What Do Bible Verses on Debt Teach Us? (Proverbs 22:7 and Romans 13:8)

Podcast: Play in new window | Download

What doo Bible verses on debt teach us? What does the bible say about borrowing money? Read or listen to this chapter from Your Finances God’s Way to learn the scriptures on owing money.

The text in this post is from my book, Your Finances God’s Way, and there is an accompanying workbook and audiobook. I am praying God uses the book and workbook to exalt Christ and help people manage their finances well.

A man came home with a fancy new car. His wife asked, “Why did you buy that? We can’t afford a new car, and there was nothing wrong with our old car.”

The man answered, “Our old car needed a new battery.”

His wife replied, “Then why didn’t you just buy a new battery?”

The man said, “Well, I was faced with a choice. A new battery cost $100 and a new car cost $25,000, and they wanted me to buy the battery with cash.”

Many people can relate to this man. We think debt is a blessing because it allows us to buy things with money we don’t have. Read on to learn how God views debt.

Just to let you know ahead of time, you might have more trouble with this chapter than any other in this book. Is it because avoiding debt is more difficult than obeying the other teachings in the book? No, not at all. In fact, giving is probably more difficult for many people than avoiding debt.

You might have more trouble with this chapter because the principles in it are so contrary to the world’s approach to money. For example, if I tell you it is important to give, save, and plan for retirement, you can find plenty of non-Christians who agree. But if I tell you to avoid debt, you can find plenty of financial advisors who will disagree and tell you that not only is debt acceptable, it is necessary and beneficial.

I will be the first to say that we should consider the counsel of financial advisors. When I do counseling, I have recommended people visit them. But let me ask you this before we go any further: Whose counsel should we value the most? Whose instruction should trump all others? God’s!

The question is not “What makes the most sense financially?” or “What do financial advisors recommend?” The question is, “What does God want?” Your Finances God’s Way received its title because it is about managing finances the way God wants, and the Bible tells us how to do things God’s way. Walking by faith means obeying God when it doesn’t appear to make sense or goes against the counsel of others. As Peter said, “We ought to obey God rather than men” (Acts 5:29). So what does God say about debt?

What Does the Bible Say About Debt?

To learn the Bible’s teaching on debt, we must understand the difference between law and wisdom literature. The law (think Leviticus) contains commands forbidding sin, while wisdom (think Proverbs) contains principles that help us navigate through life. Let’s consider what the law and then wisdom literature have to say about debt.

What Does the Law Teach?

The law does not condemn lending and borrowing. Instead, it condemns usury (exorbitant interest) and promotes generosity:

• “If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him” (Exodus 22:25 ESV).
• “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 (Leviticus 25:35-36).
• “At the end of every seven years you shall grant a release…every creditor shall release what he has lent to his neighbor” (Deuteronomy 15:1-2 ESV).

The point to notice is debt is not a sin because the law does not forbid it.

What Does Wisdom Literature Teach?

Wisdom literature also discusses lending and borrowing: “O LORD, who shall sojourn in your tent? Who shall dwell on your holy hill? He who…does not put out his money at interest… The wicked borrows but does not pay back, but the righteous…is ever lending generously” (Psalm 15:1-2, 5; 37:21, 26 ESV). Jesus is “the wisdom of God” (1 Corinthians 1:24, see also verse 30 and Colossians 2:3), so His words also tell us what wisdom says about debt: “Give to him who asks you, and from him who wants to borrow from you do not turn away” (Matthew 5:42). We see (1) lending and borrowing aren’t discouraged, (2) usury and failing to pay what’s owed are condemned, and (3) generosity is praised.

Up to this point, debt hasn’t sounded bad. But now we must consider one of the most well-known financial verses in the Bible: “The rich rules over the poor, and the borrower is the slave of the lender” (Proverbs 22:7 ESV). How do we understand debt sounding acceptable elsewhere, but unacceptable now? Combining the teaching on debt from the law and wisdom literature, we find the biblical balance is this: Because debt is not forbidden in the law it is not necessarily sinful, but because wisdom warns against it, we are wise to try to avoid it. The danger is debt makes us slaves to the one we owe money to. If we’re going to be slaves of anything, we should be “slaves of righteousness…so now present your members as slaves to righteousness [and]…slaves of God” (Romans 6:18, 19, 22).

