This article is part of the Lending Club Debtbuster Challenge. I have written two other in the series: “Debt Help – The Lending Club DebtBuster Challenge” and “Debt Consolidation – It Can Work.”

How is debt slavery?

Don’t let anyone fool you… no debt is good. Sure, some debt is better than other debt… but no debt is actually “good.”

Although there are always exceptions to the rule, typically “bad debt” refers to any high interest consumer debt (like credit cards) while “better debt” alludes to low interest debt (like 1st mortgages and student loans.) Whether bad or better, debt is bondage and it presumes upon our future ability to earn.

Let’s examine 3 trust worthy sources to prove the point, then mull over a few ways out. How is debt slavery?

1. The bible tells us so…

While the bible does not equate debt to sin, is does equate debt to slavery.

“The rich ruleth over the poor, and the borrower is servant to the lender.” – Proverbs 22:7

Now let’s apply Proverbs 22:7 to a modern context:

Bankers charge us interest to borrow their money. We labor for the better part of our lives to repay the bankers.

Sounds like debt slavery to me.

2. Common sense tells us so…

Would you rather have debt or be debt free? And therein lies our common sense answer. 🙂

Yes… it is possible to earn more in interest on our investments than we pay in interest on our debts, but it’s risky at best. Getting rid of debt guarantees us a rate of return equal to the interest rate of the debt. While in debt, no investment can guarantee you specific and consistent returns better than eliminating the debt itself.

Ask yourself this question, “If you were debt free… would you continue to work full-time at your current job?” If your answer was even partially no, then you are likely in some form of debt slavery.

Our grandparents knew the dangers of debt slavery… why don’t we?

3. Mathematics tell us so…

If we were to consider neither of the previous points, we can always turn to the concrete wisdom of mathematics.

[Borrowing + interest = more debt] [income – more debt = less savings & less investing] [more debt + less savings + less investing = more labor & less giving]

The less money we borrow the less interest we pay to others, the more we can save, the more we can invest, the more our money pays us, which ultimately translates into less necessary labor and a greater ability to give.

I trust the bible, common sense, and mathematics. What do you trust?

Ways out of debt slavery

1. Sacrifice and repay

Quit acting like you deserve to go out to eat 3 – 5 times per week and get a clue. You’re not alone, me and the misses spent nearly $6,000 dining out in 2008 and thought it was totally normal… our brains were in debt slavery! As a result of this mindset we grew complacent toward our fiscal health and mathematics caught up to us. Our biggest problem wasn’t massive bouts of irresponsible spending but rather a plain old fashioned lack of self-discipline. Now it is time to sacrifice and repay.

2. Consolidate, sacrifice, and repay

Sometimes debt consolidation makes perfect sense, it did for us. If your goal is simply to shift debt around, then you are approaching debt consolidation inappropriately. The healthy purpose of debt consolidation is to combine several higher interest debts into one lower interest loan to be repaid on a graduated scale.

I advise you steer clear of debt consolidation service companies and recommend instead negotiating you own settlements and securing a debt consolidation loan through Lending Club. We used LC to consolidate debt which saved us $500 and a bunch of stamps! 🙂

Use this calculator to help determine if personal debt consolidation is right for your situation.

3. Bankruptcy

“If ye have faith as a grain of mustard seed, ye shall say unto this mountain, Remove hence to yonder place; and it shall remove; and nothing shall be impossible unto you.” – Matthew 17:20b

Should you file? I advise against it at all costs and beg you to turn to God instead. Although I do not presume to know the will of God, I do know that he does not desire his children be in debt slavery. In the scriptures Jesus healed people according to their faith and belief in his ability to do so (Matthew 9:27-30) and likewise will help us according to his will and our belief.

If faith in God is not for you then please make sure to consult your attorney and/or accountant to determine if the last ditch effort of bankruptcy is your only viable alternative remaining.

Are you in debt slavery?

What is your plan for getting out?

photo credit to Doug Naugle