Debt is a controversial topic in finance. Some say borrowing is forbidden, others say it’s allowed if you repay, but neither view fully considers the borrower’s circumstances.
In this month’s article, I try to bring balance to this controversial topic. Scripture gives us guidance in Proverbs and Psalms on both borrowing and lending. In Proverbs 22:7, King Solomon shares his wisdom on debt: “The rich rule over the poor, and the borrower is slave to the lender.” In Psalms 37:21, King David shares his wisdom on debt as: “The wicked borrow and do not repay, but the righteous give generously.” These two passages view debt very differently: one as bondage and the other as a failure to meet one’s obligation. Let’s examine some different circumstances of borrowing.
In the classic theatrical Popeye the Sailor cartoon series, the character J. Wellington Wimpy’s famous catchphrase was: “I’ll gladly pay you Tuesday for a hamburger today.” If a person or their family member was hungry, would it be okay to borrow food today and repay it next week? I believe it would be. In Wimpy’s case, he wasn’t hungry, and he was running a con on the local business owners because he never intended to repay his debt. The issue with Wimpy wasn’t borrowing; it was the borrower’s heart. The wisdom from both Solomon and David is to avoid debt when possible, but if you do need to borrow, pay it back aggressively.
Areas of borrowing to avoid as a principle of good stewardship include using debt for impulse purchases, luxury items to impress others or make yourself feel a sense of worth, or non-essential items. This is the process of using debt as a replacement for God in your life. You create financial bondage and limit your ability to serve God with complete freedom.
Borrowing can make sense for essentials like a home, education, business, or even an interview suit. In my experience counseling others for more than two decades, those who borrowed for these reasons and repaid aggressively often improved their lives significantly. For me, 30-plus years ago as a recent graduate, I used a credit card to buy a suit for my upcoming interview. That purchase let me dress appropriately for my interview and helped me get hired. That initial job led to a 32-year career in the financial services industry. It may have been the best borrowed money I ever spent. Later in life, I used a home-equity line of credit to fund the start-up of two of my companies. Today, both are growing and sharing our message of faith-based investing with consumers seeking advice that aligns with their core beliefs.
The summary: Be responsible. Use debt only when necessary, and pay it back aggressively when you borrow. Use debt as a means of building wealth, e.g., buying a business or assets, that allows you to create more income, create jobs, and promote God’s kingdom in your community.
If you need financial guidance or debt management, call our office to speak with one of our seasoned professionals.
—Michael Wallin, Optivise Advisory Services, helping families align their finances with their faith. 855.378.1806
Investment advisory services are offered through Optivise Advisory Services, LLC (Optivise), a SEC registered investment advisor.
