September 29, 2005

I Owe, I Owe

AST YEAR CREDIT CARD ISSUERS IN THE United States stuffed mailboxes with more than 7 billion offers. Debt is now the most highly advertised commodity in Western society! As you would expect, people, businesses, and even governments are accepting the offers of credit and are sinking deeper and deeper into debt-bondage.

1541 story1Personal bankruptcies are at an all-time high with more than 30,000 U.S. families filing for bankruptcy protection every week! Giant corporations are imploding and taking down with them the pension funds of many of their long-time employees. And over the last 30 years the United States has been transformed by its balance-of-payments deficits from the world's largest creditor into the world's most heavily indebted nation. Homeowners are concerned that housing prices are shooting up higher and higher followed by an ever-increasing property tax bill, and for reasons unknown to the average person, home mortgage rates are lower than the prime rate. In spite of ever-escalating home prices, however, automobiles are being sold to everyone at the employee discount price.

Strange and unusual things are happening in the world of credit, debt, and finance. During the second half of the 1990s dot.coms and telcos burned through cash as if there were no tomorrow--and, of course, as it turned out, for many of them there wasn't. The extraordinary economic growth and stock market boom during this period gave rise to the belief that a "New Paradigm" had made the business cycle obsolete. And then, almost overnight, it became obvious that corporate America had made some tremendous mistakes during the bubble era: In 2002 the public learned that many of the largest corporations had resorted to fraud in an attempt to cover them up. Scandal followed scandal. In quick succession, Enron Corporation, Global Crossing, and WorldCom filed for bankruptcy. And when Arthur Andersen, one of the "Big Five" accounting firms, disintegrated after it was found guilty of obstructing justice by destroying documents in order to cover up malpractices at Enron, faith in the entire system was shaken to the core.

Astonishingly, in spite of everything that has gone wrong, consumers are spending as though nothing is wrong. Many are buying expensive homes with "interest only" loans. Their creditors have encouraged them. Borrowing has never been easier or cheaper. Mortgage financing and consumer credit have been flowing freely. As one bank chairman recently put it, "You'd have to be an insolvent arsonist not to get a loan right now." The big question is: "How much more debt can the typical consumer handle?" Almost every indicator suggests that consumers are overindebted relative to their income and earning prospects. Debt cannot continue to expand more rapidly than income indefinitely--at either the household level or at the national level.

Which Way for the Christian?
As Bible-believing Christians we live in this scary world I've just described. How are we to relate to all of this? Do we just go along with the flow? Or should our lives and financial management reflect a different paradigm?

The answer is, of course, axiomatic. We see the world through different eyes. We have been told, "Do not love the world or the things in the world. If anyone loves the world, the love of the Father is not in him. For all that is in the world--the lust of the flesh, the lust of the eyes, and the pride of life--is not of the Father but is of the world. And the world is passing away, and the lust of it; but he who does the will of God abides forever" (1 John 2:15-17).* We have direct inside information that the world as we know it will end soon at the second coming of Jesus, and that everything earthly will then be burned up. That will reduce its value considerably! "But the day of the Lord will come as a thief in the night, in which the heavens will pass away with a great noise, and the elements will melt with fervent heat; both the earth and the works that are in it will be burned up" (2 Peter 3:10).

Jesus said that we are to be a light to the world (Matt. 5:14) and as salt that gives flavor to life (verse 13). Unfortunately, however, in the management of money, the world is often salting us more that we are salting it. Many Christians find themselves mired in debt, just like the people of the world.

Reasons for Financial Problems
In 15 years of financial counseling and teaching biblical stewardship, I've found three primary reasons that people get into financial difficulty, listed here in the order of greatest frequency.

The first is ignorance. Many people, even college graduates, are financially illiterate. They were simply never exposed to the biblical or even secular principles of money management. There is hope for these people! The bulk of this article will provide a simple outline of these principles and how to apply them.

1541 story1The second reason for financial difficulties is greed--selfishness. In response to advertising and personal wants, people simply live beyond their means. They aren't willing to live in, drive, or wear what they can really afford. Many of these same people also feel that they are just too poor to tithe. As a consequence, they live their lives without God's promised wisdom and blessing (see Prov. 3:5-10). There's hope for these people also, but it requires a change of heart--and the reception of a gift from God called contentment. Paul exhorts, "Now godliness with contentment is great gain. For we brought nothing into this world, and it is certain we can carry nothing out. And having food and clothing, with these we shall be content. But those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition" (1 Tim. 6:6-9).

The third reason people find themselves in financial difficulty is that they experience an unfortunate tragedy. They may have had a serious illness without adequate health insurance. They may have been abandoned by a spendthrift marriage partner. A natural disaster may have wiped out their possessions. Or they may have been born and raised in abject poverty. There is hope for these people too. Though their path is more difficult, it can be overcome. Change may come in the support of Christian friends, the counsel and/or assistance of godly counselors, hard work coupled with a good education, and the blessing and providence of God.