Proverbs 22:7 is a cautionary alert to, as much as possible, not make someone else our master. Some people in debt feel enslaved to creditors. They dread going to the mailbox because they’re afraid of receiving another bill they can’t afford—they don’t know how they’re going to pay their master:

What does God have to say about the impact of debt on His people? In the Old Testament world if you couldn’t pay your debt on time you became the slave of the lender until you worked off your debt. In our day, if you borrow money you become the lender’s slave by giving much or most of your income back to the lender.

Rod Rogers, Pastor Driven Stewardship: 10 Steps to Lead Your Church to Biblical Giving (Dallas, TX; Brown Books, 2006), 228.

Even Churches Can Be Wrong

The biggest threat to viewing debt biblically might not be the world or financial advisors. Sadly, it might be churches! We shouldn’t be surprised when the world acts like debt is a blessing, but we should be surprised when churches do. I don’t like to criticize churches, but I feel obligated to do so because I fear you could read this chapter and think, We shouldn’t worry about debt, because I remember when that church went into debt. Churches aren’t the standard. They don’t always do what’s right.

It is sad when churches go into debt to supposedly accomplish the Lord’s work, when the same Lord they’re claiming to serve might condemn the debt they’re embracing. This often happens when churches get huge loans for buildings, which is an ironic situation. They want a building to worship the Lord in, but that same Lord warns against the debt they embraced to purchase the building. As Jesus said, “God is Spirit, and those who worship Him must worship in spirit and truth.” We must worship God according to the truth, which means worshiping Him in according to the truth in His Word.

The situation is made worse when churches justify their actions by saying, “The Lord led us to do this.” As soon as people attach God to something, nobody can disagree because then it would be disagreeing with God. But if God did not lead the church leaders to go into debt, then how bad is it to claim He did?

If a church goes into debt but struggles financially, the leadership often turns to the congregation and pleads (or guilts) the people into giving more money for the cause God supposedly wanted. Perhaps the pastor will even rebuke the people for not giving more. But what if it was the church leadership’s fault for acting outside God’s will in taking on the debt?

When the leadership says, “The Lord led us to do this” but they don’t have the money to continue the work they claim God wanted, God looks bad—He called His people to do something, but then didn’t give them what they needed to do it. He led His people to step out in faith but didn’t honor their faith.

Hudson Taylor was a missionary and the founder of the China Inland Mission. He said, “God’s work done in God’s way will never lack God’s supply.” This is true, but when church leadership say it was God’s will to get a building loan and then can’t afford the payments, they make God’s work appears to lack God’s supply. God looks unfaithful and unable to be trusted.

Christians must keep in mind that churches are led by fallible men who do not always make the best decisions. While I would like to be able to encourage you to look at what churches do and follow the examples of pastors and elders, the standard is not what men do. The standard is the Bible.

Debt Is Your Enemy Versus Your Friend

Let me first say that people aren’t always in debt for bad reasons. Some situations put people in debt against their wishes. There could be health issues that cause bills to pile up, a job loss and accompanying inability to pay expenses, or an unforeseen accident that drains emergency funds. People experiencing such circumstances should not feel condemned by this chapter.

What’s important to note here is that the above examples are all situations outside of people’s control. They didn’t invite the debt into their lives. Sadly, when most people are in debt, it was completely within their control—it was their choice. They put themselves in debt when they gave in to sins such as covetousness, discontentment, materialism, or self-entitlement.

You might read this chapter and think I’m being judgmental or harsh, especially if you have been taught that debt is a blessing. The truth is that I’m trying to help you! As a pastor, I have watched debt cause enough problems that it would be unloving of me not to warn you. Please hear me clearly: Debt is not your friend!

Think about this logically: If God warns us about something in His Word, how often could it be his will to act against that warning? Not often! If Scripture cautions us about something, how cautious must we be about allowing it into our lives? If we answer these questions honestly, we must approach embracing debt with great apprehension.

Let’s get an elevated view of debt by considering the situation in our country. Then we can zoom in and look at the situation in households.

