A Biblical Worldview of Debt

Shawn (00:00): Are you feeling the weight of debt dragging you down? You’re not alone. The average American household carries tens of thousands in consumer debt, and even our own government is approaching $40 trillion in the red. But what does the Bible actually say about borrowing money? Is debt a sin? And what can we do to find freedom? Today, Bob Barber is going to walk us through the biblical worldview of debt. Let’s get some perspective. Welcome to Christian Financial Perspectives. I’m Shawn Peters, joined as always by Bob Barber. Bob, today we’re tackling a topic that affects just about everyone listening or watching debt. And you actually wrote an article on this called The Biblical Worldview of Debt. What made you want to put this together? Bob (00:50): Well, Shawn, after 40 years in this business, I’ve seen debt hurt a lot of people. And I have used debt in my own life, so I’m not going to point fingers at anybody. I’ve used it in real estate many times, but that’s about it. I haven’t used a lot of consumer debt. I don’t think I’ve ever carried a balance on a credit card, but I’ve seen so many people that have. And how truly you become a slave to the lender. And one of the things I want to make sure that we point out is that debt’s not a sin. The Bible doesn’t say debt is a sin. But it says the unwise use of it is. Shawn (01:36): So I just kind of wanted to lay it all out in one place for why you put this together with the biblical worldview of debt. Bob (01:43): And it really took me a long time. I remember when I wrote the article, it’s only about three pages, but it took me like two, three weeks to write it because I wanted to make sure to get this right about it. Because as you know, Dave Ramsey, one of the most popular guys in America about debt. I mean, he’s made his entire career helping people get out of debt. And so was Crown Ministries the same way. So, I want to make sure I cover this in the right way from a biblical viewpoint and give some practical steps. Shawn (02:14): Good. Well, that’s exactly what we’re going to do today. We’re going to dig into what the Bible says about debt, why people get into it, the dangers, and then how to get out. Sound good? Bob (02:22): Yeah, sounds good. All right. Shawn (02:25): Well, let’s do it then. So, Bob, let’s start right at the foundation. A lot of people assume the Bible says debt is a sentence. What’s the truth? Bob (02:34): Well, the truth is Proverbs gives us a couple warnings about it that, “The rich rule over the poor and the borrower is slave to the lender.” This is from Proverbs 22:7; 26-27. And it speaks of, “Do not be one that shakes hands in pledge or puts up security for debts because if you lack the means to pay, your very bed will be snatched out from under you.” And security for debts, if you look when you’re signing a mortgage agreement, you’ve got to be careful because I’ve seen that security, meaning that it goes beyond just your house. It goes to other areas. And I remember this was a big thing with me years ago, like 30 years ago with a lending institution on a real estate debt, and they wanted me to put up securities for debts. And I said, “You got to take that out of there. I’m not signing that. ” (03:24): And they did. And there’s another scripture that says that, “The wicked borrow and do not repay, but the righteous give generously.” Shawn (03:33): Which is Psalms 37:21. Bob (03:35): And that scripture’s all about this, Shawn. You notice it says, “But the righteous give generously.” It’s hard to give when you’ve got a lot of debt over you. So both of these scriptures say, it doesn’t say that it’s a sin to borrow, but you become a slave to the lender. You become enslaved to that. And I think there’s another great scripture that Jesus spoke of that talks about if you want to build a tower, it’s in Luke 14:28, “Suppose when he wants to build a tower, won’t you first sit down and estimate the cost to see if you have enough money to complete it.” So, we’re going to get into some areas about debt, like assumption of the future that you have no idea about. Shawn (04:15): Yeah. So, these scriptures point to the dangers of debt, the importance of paying it back, and the need to count the costs like that last scripture, Luke 14:28. When we borrow irresponsibly, we take control over allowing God the opportunity to provide what we need. Okay. National debt. Now, Bob, you also wrote about this on a much larger scale, so the national debt. Bob (04:39): I did. Shawn (04:40): And the numbers are staggering. Bob (04:42): They are. I just looked at the debt clock yesterday, and you can go to debtclock.org, that’ll tell you what we’re- Shawn (04:48): I wouldn’t recommend going to that site. Bob (04:50): It’ll scare you. Numbers just going like crazy. But it’s not going to be long before our country’s $40 trillion in debt. And when you take the population of the United States, which is- Shawn (05:03): Now, Bob, 40 trillion. Bob (05:04): 40 trillion. That’s a 40 with 12 zeros. Shawn (05:07): A 40 followed by 12 zeros. Bob (05:09): That’s right. 