I remember watching an infomercial where the host opened the show with a warning:
“I am about to say a four-letter word.” Audience gasps.
Four-letter word is usually an english idiom for a bad or a curse word. As Irl and I go through the Crown Biblical Financial Studies, I realize there’s a deadly four-letter word that we need to learn to avoid as much as we can:
Debt is defined as “money that a person is obligated to pay to another” including loans from the bank or from relatives, past due bills, home mortgages. If bills, like credit cards and utilities, are paid on time, they are not considered debt.
The bible shows being in debt as being in a subservient position. It is not a sin to be in debt. But it is discouraged. Warnings abound in Proverbs, such as “Just as the rich rule the poor, so the borrower is servant to the lender” (22:7) Before Israel left the wilderness, Moses reviewed the past 40 years to them, reminding them of God’s promises of blessing for obedience, and curses for disobedience (Deuteronomy28). Among these were mentioned lending and borrowing. Should Israel then choose obedience, they will be so blessed that they would be able to lend. Disobedience had the promised consequence of being the borrower, which would put them in the servant’s position. Tail as opposed to head was the image used.
The beauty of the Biblical Financial Studies is that they don’t simply make you aware of debt, they help you come up with a plan to get out of it. They teach you how to come up wit a debt repayment plan, encouraging you to talk to your creditors and present it. Usually, they find, creditors are wiling to consider such a plan. After all, they do want to get their money back.
I remember when I discovered my father’s realty tax debts. The friend who was working in the municipal office could see how shocked I was, and the clerk told me that if we can pay it in full – it’s not really that big, considering the assets we have – they would consider lessening or maybe even waiving the penalties. At that point in time, I was confident we had the money. So I told my father the town office’s offer.
And he goes out and buys a car.
This brings me to a third aspect in the debt discussion in the Crown BFS that I appreciate. You see, like the bible says, being in debt is not sin. But what got you into debt may be sin.
Some debts are unavoidable when the unexpected comes. In the bible, during the seven years of famine, even the prepared people of Egypt ended up offering themselves as slaves in order to survive. Seven years of famine made them unable to produce income, even if they had the resources. It was just too long. But Joseph, in his wisdom and kindness, declared that only 20% would be Pharoah’s part from their produce, even if Pharoah was now owner of their fields.
Still, it seems a lot of debt can be avoided, if we’re willing to deal with that little brat inside each of us that cries out “NOW! NOW! NOW! GIMME GIMME GIMME NOW!!” That’s the little brat that credit card companies are wooing with their BUY NOW, PAY LATER line, highlighting their LOW INTEREST RATES. Then when the bill comes, there’s that little box right under AMOUNT DUE that says MINIMUM AMOUNT TO PAY. So sweet. So little brat begs you to flash the card and get it.
What tempts me about the credit card is the installment option, which is different from the minimum amount. Take a computer set-up. Most people now need one, but buying one in cash can be difficult. Shops now offer installment options for these purchases, but only through a credit card. We can’t offer to come to the store every month to give the monthly payment. They have 6-month-Zero-interest plans, with the fine print of a 5% discount if you buy in cash. So technically, if it can be sold for 5% less, they’d have earned 5% more in the six months you pay them.
But there can be presumption involved here. By getting it this way, you presume you will have enough over the next six months to pay off the purchase. New Testament writer James says: “You do not know what your life will be like tomorrow.” (James 4:14) The recent economic crash proves this. Companies began to downsize. The Philippines is a top outsourcing location for US companies, but the crash has forced a lot of them to cut personnel. And more often than not, they consider the salary more than the performance, so usually the ax falls on the middle managers. It happened to a friend.
What if that happens in the middle of your installment payments? Maybe it would be good if you can sell that item to finish paying it off. This is somewhat like what Crown suggests for borrowing for an investment. Try to arrange it so that the investment itself can serve as the collateral or security for the loan (like in the home mortgage), they said. Their example was a rental house that could be forfeited, along with all previous payments, if for some reason payments can no longer be made. The lender now has to decide if it is a good investment.
As I had previously shared, I still struggle with the fear of inheriting debt. I hope that my father “puts his house in order” before he leaves us, but I’m hanging on to my Heavenly Father who has promised to supply all need, because He is provider. He has seen it ahead of time, and is prepared for it. For our part, we are learning to be content with what we have. I’d love to have a better computer and internet set-up at home, though, because I’m starting to see a need around me that I wanna try to cash in on, specially because I think I’ve already proven some of my skills to the people I plan to offer it too. A little investment in training will be needed, and I’m scouting around for the best deal for that, too.
This is aside from the crochet stuff, guys. If I may be so bold, please help me pray for this. God will tell you how,
One of the questions asked for the Debt week in the study was: If you have a debt, do you have a strategy to get out of debt?
My answer: basic plan is NOT to get into debt. But circumstances are not under our control. And sometimes, like the Egyptians during the famine, what you prepared won’t be enough.
Take typhoon Ondoy. Although our family was safe and our stuff spared, my helper and her family were not. That would have been relatively easy enough to deal with but then her husband contracted leptospirosis. We shouldered around half of the hospital bill, in exchange for part of her salary, which admittedly, isn’t actually going to be enough. In doing so, money we had set aside for insurance payments got sacrificed. Eventually, it lapsed. While reading the notes on Debt in our workbook, I was struck by this:
It is not wise to use up all your savings to pay off debt. Maintain a reasonable level of savings to provide for the unexpected.
I believe this is where Irl and I made a mistake. Because we considered the insurance as, well, insurance for the future, we had begun to think of it as our savings. It is not. So now we’ve revised our mindset: savings are for emergencies. If it doesn’t get used up a lot, and gets to grow large enough, we’ll start investing a portion of it, while keeping an emergency fund. So far, Irl’s HMO covers all of us so that gives us a bit more room to breathe. That’s a deduction that I no longer grudge, ever since our daughter Jodie fell from the ladder of our double-deck bed, and I was told the HMO covered everything, even the CT Scan!
This is a learning process. And if I can only learn this one thing about this topic, I think I’ll be able to remember the rest of it:
Debt is a four-letter word.