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Franchisee J. Barry Watts continues his examination of the Bible’s perspective on borrowing money
By J. Barry Watts Editor’s Note: Please see the previous issue of The Vestor’s Voice® for Part 1 of this series of articles. As you read the articles, we welcome your comments, which you can post on the Message Board at HomeVestors.com.
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| J. Barry Watts |
Debt is something that is owed. Therefore, all of us are technically in debt all the time. We owe the electric company for the power that kept our lamp burning last night, and on Tuesday, we owe our employees for Monday’s work. So in a literal sense, it is not possible to avoid debt unless we pay all of our bills (including laborers we hire) in advance. Of course, that isn’t practical because we know of many people who would stiff us rather than produce the work for which we had prepaid.
Perhaps a more practical definition of debt is “an obligation that is not covered by a corresponding asset.” That means that owing $60,000 on a house that could be sold for $100,000 isn’t debt, but owing $15,000 on a car worth only $10,000 is debt. So the question is: Do I owe more than the assets securing the loan are worth? If so, you are in debt.
In the history of commerce, no one has ever been forced into foreclosure by not borrowing. When we borrow, we open doors to opportunity and calamity, so if we choose to borrow we must be sure we do so wisely and be sure we are opening the right doors and leaving the wrong ones closed. In a large sense borrowing presumes on the future.
The Bible clearly teaches that we don’t know what the future will bring. In James 4:14 it says “you don’t know what your life will be like tomorrow.” That’s why it is important that we think with wise and prudent minds, that we don’t strive to get rich quick by taking imprudent risks because we have a love for money, that we seek the advice of wise people, and that we ask God through prayer for his direction with full confidence that He wants to answer even more than we want to hear, and why we make sure that what we’ve borrowed is secured by an asset worth more than the debt. That way if our view of the future doesn’t come to pass the lender can take the asset and sell it to satisfy the loan.
Is Borrowing Wrong?
Borrowing isn’t a new notion. From the earliest of times people borrowed from each other. In the Bible, references to borrowing predate the Ten Commandments. Early in the book of Exodus you begin to find references to and rules for the relationship between borrowers and lenders.
King Solomon, known for his wisdom, kept a book of wisdom which we today know as Proverbs. In the 22nd chapter and the 7th verse he wrote “The rich rules over the poor and the borrower becomes the lenders slave.” Well duh! We know that the “haves” possess more than the “have nots” and that the “have nots” typically work for the “haves.” Who has a better balance sheet? You, or the employee of your drywall subcontractor? There is a reason Momma wanted you to grow up and be a doctor instead of a ditch digger. It’s the “rich vs. poor” thing.
We all understand that it is also better to be the person who loans money than the person who borrows it. In our analogy, the lender would be a “have” and the borrower would be a “have not.” Surely we aspire to the lender’s position. But life isn’t lived in aspiration, it’s lived where we are today. Where most franchisees find themselves is with a great vision far bigger than their supply of capital, and thus the requirement to borrow if they are going to bring those visions to reality.
Is that borrowing a sin? No. The Bible never says borrowing is a sin. However, it does always position borrowing in a less than ideal light. That makes sense, too. It would be better if borrowing weren’t necessary.
Romans 13:8 says “Owe nothing to anyone except to love one another…..” Often this passage is misunderstood to prohibit borrowing, but that reading is out of context. The context of that passage is actually more clearly understood to be saying “pay what you owe” rather than “don’t owe.” In context is says, “pay your taxes, respect authority, honor the honorable, don’t withhold anyone what is due them but rather give it to them. Leave yourself owing no one anything but love--an obligation so enormous and reoccurring that you can never consider it fully paid.”
. . . In the next issue, Barry will offer his personal conclusions about borrowing.
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