You're in a financial hole — and it's a deep one. How do you even begin to get out?
I have over $100,000 in student loans! I pay more on them than most people pay for their house!
I thought it would be easy to pay off my credit card once I got a job. But the balance has gotten overwhelming. I don't even want to answer the phone anymore.
I've had the house on the market for six months. If I decrease the price anymore, I won't be able to cover the debt.
I make a good salary. But I can't figure out where the money is going.
Sound familiar? Or close?
In his book Money, Possessions and Eternity, Randy Alcorn writes how many of our financial situations are just like the story of the man who jumped off a 20-story building:
The onlookers were terrified, but the man seemed perfectly calm. As he plummeted by the window of a fifth-story apartment, he looked at the wide-eyed occupant and said, "Everything's all right so far."
But, just like that man, we're headed for a financial fall.
Maybe you've just jumped, but don't like the direction you're headed. Maybe you're at the fifth floor but, unlike the man in the story, you see the pavement coming. Or maybe you've already hit bottom.
Wherever you are, you're probably worried, and scared, and wondering what to do.
Of course, the world is more than ready to help — with loans, programs and agencies that claim to help manage your debt or even, magically, eliminate it. Some help, some don't. Some are based on sound principles and some I wouldn't trust within a mile of my debt.
But most of them aren't one thing: biblical. And that's a problem. As Christians, we have a unique responsibility that the world does not have — to seek first the kingdom of God and His righteousness.
So our question can't just be: How do I get out of the financial mess I'm in?
We need to ask distinctly Christian questions. We need to try to look at our debt from God's perspective. And we need to search His Word — not conventional wisdom — for the answers. We need to be willing to ask the hard questions, starting with one of the most difficult: How did I get here?
How Did I Get Here?
When the world deals with debt, it seems to have one motto: fix the problem. Get the debt gone — or, at least, put off the pain a little while longer.
But Christians shouldn't just want debt gone — although it's amazingly freeing when it is. We should also care why the debt happened. We should care because, very likely, there may be sin at the heart of it.
It's not that debt itself is always a sin. Scripture does tell us to "let no debt remain outstanding," but as Randy Alcorn writes, "If going into debt is always sin, it's difficult to understand why Scripture gives guidelines about lending.... If debt is always sin, then lending is aiding and abetting sin, and God would never encourage it."
The Bible does tell us, however, that:
- Debt is enslaving (Prov. 22:7)
- We are to avoid surety — in other words, to avoid taking on a debt without a sure way to repay (collateral) (Prov. 22:26-27).
It's because of these two principles (and others) that Christian teachers have been warning us for centuries to flee from debt.
As Charles Spurgeon said, "Better a purse empty than full of other men's money ... honorable poverty is infinitely to be preferred to dishonest wealth or to large indebtedness." Alcorn, who warns against all borrowing (even with collateral) because of its temptation to short-circuit God's ways and provision, writes, "The more you're inclined to go into debt, the more probable it is that you shouldn't."
If we really believed God about those two principles, it's hard to see how we would get into serious debt trouble. So if we are in serious debt, most often, it's because of one of two possibilities.
First, we didn't know God's financial principles. We thought that debt was just the way things were — the way everyone got their stuff. If that's the case, we may need to ask forgiveness that we did not seek the Lord's counsel or the counsel of His Word — and then begin to fervently seek that counsel.
Second, we knew the principles and ignored them. Alcorn writes, "Ninety-eight percent of the time debt is an internal problem, not an external one. It isn't a matter of insufficient funds, but insufficient self-control." Alcorn leaves open the small possibility of calamity — the catastrophic event which almost no finances could withstand. But he also points out the painful truth that almost all debt trouble is brought on by a lack of self-control. We want something and so we get it — through debt. If that's the case, we have a whole different kind of repenting to do (possibly from greed, self-indulgence or laziness).
James 4 reminds us sternly that repentance for our selfishness must be our first priority.
What causes fights and quarrels among you? Don't they come from your desires that battle within you? You want something but don't get it.... You do not have, because you do not ask God. When you ask, you do not receive, because you ask with wrong motives, that you may spend what you get on your pleasures....
Come near to God and He will come near to you. Wash your hands, you sinners, and purify your hearts, you double-minded. Grieve, mourn and wail. Change your laughter to mourning and your joy to gloom. Humble yourselves before the Lord, and He will lift you up.
Those are serious words. They are also words we must take seriously. If we have been selfish, self-indulgent, envious or greedy, we must repent. And, as James tells us, we must repent humbly.
What Do I Do Now?
Once we've addressed the possible sin in our lives, it's on to the ten-step "get out of debt" program, right? Nope, not yet. Because here's what I've found: God is concerned about my debt and its consequences, but He's more concerned with the attitude of my heart. It does me no good to clean up the outside of the bowl if the inside is still caked and rotting. So I need to start with God and the financial things He considers important.
There are three concepts that are clear in His Word: paying back what we owe, seeking out wise counsel and giving.
Paying Back. Matthew 5 and Psalm 37 make it clear that there is simply no room in Scripture for Christians not to repay our debts. It may take a long time. It may be extraordinarily difficult. But we are to repay. For our own good and for our witness.
