Debt

The use of debt by individuals is growing rapidly in many countries around the world. Debt is money which one person is obligated to pay to another. Debt includes money owed on credit cards, bank loans, loans from family and friends, and property loans or mortgages.

1. God's Perspective on Debt
Debt is discouraged.

The Bible does not say that it is sin to be in debt, but it does discourage the use of it. "Let no debt remain outstanding" (Romans 13:8). The reason the Lord discourages debt is found in Proverbs 22:7, "The rich rule over the poor, and the borrower is servant to the lender. " The Lord wants His people to be free to serve Him, and not be financial servants to lenders.

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

"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 of the earth. All these blessings will come upon you. You will lend to many nations but will borrow from none" (Deuteronomy 28:1-2, 12).

2. How to get out of debt
Here are some steps for getting out of debt.

(1) Pray.
In 2 Kings 4:1-7, a widow was threatened with losing her children to her creditor, and she asked Elisha for help. Elisha told her to borrow empty jars from her neighbors. The Lord multiplied her only possession, a little oil, and all the jars were filled. She sold the oil to pay her debts and free her children.

The same God who provided for the widow is interested in helping us becoming free from debt. The most important step is to pray, seeking the Lord's help.

(2) Accumulate no new debt.

(3) List all your debts and everything you own.
List your debts to determine your current financial situation. Then decide whether you should sell any possessions to reduce debt.

(4) Use a written spending plan or budget.
Develop a written spending plan to ensure that spending does not exceed income. Some people need to lower their spending to get out of debt.

(5) Establish a repayment plan for each debt.
Most creditors are willing to work with people who honestly want to repay their debt, so communicate regularly and follow through.

Try to pay off the smallest debts or those with the highest interest rate first. Once you have paid off the first debt, add that payment amount to the regular payment for the second one you want to pay off. Then, when that one is paid off, apply both payments to the next debt and so forth until all debts are paid.

(6) Consider earning additional income.
Many people hold jobs that simply do not produce enough income to meet their needs even if they spend wisely. They may need to earn additional income to stay out of debt.

3. When is debt acceptable?
Scripture is silent on when using debt is acceptable. In our opinion, it is permissible to owe money for your business, for the purchase of a home, or for education for your vocation. If you borrow for any of these uses, follow these guidelines:

o Make debt the exception and not the rule.
o Plan to repay what was borrowed as soon as possible.
o Create a written repayment plan.

4. Cosigning
Cosigning relates to debt. Anytime you cosign, you become legally responsible for the debt of another. It is just as if you borrowed the money and gave it to your friend or relative who is asking you to cosign. The Bible discourages cosigning. Proverbs 17:18 reads, "It is poor judgment to cosign another's note, to become responsible for his debts" (TLB).

[The text is from "Principles of Financial Success", a seminar presented by Crown Financial Ministries.] ¶ 10:09 PM