The Bible on Debt

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why. Today we have a guest post from CJ at Wise Money Matters.

The Bible is very clear about avoiding debt.

"Just as the rich rule the poor, so the borrower is servant to the lender."

Proverbs 22:7

I've never really thought of myself as a servant. This is America! Land of the free! Right? Wrong. We become servants to lenders all of the time. Don't believe me? Try not paying your house or car payment. I bet you that you'll be living on the streets and walking to work within a few months. Are YOU comfortable being a servant?

The Bible even refers to debt as a curse for not following God's commandments.

"If you do not obey the Lord your God, to observe to do all His commandments and His statutes with which I charge you today, that all these curses will come upon you and overtake you... The alien who is among you shall rise above you higher and higher, but you will go down lower and lower. He shall lend to you, but you will not lend to him; he shall be the head, and you will be the tail."

Deuteronomy 28:15,43,44

It's interesting that the Bible puts debt as a curse. However, earlier in this same book it talks about being the lender as being a blessing. Several thousand years ago, people still understood the importance of interest. Maybe if we looked at debt as a curse, we'd change some habits.

The Bible even discusses cosigning a debt.

"It is poor judgment to countersign another's note, to become responsible for his debts"

Proverb's 17:18

When I was just going into college, my parents took in two foster children who were friends of mine and had no family to live with due to unfortunate circumstances. They stayed with us through high school. My foster brother needed a car and so my father cosigned the loan on the vehicle as my foster brother had no credit. After he moved out of the house, he got involved in drugs and other things which took most of his money. We had lost contact with him and he stopped paying his car payment. The car was eventually repossessed and my father's credit score is now hurting because of it.

This example shows how even cosigning for family can be a bad idea. Why would anyone want to guarantee another person's debt? It just seems ridiculous yet Solomon understood the concept close to 3000 years ago.

The Bible's advice even predicts today's economy.

"Come now, you who say, 'Today or tomorrow, we shall go to such and such a city, and spend a year there and engage in business and make a profit.' Yet you do not know what your life will be like tomorrow."

James 4:13-14

I just talked to a friend who was looking back on an investment he made two years ago. He was deciding between the option of buying 120 acres of farmland in Iowa or purchasing a home in Flagstaff, AZ. Everyone was saying how the farmland was a waste of money and that property in Flagstaff never goes down in value. With the way real estate markets were at the time, they expected it would keep going up. So he invested in the Flagstaff property.

Two years later he is losing lots of money on the Flagstaff property and due to increase in food prices, the farmland has doubled in value. It goes to show us that we really don't know what the future will hold.

We might invest in Apple and tomorrow it goes out of business. We might put an investment in an Index Fund and have another Great Depression. We don't know what could happen so we need to prepare for such situations and not spend (read: get into debt) because we think we will have a consistent income which will cover our debts. Heck, you might not have your job tomorrow. Look at all of the foreclosures in the US as a great example of people not predicting the future.

The Bible, although written over 2000 years ago, already understood how dangerous debt can be. How is it that after such a long period of time, we still don't understand these principles? I guess history does repeat itself.

Comments

["Mo" Money]

Very good! And here's what the bible says about diversifying! Ecclesiastes 11:2 “Put your investments in several places---many places even---because you never know what kind of bad luck you are going to have in this world.”
King Solomon says "don't put all your eggs in one basket".

[Jabi]

how interesting. does that mean all the banks around us (our lenders) are blessed??

[wolf]

Very good information. I'm ashamed to say that I didn't know this was in the Bible. :(

[MInTheGap]

Lenders have done a very slick marketing job when it comes to tapping in to the desire to "have it now." They realize the power that they have when they have your money, and many people do not.

Great quotes from the Word!