home, high school or college I didn’t know about what God’s word said about debt and money management. I wasn’t following His commandments nor was I following in the footsteps of my friends and peers as they made several major purchases on credit in a short period of time. I continued to use my revised method of operation for non-mortgage debts for many years until I saw the vision of the ship. More about that later…
What are your current thoughts on personal debt? Are you living a lifestyle of debt? How much debt do you have today?
Today is a great day to take a look at your personal relationship with debt. A good way to do that is to create a list of your current debt obligations. Debt obligations include all established mortgages, credit card balances, balances owed for cars, furniture and other installment purchases. For each debt that you have, list the following information:
Creditor Name What was purchased
Account Balance Monthly payment Interest Rate
Total credit line (max amount that can be charged) – this is for revolving / credit card accounts only
With this list completed, you will be able to have an accurate, up-to-date view of your current debt situation. This is the first step in beginning, improving or resuming your financial management responsibilities in the area of your personal debts.
Debt-to-income ratio
Your debt to income ratio is a measurement that is used by creditors to determine your capability to take on more or pay your current debts based on how much you owe and how much income you have. This is calculated by dividing your current monthly debt payments by your total gross monthly income. For example:
Current monthly debt payments - $1,577
Current gross monthly income - $2600
Debt to income ratio – 61% (1577 divided by 2600)
This debt inventory exercise is a part of most commercial budget management software packages. Your can also do this by using a spreadsheet on your computer or with a simple pencil and piece of paper. For your convenience, I’ve created a simple spreadsheet that you can use to capture this information. This tool will enable you to capture and document the information I listed above and it will total the approriate colums and calculate your debt to income ratio for you. Click here to download this free tool to your computer.
If you’d like to ask for God’s help in your debt situation, seek him diligently. I know that the my Lord and Savior Jesus Christ hears and answers prayers. Here’s a prayer that you could use as a starting point in petitioning His guidance in this area.
Lord, I thank you for your word. I thank you that your word is living, active and sharp. I ask that as I read your word, the desire to study, know and operate as your word instructs increases. Lord, I repent for any financial decisions concerning debt that I made in the past that are directly against your word. Create in me a clean heart and renew a right spirit in me today Lord as I strive to operate as your word directs me in the areas of debt and borrowing. As I take the responsibility to write down and take charge of my debts, I seek your wisdom and understanding in managing personal finances following your principles. I thank you Lord that as your child, I am an lender and not a borrower. I receive your blessings of rain in its season as you bless the works of my hands. I commit to not be a slave to man and to be your servant only. Thank you for this divine understanding. In Jesus name I pray. Amen.
I welcome your comments, feedback and questions. Please post all feedback in the comments area directly below this writing.
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