Weekly Bible Verse – Servant to the Lender?
The rich rule over the poor, and the borrower is servant to the lender. Proverbs 22:7 (NIV)
You’ve probably seen this verse before somewhere (I see it all over the place) but I thought I’d take a moment and focus (again) on the restrictions we place on ourselves when we go into debt.
I saw a discussion take place (that sounds weird to say you “saw” a discussion but the discussion took place through comments on a blog – work with me here) once where a participant railed against the “overuse” of this verse in personal finance blogging. They claimed that the verse was being taken too literally today; that it applied only to Biblical times when you literally could end up a servant to your lender if you were unable to repay your loan.
I personally disagree with this interpretation. Though I do a agree that you won’t actually end up as a literal servant to your bank or whatever, I do feel that this verse is an accurate description of the seriousness of taking on debt.
Debt limits your freedom
Let’s think about it for a moment – say you take out a loan for something (car, boat, house, whatever). You have entered into a legally binding agreement to pay back the money you received (plus interest – don’t forget that). You have now placed a restriction on yourself and are probably no longer able to now follow any course of action that you desire.
For instance, you have just decided that you want to change careers and you need to stop working at your current job so you can focus on going back to school for a time. Oh, and the new job will not pay as much money as the old one. Wait! Don’t forget that you owe $2000 a month on your mortgage. If you can’t afford to continue making that monthly payment while not working and going to school, then that debt is now limiting your potential courses of action.
I could make up a number of examples like this. The point is that when you enter into debt, most likely you do not have full freedom anymore to do as you please (and if you are able to just pay the debt off at anytime and move on with your life, then why did you take out a loan and agree to pay interest in the first place!).
Well, you say, “that’s silly, I could just sell my house (or whatever) and then go to school (or whatever).” Sure, you could, but don’t miss the point of what you’re doing: you’re removing that debt from your life so you can have freedom again. Actually, you probably shouldn’t necessarily count on being able to do that at any time anyway. If you bought your house in an unfortunate location in the US a couple years ago and need to sell it right now to gain more freedom, that might be a difficult thing to do.
Freedom!
So, in summary, remember that, according to Dictionary.com, two of the definitions of the word “freedom” are “exemption from external control, interference, regulation, etc.” and “the power to determine action without restraint.” I argue that whenever you take on debt, you no longer are exempt from external control and no longer truly have the power to determine action without restraint. Therefore, I contend that the statement from Proverbs that the borrower is servant to the lender is applicable to our lives today. That’s something to remember the next time you’re tempted to buy something you can’t yet afford or someone tries to entice you to open a credit card account to save 10% on your purchase.
God bless and have a great week…
Retired Baseball Player Files for Bankruptcy with $31 Million in Debt
I read yesterday that Lenny Dykstra filed for bankruptcy with an incredible $31 Million in debts. For those who might not know (or care), Dykstra is a former Major League Baseball player who played at the highest level here in the US for 12 years. He was also an all-star during his career. My point is, I’m sure the guy earned some money during his career (millions if not tens of millions).
So how did he end up with debts of $31 Million and assets of less than $50,000? I don’t have the slightest idea! For me, I’m thinking if I could earn $2 Million dollars, I would probably be set for the rest of my life and if I was worried it would run out before retirement, I could easily make that stretch far enough by working for a few more years. Of course, I probably wouldn’t be living in a mansion, flying around in my private jet, and driving a Rolls Royce as reported by cnnsi.com (I guess that answers my previous question!).
Seriously, is it just me or are you also astounded by how some of these incredibly wealthy athletes and entertainers can run through tens of millions of dollars and end up broke (a la MC Hammer)? This isn’t common, but it’s not ultra rare either. In fact, Sports Illustrated ran an article discussing how and why athletes go broke just a few months ago. It seems like they would be smart enough to at least sock away a little bit of it somewhere safe so they could fall back on it if they needed to? No? Private jet just too enticing? (I don’t know much about private jets, maybe they are an appreciating asset…but I doubt it – but they sure do seem convenient!)
There’s my tip of the day to you, my faithful reader, if (let’s think positively -”when”) you come into a few million bucks, take a bit of it and store it somewhere nice and safe – think emergency fund on steroids. Granted, it’s not as easy as just sticking your millions into a savings account at your local bank (”Sorry, John, our bank went under with $10 Million in your account, but luckily it was an FDIC-insured account so here’s your $250,000″) so maybe I’m just being naive. Well, I’ll be sure to do a series of posts on how to safely diversify and protect your millions of dollars if I ever have that much.