The Bible Plan for Debt Elimination
But enough about the problems. Let's focus now on what you can do to experience financial freedom.

The Bible says, "The rich rules over the poor, and the borrower is servant to the lender" (Prov. 22:7). Some Bible translations say "slave" here instead of "servant."

Probably no one needs to be told that debt is bad. It's almost like telling someone who smokes that smoking is harmful. The person already knows that. What he or she needs is help.

What can be done to insulate your family from this unfortunate phenomenon? Is there anything that a family can do to prevent the embarrassment and stress of unmanageable debt?


Try This at Home!
Need additional help with debt reduction?

1. Establish a budget.
Many families make a reasonably good income, but they don't know where it goes. By making a simple budget they can see where it all goes. One way to begin is to make all purchases for a period of three months by using your checkbook only. Then you can look back over that period to see exactly what you are spending your money for. Many are surprised to learn how much money is spent on unnecessary items.

2. Set goals for your family.
Many families just live from paycheck to paycheck. They aren't really enjoying life. They are just existing--just getting by. Why not set goals for your family? Pay off some debt by a set date. Save up cash to purchase your next car. Have the children help a certain amount toward their college expenses. Setting goals and meeting them brings satisfaction.

3. Destroy credit cards.
Credit cards are one of the major causes of family indebtedness. They are so easy to use and so hard to pay off. If you find that you aren't paying off the cards in total each month, or that you are using them to purchase items that you would not otherwise have bought, you should destroy your credit cards before they destroy you or your marriage.

4. Purchase depreciating items with cash.
Many folks find that if they use cash for their purchases, they spend less. When you save up for an item, you're more likely to make sure you get the best deal available when you purchase it. In addition, many items purchased with credit are used up or eaten before the bill comes in the mail. It's more difficult, somehow, to pay for things that are already gone.

5. Begin economy measures.
Sometimes we aren't aware of how much we could save on our monthly expenses just by watching some of the small things. Take utilities for example. Just adjusting your thermostat a little higher in summer and a little lower in winter and turning out the lights in rooms not being used can save a significant amount over the course of the year. Other areas include making fewer and shorter long-distance calls, shopping on sale days, and eating out less often.

6. Have a sale.
Most of us have items that we'll never use again, but we still hold on to them. Children's clothes and toys, old books, magazines, record albums, tools, leftover building materials--the list goes on. Make an inventory of all your possessions and sell off what you don't absolutely need. Why not collect all this "stuff," have a yard sale, and place the proceeds on your debt?

The answer is a resounding "Yes!"

 If you are out of debt, thank the Lord and those who trained you. If you are in debt, the following outline will help you to begin a debt elimination process that will bring financial freedom to your family.

The plan is simple. It has a basic premise and three steps.

The basic premise is a commitment to God to be faithful in returning His holy tithe to access His wisdom and blessing (see Prov. 3; Deut. 28; Mal. 3; Matt. 6, 25). No one would honestly expect God's blessing while robbing Him. He is eager to bless those who obey Him.

Step 1 is to declare a moratorium on additional debt: No more credit spending! If you don't borrow money, you can't get into debt. If you don't borrow any more money, you can't get further into debt.

Step 2 is to make a covenant (a promise or agreement) with God that from this point on, as He blesses, you will pay off your debts as quickly as possible. Set a target date for being debt-free. When God blesses you financially, use the money to reduce debt--not to purchase more things. This step is probably the most critical. When most folks receive unexpected money, they simply spend it. But if you've made a covenant with God, you'll then know what to do with the extra money. You'll apply it to your debt-reduction plan.

Some time ago, a man came up to me and remarked, "How true this covenant business is! We received $2,500 that we weren't expecting, so I told my wife, 'How did God know that we needed a riding lawn mower?' Then I promptly went out and bought one. Now I realize that I should have put the money on my debts."

Step 3 is the hands-on practical part. Make a list of all your debts from the largest to the smallest in descending order. For most families, the home mortgage is at the top of the list and a credit card or personal debt is at the bottom. Begin by making at least the minimum payment due on each of your debts on a monthly basis. Next, double up or increase in any way you can your payments on the debt on the bottom of the list. You'll be happily surprised how quickly you can eliminate that smallest debt. Then use the money that you were paying on the bottom debt to add to the basic payment on the next debt as you work your way up the list. As you eliminate your smaller high-interest debts, you'll free up a surprising amount of money to place on the next higher debts.

