A century ago, debt was regarded as an earned privilege for a few. But today, debt is viewed as a right for all and borrowing is an integral part of our lives. There has been a generational shift in our country. The World War II generation was savers, but later transitioned into a generation of consumers, or spenders, and today, we are a generation of debtors as we spend beyond our income through the use of easy, yet harmful, debt (e.g., credit cards).
Scripture does not say debt is sinful, but sinful behaviors in most cases can lead to or create debt behaviors such as envy, pride, greed, gluttony or lust. Make no mistake about it, God has nothing good to say about debt. The psalmist says in Psalm 37:21: “The wicked borrow and do not repay.” Solomon wrote in Proverbs 22:7: “The rich rule over the poor, and the borrower is servant to the lender.” Second Kings 4:1–7 tells the story of the widow and the oil where, because of the widow’s deceased husband’s debts, she faced losing her children to the debt collector. Fortunately, there is a positive outcome to this story, as the widow’s obedient faith and willingness to follow godly counsel led to an incredible blessing from God.
Debt extracts a physical toll. It increases stress, which contributes to mental, physical and emotional fatigue. It harms relationships and is the number one reason for divorce in the U.S. Many people raise their standard of living through debt, only to discover that the burden of debt controls their lifestyles. Debt also places the believer in financial bondage, and gets in the way of our fulfilling the calling on our lives to be abundant and cheerful givers. Accumulating debt also creates a blurred line between wants and needs. Lastly, for those who have children, the question we should ask ourselves is “What lessons are we teaching our children by living in the bondage of financial debt?”
Credit cards are not inherently sinful but are very dangerous. Studies show that people spend about 30 percent more when they use credit cards than when they use cash, simply due to the fact that it is easier to spend money we don’t actually have. As of November 2012, the average U.S. household was carrying $7,117 in credit card debt (versus $2,966 in 1992). If you can’t pay the monthly balances, you should strongly consider cutting up your card(s). Again, it’s just simply too easy to spend money that you truly don’t have! Return to the days of “if you don’t have the money to buy it, go without” until you have saved for the purchase.
The dirty secret of credit cards:
Years To Pay Off
$160 per month ($5 per day)
$300 per month ($10 per day)
Remarkably, if a person increases the minimum payments on his or her credit cards, he or she can significantly reduce the amount of time it takes to pay off the balances. The chart above lists the same amount of debt and interest rate. The difference is in the monthly payment amount. A person with $8,000 of debt on a 16 percent interest rate can reduce 27 years of payments simply by increasing his or her minimum payments.
Nine Things to Consider When Eliminating Debt
1. Track Expenses / Establish a Family Spending Plan
You should know exactly where your money is going, right down to the penny. A written budget helps you plan ahead and analyze spending. Having a budget will help you cut back on “impulse buying.” Every family / individual should have a spending plan.
To learn how to develop your family spending plan, go to prestonwoodfoundation.org/freedom
2. List Your Assets
You should list every possession you own, including: your home (equity), car, and furniture. You should evaluate the completed list to determine whether you should sell any assets, including downgrading your car or house, and selling your coin, gun and baseball card collections, etc. The correct attitude should be, not to think about what you are losing; think about how much you will gain by being out of debt.
3. List Your Liabilities
Most people do not know exactly how much they owe. A person should list each debt with the interest rate and minimum payment. One should also understand the need to prioritize which debts to pay back first.
4. “Rollover Your Debt” Technique Example
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You should throw every single dime you can find at debt #1. Even if this process takes years, think of how much better off you will be in time. Once the debt is paid off, for most this will be the single largest disposal income increase you will ever experience. This is a great time to start building up short-term and long-term savings. Better yet, if you have not been able to biblically give to God what is rightfully His (the tithe) due to the bondage of debt, start now and enjoy the gift of giving. Make sure to visit crown.org and access its useful tool to Rollover Your Debt. This will be discussed in greater detail in the Three Action Steps to Eliminate Your Debt section.
