How to CLIMB Out of Debt
Building Blocks of Financial Freedom – Part 2
Psalm 37:3-26
We continue our series on Financial Freedom today. Last week, we talked about the importance of giving to God. We talked about how giving first to Him, and giving it regularly will bring financial freedom in your lives. Giving your money to Him is the only place where God says to test Him. He will give back more than what you can give.
Today, I want to talk about the flip-side of giving. I want to talk to you about how to get out of debt. You know, many people think about debt today. I should say they worry about debt. It is a big concern among people. This is especially true in a materialistic society like the one we live in.
I was reading in the German magazine “Stern” about a report concerning the German government and its budget. They keep talking about a huge hole that is in the budget. They show all of kinds of details about where the money is coming from and where it is going. One simple statement stuck in my mind. People like to blame the government for the way it spends its money. But have you thought why it is happening? I suggest to you that one of the reasons that the government is in debt is because its citizens are in debt. So goes the people, so goes the nation, as the saying says. The government budget and its related debt is a reflection of the people and their budgets and debt.
Many people want to blame the government for their own woes. When it comes to finances, it is important that the individual person take responsibility. That means that if you are in debt, you don’t look to the government to get you out. But what can you do about the situation you are in? We can listen to many stories about how a person got into debt, but the important question is: How do I climb out of debt?
Before I answer that question, I need to clarify what I mean by debt. A debt is not an investment. Debts are things you bought that you are no longer using for which you still do not own. Debt is owing to anyone that which you cannot righteously repay without undue hardship to yourself. In other words, you shouldn’t be paying on something you’re not using productively. If you bought a house, or a computer, or a car, and you are using it while you are repaying it, then it is an investment. When you have paid it, it becomes an asset which has value. As long as it is usable, it is an asset. But when you have it, and you don’t use it, and you have to repay it, then it is good debt. If you have bought something – something you don’t need, and you are still repaying it, then it is bad debt. If you buy something that you can’t pay back for whatever reason, that is also bad debt. Debt can be that huge television you bought on credit for €2000, when a small €200 TV would do. Webster’s dictionary defines debt as:
DEBT, n. det. [L. debitum, contracted.]
1. That which is due from one person to another, whether money, goods, or services; that which one person is bound to pay or perform to another; as the debts of a bankrupt
When you run in debt, you give to another power over your liberty.
But more than that, debt can be a lifestyle for most people. Some people go from one credit card to the other. Some people buy and buy and buy until they are overloaded with bills and repayments that they cannot reasonable repay. Some people live today with all kinds of debt. Debt is a human problem, not a divine misstep. God did not put you in debt. You put yourself in debt. Just like any other sin, you didn’t follow God’s plan and so there are difficult consequences.
Categories of Debt
There are two different categories of debt you can accumulate:
1.
Personal Debt
Personal debt, often called "bad debt", results from the purchase of an asset that will likely depreciate in value over time. This includes borrowing for such items as a new car, clothes, or furniture. Going into debt to finance a vacation or go out to eat are other examples of personal debt. Bad debt offers short-term pleasure in place of long-term anguish. It really is as simple as that.
Note: With personal debt, it’s important to note why you have it in the first place and to what degree it’s necessary. Financing a car because it gets you to work or school may be an acceptable form of personal debt. Purchasing a new car on a moment’s notice is not. Each situation should be weighed differently.
2.
Investment Debt
Investment debt, often called "good debt", results from the purchase of an asset that will likely appreciate in value over time. This includes borrowing for an education, the purchase of a new home, or even starting a new business. The tax deduction alone on mortgage interest makes investment debt one of the more acceptable types of debt.
That means there are good debts and bad debts. There are debts that come from making poor decisions and debts that come from making good decisions. But all debts have to be paid.
3.
Debt Payments
When it comes to making debt payments, some debts are more essential than others. Sometimes we get into debts because we have to. We get into debt to pay for items that we know we can use.
