Borrowing & Lending
Tom Shrader examines the spiritual and practical dangers of borrowing money, emphasizing that debt mortgages the future for present desires and enslaves the borrower to the lender. He challenges listeners to examine their motivations for borrowing, distinguishing between casual longings (creature comforts), critical longings (relationships), and crucial longings (only satisfied by God). Shrader advocates for delayed gratification and debt-free living as pathways to spiritual and financial freedom.
“I don't want to feel like a millionaire, I want to be a millionaire.”
— Tom Shrader
Series: Financial Foundations
Recorded: February 09, 2006
Duration: 39 min
Themes: stewardship, debt, freedom, contentment, wisdom, sacrifice, discipline, priorities, struggling with debt, financial stress, young adult, newly married, financial decisions, parent, facing temptation, seeking freedom
Scripture: Proverbs 22:7, Proverbs 27:12, Luke 12, Genesis 1, 2 Timothy 2:4, 1 John 5:21
Theological Themes: biblical stewardship, financial discipleship, kingdom priorities, spiritual bondage, godly contentment, christian liberty, biblical wisdom, sanctification
Full Transcript
It's week three of what is an eight-week series titled Financial Foundations. Obviously, we're going to talk about money, but the principles are so much bigger than just money. Sandy asked me the other day, how's the series going? I love this series because each week there's this one gigantic, huge takeaway.
Week one established that we are stewards, not owners. That revolutionizes my whole life. I reach into my pocket, pull this stuff out, and realize this is not my money. It's God's money that He's entrusted to me. What makes this complicated is that He transfers possession, but not ownership. In every aspect of my life—my time, my energy, my effort, my money, my resources—God transfers possession to me, but not ownership. Therefore, I have to figure out what He wants me to do as I manage the resources He gives me.
Stewardship and Security
Last week, we looked at savings and security. We examined Luke 12, where Jesus tells a parable. Depending upon how you count and whether some are duplicates, Jesus tells 36 to 38 parables. When Jesus wanted to make an extra point, He would tell a story. Of those parables, 16 of them deal with stuff. 288 verses in the Gospels deal with stuff. More than 500 verses in the Bible address prayer, less than 500 verses on faith, but over 2,000 verses in Scripture on stuff. It's not that God's obsessed with money, but He knows you are.
When we enter into this discussion, it's not nuts and bolts about money. It's a spiritual indicator of where I am—how I spend my money, how I earn my money. As Jesus tells the parable in Luke 12, what He's saying to you is that even when you have stuff, life is not about the money.
Lending: A Word of Caution
Today we look at borrowing and lending. Let me deal with the lending part first, because I'm going to spend essentially no time on it. We're not talking about corporate lenders—if you're Bank of America or similar, we're not talking about that. We're talking about you and me as individuals needing to be careful as we engage in lending. We need to be careful why we're involved in that.
When somebody comes to me for help and says a bank won't loan to them, there's a reason. When you move into that lender role, you're assuming that same reason. When my daughters got engaged, I met with each of their fiancés, now husbands, for about a year and a half, every Friday morning. Then I met for about another year after they were married.
One of the points I made to these guys was—when I said this yesterday out loud, it sounds terrible—once you take these girls, I don't want them back. I don't want them back. I'm not here to bail you out. If you can't support them, don't marry them. I remember Tyler. He came in, and I could tell he was standing right in the kitchen. He said, "Listen, I know you're worried about this. I've worked out a budget." He had one page to demonstrate how he and Haley could live on $17,000 a year or whatever.
I said, "Tyler, it doesn't matter what's on that page, because you're going to make it work somehow. It's like a budget—I can get to zero balance just by cutting out food and water." But I told him, "I'm not here. You're not marrying me. You're marrying them. You're saying you're man enough to support them. Don't be coming to me." I'm proud to say over the years, I haven't changed my position on that, and they haven't come. They probably wouldn't at this point. I don't want to fill that role. I don't want to be their banker.
The Heart of Borrowing
I want to talk about the borrower part. That's the thing that really comes into play. I first taught this series, or a version of it, in 1990. I've taught this in up cycles and in down cycles. These principles are timeless, and they hold true.
