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Teaching Your Children about Debt

What does God think about debt? After all, almost every American is involved in it to one degree or another. Does He view debt as a means of creating wealth? Does He see debt as a necessary evil? Does He have an opinion about debt at all? Biblically speaking, is debt okay for some purchases, but not for others? Are we allowed to go into debt for appreciating items, but not depreciating items? How should we view this institution that affects almost everything in the culture in which we find ourselves? Of course, what I think is irrelevant. Actually, what you think is irrelevant as well! The only opinion that really matters belongs to the One to whom we must give an accounting.

So, let us look at a few passages in the Scriptures and see what God thinks of debt. Sound easy enough? I will caution you on one thing, however. If we lack wisdom on a certain subject, James tells us to ask God, Who gives to all liberally and without reproach. But James also sternly warns that we should not come to the Scriptures doubting, for then we will be a double minded man, unstable in all our ways (James 1:4-8). In essence, when we ask God His opinion on a certain matter, we must ask with the full intention of obeying whatever He tells us to do. We do not have the right to pick and choose which commandments we will obey. God’s Word is not a salad bar. When we approach His Word weighing our options, James tells us to not expect any wisdom from God. So let us dig deep into His Word and have some fun! Let us also pray that “the Father of glory, may give to you the spirit of wisdom and revelation in the knowledge of Him - the eyes of your understanding being enlightened.”  (Ephesians 1:17-18)

Biblical Guidelines on Borrowing and Lending

The Bible actually has very specific guidelines on when to borrow, when to lend and under what circumstances we can do these things. The first principle, stated over and over in the Scriptures, is that we are never allowed to charge interest on a loan made to another believer (Exod 22:25, Lev 25:35-37, Deut 23:19-20, Neh 5:10-12, Ps 15:5, Prov 28:8, Ezek 18:8-9, Ezek 22:11-13). And lest we are tempted to not lend to other believers since we will receive no financial gain in return, the Bible prohibits that as well (Lev 25:35-37, Deut 15:8,11, Matt 5:42, Luke 6:34). This is not a carte blanche for some believers to take advantage of others, however. The Bible gives specific scenarios in which we should lend to other believers.

Exodus 22:25

If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest.

Leviticus 25:35-37

If one of your brethren becomes poor, and falls into poverty among you, then you shall help him, like a stranger or a sojourner, that he may live with you. Take no usury or interest from him; but fear your God, that your brother may live with you. You shall not lend him your money for usury, nor lend him your food at a profit.

In both of these passages, we are to lend to those who are poor or who have fallen into poverty. Of course, in this day and age, we probably need to define poverty, but I will leave that for another article! The point is that we are to help our brothers and sisters in Christ without interest when they fall on hard times. Even then, we are to help them in a gracious manner, showing compassion and respect when we do so (Exod 22:26-27, Deut 24:10-13, Deut 24:17-18, Neh 5:1-15).

But, can we use a bit of reverse logic on this passage? If there are specific situations and guidelines when I must lend, by converse, are there not situations I must find myself in before I can biblically borrow? Must I not be in dire straits, either want of food or shelter, before I can biblically borrow from other believers or skip down to the bank and sign a note? The Bible makes it very clear that we are to “owe no one anything except to love one another” (Rom 13:8). In every instance that God gave laws regarding borrowing or lending among His people, it was reserved for only the gravest circumstances. Borrowing money was only an option for the poor (Exod 22:25), those who had fallen into poverty (Lev 25:35-37) and those who were starving (Neh 5:1-15). Even then, God’s people were to lend out of charity and never charge interest to another believer. Surely this does not apply to home mortgages, right? Most Christian authors who write books on finance allow for mortgages and car loans since these are collateralized loans. If someone defaults on the loan, the house or car simply returns to the lender, so therefore, no true debt is incurred, so the idea goes. What happens when you wreck a collateralized car? Now you owe more than the collateral (car) is worth and you are truly in debt! The same applies to a mortgage. What happens when property values plummet and your house is worth less than you owe on the loan? Collateralized loans are not the sure thing they are made out to be. The question is not whether the value of the collateral (the house or car in this case) is appreciating or depreciating. The question is how close to the thin ice are you willing to skate in clear defiance of God’s Word. He is not the cosmic kill-joy, robbing us from all earthly pleasures. He is a loving Father and has set boundaries for His children out of love (Matthew 7:11)! 

