Lesson 8

Repay Debts

Regarding debt, you can be:


The dangers of being casual with debt include:

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Become enslaved to the lender.
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Miss out on Kingdom giving opportunities.
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Never own a home.
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Is Borrowing Bad?

When you save money, you sacrifice your options today in order to have more options tomorrow.

Debt is the opposite: you sacrifice your options tomorrow in order to have more options today.

Is debt this morally wrong?

The Bible is clear that a lender should always be careful to never prey on the financially vulnerable and to protect people over property claims (Exodus 22:25, Deuteronomy 23:19-20, Luke 6:34-35, Matthew 5:42).

While a few verses hint that borrowing is dangerous to the borrower (Proverbs 22:7, Romans 13:8, Proverbs 22:26-27), there are many more verses that instruct lenders in the proper way to lend money without prohibiting its practice. Jesus’ words:

“Give to him who asks of you, and do not turn away from him who wants to borrow from you.”  Matthew 5:42, ESV

So, is borrowing morally wrong?  No.

Is borrowing wise?      IT DEPENDS

Very important to ask the question:

What are you buying with the borrowed money?

Depreciating Asset

Appreciating Asset

Debt on Depreciating Asset

A depreciating asset is something that needs to be replaced (i.e., the asset depreciates). 

People often borrow to get these depreciating assets:

Because depreciating assets need to be replaced, you must begin to save to replace them the moment you buy them.

For example, the moment you buy a car, you should start saving to replace that car.

It is unwise to buy something with debt that you need to replace since it inhibits you from saving to replace it.

For example, using debt to buy a car means that you will have to both pay the loan back and pay lots of interest. This payment will eliminate your ability to save.


This locks you into a cycle of debt.

  • The high interest levels help ensure that you will go deeper into the debt since debt grows exponentially.
  • Any unexpected emergency will cause you to sink even deeper, since you will keep needing to replace your car, your phone, your clothing…pushing you further into debt.

Debt on Appreciating Asset

An appreciating asset is something that is expected to grow in value over time.

People often borrow to get these appreciating assets:

Unlike borrowing on a depreciating asset, if the asset is reasonably expected to grow over time, the growth of the asset will likely match the growth of the interest payment – leaving you out of a vicious cycle of debt.

This type of debt should still be highly feared.

  • Still beholden upon another.
  • Having debt means having less options, as compared to being debt-free.
  • If you do not pay your payment, you trash your credit.
  • The asset may depreciate, which would put you in a bad place if an emergency occurs.

Make sure asset is reasonably expected to grow over 10-year period.

  • If you buy real estate at peak prices, they will most likely go down over time.
  • If you pursue a degree in art using a $100,000 school loan, your salary out of college will most likely not grow enough to keep up with the interest payments.

Repaying Government School Loans


  • 10-Year fixed payment.
  • Lowest interest paid, highest monthly payment.
  • May also choose graduated repayment where payments begin low and then increase over time.


  • 25-Year repayment.
  • Fixed or graduated options.
  • Minimum $30,000 debt.


  • Must qualify (student payments >10% of student income).
  • Loan payment = 10%* income, with a cap on total payment.
  • After 20 years, remaining debt is forgiven. Forgiven debt is included as taxable income in the year it is forgiven.
  • No repaying loan early.


  • Payment equals 10% of income with no cap.
  • Any remaining debt is forgiven after 20 years (undergrad) or 25 years (grad) of payments. Forgiven debt is included as taxable income in the year it is forgiven.
  • No repaying loan early.


  • If you work for a school, church, government, or other non-profit.
  • Make 120 on-time, full, scheduled monthly payments under either an IBR, PAYE, or REPAYE repayment plan.
  • All debt is then forgiven after 120 payments. Forgiven debt is not included as taxable income.
  • Ask loan servicer whether your non-profit qualifies.

Repay Debts Video

Download PDF Worksheet

Activity: Make Debt Repay Plan

How Much Debt?

Add up all of your debt:

  1. Non-government debt will be listed in your credit report:
  2. Government school loan debt will be listed here:

Plan for Student Loans

Repayment Ability

  • What is your repayment ability?
    • Manageable
    • Challenging
    • Complex
  • Consider stopping any further debt if you identified as challenging or complex.


What role do banks and saving have in our money lives? Can we still have a healthy outlet while also saving money?

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