No down payment requirements for loans.
Rock-bottom low interest rates.
If borrowers foreclose on their loans, the government will spend our tax dollars to repay lenders.
These and other ideas are part of the new plans from the U.S. federal government to stimulate the housing market and the broader economy and will probably be effective for bringing about new mortgage loans and home sales. But is the short-term goal of “more loans and sales” good for the long-term well being of our country, our families, and our souls?
“The whole issue of cheap and easy credit is coming at us from a number of different directions” says David Smith, of Smith Investment Management. “It comes at us with school loans, it can come at us with these new mortgage loan products, it can come at us in a variety of ways”
Smith, who along with advising investment clients also teaches a Bible-based finance class to children, is quick to point out that the low interest rates and new, lax lending requirements are arbitrary policies set by the federal government. He is also quick reference Scripture when talking about such things.
“Proverbs 22:7 tells us that the borrower is a servant, or a ‘slave’ to the lender” he noted during his recent visit to Austin Hill In The Morning. ” We need to think long and hard before we put ourselves in a situation where we can become a slave to a lender.”
Smith is quick to point out that government officials often think about and manage our nation’s finances in ways radically different how responsible individuals manage their money.
“In Washington, DC right now there is this worldview that says that we must grow our government debt every year, if we are going to grow our overall economy. Think about that. No individual household or family can expand its debt year after year and expect to prosper, but that’s how people think and act with our government and our tax dollars. But no person can drink themselves to sobriety, and no government nor family can over-spend themselves to prosperity.”
Smith recommends getting very clear about one’s expenditures before making any plans to buy more. “We all need to make sure we are under-spending our income today before we make more financial commitments to pay more debts in the future” he noted.
“If we’re robbing Peter to pay Paul, and we see an offer of inexpensive debt that would allow us to acquire something that we really want today, we need to check ourselves, think very seriously and as for God’s guidance before taking-on new commitments.”