Thursday, October 18, 2007

Financial Peace 3: Dumping Debt

“Consuming Culture” – Rene Padilla video (Watch the video by clicking this link, or read the italics text below.)

We are captivated by the idea of having things and giving more value to things than to people. And I think that is dangerous – very, very dangerous.

What is the place of things in your life? Do you live in order to possess, or do you possess because you need to live? People buy because – you know – they feel good about buying, whether they need the things they buy or not. And, of course, a lot of people get into big debts because of this, and they become enslaved to work because of a consumer society that forces them to buy.

And that is for this country – consumption is a sort of ideology. In fact, there is a sociologist, Les Disclaire, who talks about globalization, and he says the ideology of globalization is the culture of consumerism, the cultural ideology of consumerism. People seem to be very much captive to this kind of ideology, often times without realizing it. They are responding to the way in which society conditions them to consume.

Also, very closely related to that is individualism. People isolate themselves, and they protect their privacy. And they fail to realize that you can never be a fulfilled human being without social relations. Social relations are so much more important than things and so much more important than having a lot of money. But if you are an individualist, you protect your privacy and also your freedom. But what kind of freedom? Freedom to do whatever you please – you know – “No one should get into my privacy. I mean, no one should prevent me from doing what I think I should be doing. I am free. I am free.”

Well, I say the response, the answer, to consumerism is the recognition that we are created in the image of God, and the value of life has to do with that kind of design that God has made for us to live a life that is very much in relation to God, to God’s creation, and to other people.

We live in a culture of consumerism. Our culture tells us to buy, buy, buy. We are constantly bombarded with encouragement to spend. Advertisements are at the bus stop, on taxis, on buses, in elevators, on TV, on the internet, on the radio, in magazines. Everywhere we look someone wants to sell us something.

The basic message from our societies and even from our governments is that buying more will improve our lives, help our families, and even help our nations. Our global culture has become captive to the ideology of consumerism. Our entire culture – including the church, including you, and including me – we have bought into this philosophy of consumerism. We always feel like we need more, more, more.

This is a big problem in my home country. The American dream is financed by the American nightmare.

  • About 43% of American families spend more than they earn each year. On average, Americans spend $1.22 for every dollar they earn.
  • Average American households carry $8,000 in credit card debt.
  • Personal bankruptcies in America have doubled in the past decade.[1]

Unfortunately, this is not just an American problem. Citizens around the globe are spending more and more and borrowing more and more.

  • New Zealanders are now spending 143% of their disposable income.[2]
  • The people of the UK owe more money than the entire nation makes in one year.[3]
  • Here in South Korea, the average debt for each household has tripled in just 10 years.[4]
  • And with all of this debt, more and more people around the world are going bankrupt.[5]

We are living in a culture of consumerism. It is driving us to spend too much and to borrow too much. And we are following the crowd of consumers around the world into hard times.

But God gives us a different challenge:

Take your everyday, ordinary life – your sleeping, eating, going-to-work, and walking-around life – and place it before God as an offering. Embracing what God does for you is the best thing you can do for him. Don’t become so well adjusted to your culture that you fit into it without even thinking. Instead fix your attention on God. You’ll be changed from the inside out. Readily recognize what he wants from you, and quickly respond to it. Unlike the culture around you, always dragging you down to its level of immaturity, God brings the best out of you, develops well-formed maturity in you. (Romans 12:1-2, The Message)

“Don’t copy the behavior and customs of this world.” Don’t let the world drag you down to its level of immaturity. You might say, “But everybody’s doing it.” Remember what your mom used to say, “If everybody was going and jumping off a cliff, would you do it, too?” God is calling us to be counter-cultural – to go against our cultures – in many ways, but especially in this philosophy of spending and consumerism.

If God is calling us to do something different, to live in a different way, then we need to ask some basic questions. What does the Bible say about debt and spending? How does God want us to deal with debt or to use our money?

Dave Ramsey, a popular Christian financial advisor who has a lot of good stuff to say, claims that “debt is dump, stupid, and wrong.”[6] He argues that the biblical plan is no debt ever, for any reason – no loaning, no borrowing, no cosigning loans for other people – no debt at all. This is very clean and simple and easy to understand, but on this point Ramsey is wrong.

We read last week that debt is sometimes a good thing:

The Lord your God will bless you as he has promised. You will lend money to many nations but will never need to borrow. You will rule many nations, but they will not rule over you. But if there are any poor Israelites in your towns when you arrive in the land the Lord your God is giving you, do not be hard-hearted or tightfisted toward them. Instead, be generous and lend them whatever they need. (Deuteronomy 15:6-8)

This passage tells us a few things about debt. First, God’s desire is that we will have an abundance so that we will not need to borrow. God’s basic desire for us is that we will not have debt.

Second, God wants the economic systems of loaning and borrowing to bless us not to hurt us. He wants us to be lenders, not borrowers. We’ll talk more about this next week when we discuss saving and investing.