40 trillion. And now when you take that and you divide that by our country’s population, which is estimated to be somewhere around 350-360 million, that comes out to $100,000 of debt for every man, woman, and child in the United States. Shawn (05:27): It’s not just every adult. Every person. Bob (05:30): Every person. And you know, Shawn, this is just the federal debt. This is not including the debt that your state might be in or the debt that your county or city may be in as well. So,debt – Shawn (05:44): So effectively, my family of five, Bob (05:47): Think about that. Shawn (05:48): Including our seven-year-old, our four-year-old, and our not even quite one-year-old- Bob (05:51): You owe $500,000. Shawn (05:53): We already owe $500,000 just from the federal debt. Bob (05:55): Exactly. Shawn (05:55): For our share. Bob (05:56): Yeah. Yep. And you know, the big deal about debt today too is- Shawn (06:02): I don’t even owe that much on our house. Sorry. Just wrapping my head around that. Bob (06:07): I don’t either. I don’t either. And there’s daily discussions about debt. You can’t go to any financial channel or TV program or whatever. And there’s daily discussions about what the Federal Reserve is going to do with debt. And the Federal Reserve, when they lower interest rate, it causes inflation because everybody goes out and buys. And we saw this three or four years ago. We all remember when interest rates went to 50, 60 year historic lows for mortgage rates, the prices of homes nearly doubled. And now the interest rates have gone back up. Home prices have come back down. I’m not saying that interest rates totally control inflation, but they do, and the Fed knows it. Because that’s how they use that. Shawn (06:53): Think of it as it’s a lever. It’s not the only lever. It’s not guaranteed if you go one way or the other, that’ll immediately make a change. But yeah, it definitely can affect it. But Bob, I was just kind of reading through your original article, but our government’s irresponsible spending habits, you had something in there, have enslaved us through overtaxation. I thought that was a really interesting way to think about it, that without really our choice being part of it, we’ve basically become slave to the lender through the overspending. Bob (07:28): And the taxation, when you start thinking about all the taxes that we have to pay, it’s not just income taxes, it’s state taxes, it’s property taxes, it’s sales taxes. You pay tolls on roads. I mean, it’s enormous the amount of taxes that people have to pay. Shawn (07:46): Well, it was what, just three to four years ago when the mortgage rates had fell to those super low rates. I think the federal funds rate at the time was what, like zero or. Bob (07:55): Yes, it was. The federal funding went to zero and- Shawn (07:58): I mean, there are people getting mortgage rates at under 3% on a 30 year loan. Bob (08:03): I got one, Shawn. I got a 2% loan. It’s like a 10% loan to value on our house, but it’s like free money. I mean, you can go make that more than that in a money market account. Shawn (08:14): Well, Jenna and I missed it both times because we were happy when we got 5.25% back in 2010. And then when we had to refinance, it was like, yeah, we got 5.0-5.5%, whatever it was. But when you look at the historical rates, that’s actually kind of around the norm. That 5-6% is kind of a normal. It’s not too high. But it’s not too low to cause rampant inflation. Bob (08:37): Right, right. But right now we have a president that wants to take them to 1% again. Shawn (08:44): Can you imagine, Bob, how low the prices of things like real estate, vehicles, RVs, et cetera, college education would be if borrowing wasn’t a thing anymore or it was like, “Oh, if you want to borrow, it’s going to be 15%.” Bob (08:57): Yeah. We’d say, “Well, I’m not going to borrow it then.” Right. Shawn (09:01): We’d probably have a little bit less of a debt problem. So, Bob, why do people get into debt? Bob (09:06): This was a real soul