Pay off a small debt first —it will encourage you! Next, pay off debts with higher interest rates. Once you have paid off an account, add the monthly amount from it to another debt payment. Also, you should constantly be striving to lower your interest rates; the lower the rate, the less money you will have to pay back over time. Here are some helpful tips when attempting to lower your interest rates:
a) Contact each card’s customer service number.
b) Understand that most cards have inflated interest rates because of missed/late payments. Be ready to state that you know this to be the case and share how you have been on time for “x” number of months.
c) Don’t take it personally if they reject this request — keep calling! Also, do not hesitate to ask to speak to a supervisor.
d) Always remain calm, friendly and professional, even if the customer service rep is harsh in dealing with you.
5. Consider Generating Additional Income
Additional income should be applied to debt elimination. But beware of protecting your relationship with your family and Lord. You can be creative, use your special talents, and do something you enjoy.
Have a garage sale. Most American homes are cluttered with material possessions that are never used or simply no longer needed. You’ll be amazed how much stuff you can sell to generate funds that will solely go toward paying down your debt.
6. Accumulate No New Debt
If you can’t pay for it with cash, check or debit card, then you have to go without. If you are dealing with harmful credit card debt, it is highly recommended that you cancel your cards except for one card you can keep for emergencies. Be warned that when you cancel a credit card, your credit score may decrease for a short period of time. As crazy as it sounds, the credit bureaus view it negatively when your capacity to use credit is reduced; but be assured, the best thing you can do is to stop using and depending on credit cards when making your daily purchases.
In principle, debt consolidation is a good step, given that you are working with an honorable firm, and you are committed to using only cash for ALL future purchases. Some recommended nonprofit debt consolidation services include:
- Consumer Credit Counseling Services 800-856-0257 / cccs.net
- Christian Credit Counselors 877-474-5291/ christiancreditcounselors.org
7. Be Content with What You Have
Contentment is mentioned seven times in the New Testament, and six of those passages refer to money and possessions. The apostle Paul wrote in Philippians 4:11–13, “I have learned to be content in whatever circumstances. I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do everything through him who gives me strength.” Paul learned the secret of contentment because his circumstances and accumulation of material possessions did not determine his mindset. Rather, Paul knew that true contentment was found in knowing and serving Christ, and that the Lord would provide for his needs. Society today dictates that we cannot be content unless we drive a certain car, live in a certain house, or have a certain job title. Be assured; having more will never be enough, as we will soon become dissatisfied and want the next better material possession that’s out there.
8. Consider a Radical Change in Your Life
You should lower your expenses significantly to get out of debt more quickly. Ideas include selling your home and buying a smaller one, or renting; you can also cut out all non-essentials, including cable, internet, eating out and entertainment. Bare-bones living with no extras for a period of time will allow you to achieve your goal of debt-free living! Short-term sacrifices can turn into long-term gains if we are diligent in watching every penny we spend.
9. And Lastly… Don’t Give Up –Get Angry with Your Debt!
There will be 100 reasons for you to delay or quit your efforts. You should get angry at your debt. How many dreams have been put on hold by your debt? How many sleepless nights have you stayed awake worrying over that debt? Use your anger to get fired up about a plan to pay off your credit card debt, once and for all! Also, don’t yield to temptation. Jesus brings freedom in all areas of our lives.
Three Action Steps to Eliminate Your Debt
Step 1: Collect Exact Debt Details
Determine current balance owed, monthly payment amount, and interest rate.
Creditor Current Balance Payment Amount Interest Rate
Visa $2,000 $ 50 16%
MasterCard $5,000 $ 110 12%
Discover $7,500 $ 325 29%
Step 2: Input Data into Debt Payoff Calculator
Go to crown.org to access the Debt Snowball Calculator. Please note this tool is free from Crown Financial Ministries and all information required is safe to enter as you will not be asked to share any account numbers.
Steps to access Debt Snowball Calculator:
- Go to crown.org.
- At the top of the page, click on "Resources", then under "Personal Finance", click on "Calculators".
- Click on "Debt Snowball Calculator".
- Scroll down and click on the green "Let’s Go!" button.
Instructions for Debt Snowball Calculator
- Enter the appropriate information under each column header (e.g., creditor, principle balance, interest rate, minimum payment).
- To add additional debts, click on the blue "Add Another Debt" link.
- Click Next, then click Calculate Results.
- Click Create Payoff Summary.
