Getting Control of Your Finances Part 2
Week 2 Outline
“Being a Slave to the Lender”
Last week we learned that God has a lot to say about money. The bible has more than 2350 verses on money and possessions. In fact, Jesus said more about money than almost any other subject. It’s also very interesting that the bible only has approx 500 verses about prayer and 500 verses about faith.
Through His word we learned that God is in control of our money not us. Ps 24:1 ”The Earth is the Lord’s and all it contains.”
We also learned that how we handle money has a direct impact on our relationship with Christ. Luke 16:11 “If therefore you are not faithful in the use of Worldly wealth, who will entrust the true riches to you?”
In fact we are not the owners of what we have but God is. We are stewards. What kind of stewards are we supposed to be? 1 Corinthians 4:2 “It is required in stewards, that a man be found faithful.”
Let’s see today what the bible has to say about debt.
Debt has become a way of life in our country. Personal consumer debt in our country increases at the rate of $2,000 per second. We are drowning in a sea of debt; in 2005 the national savings rate fell below zero percent for the first time since the Great Depression. And with all this credit floating around, more and more people are declaring bankruptcy, can’t pay their mortgage and banks are foreclosing on their home. More than 2 million people are declaring bankruptcy every year and that number is rapidly increasing.
Today’s Lesson is a discussion around debt and being enslaved to those that we are in debt to. I am sure some all of us in this room have either been in debt or have been in debt at some point of our lives. Today we are going to learn what God’s word has to say about debt and how serious we should be about getting out from under it. Debt can truly enslave you if you don’t have a plan in place to get out from under it. We will also learn about criteria that must be met to make debt permissible. Not all debt is a bad thing….Let’s get started.
The best way to kick off this lesson is to understand what debt is.
What is debt?
The dictionary defines debt as: “Money which one person is obligated to pay one another.” Debt includes money owed to credit card companies, bank loans, money borrowed from relatives, car loans, and the home mortgage. Bills that come due, such as the monthly electric bill, are not considered debt if paid on time.
This portion of the study should assist with immediate questions such as:
Why is it important to learn what God says about money? (It is crucial to see what God says about all things through his word)
What does it mean to be financially free?
Is being financially free becoming rich?
Is being financially free about more then just money?
Scriptures Perspective on Debt
- First off Debt is discouraged….
“Owe no man anything” “Pay all your debts”. Owe nothing to anyone. “Keep out of debt and owe no man anything – Romans 13:8
Q. Can you think of a situation where being in debt to another caused friction in a relationship? If so, please share…
A: I think of our situation with Pat (Kristen’s Brother) from years ago. He lived rent free with is and we had no intention of him paying us a dime as we simply desired to help him through a tough time. Somehow the feeling of being indebted to us caused friction in our relationship with him and we still see some remnants of it today. I believe this is why to Lord desires us to give freely and to give without the others knowledge of it. If someone hands you $500 you somehow feel in debt to do something for them….If $500 gets slid under your door in the darkness you can simply just give God the Glory.
B: I think this is also why giving to other people should be done anonymously. It eliminates all the issues from a human perspective and puts both the giver and the receiver in freedom out of obedience to God and where He gets all the glory.
- Debt is Slavery.
“Just as the Rich rule the poor, so the borrower is servant to the lender”. Proverbs 22:7
Q. Why do you believe the Lord would discourage us from being in debt to others?
A: The Lord desires to be number one in our lives and by putting ourselves into a position of debt our focus can easily change from serving the Lord to serving another. “Work as unto the Lord” and not as unto the lender.
- Old Testament View Of Debt
One of the rewards for obedience was being out of debt.
If you will diligently obey the Lord your God…all these blessings will come upon you…and you shall lend to many nations, but you shall not borrow – Deut 28:1-2, & 12
Debt was one of the curses for disobedience.
If you shall not obey the Lord your God…all these curses shall come upon you…The alien who is among you shall rise above you higher and higher… He shall lend to you, but you shall not lend to him. – Deut 28:15 & 43-44
Q: According to these verses how was debt viewed in the Old Testament?
