Should I Cosign For a Loan?

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A friend or family member needs a loan, but their credit score is not high enough (due to terrible or no credit history, or massive credit card debt), or they don’t have a large enough down payment or some other reason. So they come to you and ask you to be a cosigner on their loan.

 

What Does It Mean To Be A Cosigner?

To be a  “cosigner”, simply means that you agree to assume the responsibility of another person’s debt if they are unable to pay it. For example, if you are a cosigner on your brother’s $20k car loan, you have now agreed to pay the bank back that $20k (or whatever is left at the time of default) if your brother is not able to pay it back.

Many people will face this dilemma at one point in their lives. In fact, many people will actually cosign for loans even when they do not feel comfortable doing it. It is usually due to not wanting to be the bad guy, or is sometimes a genuine attempt to help someone. This is often viewed as a way to help out someone in need – such as a responsible, young person who just needs a chance to display or prove their credit worthiness; or a way to assist your child at the beginning of their “independent life”. But is this a wise thing to do?

What Does The Bible Say About Being A Cosigner?

Proverbs 17:18 tells us that,

A man lacking in sense pledges and becomes guarantor in the presence of his neighbor.

Right away we see that the bible describes one who becomes a cosigner on a loan as “senseless“! We can see that it is not a wise thing to make a pledge based on someone else’s ability to pay back a loan.

We also see such council in Proverbs 22:26,

Do not be among those who give pledges, among those who become guarantors for debts.

Not only are we instructed not to cosign for a loan, but we are also shown some of the dangers of doing so… Proverbs 11:15 tells us that:

He who is a guarantor for a stranger will surely suffer for it, but he who hates being a guarantor is secure.

So, we are actually told that we will “surely suffer” if we decide to pledge ourselves for another person’s debt; and that one way to stay secure is to “hate being a guarantor“! Those are very strong words to describe what has become such a common practice today.

Also in Proverbs 20:16 we find these words,

Take his garment when he becomes surety for a stranger; and for foreigners, hold him in pledge.

It was common to pledge a garment as security for a loan, but – according to Exodus 22:26-27 and Deuteronomy 24:10-13 – that garment had to be returned by sundown.

The idea here is that one who is foolish enough to pledge himself for the debt of a stranger will most likely never be paid back; so the one making the loan should demand the cosigner’s garment as security for the loan.

This shows the senseless and unpredictable nature of pledging your possessions or your life based on another person’s ability or willingness to pay their debts.

Also, one question that must be asked is, “Why does this person need a cosigner?”. The most basic reason is that their bank does not believe that they will pay back the loan.

They use their own experience, a few calculations and the potential borrower’s history with loans (usually expressed on their credit report) to make their decision regarding the loan.

When they request a cosigner they are basically saying, “We don’t trust this person to be able to pay us back, but if YOU are willing to take all the risk then we will give him the money!

What Should You Do If You Have Already Become A Cosigner?

Proverbs 6:1-5 gives us additional instruction. This time however, the instruction is given to one who has already pledged himself on behalf of someone else:
My son, if you have become surety for your neighbor, have given a pledge for a stranger
If you have been snared with the words of your mouth, have been caught with the words of your mouth
Do this then, my son, and deliver yourself; Since you have come into the hand of your neighbor; go, humble yourself, and importune your neighbor.
Give no sleep to your eyes, nor slumber to your eyelids;
Deliver yourself like a gazelle from the hunter’s hand and like a bird from the hand of the fowler.

As we can see from the strong language in this passage, it is a serious matter to pledge yourself on behalf of another. This is because you have essentially given up control of something that God has given to you as a stewardship, and have become “snared” by your pledge.

This situation is so serious that you must do everything that you can to free yourself from this arrangement and gain back control of your God-given resources. Look at how strong the language is here; you are told to “deliver yourself” and not to sleep until you have freed yourself (see Proverbs 22:7)! You are to act as a gazelle  or bird that is about to lose their life to the hunter!

So, if you are in this situation, it should be your highest priority to free yourself from this before you “surely suffer” (Proverbs 11:15; cf. Genesis 43:9, Genesis 44:32-33).