Our National Debt

Michael Farris is a lawyer and the founder of the Home School Legal Defense Association (HSLDA) and Patrick Henry College. In 2001 he wrote:

We should demand that our government respect the economic freedom of our children and grandchildren by eliminating the national debt. In the fall of 1992, the national debt was $4 trillion. That is $16,000 for every man, woman, and child in America. A $4 trillion stack of $1000 bills would be 245 miles high.

Michael Farris, The Homeschooling Father (Nashville, TN: B & H Publishing Group, 2002), 110.

The national debt was $4 trillion in 1992, $6 trillion in 2001, $15 trillion in 2011, and it is expected to reach $30 trillion in 2021. Why do we have a debt ceiling if we keep raising it? If the purpose is to prevent debt from exceeding a certain level but we raise the ceiling when it’s reached, haven’t we defeated the purpose? We should get rid of the pretenses that have no real significance and be honest about our actions: We take on debt recklessly.

Biting the Bullet

The way our nation is accruing debt is unsustainable, and ultimately, there are only three possible ways to change the course we’re on. The first possibility is to raise taxes. The second possibility is to spend less. But most economists believe either strategy compromises the economy. Lowering taxes stimulates growth and spending, but also increases the debt. As the government spends money or engages in “quantitative easing,” also known as stimulus spending (injecting large amounts of money into the economy), the economy grows, but so does the debt. It should also be noted that some economists believe when the government stops stimulus spending, the economy returns to where it would have been without it, but with one exception: an increased national debt.

The third solution is, to put it bluntly, bite the bullet. Suffer through difficult years, including economic slowdowns, and lower the quality of living until the debt is in check. But could a political candidate win if he talked about making these kinds of sacrifices? I doubt it. People want a candidate who promises prosperity versus poverty. Also, as the percentage of our nation receiving entitlements grows, so too will the number of voters who want candidates promising more rather than less spending. Sadly, I hope this famous quote doesn’t define our nation:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.

The earliest known attribution of this quote was October 20, 1948, in what appears to be an op-ed piece in The Daily Oklahoman under the byline Elmer T. Peterson: “This is the Hard Core of Freedom,” The Daily Oklahoman, 19. The quote has not been found in Tytler’s work. It has also been attributed to Alexis de Tocqueville.

If I can paraphrase: A democracy only lasts until the people learn they can vote themselves the greatest amount of immediate prosperity. At that point, the nation will be crushed under the weight of the people’s selfishness.

Sacrificing Our Children’s Future for Our Present

We have an amazing capacity to sacrifice the future for the present, but what’s surprising is we will even sacrifice our children’s future for the present. The preamble to the US Constitution states the purpose of it is to secure the blessings of liberty to us and to our posterity (children), something we are not doing. One of our founding fathers, Thomas Jefferson, said:

The question whether one generation has the right to bind another by the deficit it imposes is a question of such consequence as to place it among the fundamental principles of government. We should consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves.

Jay H. Brown, Truth in Government: Restoring Pride and Prosperity in America (San Antonio, TX; Freedom Publishing Company, 1996), 32.

Again, if I can paraphrase: Our generation should not be able to hurt the next generation by “kicking the can down the road” and giving them the consequences of our actions. Although the debt negatively affects us, our children will suffer the most.

The Bible’s Condemnation

Proverbs 13:22 says, “A good man leaves an inheritance to his children’s children.” I don’t know if there’s a better verse describing the opposite of what our nation is doing. It would be one thing if we were only failing to leave our children an inheritance, but our sin goes beyond that because we’re robbing them of their futures. They will be burdened with the problems that are being creating today.

Psalm 37:21 says, “The wicked borrows but does not pay back” (ESV). We currently borrow forty cents of every dollar. You could argue that our nation has never defaulted on its debt, but we were within days of doing so in 2011. We lost our triple-A bond rating with Standard & Poor’s and received a negative outlook for the future, indicating risk of a further downgrade if the government’s fiscal discipline weakened or the economy deteriorated further. China’s official Xinhua news agency said, “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.”

