Reflections on God and Money: Choosing Credit (1)

The rich rules over the poor, and the borrower is the slave of the lender.

Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.

Proverbs 22:7 & Romans 13:8

I have heard the above Bible verses used to support the argument that all borrowing is wrong. I find that hard to accept. Before money was created, credit was necessary in order to exchange goods and services.

Historically, grain was loaned to a farmer who later repaid the loan with a share of the harvest. Today, credit can still be used to pay for something important that would otherwise be beyond our reach, like a house or a car or a university education. It can also, sometimes and when used carefully, help us through a short-term financial crisis. But it is important to always keep in mind that credit can easily plunge people into debt and all the associated problems.

I advise people to treat credit like explosives: handle it well and it can clear a path for you but beware it does not blow up in your face! Credit can quickly spiral into debt and the misery it brings. Debt can cause relationships to break down and social isolation.

It is therefore very important that your borrowing fits into your budget. If you are struggling to make ends meet, borrowing may seem the easy way out but if you borrow what you cannot repay, your problems will only get worse.

I should add that I am not here including putting purchases on to a credit card and then paying off the total amount spent in this way in full each month. This can be a sensible thing to do, especially if you buy things over the internet or by telephone, because of the added security you get from a credit card as compared with a debit card.

I will conclude this theme tomorrow by suggesting some of the things to think about before borrowing.

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Handling money and dealing with debt can be complicated and neither the author nor anyone else involved in the production of these Reflections is responsible for any action you take, or fail to take, based on what is written here. You are invited to put a link on your website to these Reflections. You are welcome to copy these Reflections for personal study or for circulation to family and friends on a non-profit basis. For any other purpose, whether or not for profit, you will require written permission in advance from the author before copying, reproducing or transmitting extracts in any form or by any means, electronic or mechanical, including photocopying, recording or using any information storage and retrieval system.

Friday, 13 September 2013

Choosing Credit (1)