Wise Counsel. You will need counsel on your journey out of financial trouble. Proverbs 13 says that the "teaching of the wise" will be a fountain of life and can turn you from the snares of death. But be cautious from whom you take advice. According to Proverbs 14, someone isn't wise because of their financial certifications or books or television shows. Someone is wise if they fear the Lord and shun evil. Ask God to bring someone into your life who understands His financial principles.
Giving. When we are facing serious debt trouble, it is so incredibly tempting not to give to God. After all, we might argue, if God wants me to repay my debts, I can't do that as well or as quickly if I am tithing. Surely He wants me to get my finances in order — then I'll give.
But there lies the problem: the assumption that it is even possible to get things financially "right" without giving. Because, according to the Word, giving is the right financial thing to do — no matter our financial condition (consider the poor widow and the rich ruler).
Throughout Scripture, we are commanded to give. To give to the needy (Matt. 6). To give to the poor (Luke 12, Deut. 15). To give to our enemies (Romans 12, Prov. 25). To give to missionaries (Romans 10). To give to those who preach the Word of God (1 Tim. 5).
We are told and told. "It is more blessed to give than to receive," Jesus said. And, yet, we still consider not giving. It's a struggle I've had in my own life. But I've learned how giving actually helps me to conquer debt.
My debt came, I learned, from focusing on myself. I wanted. I felt I needed. I found a way to get. I had a "me" problem.
The solution to my "me" problem, God showed, was not to concentrate exclusively on getting "me" out of debt. It was to concentrate more fully on His things — giving to others, loving others as much as myself, considering their needs as important as I did my own and trusting God.
God's commands are not burdensome. They are absolutely for my own good. And, it turns out, giving has transformed my life. Suddenly, contentment is easier to maintain. Dollars stretch further. Not because giving brings me prosperity, but because giving changes me.
On to the Steps
OK, now on to some specifics. Practically, there is only one way to get out of a debt problem: Pay it back. Here are some suggestions:
- Do No Harm. No new debt. Period.
- Develop a Spending Plan. You have to start telling your money where to go, instead of letting it slip through your fingers. Put down on paper what you will spend on different budget categories. If you need help developing a plan, try Crown Ministries' online calculators. Converting to a cash-only life may make this much easier.
- Create an emergency fund. This is financial author Dave Ramsey's idea and I like it. Before you start paying off debt, you save $1,000 in an account that you do not touch except for major life-altering emergencies (a refrigerator breaking down might count, an ipod probably would not). This account is your emergency cushion as you get out of debt. There's nothing worse than paying every extra cent on your debt, only to have the car break down and have to put it on the Visa because you have no extra cash.
- Pay down. You cannot get out of debt paying minimum payments. You have to pay extra. If you can't pay extra, see #6 & #7.
- Pay down strategically. It's difficult to pay off debt if you're just throwing a dollar here and a dollar there. So, get strategic. Dave Ramsey recommends "snowballing" your debts — paying off the smallest one first then using that money to pay off the second smallest and so on until they are all paid. Crown Ministries recommends paying on those with the highest interest rates first, then the next highest and so on. Pick a strategy and go for it.
- Expenses Down. Most debt comes from wanting something we can't afford. Since the money wasn't there in the first place, it's difficult to find money to pay the debt off. You have to get expenses down and, often, radically down. No more eating out. Clothes will have to do for another season. Gifts can be made, not bought. Vacations are nonexistent. You drop the gym and run around the block. Find where you can cut. It won't be easy, but remember that easy is what got you into this.
- Income Up. You can also help your debt problem by getting income up. This may mean selling possessions (and not just the junky ones). It may mean working more (freelance work, extra hours or an extra job). But be cautious about sacrificing things that God tells us are priorities — time with our families, time to worship and time to serve — just for extra money. Sacrificing our Wii time or our girls' night out, however, won't hurt us.
- Look at the big two. Houses and cars take most of our budget. If your payments to those overwhelm your budget, it's going to be difficult to make any progress. Dave Ramsey recommends no higher than 25% of your take-home pay for a mortgage payment. Crown Ministries recommends no higher than 30% of you net income (after taxes and tithe) to go to housing. Prayerfully (and with counsel) consider whether you need to take action in these areas.
- Get Radical. Remember what God tells us: debt is dangerous. So the faster you get rid of it, the better. If your spending plan only allows for minimal progress on your debt, consider doing a little more of #6 and #7 to speed up the process.
- Keep Your Eye on the Prize. Debt enslaves us. Galatians 5 tells us that we "were called to be free." But financial freedom isn't our final goal. Neither is our goal to feel better (though we will) or to be free to spend more on ourselves again. The goal is righteousness. By gaining financial freedom, we are freed up to do even more giving for God. Galatians spells that out, "But do not use your freedom to indulge the sinful nature; rather, serve one another in love."
Finally, be patient. It may take a long time to undo five, 10 or more years of financial foolishness. But it's worth it. Pray diligently to the Lord for guidance and wisdom. Charles Spurgeon said, "Money is a good servant, but a bad master." Time to make it your servant.
Copyright 2008 Heather Koerner. All rights reserved. International copyright secured.