Financial Deception—Debt Restructuring Will Solve Your Financial Problems

Several years ago, I counselled an individual who had accumulated significant debt on his credit cards. To lower his interest costs and to be able make appropriate repayments, it made sense to restructure his debt. He obtained a line of credit from his bank at a much lower interest rate and used those funds to pay off his credit cards. At the same time, I emphasized to him that restructuring his debt was treating the symptom and not the problem. The real problem was that he and his wife were spending more than they were earning, and they had been doing this for a couple of years.

I strongly recommended that they develop and implement a budget with the objective of ensuring that they spend less than they earn on a monthly basis so that they can use the surplus to pay down debt. Unfortunately, they did not do so, and within three years they had accumulated new credit card debts. Since his bank line of credit had been fully utilized, it was necessary to take out a second mortgage on his home to pay off the new debt. Again, I emphasized the importance of spending less than their income.

About four years later, he came to me again with the same problem. With all sources of credit maximized, it was necessary to withdraw money from the couple’s RRSPs to pay off the high-interest credit card debt and satisfy the credit card companies. This resulted in two new problems: first, a tax liability because of the RRSP withdrawals and second, a significant concern that they would not have sufficient funds for retirement.

At this point you may well think that this individual cannot be very astute financially. Actually the reverse is true. He is chartered accountant who understood and agreed with the advice. However, because he and his wife were not prepared to make the necessary sacrifices to reduce their personal spending, today they are reaping the negative consequences.

Sometimes the root of financial problems goes beyond the financial sphere and into the spiritual. Some spiritual problems that can give rise to financial problems include covetousness, lack of contentment, greed, selfishness, and pride. These mindsets are clearly contrary to God’s Word. Often it is necessary for a Christian to meditate on God’s Word with regard to finances in order to think differently about money and material things. Romans 12:2 states, “Do not conform any longer to the pattern of this world, but be transformed by the renewing of your mind.”

In summary, if you are in debt, may I encourage you to do two things:

1. Develop and implement a budget to ensure that you are spending less than you are earning, and use the surplus to pay off your debts. 

2. Study and meditate on God’s Word regularly with regard to finances. Excellent materials are available through Crown Financial Ministries: www.crown.org and www.crowncanada.ca

Counsel and Wisdom—From Godly Financial Advisers

God admonishes us to obtain counsel. Proverbs 12:15 states, “The way of a fool is right in his own eyes, But a wise man is he who listens to counsel” (nasb), and Proverbs 15:22 states, “Plans fail for lack of counsel, but with many advisers they succeed.”

Unfortunately sometimes Christians refuse to seek counsel because of pride. Proverbs 13:10 states, “Pride only breeds quarrels, but wisdom is found in those who take advice. Proverbs 11:2 states, “When pride comes, then comes disgrace, but with humility comes wisdom.”

Nevertheless, God indicates that your probability of success is greater with many advisers. Proverbs 24:6 states, “For waging war you need guidance, and for victory many advisers.”

God recommends that we obtain biblical counsel from godly financial advisers.

The man without the Spirit does not accept the things that come from the Spirit of God, for they are foolishness to him, and he cannot understand them, because they are spiritually discerned. The spiritual man makes judgments about all things, but he himself is not subject to any man’s judgment. (1 Corinthians 2:14, 15)

Blessed is the man who does not walk in the counsel of the wicked. (Psalm 1:1)

I have met some non-Christian financial advisers who do give good practical advice. However, if you want advice from a biblical perspective, which I believe is God’s will for every Christian, then you can get godly advice only from a godly financial adviser. For example, a nonbeliever is simply not going to understand the desire in the believer’s heart for giving a significant portion of one’s income to God’s work. The believer has an eternal perspective, wanting to build up “treasures in heaven” rather than “treasures on earth.” (Matthew 6:19–21)

In addition, a godly adviser would counsel you to use minimal debt (Proverbs 22:7), while many worldly advisers would encourage the use of a lot of debt, based on the belief that “smart people use other people’s money” or “buy now and pay later.”

Therefore, before making any major financial decision, I recommend that you seek the advice of two or three godly financial advisers. In my view, an appropriate definition for such a person would be as follows: a spiritually mature Christian who understands and applies God’s financial principles (Psalm 111:10), has a close personal relationship with God (John 15), has the necessary practical financial knowledge (Proverbs 24:3, 4), and habitually puts the interests of clients first (Philippians 2:3, 4).

I believe that one of your financial counsellors should be your spouse (Genesis 2:24), even if she or he has limited financial knowledge. God, through his Holy Spirit, can give his peace or lack of peace to an objective spouse who is not emotionally excited about or biased against a particular financial decision.

After obtaining the counsel outlined above, it is your responsibility, to pray and ask God to give you his wisdom (James 1:5) in weighing the advice you have received. Proverbs 14:15 states, “A simple man believes anything, but a prudent man gives thought to his steps.”

In summary, before making any major financial decision, seek counsel from two or three godly financial advisers and from your spouse. Proceed only after you and your spouse have spent considerable time in prayer, and God has given you his peace and his wisdom.

Personal Guarantees for a Business Loan

During the mid-1980s, it took about three years for me to convince a Christian businessman that giving his personal guarantee in regard to his company’s bank loan was inconsistent with what God’s Word said about surety.

