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Virtuous Blonde and I sat down again this past weekend trying to figure out, for this month, what we should do with the money that the Lord has entrusted to us. It’s a big responsibility. At one point in our life, we allowed ourselves to go into debt on a couple of cars. Then we tacked on part of a payment for a new roof.
The question came down to what is important as far as priorities in our house. You see, we picked up a copy of Dave Ramsey’s book, the Total Money Makeover. What was most eye-opening for me was two concepts. The first, the sheer amount of money that we make in a life time– and just how much we are blowing in interest. The second goes along with Harry Bethel’s next list item for pastors:
A God-sent pastor would accept and apply the truth of Romans 13:8 to not owe any money or finance anything including houses, automobiles, furniture, appliances, church buildings or have business loans or loans for anything else. He would not use or have credit cards. He would trust in the Lord to provide all his needs. He would accept the truth that the borrower is slave to the lender (Proverbs 22:7).
Yes, Proverbs 22:7 is a powerful verse– the borrower is a slave to the lender. This is exactly the reason that you should not lend money to family. It should be a gift, but I digress. We should desire to be “slaves” to Christ alone, and as Christians we should want to stay away from debt.
There are many Christians in bondage as we speak. My family being one of them. Lord willing, we will be out of all but the house by this time next year, but that’s not the point. Debt is something that grows. They wouldn’t be offering you a card if they didn’t expect you not to pay off your balance every month. They throw on gimmicks to get you to sign up because that more than 60% of those who have cards carry a balance from month to month.
Christians should stay away from, or get out of debt. Ramsey believes that the only debt that’s acceptable is a mortgage for a house– and even then it should be a 15-year mortgage. Good stewardship demands that we do what is financially prudent.
That being the case, I’m personally aware of many Pastors that are debt free (including the house which can be a parsonage), though I have seen some that have many struggles with money and debt. It should be something avoided. Chop up those cards and start paying them off!
I don’t really see the logic of why mortgage debt is any better than other debt, although the principle of paying it off quickly is sound.
Yesterday there was a news report that people in the UK have the highest levels of debt in Europe. Apparently elsewhere in Europe there are much lower levels of home ownership. Germans, for instance, are much more likely to rent than own a home – and this also means they are less likely to take out unsecured loans for home improvements, and repairs.
In Italy, apparently, there are very high levels of single adult males still living with “Mamma”. Again this reduces levels of mortgage debt (and presumably means that these bachelors are much better fed too!)
I think it is right that we strive to avoid debt. I wonder though whether David Ramsay has considered that one of the ways we can put our faith in Christ is to avoid the apparent financial good sense of buying property (so that we might enjoy any capital gains).
Not an issue on which I would like to be prescriptive – but Christians should be more aware of the problem of debt. Thanks for raising the issue.
Ramsey actually has a few things to say regarding the house. Usually he would say to sell the house (as he would other things that you have like the extra car, etc.) in order to get out of debt. And yet, he believes that there is such an emotional attachment to a house that it’s better to leave that to a later step in his money makeover scheme. I feel like a Dave Ramsey apologist, but his concept is retraining you in what ways to use your money rather than just giving you a get rich quick scheme. For instance, the whole house and debt reduction steps– if it’s not going to be done in a quick time peroid, he suggests investing in retirment, but if it can be paid off in a hurry, he suggests not putting money into retirement so you can stop paying others interest.
In any case, it’s something that has ensared a lot of Christians, and this may not be the only post where we explore this issue!
I can’t wait to get my hands on Dave Ramsey’s book…I’ve heard so much about it, from friends and family who are revamping their lifestyle according to Dave’s plan.
When we bought our home, my dad convinced dh and I to go the 15 year mortgage route…only 6 years left, yay! Alas, we borrow at the drop of a hat when dh wants a different vehicle etc.
We do have a credit card, but it’s for “emergency” only and to help our credit reports. We went ten years without cards and had NO credit; strange indeed in this world of credit, to be guilty of paying cash! We were too leery of the debt trap, heard/seen too many horror stories of people getting in over their heads!
Great post, I’d be interested in more on Christians and finances!
Ah Debt. The Holy Spirt has really been working on me with this one. It seems every step we take, God keeps nudging me a step farther. Meg and I have two forms of debt right now. Our mortgage, and a home equity loan. We use credit cards almost exclusively, but pay them off every month (usually earlier then required). We do not have a car loan, nor have we ever had a car loan. I purchased the car we have now new with cash while I was still in college. I had been saving up to avoid debt. We’ve thought about getting another car many, many times, but we’ve never been able to justify debt for purely convenience.
With all of this you might ask “Why the Home Equity Loan?” There came a time where we needed to get some work done on our carport (attached to the house), or it was going to cause a much more expensive structural damage. I could have financed with short-term debt that would have been paid off quickly. However at the time I did the calculations and found that if I took out a home equity loan and invested the extra money not used I make modest income with tax considerations. When rates went up, I would start making money money. Functioning out of my rational brain, I made the decision to get the Home Equity Loan.
That Home Equity Loan is at its fixed rate of 4.99%. My savings account now pays 5.15%. I am making money off of holding debt, but God’s really been working on me to get rid of it soon. It makes no rational sense. I’ve had Christian’s I admire who have told me I should not get rid of this debt, and its a good thing. While its contrary to my business training, I don’t see anywhere in the bible where they talk about “good debt” and “bad debt”. Maybe I’m missing something.
Meg and I are on track to be completely out of debt within the next 5 years. My goal is to own our house before I turn 30 (~3 years). It is conceivable if we sold our house now we would be able to purchase another house outright off of the profit. I’ve just been praying on the timing.
And DLOGANs wife is totally eager! God’s been working onmy heart about getting rid of possessions!! and preparing to live in a smaller space! WOOHOO a big adventure! think of all the planning! all the preparing so that every inch is useful!
Mrs Meg Logan
Interesting.