Third, God wants us to help poor people meet their needs through meaningful loans. In today’s world, there are two great examples of helpful, biblical-style debt: micro-financing and college loans. Micro-financing is loaning a very small amount of money to a poor person so they can start or improve a business to care for their families. College loans help many low-income students gain an education and the tools for success.

OK, so debt can be good, sometimes. However, God’s basic desire is that we will not have debt. Why? What’s the big deal with debt? Why is spending too much so bad?

We can get a picture of dangers of spending too much from something Jesus said: You can only enter God’s Kingdom through the narrow gate. The road that leads to destruction is broad, and its gate is wide for the many who choose that way. But the gateway to life is very narrow, and the road is difficult, and only a few ever find it. (Matthew 7:13-14)

When Jesus said this, he was talking about all of life. Going with the flow of our culture is always easier, but that path leads to destruction. Going against the flow of our culture and living God’s ways is usually pretty difficult, but it is the pathway to real life.

When we think about this especially in terms of finances it makes perfect sense. Foolish spending and taking on debt is easy at first, and the gate is wide. Lots of people are doing it. “Hey, just go with the flow.”

After a while though, this path gets harder. All of that spending starts to catch up with us. The bills start coming in the mail. We start to worry about our finances. Will we have enough money this month? What about our future? Do I have enough money in the bank for this? Pay day becomes more and more important in our lives, and we begin to live from paycheck to paycheck. “This path often leads to strained relationships, headaches, stress, and discontentment.”[7] In fact, financial problems are the number 1 cause of divorce in my home country.[8] That wide, easy path is starting to get confining and difficult.

If we don’t get out of this foolish spending and debt cycle here, we will find ourselves trapped. Listen to what Proverbs 22 says about this:

3 A prudent person foresees danger and takes precautions.
The simpleton goes blindly on and suffers the consequences. …

5 Corrupt people walk a thorny, treacherous road;
whoever values life will avoid it.

7 Just as the rich rule the poor,
so the borrower is servant to the lender.

Foolish spending and collecting debt is like a traditional bamboo fish trap. It’s nice and easy at the beginning, but if we keep going in, we get stuck. A wise person will see the danger and get out, but if we keep going, we’ll end up stuck like slaves. If we let debt overtake us, we start to run out of choices. We can’t save. We can’t give. We can’t help others. We can’t do what we want to do. We could even face bankruptcy, losing our homes, and losing our reputation.

This is really easy to do. Debt is like a chain. We usually start out small, maybe with some school loans. (I know, some of you are thinking, “My school loans weren’t small.” But they’re manageable.) Then, maybe we buy a house or an apartment that’s bigger than we need, just because everyone else is. (It may be low interest, but it’s still a burden of debt.) Along the way, we had some emergencies – like a new pair of shoes or a night at the movies. Maybe we buy a computer or some furniture that is “90 days - same as cash” – yeah right. We’ve got to get to work, so we buy a car … or two. Then, there’s that vacation that we just had to have because we were so stressed out about all our debts. Before you know it, we’re all chained up in debt, enslaved to the consequences of our foolish spending. Then, we say, “OK, God, here I am. I want to serve you. Use me please. Uh, what’s that? You want me to help someone? You want me to give to the poor? You want me to help the church? OK, um, ughh! I’ll try.”

God wants to use us to change the world, but we keep getting trapped in debt and foolish spending. We are chaining ourselves up and wasting away our opportunities. God has a plan for our lives. God has marked out a race for us to run. For us to run this race to the fullest, freest extent, we have to get rid of the chains of debt and foolish spending. Like it says in Hebrews:

Let us strip off every weight that slows us down, especially the sin that so easily entangles [or wraps around us]. And let us run with endurance the race God has set before us. (Hebrews 12:1)

Remember what Jesus said about that wide, easy path that leads to destruction. Well, that’s not the only option. There’s another path:

But the gateway to life is very narrow, and the road is difficult, and only a few ever find it. (Matthew 7:14)

This path starts out hard. It will probably feel constrictive or uncomfortable at first. New things always feel difficult or awkward at first. Also, living God’s way will mean saying “No!” or “Wait” to some of your desires. That never feels good. Most of all, though, this path feels narrow because it is counter-cultural. Lots of people around us will always be spending freely and stacking up debts. It will feel hard at first to be different.

The good news is that it gets easier. Just like we developed bad habits that became natural and easy, we will also develop good habits that will also become natural and easy.

When the good habits of wise spending and careful saving become a regular part of our lives, we will become financially free. We won’t have the stresses of financial problems. We won’t have to worry if there’s money in the bank. There’s always money in the bank. We won’t have to stress out when the pastor starts talking about giving. We have room to spare. We aren’t chained to the same old job just to pay the bills. We have freedom. We have peace. We can follow God without worry. Working toward this kind of financial freedom really is part of a faithful spiritual life.

So how do we do it? How do we get out of debt? How do we break free from foolish spending? Let me suggest 5 simple steps to living a debt-free, financially wise life.