But back to Dykstra for a moment – $31 Million in debt and less than $50,000 in the bank?!? How is that possible? I mean, who was still loaning this guy money? “Ok, Mr. Dykstra….can I call you ‘Nails?’ Anyway, let’s see here….$25 Million in debts, no income, no assets, ummmm, sure, here’s another $6 Million to buy another mansion.” What the?!?
Book Review: Your Money Counts
The biblical guide to earning, spending, saving, investing, giving, and getting out of debt
By Howard Dayton
BFN Book Reviews
Well, it has been quite a while since I did a book review here at BFN. It’s a habit that I’d like to get back into – so why not start again today? I provide a brief overview of the book and the author, touch on the good and bad in the book, and finally, give you my personal recommendation for whether you should borrow the book, buy the book, or neither.
What is this book about?
This book is a pretty small book but it basically tries to cover everything about money. Specifically, to clarify, it tries to cover most of what the Bible says about finances. It’s a pretty ambitious goal, especially given the size of the book (it is 175 pages, but it’s skinny). It actually does cover quite a bit of the ground it mentions on the cover. In fact, it touches on other subjects as well. Of course, it can’t go into much detail on each portion. Overall, however, the author is quite successful in jamming an extraordinary amount of biblical guidance into this skinny little book.
Who is the author?
Howard Dayton is a co-founder of Crown Financial Ministries with Larry Burkett. The mission of Crown Financial Ministries is:
Equipping people worldwide to learn, apply, and teach God’s financial principles so they may know Christ more intimately, be free to serve Him, and help fund the Great Commission.
Before founding Crown Financial Ministries, he founded Crown Ministries back in 1985. Therefore, Dayton has been studying Biblical financial principles for quite some time and attempting to teach them to others through the Crown bible studies and events.
What are the best parts of the book?
As I mentioned above, this book undertakes a very ambitious goal. I feel that it does, for the most part, meet that goal. This is a great introduction of God’s teachings on money, possessions, and prosperity. The book starts off by providing these statistics from the Bible:
- 16 of the 38 parables regard how to handle money and possessions
- There are approximately 500 verses about Faith
- There are approximately 500 verses about Prayer
- There are over 2350 verses about money & possessions
So, the author points out that the proper attitude and treatment of money and possessions is quite important. Why is there such an emphasis on money and possessions in the Bible, you ask? Dayton offers these three answers:
- How we handle money affects our relationship with the Lord (see Luke 16:11 )
- Possessions compete with the Lord for our focus and attention (see Matt 6:24 )
- Much of life as we currently live it revolves around the use of money
Dayton then spends the remainder of the book going through the various aspects of finances that touch us on a daily basis. For each section, he discusses the main points and provides numerous Bible references. Personally, I feel that the references are the most valuable part of the book. For the topics covered, this book provides a great starting point for personal Bible study.
The book really does cover a lot of ground, so I can’t possible summarize even a fraction of it in this review. Allow me to provide you with a glimpse of some of the interesting things I learned while reading it.
Giving
The author touches on the importance of giving and mentions that there are more Bible verses on giving than on any other individual financial topic. He points out that your attitude about giving is of crucial importance. He does not provide a set percentage that you should give, however, as he leaves that as a decision between you and God.
Working
Dayton also brings to the reader’s attention that work was designed before the fall of Adam and Eve in the Garden of Eden (Genesis 2:15 ). So, having to do work is not a result of sin, work just got a lot harder because of it.
Investing
The author advocates being a "steady plodder" when it comes to your investing strategy. He uses the quote "saving is making provision for tomorrow while debt is presumption upon tomorrow." He lays out these three important investment goals:
- Providing for your family
- Becoming financially free to serve the Lord
- Operating your business
He also stresses that it is not an acceptable investment goal to save and invest for the sole purpose of becoming very wealthy (1 Tim 6:9-11 ). His counsel is to determine the maximum amount of money you want to save and when you reach that number, stop saving and redirect the money you were investing to helping other people (kinda like those commercials where the people carry around those big orange numbers).
At the end of the book, there is a small section with some related questions (basically a FAQ), here are two questions and summarized answers that I thought were interesting:
How does the Bible define financial success?
