Among Christian families I know, there is a common theme among those who wish to talk to me about self-sufficiency. One of the first lines out of their mouths is: “We’d like to get out of debt.”
My question is always: “What does that mean?”
There is no excuse for consumer debt in the form of credit cards used for conveniences and luxury goods. We must all keep out of that kind of debt, for sure.
Yet, debt in the form of borrowed capital that is put to work on projects or investments that will yield significantly greater profit than the interest they demand of us is one simple means by which wise and industrious men increase their wealth. In my planning, I call loan interest “opportunity fees”.
The desire to avoid this kind of debt is owed more to laziness than prudence. Borrowing money is a risk, but a good man cannot live without taking risks. The risk of borrowing places pressure on the man’s work, which pressure an industrious man is motivated by to work smart and achieve the objectives of his business plans. That pressure is an essential part of man’s daily experience, and in that pressure he learns wisdom and gains wealth.
Educational loans are worthy of discussion because the average American college graduate starts his/her professional life with an average of $30,000 in debt. Now, if the degree program paid for by that debt is an important part of a wise business plan for the student’s life, then it is likely a good investment (risk), especially because the interest rate will be low. However, if the student is in college trying to “discern” God’s will for his life, with the student loan meter running, he’s only going to have one option anyway: get to work and pay his student loans. Thus, student loans can be good if they are part of a good plan, but otherwise are likely a foolish risk/expense taken.
Rather, therefore, than saying that our goal is to “Get out of debt.” (which isn’t necessarily smart), we should say, “Our goal is to live virtuously.” Virtue does not consist in a timid, false idea of “prudence”, but in a courageous and true prudence that is joined always to temperance and justice.