Borrowing, number one on your outline: You will be mortgaging the future for the present. Charles Lamb once observed, "The human species, according to the best theory I can form of it, is comprised of two distinct races: those who borrow and those who lend, those who earn interest and those who pay interest."
Proverbs 27:12 says, "A sensible man watches for problems ahead and prepares to meet them. The simpleton never looks and suffers the consequence." In the book of Proverbs, there's a contrast we see over and over again between the wise and the fool. A wise man—it's not that I have a crystal ball—but a wise man looks to the future. You know certain things are in place.
A Practical Example
Here you go—I'm not going to ask you to raise your hands. How many of you have a car? My guess would be everybody. The second question: How many of you would say that car is a necessity? We don't have light rail out in Gilbert yet, but until it gets there, I'm going to put down car as a necessity. I'm sure you can Uber and walk and figure your way out, but for sake of our illustration, a car is a necessity.
How many of you think that the car you have right now, which is a necessity, is going to wear out? We still have everybody's hands up. Here's where we lose some. How many of you regularly set aside money to buy the car that you're acknowledging as a necessity and is going to wear out? A lot of hands go down at that point.
Think what I'm saying. I'm either saying I'm very cash rich, or I've programmed into my future borrowing money for a depreciating asset. Proverbs 27:12: "A sensible man watches for problems."
I know this is coming. When I was a boy, we didn't have DVRs. We only had, when I was a real little boy, two TV stations, NBC and CBS. The NBC local affiliate, from 4:30 to 5:00, right before the local news, would block out time for local programming. Ours were cartoons.
We had a guy—we were at Davenport, Iowa, on the river—so our cartoon guy was Captain Ernie, and he had a riverboat. He showed cartoons. I'd race home every day. There was a cartoon that was my favorite, and there was a character in the cartoon who was my favorite. I didn't fully understand what he was saying. I just thought it was funny. Here's what he would say: "I'll gladly pay you Tuesday for a hamburger today." I don't know why that just struck me as funny. Now grown up, I see what he's saying. He represents the basis, in some way, of our whole economy: I'll gladly pay you sometime for this thing today.
Defining Debt
Let me give you my definition of debt. It's not Harvard—it's my definition. It's an obligation to repay the money we borrow to acquire possessions or experiences for which funds are not available, but credit is. So it's an obligation to repay the money we borrow to acquire a possession or an experience. We typically think possessions, but vacation, school—for which there's not the cash, but there is the credit. I'll gladly pay you Tuesday for a hamburger today.
American Express used to run an ad and the tagline was this: "It's making you feel like a millionaire." I don't want to feel like a millionaire—I want to be a millionaire. In a way, cut me slack now, debt allows me to pretend to be something I'm really not. I can borrow the money to drive—and you fill in the blank because the minute I put a car in it, be the car you drive and you'll think I'm after you, I'm not. It allows you to pretend to be a whatever driver when in fact, you really don't have the resources for it—you have the borrowing capacity for it. I can acquire stuff, I can get stuff that I never otherwise could possibly afford.
The Challenge of Delayed Gratification
There is this phrase that has been at the hallmark of my—and I'm going to use myself today a couple of times as an illustration, and I'm reluctant to do it because I look very good in these illustrations and I don't want to do that. But at the core of my financial approach for a long time has been the phrase: pursue delayed gratification. That doesn't sell in the world we're in right now. It doesn't even sell to humanity. I want what I want when I want it.
Yesterday, I was home and knocking the door and I look out and it's Haley, and so wherever Haley's by herself, it means that she's got the car there and the kids are in it. So it's Harmony's birthday was the day before yesterday. So Harmony's there and Lucy's there and Yale's there. Yale had just written a paper about a snow monster named Tom at school. So he got credit for that and Brayden's there.