What can you do instead if you want to help?

If you still want to help while obeying God’s word regarding cosigning, there are a few things that you still can do.

Give Them An Interest-Free Loan:

If you know the person is in need, this is one way to help them that will honor God. Proverbs 28:8 assures us that,

He who increases his wealth by interest and usury gathers it for him who is gracious to the poor.

According to Deuteronomy 23:19-20, it was against the law for an Israelite to charge interest to fellow Jews (of course, loans were only to be requested in times of extreme need and poverty – not to fund frivolous, sinful spending like we see today), but many violated this command. As we see here, giving someone in need a loan and not charging interest is a way that you can assist the one in need and please God.

Give them the money that they need.

Proverbs 19:17 tells us that,

One who is gracious to a poor man lends to the Lord, and He will repay him for his good deed.

If you are able, giving your money to one in need – and only expecting repayment from the Lord – is another way to assist a brother in need and honor God with your finances.

Final Thoughts:

As mentioned earlier, since the bible teaches that debt is slavery (Proverbs 22:7), borrowing should only be done when one has a basic need that cannot be met by their income. It was usually a short-term loan, and the Israelites were commanded to forgive all debt every seven years (see Deuteronomy 15:1-15).

Much of the borrowing that we see today represents a person’s desire to live above their means, and I do not believe that type of borrowing (or giving) is what God is speaking of. Hopefully, I will have a chance to address this in much detail in a future article.

So overall we see that God is completely against the idea of one becoming a cosigner for the debt of another, even if we are really seeking to be a blessing to someone in need. However, the bible does teach us other ways in which we can assist others.

I mentioned stewardship earlier. I realize that this may not be a term or concept that is familiar to many modern readers, but this is a concept that God expects us all to understand. A steward is one who manages another person’s property, finances or other affairs. Here are several articles that do a good job of describing the concept of stewardship:

I would love to hear your thoughts on cosigning – even better would be your experiences with it. If you have any questions on this or other concepts, please leave your comment below.

photo credit: 4PIZON

3 Ways to Honor the Lord with Your Wealth

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There is clear instruction to honor the Lord with your wealth in the scriptures.

In Proverbs 3:9-10 we find this command: “Honor the Lord from your wealth and from the first of all your produce; so your barns will be filled with plenty and your vats will overflow with new wine.”

Honor the Lord with Your Wealth

In our finances, we are expected to give our BEST and FIRST to God! God commanded the nation of Israel saying, “You shall bring the choice first fruits of your soil into the house of the Lord your God” (Exodus 23:19a) and when detailing the offerings that went toward supporting the priests He says, “You shall give him the first fruits of your grain, your new wine, and your oil, and the first shearing of your sheep” (Deuteronomy 18:4).

We are to honor the Lord with all that we have. How we behave with our finances does a lot to reveal our heart toward God. Jesus said, “…for where your treasure is, there your heart will be also“. ~ Matthew 6:21

How Do You Honor the Lord With Your Wealth?

How do we accomplish this?

We are exhorted to trust Him.

We are instructed in verse 5 of Proverbs 3 to “trust in the Lord with all [our] heart and do not lean on [our] own understanding”. Trusting God is the first step in honoring Him – this is true in salvation, finances and all other affairs of life. According to Romans 4:3 (quoting Genesis 15:6), this is what pleased God about Abraham.

Often times when we falter in our faith, we don’t realize it is due to unbelief, or in other words, a lack of trusting in God. When it comes to our finances, this can be seen by our dependence on money to ‘save’ us from trouble or blaming our lack of money on our troubles.

We have to remember that no matter what life may bring us, God is our source. He is the one who brings prosperity and opportunity to us, and as His children, He promises to supply our needs because He is a caring Father. Matthew 6:25-35

“For this reason I say to you, do not be worried about your life, as to what you will eat or what you will drink; nor for your body, as to what you will put on. Is not life more than food, and the body more than clothing? Look at the birds of the air, that they do not sow, nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not worth much more than they? And who of you by being worried can add a single hour to his life?