Essential (must pay)
Mortgage payments
Car payments
School loans
Secured loan payments
Income Taxes
Medical bills
Utility bills Health Insurance
These are debts that we enter because we know the long term value is bigger than the immediate costs. We plan to pay them off because we are going to get a benefit.
Nonessential debt – or debt that you should not get into.
Credit cards
Subscriptions
Personal loans
Unsecured loan payments
Charge cards
Membership dues
Your financial situation must not be plagued with high personal debt.
Since most people have come into debt for different reasons, it is important to discover how you can get out of debt. I am using an acronym CLIMB, which is the first letter of each point. Each letter represents a principles that can help you CLIMB out of debt.
Five Effective Ways to Climb Out of Debt
1. Commit your cash to God (37:3-5)
Trust in the LORD and do good. Then you will live safely in the land and prosper. Take delight in the LORD, and he will give you your heart’s desires. Commit everything you do to the LORD. Trust him, and he will help you.
(Psalms 37:3-5 NLT)
Three times in these two verses, the psalmist insist to trust God. He says to commit everything you have and He will help you. So in the principle of money management, when you trust God with your money, He will help you.
This is the principle of the tithe. As we said last week, God wants you to give to Him. He wants your best and He wants it first. But this verse tells us that when we do this, God will help us. God said the same thing in Malachi.
Bring all the tithes into the storehouse,That there may be food in My house, And try Me now in this,"
Says the LORD of hosts, "If I will not open for you the windows of heaven And pour out for you such blessing That there will not be room enough to receive it.
(Malachi 3:10 NKJV)
God says: Test me and I will prove it with the money. Jesus said the same thing:
Therefore do not worry, saying, "What shall we eat?’ or "What shall we drink?’ or "What shall we wear?’ For after all these things the Gentiles seek. For your heavenly Father knows that you need all these things. But seek first the kingdom of God and His righteousness, and all these things shall be added to you.
(Matthew 6:31-33 NKJV)
The principle is clear. When it comes to money management, God wants you to trust Him first. Your ten percent does not come at the end of the bills, but it should be the first of the bills you pay after you are paid. You have to change your priorities to do this. Many people think to wait until the end and then pay the tithe. Then they complain that they cannot pay it. But if you reverse the order, God honors it and helps you.
When it comes to debt, you can’t stop giving to God because you made stupid decisions. You can’t replace your tithe with debt payments until you are in the clear. You can’t rob Peter to pay Paul. You can’t rob God to pay for your debts.
This church does not need your money. God will take care of our needs. Each member commits to give the tithe, and all of our bills and plans are paid by the members. We make it a priority to follow God in our lives. However, if you are not a member, and you are a Christian and you want to give to where God is working, this church is an excellent place to invest financially.
2. Live on what you earn. (37:7, 11, 16, 18-19)
This is the principle of self-control.
In many verses in this psalm, David tells people not to worry about money. He gives clear advice related to the proper standard of living we should have. God says this:
1. Don’t worry about how much the other person makes (37:7)
Many people worry about how much the other person makes in life. They compare themselves to others and say that they themselves should have the same. They say: “Look at this person – see what he has got. I want that. I need that. I need that because he has that.” God says: Don’t worry about that. Don’t compare yourself. Don’t think you need what someone else has. This can lead you into a debt-staying-mentality.
2. Don’t get greedy. (37:11)
Jesus repeated this phrase in Matthew 5. His point, and the point that David is trying to make is this:
Be content with what God gives you. Be satisfied with what money God gives to you. You don’t need more. You need to live on what you have. God has given you enough money to live on right now. Debt is man’s way of saying I want more. If you can’t pay it back, you should not have it. If it costs too much and you want it now, maybe you need to wait.
Do not overwork to be rich; Because of your own understanding, cease! Will you set your eyes on that which is not? For riches certainly make themselves wings; They fly away like an eagle toward heaven.
(Proverbs 23:4-5 NKJV)
The little that a good person owns is worth more than the wealth of all the wicked, because the LORD will take away the strength of the wicked, but protect those who are good.