searcher of mine as I was writing this article on that and there’s like three major points I believe that … And I came up with this. I kept looking at this and I’m going, “This seems like the reason that debt offers instant gratification.” Shawn (09:25): So like the buy now, pay later, all the rise of those. Bob (09:27): Exactly get it right now, but even if you can’t afford it, you can get it right now and instead of saving over time and then buying it. Shawn (09:36): You may not believe me when I say this, but I have seen it. There are instances where people have actually used those buy now, pay later services to purchase something from like, I won’t mention the name of it, but there’s a bell and they’re inspired by Mexican cuisine type thing where you’re buying basically tacos on buy now, pay later, which is just- Bob (09:57): Insane. Shawn (09:57): Why? How? How could that even be allowed? I mean, that’s really taking advantage of people by that psychology, that instant gratification. Bob (10:09): Another area saw is I think people are not content with what they have, Shawn. They’re not content with driving that older car because they can go get… or the present furniture or they don’t like the color of the countertops because of what they saw on HGTV. By the way, all the colors are going dark now where they’ve been light over the last few years. You know what? That’s all a ploy just to get you to buy. Shawn (10:30): No, no. It’s totally better now. Yeah. Bob (10:35): So I think- Shawn (10:35): The color makes it different. Bob (10:37): I think a lot of it has to do with, they’re not content with that. They want the bigger and the better and the newer and kind of comes into the play of the 10th commandment. They start coveting what other people have and debt allows that to happen. Shawn (10:54): Well, Christians are guilty of this too when it comes to debt, but I do think that there’s the public at large, it’s a little bit of the God-shaped hole of there’s something missing. And so there’s that tendency in this and why debt sometimes tries to fill that need is, well, maybe if I just had the new thing or this new model or then I’ll feel better, then I’ll feel happy, then I’ll feel that joy and it’s never going to work. Bob (11:23): It satisfies those, what we call those emotional needs and you got to be careful and not ever mix finance and emotion.That messes things up. We’re going to get into the next on the dangers of debt. It’s just amazing to me how fast you can get into debt, but then how long it takes you to get out of it. It’s like I’m going to put a collar around your neck and the high interest rates on these credit cards and consumer debts really make it difficult to pay down the principle so the debt just grows exponentially. I think you started with, you said tens of thousands. I didn’t know it was that high. People get that high in credit card debt? Shawn (11:58): Yeah. Wow. When I was looking up the … And obviously this is average. Bob (12:02): Okay. Shawn (12:02): So there’s some people that don’t have any debt, but yeah, it’s tens of thousands. Bob (12:08): Tens of thousands. You mean like 20k? Shawn (12:10): 10 to 20 is common. Bob (12:13): Okay. Shawn (12:14): At a minimum. And that’s like money that didn’t get paid off by the due date and now it’s accruing interest as much as what is it like 25% or 28% on some of the credit cards? Bob (12:23): Yeah, it’s crazy. It’s crazy. It’s insane. The third area is consumer debt, what we were talking about in the credit cards, while we’re going to get into good debt and bad debt later. And so purchasing a home, I don’t really consider bad debt because you’re building equity, all right? But the consumer debt limits those options because it really can lower your credit scores and it gets you caught up in that and you don’t have the money for emergencies or even saving for retirement. So, that’s one of the dangers, especially of consumer debt. Shawn (12:57): So number one, just the fact that you can get into it so quickly and it can take years to get out of it, super high interest rates, especially on credit cards, and then the consumer debt limiting your purchasing power for a home, causing lower credit scores and limiting your ability to save for emergencies or for retirement. So, what would number four be? Bob (13:17): The mental stress. I mean, it’s stressful. And I’ve heard of people losing sleep over it. It destroys relationships. Many marriages are destroyed by debt. Shawn (13:30): I mean, I think the number one reason for failed marriage is