Is debt sin?

I stumbled upon an interesting article today called, “Debt is Sin“.  The author, Bob Mallory writes:

The fact is, everyone knows that debt is wrong, and no one refers to it as if it’s a good thing. Yet the further we seem to wade into financial bondage in America, the more our Christian financial counselors and pastors falter when it comes to the Word of God.

Let’s cut to the chase: Debt is a sin. It’s a sign of a covetous heart, and not trusting that our Heavenly Father will provide us with everything we need. Since American Christians worship an insufficient savior, they turn to credit to purchase the things they want. The Scriptures are consistently negative when discussing financial debt for believers. It’s never neutral or positive, as many financial counselors will tell you.

He lists a set of scripture verses as proof texts:

Exodus 22:25-27; Deuteronomy 15:6; Deuteronomy 28:12; Deuteronomy 28:43-45; Leviticus 25:35-38; Nehemiah 5:1-5; Psalm 15:5; Psalm 37:21; Proverbs 6:1-5; Proverbs 11:5; Proverbs 12:9; Proverbs 22:7/1 Corinthians 7:23; Ezekiel 22:12; Matthew 5:42; Matthew 6:24; Luke 6:34-36; Luke 16:13; Romans 13:8; 1 Timothy 6:6-10; 2 Timothy 3:1-5.

Now first of all, many of these texts warn against covetousness and the love of money (e.g., 1 Tim 6.6-10; 2 Tim 3.1-5; Matt 5:42; Matt 6:24), but not against debt.  Others, to be sure, counsel the Christian to avoid debt (Rom 13.8), explaining that debt puts the person into virtual slavery to the creditor (Proverbs 22), and naturally, it was a blessing that Israel was to be a creditor nation, not a debtor nation, unless it sinned against the Lord, in which case they would become a debtor nation (cf. Deuteronomy).  Proverbs 6.1-5 actually counsels against providing security for someone else’s debt.  Finally, in Israel, it was against the Torah to charge another Israelite at interest.  But do these passage all say that debt is sin, no matter what kind of debt it is?

First, I would suggest that this way of thinking is basically a “fundamentalist” approach to the Scripture (see this post) in that it attempts to create a new law for Christians; that if the Christian followed that law, he would be on the path of blessedness.  It may be true that this path of avoiding every form of debt could be blessed.  Certainly in our current recession, had you avoided debt, you could be far ahead of those who were leveraged to the hilt, such as stock holders who received margin calls in 2008 and 2009; or Lehmans and Bear Sterns, which were highly leveraged investment firms.  Such advice might have seemed prescient for such people.  However, I approach the Bible differently.  The Bible contains wisdom and advice, which is bound to a particular context.  The crucial task of hermeneutics is to determine the principles taught by the Scriptures and to attempt to apply them in new cultural contexts today (see Klein, Bloomberg and Hubbard, Introduction to Biblical Interpretation, chapt. 11) through the help of the Holy Spirit and the accumulated wisdom of the church through the ages.  Thus, the categorical use of biblical advice as the new Torah is not a good way to apply the Bible today.

Contemporary financial advisers correctly distinguish between good debt (cf. this post) and bad debt. The effect of bad debt is that the debtor becomes a slave to debt payments.  The effect of good debt is the opposite.  It leads to profit and wealth.  I would agree that wisdom teaches us that bad debt should be avoided, and it is a sin if it is accompanied by greed and a lack of self-control.  A poor person who borrows in order to survive is probably to be pitied rather than called a sinner; the Bible often defends such people and condemns those creditors who exploit the poor.  However, people who accumulate credit card debt to buy consumer goods because they can’t defer gratification have a problem, not too dissimilar from alcoholism.  It is a spiritual problem related to a religion of consumerism.