You might be saying, “I’m not in government. I didn’t make these decisions. What do our nation’s debt and spending problems have to do with me?” The answer is our nation is people: you and me. We are part of the problem. Most Americans don’t spend or view debt any differently than the government.

How Much Debt Do We Individually Have?

Let me share some numbers with you. As of 2020, on average, people have the following debts:

• Credit card debt is $6,500
• Automobile debt is $18,500
• Student loan debt is $39,000
• Household debt is $145,000
• Mortgage debt is $210,000

Let’s look at a few of these categories of debt so we can manage our finances God’s way.

Credit Card Debt

A Bankrate survey found 30 percent of Americans have more credit card debt than they have saved up for emergencies. If people have $6,500 in credit card debt, are charged the average APR of 19 percent, and pay the minimum each month (3 percent, which is roughly $190), they would stay in debt for more than 17 years, put more than $5,800 toward interest, and pay back more than $12,300. Pay back $12,300 to borrow $6,500? Why would we think this is anything other than foolish?

Embracing credit card debt is one of the worst financial mistakes we make. Ted Rossman, industry analyst at CreditCards.com, explains how detrimental it can be:

Credit card rates are at record highs 17.73 percent, and that’s for people with good credit. Many people with lesser credit are paying 20 to 25 percent on their cards. Paying these kinds of rates for any length of time is really going to hold you back financially. Credit card rates are three to five times what we typically see on mortgages, auto loans, and student loans.

The problem with credit cards is they seem like free money—you can buy something today and pay for it later. Because the bill doesn’t arrive for weeks, you feel as though you didn’t spend a cent. Even when the bills arrive, the purchase still doesn’t seem painful because the payments are only smaller installments of the entire cost.

We must keep in mind that, in the end, we pay back more than twice the initial purchase. For example, a $10,000 purchase at 20 percent interest, paid off over 8 years, requires monthly payments of only $210, but the total paid back is $20,115. That means $10,115 in interest! Would you still make that $10,000 purchase if it were $20,000 instead? Hopefully not.

While I would highly discourage credit cards, if you are going to use them, be sure to pay off the balance each month. Wise people never pay the exorbitant interest tacked on to their credit card purchases. They pay off the balance each month, thereby using the card without it using them.

Student Loan Debt

The student loan debt in the United States is now more than $1.57 trillion, which exceeds credit card debt by more than $780 billion.19 Student loan debt has increased almost 160 percent since 2007, also making it the fastest-growing type of debt.20 Sixty-two percent of students graduate with student loan debt,21 the average monthly payment is $393,22 and the average repayment period is 21.1 years.23 Instead of making these payments, if 21-year-olds invested $393 every month with a 10 percent return, they would have 4.5 million dollars when they reach 67years of age.24 How many graduates can say the money they made from their degrees exceeded the money they could’ve made if that same amount were invested?

Three misconceptions have contributed to the problem. Let’s look at each of them.

Misconception One: A Degree Always Improves Your Life

While some graduates found degrees improved their lives, others experienced the opposite. Fifty-three percent who took out student loans say they regret doing so, and 43 percent say they regret going to college altogether.25

Student loans can become a gateway to greater debt. When people have tens of thousands of dollars of college debt, a few thousand more seems insignificant. Student loans can create bad financial habits that graduates take with them throughout life.

Misconception Two: You Need a Degree to Succeed

Many high-end professionals will tell you they wouldn’t be where they are without their degree, while others would tell you they have never used their degree (think of the discussion about “worthless purchases” in the previous chapter). How do you know if you need a degree? The answer is contained in one word in that question: need. Those who work in some professions, such as medicine, law, and education, need degrees. Those who work in other professions, such as firefighters, insurance agents, cooks, plumbers, God’s View of Debt 165 exterminators, medical assistants, landscapers, construction workers, and phlebotomists, don’t need degrees, and some of these jobs pay as much or more than those requiring degrees.26

A gentleman who has been doing some remodeling on our house lamented the money he spent on a degree he isn’t using. Many people (myself included) have college degrees that have gone unused. I have a bachelor’s in business and two masters (education and biblical studies), and I rarely use the information I learned in those programs. My biblical studies degree has helped me as a pastor, but if I used all that time spent writing papers and taking tests, I believe I could have learned as much or even more on my own.

