It has become conventional wisdom that paying down debt should be the highest priority for excess cash. However, research suggests that saving, rather than debt pay down produces better results.
Two researchers affiliated with Texas Tech University, Russell James and Scott Garrett, studied 839 audits over 50 years old for 4 years to find out which strategy—paying down or savings—produced the most financial satisfaction. They found that those who save and increased their assets had a high level of satisfaction. On the other hand, those who used their money to pay down debt did not have a significant increase in satisfaction.
We have always told people they were not in a race to get out of debt, and this research confirms our research, which began 180 years ago. It was during the panic of 1837 that our role model, Abraham Lincoln, lost his business and ended up with a debt the size of a small home loan in today's dollars. Lincoln suffered from asset foreclosures until he got a new career as a lawyer, increasing his income. In 1842, he married, and in 1844, he bought a home, mostly with cash. From his writings, we know he had not paid off his debt in 1848, but that eventually he did pay the debt and earned the name "Honest Abe."
Abraham Lincoln teaches us that you should build your life first, and then repay your debt. Unlike some teaching today, he did not let his debts keep him from marrying, owning a home and having a family. He also began his career in politics and did not let his debts steal his destiny.
Lincoln knew very well that "The borrower is servant to the lender" (Prov. 22:7). While he was fighting his own war of financial independence, he practiced as a bankruptcy lawyer to help set others free from debt bondage. These experiences prepared him to end the bondage of slavery, which steals the work and lives of its victims.
So we say get free of debt if you can, but build your life first.
Do not let debt steal your destiny.
Ron Allen is a Christian businessman, CPA and author who serves in local, national and international ministries, spreading a message of reconciliation to God, to men and between believers. He is founder of the International Star Bible Society, telling how the heavens declare the glory of God; the Emancipation Network, which helps people escape from financial bondage; and co-founder with his wife, Pat, of Corporate Prayer Resources, dedicated to helping intercessors.
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