Never forget that helping others is a blessing both to the giver and the recipient. An integral part of anyone’s march to solvency and balance in their life should be helping others. Can you really benefit your community by only working for and thinking of yourself? With that being said, debt and poor personal financial management prevents you from helping anyone or any organization consistently and effectively.

Debt in and of itself is not wholly bad. The misuse of debt is what is really appalling. Using leverage to move your business forward or purchase an affordable home is a good use of debt. However too many people have put themselves in a disadvantageous position of surety leading up to, and exacerbating the current recession. Surety, which means property that your creditor can claim in case you default on your obligation, in the case of real estate is a good thing both for the borrower and the lender. What has happened in the during the current recession is that homeowners worked with lenders to “figure out” how they could afford a particular home with both parties knowing good and well that the mortgage shouldn’t have been made. Therefore if you didn’t have 10% or 20% to put down as a down payment on your new home with a 15 or 30 year fixed mortgage you got involved in “qualifying” for all the various types of ARM’s (Adjustable Rate Mortgages) so you could “afford” your dream home.

The result could have been predicted and people have been forced from their homes for reasons ranging from job loss, inability to sell the home for the amount of the mortgage, or inability to sell the home because of the current housing market to adjusted interest rates. If a homeowner ends up with a home that is now worth far less than the mortgage amount they will have to short-sell, meaning that they will owe the lender the difference between what they sold the house for and what they owed! In other words the house won’t cover the debt with the lender but that amount is still owed by the borrower.

This scenario breaks several sound biblical financial principles.

Biblical Principle of Debt

1) All debt should be short term. Even though traditionally you would take out a 15 or 30 year fixed rate mortgage to buy a home by using aggressive early principal payoff strategies you can cut your mortgage term by a one third to one half. Spend some time at Yahoo Finance and educate yourself on mortgages and payoff strategies. Don’t have time? Make time or lose your home. It is up to you to do your due diligence!

2) All debt should be taken on without surety. See my definition above but also when taking out a mortgage ask your lender for an exculpatory clause (a provision in a Mortgage allowing the borrower to surrender the property to the lender without personal Liability for the loan). To understand why this is to your advantage here is an example.

“Abel buys land for $100,000, paying $40,000 cash and gives a $60,000 mortgage to the seller with an exculpatory clause. The Market Value of the land drops suddenly to $55,000. Abel abandons the mortgaged property, losing the $40,000 investment but keeping everything else he owns.”

In other words if the lender grants you a mortgage they work with you to understand what you can really afford not just put you in some exotic “cooked up” financial instrument so that if you lose your home the lender can resell at a profit after foreclosing on you. In our current economic environment the lender can’t be sure if they take your home from you they can resell at a profit so they have to be careful that they properly value the home and your ability to pay once you are in it.

3) Debt is not your normal operating mode. This condition speaks for itself. You are financing a lifestyle or something beyond your means and clearly doing this on a regular basis. Having budgeting problems? Visit Yahoo Finance, MSN Money, and CNN Money. There is plenty of good advice regarding how to seek proper help and guidance.

More Biblical Strategy

1. If you have a job, do whatever (ethical and moral) it takes to keep it, work diligently to make sure that your income covers your debt, and you have something left over to save.

2. Current job isn’t enough? Take the right actions to get another position or part time job. Network with other people both in person and online at places like LinkedIn, Facebook, FastPitchNetworking, and many other online social networking sites.

3. If you own your own business work diligently and manage it properly.

4. Your best first “investment” is still your home.

5. Your next best investment is in solid income producing rental property, or consider starting your own part time business. Perhaps your spouse can work it or a trusted partner perhaps.

6. Don’t turn your money totally over to someone else. Keep the Bernie Madoff scandal in mind when putting all your money into someone else’s hands.

Proverbs 24:3-4 (New International Version)

3 By wisdom a house is built,

and through understanding it is established;

4 through knowledge its rooms are filled

with rare and beautiful treasures.

Wise investors don’t look to get rich quick.

Educate yourself on basic investing terms so you can have an intelligent conversation with your investment adviser or read the investment reports.

Proverbs 18:15 (King James Version)

15 The heart of the prudent getteth knowledge; and the ear of the wise seeketh knowledge.

Always read the financial pages and acquaint yourself with what is going on in the general economy.

Extra Biblical Direction

    Pray and meditate on your life’s decisions including your financial ones.

    Understand yourself. Are you a saver or investor?

    Don’t borrow money to invest in stocks or mutual funds.

    Diversify your investments.

Investing for the long term? Don’t look to get rich fast no matter how tempting!

Have you educated yourself? There is no dearth of information available online, at your local library or by asking experts in whatever it is that you are asking questions about.

Proverbs 15:22 (New International Version)

22 Plans fail for lack of counsel,

but with many advisers they succeed.

© 2009 THJ & Associates, LLC

Author's Bio: 

Theodore Henderson is a professional speaker and business person. However, he is not a speaker who uses “canned” presentations, but one who speaks from personal experience, business know-how, and from his heart on issues that resonate with a wide audience. He coaches using universal themes of financial education, faith, perseverance and self development.

Find Theodore Henderson on the Web at http://thjassociates.com