And why are you worried about clothing? Observe how the lilies of the field grow; they do not toil nor do they spin, yet I say to you that not even Solomon in all his glory clothed himself like one of these. But if God so clothes the grass of the field, which is alive today and tomorrow is thrown into the furnace, will He not much more clothe you? You of little faith! Do not worry then, saying, ‘What will we eat?’ or ‘What will we drink?’ or ‘What will we wear for clothing?’ For the Gentiles eagerly seek all these things; for your heavenly Father knows that you need all these things.

But seek first His kingdom and His righteousness, and all these things will be added to you. “So do not worry about tomorrow; for tomorrow will care for itself. Each day has enough trouble of its own.”

In times of doubt, we must cry out to the Lord as the man who needed Jesus’ help to heal his son in Mark 9:24  “I do believe; help my unbelief.”

We are also expected to be generous and ready to share.

Proverbs 11:24-29 tells us:

“There is one who scatters, and yet increases all the more, and there is one who withholds what is justly due, and yet it results only in want. The generous man will be prosperous, and he who waters will himself be watered. He who withholds grain, the people will curse him, but blessing will be on the head of him who sells it. He who diligently seeks good seeks favor, but he who seek evil, evil will come to him. He who trusts in his riches will fall, but the righteous will flourish like the green leaf. He who troubles his own house will inherit wind, and the foolish will be servant to the wise-hearted.”

Also in 1 Timothy 6:17-19, we find this instruction:

Instruct those who are rich in this present world not to be conceited or to fix their hope on the uncertainty of riches, but on God, who richly supplies us with all things to enjoy. Instruct them to do good, to be rich in good works, to be generous and ready to share, storing up for themselves the treasure of a good foundation for the future, so that they may take hold of that which is life indeed.

It is amazing to see this principle played out over and over again in our lives. If you are generous even when you have little, God seems to bless your finances to be able to do more than most who have more money than you.

We constantly hear and read about people who recovered from massive amounts of debt while staying faithful (and in many cases increasing) to giving. In fact, most respected financial advisers (many of whom do not believe God’s word) will tell their clients that giving has to be an integral part of their lives in order to be successful financially.

We should be fair in our dealings with others.

In verses Proverbs 3:27-28 we find the following instruction,

“Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, ‘Go, and come back, and tomorrow I will give it,’ when you have it with you.”

As believers, we are called to an even greater level of consideration as we contemplate Christ’s goodness towards us and His example. Philippians 2:3-4 states:

“Do nothing from selfishness or empty conceit, but with humility of mind regard one another as more important than yourselves; do not merely look out for your own personal interests, but also for the interests of others.”

So in doing all of these things we will begin to honor the Lord with our wealth; which, according to verse 10, will lead to God sustaining us, causing us to be prosperous (cf Luke 6:38, Matthew 6:33) and satisfied (Philippians 4:11-13)!

For more on developing a biblical view of wealth, see our previous article here: http://knsfinancial.com/2010/01/10/wealth-from-the-bible/

 

 

Photo for social media by Suphakit 73 @ FreeDigitalPhotos.net

Is It a Sin to be Rich? Find Out What The Bible Says

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Is it a sin to be rich? This is a tough question if you’re a Christian. Our faith tells us that God is to be our first love, that He provides for our needs and we’re to trust Him in all that we do. The world tells us that we need to strive to be the best that we can be in all that we do, and that includes finances.

When it comes to money, the world tells us that more is better—the more money we have the better protected we’ll be, the more opportunities we’ll have and even that the more we have the more we’ll have to share with others.

Truth be told, it’s hard to argue against the worldly compulsion to have money, and plenty of it. In fact the entire financial realm is based on the idea that money is something to be nurtured and grown. Look at all the articles and advertisements for retirement planning; they promise us millions of dollars for a secure retirement. I know all about the inflation thing, but from where I sit, having millions of dollars sitting in a retirement account looks a lot like being rich.

The pursuit of financial security itself seems more like a money chase than anything else.

Is It a Sin to be Rich

So here are the relevant questions: if we need a certain amount of money to achieve some level of security in life, how much money will be enough? Is it possible to carry the pursuit of financial security too far? Can the pursuit of “financial security” turn into—or mask—the quest for riches? And finally, is it a sin to be rich?

