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A Declaration of Independence from Debt

  • Larry Burkett Co-CEO of Crown Financial Ministries
  • 2003 29 Sep
A Declaration of Independence from Debt
Regardless of what our society may believe, debt is not normal in any economy and should not be normal for Christians. Our economy is driven by high levels of consumer spending, which are made possible by easy access to credit.

This dependence on credit (debt) is a symptom of a problem that affects many areas of our society: unwillingness to follow God's directions. We also see evidence of this problem in America's high rates of abortion, homosexuality, pornography, adultery, and promiscuity. There are Christians who would never think of participating in these sins, yet they naively follow the world's path in the area of credit.

If you're a Christian who's in debt, you potentially are in a position of servitude, even if all your payments are up to date. As Proverbs 22:7 says, "The rich rules over the poor, and the borrower becomes the lender's slave." That's why it's important for you to become debt free, including your mortgage.

At this time of year, we celebrate our victory over England in the American Revolution, which resulted in the freedom we enjoy today. Our determination to win that war was galvanized by our Declaration of Independence. Why not use this opportunity to declare your independence from debt, establish a budget, and begin to pay off your credit card balances, small loans, and mortgages?

Is borrowing wrong?

Perhaps fewer Christians would accumulate debt if God's Word prohibited borrowing. But no Scripture says, "Do not borrow money." At the same time, no Scripture encourages borrowing, which is always discussed in the Bible as a negative, rather than a positive, principle.

Principles are not laws; they are instructions from the Lord to help guide our decisions. But negative consequences may result from ignoring principles.

One biblical principle related to borrowing, Proverbs 17:18, tells us about the danger of accepting surety on a loan. Since many Christians have ignored this warning, they're now in financial bondage.

Surety involves taking on an obligation to repay without having a sure means of repayment. In other words, you presume upon the future. If everything goes as you expect, you'll be able to repay your obligation. But if an accident, illness, or job loss takes away your means of income, your ability to repay will be gone.

Examples of surety are easily found among automobile loans. Suppose you purchased a new car three years ago. After negotiating with the dealer, he or she added taxes, tag, and title, which did nothing to enhance your new car's value.

You made little or no down payment, and to make matters even worse, your car is a depreciating asset, which means it is constantly losing its value. Now, three years later, your car's value actually is less than the value of your loan. If you became unable to make your monthly payments, your car would be sold, since it was pledged as collateral when you acquired your loan.

However, you also had to personally endorse the note, which made you liable for any difference in the sale value of the car and the amount still owed. As a result, you are bound by surety to repay that difference.

The alternative is to drive your previous car for a few more years, save your money, make a large down payment on a new car that's within your means, and borrow an amount that's smaller than the car's resale, not retail, value.

The car may still be "new" to you, but once you've driven it for a few weeks, it will be less valuable because it's "used." You also could buy a less expensive used car. It will still depreciate, but not to the extent that a new car does in its first three years.

Surety is an issue that we should consider in all our purchases, particularly those made with credit cards. Remember that much of what you buy with credit cards depreciates -- expensive meals, vacations, and entertainment are good examples. Yet, after the thrill of these purchases is long gone, you're still paying the bill, and the interest!

What matters most

God has a unique and meaningful plan for every believer, and it does not depend on age, income, or ability.

Unfortunately, debt can be a hindrance to God's plans for our lives. He wants us to have peace, but debt can produce stress. He wants our marriages to be successful, but the pressure caused by debt can contribute to divorce. He wants us to have meaningful time with our loved ones, but working extra jobs to repay our debts consumes this time. He wants us to be ready to serve, but the bondage of debt can restrict our ability to go at His command.

The problem with many people these days is "too much, too soon." Some young couples, for example, try to accumulate in three years what took their parents 30 years to accumulate. These people, and all of us, cannot count on lenders to make us live within our means. That job is ours alone.

God promises that He knows our needs and will provide them in His time according to His plan. Dependence on credit is an indication that a Christian has not yielded all rights to God.

That's why transferring ownership of what you have to God is one of the first steps toward financial freedom. Then, in conjunction with living on a budget, accept God's direction in your life, buy within your means, save for what you want instead of buying it on credit, and avoid quick spending decisions.

CFC received a letter from a woman who keeps her credit cards in a container of frozen water. In order to use them, she must wait for the ice to melt, which gives her time to think through her spending decisions. That may sound a little extreme, but if it works, it's worth it!

The truth is, getting into debt is simple, but getting out of debt may not be. Depending on how much you owe, there's no guarantee that the road to financial freedom will be easy and quick. But one thing's for sure: when you reach the end of that road, your efforts will have been worthwhile.