(Psalms 37:16-17 GNB)
Less is more and more is less. One righteous will outclass fifty wicked, For the wicked are moral weaklings but the righteous are GOD-strong.
(Psalms 37:16-17 MSG)
You aren’t as rich as someone else. So what? You have God, and He will give you the strength to handle everything that comes your way. God is better than money. Don’t get me wrong, it is nice to have money. But it is better to have God. Think about this. Because many people put their strength in their money and not in God. They strive very hard to get richer so that they can place their security in money. But money brings its own problems.
J.D. Rockefeller was asked, "How much money is enough?" and he said, "Just a little bit more."
But when you are poor and you have to ask God for help, He provides all the time. Look at the next verses with me:
3. Don’t worry about where the money will come from. (37:18-20)
Day by day the LORD takes care of the innocent, and they will receive a reward that lasts forever.
They will survive through hard times; even in famine they will have more than enough.
But the wicked will perish. The LORD’s enemies are like flowers in a field--they will disappear like smoke.
(Psalms 37:18-20 NLT)
3. Investigate where your money goes.
This is the principle of research.
For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it-- lest, after he has laid the foundation, and is not able to finish, all who see it begin to mock him, saying, "This man began to build and was not able to finish.’
(Luke 14:28-30 NKJV)
Be diligent to know the state of your flocks, And attend to your herds;
(Proverbs 27:23 NKJV)
You need to know where your money goes. If you are in debt, you need to find out where your money is spent. You have to find out how much things cost, and where you spent the money.
4. Make a plan.
This is the principle of the budget.
A budget is a simple plan of how much comes into your home and how much you will spend. Without a budget, you will never exactly know where your money is coming and going. With a budget, you can plan ways to get out of debt. You plan where you are going to spend and where you are going to save. A budget is necessary for you to get out of debt.
Get your fields ready and plant your crops before starting a home.
(Proverbs 24:27 CEV)
This verse shows that you should have an income first. When you know what money you have, then you plan your way of spending the money. A farmer had to go out and plant crops – do the work that was necessary to have the money that he needed. He receives an income and then he plans to build a house. But notice the order – give to God, start living on what you earn, know where your money comes from, and then plan. But most people plan and spend without any knowledge of how they are going to pay for it. This is how most people get into debt in the first place. Don’t spend money until you know where it is coming from and you know how you are going to pay for it.
5. Build up a reserve. (37:21, 26)
This is the principle of saving and investing.
The purpose of building up a reserve is so that you can give. You want go from being a borrower to a lender. You want to go from a debt-death-style to a lending-lifestyle. Jesus said this:
Give to him who asks you, and from him who wants to borrow from you do not turn away.
(Matthew 5:42 NKJV)
You can see that in the Old Testament, people who had money were expected to be able to live debt-free. They were able to build a reserve in such a way that they could give to God and to other people in need.
Exodus 22:25-27, Deuteronomy 24:10-13
So as Christians, we need to get to the point where we can give. If you are not giving to God and His kingdom because you are in debt, then you need to re-evaluate your priorities.
The plans of the diligent lead surely to plenty, But those of everyone who is hasty, surely to poverty.
(Proverbs 21:5 NKJV)
There is desirable treasure, And oil in the dwelling of the wise, But a foolish man squanders it.
(Proverbs 21:20 NKJV)
Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal; but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal.
(Matthew 6:19-20 NKJV)
Jesus states very clearly why we should save and invest. He wants us to use our reserves for His kingdom. This will take a change in our priorities. Many people think today: I will save for retirement and then enjoy my money the way I like it. But what God wants you to do is to save and invest so o that you can give to His kingdom. He wants you to switch from thinking about your interests and start thinking about His interests. One of the most essential places to switch your thinking is in the way you spend. We as Christians need to set the example of going from a debt-death-style to a lending-lifestyle. We need to be givers and not borrowers. We need to have financial freedom so that we can be free to give to what God wants us to give.
