Biblical Principles of Borrowing


Biblical Principles of Borrowing

1739 Edition of Poor Richard's Almanac

1739 Edition of Poor Richard’s Almanac (Photo credit: Wikipedia)

Principles of borrowing appear in God’s Word, although it should be noted that principles differ from laws.

A principle is an instruction from the Lord to help guide our decisions. A law is an absolute. Negative consequences can result from ignoring a principle, but punishment is the likely consequence of ignoring a law of God.

An example that shows the difference between principle and law: the principle of borrowing given in Scripture is that it is better not to borrow if the loan must be taken with surety. “A man lacking in sense pledges and becomes guarantor in the presence of his neighbor” (Proverbs 17:18).

The law of borrowing given in Scripture is that it is a sin to borrow and not repay. “The wicked borrows and does not pay back, but the righteous is gracious and gives” (Psalm 37:21). The implication of this Scripture is that the wicked can repay but will not, as opposed to those who want to repay but cannot.

Principles are given to keep us clearly within God’s path so that we can experience His blessings. To ignore them puts us in a constant state of jeopardy in which Satan can cause us to stumble at any time.

Principle 1: Debt is not normal
Regardless of how it seems today, debt is not normal in any economy and should not be normal for God’s people.

We live in a debt-ridden society that is now virtually dependent on a constant expansion of credit to keep the economy going. That is a symptom of a society no longer willing to follow God’s directions. God told His people what He would do if they kept His statutes.

“Now it shall be, if you will diligently obey the Lord your God, being careful to do all His commandments which I command you today, the Lord your God will set you high above all the nations of the earth….The Lord will open for you His good storehouse, the heavens, to give rain to your land in its season and to bless all the work of your hand; and you shall lend to many nations, but you shall not borrow”

(Deuteronomy 28:1, 12). Borrowing is never God’s best for His people.

Principle 2: Do not accumulate long-term debt
It’s hard to believe that a typical American family accepts a 30-year home mortgage as normal today or that it is now possible in some cases to borrow on a home for nearly 70 years.

The need to expand the borrowing base continually forces longer mortgage loans, because expansion through taking on debt causes prices to rise through inflation. As prices rise, mortgages lengthen.

Today it requires from 40 to 70 percent of the average American family’s total income to buy an average home, even with a 30-year mortgage.

The longest term of debt God’s people took on in the Bible was about seven years.

During the year of remission, the seventh year, the Jews were instructed to release their brothers from any indebtedness (see Deuteronomy 15:1-2). Thus, the only debts that could exceed seven years were those made to non-Jews or from non-Jews.

Principle 3: Avoid surety
Surety means accepting an obligation to pay without having a guaranteed way to make the payments.

The most recognizable form of surety is cosigning a loan for another person. But surety also can be any form of borrowing in which an unconditional guarantee to pay is committed.

The only way to avoid surety is to collateralize a loan with property that, if sold, would cover the indebtedness, no matter what.

Currently Americans charge in excess of $400 billion annually on their credit cards, of which $50 billion or more is for annual finances charges, and they carry an average monthly balance of between $3,000 and $5,800 at 12 to 21.5 percent interest.

These credit card purchases have become the most common form of surety in America today. In a credit card transaction, one merchant sells a consumer a product and another finances the purchase, unless the credit purchase is with an in-store credit card.

In the event of a default, the return of the merchandise to the original merchant does not cancel the debt because the finance company has no interest in the merchandise purchased.

Principle 4: The borrower has an absolute commitment to repay
In this generation, situational ethics is widely accepted—so much so that it’s easy to rationalize not paying a debt, especially when the product or service is defective or when family financial situations seem to be out of control.

Unfortunately, many borrowers discover that it is possible for them to accumulate far more debt than they can repay and still maintain the lifestyle they want. As a result, they bail out.

Currently (2002 standards) over one million people a year now choose bankruptcy as a way to postpone or avoid repayment.

Nevertheless, in some cases voluntary bankruptcy is acceptable—but only in the context of trying to protect the creditors, never in the context of trying to avoid payment.

A Christian needs to accept that God allows no exceptions to keeping vows. “It is better that you should not vow than that you should vow and not pay” (Ecclesiastes 5:5).