So I go out and Harmony said, they were at the gym, and Harmony said, "A girl bited me today" and she had, I mean, it was incredible. She had this girl and he said, "Did you hit her? Did you knock her in the head?" "No, you don't knock her in the head." And this girl had bited her. That was her way of saying it. That's her past tense, had bited her today. She had something the girl wanted and back and forth. Now the girl's on probation. This four-year-old girl's on probation at the gym. So they're all trying to figure out what probation is and they're solving that. Well, from the time you go, "I want what you have and I'll even bite you for it," right? Pursue delayed gratification. It's contrary to how we fit. We don't think that way. And it seems to me, since I was a kid, that's accelerated even more.
A Christmas Bike Story
Every day I listen to at least one Christmas song. I don't know, I still do it every day. Can you think of a kid growing up, as a kid growing up, can you think of a significant Christmas in your life, something you got? I remember the year I got a bike. I wanted it. It was right about this time of year. We were coming into summer and I didn't have a bike. I went to my dad and I said, "I want a bike." And he said, "Well, maybe you'll get one at Christmas." And I'm going, it's March. We haven't even started baseball season yet. "Well, maybe you'll get one at Christmas."
So we waited nine months. My mom could add another baby. We waited nine months and I got a bike. Then I got a green one. I wanted a blue one. I remember on Christmas day, snow, ice, sleet, wind blowing, riding that bike down 16th street. Do you know any kid today who's going to say, "I want a bike," and the parent's going to say, "Maybe you'll get one for Christmas"? I mean, they're going, "You'll probably get one for Easter." "Oh honey, that's weeks away." "You'll get, well, it's International House of Pancake day next week. Maybe you'll get it for that." Pursue delayed gratification. Well, now I grow up and I now have the ability to borrow. I end up in trouble.
Understanding Our Motivations
I'm going to give you about five minutes here. This is a huge point. One of the things that you want to unpack are motivations. Why does somebody do what they do? I had a chance yesterday, I didn't know exactly what I was doing, to speak to the athletic department, the coaches at Arizona Christian University. We were talking about intrinsic motivation versus extrinsic. So you can get the kid to the weight room on Monday, Wednesday, Friday, when he knows you're going to be there. But how do you get them there on Tuesday and Thursday when you aren't there? How do you change a heart? What's going on in the heart?
So one author kind of dissects this and talks about longings, yearnings, urging, and he puts them in three categories. This is really, really, really big. There's three types of longings. Number one are casual longings. Casual longing is something that can be satisfied with, I'm going to say, creature comfort. I am on my normal Thursday schedule.
At 5:40, I'm at Circle K. I go in, I get my coffee, I get my gas, I get the car, I drive up. I love to drive. I love to drive through South Phoenix. I drive down by where the Valley Ho is. All those apartments down there, I keep waiting for the rat pack to walk out of them. They all look like, here comes Dean Martin and Frank Sinatra and Sammy Davis Jr. It's so cool down there.
I've got this way I drive up and I've got all this. Well, part of it is about now I get hungry. So I'm going to meet Jamie today for breakfast and I'll get a couple of scrambled eggs and a bagel. And this casual hungry longing will be gone for a while. I'll have dinner tonight. We're going to the Hale Theater, love that. So you have casual longings.
Three Types of Longings
The second kind of longings are critical longings. Those are longings that are met with a relationship. So if I go to Genesis 1, God starts creating and He creates and He says, it is good, it is good, it is good, it is good, it's good, it is good, it is good. It's not good for man to be alone. I have these critical longings that are met through relationships, friendships, spouse.
There's a third type of longing. It's a crucial longing and it can only be satisfied through a relationship with God. Now, here's where it gets crazy. When I try to take that crucial longing that can only be satisfied with God, and try to make it and satisfy it with a person, place or thing other than Him. So here's why people go from guy to guy to guy, girl to girl to girl, house to house to house, project to project to project, Calloways to Pings to Titleists, whatever it is.
Sandy and I had been married, I think it's 44 months. Now I have to be really careful how I say this and I haven't found a way to say it that doesn't sound condemning of me, but I'd be really careful. Sandy in that relationship, and I'm looking at strictly from my perspective now, Sandy satisfies a need that I have. I don't mean that that sounds so self absorbed, but I'm just saying there's a critical need for relationship and she meets it. Where this becomes problematic is if I look to Sandy to solve that crucial longing that only God can.