1. Get closer to God. I know, I know, I sound like the TV preachers: “All you need to do is pray more. God is the answer to every problem. Jesus is the answer to every question. Are your bills late? Get down on your knees! Is your kid sick? Talk to the Father! Bring it all to Jeeeeeezuuuussss!”

But hear me out. Think about the reasons why we spend too much money and get into debt: envy (“I want what she’s got.”), impatience (“I want it now!”), lack of contentment (“This will make me happy.”), selfish ambition (“I want to look important.”), and lack of self-control (“Before I know it, my money is gone.”). I think we can all agree here. These are the basic reasons why we spend too much.

Well, listen to what Paul says in Galatians 5:

16 So I say, let the Holy Spirit guide your lives. Then you won’t be doing what your sinful nature craves. 19 When you follow the desires of your sinful nature, the results are very clear: sexual immorality, impurity, lustful pleasures, 20 idolatry, sorcery, hostility, quarreling, jealousy, outbursts of anger, selfish ambition, dissension, division, 21 envy, drunkenness, wild parties, and other sins like these. … 22 But the Holy Spirit produces this kind of fruit in our lives: love, joy, peace, patience, kindness, goodness, faithfulness, 23 gentleness, and self-control.

It’s amazing! When we “let the Holy Spirit guide our lives” he makes us the kind of people we’ve always wanted to be: loving, joyful, full of internal peace, kind, good, faithful, gentle, and self-controlled. This will naturally decrease our desires to spend money foolishly on junk, and increase our ability to use our money wisely. Getting close to God has a side effect that we begin to use money more wisely.

2. Stop! Stop borrowing money. This is common sense. If you want to get out of debt, don’t take on more debt. If you can’t pay off your credit cards, don’t buy another thing on credit until you’ve paid everything off. If you are struggling with debt, STOP! Stop using debt.

3. Spend less! Last week when we talked about biblical economics, I told you to spend less. This week, when we’re talking about debt, I’m telling you to spend less. Next week, when we’ll talk about saving, I’ll tell you to spend less. Do you see a trend here? The single most important thing all of us can do to be more financially faithful and free is to spend less money. Get a smaller apartment. Buy a cheaper car. Take a cheaper vacation. Eat at cheaper restaurants. Proverbs 22:20 says, “The wise have wealth and luxury, but fools spend whatever they get. Don’t be a fool. Spend less.

4. Make a budget! Zig Ziglar said, “If you aim at nothing, you’ll hit it every time!” John Maxwell, a leadership wise-guy, says, “Budgeting is simply telling your money where to go instead of asking where it went.”[9] Make a plan for how you will spend your money. Be sure to include one time expenses, like dentist visits and vacations. Also make sure to plan some spending money. You’re going to spend some money on junk, so go ahead and plan for it and set a limit on how much. If you need help making a budget, go to and search for the “Quickie Budget.”

5. Create a “Debt Snowball”! This is another Dave Ramsey idea. Make a list of all your debts, everything you owe to anyone. Put them in order from the smallest to the largest. Then, pay the minimum payment on everything else, and devote all your extra money to paying off the smallest debt. When you pay off that first debt, throw a little party, and devote all your spare money to the next debt. When you pay of that debt, you throw another party, and move on to the next one. You keep this up, getting little wins first, and celebrating along the way, and you build some emotional momentum. This helps you when you are at the beginning of the “narrow” path.

Here’s the irony, the paradox, the mystery.

If we follow our culture on the wide and easy path… if we spend freely and without a care now … if we keep going with those credit cards and bigger apartments and nicer cars … we will end up stressed out, worried about money, and trapped in our debts.

On the other hand, if we live God’s way… if we slow down and wise up … if we stop spending so much… if we make a plan and stick with it … this new way of life will be hard at first, but it will lead us to stronger character and real freedom, including financial freedom.

If we spend freely, we lose our freedom. If we spend carefully, we become financially free. Live the mystery, and be free!

[1] Kim Kahn, “How Does Your Debt Compare?” downloaded Oct. 18, 2007.

[2] Mike Tait, “Working Harder for Less,”,

downloaded Oct. 18, 2007.

[3] Rob Mackrill, “UK Consumer Debt More than GDP,” The Daily Reckoning, UK Edition, Aug. 23, 2007,, downloaded Oct.

18, 2007.

[4] National Australia Bank, “South Korea: Housing Boom Fuels Debt Growth,” December 2006,, downloaded Oct. 18, 2007.

[5] Johanna Niemi-Kiesilainen, et al (ed.) Consumer Bankruptcy in Global Perspective, (Hart, 2003), 1-2.

[6] Dave Ramsey, “Dumping Debt,” Financial Peace University video series.

[7] This quote and this entire section are from Victorious Christian Living International, My Money, Seven Areas of Life Training series, (Phoenix, 2006), 26-34.

[8] “Why Money Is the Leading Cause of Divorce,” Jet, Nov. 18, 1996, downloaded Oct. 18, 2007.

[9] Dave Ramsey, “Cash Flow Planning,” Financial Peace University video series.

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