The Myth of Using Debt as a Tool

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Mortgages. Student loans. Credit card bills. Auto loans. Medical bills.

They’re all forms of debt, but which ones are good and which ones are bad?

Answer: Debt is dumb.

All debt is the same. As finance expert Rachel Cruze puts it, “Debt is owing anything to anyone for any reason.” And the Bible has nothing good to say about owing anyone anything.

Proverbs 22:7 says, “The rich rule over the poor, and the borrower is slave to the lender” (NIV). It does not follow that up with “some of the time” or “except when debt is good.”

If you're in debt, then you're a slave to your creditors. Instead of having the freedom to use the money God entrusted to you for His glory, you’re sending it off to the bank. God wants more for us than that!

Paul was on to something when he wrote, “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law” (Romans 13:8 NIV). When we’re in debt, that debt becomes our focus. As a result, we can't do the very thing Paul tells us to do—love.

Related: The Total Money Makeover - 7 Easy Steps to Dump Debt and Change Your Future. Order Now

Debt becomes a big-time distraction.

Have you ever borrowed money from or loaned money to a family member? Then you know that a loving relationship can turn sour quickly when debt is involved. Sure, we may have good intentions when we loan money, but the reality is that intending to love one another means nothing without being positioned for it.

Now, some so-called “experts” argue that it’s smart to use OPM (Other People's Money) to prosper. Debt’s a tool, they say. But here’s the problem: When we take on debt, we’re also assuming enough risk to offset any possible advantage.

Use debt often enough, and the odds will catch up with you. Eventually, you’ll find yourself scrambling to repay the money you owe without the cash to do it. Take it from me: That’s not a party you want to be invited to.

Back in 2008, I borrowed nearly $1 million to invest in several properties I planned to flip for profit. In the end, though, I was completely flattened financially by what I thought was “good debt.” The prospect of using debt to make a quick buck was enticing, but believe me, it will flat-out mess you up.

My plan worked a few times, but then the real estate market crashed. I paid more than 8% interest on the other properties for the next three years when I couldn’t rent or sell them. It was brutal, and it wasn’t worth it. I gambled with borrowed money, and I paid the price.

It turns out the Bible is right when it comes to debt, but that good advice only works if we actually apply what we read to our own lives. We can either let MasterCard be our master—or we can trust the King of kings. It’s our choice.

money | @ChrisBrownOnAir