Is Living in Debt a Sin?
Christians have love-hate relationships with many issues that the Bible does not directly condemn as sin.
If we agree with the issue, we love it. If we disagree with the issue, we hate it. Instead, though “gray areas” God is asking us to navigate it. Debt is that kind of issue.
In the Bible, God does not directly tell us that it is sinful to be in debt, nor does He command us to get out of debt. In fact, more than 3,500 years ago, God told His people, the Israelites (who we know today as Jews) that they should release their fellow Israelites from their debts every seven years, on what is called a Sabbath year. Debt was actually a way for God’s chosen people to practice mercy, forgiveness and generosity. Today, that’s not going to happen in this modern world (in fact, the Jews had a tough time with this too and eventually went into captivity in Babylon for this among other reasons, but that’s a story for another time). What would it be like for our banks to forgive our 7% interest home mortgages after seven years, instead of making us pay for 30 years? If we want to buy a house, we’re probably going to have to get a mortgage loan that’s up to 30 years. We joke about “signing our life away” but we’re not that far off. The Bible says we are not to be “slaves to sin,” but a mortgage loan sure sounds sinful. We must do what the creditor says – pay interest and principal on the loan every month - even if we don’t have enough money in our bank accounts. But if we don’t take out a mortgage, then we won’t be able to own a house. That said, renting a house or other place to live isn’t sinful, either. It just feels like we are throwing money away instead of investing it in a house to sell at a profit later. Which isn’t very wise, is it?
This kind of gray area about debt requires something the Bible does tell us to do – get wisdom. The book of Proverbs is full of financial wisdom. One piece of wisdom is about debt – if you must take on debt, pay it off as quickly as possible, or else you will feel like you bound like a slave.
The rich rules over the poor, and the borrower becomes the lender’s slave.
- Proverbs 22:7
Debt feels like sin to Christians, because it is a burden that we cannot shake off unless we win the lottery or receive an inheritance (and some Christians think winning the lottery and receiving inheritance are sinful too, but those are other gray issues). Actually, debt can feel worse than sin, because we can ask forgiveness and repent of sin. We may still have to face terrible consequences due to our sinful actions, but we are released from the guilt and condemnation. Debt is a commitment that we must fulfill. We feel guilty for taking on debt, and we feel condemnation like a failure for not being able to pay off our debts quickly. Debts usually won’t go away or be forgiven. Someone must pay it off. We can ask bank loan officers for forgiveness, but their hands are tied. They might be able to work out payment plans with lower monthly payment schedules, but they usually do that by increasing the length of the loan. We will actually pay more in the long run because the interest keeps multiplying the longer we are on the clock.
But isn't debt a tool to get what you want?
You may not see debt as a burden or sin at all. You might see debt as a tool. With a student loan or credit cards or stock margins, you can do something now and then pay for it later when you have the money in the bank. The interest is a small price to pay for the flexibility to use the debt money to increase your income or improve your life situation. You may even think defaulting on debt is no big deal anymore either – that’s what declaring bankruptcy is for. Our personal finances are like hitting the “reset” button on a video game. Actually, bankruptcy can be even more restrictive, because until you work through the court’s bankruptcy requirements, you cannot borrow more money; at least, not legally.
Here's the dilemma for Christians: before we became Christians we may have had the typical open mindset about debt. Then when we transform into Christians, we tend to either continue that wide open “debt is fine, no big deal” mindset without changing it, or we totally swing the mindset pendulum the other way, and decide that “all debt is bad and sinful,” and we guilt-beat ourselves for being in too much debt in the first place because we were financial sinners.
Where do Christians land in the foggy gray area of debt?
Sin or not? Good or bad? Evil or right?
Money is not bad. Debt is not bad.
Money and debt are tools to do good or bad.
As Christians, God is much more concerned about our character than our debt. As God transforms our character, we renew our minds, and then we behave positively and make wiser choices.
The character issue about debt is contentment. Are you content with what you have? Or are you using debt to get more better stuff, make “bigger better,” take more cruises, have more fun, or fulfill other selfish desires? If you are, then you may not be making wise choices.
Sometimes debt is unavoidable. Unexpected medical issues produce bills that even after insurance processing can drain our savings accounts dry. For example, if you are in a car crash because you lost control during a rainstorm, and you are transported by ambulance to an emergency room, and then doctors operate to save your life and stabilize your injuries, was the debt caused by those medical bills sinful? No! It is a terrible trial, but you only sin if you refuse to pay the debt, especially if you increase your debt on credit cards or other loans at the same time. Not paying a debt is stealing. Stealing is a sin.
However, most of the time our debt is totally in our control. It is a choice. It isn’t a result of unexpected consequences. We choose our debt. Often, we choose poorly. Before choosing debt, ask yourself these questions:
Why do we want to buy or do this? Is this a need or a want?
Can we pay for this out of our savings or cash instead if we wait a little while? How long would we have to wait and save? What can we give up buying now to save faster?
What is the interest rate? How much is the total cost of the principal and all the interest? Can we reduce the total cost if we make double or triple payments, or get a shorter loan period time?
Can we sell something else to pay for this?
What else can we do to improve our budget situation to make room to pay for this without going into debt?
Do we have any side gigs or part-time jobs or extra work we can do to quickly save for what we need/want or to pay off our debts faster?
Is this really worth the debt commitment? What good thing will we have to sacrifice to take on this debt? (This is called “opportunity cost” – what opportunities will we not be able to do if we pay this cost?)
How do we feel after we pray with God about this purchase and this debt commitment?
Paying off debt often requires self-control about not spending money elsewhere.
That takes some spiritual muscles – self-control is a fruit of the Holy Spirit in our lives. Paying off debt also requires wisdom in when to spend money. Losing self-control and wild spending can be caused by sinful habits. But debt itself is not always sinful, it could be one of God’s tests of faith. Either way, debt is a restriction on living our lives. It can keep us from investing opportunities and generously giving to others unconditionally, which pleases God. So let’s put off the heavy weight of debt as fast as possible and run our race with one less chain – that’s Financial Freedom!
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