The Black Hole of the Heart
So my heart is essentially a black hole that will absorb any person, place or thing I put in it. I'll never get enough stuff. I'll never win enough trophies. I'll never get enough championships. I'll never close enough deals. There'll never be enough girls. There'll never be enough guys. There'll never be enough cars. There'll never be enough houses. There'll never be enough kids.
Whatever that is, I don't know if I did that well. Do you see that point? That explains this emptiness as somebody sits down and goes, this doesn't make sense. I achieved everything I wanted to achieve and yet I'm empty because you have this crucial longing that's filled with a vibrant relationship with God through Christ, and you're trying to meet it with a person, place, or thing other than Jesus. And it's going to result in goofy, bizarre behavior.
The Balance Beam Living Room
When we were married, when we were married and we bought a house, our first house, we lived in the house 22 years. And we had a big living room. We walked in the house and it was a big living room. I don't know how big. I'm going to say like a third of this room. It was a big room. And the only piece of furniture in it was a balance beam for the girls. It was only about this far off the floor so they couldn't hurt themselves. But the girls spent hours doing cartwheels, handstands, walking, routines on that balance beam.
I was a little self-conscious when people would come to visit us because you walked in our house and the first thing you saw was a balance beam. And it seemed every time I explained the same story. But here's what I said. We don't have any furniture in this room. Here's why. We don't have money for it. We could borrow it. I could go and get a furniture and a living room set today and not have any interest payments until 2019. I could borrow it, but I didn't have the money to pay that.
And to this day, when the girls talk about our house, the thing they talk about is the balance beam in the living room. Now, I know I watched my friends who would say I'm not going to do that. I'm going to put living room furniture in there. There's nothing wrong with living room furniture. But you're borrowing money to do that.
Granite and Stainless Steel Madness
I watch a lot of television. And there's two channels I watch which are really odd. I watch HGTV and I watch The Cooking Channel. And what's odd about them is I don't do anything around the house. I don't fix anything. I don't have anything in it. But I'm fascinated by House Hunters.
So I'll watch House Hunters. I am stunned. It's typical. They're buying a house. They'll come in. Oh, this is perfect. Look at these views. These views are amazing. And they get to the kitchen. They'll go, oh, look at it. Here's what? What do they always say? Granite and stainless steel. Now, oops, you took your hand away. Look at that. But that's a different thing. There's stainless steel. There's granite. Oh, and all these bedrooms. Oh, my God, this is perfect.
And they get to the backyard and they'll go, well, this isn't big enough for our dog. Well, how much, you only need a plot about this big to bury him, I think, right? I mean, I don't know how much land. So I'm sorry, Rebecca. But I mean, and I watch, I watch decision after decision after decision. I'm going, you're insane. You're going to put that yard on a 30-year mortgage?
Now, I'm not anti-dog. I'm not overtly anti-dog. I'm just saying, think about it. It's like saying, we have to have an extra bedroom for people to come and visit. Well, how often do they come and visit? Well, they come a week a year. So you're going to get that bedroom and put it on a 30-year mortgage and you're going to furnish it and air condition it and insure it so they can come once a year and after three days, you hate them and they hate you. They'd rather be at
The Power of Small Financial Decisions
Think about this process. I deal with a lot of young people who are constantly whining to me that they can't get ahead. "It was easy when you were young," they say, which is kind of interesting. "But for us to save money is impossible."
So I went to a gal in our church who is a money expert and I said, "Run some numbers for me. If I can get a guy—double this if it's a couple—to take a $4 Starbucks, which is low, and not have it during the week, fifty weeks a year, so you can have it on the weekends and you can have it on vacation, and you took that money and invested it, what would happen?"
Here's what she sent back. Based on a drink of $4 a day, five days a week, fifty weeks a year, the average adult could save $1,000 a year by giving up the one drink. The future value of the money, $83.33 a month, invested over forty years, amounts to the following: At 5% return, it's $127,000. At a 7% return, it's $218,000. At a 10% return, it's $527,000. A half million dollars and you gave up a cup of coffee on the weekdays. But instead of giving that up, "I'm going to borrow and then I'm going to go to school and then I'm going to default."