A: Debt was considered a curse & being out of debt was considered a blessing.
- Scriptural warning against presumption.
Come now, you who say: Today or tomorrow, we shall go to such and such city, and spend a year there and engage in business and make a profit. Yet you do not know what your life will be like tomorrow…instead, you ought to say, If the Lord wills, we shall live and also do this or that. – James 4:13-15
Q: What are your thoughts about these verses out of James?
A: To me this speaks of allowing the Lord to rule your life. He doesn’t fit into your plans you fit into his.
B: Debt can cause immediate disobedience but it can also cause disobedience in the future. What if God called you to be a missionary? If you were loaded down with debt, how could you obey? What if God called your wife to be a homemaker and stay at home mom? How would you be able to obey?
- Responsibility to Repay.
“Do not withhold good from those who deserve it, when it is in your power to act. Do not say to your neighbor, Come back later; I’ll give it tomorrow, when you have it with you – Proverbs 3:27-28
Q: How does this verse speak to you about debt repayment?
A: Many are taught to delay repayment to use other’s money as long as possible, but that isn’t biblical.
When Can We Owe Money?
In Crown’s opinion, it is permissible to borrow for:
1). Home Mortgage
2). Your vocation
3). Your business
This is the criteria that must be met for debt to be permissible:
1). The item purchased produces an income or has the potential to appreciate.
Example – A business
2). The value of the item equals or exceeds the amount owed against it.
Example – Home or land
3). The debt is not so high that the repayment puts undue strain on the budget
Example – Education
How to get our of Debt
- Pray for Strength and God’s help.
- Start giving regularly.
Will a man rob God? Yet you rob me. But you ask, How do we rob you? In tithes and offerings. You are under a curse-the whole nation of you-because you are robbing me. Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this, says the Lord almighty, and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it. – Malachi 3:8-10
Q: What does this verse say to you?
A: I think the scripture is pretty clear. If you are not tithing you are stealing from God. Throw out a dime. Oh, you think 10 cents isn’t that much. It’s 10% of a dollar. If you would keep the 10cents from God you would steal 100,000. God doesn’t grade on a curve. Sin is sin.
3). Accumulate no new debt. Stop Borrowing!
4). Establish a written spending plan that allows a monthly surplus for debt repayment.
5). Setup an emergency account of it least 1000.
6). List your assets everything you own. Determine if you should sell any assets and use that money toward debt reduction.
7). List your liabilities everything you owe.
8). Establish a debt repayment schedule. Decide which debts to pay off first. Base your decision on two factors: The size of the debts and the interest rate being charged.
9). Consider earning additional income.
***Be careful here….You can’t sacrifice your family because of debt….get creative and see what the Lord can do. (I think of MAH, tutoring, etc…)
10). Consider a radical change in your lifestyle.
“Therefore, I urge you, brothers, in view of God’s mercy, to offer your bodies as living sacrifices, holy and pleasing to God – this is your spiritual act of worship. Do not conform any longer to the pattern of this world, but be transformed by the renewing of your mind. Then you will be able to test and approve what God’s will is-his good, pleasing and perfect will” – Romans 12:1-2
11). Do not give up!
12). Have a plan!!!
B: Will talk about how Tanya and I got out of debt.
Reducing Common Non-Consumer Debt
1. Automobile Debt – Keep your car long enough to pay off the loan. Then, continue paying the monthly car payment into your own savings account so you can buy your next car without a loan.
2. Home mortgage – If you have a home mortgage, consider pre-paying at least a little bit each month to shorten the length and save interest. Bi-Weekly payments are another option. If you are paid biweekly being on the same mortgage payment schedule can be very effective.
3. Investment debt – Borrow for investments only when the investment is the sole collateral for the debt.
4. Business Debt – Carefully consider the stability and competitive edge that accompany operating a business debt free.
B: Harvey talks about some of his decision making into purchasing Babytime. How were they led to Babytime? Why it made sense?***
Cosigning
A person who cosigns becomes legally responsible for the debt of another.
