Too often people in both niches of finances and religion identify a situation as black and white when it is actually gray. I hate to burst anyone’s bubble, but the world is much more complex than to have a clear cut answer for every question out there. This is the reason why it is important to be intentional with your finances. Making well-thought-out decisions about what and why you do them is an important step for every individual and family. While it is a wise decision to get advice from those you trust, you have to make the decision.

One of the most challenging questions is whether you should avoid debt like the plague. Most people, including myself, will tell you that it is better to live a debt free life because of the flexibility and freedom that it gives you. Yet, there is also many benefits of using debt to your advantage. Many card companies offer credit card rewards for using their card on everyday purchases. You can leverage your money in real estate by taking out a mortgage instead of buying a home in cash. Thus, I think it is an important question to ask whether one should avoid debt at any cost or if you can use it to your advantage.

Biblical Defense?

One of the most common things that I see among other religious finance blogs is the use of the bible to support one argument or the other. But, if you examine the entirety of the book, you will see that it isn’t black and white.

Pro-Debt Use:

Luke 19:11-27

¹¹ As they heard these things, he proceeded to tell a parable, because he was near to Jerusalem, and becausethey supposed that the kingdom of God was to appear immediately. ¹² He said therefore, “A nobleman went into a far country to receive for himself a kingdom and then return. ¹³ Calling ten of his servants,^[a] he gave them ten minas,^[b] and said to them, ‘Engage in business until I come.’ ¹⁴ But his citizens hated him and sent a delegation after him, saying, ‘We do not want this man to reign over us.’ ¹⁵ When he returned, having received the kingdom, he ordered these servants to whom he had given the money to be called to him, that he might know what they had gained by doing business. ¹⁶ The first came before him, saying, ‘Lord, your mina has made ten minas more.’ ¹⁷ And he said to him, ‘Well done, good servant!^[c] Because you have been faithful in a very little, you shall have authority over ten cities.’ ¹⁸ And the second came, saying, ‘Lord, your mina has made five minas.’ ¹⁹ And he said to him, ‘And you are to be over five cities.’ ²⁰ Then another came, saying, ‘Lord, here is your mina, which I kept laid away in a handkerchief; ²¹ for I was afraid of you, because you are a severe man. You take what you did not deposit, and reap what you did not sow.’ ²² He said to him, ‘I will condemn you with your own words, you wicked servant! You knew that I was a severe man, taking what I did not deposit and reaping what I did not sow? ²³ Why then did you not put my money in the bank, and at my coming I might have collected it with interest?’ ²⁴ And he said to those who stood by, ‘Take the mina from him, and give it to the one who has the ten minas.’ ²⁵ And they said to him, ‘Lord, he has ten minas!’ ²⁶ ‘I tell you that to everyone who has, more will be given, but from the one who has not, even what he has will be taken away. ²⁷ But as for these enemies of mine, who did not want me to reign over them, bring them here and slaughter them before me.’”

While not explicitly about debt this passage in luke helps illustrate the importance of using what we have been given to grow wealth. Most of the time this is use to argue about using our personality strengths for the purpose of God’s work. While this analogy may still apply, this passage has many financial illustrations:

• The money that the nobleman gave to his servants
• Talk of interest, bank, minas as a form of investment (note that a mina is about 3 months work for a laborer – imagine getting three months of your salary, how would you invest it?)

On the other hand, there are a number of other biblical verses that are strongly against debt:

Proverbs 22:7 –

The rich rules over the poor, and the borrower is the slave of the lender.

Romans 13:8 –

⁸  Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.

While it is important to consider the context of both of these passages (which I don’t have time to explore) the message is quite clear. Owing money to other people or companies can limit your pursuit of happiness and justice. Living in debt can be a debilitating thing.

My Take on Using Debt

While I would love to hear from my readers considering this interesting debate, I will give you my stance on debt (which isn’t normal). For the most part, I live a hard and fast rule of living a debt free life. Again, I said for the most part. I do think that owing money (like getting a mortgage) whether that be for your own home or real estate investments is a great way to go, but within reason. Too many of my friends and family jumped into buying a home before they could afford it and are now under water.