Is It a Sin to be Rich? Biblical Positions Against Riches

Most of us can easily cite passages that warn against wealth and its potential for sin. Proverbs deals a good bit on wealth and has a lot to say on the subject, both good and bad. Among the bad ones,

Riches do not profit in the day of wrath, but righteousness delivers from death.—Proverbs 11:4

He who trusts in his riches shall fall; but the righteous shall blossom like a branch.—Proverbs 11:28

From Jesus we have one of the most famous Biblical rebukes of wealth in Matthew 19:24:

”…it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.”

Perhaps scripture contains so many verses warning against riches precisely because we’ll be drawn to it—our sin nature virtually guarantees it.

Biblical Positions Favoring Riches

Less well known however is the fact that there are times where the Bible portrays wealth as a virtue, such as in Proverbs 10:15:

The rich man’s wealth is his strong city; the ruin of the poor is their poverty.

I could be interpreting this verse incorrectly, but it seems as if Solomon is according wealth to be the rich man’s reward—the very insulation we see money to be today.

Another example from Proverbs 19:4:

Wealth makes many friends; but the poor is separated from his neighbor.

Once again, Solomon seems to pointing out a benefit of wealth, that is “makes many friends”. This too appears like a reward for being rich.

Finally, in Matthew 27:57-60 we have the story of Joseph of Arimethea:

”As evening approached, there came a rich man from Arimathea, named Joseph, who had himself become a disciple of Jesus. Going to Pilate, he asked for Jesus’ body, and Pilate ordered that it be given to him. Joseph took the body, wrapped it in a clean linen cloth, and placed it in his own new tomb that he had cut out of the rock. He rolled a big stone in front of the entrance to the tomb and went away.”

Like many figures in the Bible, we know very little about Joseph of Arimethea—in fact, we know nothing about him other than that he was “a rich man” and he was from Arimethea. Yet this rich man did something that will exalt him forever—he provided for Jesus’ burial at a time when even his closest disciples had abandoned him for fear of their own lives.

Clearly not all rich people are outside of God’s love and there’s a message in there us all.

The Christian Conflict On Riches

There’s a notion in some quarters of the faith that we’re to swear off earthly riches and maybe even to live a life comparable to monks in monasteries. There is merit to this: if we aren’t participating in the pursuit of earthly riches we won’t be corrupted by them. But for the majority of us who feel that we need to be out in the mainstream of life to be the “salt and light” that Jesus called us to be, money IS a factor.

We do need a certain amount of money just to function in the world, and beyond that there is also the question of providing for our loved ones. Since the vast majority of us no longer grow our own food and barter hardly exists, we must earn money in order to survive in the world. But beyond basic necessities, we also need to educate our children, provide for our old age so we don’t become a burden to others, and to leave sufficient assets to our loved ones that they’ll have a fighting chance when we’re no longer around to take care of them.

Just exactly how much each of us needs depends on our individual circumstances, but there is a need for a certain amount of money—of riches—in order to accomplish those goals. To that extent, riches aren’t necessarily bad; they’re how we handle our responsibilities.

This Is A Complicated Subject—What Are Your Thoughts?

I don’t think there’s a right answer to the question, is it a sin to be rich. But the question is hardly irrelevant. There’s a line we can cross that can turn being rich into a sin, yet there is a certain level of wealth that we need just to get by in the world.

What do you think?

Is being rich a sin? Or is it only when we cross a line?

If so, where is that line? Is it being rich, or is it something about the pursuit of being rich?

Or is there a better question that I haven’t asked?

photo by pasotraspaso

Prosperity Gospel? We Should Know Better!

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Give your money to God, and He will return it many times; have you ever heard that message or some variation of it preached? Do you believe it? In many churches, that belief is close to being the eleventh commandment. It’s often implied as give God a dollar, and he will give you back ten.

That’s the prosperity gospel, and it’s preached in many TV ministries as well as more than a few local churches.

Feel free to disagree, but I think that this teaching if flawed on a number of fronts.

