Debt Free Living


Debt free living is a dream that can become a reality in your life; but according to an article in Consumer Reports on January 30, 2020, debt is a key reason so many millennials are falling behind financially. “A new Bank of America survey found that more than three-quarters of millennials are carrying debt, such as student loans and credit card balances. Of those, 16 percent owe $50,000 or more (not including mortgage debt).” Nearly eight out of 10 of millennials with debt say they can't achieve their personal or financial goals because of it, including buying a house or saving for the future.

Sounds dismal, doesn’t it? But there’s hope! If you have a great deal of consumer debt right now, don’t despair! Debt free living is possible. Let’s take a look at what the Bible says and doesn’t say about debt. Focus on the Family has a great article on this topic entitled, A Biblical Perspective on Debt:

The Bible doesn’t say it’s a sin to borrow.

While the Bible offers many warnings about the dangers of debt, it never says that you are out of God’s will or violating one of God’s commandments when you borrow. We can debate the wisdom of incurring debt under certain circumstances, but it’s never a black-and-white issue. And there are cases where debt is simply unavoidable –medical emergencies, job layoffs, or bankruptcy, for instance. Romans 13:8 is often used to “prove” that borrowing is sinful, but this verse is primarily concerned with relationships, not money issues.

It doesn’t say it’s wise to borrow.

Nowadays you can find many financial pundits who will tell you that leverage – the use of borrowed money to buy assets for appreciation – is the “way to prosperity.” It goes without saying that this is not a biblical perspective. Absolutely nowhere in the Scriptures are we advised or commanded to use debt to accomplish God-given economic goals. On the contrary, the Bible contains many warnings against the use of debt.

It doesn’t say God will bail you out of debt.

Some Christians who are heavily indebted seem to have the impression that God has promised to get them out of their problems. The verse most often cited is Philippians [4:19]: “And my God will supply all your needs according to His glorious riches in Christ Jesus.” That promise is true, of course, and God will meet our needs. But He hasn’t pledged Himself to cancel the consequences of our unwise behavior.

It doesn’t say debt is an exercise in faith.

To say that we’re exercising faith by borrowing money is the same as saying that God needs to use a lender to meet our needs. In fact, in many cases we put the lender in the place of God and allow him to fulfill the desires of our hearts as opposed to our true needs. In some ways, this can be interpreted as a denial of faith.

It doesn’t say it’s a sin to loan money.

Just as the Bible doesn’t say that it’s a sin to borrow money, it also doesn’t say that it’s a sin to loan money. Nevertheless, it’s important to remember that when you loan someone money, you inevitably change your relationship with that person, even if he or she is your own child. And the change usually isn’t for the better.

“What, then, does the Bible have to say about debt? This is an extremely important question, since there are circumstances under which certain key biblical principles seem almost to compel us to borrow money. For instance: in 1 Timothy 5:8, Paul writes, “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” What does this mean for parents who don’t have ready cash on hand to pay for a child’s emergency surgery, arrange nursing care for an aging loved one? Clearly, it’s possible to find ourselves in situations where the implied command to care for family members may outweigh all other financial considerations. Sometimes we must in order to adequately care for our own.

If and when we are obliged to incur debt, there are three important biblical concepts that should govern our borrowing decisions:

It’s wrong not to repay debts.

Psalm [37:21] states, “The wicked borrow and do not repay.” The conclusion is obvious: if you don’t repay your debts, you’re what the Bible calls “wicked.” Does this mean that it is always wrong for a Christian to declare bankruptcy? Not necessarily. Our legal system allows individuals and businesses in distress to regroup and re-establish themselves under the protection of bankruptcy laws. Ultimately, however, a believer has a moral obligation to repay his or her creditors to the best of their ability.

It’s foolish to put yourself in a surety situation.

In case a definition is required, surety is a formal commitment to guarantee another person’s loan (for example, by cosigning). Proverbs [11:15] says, “He who puts up security for another will surely suffer, but whoever refuses to strike hands in pledge is safe.” If you’re in a surety situation, the Bible advises you to waste no time in getting out of it. If you feel you have no choice – for example, if you’re helping an adult child who is financially strapped – we’d recommend that you set aside the money in a separate account and absolutely expect to repay that debt. If you don’t, you may find yourself in violation of Psalm [37:21] (see #1 above).