It is achieved by being a faithful steward – not by how much wealth you have accumulated.
Should Christians give to secular charities?
There are many charities competing for our dollars and scripture does not specifically address whether we are only to give to Christian charities. The author and his wife have decided that, with some certain exceptions, they themselves will only give to Christian charities. This is mainly because, for the most part, everyone gives to secular charities but only Christians give to Christian charities.
What is not-so-good about the book?
This book covers a tremendous amount of information in a relatively short amount of time (well, I guess it depends on how fast you read). As you might imagine, there are not enough pages to go into terrible detail on each topic. As a result, your appetite is whetted but you will need to turn elsewhere if you want an exhaustive treatment on any specific topic.
Also, it is not nearly as practical or "step-by-step" as some other financial books. For instance, Dayton spends about half a page on his four step process for getting your finances in order. Dave Ramsey, in contrast, has an entire book on the subject . I feel that this book is not really trying to be that, though. The point of this book is to get you thinking about Biblical standards for money. It is to give you a primer on the main points, to maybe challenge some of the (wrong) ideas you may have about money, and to pique your interest to delve into the subject more. And in that scope, I think it performs well.
So what is my recommendation?
I think this is a good reference book to own. It has a ton of information crammed into it. In fact, it’s going onto BFN’s virtual bookshelf . I think it is a valuable read to get started on your path to understanding what God teaches about money. There are copious amounts of Bible references throughout, so it is helpful to open it up to a specific topic to see how the author summarizes the topic and start searching the Bible references provided.
As I mentioned, it’s not a practical step-by-step guide to getting out of debt or whatever. If that is what you need in your life right now, this is not the book for you. One option is to find a Crown Financial Ministries Bible study in your area – that’s actually where I received this book (you get it as part of the material for the class) – as it will provide that step-by-step process you’re looking for.
I would say that if you can do the Bible study or pick up a copy of this book at a good price, then it’s a good book to have and refer back to often.
Want to borrow this book? Search your local library
Want your own copy? Buy this book now at Amazon.com
Check out the other books I’ve chosen for my virtual bookshelf
The Bible and The Bard Agree on this Financial Principle
Last summer my wife and I took off for an overnight getaway – just the two of us – and ended up in Staunton, VA near Charlottesville. The draw to this particular place was the American Shakespeare Center’s Blackfriars Theater . Here’s a blurb from their website:
The American Shakespeare Center is an internationally acclaimed theatre company that performs Shakespeare’s works under their original staging conditions — on a simple stage, without elaborate sets, and with the audience sharing the same light as the actors. Home to the ASC’s resident troupe, the Blackfriars Playhouse has been established as one of America’s premier Shakespeare destinations.
I was just searching for something to do and came across the town and the theater and was intrigued by them. So we made some reservations and set off to Staunton to see Shakespeare’s Merchant of Venice . I was blown away! The theater experience was amazing and I had so much fun that evening! If you are ever in the area, I would definitely recommend checking it out.
At the end of the play, I turned to my wife and said, "You know what the takeaway from this evening is? Never cosign a loan!"
C’mon – what else would you expect from a guy who has a personal finance blog!
As a reminder, here’s a brief summary of The Merchant of Venice from sparknotes.com :
Bassanio is desperately in need of money to court Portia, a wealthy heiress who lives in the city of Belmont. Bassanio asks Antonio for a loan in order to travel in style to Portia’s estate. Antonio agrees, but is unable to make the loan himself because his own money is all invested in a number of trade ships that are still at sea. Antonio suggests that Bassanio secure the loan from one of the city’s moneylenders and name Antonio as the loan’s guarantor. Antonio and Bassanio approach Shylock, a Jewish moneylender, for a loan. Shylock nurses a long-standing grudge against Antonio, who has made a habit of berating Shylock and other Jews for their usury, the practice of loaning money at exorbitant rates of interest, and who undermines their business by offering interest-free loans. Although Antonio refuses to apologize for his behavior, Shylock acts agreeably and offers to lend Bassanio three thousand ducats with no interest. Shylock adds, however, that should the loan go unpaid, Shylock will be entitled to a pound of Antonio’s own flesh.
So not only has Antonio cosigned the loan for his friend Bassanio but he has also put his life on the line for it! Of course, in the end things do not work out as bad as it could have been for Antonio…but if you want to know the entire story and experience it in a supremely entertaining way – go check out the Blackfriars Theater! (though that particular play is not playing there any more, I’m sure any of them would provide a wonderful evening)
The Bible cautions against cosigning loans also
I was amazed to learn that God actually talks about co-signing a loan in the Bible.