It is poor judgement to cosign another’s note, to become responsible for his debts. – Proverbs 17:18
***Crown suggest that if we have cosigned, that we are to humbly and diligently
seek the release of the obligation***
Discussion Questions:
1). Why do you think so many people in our Country and in debt?
A: Read Matthew 25:14-15 – This verse illustrates how God gives based on his plans and not ours. We just need to be faithful. I believe many in our age group try to keep up with the Jone’s. The thing is, we aren’t in the same situation as the Jone’s. They could be in debt up to their eyeballs, they could be serving manna rather then God, or they might be just getting their pants blessed off by God because they have been found faithful ….who knows?
B: We want it now!
2). How does the Lord view debt?
A: This was answered earlier….Being out of debt is viewed as a blessing and being in debt is considered a curse.
3). Do you have a strategy for getting out of debt? If you have a plan, describe it….
A: Kristen and I had debt from college when we got married. We took all our savings, with the exception of 3 months of living expenses, and paid as much of the debt off as we could. This was hard to do because we saw people getting houses, new cars, etc….We then used the envelope system to budget our monthly expenditures and once the envelopes were empty that was it. We then put anything over the monthly budget towards the debt and we became debt free within 1-2 years of getting out of school.
B: Both of us will talk more in depth about the envelope system in the coming weeks.
Stay tuned, next week we look at giving.
Dave Ramsey:
When you talk about money with your spouse does it generally end up in a fight? Do you feel inadequate and your wife feel afraid.
Do you feel like a lost ball in tall weeds?
Do you have too much debt, too little savings, and no sense of control in your life?
I don’t have time to work on a budget, savings plan, or retirement. The truth is you don’t have time not to.
Everyone isn’t supposed to live in debt. This is not how God designed your finances to work. Don’t believe the lie that everyone lives like this.
Do you feel that you have just enough wiggle room so you can continue to lie to yourself that your making headway, but deep down you know you aren’t?
Are you sick and tired of being sick and tired?
Winning at money is about 80% behavior and 20% knowledge.
According to the WSJ 70% of Americans live paycheck to paycheck.
Don’t dilute yourself into thinking that you’re in the other 30% if you truly are not.
90% of people in our culture buy things they can’t afford.
Interestingly enough 90% of solving a problem is realizing there is one.
What would you do if you or your spouse were laid off?
If you will live like no one else, later you can live like no one else.
Being debt free is complete financial freedom.
You must face the music that It is Your Fault you are in debt and in this mess. No one is going to clean it up for you.
For your own good, for the good of you and your future, grow a backbone. When something is wrong, stand up and say it’s wrong, and don’t back down.
The choice is yours. Few people have the courage to seek out change.
You probably need to make some dramatic changes. We did.
Debt Snowball:
The bottom line is that it’s easy to become wealthy if you don’t have any payments. If you didn’t have a car payment, student loan, credit cards out your ears, medical debt, or even a mortgage, you could become wealthy very quickly. I know that may seem like a faraway place for some of you. If you really believe that wealth building will no longer be a dream but a reality if you have no payments, you should be willing to do bizarre and sacrificial things to have no payments. Time to pay off the debt!
The way we pay off the debt is called the debt snowball. The debt snowball process is simple to understand but it will require truckloads of effort.
List your debts in order with the smallest payoff or balance first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan. If you were so fabulous with math, you wouldn’t have debt, so try this my way. The reason we list smallest to largest is to have some quick wins. This is the behavior modification over math. After you list the debts smallest to largest, pay the minimum payment to stay current on all the debts except the smallest. Every dollar you can find from anywhere in your budget goes toward the smallest debt until it is paid. Once the smallest is paid, the payment form that debt, plus any extra “found” money is added to the next smallest debt. Every time you pay one off, the amount you pay on the next one down increases. All the money from old debts and all the money you can find goes on the remaining smallest debt until it is gone. Hence the snowball effect. You start building momemtum and attack the debt in your financial life.
Once you are debt free with the exception of your house you will experience financial freedom. God tends to pour blessings on people going in the direction He wants them to go.
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