Misconceptions About Debt and Credit with Dr. Shane Enete

Many people are using the FaithFi app to help provide the wisdom, community, and money management to stay on track, financially speaking. To date, over 37,000 members are using its digital envelope system, participating in our community forums, and engaging in virtual workshops. And one of the most convenient features is the ability to keep all your accounts in one place for an easy-at-a-glance view. You can choose from one of three options, depending on your management style, and it's available on desktop or mobile.

Go to faithfi.com and click App to get started. The poet Ogden Nash once said, Some debts are fun when you are acquiring them, but none are fun when you set about retiring them. I'm Rob West. One thing's for sure, getting into debt is much easier than getting out of debt. So the more you know about debt and credit, the better off you'll be. Author Dr. Shane Enoch joins us again today for his take on that double-edged sword. And then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial journey. Well, it's a great privilege to have our friend Dr. Shane Enoch with us again today. He's an associate professor of finance at Biola University. He's the author of the brand new book Whole Heart Finances, a Jesus-centered guide to managing your money with joy. Shane, welcome back.

Thanks so much for having me. Absolutely. You know, we're going to talk about debt and credit, as you know, in just a moment. But before we do that, I'd love for you to give us your definition of whole heart finances, the title of your book. Sure.

Yeah. So money is deeply connected to our hearts. And so when we learn about finances as Christians, our hearts love Jesus, but too often we don't involve him. And that leads to fractured heart finances and a type of alienation. But this book is really helping to make Jesus the center of our finances through helping instill simple habits that unlock financial joy.

Yeah. Well, folks, I'd really encourage you to pick it up. It will be a great blessing to you, no doubt. Let's talk some about debt and credit. I want to kick it off with a great story you have in the book about a roommate struggling to pay off student loan debt. Share that with our listeners.

Sure. Yeah, I was in a house full of eight guys just after college and I'd gotten a good paying job in finance. And, you know, I was just blessed to not have college debt coming out of college. And I had a roommate who, you know, he worked so hard to get through college and was mostly able to get out debt free, but had this this debt amount that really just was a great burden to him.

And he was just working so hard and he couldn't make any progress after a couple of years after college. And so I received a windfall, you know, from an inheritance and was just praying for weeks. You know, where should this surplus go? You know, this extra that I wanted to just pass along to someone in need. And it just God kind of gave me this vision that, you know, I had been given enough money to be debt free and how wonderful to pass it along, you know, and to help my roommate become debt free. And when he learned that he was now debt free, that God had kind of passed along my inheritance, part of it to him. It was just this incredible moment where I could see the weight that debt had been on his shoulders had just been released.

And he was he was a lot more a lot more lights and free after that. Wow. I bet you experienced some incredible joy along with that, didn't you?

Very true. Yeah, it's lovely to just be a part of God's provision for others as well as yourself. Oh, that's powerful. Well, there's no doubt, Shane, that debt can be a real burden. In fact, when we look at God's word, we see that clearly Jesus treats debt seriously. We see it in Paul's letter to the Colossians.

So unpack this for us. Why do you think this topic is treated in this way in God's word? You know, debt is so serious that's often threaded throughout the Bible when, you know, God describes what he's offering his people. He says it's like being freed from debt, you know. And so Jesus, when describing the kingdom of heaven, is saying it's like being freed from debts. And Paul, when describing atonement, is saying it's like being freed from debt. And so debt is this type of bondage that is serious. And, you know, of all the ways to help describe our redemption from sin, he chooses to say it's like being freed from debt. So it's this very serious thing to not be totally free, to not be able to express who we are in Christ to the world in a total free way. And so we glorify God when we are image bearers and we're able to make all of our choices based on what he wants and not having to look towards other masters on this earth.

Yeah, no doubt about it. There are clear financial and emotional byproducts, but there are also spiritual byproducts of being in debt. That master-slave relationship that the Bible talks about.

Well, we'll continue to unpack this just around the corner and talk about what God's word says. Is debt immoral? And what do you need to know about credit?

And are there certain types of credit that are worse than others? Dr. Shane Enad with us today. He's associate professor of finance at Biola University. We're talking debt and credit today and back with much more just around the corner.

Stick around. Every day we hear life changing stories from listeners just like you who see money and possessions as tools to invite more people into God's kingdom. Instead of chasing wealth, you've chosen to embrace God as your source of love and provision.