This same principle applies to business loans as well. Deuteronomy  24:6 tells us that “no man shall take the lower or the upper millstone in pledge, for he takes one's living in pledge.” What does the millstone represent in this passage? It represented the ability to earn a living and provide for one’s family. We are not to use our tools or our ability to make a living as collateral to secure a loan. What is the number one item used as collateral in the business world today? Accounts receivable. How long would a company stay in business if they were to lose their accounts receivable? Not very long, for that is what generates the cash flow to pay bills, employees and make new products. Today’s accounts receivables are the modern day equivalents of upper and lower millstones and should not be used to procure a loan. Why? Because it enslaves the business to its creditors. Now, someone else has a say in how the company is run, what products it will develop and how biblically it will be managed. What would happen if the bank decided to call its note or went out of business as many did in the 1980’s. Your business would be toast, because you borrowed against your millstone. Beyond these practical reasons, however, borrowing against your assets flies in the face of God’s wisdom found in His holy Word. Now, I must give a caveat here. I am not talking about a revolving credit that is paid off every month. This is similar to the using credit cards wisely. As long as credit does not incur debt and financial slavery, it can be used as a convenience. Think checking account here. When you write a check, you are actually borrowing money, but your accounts settles very quickly and there are no interest charges incurred. There is no enslavement.

You will be hard pressed to find the Bible commending someone for borrowing money to buy a house, start a business or get an education. And you risk extreme consequences for borrowing money to buy a better house, remodel a house or go on an expensive vacation. Borrowing money for luxury items such as furniture, expensive cars, boats and even Christmas gifts is an abomination to the Lord. What extreme irony it is to celebrate our Savior’s birth by giving gifts bought with borrowed money - the very thing He hates. Do you think I am exaggerating?  Would you like to see how much God abhors lending money with interest to His people?

Ezekiel 22:11-13

One commits abomination with his neighbor's wife; another lewdly defiles his daughter-in-law; and another in you violates his sister, his father's daughter. In you they take bribes to shed blood; you take usury and increase; you have made profit from your neighbors by extortion, and have forgotten Me, says the Lord GOD. Behold, therefore, I beat My fists at the dishonest profit which you have made, and at the bloodshed which has been in your midst.

Notice that the one taking usury and increase is ranked with the men who sleep with their neighbor’s wife, daughter-in-law and half sister! This is pretty ripe company. God hates debt and the enslaving power it exerts on His people. It would be difficult for God to say more times and in more ways that the borrower is slave to the lender. Don’t even get me started about God’s people going into debt to build a church building! “Oh, but look how many more people we can reach for God by going into debt to build this bigger building.”  Spare me, please! Hudson Taylor said, “God’s work, done God’s way, will never lack for God’s supply.”

Year of Jubilee

Actually, God set up a unique system of debt removal among His people.

Deuteronomy 15:1-2

At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD'S release.

What do you think our modern banks would do if all debt was to be forgiven in the seventh year? We would all have six year mortgages! Actually, many obedient Christians do not have mortgages at all. What about the credit card companies? They would allow substantially less unpaid balances, because they would have only six years to bleed you dry with exorbitantly high interest payments! God instituted this Jubilee year (see also Lev 25:28) to keep His people out of the enslaving power of debt and to remind them of the freedom He gives to His people. He wanted them to be free to serve Him, not the other nations. Always thinking multi-generationally, He wanted His children to focus on the task at hand, instead of mortgaging their futures and their children’s futures to obtain the things of this world.

Teaching Our Children About Finances

Proverbs 22:6

Train up a child in the way he should go, and when he is old he will not depart from it.

We all know this verse by heart, but have you considered the context? Look at the very next verse.

Proverbs 22:7

The rich rules over the poor, and the borrower is servant to the lender.

Apparently, training your children in the way they should go also involves training them in financial matters, specifically debt. And not only are we to teach our children about debt, we are to teach them the relationship between debt and reigning. One of the reasons that God instituted the year of Jubilee is found later in that chapter.

Deut 15:6

For the LORD your God will bless you just as He promised you; you shall lend to many nations, but you shall not borrow; you shall reign over many nations, but they shall not reign over you.