The Compound Effect of Starting Early
Something else I found really interesting in terms of accumulating wealth. A person who contributes $1,000 a month from age 21 to 28—that's eight years, $8,000—will accumulate $427,000 by age 65 if he or she earns 10%. A person who waits eight years, starts at age 29, and continues to invest $1,000 a year from age 29 to 65—$37,000—will accumulate almost $100,000 less: $363,000.
I'm throwing a bunch of numbers at you to say this: I need to be careful when I'm borrowing.
Borrowing Creates Bondage
The second point: As the borrower, you become enslaved or subservient to the lender. Proverbs 22:7 says, "The rich rule over the poor. The borrower is a servant or a slave to the lender."
In the movie Wall Street, there was a great line that said this: "The problem with money is that it makes you do things you don't want to do." Paul writes to Timothy and says it this way: "The love of money is the root of all sorts of evil." When somebody says, "I'm self-employed" and you ask the question, "Could you walk away today and be done?" they answer, "No, I couldn't, because I still have this obligation." Well, you're enslaved to the lender.
Here's a stat I use all the time. I have no idea if it's true or how you prove it's true, but it's powerful in what it communicates: 90% of people who apply to go to the mission field are rejected in the first phase because of consumer debt. Think about that. You're a man or woman who said, "God's called me to the mission field. God's gifted me. I've heard it. I know I'm ready to go," but you can't because you've got to pay for this refrigerator, this car, this whatever it is.
Second Timothy 2:4 says, "No soldier in active duty entangles themselves in the affairs of everyday life." Here's what He's saying: that's what debt is. That's what borrowing is.
The Materialism Trap
I need to do the disclaimer: I'm not anti-borrowing. I'm not anti-money. Nor is Jesus. Jesus isn't anti-material, but He's anti-materialism. That's why this series builds. If you think stuff is going to bring you happiness, you're wrong. And most of it isn't going to go up in value.
Let's try to connect dots here. If I'm trying to meet that crucial longing through something I'm borrowing to buy, it isn't going to happen. What does that trip cost me when I borrow the money to go on the trip? It's the same thing you see all the time with school. It makes no sense in my mind to borrow $200,000 to go to college to get a job that pays $40,000 a year. How are you going to pay that back? You're not going to do it. You have a bigger collapse coming now on the college debt than you did on the housing debt. 50% of these college loans are now in default.
Everything at Risk
Here's where it gets ugly as I'm unpacking my heart: Debt is a bondage. You're giving up your freedom. Now I want to look at points three, four, and five and combine them.
When you borrow, you place everything at risk. Proverbs 22:27 says, "If you lack the means to repay, your very bed will be snatched from you." Number four: you've got to pay this back. And number five: you should be working toward being debt free.
I have a friend whose business is to repossess cars. He has a contract with General Motors Credit. Every time General Motors Credit starts a no-money-down push, he staffs up. You see it coming. He tells these stories about getting called from the police department. People are saying, "Somebody stole my car." "No, you didn't steal it. You're four months behind." What never occurred to me is that they jeopardize everything.
A Personal Decision That Changed Everything
You have to ask why. God saved me March 6, 1980—three days from today marks that anniversary. It was right in my career path when things for me were taking off pretty well. We were at a crucial time in our life. Nobody told me that, but I sensed it.
We had a house, and as I said, we ended up staying in it twenty-two years. I loved the house. But we started on Sundays going to model homes looking for decorating ideas—bad idea. And the more model homes we saw, what do you think happened? The more we wanted. The cooler the model home, the uglier our house got.
Finally one day, we're driving home, and I said to Susan, "We're done. We're not looking at any more model homes. We are staying in this house." I didn't know how significant that would be. She said, "It's like you took a hundred pounds off my shoulders"—all of that pressure.
The Power of Financial Freedom in Ministry
Don't feel condemned in this. I'm explaining to you my thought process, and here's exactly what it was. I knew I could give. I went to the bank one day, I don't know what the problem was, but I ended up at the bank. This guy is going through this house and our loan, and he said, "You know what, you can borrow twice as much as this easy. I can approve that today."
