Monday, July 29, 2013


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

- Proverbs 22:7

There is a reason it is called "servicing debt".

We are a nation with an insatiable appetite for borrowing and consumption fueled by that borrowing. Working hard, saving and waiting have been replaced by easy credit, massive debt and instant gratification. When you step back and look at the big economic picture you see a nation teetering on the edge of disaster thanks in large part to debt and the resulting wage and housing inflation it has caused. In terms of actual debt already incurred and liabilities promised with no feasible means of payment (public pensions, Social Security, Medicare, Obamacare, etc.) America is already fiscally dead but the nation keeps shambling along like a zombie.

Here is a little exercise, please bear with me. Just around the corner from our home there is a decent sized plot of farmland coming up for sale, a little over 600 acres. That is a sufficient amount of acreage for a full-time farmer. Thanks to inflated crop prices, government subsidies, a culture of "get big or get out" in farming and readily available credit I am guessing that the whole deal will sell at some $6000 an acre. That actually might be kind of low. $6000 for an acre sounds pretty cheap if you are buying a lot to build a house on but multiply that by 600 and you get $3,600,000. Over 3 1/2 million dollars is nothing to sneeze at. Using some random numbers for a 20 year loan at 5% you get monthly payments of $23,000 and total interest paid of over $2 million. That is over a quarter million a year in just mortgage payments. If you plant corn that yields a very nice 185 bushels to the acre you get 111,000 bushels of corn. Now with great corn prices, say $7 per bushel, you get $777,000 from a corn crop. That is what prices were hovering at around the beginning of last week. As Reuters reports by the end of the week thanks to ample rain in the corn belt prices had plummeted to around $5.50 a bushel which equates to a potential drop of over $150,000 in income in just one week. That is farming, great weather and great crops equals low prices, bad weather and poor crops means great prices but little to sell. Anyway the difference between the mortgage and the crop revenue is a huge number, somewhere between $300,000 and $500,000. So why don't more people get into farming with that kind of revenue? Well you also have to feed and house your family, buy seed and fertilizer and pesticides to get those big yields, buy and maintain enormously expensive farm equipment. Other than a small few who have an enormous amount of land, probably passed on for generations by a business savvy farmer, most farmers live right on the edge and choose to farm for the pride and the lifestyle rather than the money. Someone who wants to get into farming? Good luck going to the bank and getting a multi-million dollar loan based on potential revenue from farming. Thanks to the debt system that has inflated land and machinery prices, few young people can get into farming leaving us with a bunch of old farmers and fewer and fewer giant farms. Many of the very policies allegedly designed to "help" farmers have actually worked to drive aspiring farmers out of the fields and into regular jobs.

Farming is hardly the only area that government tinkering in lending has hurt the very people it was supposed to help. Student loan debt that was supposed to make college affordable and accessible to everyone has instead achieved the opposite, driving tuition prices sky high and saddling new graduates with a crippling debt in return for the promise of a life of working in a cubicle. Meanwhile the value of a college degree has diminished but people are fed the lie that the only way to make a decent living is by getting a four year degree. Meanwhile skilled workers are desperately needed all over the country but we keep churning out grads with the magical Bachelors degree in sociology or art history. Then there is the mortgage business where political pressure to make "the American dream" accessible to everyone created a situation where lenders were given an incentive to make stupid loans and shockingly that whole thing blew up when borrowers who couldn't afford the loans they were given started losing houses that were overpriced thanks to those same loans. Meanwhile people who had saved and built decent credit get to pay the same inflated prices thanks to government housing policies. So creditworthy borrowers were hurt, people who were not creditworthy got loans they couldn't pay making them more un-creditworthy and the whole system has been in distress for years.

The church is not only not immune to this craving for debt but largely a willing and enthusiastic imitator of the culture. Both corporately and individually the church is virtually indistinguishable from the world on this question.

We send young men to seminary to learn how to "minister" and at the same time accumulate a bunch of debt that will hamper their ability to apply all of that leaning later on in life for years or likely decades. Rather than learn under the local elders of the church by observing and imitating they study expensive academic concepts from relative strangers and then are thrust into the world with a degree in hand and no useful job skills to show for it. No matter what he feels called to do, like move to an inner-city or a poor rural area, the new seminary grad really is limited by having to service that debt (as well as the costs of caring for a family which means a mortgage). So that means going to a small church until he builds up a resume to move to a larger, better paying job calling. or getting on staff at a large suburban church so he can pay his student loan (and probably credit card) debt. As a result many young seminary grads end up in the religious professional system and either climb the vocational ministry corporate ladder or burn out after 5 years with a bunch of debt and no job skills. In other words we not only don't equip men biblically for the work of ministry, we cripple their ability to follow callings because of their debt that the church demanded they take on as the part of the price of admission for "ministry".

