Although I strive for excellence, and I wish to be able to abide by the standards and practices upheld by the Bible flawlessly, it will never occur. There are thousands of morsels of wisdom embedded in the pages of the most widely distributed book on the planet, and for some, they are every sign-post needed to navigate the road of life.
One of those sign posts reads as follows:
“The rich rule over the poor, and the borrower is servant to the lender.” – Proverbs 22:7
Now, whether or not you are really a Christian, call yourself a Christian, or don’t have anything to do with Christianity, the statement presented, in my opinion, cannot be disputed. When you borrow money, you are placing yourself under the obligation to re-pay whomever you borrowed that money from which means you’re are placing yourself under that person, and they have a vested interest in how you re-pay that debt, and how quickly you repay it.
I am a Dave Ramsey freak. I drank the cool-aid, and I have been completely convinced that borrowing money opens a door to potential problems. Why would I want potential problems? Why take risks like this? Carefully calculated risks should be a part of your financial portfolio AFTER you have eliminated the burden of debt, not before, and not during. The rate of return on your investments is almost always going to be less than the bank’s investment in you.
Is there good debt?
I don’t think so. Debt is debt and it places you at a disadvantage. Sure, people, accountants will say that you need debt to be able to reduce your taxable income, but that doesn’t really make any sense. If you’re sending $10,000 in interest to the bank to avoid paying the IRS $3,000 then you have a problem with arithmetic.
Is there bad debt?
Well, since I don’t like debt at all, I think all debt carries negative consequences, but the justification for carrying debt is usually centered around the burden associated with the debt as opposed to what it affords you. Owing $100,000 on a house where your monthly payment is $500.00 based on an income of $2000.00/month means you’re only spending 25% of your take-home pay on your housing. You have a place to live, and you’re not renting. So, in terms of cash-flow, that’s not too bad. But you’re still in debt. You’re still a slave to that lender. You owe, and you cannot just up and leave at a moments notice.
Some say that owning your home outright is absolutely impractical. Some also say that you’ll have to have a car payment the rest of your life. These are both lies. I know this first-hand, as I am currently facilitating the sale of 3 properties, all of which have attracted buyers who are paying cash.
Within the Christian church, many of us will butt heads on this issue of “good debt vs. bad debt.” Is it okay to have some types of debt? Perhaps it is less of a burden, but it’s still debt, and it’s still not the best practice. Is it prohibited? No. The bible doesn’t tell us debt is wrong. It warns us of the consequences of owing. If we are to strive for excellence in all that we do, then we will be wise with our money, and we’ll be patient so we can be more of a blessing faster, and that means saving for purchases, not borrowing for them.
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