But I don't want that. I didn't know why, but here's what I knew. I knew God was doing something in my life. I didn't know what it was. I knew He was doing something. I didn't know how it was going to flesh out, but I knew this: that if I had debt, it was going to limit the response I could have.
So in 1988, Larry said, "Why don't you come to work with me, and what you'll do is what we're doing here, morning studies." I hesitate to say it, but to me it makes the point: in 1988 when I went to work for Larry, my salary was less than the taxes I paid the year before. And I've had one small raise since.
A Personal Testimony, Not Theory
Nobody's having a pity party for me. I'm not trying to make you feel uncomfortable or make you feel—I don't know how to—here's where this gets tough: you can't illustrate this stuff without talking about yourself. And I'm not trying to get you to go, "Isn't he terrific?" Though, if that's your conclusion, let it go then. I'm not trying to get you to say that.
I'm trying to say this isn't theory for me. This is real. I've watched it work. I couldn't do what God's done in the last 25 years. I couldn't do it if I had a bunch of debt. And my life's been rich and full. And my kids, I think, would say they've had a great life. All I'm trying to do is to get you to see this.
The Mortgage Trap: A Statistical Reality
Here's a stat I came across that puts things into perspective: the average person who goes into Social Security at age 65 has 23 years left on their mortgage. How can that be? I'm going to take you through it.
You're 28 years old, you buy a house, but you've got a name for this house. It's your starter home. So by very definition, I want you to understand, this is a jumping-off point. We had no intention of staying here or in something like it. So I get a 30-year mortgage.
Along comes the first kid or two, and now I need to move up. So now I'm 33, 34. Take another mortgage. So now I procreate. And God forbid we put two kids in one room. So each kid needs a room. So now I'm age 50, and I got another 30-year mortgage.
The Endless Cycle of Refinancing
Now my kids are ready for college. So the only resource I have, because I haven't been saving—Starbucks $4 a day, I haven't been doing that. Nobody told me. Nobody's going to save $4 a day. How stupid is that? So I don't have any money.
So now I come and refinance my house. Now, as a 58-year-old, I put a 30-year mortgage on a house, and I hit Social Security at age 65. I got 23 years left on this thing.
One of the things I try to tell people is: put a 30-year mortgage on that house, and then any house you buy after that, you only extend the mortgage to the extent of the term left on the original one. So if you got a house for five years, you go buy another house, you get a 25-year mortgage. So you're going to get out of this stuff.
Examining Our Hearts and Motivations
My whole point here is to stop and to go, "Why did I need that possession or experience? What's driving that?"
I met with a couple yesterday. I'm going to do a wedding. I haven't done a wedding—I've done one wedding in three years, and it was so funny. We're talking, and four times they said, "We're paying for this ourselves." So it was like, "Why are we going to have a cake?" "My friends will be baking it." She teaches home ec or whatever it is, house survival or whatever it is now. "Are we going to have a lot of flowers?" "Well, not a lot of flowers." "Are we going to have music?" "Yeah, but we're not going to have amplification because we're paying for it ourselves."
I think you get the point. When it comes to borrowing, you need to understand that you're mortgaging the future for the present, and you have to unpack your heart and ask, "Why is that so important?"
Guarding Against Idols
If you're looking for that experience or that possession to do something in your life only God can do, then whatever that is—this is the popular term now, it's not new—John ends his little letter, 1st John, I think it's chapter 5, I think verse 21: "Guard yourself against idols." What are those idols that come into my life? Is it comfort? Is it prestige?
We have a session coming up on investing, and I was telling Sandy the other day, there is a great tool in there to try to break down investment. So we'll take a look at that.
Anyway, I hope that's helpful. We'll pick up right there next week.
Father, thanks for these amazing truths. Thank You for allowing us to see our life as it really is. Reveal ourselves to ourselves. Help us understand how we make decisions. God, when we hear the term debt-free, it sounds like Mount Everest, so let us do it one step at a time. God, help us bring to our life a lifestyle that would glorify You. God, thank You for Jesus. We ask it in Christ's name, amen.