CHAPTER TWO - DEBT & COUNSEL

Debt & Counsel

The borrower is slave to the lender”(Proverbs 22:7, NIV)

                                           

Debt

The Bible Discourages Debt
Keep out of debt and owe nothing to anyone” (Romans 13:8).

1. "The borrower is to the lender" (Proverbs 22:7)

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Correct Answer: slave

2. In the Old Testament, being out of debt was a reward for .

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Correct Answer: obedience

If you diligently obey the Lord your God, being careful to do all His commandments. . . All these blessings shall come upon you . . . You shall lend to many nations, but you shall not borrow” (Deuteronomy 28:1 & Deuteronomy 28:12).

3. Debt was one of the curses for disobedience.   

“If you will not obey the Lord your God. . . all these shall come upon you. The alien who is among you shall rise above you higher and higher. . . He shall lend to you, but you shall not lend to him”(Deuteronomy 28:15 & Deuteronomy 28:43).

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Correct Answer: curses

Debt presumes upon tomorrow
Come now, you who say, ‘Today or tomorrow we will go to such and such a city, and spend a year there and engage in business and make a profit.’ Yet you do not know what your life will be like tomorrow” (James 4:13-14).

Getting Out of Debt

4. First .

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Correct Answer: pray

5. Create as much monthly as possible because the more your surplus, the quicker you can pay off debt. You do that by increasing your income or reducing expenses. It’s that simple.

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Correct Answer: surplus

6. your way out of debt, and here’s how. In addition to making the minimum payments on all your debts, focus on paying off one debt at a time starting with the one with the lowest balance first. After the first debt is paid off, apply its payment toward the next smallest one. After the second debt is paid off, apply what you were paying on the first and second debt toward the third smallest balance. That’s the snowball in action!

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Correct Answer: Snowball

Auto Debt

First, pay off your automobile loan and then keep your car for at least three more years. Continue paying the car payment, but to yourself into your own savings account. Then, when you’re ready to replace your car, the saved cash plus the trade-in should be enough to buy a reliable car without going into debt.

When Can We Owe Money?

7. Scripture doesn’t address when we can have debt. We believe it’s possible to owe money for a home mortgage, your education, or a business. But here’s the rule of thumb for this debt: Borrow as as possible, and pay it off as as possible!

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Correct Answer: little, quickly

Cosigning

“It is poor judgment to another’s note, to become responsible for his debts”

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Correct Answer: cosign

The words “poor judgment” are better translated “destitute of mind”! When you cosign, you pledge all of your assets as collateral as long as the debt exists, everything you own is at risk.

Counsel

9. “The way of a fool is right in his own eyes, but a wise man is he who listens to ” (Proverbs 12:15).

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Correct Answer: counsel

10. The Lord’s counsel comes to us through directly from His Word, and through others.

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Correct Answer: prayer

The Bible

11. “For the Word of God is and active and sharper than any two-edged sword and able to judge the thoughts and intentions of the heart” (Hebrews 4:12).

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Correct Answer: living

People

12. If you’re married, your should be a primary source of counsel. A husband and wife are one, and they need each other to make great decisions.

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Correct Answer: spouse

Read Romans 13:8. “Keep out of debt and owe nothing to anyone.”

Scripture to Memorize 
The way of a fool is right in his own eyes, but a wise man is he who listens to counsel” (Proverbs 12:15).


Questions to Answer

Read Proverbs 22:7. “The borrower is slave to the lender” (NIV).

Read Psalm 37:21. “The wicked borrows and does not pay back, but the righteous is gracious and gives.” 

Read Proverbs 3:27-28. “Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, ‘Go, and come back, and tomorrow I will give it,’ when you have it with you.

Read Proverbs 22:26-27. “Do not be among those who give pledges, among those who become guarantors for debts. If you have nothing with which to pay, why should he take your bed from you?”

Read Psalm 32:8, “I [the Lord] will instruct you and teach you in the way which you should go. I will counsel you with My eye upon you.”

DEBT LIST & SNOWBALL‘EM!

The Debt List will assist you in compiling your debt. The Snowball column will help you prioritize the repayment of the debt.


The columns on the Debt List are as follows:

  • Creditor—The one to whom the debt is owed.
  • Interest rate—The rate charged for the debt.
  • Monthly payment—The amount of the monthly payment. If payment is due more often than monthly, compute the total amount that is paid each month. If payment is due less frequently, determine the average monthly cost.
  • Balance due—The amount of the outstanding balance. 
  • Snowball‘em—The priority of paying off the loans.
  • Determine the snowball

Review Destinations 2, 3, and 5 from the Compass Money Map dealing with paying off debt.

Check off the debt you’ve already paid off. Then start to snowball the first debt you haven’t completely paid off. For example, if you’ve already paid off all your consumer debt in destination 3, but haven’t paid off your credit cards in destination 2, that’s where you’ll start: working to pay off your credit card debt.


Then snowball your debt: In addition to making the minimum payments on all your debts, pay off one debt at a time starting with the one with the lowest balance first. After the debt is paid off, apply its payment toward the next smallest one. After it’s paid off, apply what you were paying on the first and second debt toward the third smallest balance. That’s how to snowball your debt!

Download

Download the Debt List Download

Remember to save the Practical Applications to your computer or device before entering data.

Additional Resource- The Snowball Debt Calculator

The Snowball Debt Calculator will help you in developing a plan to snowball your debt. Based on your specific snowball strategy, the calculator will show you a report of the amount of interest you will save, the number of years and months of payments you will eliminate, how much time and interest you can save with additional payments, detailed reporting and much more. Click on the calculator icon above to get started!


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