The Debt-Free Church

"The borrower is the slave of the lender." - Proverbs 22:7b (ESV)

What a powerful statement about debt. I imagine that when the writer of this proverb penned it, folks shouted out, "HERE'S YOUR SIGN!" But, judging by the number of folks in financial trouble, and businesses either crumbling or looking for a government bailout, it's pretty obvious that most people don't buy into this obvious statement.

Anyone who has ever been in debt realizes pretty quickly that they are enslaved to the lender. Miss a monthly payment and the phone calls begin. Miss a handful of payments, and the collectors call making their threats. Miss a few more, and the bank will be on your door with a notice of foreclosure. Get the picture?

Once we head down the path of building debt, we effectively decrease our ability to live freely. What was once our free choice to live how we wanted is replace with bills, stress and uncertainty. Freedom disappears. In its place is regret and worry. We can no longer spend freely. We have to be sure the bank gets it's share before we can have fun. Friends, that's just another way of saying, "slavery."

Now, let me unpack this one step more. The church that has debt is crippled and a slave to someone who doesn't really care about the church's ministry.

I was talking recently with a pastor friend of mine about his church. They're making monthly payments to a bank for the construction of their building. So far, not too bad. Interest rates lately have been pretty low. What caught my attention was when he said his church had money sitting in a rainy day fund and a building fund, but none of that money had gone toward the building debt.

I nearly fell out of my seat. To think a church might pass up on the opportunity to lower it's indebtedness, but was unwilling to do so.

Let's run some hypothetical numbers. At the time of my writing, bankrate.com lists the current interest rate for a 30-year fixed mortgage at 5.42%. For the sake of argument, we'll use this for our construction loan, since most churches will use the property as collateral. Let's take out a $300,000 loan for our project. In 30-years, you will have made 360 payments of nearly $1,700 each month. The really staggering figure is that your the total amount you'll have paid is $607,809.60 with $307,809.60 being interest.

So, you'll waste more than the amount of the project just on debt interest. that is $307,809.60 that will NEVER be used to foster spiritual growth among children. $307,809.60 that will NEVER be used to feed and clothe the poor. $307,809.60 that will NEVER be used to send to missionaries for new churches. $307,809.60 that can't be used to fix up your building 30-years from now. That $307,809.60 will be gone forever, and never be used to spread the Gospel.

That's not a very wise use of God's money, but unfortunately, it's an all too common reality in churches today.

Now, let's twist this tale around a little. Instead of sending that $1,700 each month to the lender, let's invest it in solid mutual funds. According to Dave Ramsey, the typical healthy mutual fund will earn 12% interest annually over a long period of time. (Sure there are down years, but the up years balance it out.) At the end of 30 years, our $1,700 investment becomes $6,061,967.01, with $5,448,267.01 of that coming in the form of interest.

That's an incredible amount of money available for ministry purposes. That's an incredible amount of freedom a church will have to help people, invest in the community, start new churches, make repairs, and just flat out give away to other organizations.

I think it's pretty easy to see that he church that has debt while sitting on building and contingency funds that could pay part or all the debt is just plain stupid. Those aren't easy words to swallow, but the proof is in scripture, and in running the numbers.

Additionally, I believe that the church who relies on their banker to get things done is showing a lack of faith in God's ability to get things done. Yeah, that one stings a little, but again, the truth is in the scripture. The borrower is the slave of the lender.

So, what's a church to do if they really need the new building today? I'd suggest coming up with alternatives while you build up the finances to tackle the expansion. Go to multiple services. Rent other facilities, and begin video churches. Plant new churches out of your congregation. There are lots of option, and none really require debt.

But, what if you already have that loan? I like Dave Ramsey's advice of pouring all your extra money, wherever you can find it, into paying off that debt as soon as possible. The freedom from that thing will be worth it in the long run.

What are your thoughts? I'd love to hear them.