Thread: The world of finance teaches that borrowing money can be a high-risk, high-reward option
Thread: The world of finance teaches that borrowing money can be a high-risk, high-reward option. Scripture has some passages that seem to clearly warn people to be cautious about getting into debt. Read the following Scriptures and write a thread of at least 250 words discussing what the Bible does and does not teach about debt. At minimum, address the following questions:
What are some of the natural consequences of borrowing money?
What is “co-signing” a loan? What advice does the writer of Proverbs have about the wisdom of co-signing a loan?
What are the obligations of anyone who borrows money?
Be sure to reference any Scriptures you use to answer questions. In addition to Scripture, you must cite at least 1 article that addresses the topic.Scriptures to read (minimum…feel free to find more!): Psalm 37:21; Proverbs 11:15; 17:18; 22:7, 22–27Reply: Respond to at least 2 classmates\’ threads and comment on their observations about the implications of financing with debt. Be sure to give specific examples and state whether you agree or disagree with your classmate\’s assertions. Each reply must be at least 100 words.
CLASSMATES I
Implications of Financing with Debt
The natural consequences of borrowing money include an obligation to repay the debt, pressure to earn money, and negative long-term effects on future plans such as building a savings account or pursuing other interests. There is also a higher risk of economic vulnerability associated with an increased about of debt (Hauff & Nilsson, 2019). The Bible addresses the consequences of borrowing money with Matthew 6:24,“No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon” (King James Bible, 1769/2017). When an individual is in debt, the requirement of repayment consumes their life and affects their choices in every aspect. Morals could be compromised and questionable decisions may come from the desire to alleviate the heavy burden.
Co-signing a loan in business terms means to take on the debt of another person if they are unable to repay the loan and is commonly utilized for student borrowers (Hauff & Nilsson, 2019). The Bible warns against co-signing loans through numerous verses including Proverbs 11:15, “He that is surety for a stranger shall smart for it: and he that hateth suretiship is sure” and Proverbs 22:27, “If thou hast nothing to pay, why should he take away thy bed from under thee?” (King James Bible, 1769/2017). Simply put, it is the responsibility of individuals to love one another, but not carry another’s obligations when there is no direct involvement.
The obligations of anyone who borrows money consists of the obligation to repay the debt and any accumulated interest. As Scripture states in Psalm 37:21, “The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth” (King James Bible, 1769/2017). While borrowing money is frowned upon from a biblical sense, if an individual must take out debt, it is wise to pay off the amount and reclaim the sense of freedom that comes with being devoid of pressing financial responsibilities.
References
Hauff, J. C., & Nilsson, J. (2019). Determinants of indebtedness among young adults: Impacts of lender guidelines, explicit information and financial (over)confidence. International Journal of Consumer Studies, 44(2), 89-98. doi:10.1111/ijcs.12549
King James Bible. (2017). Cambridge University Press. (Original work published 1769)
CLASSMATES II
Some of the natural consequences of borrowing money from others is that you become enslaved to them. Proverbs 22:7 says, “The rich rule over the poor, and the borrower is slave to the lender.”. If someone was to borrow money they would own them until the debt is paid. This creates a slave/master relationship and the Bible warns us to avoid being in this situation. If a person cannot pay back the debt then they will only owe more money due to compounding interest and could be enslaved to the lender for the rest of their life. Borrowing money could encourage someone to spend more than what they can afford. Borrowing money could also cause stress from worrying about how to pay off the debt which could cause health problems or marriage problems.
Co-signing a loan is, “When you promise to pay off somebody else’s debt if the borrower stops making payments for any reason.” (Pritchard) Proverbs 11:15 says, “Whoever puts up security for a stranger will surely suffer, but whoever refuses to shake hands in pledge is safe.” An issue I can see with co-signing a loan is if the person who borrowed the money does not pay it off. Now the co-signer is in a position of enslavement to the debt, with no other recourse.
When a person borrows money they have several obligations. They must pay back the money that they borrowed and they must pay back any interest on the loan. There also is a time frame of when payments are due. If a person is late on their payments they could be given penalties and end up owing even more money. If the person cannot pay the loan then they may have to give up personal assets in order to resolve the debt.
References
Pritchard, F. B. F. T. J., CFP, Advisor, I. a F.-O., basics, an expert on banking H. covers banking, checking, saving, loans, Colorado, mortgages H. has an M. from the U. of, Unions, H. W. for C., Firms, L. F., & Pritchard, in addition to writing about personal finance for nearly two decades R. T. B. editorial policies J. (n.d.). What to Know Before You Co-Sign a Loan. The Balance. https://www.thebalance.com/co-signing-before-you-c… Pritchard, F. B. F. T. J., CFP, Advisor, I. a F.-O., basics, an expert on banking H. covers banking, checking, saving, loans, Colorado, mortgages H. has an M. from the U. of, Unions, H. W. for C., Firms, L. F., & Pritchard, in addition to writing about personal finance for nearly two decades R. T. B. editorial policies J. (n.d.). What to Know Before You Co-Sign a Loan. The Balance. https://www.thebalance.com/co-signing-before-you-c…
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