But there is also good debt.  Good debt is money borrowed to make a gain or profit.  An example would be the borrowing of money to purchase a high yield stock.  As long as the interest rate is lower than the yield and the stock maintains its value or experiences a capital gain, the debt creates a profit for the debtor.  Another example would be the purchase of a house to live in or to rent out;  as long as the mortgage holder saves on rent, builds up equity through the repayment of the principle and capital gains, this is good debt.  Another example would be the line of credit that a business has in order to fill orders.  Without the line, they would not be able to make sales without first taking a large percentage of the cost from the buyer, which is actually a form of borrowing from the buyer instead of the bank.  This is not always convenient. So businesses will often borrow money from the bank in order that they do not have to charge their customer in advance.  Businesses also have what is called “net-30” or “net-90” etc.  This means that they extend credit to their customers of 30-90 days; the customer in turn has borrowed because they don’t have to pay for it up front–they can then in turn sell the item to their clients and pay their supplier only after they themselves receive payment.  Without these different kinds of debt, businesses today would come to a virtual standstill.  Our current economic system puts creditors with capital together with businesses and people who need it–banks serve as the go-between between these two parties, and everyone is supposed to make a profit from such transactions.  The question then is:  Would the Bible forbid categorically such transactions?  Is it so clear that good debt is sin?  I don’t think so.  My wife’s company which was started by my father-in-law about 45 years ago has debts;  it provides jobs to 25+ employees.  Now if we decided that it was sin to take on debt, undoubtedly we would have to close the business, and all those employees would lose their jobs.  I think it is better to use debt wisely and to continue to provide good jobs with benefits to these hard working men and women.  [Note it would be eventually possible to use retained earnings instead of bank credit to make these transactions–but Canadian tax law makes it very expensive to retain earnings in a company of this size].

But is there biblical support for my position?  Let’s consider the parable of the talents in Matt 25.14-30, which is the “canon within the canon” of this blog.  Jesus teaches that a man going away on a journey lends his capital to three of his servants, with the ostensible purpose that upon his return, he will receive a rate of return on his deposit.  These three servants receive 5, 2 and 1 talent respectively.  This is an  enormous amount of capital:  a talent is 6000 denarii, and a denarius is probably about 2-4 days wages at minimum wage in ancient Palestine.  So the man who received 5 talents had enough capital to pay 60,000-120,000 people minimum wage for one day; this would certainly be enough to start a business of some kind.  The servant with five talents received the equivalent of well over half a million US dollars.  The first two servants were entrepreneurs who were able to double their master’s money during that period. They would receive their reward for their diligence and their willingness to risk.  The one who received one talent was afraid of his master and of risking the capital, and so he buried the talent which equals about US $87,000-174,000 (considering $7.25 per hour as minimum wage). Imagine the master’s wrath!  He lent the wicked servant an incredible sum and the man buried it.  So the master says that he should at very least have given it to money lenders so that if he himself wasn’t going to risk it, they would at least find a suitable placement for the funds, and pay him interest on the money.  Jesus called this man wicked, and he received his reward (to be cast in outer darkness).  So Jesus teaches us that the wise risk of capital is not a sin; the sin here is the failure to put at risk the capital that has been lent.

This parable is amazing on so many levels.  But at very least we must acknowledge that Jesus commends those who are not afraid to take risks.  But he does not even tacitly condemn creditor/debtor relations in this parable.  He acknowledges them as facts of life and uses them to illustrate our relationship to the Kingdom of God.  We are debtors before God, because it is He who has made us his regents and lent to us his capital to see what we will make of it, and we need to use what we have from Him profitably so that on the day of reckoning our master will commend us as good and righteous investors.

I would like to conclude by making the following points:

(1) The New Testament is not the new Torah.  Its principles need to be applied to new contexts with judicious wisdom and with the guidance of the Holy Spirit.

(2) We need to distinguish between good debt and bad debt.

(3) Jesus does not condemn the wise use of good debt, but rather, told a parable in which standard business practices illustrate our indebtedness to God.

(4) In our culture, not all debt that leads to profit making is a sign of greed, for it can be vehicle for creating wealth (which is a blessing) and providing jobs.

(5) The wise servant is the one who can thrive in the circumstances in which he finds himself.  Thus, we must ask, given the current economic environment, culture,  and tax structures, how can we Christians learn to thrive and create wealth?

7 thoughts on “Is debt sin?

  1. Good post. Jesus warned the Pharisees for placing burdens on the people by giving them laws beyond the law. People over complicate things and do not look at the real picture. It is a way to control people I think.

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  5. I was drawn to this article by your very reasonable counsel against using the NT as the New Torah. However, your arguments are not convincing. You argue mostly based on your experience e.g. our business employs people, if we didn’t have debt it would ‘undoubtedly’ close down, so this prooves not all debt is bad. If you think about it, that’s a very circular argument.

    Unfortunately, the passage you use to proove your point does not help the issue. In this passage, Jesus indeed seems to commend risk taking and the ‘wise risk of capital’. But the passage does not infer a debtor/borrower relationship but rather a employer/employee relationship. The money is entrusted to the servant but at no point is it lent to them. It is under their care, not ownership. In using this passage, you have committed the same error as the proof texting author that you quote above.