still finance related, money related. Bob (13:36): Yeah. You just can’t do the things that you used to could do because the debt restricts all that. So, I think we’ve covered some main ones here. Shawn (13:49): Number five be, I guess kind of related to number four, but just restricting your choices where maybe you can’t get the healthcare that you need or you can’t eat as good of food, as not as nutritious of food, can’t do as many maybe fun recreational activities with your family because you can’t afford it. Bob (14:08): Yeah. Shawn (14:09): So number six. Bob (14:10): You just get caught up. You get caught up in this vicious cycle and the need to pay for necessities on the credit just becomes a cycle. You just keep adding and adding and adding to it. I’ve seen this and that’s where you notice all this kind of leads into the next one. Shawn (14:26): The debt presumes upon an unknown future. Would you like me to read the scripture? Bob (14:32): Yeah. I’d like you to read this scripture because I want people to take this one at heart about what debt presumes upon an unknown future. Yeah. Shawn (14:38): James 4:13-15, “Now listen, you who say, ‘Today or tomorrow, we will go to this or that city. Spend a year there. Carry on business and make money.’ Why? You do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. Instead, you ought to say, ‘If it is the Lord’s will, we will live and do this or that.'” Bob (15:07): Shawn, neither of us even know if we’re going to be here tomorrow. Shawn (15:11): Nope. Bob (15:11): I mean, we’ve got a major highway right here and a lot of traffic. And I hope the Lord … I mean, I pray Psalms 91 nearly every single day over you and the family and everyone, but we don’t know. And when we take on debt, what we’re doing is we’re really assuming we’re going to be here and there’s a saying here, you ready for this? I want everyone to listen to this right here. This is really good. “Debt is the practice of consuming today the fruit of tomorrow’s labor.” Shawn (15:43): I like that. I don’t like the idea of doing that too often, but I like the phrase of a way to think about it. Bob (15:52): It’s really making a guarantee or a pledge to pay without a guarantee that we’re going to be here because no one knows the future, only God does. Shawn (16:04): That’s true. That’s true. And you also have the majority of borrowing presumes on the future. It’s making a pledge or guarantee to repay without a guaranteed way to do so. Bob (16:16): I’m glad you repeated that. Shawn (16:16): Since no one knows the future. Bob (16:17): Yeah. Yeah. And it’s pursuing our own will. So, listen to this one. When we go into debt, are we not pursuing our own will over God’s possible will? I mean, does God want us to be enslaved? Shawn (16:28): It depends on what it is. Like you said, if it’s for a home and it’s a home for your family and it’s a reasonable amount of debt. Bob (16:37): Right. Shawn (16:38): Okay. But if it’s just to buy the newest model of something that’s not going to be worth anything in a couple years anyway, probably not. Bob (16:46): That’s my point here is that if we’re just growing in materialism, which is what debt will do, rather than our faith and dependence on God. So, let’s put our faith independence on God and save for it and what a novel idea and then pay for it. Don’t try to get in front of God. And that’s what debt does. It gets you in front of God and it’s implying, “Well, God, you’re not providing me with enough.” Because many times debt is based on wants, not needs. Shawn (17:17): Yeah, that’s true. Bob (17:17): Right? Shawn (17:18): That’s true. So this is God’s way of providing what we need is often to deny us what we selfishly want right now. Bob (17:28): Yeah. Yeah. Yeah. Shawn (17:31): We’ve got a couple more scriptures. Philippians 4:19, “And my God will meet all your needs according to the riches of his glory in Christ Jesus.” And 2 Corinthians 9:8, “And God is able to bless you abundantly so that in all things at all times, having all that you need, you will abound in every good work.” Bob (17:50): You notice it doesn’t say- Shawn (17:51): I noticed you had underlined a word there. Bob (17:53): Yeah, I did. I did. Because you notice, and God will meet all my wants. It doesn’t say that, does it? Shawn (17:59): No, it doesn’t. Bob (17:59): It says, “God will meet all my needs.” There’s a difference between wants and needs. Shawn (18:06): All right. Well, for those of you who have stuck with us to this point- Let’s answer the question. Is it okay for Christians to