There is a direct correlation between lending and reigning. He who lends, reigns and he who borrows, serves. If our children are ever going to rule and reign for our Lord Jesus Christ, one of the first entanglements they must avoid is long-term debt. Are you molding your children’s thinking in the area of finances? Statistics show that finances are one of the main causes of marital strife. Teach your children early about the pitfalls of debt. Do a concordance study on the words “debt” and “surety” with your children and see what God has to say about the matter. You will be teaching them about finances as well as teaching them how to use the Bible to gain spiritual understanding on any given subject. History can give us a helpful perspective here. Did you know that before World War I, almost ninety percent of the American people paid for their homes in cash. Even by World War II, the percentage was almost eighty percent. What has happened in the last sixty years? We have grown accustomed to buying more house than our income will allow. What it took our parents fifty years to accumulate, we want now. A new house has to have new furniture, right? Put it on the card! Teach your children to live off one income after they are married and before they have children of their own. This will make for a much smoother transition when Mom stays home as God grants children to their young family. Along the same reasoning, train your sons to not view their wives as extra sources of income.

Not only are we to keep ourselves free from debt, we are not to cosign or become surety for others...not even for our children (Prov 6:1-5, Prov 11:15, Prov 17:18, Prov 20:16, Prov 22:26-27, Prov 27:13). Proverbs 17:18 could not make it any more plain. You are devoid of understanding if you cosign a note! Devoid of understanding is biblical vernacular for being stupid! What better way to teach them voluntary slavery than to lead them by the hand and help them buy something they can not afford. If they could afford it, why would they need your guarantee?! It is better to teach them to do without for time being, waiting on God’s timing, than to willingly submit to the chains of debt. We are not our own, for we were bought with a price - we belong to God (1 Corinthians 7:23).

Staying out of debt applies to education loans as well. Again, I refer you to Hudson Taylor’s quote: “God’s work, done God’s way, will never lack for God’s supply.” Can we not trust God to provide for the preparation for our life’s work? Perhaps if the supply for college is not there, then God is showing us another path, making us wait or testing our faith. Is God pleased when we start our life’s work on so weak a foundation as debt? He may show mercy, but He has a much better way! By the way, God has a name for those who do not repay their student loans in Psalm 37:21.

Ps 37:21

The wicked borrows and does not repay,

Enough Already! I am Already in Debt!

If you are already in debt, there is hope. It is not the unpardonable sin, but seek to be free as fast as you can.

Proverbs 6:1-5

My son, if you become surety for your friend, if you have shaken hands in pledge for a stranger,  You are snared by the words of your mouth; you are taken by the words of your mouth.  So do this, my son, and deliver yourself; for you have come into the hand of your friend: go and humble yourself; plead with your friend.  Give no sleep to your eyes, nor slumber to your eyelids.  Deliver yourself like a gazelle from the hand of the hunter, and like a bird from the hand of the fowler.

Notice how we are to view ourselves when in debt - as one caught in the hands of a hunter. We are about to get our neck broken, therefore, we should seek to be free as soon as possible. Above all, we should not get comfortable with debt. You may be thinking that it is too late. Perhaps you are in financial circumstances beyond your control. Some of you may be enslaved to debt and have no choice but to remain in your present situation, even though you know it is not the optimum setting for training godly kids. But God is a God who delivers the enslaved and sets the captive free, if we will only repent and cry out to Him. We may not see the deliverance in our lifetime, but we can train our children to be free men and women in theirs. Gregg Harris once said that it takes two generations to get completely out of debt. The parents working in concert with the children to be debt-free. Even if we must endure the consequences of foolish decisions, our children can stand on our shoulders and benefit from our sacrifices. Focus on the goal. The goal is to raise godly children who can think biblically and make decisions accordingly. It is worth the sacrifice. This is one reason I believe inheritances can be such a blessing if given and received with a godly spirit. Proverbs 13:22 says that “a good man leaves an inheritance to his children's children, but the wealth of the sinner is stored up for the righteous.” What a blessing it would be for our children to not to start their families saddled with a long term mortgage! Are we to “spend our children’s inheritance” as the bumper sticker proclaims, or can we bless them in a way that they can start their young families debt free? Perhaps the idea of a dowry is not such an old-fashioned idea after all. A lumber package from Home Depot would go a long way to helping the young couple build a house mortgage-free, or at least help to substantially reduce their mortgage. It does not always take a sack of money to build a house. Sometimes it takes a lot of hard work, sweat and time. As the writer of Hebrews said, “Let us lay aside every weight, and the sin which so easily ensnares us, and let us run with endurance the race that is set before us.” So, get out of debt, have your own Jubilee party and teach your children to live debt free!