Misconception Three: You Must Go into Debt to Get a Degree

A woman in my church wasn’t sure whether she should go to college. She wanted to get married, have children, and be a stay-at-home mom, but she knew that might not happen for years. She decided to go to college, but she didn’t want to go into debt, so she prayed that God would give her the money she needed to go to school for as long as God wanted. She attended for a few years, the money ran out, she stopped going, and soon afterward, she got married.

There are two things I like about her approach. First, she chose to remain debt-free. Perhaps you work while going to college and pay for classes as you make the money for them. Your four-year degree takes eight years, but you graduate with no student loans. Instead of living on campus, perhaps you live with your parents to save money.

Second, she put the matter in God’s hands. I do not bring this up to discourage anyone from attending college, but the decision should be a matter of careful research and prayer. Do your homework (no pun intended!) and bring the matter before the Lord to determine whether college is the best course for you.

Automobile Debt

A close second behind the damage of credit card debt is automobile debt. You have probably heard that new vehicles are terrible purchases because they lose value when driven off the lot. Let me reinforce that point by giving you some numbers. Fifteen percent is the average value lost, which means if you purchase a vehicle for $30,000, you lose $4,500 within minutes. Let that sink in. A casino is probably the only other place you can lose that much money that quickly. Sixty percent of the value of a vehicle is lost within the first five years. New vehicles are one of the worst investments people make, yet plenty of people still purchase them.

The average car payment is $545 per month. This doesn’t include the extra money for auto insurance, which is more expensive on a new car. The average new car loan is 68 months, which means the average car costs more than $37,000 when paid off completely. If you invested the same amount of money with a 12 percent rate of return, you would earn more than:

• $125,000 in 10 years
• $500,000 In 20 years
• $5.4 million in 40 years

Even if we use a smaller car payment of $415 per month and a more conservative interest rate, we are still out the following amounts:

• $390,000 in 30 years with a 6 percent APR
• $570,000 in 30 years with an 8 percent APR
• $820,000 in 30 years with a 10 percent APR

Wouldn’t you want to avoid throwing away this much money by purchasing your vehicles with cash? By doing that, you can wisely use the extra money in other ways, such as paying off your mortgage. Let’s take a look at why that is a good idea.

What About Mortgages?

For simplicity’s sake let’s divide our expenses into two categories: nonessential (such as vacations, eating out, entertainment) and essential (food, clothing, and housing). Debt should be avoided for nonessential expenses (such as vacations and flat screen televisions) and it can be avoided for most essential expenses. The one exception is housing because many people don’t have the money to buy a home with cash. If you’re wondering how much to spend on housing, the general rule is 30 percent of your income, whether it’s rent or a mortgage payment.

Some people consider themselves to be debt-free when the only debt they have is a mortgage. This is an odd perspective because a mortgage alone could be larger than multiple other loans combined. When people have a mortgage, unless they are close to paying it off, they should not consider themselves close to being debt-free.

Our Story

When Katie and I first got married, we still owed $160,000 on our mortgage (originally $164,000). Katie also owed about $6,000 in school loans. We owned two vehicles that were paid off. We didn’t (and still don’t) own credit cards.

We considered not paying off our mortgage because of the tax deduction we could receive, but we were deterred for three reasons. First, we were given The Total Money Makeover by Dave Ramsey as a wedding gift and we read it on our honeymoon. Regarding the tax deductions from a mortgage, he wrote:

If you have a home with a payment of around $900, and the interest portion is $830 per month, you have paid around $10,000 in interest that year, which creates a tax deduction. If, instead, you have a debt-free home, you would, in fact, lose the tax deduction, so the myth says to keep your home mortgaged because of tax advantages.

If you do not have a $10,000 tax deduction and you are in a 30 percent bracket, you will have to pay $3,000 in taxes on that $10,000. According to the myth, we should send $10,000 in interest to the bank so we don’t have to send $3,000 in taxes to the IRS. Personally, I think I will live debt-free and not make a $10,000 trade for $3,000.

Dave Ramsey, The Total Money Makeover (Nashville, TN: Thomas Nelson, 2013), 187.

