Good vs. Bad Debt
Many discussions are being opened these days around the concept of good vs. bad debt. This has a lot to do with some extremely important impacts our debt has like the ability to purchase a home instead of drowning in rent payments, the reputable credit history you build with installment loans and the ability to consolidate high-interest accounts for a lower single-source repayment. And most of the time when debt falls into the general categories I mentioned above, it is considered “good debt.” In other words, “good debt” shows your trustworthiness to credit companies, improves your credit score and theoretically enables you to steward your finances to permanently “own” things in lieu of temporarily “rent” them – although you’ll need your history with good debt to rent/lease/borrow things as well. And, ironically, most of these benefits are used for the purpose of getting more future “good” debt.
Bad debt on the other hand is considered excessive spending for more “frivolous” items, usually in situations where you’ll have a difficult time paying it back. Bad debt can also be categorized by high-interest repayment plans and situations where minimum payments don’t exceed the interest charged on the account. So it’s not always the type of debt (credit cards, mortgages, installment loans, student loans, personal or auto loans, etc.) that deems said debt “good” or “bad” but rather each individual’s capacity to repay it and how the debt fits into his or her overall financial situation. When viewed this way – “good” vs. “bad” debt is entirely subjective.
*A note for our readers: this post may contain affiliate links. This means we may make a small commission should you choose to purchase something through the links we provide. We only link to products and resources we actively use and support.
Instant Gratification & Entitlement
I don’t need to provide much of an argument for you all to agree that we’re living in an increasingly “instant gratification” culture. This phenomena often increases in direct proportion to “entitlement.” In fact, I’d even go so far as to say that they’re one in the same in many cases. It’d be hard to say which one is the chicken or the egg. “I want it all, I want it now and I want you to get it for me” is a common theme of this age.
Kris Vallotton explains this in his book Poverty, Riches & Wealth like this:
“One of the worst side effects of entitlement is the instant gratification culture it inspires – the sense that we should get what we want when we want it, regardless of our circumstances. This instant gratification mentality is expressed in hundreds of ways in our society. Credit cards and thirty-year mortgages are just a couple of ways that this attitude finds expression. Of course, I am not saying that these things in themselves are evil or bad; I am simply pointing out that they are expressions of a culture full of people who want it now, regardless of whether they can afford it or not. Think about it: Credit cards have only been around for about fifty years. That means our great-grandparents actually had to have money to buy things. I know it seems ridiculous to us now, but it is true.”
A Deeper Issue
This brings up a deeper issue than just the question of good or bad debt. Just like everything else in the kingdom – it is a heart issue and goes much deeper, wider, fuller than your life circumstances and financial situation. Are you acquiring debt and more debt because it’s wise stewardship of your personal resources? Or do you want it now, feel like you deserve it (even if you can’t afford it), and are impatient to go through a longer, often more difficult process to get it? I know that last part does not sound appealing in any way – but the truth of the matter is that the difficult seasons, the trials and our willingness to work and work and work for something BEFORE we get it is what truly builds character in our lives and sets us up for even more increase in the future (miracles and blessings from God that we may not necessarily have to work for – we just receive because we’re walking in the favor we’ve grown in through our perseverance and determination).
Kris Vallotton explains it this way:
“One of the challenges of the instant gratification culture is that it can take away the motivation we have to persevere through tough times in order to apprehend our aspirations, because we can just charge it. Slowly but surely, perseverance is becoming a lost art, shared by few and passed on to no one. In a strange way, our supernatural culture can even feed our impatient obsession in that we believe in miracles, which is the immediate intervention of God in a situation. This can undermine our value of life’s processes that are often rooted in perseverance.”
Kris Vallotton, Poverty, Riches, and Wealth
Inspired By Which Kingdom?
This is all important not just so you can make better financial decisions, but so you can actually grow in character, integrity and favor with God. Doing so will take you way beyond success in whatever decision you’re currently making, but will bring you into a momentum of persistence, perseverance and continual increase, both by your own will and the grace of God. And the grace of God extends infinitely beyond what we are able to accomplish for ourselves, both in the natural and what we receive for eternity. So our question to you today is not whether your debt is good or bad but whether your decision is motivated from the right kingdom. Is your heart in the right place?
“The point is, if persistence and perseverance are rooted in faith, then the instant gratification “I have to have it now” mentality must be inspired by the wrong kingdom. Furthermore, perseverance is not a gift, or even a personality type; it is a choice that we make to refuse to give up when life gets tough. The fruit of perseverance is great character and promise actualized. In fact, perseverance is to our soul what exercise is to our body. When we push against the challenges of life, our inner man gains strength day by day. On the other hand, when we act like impatient, entitled, spoiled victims, our inner man degenerated, leaving our new man withered, weak and pitiful.”
– Kris Vallotton, Poverty, Riches & Wealth
Isn’t it time we become people of character, and not just people of stuff? Do yourself and the world a favor – examine your heart. Determine the motives behind the decisions you make and don’t just let the world tell you whether it’s “good” or “bad.” It’s much deeper than that.
If you’re joining us now, be sure to check out our last couple posts in this series via the links below:
- Riches Cannot Be Intrinsically Evil
- The Financial Fatality of Unworthiness
- Where All True Wealth Begins
- Today’s Comfort or Tomorrow’s Prosperity?
Hi Impact