When you are considering using debt to leverage your money and build wealth, be sure to ask yourself it is worth the risk AND whether you can handle the risk. Will you be able to pay the debt should anything terrible happen? Or are you praying to God for a miracle each month to pay the mortgage. People often make a distinction between good debt and bad debt, but I’d like to propose smart debt and stupid debt. Stupid debt is the one that is bordering on insane. This is the type of debt that people get just because they want to – whether that be drive a new car or getting a HUGE house. Smart debt is the idea of using debt responsible to build wealth and obtain financial security much faster. These examples include using credit cards, getting a mortgage that you can afford, etc.

Debt is not something to be used out desperation, but something that can be beneficial to the people who use it correctly. It’s too simplistic to say that you should avoid debt ALWAYS, but then again, it may not be a bad motto if it keeps you from making huge mistakes.

Readers, what’s your take on going into debt?

Experienced drivers know that if they want their vehicles to run properly for years to come, regular maintenance is essential. Household finances can benefit from the same advice. To improve a budget that isn’t running as smoothly as it could, or to prevent a financial breakdown, consumers should consider performing a financial “tune-up”.

Schedule a Budget Meeting

Improving one’s financial standing requires full participation and equal effort from both partners. Before any real change can occur, it’s a good idea to gather all bills, bank statements and other financial documents. Allotting adequate time to sit down with one’s spouse and go over household finances with a fine-toothed comb is essential.

The first step is looking for budget leaks and behavior patterns that cause late payments and other detrimental effects on household finances. Budgeting software is incredibly helpful, including the many new free online budgeting programs.

Next up is an honest, blame-free discussion of how these behaviors can be changed. Examples include scheduling set bill payment days, re-allocating bill payment responsibilities, or even something as simple as having plenty of stamps on hand.

Other Household Budget Considerations

Many couples are unaware of the numerous leaks in their budgets. Like a leaky engine, these budget holes can cause more serious problems in the future if not adequately addressed.

Some are as simple as downgrading to a smaller cable or phone package. Many households have TV channels and phone features they never use. Bundling services with one company can create even greater savings.

Auto insurance is another area of the budget that is often overlooked. Many drivers stay with an insurance agency out of familiarity or loyalty. Complacency could be costing many households a lot of money.

Online vehicle insurance comparison sites make no-obligation rate and coverage comparison simple and quick. Having a current insurance coverage statement handy while shopping for car insurance online ensures that switching to a new company won’t affect coverage.

For households that have already fallen behind on credit card and loan payments, it’s a good idea to contact creditors. Credit card companies in particular may be happy to lower the payment amount or interest rate on a delinquent account. It’s in their best interest to receive less money than agreed upon rather than no money at all. In today’s economic climate, credit issuers are accustomed to these types of calls.

Accelerating Debt Payment

Having a grasp on the current state of one’s household finances makes moving forward easier. Plugging budget leaks leaves more money available for paying off installment loans, credit cards and lines of credit.

Budget calculators make it easy to find out how long it will take to pay off a given bill. Many personal finance and industry-specific sites boast free calculators that allow users to input the current balance and interest rate to find out how much extra, and how many payments, it would take to pay off the debt.

Since many consumers have multiple loans and credit cards, prioritizing early debt payment is the final step. Many financial advisers recommend paying off debt with the highest interest rate first.

However sound this advice, some find it difficult to see the light at the end of the tunnel if the debt with the highest interest rate is also the one with the largest balance. If paying off smaller balances with lower interest rates first is a better motivator, then taking this route would be advisable.

Budget Maintenance as Prevention

Performing a financial tune-up may seem daunting, but it’s the most effective way to get back on track. From creating sound bill payment habits to shopping for less expensive auto insurance, budget “maintenance” helps households avoid the need for costly repair down the line.