At FaithFi, we're passionate about meeting people where they live and work through our national radio program app resources and website to influence widespread positive change in our culture. Please consider becoming a monthly partner at faithfi.com slash give. We are grateful for support from sound mind investing in the faith and finance program. For more than 30 years, they've been helping Christians reach their financial goals with step by step guidance for investors at every stage from those just getting started to those getting ready for retirement through scriptural principles and practical suggestions. SMI offers financial wisdom for living well. More information, including the short video webinar on profit and peace of mind no matter what's happening in the market is available at soundmindinvesting.org. Thanks for joining us today on faith and finance with me today, my friend, Dr. Shane Enad. He's associate professor of finance at Biola University. He's the author of the new book Whole Heart Finances, a Jesus center guide to managing your money with joy.

You can get it wherever you buy books. We're talking about the misconceptions related to debt and credit today. And Shane, just before the break, you were talking about some of the implications of debt and why we see so much in the way of warnings found in God's word. And as I mentioned, clearly, there are financial and emotional byproducts of debt. There also are spiritual byproducts, aren't there?

Yeah. You know, when God instituted Jubilee for the Israelites, he wanted people after a certain amount of time to be free and to go back to their original inheritance. And part of that is just that, you know, as Christians, he wants us to be able to go out into the world and show off who he is, and debt becomes an hindrance to that. And so spiritually, you know, we want to be free from other people telling us what to do and just look towards our Father in heaven as our only kind of source of instruction.

Yeah, that's so good. I love what one of my mentors, Ron Blue, would often say. He says we should live in such a way that we can live or die, give or go. And often it's debt that's holding us back from that living or even dying, giving or going.

And so clearly, we want to live in such a way that we can follow the leading of the Holy Spirit. That then takes us, though, to the next question that we often get, which is, is debt a sin? Or you might say, is it immoral?

What would be your thoughts there? You know, when we look at the Bible with debt, when it talks about whether something's moral or immoral, there's very, very strong language around the idea that being a lender in such a way that you enslave people towards you, that that is immoral. And that's traditionally been called usury. And so making a financially vulnerable person more vulnerable and enslaving them through the use of debts, the Bible is clear.

And every religion, if you look at it, has language, strong language against this type of thing. However, with being a borrower, I'd say it's more a matter of wisdom and not a morality. And so we have to just understand the dangers of debts and look at it. And I'd say one of the greatest principles and use of knowledge about debts that we can apply as a Christian to be wise and to make a level path for our feet is just to recognize that debts can be on an appreciating asset or a depreciating asset. And the two types of debt are much, much different. And so just to recognize that is really helpful.

Yeah, that's well said. Shane, what do you wish more people knew about debt and credit? So I think immediately people associate credit as debt.

And I think it's important not to always pair those two together. Credit is just helping. Someone is saying that you are a good risk. I'm willing to extend some debt to you, but you can grow your credit without ever borrowing. And I think in general, to build a good credit reputation, to build and grow your credit and available credit over time is a good thing.

And I want to stress to fear it and to never use it. And that'll just generate a high credit score, let you be able to get a mortgage at a really low rate, let you access goods and services. But just to grow credit, fear it and don't use it. That would be something I think not enough people understand. Yeah.

You and I have kids and we talk to our kids often about the dangers of social media and the algorithms and how they try to draw you in. There's something similar going on with credit cards with regard to how they kind of get you into the system and teach you this is just the way you pay for things. You have a section in the book that you call the Trojan horse of credit cards. Explain that for us. Sure.

Yeah. People often are deceived by credit cards in the same way that the Trojans were deceived by the horse that came in. Credit cards, they're two products in one. They are providing a really useful service as we go use cash less and less. We need some way to pay bills and buy things. And so it's nice to have a medium of exchange where you just have this card and you can swipe and nowadays it's just on your phone.

So that's a product and that's nice. But then there's an extra product in it that is this ability to buy something without having the money and to extend a loan as you are purchasing. And that is what is the dangerous part of a credit card. And really what they do is they delay the consequence of spending.

So even if you have the money and you pay your full credit card bill at the end of the month, which means you're not borrowing, there's no interest assessed. The fact that you can go into a store, buy something and not see a consequence right away, that actually triggers a shot of dopamine and it makes it so we enjoy shopping more. If you've ever gone and bought something big and then you had cash and you actually saw the cash as it's being extended and it's going away, it's painful.