Second, we were sickened to think about the amount we would end up repaying the bank. Over the thirty years of the loan, the total would be $372,000, which would be more than twice the amount of the loan itself.

Third, and most importantly, as we talked about last week, we wanted to be guided by God’s Word and not man’s wisdom. Even if it seemed to make the most sense to keep our mortgage, we were convicted to pay it off because the Bible cautions against debt.

Being Upside Down in Your Mortgage

Some people think a mortgage is an acceptable form of debt because homes appreciate, making them investments. This contrasts with other assets—such as automobiles, boats, or electronics—that typically depreciate with time. The problem is many people have found themselves upside down in their mortgages (the value of the home is less than the loan amount). During the subprime mortgage crisis (2007 to 2010), also known as the Great Recession, 11 million Americans, or 23 percent, of the nation’s homeowners were upside down. Once the crisis was over, the number peaked at 31 percent in the third quarter of 2012.

The situation improved, but The New York Times reported in January 2015 that “about 17% of all homeowners are still ‘upside down’ on their mortgages.” A 2013 article in NPR titled “You Be the Judge: Is the Housing Market Really Improving?” reads, “The number of ‘underwater’ homeowners may be down, but it’s still extremely high, with an estimated one in five owing more than the home’s worth.” Another article:

Homeowners across the U.S. confronted the reality that their houses were worth a fraction of what they paid for them. Now, a decade later, even though the recession is over, more than six million homeowners are still upside down on their mortgages.

NPR News, “A Decade Out From The Mortgage Crisis, Former Homeowners Still Grasp For Stability,” KTOO, May 22, 2016

We live in a fallen world. When one trial concludes, another begins. As I write this, in 2020, we are dealing with COVID-19. CBS News reports,

6.7 million households could be evicted in the coming months. That amounts to 19 million people potentially losing their homes, rivaling the dislocation that foreclosures caused after the subprime housing bust.

Irina Ivanova, “Nearly 19 million Americans could lose their homes when eviction limits expire Dec. 31,” CBS News, November 27, 2020

The above statistics reveal there is simply no guarantee that a house will appreciate. Many people can attest to the financial problems they experienced when unforeseen circumstances, such as a recession, caused their home’s value to plummet.

As James 4:14-15 says, “You do not know what will happen tomorrow. For what is your life? It is even a vapor that appears for a little time and then vanishes away. Instead, you ought to say, ‘If the Lord wills, we shall live and do this or that.’” We don’t know how the economy will fare, what trials we will face, what emergencies will occur, what expenses we will have to pay for, or even what our job or income will look like. Many people have thought they would make the same amount of money, or more, for the rest of their lives, only to find themselves laid off when their company experienced hard times and downsized. The list of situations that can lead to a home foreclosure is endless.

A mortgage is a major commitment to make when the future is unknown. We must exercise extreme caution (and prayer) before locking ourselves into decades of payments that are dependent on our financial situations remaining the same. People become indebted to the loan company for up to thirty years (sometimes more if they refinance or take out a second mortgage). Think (and pray) carefully before embracing a mortgage you might pay off for the rest of your life. Consider that even if you do pay off the mortgage according to the payment schedule, the result is that you’ve given the bank more than twice the amount of the loan itself. This alone is a great reason to strive to pay a mortgage off early. When viewed this way, we must examine every mortgage and consider whether it is a good use of God’s money.

Trust God to Help You

Let me conclude with this: Don’t delay getting out of debt. Dedicate yourself to making changes that will put you on the road to freedom from bondage. In the following chapter, we will discuss how we can eliminate debt given time, wisdom, and sacrifice. But for now, let me leave you with the following encouragement.

The battle to become debt-free is fought in the heart because this is where we’re tempted to be selfish and covetous. The Lord can enable you to resist these temptations, giving you the needed selflessness and contentment. Believe He wants to help you: “Commit to the LORD whatever you do, and he will establish your plans” (Proverbs 16:3).

If you are a Christian, you are God’s child, and just like earthly parents want to see their children manage their finances well, our heavenly Father wants to see us manage our finances well. Assuming God wants you to be debt-free, He will equip you to reach that wonderful goal.