In hard times?
Q. I have a question about loaning money to family or friends. We have gone without in my family. I often say "no" to my children, and we are trying to pay off our mortgage so we can own our home in just a few years. But, family and friends have bought larger homes, boats, cell phones, and extra things like that. So what should we do when they come to us to borrow money? I find myself resenting the fact that we have tried to live within our means and they have not. Beyond tithing, what does God ask us to do?
This is an excellent question and one I'm sure many people can relate to. First of all, congratulations for living a sane life in a consumer-driven culture.
Our society has fed greed and materialism in unprecedented ways. I am sad to say that many in the Church are also caught up in this trap. For those who have tried to be frugal and sensible it has been a trying time.
A Credit Freeze
But, now we are living in a time when millions of people are losing their homes and are strapped for money. Many have chosen to live way beyond their means.
Predictably, they run into problems when they have unanticipated needs such as medical problems, a car or appliance that fails, and other things. Banks are hesitant to make new loans and home equity lines of credit are quickly disappearing. Credit has "freezed up" and that leaves people like you who are the only sources of lending left.
Biblical View of Lending
The Bible says a lot about money and lending. So let's look there for some advice.
No Co-Signing a Loan
One thing it advises is to never co-sign for a loan. Proverbs 22:16 says, "Don't agree to guarantee another person's debt or put up security for someone else. If you can't pay it, even your bed will be snatched from under you" (NLT).
Saving for the Future is Not Hoarding
Another thing Scripture makes clear is that we should save for the future. Proverbs 6:6-8 says, "Go to the ant, you sluggard - consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest" (NIV).
Proverbs 10:5 suggests that "He who gathers crops in summer is a wise son, but he who sleeps during harvest is a disgraceful son."
Finally, Proverbs 21:20 says that the wise person's home is full of provisions, foods and oil, but the foolish man consumes it all. (Notice the verse does not say the house is full of "stuff").
This should put to rest the mistaken assumption that storing up for the future is equivalent to "hoarding."
Providing for our own Families
Paul certainly makes it clear that families should provide for their own children and families. He say, "But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever" (1 Timothy 5:8).
Christians are to work and take care of their own. That may include widows and orphaned kids in our extended families - grandparents, aunts, uncles, cousins, etc.
Perhaps part of being a good steward of the resources God has given us is to be discriminating and cautious - taking it to God in prayer - when outsiders wish to borrow from us.
We know that we should not be late in paying our bills and we should never borrow more than we can pay back. Romans 13:8 says to "Let no debt remain outstanding…"
In fact, Proverbs 22:7 warns that the borrower is the lender's slave. So it isn't a good idea to take on much, if any, debt. This does not include borrowing to obtain a home in my opinion. The concept of private property is a Biblical concept although it may be more like leased land from God.
Luxurious Pursuits Led to Inflation Woes
Haggai says that the Israelites had "paneled their homes" and lived in luxury while the temple remained desolate. Therefore, they had "purses with holes" as poor economic conditions led to terrible inflation. Their money could not cover basic necessities (Haggai 1:4-7).
Knowing True Needs
Beyond tithing, it seems the bible is actually quite directive to us as far as what things we should do for others. There are numerous references to helping widows and orphans in their need. We are told to provide for "true needs."
James 2:15 says,
"If a brother or sister is without clothing and in need of daily food, and one of you says to them, 'Go in peace, be warmed and be filled,' and yet you do not give them what is necessary for their body, what use is that?" (NASB).
But, what are "true needs?"
The James reference above says that clothing and food are true needs. What is "necessary for their body" is a true need.
First Timothy 6:8 confirms that "food and covering" are true needs.
These "true needs" are a far cry from what we think are "needs" in American culture. So we can safely help family or friends with food and clothing, or perhaps help with paying a month's insurance for medical needs - without expecting anything in return. We can help true widows and orphans with rent or other necessary goods. These are kind, good biblical things to do.
But, if a family member comes to us for funds to buy new furniture, funds to pay for college, funds for a car, or even funds for some surplus medical needs, I don't think we should do that.
We can always say something like, "I'm terribly sorry but our funds are tied-up right now." (Retirement funds, funds for putting our children through college, funds to repair a car, etc. are actually "tied-up" if we have saved for that purpose anyway). Perhaps you can come up with something else we can say - please let us know.
The idea is not to be cruel, but to distinguish between life-saving necessities versus "wants."
The Ten Virgins
Although the parable of the "ten virgins" in Matthew 25:1-13 is not specifically for savers versus borrowers, the principle is similar. The wise virgins took oil with them for their lamps while the foolish had no oil. When the bridegroom came, then the foolish asked the wise for some of their oil. But, the prudent answered, "No, there will not be enough for us and you too - go instead to the dealers and buy some for yourselves" (v. 9).
If you do decide to lend substantial funds for which you desire repayment, then it is advisable to structure a secured note. Forms can be found in most office supply stores.
The note should be tied to the house or a car for repossession should the borrower default on the loan. Legal advice may be necessary in this case.
Furthermore, it is not much fun to carry out repossession in the case of family or friends. So it is probably wise to think carefully before making these kind of loans.
Remember that friendships and family relationships can be ruined through borrowing and lending practices. Many lifelong friendships have dissolved due to bad loans. Sadly, family relationships are ruined in such instances, too.
Honor God by Honoring Parents
Of course, we need to use common sense when deciding to whom we will give a loan. Caring for an aging parent is an absolute requirement in God's Word, for example. Not helping a parent isn't an option!
If that parent is an alcoholic or a drug addict, supplying for their needs such as food, clothing, and shelter can be provided rather than cash. Regardless, we honor God when we honor parents - no matter what they have done in the past.
Therefore, following biblical principles after much prayer is the wise thing to do. In summary biblical principles for our finances are to:
Tithe (Mal. 3:10).
Try not to borrow (Prov. 22:7).
Save for the future (Prov. 6:6).
Provide for true needs (food&clothing, 1 Jn 3:17)).
Pay our debts (Ro. 13:8).
Be content with what we have (Heb. 13:5).