We Must Define the Debt We Are Talking About

Since writing my last post, I have come across even more on the topic of debt. Bible Money Matters has what I think is a great article on debt by Peter Anderson I like it for two reasons: Anderson defines the debt he is talking about and presents a balanced, thoughtful view on the topic.

Defining the Debt

Too often, debt goes undefined. There is a great difference between what is often called consumer debt (usually credit card debt from consumption – shopping, eating out, entertainment) and low interest debt (anyone know of a better name?). I lump things like housing, student loans, and even cars (Ferrari…not so much) into this category. For the most part, these assets appreciate (grow in value), with the exception of cars, or add to one’s earning potential. Furthermore, the interest on these items is low and often tax deductible, making the effective interest rate even lower. Its important not to lump these two kinds of debt together, as they are categorically different, both from a lifestyle and financial perspective. Consumer spending can be cut severely, so long as one is willing to limit one’s lifestyle, while things like housing, transportation, and education are both responsible uses of money and necessary for employment in our society. Financially, there is a huge difference between the 20-something percent of a credit card and the 4.5% of your typical home mortgage. The credit card debt is going to compound exponentially faster.

Bringing Balance to the Discussion

Anderson presents a well reasoned answer to the question: Is it acceptable for a Christian to take on any debt? In a nutshell, there is no Biblical basis for thinking that being in debt, or taking on debt is inherently sinful (click the link above to read his full explanation). Scripture warns us to be careful of the effects of too much debt, but never clearly outlines it as wrong. In addition to what Anderson writes, I would add that God provides provisions in Old Testament Law for people in debt. If debt is inherently wrong, wouldn’t God have commanded the Israelites to not take on debt (or, for the lender, to forgive it), rather than outline a method of repayment?

Serving God, Rather than Money

At the end of the article, Anderson says this:

To me they key is that we shouldn’t allow ourselves to go into debt to the degree that it interferes with our service to God, and to the degree that becomes overpowering.  We should only use debt when absolutely necessary, and only when we can easily afford it.

I completely agree, but I do want to push back a bit here: If we’ve established that debt is not inherently sinful and that there are appropriate instances for it, why should we see it as a last resort as Anderson describes? Is it because it is too dangerous – its too risky that money will become our master instead of God? If the key is that we maximize our service to God (which I think we can all agree on), then what if we can actually use debt to facilitate our service to God? It sounds crazy, doesn’t it? I’m not suggesting we should, but could we? For example, what if we utilize student loan debt to deepen our education, either in Christian ministries or some other field, and then use that new understanding and societal position to further serve God. Could this be a valid case of using debt to actually enhance our view of God and our service to Him?

-N&$

Please share your comments below.