The issue of surety (guaranteeing payment of a debt for another) arises when one takes on a financial obligation without a certain way to pay. When the owner of a company gives a personal guarantee in regard to the company’s debt, that person assumes that the company will be profitable enough and have sufficient cash flow to service the debt—without the debt falling back onto the personal guarantor. God warns us that we do not know what will happen tomorrow. James states,

Now listen, you who say, “Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.” Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. Instead, you ought to say, “If it is the Lord’s will, we will live and do this or that. (James 4:13–15)

Although it is commonplace for the owner of a company to provide a personal guarantee in respect of the company’s bank loans, the past 30 years have shown that many businesspeople have lost their homes when their businesses incurred losses and the bank took legal action against them. God warns that if you sign surety for debts, then your “bed” (i.e., your home) may be taken from you. “Do not be one of those who shakes hands in a pledge, one of those who is surety for debts; If you have nothing with which to pay, Why should he take away your bed from under you?” (Proverbs 22:26, 27 nkjv, emphasis added)

I was finally able to convince that businessman I mentioned that signing personal guarantees is inconsistent with God’s Word. As a result, he negotiated a deal with his bank by which he did not have to provide personal guarantees. From 1990 until 1995, there was a severe recession. His business became insolvent, and the bank took legal action. However, because he had not provided any personal guarantees, his personal assets were protected, and today he enjoys a good retirement. On the other hand, if he had continued to give personal guarantees, he would have been forced into personal bankruptcy and lost everything, including his home, retirement fund, etc.

Avoiding surety is a biblical principle. It is not a sin to sign surety. However, God warns that if you sign surety, you may very well suffer some negative consequences. Unfortunately, over the past 30 years or so, many businesspeople (frequently including their spouses) have personally guaranteed their company’s bank loans and lost everything when the company got into financial difficulty.

In summary, God warns of the dangers of signing surety, one form of which is for a business owner to give a personal guarantee in regard to the company’s bank loans.

All Material Wealth Comes From the Lord

The 29th chapter of 1 Chronicles provides us with the account of how the gold, silver, wood, and iron were obtained to build the temple of the Lord. It’s clear that the material wealth invested in that temple was huge. The scriptures also indicate that God worked through the people, and there is no indication of any debt being taken on to build the temple. God simply miraculously provided the resources, because he is God. David’s response to God indicates very clearly where the material wealth came from.

David praised the LORD in the presence of the whole assembly, saying, “Praise be to you, O LORD, God of our father Israel, from everlasting to everlasting. Yours, O LORD, is the greatness and the power and the glory and the majesty and the splendor, for everything in heaven and earth is yours. Yours, O LORD, is the kingdom; you are exalted as head over all. Wealth and honor come from you; you are the ruler of all things. In your hands are strength and power to exalt and give strength to all. Now, our God, we give you thanks, and praise your glorious name.

“But who am I, and who are my people, that we should be able to give as generously as this? Everything comes from you, and we have given you only what comes from your hand. We are aliens and strangers in your sight, as were all our forefathers. Our days on earth are like a shadow, without hope. O LORD our God, as for all this abundance that we have provided for building you a temple for your Holy Name, it comes from your hand, and all of it belongs to you.” (1 Chronicles 29:10–16, emphasis added)

From Genesis chapter one, we know that God created everything in six days. In Haggai 2:8, God said, “The silver and gold is mine.” In addition, Leviticus 25:23 states, “The land must not be sold permanently, because the land is mine.”

Clearly all material wealth comes from God, and therefore we need to utilize the money that God has entrusted to us according to his will and not our will. You can determine God’s will by learning and implementing his principles from the Bible and through prayer, asking God to give you specific direction in any particular situation.

Priorities – Treasures in Heaven

Jesus said, “Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also” (Matthew 6:19–21).

I believe that “treasures on earth” include money and material things. These are the things that we tend to prize during our lifetime but that will have no importance when we get to heaven. The apostle Paul made it clear: “For we brought nothing into the world, and we can take nothing out of it” (1 Timothy 6:7).

On the other hand, “treasures in heaven” include things that will be important to us when we get to heaven. I believe that “treasures in heaven” include salvation (as one’s salvation will last for eternity) and the rewards in heaven that God promises to his faithful stewards.

The concept of rewards in heaven is difficult to grasp in concrete terms, because we don’t really know what heaven will be like, and scripture does not explicitly describe heavenly rewards. However, it is important to realize that what we do here on earth does have an effect on what awaits us in heaven. 1 Timothy 4:7 tells us that “godliness has value for all things, holding promise for both the present life and the life to come.” Godliness includes the way we handle our finances.

We read about treasures in heaven again in 1 Timothy 6:18, 19: “Command them to do good, to be rich in good deeds, and to be generous and willing to share. In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.”

In the Parable of the Talents, the concept of rewards is specifically linked to faithful financial stewardship. To servants who have been faithful stewards, God has promised that he will put them “in charge of many things” and that they will enjoy happiness with their master. Jesus said, “Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!” (Matthew 25:21).

As human beings, it is easy to get focused on money and material things that we can enjoy while we are here on earth. However, because money and material things are temporary, it is the wise Christian who focuses on “treasures in heaven.” Colossians 3:1, 2 states, “Since, then, you have been raised with Christ, set your hearts on things above, where Christ is seated at the right hand of God. Set your minds on things above, not on earthly things.”

May I encourage you to take a few minutes right now, and pray, asking God to reveal to you how you need to adjust your focus from treasures on earth to treasures in heaven.