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October 23, 2011


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Here is a good spiritial reason to stay out of debt. We are told by God through Paul to "Owe no one anything except to love one another, for he who loves another has fulfilled the law." We owe people a continual love but besides that we should not owe anyone anything according to this verse from Romans 13:8.

In biblical times a person can use themselves as collateral for a debt. If they did not pay the debt they were to become the slave in order to pay the debt. They also used debtors prisons which were eventually outlawed.

Today the concepts are still there. You are a slave to the debt until it is paid off.

The rich rules over the poor,
And the borrower becomes the lender's slave. (Proverbs 22:7 NASB)

For most people debt is a result of living beyond their means. This is clear violation of financial stewardship which the Bible exhorts us towards.

In that sense the focus exclusively on debt can have a misleading allure. To his credit Dave Ramsey goes beyond it to the lifestyle that gets you there. And again for most people the two are inexorably linked.

But because of this there are a number of people in the Christian community who have come down with the hard line that debt is an inseparable evil. The bible never really speaks favorably about debt (although in Matthew 5:42 it does demand that we not turn away the one who wants to borrow from us. And as such its hard to believe Christ would tell us to be a participant on any end of a transaction which was an inseparable evil). But the real point of the debt argument in the Bible is to not live a life that is consumed with money (the love of money being the root of all evil) or the things money can buy and as such find oneself trapped in a lifestyle that is unsustainable and wasteful of the resource we are provided.

To that end the real question cannot be just about debt. If that was the case we could ask people some simple questions like do you have debt? If the answer is yes, well that is not what God desires for you. Or how much debt do you have as a percent of your income? If it's too high then you are being a poor steward. In fact this very question by the Christian Financial Alliance is sort of heading down that road. The implication of the question is that debt is necessarily a bad thing and getting out of it is not only a good idea, but spiritual.

And again, I submit that they have over-simplified the issue by focusing just on the idea of debt and not on the idea of lifestyle, living with in your means, and financial stewardship.

Obviously as a real estate investor I come at this from a different perspective. It is impossible to acquire the capital necessary to run an expanding real estate business without debt unless one is born with a silver spoon in their mouth. It is also impossible to be a farmer without debt unless one is the son of an extremely and I do mean extremely rich farmer. It is impossible to run most small businesses without debt, lines of credit to meet cash flow and participate in capital asset purchases etc. The fact that the IRS tax code makes a number of capital assets depreciable over 5 years, 7 years, 15 years is testimony to the fact that cost of these items is meant to be spread over those years. They cannot be expected to be paid for in 1 year. And a business who needs them will generate revenue off them for a decade or more. They will need that revenue to pay for them. They won't have it up front and will thus need to borrow to do so.

The point I am trying to make is that debt can be a destructive drug if used to live a life that lacks financial stewardship. But it can also be a very powerful tool if used appropriately in business and investment settings. Not only can it be a tool but it is a necessity. Without debt our economy would screech to a halt and 10s of millions would be cast into poverty. In fact one of the primary reasons given for why the current recovery is so weak is that credit is too tight and the banks will not lend and the business are not interested in borrowing.

As Christians we need to be a little more careful about how we characterize debt. While Dave Ramsey does bring the debt lifestyle into his discussions he does a pretty good job of demonizing debt in general.

Debt is not a demon. It is not evil. It is not a sin. The Bible never refers to it in those terms. It is also not something that mature people need to grow out of unless they are there because of living beyond their means.

I realize that most people who are in debt are there for the wrong reason so the generalization of debt being bad is usually true. However, the spiritual thing to do is to be good financial stewards of what God has given us. That may or may not include debt. Getting out of debt may not be a spiritual thing to do at all. It depends on the reasons you are in debt.

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