borrow money? Bob (18:14): Yes. It depends on the reason, but like I said earlier, it’s not a sin to borrow money. Nowhere in scripture does it say it’s a sin to borrow money, but it gives us a lot of warnings about irresponsible debt and also that it’s a sin not to pay it back because that’s dishonesty. So, you’ve got to pay it back. Shawn (18:36): So it’s not a sin to borrow, but there are warnings about being irresponsible in how much you borrow, and then it is absolutely a sin to not pay it back because that would be dishonest. Bob (18:50): And if you stuck with us this far- Shawn (18:52): Like let your yes be yes and your no be no, like you said, you were going to pay this back, so you need to pay it back. Bob (18:57): If you stuck with this far, this is probably the most important thing to say in this entire program today. The more debt you have, the less you have to give, live on, save, and invest for the future. Say that again. You say it for me. Shawn (19:17): The more debt you have, the less you have to give, live on, save, and invest for the future. Bob (19:26): Yeah. Because there’s only so much in that pie, right? Shawn (19:29): Yeah. Bob (19:31): Unless you borrow more and try to, and then you’re just getting in a worse habit. Shawn (19:35): So debt is not inherently sinful, but it poses many risks. Bob (19:39): Yeah. Shawn (19:39): All right. Good debt versus bad debt. Bob (19:43): Well, I kind of said it already, but bad debt is anything that historically depreciates like a car, because what’s happening is you’re depreciating, you’re going down in value and you’re adding interest. Shawn (19:56): So, you’re losing value. Bob (19:57): On top of that…Okay. So basically you’re resulting in a double loss. Shawn (20:02): Yeah. So, good debt. Bob (20:06): Good debt is going to be anything that over the long term, which we’ve seen, real estate as an example, in a good location. Some people- Shawn (20:17): Doesn’t mean just any real estate. Bob (20:19): No, not any real estate. Right. Where the interest paid is going to be less than the equity gained, then it’s not bad debt. I mean, and you’ve got security for that debt, which is the real estate is tied to that real estate. So, I look at real estate as good debt, and Don that works with us was in the lending institution for a long time. He pointed out also that debt is used as a way to fund businesses and capitalize businesses. My grandma gave me a loan right out of college, which I can say happily I paid her back within a year. Shawn (20:59): That’s good. Bob (21:01): But she gave me a loan to help start my own first business. Shawn (21:04): So in that case, the debt is actually being used to fund growth. It’s creating new wealth, new income, and it’s not just, “Oh, we’re just purchasing a thing that hopefully appreciates in value or depreciates in value.” Bob (21:22): There’s some biblical examples of that, but I don’t have the scripture here on it. Shawn (21:26): All right. But Bob (21:26): I remember Don gave me some biblical examples of that. Shawn (21:28): So, our next section, getting out of debt. Bob (21:30): Get out of it. Yeah. Shawn (21:31): What do you have to say on that? Bob (21:32): Well, if you’re in debt, make it a goal to get out of it as quickly as possible. Avoid all consumer debt. That means for any depreciating items like a car, RV, boat, furniture, don’t borrow money to buy those. You’ve heard of this next one that this is kind of Dave Ramsey, and I remember Larry Burkett talked about this one too, is the debt snowball. So, if you have four debts, just pay the interest on the first three and take all the payments that would go for those first three and put them on the smallest debt. And then when you get that paid off, then you do the next smallest debt. And what happens is that creates an accelerating snowball effect to get the debt paid off. Shawn (22:20): Got it. Bob (22:20): Yeah. Shawn (22:21): Okay. Okay. What else? Bob (22:23): Well, I think you should seek wise counsel when you are struggling with debt. Go look for a Christian advisor to help you with that. And churches everywhere I know of, they’ve been teaching and offering Financial Peace University. Shawn (22:40): Which is great. I mean, whether you’re in a lot of debt, you’re in no debt, whether you’re someone that maybe you have some, but you can still, you’ve historically handled it responsibly, it’s still a really great course to take. Bob (22:52): It is. Shawn (22:53): There’s a lot you can learn in that. Bob (22:55): I’ve led that course probably 15 times over