First Things First
To be an effective steward, it is important to follow a prudent investment process that is aligned with Biblical principles and smart financial decisions. Last month, we discussed the first step of the investment process: Paying Off Any Non-mortgage Debt. This month, we will continue to explore this imperative first step for a wise investment strategy.
The first decision when starting to save or invest, is to ask what will give you the greatest return. If you have a non-mortgage debt at 6% and your cash savings is earning 2%, you are losing ground each month. Paying off the 6% (or higher) debt provides a greater return than putting more into savings. That example is pretty easy, but what about when your savings return and debt cost are the same? Or how about when your savings return is greater than your debt cost?
There are no “pat” answers to these questions as every situation is unique. However, as with all other areas of life, the Bible provides us with helpful wisdom Generally scripture says - Avoid the use of debt. The Bible never condemns the use of debt, or calls it a sin, but it does encourage us to carefully weigh the impact of its use and to understand that the borrower becomes the lender's slave. The Bible does “call us on the carpet” for the failure to repay debts or using debt to presume upon the future.
With rare exception, our recommendation to clients is to pay off any non mortgage debt as a first step of the investment process. If the decision to pay off the debt is unclear, a good question to ask is: "What admonition does the Bible give in this area?" Consider the principal above - better yet, read and pray through the references to debt in the Bible. You are not likely to go wrong following the wisdom of the God's Word.
Click here to view answers to a few of the common questions we receive surrounding this issue.
Planning Tips
Crown Ministries (www.crown.org) has numerous helpful articles on the topic of debt and we have highlighted two of them below:
“Ten most asked questions Crown receives about borrowing”
“The truth about credit repair”
In
the News
The situation with Terri Schiavo has brought to light the importance of having a living will and health care power of attorney. These articles may be helpful in highlighting some tools for preventing a situation like this from happening to your or your loved ones. Keep in mind that the advice of an attorney who specializes in wills and estate planning can be invaluable in an area like this- there is a cost but it is worth it.
Shiavo Case Puts Living Wills in Spotlight (WebMD)
Document Your Healthcare Wishes (kiplinger.com)
