Wednesday, February 5, 2014

"The Dangers of Debt"

Stewardship Lesson #10

When discussing buying & living styles, you must always consider the dangers of debt.

Is debt a sin?

Or is it just not the wisest choice for our lives?

Are there times we need to be in debt?

Or should you do without necessities to be able to avoid debt?

These are all questions that must be answered.

The Dangers of Debt

  1. Debt is not a sin. The Bible discourages debt, but does not prohibit it.
  2. Debt is never the real problem; it is only symptomatic of the real problem – greed, self-indulgence, impatience, fear, poor self-image, lack of self-worth, lack of self-discipline.
  3. Debt can be defined in many ways. It is any money owed to anyone for anything.

There Are Five Kinds of Debts

  1. Credit Card Debt
  2. Consumer Debt
  3. Mortgage Debt
  4. Investment Debt
  5. Business Debt

Before purchasing an item, & before going in debt for it, there are four questions to ask:

  1. Does it make economic sense?
  2. Do my spouse & I have unity taking on this debt?
  3. Do I have the spiritual peace of mind or freedom to enter into this debt?
  4. What personal goals & values am I meeting with the debt that can be met in no other way?

The difference between debt & cash purchases may be illustrated with the example of the purchase of a new car.

Car Purchased on Credit

Cost of car: $10,000.00
Monthly Payment at 12.5%: $265.80
Amount Paid in Four Years: $12,758.40

Car Purchased with Savings (Cash)

Cost of Car: $10,000.00
Monthly Savings at 6% in Four Years: $12,182.00
Total Cost of Car: $7,818.00

The fact is: Debt always mortgages the future.

Are there times when you may need to borrow? Yes. But whenever you borrow money for any reason, there must be a guaranteed way to pay it back.

Read the following Scriptures for a Biblical view on debt.

Psalm 37:21 - The wicked borrows and does not pay back, but the righteous is gracious and gives.

Romans 13:8 - Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law.

Proverbs 22:7 - The rich rules over the poor, and the borrower becomes the lender’s slave.

1 Timothy 5:8 - But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever.

Luke 12:15 - Then He said to them, “Beware, and be on your guard against every form of greed; for not even when one has an abundance does his life consist of his possessions.”

There are two rules for borrowing:

  1. The cost to borrow (after-tax interest) must be less than the economic benefit received (interest, yield, and/or growth in value).
  2. There must be a guaranteed way of repayment.

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