Debt may violate two biblical principles that directly affect our relationship with God.

First, while the Bible does not say that it’s wrong to borrow money, it does warn us against presuming upon the future: “Come now, you who say, ‘Today or tomorrow we will go to such and such a city, spend a year there, buy and sell, and make a profit;’ whereas you do not know what will happen tomorrow. For what is your life? It is even a vapor that appears for a little time and then vanishes away. Instead you ought to say, ‘If the Lord wills, we shall live and do this or that” James [4:13]-15). Second, by borrowing you may be denying God an opportunity to provide. The Lord has promised to supply all our needs (Philippians [4:19]). Sometimes borrowing is just an easy way out of a situation that would otherwise force us to grow in our faith.”

What do you do when you're in debt

1. Pray and wait on the Lord

The Scripture says, “You do not have because you do not ask.” (James 4:2).  Sometimes when there’s a problem, we do everything in our power to solve it, then as a last resort, we pray; but our loving, generous heavenly Father actually prefers that we come to him sooner rather than later. We can avoid a lot of pain in life just by bringing every issue, great or small, directly before “the Throne of Grace” (Hebrews [4:16]). Tell God that you are willing to do your part to achieve the goal of debt free living, but also ask him for what you need--specifically!

This is all about sonship. You are not a slave asking for mercy, you are a son or daughter of the Most High, laying your request before your King. He wants to learn how to steward what he puts in your charge because he is treating you as a son or daughter. Put another way--you are co-laboring with Christ. He is walking through this with you. There are certain things he may want you to do, then there’s other things that only He will do.  “His yoke is easy and his burden is light.” (Matthew [11:28]) Remember that , even when we are doing our part, we acknowledge that it’s only by his grace. Jesus said, “Without me you can do nothing.” (John 15:5).


2. Follow a proven debt elimination plan

There’s no question that getting out of debt is a wise decision. Debt free living can be in your future! The question is--how do we get there?  If you are currently deeply in debt now, we recommend that you take Dave Ramsey’s course, “Financial Peace University.”  Many local churches that host this seminar on a regular basis. There are a total 7 steps to follow in the course, but let’s keep things simple and focus just on the first three for now:

Baby Step 1: Make every effort to get $1,000 in your emergency savings fund as soon as possible.

There are a number of things you can do to speed up the journey to debt free living. Try as many of these ideas as you can, at least until your emergency fund is in place:

  • Stop using your credit cards and pay just the minimum amount due each month on each card until you reach the $1,000 mark in your emergency fund.
  • Put yourself on a realistic budget. (Listen to Episode 7 – Household budgeting)
  • As much as possible, stop eating out and also cut out as many unnecessary food purchases as possible.
  • Get on a monthly budgeted plan for your utilities where possible. Watch your use of electricity, water, gas, etc.
  • Shop for less expensive insurance.
  • Give simple, but meaningful gifts instead of expensive items.
  • Cut out as many luxuries and entertainment expenses as possible, especially unnecessary monthly subscriptions.
  • Assign any windfalls unexpected income to your emergency fund.

The idea is to reduce your expenses to the point that you can assign any excess funds each month to your emergency fund. This is going to take constant effort and repeated choices for a period of time; but don't give up! Debt free living is in your future! We think it helps to take some steps to keep yourself encouraged during this painful process. Sometimes it helps to post a visual image of what you want to achieve in a place where you will see it every day, such as on your refrigerator. Write some Bible promises regarding provision on 3 x 5 cards and say them out loud every day. Do whatever it takes to stay encouraged!

Baby Step 2: Pay off all personal debt except your home.