- Print the Download PDF of Schedule plan for your records.
In our example above, the Payoff Summary tells us that, based on your payment schedule, we will:
- Pay off the Discover card in 24 months.
- By adding the former payment from the Discover to the Visa payment; in addition we estimated we can pay an additional $315 toward our debt; the Visa will be paid off in 26 months.
- Lastly, with the former payment from the Visa added to the MasterCard payment, MasterCard will be paid off in 30 months.
Step 3: Execute on Plan, and Other Helpful Information
It is imperative that you remain diligent in paying off this harmful debt. I’m sad to report that in working with couples over the years, they will stick to their debt payoff plan for a period of time only to later return to spending money they do not have. You will be faced with many hard decisions and temptations to divert from the plan, but I want to encourage you to stay the course! Harmful debt is financial bondage, and the fact of the matter is that Jesus Christ died on the Cross for us to experience freedom in all areas of our lives.
Continue to look for ways to divert money to add to your debt payoff. It’s the little things that we never think about that can add up. For example, daily Starbucks coffee, driving on the tollway, bottled water, soda, eating out, premium cable channels, etc. can add up to a lot of money quickly. Just have the mindset that every dollar you put toward paying off your debt gets you that closer to true financial freedom.
“It is for freedom that Christ has set us free. Stand firm, then, and do not let yourselves be burdened again by a yoke of slavery.” - Galatians 5:1
God Cares about Your Finances
Did you know that there are more than 2,300 verses in the Bible that deal with money and possessions? To put this number in context, if you combined the subjects of faith and prayer, you would find less than 1,000 verses pertaining to these extremely important biblical disciplines. These numbers clearly point to the fact that God cares about how we handle our money and possessions. The fundamental biblical principles we must embrace in these 2,300-plus verses can be summed up in four points:
- God is the owner of all that we possess. Psalm 24:1 clearly states, “The earth is the Lord’s and all it contains.” Your name may be on the deed or the bank account, but make no mistake about it, God is the owner. Once we fully comprehend this principle, we will look at our possessions with a newfound sense of how to honor the Lord with them.
- God is in control of all situations (Psalm 135:6; Isaiah 45:6–7; 1 Chronicles 29:11–12), and He will make good out of any situation for those who are faithful to Him (Romans 8:28). There is no circumstance in your life that catches God by surprise. He is an intimate God who knows every detail of our lives and He wants what is best for us (Matthew 10:30). If God is in control of all, certainly a logical question would be: Why do God’s people go through financial hardship and trials? James 1:2–4 doesn’t say if we go through trials but rather when we go through trials that we are to count it as joy. This can sound like a strange concept at first but God is telling us He will use these trials to shape and mold us, to prepare us to be whom He intends for us to be. No matter what season of life we are in, God is still working on and refining all of us.
- God promises to provide for the needs of His people. Philippians 4:19 is clear in that God promises to supply every need (not greed) from His infinite resources and this promise is to His people only. What comes with this promise, though, is the premise that man must go about his or her business in a manner that honors our Lord. This leads us to the fourth principle that speaks to how we are to address this premise requirement.
- The only role for man in regard to our finances according to Scripture is to be faithful stewards. Simply put, we are being called to be good managers no matter how much or how little we possess (Psalm 8:6). This is an incredible responsibility and opportunity to honor God through the management of our earthly possessions.
The fact of the matter is, being a good manager of what God has provided has eternal significance when you consider Luke 16:11: “If then you have not been faithful in the use of worldly wealth, who will entrust the true riches to you?” Considering the eternal ramifications of this verse, it is something worth praying and mediating about during your quiet time with the Lord.
Restoration in Your Finances
For those struggling with harmful debt, one must never forget that our God is a God of restoration. His Word (The Bible) is filled with account after account of how he restores His people. This restoration includes your finances so don’t lose heart, and be assured that if you seek the Lord and practice sound biblical financial principles, our gracious all-powerful God will restore!
"Blessed is the man who trusts in the LORD,
whose trust is the LORD.
He is like a tree planted by water, that sends out its roots by the stream,
and does not fear when heat comes,
for its leaves remain green,
and is not anxious in the year of drought,
for it does not cease to bear fruit.”