God clearly doesn't want us in debt. Once the covenant is made, many families find that God blesses them in unexpected ways and the debt is reduced faster than they had

Once you reach the home mortgage at the top of your debt list, you can begin to make additional payments on the principal of your loan, thereby saving considerable interest that you would have had to pay. You also, of course, reduce the length of the loan as well.

By following these three simple steps, many families have become debt-free. You can too! By putting God first, you'll receive His wisdom and blessing for managing what He has entrusted to you. By eliminating debt, we are more free to participate in advancing the cause of God and in helping others, thereby storing up treasures in heaven.

Seven Biblical Principles
I've discovered seven biblical principles that give practical guidance about what to do to get peace and freedom in your financial world. Look up these verses and mark them in your Bible.

1. God is the owner of everything (Ps. 24:1; 50:12; 1 Chron. 29:13, 14). As Christians we understand that we brought nothing into this world and that we are taking nothing out. While we live on this earth we are simply managers of what God has entrusted to us. Faithfulness is all that matters.

2. God and His wisdom and counsel must be first place in your life (Prov. 3:5-9; Matt. 6:33). God can see our lives from the beginning to the end. He knows what is best for us and desires that we prosper. This means more than the simplistic question "What would Jesus do?" We ask instead, "What is His counsel in this area of my life?"

3. Your purpose in life is to glorify God (Matt. 5:16; 1 Cor. 10:31). The worldling seeks prosperity in order to spend and accumulate. The Christian seeks prosperity in order to provide for personal needs, the needs of others, and to help advance the cause of God. The Christian is God's ambassador.

4. Prosperity is having what you need when you need it (Phil. 4:19; Matt. 28:20; Isa. 26:3). God has not promised us that if we become Christians, we will become wealthy by the world's standards. But He has promised that if we serve Him, He will provide for our needs, be with us wherever we go, and give us peace in our hearts.

5. Debt is bad (Prov. 22:7; Deut. 28:15-68; Rom. 13:8; Ps. 37:21). Recognizing and following this single principle would do more than anything else to bring peace to our families and prosperity to the cause of God. Debt causes strife in families and stress in individual lives.

6. The tithe is the minimum testimony of our Christian commitment (Gen. 14:20; 28:20-22; Lev. 27:30; Mal. 3:6-11). From the perspective of one who reads through the Bible each year to review the big picture, I can tell you that nowhere in the Bible does God suggest that less than a tenth is His. Failure to recognize and practice this principle cuts us off from God's wisdom and blessing (see Deuteronomy 28).

7. Everyone must give an account to God of his or her money management (Matt. 25:19; 2 Cor. 5:10; Rev. 22:12). There is nothing more certain in Scripture than the fact that we must all face the judgment bar of God. When settling accounts with those who are faithful, God says, "Well done, good and faithful servant; you were faithful over a few things, I will make you ruler over many things. Enter into the joy of your lord" (Matt. 25:21).

Help the Poor--Store Up Treasure in Heaven
It should be more than obvious to all who study Christian stewardship and money management that God doesn't need "our money," and that He could easily take care of the poor Himself. He allows us to aid the poor in order to assist in the transformation of our characters, and to see in the depths of poverty the result of sin in the world. But, characteristically, God has several blessings in mind for us. In addition to the two mentioned above, God also promises to add to our heavenly treasure when we help the poor. So when we help the poor, we are really not giving our money away: we are storing it up in heaven. It's interesting to note that when we help others and advance the cause of God, the money is credited to our heavenly account and will be ours when we get to heaven. This is detailed in the following statements.

1541 story1"Every opportunity to help a brother in need, or to aid the cause of God in the spread of the truth, is a pearl that you can send beforehand and deposit in the bank of heaven for safekeeping. God is testing and proving you. He has been giving His blessings to you with a lavish hand and is now watching to see what use you are making of them, to see if you will help those who need help and if you will feel the worth of souls and do what you can with the means that He has entrusted to you. Every such opportunity improved adds to your heavenly treasure" (Testimonies, vol. 3, pp. 249, 250). "And as Christ's followers give back to the Lord His own, they are accumulating treasure which will be theirs when they hear the words: 'Well done, thou good and faithful servant: . . . enter thou into the joy of thy Lord'" (ibid., vol. 9, p. 59).

Perhaps Zacchaeus was smarter than we give him credit for. After a single encounter with Jesus, instead of going away sorrowfully, as did the rich young ruler, he announced that he was giving half of his goods to the poor. Responding to the tax collector's transformation, Jesus proclaimed, "Today salvation has come to this house" (Luke 19:9).

Wouldn't you like Jesus to say that at your house?

*Bible texts in this article are from the New King James Version.

G. Edward Reid is stewardship director of the North American Division. He is an ordained minister, a licensed attorney, and is certified as a personal financial planner. He is the author of It's Your Money! Isn't It? available at your local Adventist Book Center, and seven other books, including several about end-time events.