Debt is Not Your Friend

Debt seems to be a way of life in modern day America. We have mortgages, car payments, credit cards, home equity lines of credit, second mortgages, student loans, loans from relatives, bank overdraft charges, payday loans and past due bills.

That mountain of debt is ruining families and marriages. We have talked to so many people who are struggling with debt and overspending in various forms. When we drive through neighborhoods, we see beautiful homes on the outside that are wracked with pain and trouble on the inside due to mountains of debt.

We know how that feels, because we were once in that position with a mortgage, two car loans, a ton of credit card debt and no savings. It is not a nice place to be.

It was only by learning and applying with the Bible teaches that we were able to dig ourselves out of the hole, control our spending, pay off the debt and save for the future. It wasn’t fun at first. In face it was a very painful transition. I remember times when date night was taking a walk in the neighborhood park. And a really fancy date night was topping off the night with an ice cream cone.

But working together on a common goal that was beyond challenging made us stronger as a couple. And using Scripture and our faith as the guidepost for that goal gave us the strength to persevere.

Scripture does not call debt a sin, but it does strongly discourage us from being in debt. Proverbs 22:7 tells us that “The rich rule over the poor, and the borrower is the slave of the lender.” If you don’t think you are a slave to debt, try missing a few payments and see how much of a slave you are to your lenders.

When we are in debt, we are truly a slave to the lender and the deeper in debt we are, the more enslaved we become. Debt means we have no freedom to decide where or how to spend money as it is already obligated to meet our debt payments.

In the Old Testament, being out of debt was one of the promised rewards for obedience.

“If you continue to heed the voice of the LORD, your God, and are careful to observe all his commandments which I enjoin on you today, the LORD, your God, will raise you high above all the nations of the earth. When you hearken to the voice of the LORD, your God, all these blessings will come upon you…. you will lend to many nations and borrow from none.” (Deuteronomy 28:1-2, 12)

On the other hand, debt was listed among the curses for disobedience. “If you do not hearken to the voice of the LORD, your God, and are not careful to observe all his commandments, which I enjoin on you today, all these curses shall come upon you and overwhelm you…. The alien residing among you will rise higher and higher above you, while you sink lower and lower. He will lend to you, not you to him. He will become the head, you the tail.” (Deuteronomy 28:15, 43-44)

When we get into debt, we’re assuming that we will earn enough in the future to repay it. But can we really assume such a thing? The Bible strongly cautions us against such presumption: “You who say, ‘Today or tomorrow we shall go into such and such a town, spend a year there doing business, and make a profit’ — you have no idea what your life will be like tomorrow…. Instead you should say, ‘If the Lord wills it, we shall live to do this or that.’” (James 4:13-15)

Most people slowly slide into debt and it’s easy to do. It’s overspending on Christmas or vacations. It’s not having an emergency fund and using the credit card when there’s no money in the savings account to cover unplanned expenses. It’s getting laid off or having a medical emergency. It’s any number of things that happen to all of us. The problem is that each penny of debt results in having to pay interest on the debt.

Sirach 20:11 is the perfect verse for the results of debt, “A man may buy much for little, but pay for it seven times over.”

The typical American family has about $15,000 in credit card debt. Assuming they are paying the typical interest rate of 18%, they are spending $225/month in interest or $2,700 a year in interest only. And that’s just on credit cards. It does not count interest on the mortgage, car loans, student loans, past due bills, etc., etc.

Think of how much that $2,700 adds up over time. In 20 years, the number will balloon to $54,000 in interest payments. Without paying interest on debt, that’s $54,000 that could have been saved.
Looking at the opposite side of PAYING interest is EARNING interest. Take the same $225 paid on credit card interest and save it each month for 20 years. At the end of 20 years, at 2% interest you’ll have almost $70,000 in your savings. Higher interest rate on your savings will grow that nest egg even further.

Paying interest is just throwing away money. That $2,700 in interest a year is like throwing away $8.00 each and every day for 20 years. It adds up to a lot of money!!!

In the meantime, whatever was bought on credit is probably lost, used up or no longer valid by the time the credit card is paid off.

Many people raise their lifestyle through debt, only to discover that the burden of debt then controls their lifestyle.

If you are trying to get ahead, build up savings for college, or a home, or retirement, paying interest is not going to help you get there. If you think you don’t have enough money to save $225 each month, how can you possibly be paying $225 in interest payments?

Debt is definitely not your friend!