MoneyWalk 55: Don't Borrow Unnecessarily

This program will help you undo financial bondage.

This process starts by saying no to any loan for items that depreciate in value when you cannot immediately pay cash for them and when accepting the credit won't immediately benefit you by allowing your savings to accumulate at a higher interest rate than the interest rate you would pay the creditor on the loan balance.

It’s impossible to meet these requirements with most types of borrowing, including revolving credit card and store charge card accounts, because most institutions that offer such credit charge you very high interest rates. For example, the interest rate for most store charge cards is usually greater than 20%. While the interest rate for some credit cards can be lower, by accepting them you’re generally allowing the credit card issuer to raise interest rates sometime down the road if it believes you then represent greater risk of not paying or not paying on time, etc.

For the most part the rates on these cards hover in the teens and are much too high to presume that you can invest and monthly, annually, or over the long haul generate more investment growth than you’ll pay out in interest. This inability to generate greater growth does not even encompass the various penalties you will pay if you are not able to meet the card issuer’s payment requirements down the road.

There is a very small percentage of people who have played the hedging odds and seem to have beaten the system; people who have financed their business ventures using credit cards and yet experienced such a surge in customers that it seems their revenue has overcome the interest they paid on the credit cards. The small group that seems to have been successful probably represents less than one percent of business owners who have used this method. Don’t let what seem right now to be their success fool you into thinking that this is a prudent strategy for financing a business. Most of those who have tried this method have gone belly up.

Biblical instruction strongly guides you to pursue your financial life, personal and business, from a debt-free mindset; asking God and seeking a number of godly counselors who can help you find prudent ways to start and invest in business endeavors and purchase personal merchandise that is desirable to you. The vast majority of people I’ve met who did not follow this method have found themselves in financial turmoil at some point in their lives and the turmoil for many continues today because they still refuse to utilize biblical money management instruction to guide their financial affairs.

If you have a history of undisciplined use of credit cards, then you should immediately discipline yourself to stop using them, build at least three months of income in an emergency reserve account, and even eventually cut up the ones you have and throw them away because they will continue to bring torment into your life.

If you are a disciplined spender who stays well within established budget boundaries, a low interest revolving credit card will generally not hurt you because you will only use it for convenience and record-keeping purposes where you will only make purchases already accounted for in your budget and you never charge more on these cards than the amount of cash you have available in the bank minus your monthly bills, saving, investing, tithing, and giving.

Though scripture does not absolutely say that you cannot take on any debt, it strongly advises you to live debt-free and that God desires debt-freedom for you. The compounding interest nature of most debt will wreck your ability to build wealth for the future. The enemy knows this and tempts you to satisfy the cravings of your flesh using debt instruments. However, when you commit to God’s plan of living debt-free He will provide your every need without you having to borrow to supply it. When you refuse to take on debt, you enable the LORD to supernaturally provide by moving others to provide needs and desires at no cost when you're unable to purchase them.

Please email any questions and pray for this ministry. May God bless you richly as you follow His plan!!!
Deuteronomy 28:12, Psalms 37:21, Proverbs 22:7, 27:23-24, Romans 13:8
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