You actually experience the consequence. But if you just swipe, nowadays I don't even know what things cost as I just use Apple Pay and you just can buy things automatically. And so credit card companies know that and they've made shopping more enjoyable. And again, even if you're paying your bill at the end of the month, you're going to be spending more. And they've shown that you do spend about 30 percent more if you are not using cash. And so that comes in and it dicks you and then you get kind of anchored to the minimum payments. And so two thirds of people don't pay their full balance because they've brought this Trojan horse into their house.

Yeah, it's becoming more and more challenging. I mean, the stores that I'm going into these days, often they will say we don't accept cash. And so they're just not even offering you that option in some cases. And so unless you have visibility into it with something like the FaithFi app where you can see where your money's going, you may not even realize.

So what would be then some of those keys, Shane, to overcoming this and perhaps some disciplines you can put in your life so you don't get drawn into the trap you're describing? Yeah, so the trap is to delay the consequence of spending. And the solution is to hurry up the consequence of spending. And, you know, it's not quite practical to go all cash because you just can't do a lot of transactions that you need to do. But as you said, the FaithFi app and just a basic tracking system, you know, you could do it by hand, you could do it through an app.

You need to look and see what's happening. And I recommend a three minutes a day tracking habit to shine a light bright because then you see the consequence. And that really helps. The other really useful thing is an envelope system. So the old school envelope system is you get paid, you get a bunch of cash, and then you divvy up the cash into groceries and a gasoline envelope. But nowadays, you know, with most apps, including the FaithFi app, you can set money aside ahead of time into a digital envelope. And really, that's the next best thing. And so if you create a general rule or principle that you'll only spend out of envelopes that have cash in them, then that's going to really help also show the consequence of your spending right away.

Shane, we're about out of time, just about 30 seconds. What is the promise if we live this way? What is in it for us if we seek to honor God with managing money his way? You know, Paul asked us to excel in the grace of giving. And really, he says that benefits us because we'll experience the gospel over and over. And so as we get rid of debts and we stay debt free, we get to maximize and excel in our giving.

And that'll help us encounter the gospel in a rich and unique way throughout our whole life. That is so well said. Well, Shane, that was just incredible. We're going to have to have you back real soon. Thanks for stopping by today, my friend. Thanks so much for having me.

That's Dr. Shane Enad. He is the Associate Professor of Finance at Biola University and the author of the brand new book, Whole Heart Finances, a Jesus-centered guide to managing your money with joy. Pick it up today. Back with your questions after this. Stick around. We'll be right back. Hey, thanks for joining us today on Faith and Finance for taking your calls and questions here in our final segment.

We'll try to get through as many calls as we can. Let's go to Chad a new guy. Linda, go ahead. Hey, Rob, how you doing? I'm good. Thank you.

You're welcome. I was calling to ask the question about Social Security benefits. I would be retiring before my husband. He will continue to work, but I doubt if he will continue to work at the age 70. So he will probably be the higher earner opposed to me because he'll be continuing to work. So I was trying to figure out, would I be able to switch over to his Social Security benefits as a higher up beneficiary once he retires, even though he retired before 70? Well, here's the key is your husband has to begin taking benefits before you can apply for spousal benefits, regardless of what age it is. So he has to walk through the door before you can walk through that door to get the spousal benefit. And the spousal benefit is going to be up to 50 percent of his benefit. So whenever he starts collecting benefits, then you have the option to begin collecting spousal benefits so long as he started to take his. And the most you can get if you wait until your full retirement age is 50 percent of his benefits. And if you begin taking spousal benefits before your full retirement age, it will be lower than 50 percent because it will be reduced for you taking it early. Does that make sense?

Yeah, it does. But also, I was oh, yeah, I was talking about after I was referring to after he retired. So I wouldn't be able to get spousal benefits plus my retirement, though, correct?

No, you'd get the higher of the two. But I just want to make clear one distinction. You said you're talking about after he retires. It's not a matter of whether he's retired or not. It's a matter of whether he started collecting because he could retire and not start taking Social Security. And you can't begin getting the spousal benefit until he starts collecting his benefit, whether he's retired or not. That doesn't matter. Now, once he starts taking his benefit, then, yes, you're correct.

