Wisdom Regarding Debt

William J. Stewart | Lessons from the Book of Proverbs

In our last article, we considered a few proverbs on financial matters, but it makes sense to devote a single article to the topic of debt. The fact is we have a debt problem in our nation. Reports indicate the average Canadian has $27,000+ in consumer debt (credit card & other loans, mortgages not included) [The Globe & Mail]. Again, the average Canadian debt to disposable income ratio is 163.7% [CBC.ca]. In other words, Canadians are spending 63% over their take home pay. The end result, 122,959 bankruptcies in 2013 (source). Surely it is evident that as a nation, we have got ourselves into a financial pickle!

Let’s notice what the wise king of Israel has to say about debt.

DEBT IS SLAVERY!

Solomon states:

The rich rules over the poor, and the borrower is servant to the lender. (Proverbs 22:7)

Debt gives another, whether an individual or a corporation power over us. We have subjected ourselves to their will. We are bound by their repayment terms, and if we do not abide by those terms, the consequence could be dire.

Nehemiah 5:3-5 tells of those who mortgaged their lands and vineyards, and borrowed money in order to pay their taxes. But that was not all—their children were being forced into slavery, and they had no ability to redeem them! A similar situation is recorded in 2 Kings 4:1, where a widow cried out to Elisha:

Your servant my husband is dead, and you know that your servant feared the LORD. And the creditor is coming to take my two sons to be his slaves.  (2 Kings 4:1)

Not only does debt make us a slave to the lender, but it also has an adverse affect on others, in particular our family. It is unlikely that a creditor is going to take possession of your children and sell them as slaves, but there are other negative consequences to both children & other relationships. Note:

  • Children learn how to handle money by watching their parents;
  • Some may bury themselves so deeply in debt that they are not able to supply the needs of their children (extreme, and yet it certainly happens);
  • A loan from a family member left unpaid may destroy the relationship.

DEBT WILL MAKE YOU POOR

Now, I understand our purpose here is not to amass wealth, but still, that is no reason to squander what we do or could have. Debt will make and keep us poor. Hear the words of Solomon:

He who oppresses the poor to increase his riches, and he who gives to the rich, will surely come to poverty. (Proverbs 22:16)

Again, he writes:

The poor man uses entreaties {requests for grace, BBE}, but the rich answers roughly… (Proverbs 18:23)

Who gives to the poor more than those who are perpetually in debt? Creditors love people who come back for more and more and more debt.

Who may need, when times are tough, to make requests for grace? Certainly this may characterize the poor in general, but if we don’t owe anyone, then presumably there is no one that we need to seek grace from. Borrowing will make and keep you poor.

LENDERS ARE NOT THERE TO HELP US

Despite what they say in their advertising, lenders are not there to help us. They want to enslave us perpetually. Consider that store credit cards have interest rates up to 29%! Rent-to-own places love our business, for they charge several times the value of our purchase (with a convenient long-term monthly payment). Payday loans are legal loan sharks. The APR on $100 over 2 weeks is 520% or more! The EAR on the same loan would be 11,000% or more. Have you ever got a consolidation loan? Though the intent is to make debt easier to pay off, unless it is done correctly (a change of spending habit on the borrower’s part), the end result will be the borrower accumulating even more debt. There are a lot of ways for lenders to take advantage of and fleece borrowers. Keep in mind, they are not there to help.

Again, notice what the wise king wrote:

Do not be one of those who shakes hands in a pledge, one who is surety for debts; if you have nothing with which to pay, why should he take away your bed from under you?  (Proverbs 22:26-27)

 THE CONSIGNNMENT OF CO-SIGNING

Sometimes a financial institution will require that a person applying for a loan have a co-signer. Do you know why? Quite simply, they believe the person is too much of a risk, and so they want surety. Rather than bearing the risk of default, the bank wants mom or dad, or grandma or grandpa, or whoever is foolish enough to co-sign the loan to pay up if the loan goes into default. Solomon warned about this:

My child, if you become surety for your friend, if you shake 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; please 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.  (Proverbs 6:1-5)

Again, he writes:

A man devoid of understanding shakes hands in a pledge, and becomes surety for his friend.  (Proverbs 17:18)

Not only is it financially irresponsible, but what if your friend or family member defaults and you need to pay the debt? Will it not place a strain on the relationship at best, or destroy it at worst?

May we use the wisdom of Solomon with regard to debt.

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