Now that you have $1,000 in your emergency fund, don’t touch it unless there is an actual emergency. (If there is, refill the fund as soon as possible.) Each month, take that same extra income you used to build your emergency fund, plus any windfalls, and use those funds to pay off the debt with the lowest balance. After that first debit is eliminated, you now have even more funds freed up to pay off the next largest debt. Continue this process until all your consumer debt is paid in full. (Dave Ramsey calls this “the debt snowball”) Don’t be surprised if God intervenes with some surprises along the way—because that’s his nature! He wants to train you as a son, but he always wants to surprise you with his extravagance!

That’s what happened with us while we were working diligently on step 2. We were busy cutting our budget and diligently paying some large consumer debt that had accumulated—then along came a small inheritance; so, we paid off the remaining balance with one stroke. (We were given mercy.) So now we are enjoying debt free living, other than our mortgage.

Baby Step 3: Save three to six months of worth of expenses in your emergency fund.

Wait! Don't skip this step! These funds may come in handy one day. Yes, we need to depend upon God for all of our needs, but we also need to use Godly wisdom and plan for the future (Proverbs 6:6). As usual, keep these funds in a money market account, but don't use them for luxuries or investment. These funds are for your protection should you lose your job or another major financial need comes up. You can do a rough estimate of how many months of income need to be saved by taking a look at your typical monthly cash flow. If your income is very regular and stable, maybe you won’t need 6 months of income in reserve. In our situation, we decided to reserve 3 months of income, then slowly save more.

How to keep from getting back into debt

Even with a large emergency fund, you may eventually go back into debt unless you address the attitude that could have led to living in debt in the first place. Here are 3 things you can do to ensure that you stay in debt free living:

1. Be content with what you have

Remember—if you get out of debt, but continue to spend more than your budget allows, you will go right back into debt again. The secret to successfully breaking this cycle is a change of heart. Whatever is in the heart will always come out of the mouth and shortly be translated into action. If you find yourself always in debt and overspending, repent!  Usually, the reason why we overspend is because we are not content. In Philippians [4:11]-13 Paul says, “Not that I am speaking of being in need, for I have learned in whatever situation I am to be content. I know how to be brought low, and I know how to abound. In any and every circumstance, I have learned the secret of facing plenty and hunger, abundance and need. I can do all things through him who strengthens me.” When our hearts are not content with what we have, then our minds are busy looking for a better house, a better car, or just more of the latest stuff. Ask God to show you if you have been discontented and to forgive you. Refuse to buy on impulse!  Once your heart is right your checking account will no longer be a bag with holes. You should start seeing more opportunities to give, to save, and to invest. Your present debt will be shrinking and eventually disappear—all because of a change of heart.

2. Pray before any major purchase

Pray and ask God to show you what is in your heart. What is your motivation in buying that item? Wait at least 24 hours. Sleep on it. This will help curb any tendency towards impulse buying and will also give you some time to more carefully consider your decision.  Don’t let anyone slick talk you into making a major purchase immediately. They will say things like, “This offer is only good today, then it’s gone.” If that’s really the case, run away from that like the plague!

3. Maintain a zero balance on all credit cards.

We recommend that you don’t use credit cards for any purchase unless you have a history of successfully paying the balance to zero within 30 days from your savings funds. But if that seems impossible for you, don’t do it! Cut up your credit cards and commit to using debit only. (By the way--you don’t need to use credit cards in order to have a credit score. If you have any type of financing whatsoever—such as a car loan, a mortgage, or student loans, you probably already have a credit score.)

Recommended Course: Financial Peace University

This course was a financial life-changer for us as we raised our five children. To this day, we have no consumer debt, no student loans, and no car loans--just a small mortgage that we are paying quickly paying down.  There are a total of 7 steps. Steps 1-3 are outlined above. Steps 4 through 7 are about planning for retirement, college funds, paying off your mortgage, and wealth building.

Recommended Book: Financial Peace Revisited

Purchase this book if you are unable to attend the course. It could be one of the most valuable purchases you'll ever make. All 7 “baby steps” are listed in chapter 21 for quick reference, then you’ll find some financial management forms in the back of the book.

Other Financial Articles by Stewardship and Romance

Financial Freedom God's Way

The Blessing of Giving

Household Budgeting



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