Conclusion
Benjamin Franklin’s Poor Richard’s Almanac quotes, “Neither a borrower nor a lender be.” Although it is good common sense, it is not from God’s Word.

However, many Christians feel that all borrowing is prohibited according to Romans 13:8, “Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law.”

To properly interpret this Scripture, it must be considered in light of the context in which it appears. In this particular reference, Paul was not talking specifically about money—teaching that we are never to allow people to do things for us if we are not willing to do even more for them.

Scripture very clearly says that neither borrowing nor lending is prohibited, but firm guidelines are given.

Borrowing is discouraged and, in fact, every biblical reference to it is a negative one. “The rich rules over the poor, and the borrower becomes the lender’s slave” (Proverbs 22:7). The scriptural guideline for borrowing is very clear. When you borrow, you promise to repay. Literally, borrowing is making a vow and God requires that we keep our vows.

by Crown Financial Ministries

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Brian Raines is a former Senior Financial Advisor for an international firm, and is now an associate with Crown Financial Ministries.  If you are interested in utilizing Crown resources in your church, school, or business, please contact Brian at brianraines@bellsouth.net

Symptoms of Financial Problems


Symptoms of Financial Problems

A credit card, the biggest beneficiary of the ...

Without question, family financial problems seem to increase dramatically during economic slumps. Are the financial problems caused by economic slumps? Generally not.

With rare exception, family financial problems have begun long before the economic slumps, perhaps as early as childhood.

Ignoring God’s Word
Usually families with financial problems only recognize the symptoms of the problems (such as unpaid bills) or the consequences of the symptoms (such as repossession of property). They seldom identify the real underlying cause of the problem.

Most of the symptoms of financial problems that families face in today’s society—business failures, foreclosures, bankruptcies, out-of-control debt, two-job families, and divorce—can be traced to a central problem of ignoring God’s financial principles as recorded in His Word.

It is likely that the problem was learned from parents who also had the same problems. “Now it shall be, if you will diligently obey the Lord your God, being careful to do all His commandments which I command you today, the Lord your God will set you high above all the nations of the earth” (Deuteronomy 28:1).

God’s financial principles and instructions are not complicated or hard to understand. They were designed to free His people from financial burdens and not to bind them with an unattainable set of dos and don’ts.

Unfortunately, though, since the mid-1950s God’s principles have increasingly been ignored by families who have adopted a get-rich-quick mentality by using easily obtainable credit to purchase “what I want, when I want it.”

The children of these 1950s and 1960s parents learned to buy on credit from their parents’ example.

Now, a generation later, we are reaping the burden of sown seeds of moderate debt in the form of overwhelming excessive debt.

It was Benjamin Disraeli (1804-1881), Earl of Beaconsfield, who said in an address before the British House of Commons on May 1, 1865, “What we do and allow in moderation, our children will allow and do in excess.” What better words can describe the primary cause of the downward financial spiral of families in our society?

Without a doubt, the lack of financial discipline in parents is reflected and amplified in the lives of their children and their children’s families.

Symptoms of financial problems
If parents do not operate on a budget, seldom will the children.

If parents use credit readily and make buying decisions based on the ability to make monthly payments, rather than on the initial price of items purchased, so will the children.

Once married and on their own, young couples attempt to duplicate in a few years what perhaps has taken their parents decades to accumulate. In order to accomplish that goal, they use credit, as they were taught.

Before long they have numerous assets, but the assets are all tied up in liabilities.

This debt burden causes many of these young couples to experience the following symptoms.

They no longer can pay the monthly bills. Once the credit cards have reached their maximum limits and other sources of readily available credit begin to tighten, financial pressure begins to build. Finally, in desperation, a bill consolidation loan is obtained. Usually within less than a year the credit card debts return, making the end result worse than the beginning.

More income is needed. More credit cannot be the answer, so logic says that more money is needed. Consequently, the wife usually has to go to work. When young children are involved, the result may be breakeven or less.

Buy to pacify the pressure. At this stage many Christian families try to pacify the financial pressures by buying something new or going on a “get away from it all” vacation. However, these usually have to be financed with credit, so again the end is worse than the beginning.

Divorce and/or bankruptcy. When financial pressure reaches the boiling point, with no apparent way out, either the couple takes it out on one another—resulting in divorce—or they file for protection under the bankruptcy laws in order to start over again. However, if God’s principles were not learned during the process, the same financial problems will be present in the second or third marriage or after the discharge of bankruptcy.