You will get either your own benefit based on your work record or you will get up to half of his. You can't get both. OK, that's what I want to know. And also, I called the other day to ask you about how I could find investments that are lined up with my faith belief. And you told me the information, but I didn't grasp it. So I'm trying to see if you can give me that information again as well. And I'm going to try to write down. No, I can't do that, Linda. I can only give it out once. No, I'm just kidding.

Absolutely. I'd be happy to. So I probably gave you a Web site that gave a listing of the faith based investing mutual funds that are available.

There's like somewhere around 20 of them now, and there's more coming online all the time, which is really exciting. But when you're ready, I'm going to give you a Web site where you can download a free document that will give you all the funds. Does that sound good?

Yes, and I'm ready. OK, it's faithandinvesting.com forward slash Faithfi. That's Faith F.I.

So I'll give it to you the whole thing one more time. Faithandinvesting.com forward slash Faith F.I. And that will take you to a page from our friends at the Eventide Center for Faith and Investing.

And you'll be able to download a free PDF, a document with all of the faith based investing mutual funds listed. OK? OK, I got that.

I just want the Web site. OK, sounds good. I appreciate your call. Let's go to Chicago. Hi, Teresa. Go ahead.

Hello. I had a question about a Social Security beneficiary. My adult son is disabled. He collects SSI and SSA. I took an early retirement, but I am also a teacher seeking license licensure. I finished my teaching degree, but I do work and I'm not working right now until school starts again. But my question is, in order for me to get a loan for the purchase of another home.

I have a home that a condo that I'm selling, but I'm going to go back to purchasing a single family home. He lives with me. He's lived with me all his life. He became disabled later on in life.

But he is 46 years old. He lives with me. The bank is saying that they cannot use his income unless I'm a beneficiary. And so my question is, if I become a beneficiary to show his income, how does that impact me later on with the home? And will the government try to take that home and say, oh, well, you know, he was receiving Social Security and so.

It's a good question, Teresa. Unfortunately, this is a fairly complicated component of the law for two reasons. One is it has to do with Medicaid and the five year look back rule and, you know, income and asset requirements for you and state recovery. And then also SSI, which is also complicated in and of itself. And I wouldn't want to try to give you an off the cuff answer to this.

I would either check with Social Security Administration or an elder care attorney who can help help you understand the implications of all this, both, you know, what is possible from an SSI standpoint for your son, but also the impact of all of that on Medicaid and just your future. So I'm going to stay away from kind of weighing in on that just because of the complexity of it. I wish I could give you a simple answer. I just don't think there is one. And the last thing I want to do would be steer you wrong. But I do appreciate so much you calling today. And if you need an estate planning attorney or an elder care attorney, one that shares your values as a Christ follower, you could connect with one of our Certified Kingdom Advisors at FaithFi.com and just click find a professional. Any one of them can make a referral to you. And then, of course, the Social Security Administration would also be a helpful resource there. The one part that's confusing is, you know, there's not really a beneficiary designation on SSI benefits. But again, they can tell you all of that and help you understand kind of what the the options are. And I would reach out at SSA.gov to learn more. Teresa, thank you so much for your call.

Well, that's going to do it for us today. Thanks so much for your calls. By the way, if you ever have a testimony you'd like to share about God's faithfulness in your financial life or how you've applied one of the principles that we talk about here on faith and finance. Be sure to call us with those as well.

We always love to hear your stories. Before I let you go today, let me remind you about our great study, Rich Toward God. That's right. It's a four week study on the parable of the rich fool found in Luke 12. It explores the themes of greed and treasure, pride and abundance. It ultimately helps you discover what it means to be rich toward God. Now, if you'd like to study it just personally or use it in a small group, perhaps in your neighborhood or at church, you can check it out at faithfi.com.

Just click store. That's faithfi.com and click store. And if you're like me, you're in a small group, you're always looking for rich biblical content that's practical. This study, Rich Toward God, is just that.

Again, faithfi.com and click store. All right. That's going to do it for us today. Let me say a big thanks to my team. Certainly couldn't do this without them. Amy Rios, Devon Patrick and Taylor Stanrich. For those folks and everybody here at faith five, we'll see you next time. Bye bye. Faith and Finance is provided by FaithFi and listeners like you.