Corporately our local churches borrow enormous sums of money for buildings and improvements and then spend years asking church attenders to put money in the plate to keep the doors open so they can come back next week to put money in the plate to keep the doors open and on and on. Show up, pay up, come back next week, repeat. Enormous sums of money are tied up in maintaining our religious institutions and by tying up our giving in budgeted expenses to maintain buildings, service debt and pay staff we are left with precious little left over to minister to the poor and needy, not to mention funds to support missionaries.

Debt is a sickness and it is slavery. We are two and a half year into a 15 year mortgage and I can't wait to pay this house off. Having a mortgage, even a very modest one like we do, impacts everything we do and we only have a dozen years left. For those with a 30 year mortgage, it is unlikely to ever get paid off. A 35 year old couple, assuming they don't keep refinancing and extending that 30 year mortgage, will pay their house off the same year they retire having paid an enormous amount of interest. The church needs to address this sickness and I mean more than just sponsoring Financial Peace University classes. The issue is not one of poor budgeting, it is an issue of worldliness, of covetousness, of fear of being different, of sin. We cannot be blind to this log in our collectives eyes while wagging our finger at the speck in the world's eye. When we turn a blind eye to our own sinful attitudes and behavior we lose much of our standing to be salt and light to the world. Our embrace of the American love affair with debt is just one more place where we have compromised and exhibited the exact sort of hypocrisy that we are warned about in Scripture.


I would also recommend this great article by my friend Matt Jabs, Debt Slavery - What it is and ways out


Anonymous said...

Hi Arthur,
Good post. Here in Canada if the bank decides to call in a mortgage and the mortgagee cannot repay the loan, the bank takes the home. If a debt is still owing after the home is sold, the mortgagee is still responsible to pay the remaining debt (not covered by the sale) to the bank.

I'm trying to pay my home in full next year. I will have to cash in some retirement funds to do this, but I feel that the amount I owe to the bank is small and I want to get out of debt as soon as possible. My plans are to pay cash for everything going forward now that I am almost 60 years old. The Lord permitting, I will be able to do this while I live a lifestyle that is modest.

dle said...

With farming as my on-the-side profession, I can say that it is hard to the point of tears. I've been trying to grow fruit organically in southern Ohio, and it verges on impossible. What bedevils you one year is for that year; next year is ANOTHER problem. I feel like I am always a year behind, and my harvest (and trees) suffers for it.

For instance, I've had to deal with cherry leaf spot on one cherry tree every year, late in the year. No huge deal. This year, every tree got hit and early. The organic spray I use to combat it, one I've never had a problem with in the past, somehow burned all the leaves on every tree this time. In other words, disaster.

Fireblight killed almost all my pear trees despite planting resistant varieties; no organic counter is available. My apples have been hit with every pest and disease known to man. One year it's one unexpected thing; the next year it's something else.

In short, nature really hates me. I'm surprised we as a human race haven't all starved to death by now. All the ag advice in the world seems to go nowhere.

In short, you owe your life to farmers. Be nice to them. Like I said, there are a lot of tears.

Marshall Diakon said...

one factor in all this, inflation, though the most punishing tax of all, has actually brought the currency's value to near nothing. 3 million dollars sounds like a big number, though its real value today has become quite small.
Due to fractional reserve banking, when a mortgage is acquired, the money for your purchase is created in computers out of "thin air". Following this, your own mortgage payments are pretty much free & clear to your lender, who can pocket your cash because they never actually put up any money at the start.

Romans 13:8 is sound & true. Better to live in a cave bare naked, than to owe anyone anything excepting the debt of love. But of course, the righteous man who trusts Our Lord is never forsaken --- he has everything he needs (without borrowing money); you will never see his children begging bread.
[Psalm 37:25]

Bean said...

We recently visited a local church and I was quite shocked to see in the bulletin that they need $8,661.00/week!! $450K annually. Ok, they have a fab gym, a wonderful parking lot, a preschool wing, and many, many programs for everyone, and it all costs money. I have been trying to justify this, thinking, well the property taxes are probably on the high side, it is a nice facility, they have to pay the pastor and his housing, they have to pay the secretary, and utility bills, and probably a mortgage (the gym and preschool wing were new additions about ten years ago)and materials, etc. etc. And, according to the bulletin there are 14 ministry staff, the pastor and secretary being 2 of them, and I don't know if all are paid positions. But still, $8661 is a lot of cash to collect each week.

I think to myself, aren't we as Christians called to serve, do there really need to be a ton of paid ministry positions? Is a gym really necessary? Shouldn't the preschool be self supporting (maybe it is). I don't know I have only visited this church twice.

But the folks seem friendly, the pastor gives a good sermon, the praise and worship service is pleasant. But golly it costs a lot to support.

I am sure there are churches that are run on a shoestring budget, but how many are led with the intention of forever being on a shoestring budget? I would assume that most start out with very little and are eager to grow as they want to keep attracting more and more people.

Not sure how I feel about any of it as money is necessary to some extent to run a church.


Debbie said...

I've been pre-reading one of ds's books for this coming year, and it addresses many of the core issues we have with money. The book is Money, Possessions, and Eternity, by Randy Alcorn. It's helping to refocus my thinking.