the years. Shawn (23:00): The one thing you’ll hear contrary to what we’re talking about today is that you want to get rid of all debt. Again, it’s okay if you have a reasonable amount, say on your home. Now, if you can get it paid off, I mean, great. Not going to say that’s a terrible thing, but that’s the one part where I’d say we’d come- Bob (23:17): Well, the average home here in New Braunfels where we make the program is about $400,000 – $500,000. Not many people have that much saved up. Shawn (23:24): Right. Yeah. Bob (23:25): Okay. Shawn (23:25): And then one more, Crown Ministries is another great resource for those in financial bondage. They’ve got a mentoring coaching program. They even have a thing to help you with basically, I think it’s the consolidating of your debt, again, to try to help you be able to pay it off, similar to snowball effect, but it’s more official. Bob (23:46): Well, I mean, I remember Dave Ramsey one time and here we gave him the Larry Burkett Award at Kingdom Advisors and he said, yeah, he learned everything he knew from- Shawn (23:56): It’s awesome. Bob (23:57): From Larry Burkett, which started Crown Ministries. Him and Ron Blue started Crown Ministries. So, it’s kind of the original out there. Shawn (24:04): So, what are some benefits of being debt free? Bob (24:05): Yeah, as we get done here. Shawn (24:06): Are there any benefits? Bob (24:07): Yeah, absolutely. I can tell you that firsthand, all right? Reduce stress and better health without that debt weighing down on you, it’s less financial anxiety. And I think it also helps you spiritually, mentally, and like I said, physically. It gives you a lot of flexibility. Because we’re debt free, we can give more to charities. Shawn (24:30): So the financial flexibility. Bob (24:33): We can travel when we want to. We can invest when I see an investment opportunity come along. I can jump on it really quick. I can purchase appreciating assets because I’m not in debt. Definitely it gives me security. Shawn (24:47): Okay. So, increased security. Bob (24:49): You’ve got a safety net. It’s easier to handle unexpected hardships. Like when Rachael got cancer, we were able to handle that. That is a definite benefit of being debt free. And the last is instead of paying interest, you’re making interest. You’re making returns on your money. So, you’re going the exact opposite direction, right? Shawn (25:12): Yeah. Yeah, that’s true. Bob (25:14): And then the main benefit, go ahead. What is it? Shawn (25:16): Freedom from financial bondage. Bob (25:18): Yeah. Shawn (25:18): Yeah. Bob (25:19): Yeah. Shawn (25:19): All right. Well, we got some key takeaways for you. Thanks for sticking with us. First one, if debt has become a problem, it is always good to seek wise counsel. And financial planning should play a key role in managing debt, including monthly income, expenses, annual tax liabilities, age assets, goals, whatever else might go along with that, but with a qualified, fee-only, fiduciary based financial planner. Not all are created equal. So, if you go to someone that makes most of their revenue on commission products, I’m not saying that there aren’t any people in that situation that would do the right thing and give the right advice, but there is a big financial incentive for them to do what’s going to make the money. Bob (26:05): And let me share this next one, Shawn, because you know I’ve been doing this for 40 years, okay? The breadwinners in a family, like you have debt on a mortgage, should have adequate term. I say term, term life insurance coverage to cover all those debts in the case of a premature death. I’ve seen this happen and it was so fortunate that the life insurance was there to pay off that debt so that the surviving spouse and in like four or five cases, the surviving spouse was a stay at home mom. So, it was a good thing that there was enough life insurance coverage there. Shawn (26:48): Yeah. And so last one, save up enough cash and savings for buying depreciating items like cars, vacation, new furniture so borrowing doesn’t have to be an option or borrowing doesn’t end up being the only option. All right. Well, thank you so much for joining us. As always, if you have questions, comments, suggestions, or jokes, feel free to call or text us at 830-609-6986. You can also visit our website, www.christianfinancialadvisors.com. And if you’re on YouTube or wherever else you’re watching, listening to this, there’s a comment section. So, we keep an eye on those as well. As always, thank you so much and God bless.