    • Thank you MW for your very interesting comments. My first argument is that this is the way business operates. Lines of credit are used to fill orders so as not to burden the client with the debt. Perhaps you don’t think hiring 25 people at a livable wage with benefits is a virtuous thing: I do. So I am not about to bash my wife’s company over the head with passages from the New Testament Torah. Jesus said that the Pharisees left out the important matters of the law, justice and mercy, in order to tithe small herbs (Matt 23.23). They swallowed camels and strained gnats (Matt 23.24). So my point is that mercy would teach us that providing good jobs is a noble end in itself, and that requiring the absence of debt in our current financial system would be unnecessarily rigid and would lead to unemployment. The overuse of leverage and unwise use of debt has likewise lead to unemployment: we see Bear Stearns and Lehman Brothers (a few years ago, Long Term Capital Management and many others), highly leveraged companies that used debt greedily to attempt to multiply returns. We see it everyday in government debt at all levels: this is the foolish use of debt to pay out benefits, payroll, and pensions, that has zero investment value, and therefore is a perpetual sinkhole that leads to government default.

      As to your second point, I would remind you that the Bible characterizes debt as creating a slave/owner relationship. The slave is the borrower; the debtor the slave. The parable (Matt 25.14) literally calls these men slaves (δούλους). So the slaves are now required to make something with what the master gave them. This is exactly the way that business debt works. The bank (slave master/creditor) gives money to the business (slave/debtor) which they must pay back with interest, because the bank requires a ROR (rate of return), just as the master expected a return on his money lent–haven’t you heard the old dwarf song: “I owe, I owe, it’s off to work I go.” That’s the debtors song to show that they have become de facto slaves to their creditors. When a bank lends money to an individual, it is entrusted to that person too, not given; promissory notes, contracts, loan agreements are signed, showing that the money doesn’t belong to the debtor but to the creditor, and that the debtor must pay back the money and the interest too. Matt 25.14f. is a very rich passage that has many analogies to our current situation, and I still can’t see my error. Thanks again.

  6. Peter, I think you nailed it – especially in this paragraph:

    “Contemporary financial advisers correctly distinguish between good debt (cf. this post) and bad debt. The effect of bad debt is that the debtor becomes a slave to debt payments. The effect of good debt is the opposite. It leads to profit and wealth. I would agree that wisdom teaches us that bad debt should be avoided, and it is a sin if it is accompanied by greed and a lack of self-control. A poor person who borrows in order to survive is probably to be pitied rather than called a sinner; the Bible often defends such people and condemns those creditors who exploit the poor. However, people who accumulate credit card debt to buy consumer goods because they can’t defer gratification have a problem, not too dissimilar from alcoholism. It is a spiritual problem related to a religion of consumerism.”

    That’s the most concise but complete statement I’ve seen on a Biblical position toward debt.

    I think you’ve also nailed another common problem (certainly with the fundamentalist approach) in that the New Testament is often applied as a New Torah. (And often just added on top of the Old Testament Law!) I often deal with comments from people on my blog who just can’t seem to grasp what Jesus really did with His teaching. He wasn’t setting up a new set of laws, and He wasn’t “abolishing” the old Law either. He was leading us in the path that would both completely fulfill the Law and completely free us from it as well. It’s the whole idea of having the Law written on our hearts. When we are conformed to His image, we will naturally fulfill the Law because we are like Christ. When Christ is living in you, you don’t need the Law to tell you what is right and wrong – you have Christ to teach you! The Law was our schoolmaster/tutor/guardian until Christ came, but now that we can be justified by faith in Him we are no longer under that guardian (Gal 3:23-26). Why do we think we’re going to become holier if we keep the Law or set up our own new laws. Our only “requirement” is to have faith in Christ and follow Him so that we might become like Him.

    I’ll stop now… 🙂 This is just something that bothers me so much. And when I say these things, people suspect I’m trying to get out of being righteous or doing the right things. That’s the farthest thing from the truth. The best description that I’ve heard of what I’m talking about is this. Just trying to keep the Law (or laws…) is like tying good fruit to a bad tree. In this case, the appearance of good fruit means nothing – it tells us nothing. What Jesus wants to do is to change us completely so that we become good trees that naturally produce good fruit. It’s a completely different approach to what it means to be righteous and holy!

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