Preventive measures
Although symptoms of financial problems can be devastating, it is much easier for families to practice prevention rather than recuperation.

As such, there are four basic preventive measures that families can exercise to counterbalance unbiblical financial practices and to prevent the symptoms of financial problems.

Abstain from borrowing. “The wicked borrows and does not pay back, but the righteous is gracious and gives” (Psalm 37:21). Scripture clearly indicates that borrowing is not God’s best for His people and should never be used as a routine part of financial planning.

Saving. “There is precious treasure and oil in the dwelling of the wise, but a foolish man swallows it up” (Proverbs 21:20). In today’s society, spending and borrowing are promoted, and saving—in order to purchase with cash—is discouraged. It is more in keeping with God’s principles to save for future needs and purchases than to borrow or use credit.

Making hasty decisions. “The plans of the diligent lead surely to advantage, but every one who is hasty comes surely to poverty” (Proverbs 21:5). Patience and consistency, rather than quick decisions and instant success, are the ways to financial security. One of the best disciplines parents can teach their children is to work to reach a goal.

Develop a budget. “Poverty and shame will come to him who neglects discipline, but he who regards reproof will be honored” (Proverbs 13:18). Children should learn by parents’ examples how to develop and live on a balanced budget. If they don’t, chances are when the children have families of their own, they will continue with the cycle of debt.

Conclusion
If Christian families truly lived by sound biblical financial principles, they would not only be lights to show the way to financial freedom for their friends and acquaintances, but their children would grow up with the knowledge of God’s principles and how those principles should be used.

They in turn would pass on to their children what they were taught. With consistent teaching and discipline it would take less than a generation to break Christians’ financial bondage and free them to fund the work of the Lord.

 

Getting Out of Debt


With home mortgages, school loans, and car loans, young couples today may

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

owe more than $140,000 within the first couple of years of marriage. This may seem normal to many, but God’s Word says debt isn’t normal, especially long-term debt (see Deuteronomy 15:6; Psalm 37:21; Romans 13:8).

Become debt free

If you’re already in debt, you can break the debt cycle with desire, discipline, and time. Using these five basic steps you can become debt free and stay that way.

  1. Transfer ownership
    God forces His will on no one; you must willingly surrender your will and possessions to God. Prayerfully transfer ownership of every possession to God – money, job, time, material possessions, family, education, and future earning potential (see Psalm 8:6).
  2. Give the Lord His part
    Once you’ve transferred ownership to God, give Him the first part, the tithe of gross income. If you withhold from God, it indicates that ownership hasn’t been transferred. Give Him freedom to work unobstructed on behalf of your finances – give Him the tithe – and He can give us His best.
  3. Allow no more debt
    Don’t use any more credit or credit cards until all existing debt has been paid. Pay with cash, check, or debit card at the time of purchase. Don’t borrow any more money from institutions, family, or friends until all indebtedness (home mortgage excepted) has been satisfied.
  4. Develop a realistic budget
    You’ll need a written budget that allocates percentages of Net Spendable Income into living expense categories – including repayment of creditors. Write to each creditor with a repayment proposal, but promise only what can be paid every month. Include a financial statement and budget that shows how much will be paid to each creditor.

    If you need to generate extra funds by working overtime or on an extra job, all money generated by the extra work must go to eliminate the debt for this to be effective.

  5. Retire the debt
    Pay extra on the debts with the highest interest rates. If all interest rates are comparable, begin paying extra on the smallest balance. After that debt has been paid, apply the regular payment as well as the extra money that was going to it toward the next highest balance. After the second is paid off, then the third highest and so forth.

Conclusion
No one who is financially bound can be spiritually free. Generally speaking, if these steps are faithfully followed, the average family can usually be debt free in about five years.

Accomplishing debt freedom can produce a radical change in lifestyle and a reevaluation of family values that can help prevent similar debt situations from recurring.

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Brian Raines was a Senior Financial Advisor with an international firm for fourteen years. He is now the President of PHP Financial, a division of The Raines Organization, Inc., and an associate with Crown Financial Ministries. To schedule a no-obligation consultation with Brian, contact him via e-mail at brianraines@bellsouth.net