My child, if you have put up security for a friend’s debt or agreed to guarantee the debt of a stranger. If you have trapped yourself by your agreement and are caught by what you said—
follow my advice and save yourself, for you have placed yourself at your friend’s mercy.
Now swallow your pride; go and beg to have your name erased. Don’t put it off; do it now! Don’t rest until you do. Save yourself like a gazelle escaping from a hunter, like a bird fleeing from a net. Proverbs 6:1-5 (New Living Translation)
Again, cosigning a loan for someone is not a good thing to do. The Bible informs that you should "swallow your pride" and "go and beg" to have yourself removed from the loan. And don’t even wait until tomorrow it urges – "do it now!" This is serious and urgent advice! It certainly does not appear to me that cosigning a loan is something you should do.
Why does someone need a cosigner?
Remember, the reason that your friend needs a cosigner on a loan is because the bank (or whoever) is fairly confident that your friend will pay back the loan. If they thought your friend was good for the money, they would not have required a cosigner. And if you friend does not pay back the loan….guess who will be. So, my advice is (obviously) do not cosign a loan for someone else. And if you do consider cosigning a loan, assume that you will be the one who has to pay back the loan. Make sure that your finances, your family relationships, and you relationship with your friend will survive the probable event that you will be paying for it. It might be hard to say "no" to someone asking you to cosign for them, but that still might be a lot easier than doing serious damage to your personal finances and serious damage to your relationship with your spouse and/or family!
Photo Credits: ryanrocketshipWhat if Everyone only got Paid once a Year?
I have no idea what I was thinking about the other day…but this thought popped into my mind:
"Would people take better care or worse care of their finances if everyone only got paid once per year?"
I like to come up with these strange questions to try to get myself and others thinking – I feel like it stretches my brain somehow (not literally) (I guess this is why I ended up having to answer most of my own questions in that Bible study we used to host in Arizona) (I should really stop talking to myself). I know it isn’t practical and it would never work and all of that – but practicality is not the point of this exercise.
Payday
So, on January 2nd (the 1st is still a holiday) (ok, the first weekday after January 1st – how’s that?), everyone got their single paycheck for the entire year. What happens next?
At first, I thought this would be a complete train-wreck. A number of people would have that money blown by Groundhog day. On the other hand, for fiscally responsible people, this would actually be somewhat of a boon. If you had all your entire year’s salary up-front instead of accumulating it little by little throughout the year, you’d be able to earn significantly more interest during the year.
Taking into account how much credit card debt the average American has, I think it is obvious that some people have a problem delaying immediate gratification to focus on the long term. Therefore, would people flush with cash at the beginning of the year run out and satisfy their every whim? I would say "probably." (you might say, "at least they’re not using a credit card," and this is true…but come the end of the year all expenses would end up on the CC)
But maybe, just maybe, if people knew that they only got this one paycheck and they were not getting any more, maybe they would be inspired to be more careful about their planning and living. Yeah, you’re right, that’s unlikely and it would probably end up being worse than now. Now that I think about it, that large lump sum would probably distract some normally fiscally responsible people and cause them to overspend early in the year as well.
So, I would answer the question like this: for some people it would work out a lot better. For some others, they would be inspired to get more serious about saving and planning. Unfortunately, I’d guess that some people would get distracted by the money, lose sight of the long-term, and end up being worse off. And, of course, I still believe that a number of people would have it all spent by MLK, Jr Day. The bottom line is it would be a lot better for some and a lot worse for others.
What do you think? Better? Worse? Why am I even wondering about this?
This Week in the Blogosphere
- This is just a great post discussing the different stages of how we view the purpose of money (@ The Happy Rock )
- Here’s a post discussing debt, debt myths, acceptable debt, and reasons to avoid debt . There are some really good reasons in his list of why to avoid debt. (@ Bible Money Matters )
- Frugality sometimes gets a bad rap – but I agree with Bob that there is a difference between being frugal and being cheap (@ ChristianPF )
- Tithing! Anyone still here? Here’s a story about someone going through the process of tithing for the first time (Guest post for Gather Little by Little written by Capital Couples Finance )
Have a great weekend and God bless…
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