Prosperity Gospel

The “Return” On Giving Isn’t Usually Monetary

Malachi 3:10 is often cited as the source verse for the prosperity gospel. In it, God tells the Israelites to “test him” in the matter of tithes. The “reward” God provides for faithful tithing is widely interpreted by the believers in the prosperity gospel to be money, but is it? Let’s examine that assumption.

”Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the LORD Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.”—Malachi 3:10

Notice that there’s no promise of monetary reward. Instead, God promises to “throw open the floodgates of heaven and pour out so much blessing”. While a blessing can be financial, it’s actually a much broader word. Blessing can be any one of dozens of benefits, most of which having nothing to do with money.

It’s unquestionable that God can and does multiply our generosity, but not usually in ways that we think. He can, for example, use a $100 gift from one person to bring the Gospel of Jesus Christ to ten other people. Even though the giver never sees any financial gain as a result of his or her gift, that gift has nonetheless been multiplied.

In the Parable of the Sheep and Goats (Matthew 25:34-40), when Jesus commends the righteous, they aren’t even fully aware of the good work they have done: ”Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? The good work they did was done with no expectation of reward!

Personally, I believe that God does bless our giving, but not usually in the ways we think. It’s usually not monetary, and there’s certainly no mathematical return to it. Not ten-to-one, or any other type of ratio.

We Need To Support The Church

Before we go any further, I want to make clear the obvious fact that we do have a Biblical requirement to support the Church. But that support must be done with an open heart and no expectation of any sort of earthly benefit as a result of doing so. If there were an earthly benefit, we would be doing it for the reward, and not out of love for God for what he’s already done for us.

Where Does The Prosperity Gospel Come From?

There are at least two sources:

Our own hearts. We can easily support the idea of something like a ten-to-one monetary return in our human desire for riches. Attaching some sort of heavenly stamp of approval/partnership with God message to it gives it a higher purpose.

From the pulpit. Too many Christians get their “Scripture” from other people, rather than from the Bible. We hold pastors and preachers in high esteem and assume that they’ve done the job of studying the Word of God for us. Chances are, if your pastor or favorite TV preacher believes in the prosperity gospel, then you will too.

The only way to know the truth of God’s Word is by studying it ourselves, and praying and meditating over it. Any time we accept the interpretations of others, we’re leaving ourselves open to false doctrines.

The Anti-Prosperity Message Of The New Testament

If we compare the prosperity gospel to the teachings of the Bible, we find little support for it. In fact, in the New Testament, we see example after example of quite the opposite. Consider the following verses:

”For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.”—1 Timothy 6:10

”It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God”—Mark 10:25

“Peter answered: “May your money perish with you, because you thought you could buy the gift of God with money!”—Acts 8:20

The prosperity gospel seeks to enter into something like a business deal with God, and we can see from these verses—and so many others—that that isn’t a true relationship with God.

Jesus Had No Money, And Accepted No Money

We have no evidence from the Bible that Jesus ever collected money from anyone. In fact, in the exact opposite direction, Jesus drove the money changers out of the temple accusing them of making it a “den of robbers” (Matthew 21:12).

Meanwhile He counted himself among the poor. In Matthew 8:20 Jesus says, “Foxes have dens and birds have nests, but the Son of Man has no place to lay his head.”

Based on these facts, can we believe that Jesus Christ—the figure at the very heart and soul of the Christian faith—would somehow advocate anything resembling the prosperity gospel?

Attaining Prosperity Through Giving Focuses Completely On The Self

For me, this is the point that makes the strongest case against the prosperity gospel. If we give based on the assumption that we’ll be financially blessed, then we aren’t giving out of a pure heart. We’re giving based on the expectation of a return on our gifts. That really turns gifts into investments, and that can’t be true.

If we’re giving with the expectation of a financial reward, then the giving isn’t about God or the people we’re giving to. It’s really about our attempt to improve our lot in life through an implied financial alliance with God—and that’s really all about us.

From a Biblical perspective, if anything we do is about us, it isn’t about God, and we shouldn’t expect to be blessed for doing it.

What to you think about the prosperity gospel? I know some people swear by it, but from where I sit, it doesn’t fit with Scripture. Feel free to disagree!

photo credit: Freedigitalphotos.net