R&L: As a Christian financial advisor, how do you understand the connection between your faith and the world of economics and finances?
Burkett: I believe there is a direct link between faith and finances. In the New Testament, our Lord gives us, depending on how you count them, around thirty-four parables, two-thirds of which deal with the subject of money. I believe Jesus uses money as teaching tool to illustrate graphically this point: The way we handle financial matters is an indicator of the way we handle spiritual matters.
That is what Jesus meant when he said, “If you are not faithful with the smallest of things, you will not be faithful with larger things either.” Money is just one of those smaller things.
R&L: An important part of your ministry is getting people debt-free and keeping them debt-free. What are the Biblical guidelines regarding going into debt?
Burkett: It is better for God’s people to be debt-free, because then what they own belongs to them, not someone else, and furthermore all that interest that is given away–that is what you really do with interest, give it away–can be put back into the Lord’s kingdom to help other people. I try to use a balanced approach here, though, because the Scriptures do not say that we must be debt-free, but that there are certain limitations we should observe when borrowing. The problem today is that our generation has so grossly violated these limitations.
The first principle taught in God’s Word is that debt should not be normal; it should be abnormal. Every reference to debt in Scripture is a warning, not an encouragement.
The second principle is that debt should never be long-term. In the Old Testament, every seventh year those who had loaned money to another had to forgive the loan, so that no one could be forced into debt forever. But in our generation we have thirty-year mortgages, forty-year mortgages, and now out in California they have just created a ninety-year mortgage. We just keep extending the cycle.
The third principle the Scriptures teach about debt is that we should not go into surety, meaning that there should be a certain way to close out a loan. The only way to do that is to collateralize it with the lender. For example, suppose I am going to buy a $100,000 house and I am able to put $20,000 down and finance the rest with a lender. My agreement with the lender should be that if ever I cannot make the payments, then I will give the house back and the lender keeps whatever I paid, but I am free and clear. I have therefore done what is called an exculpatory loan; I have been released from liability. On the other hand, if I do what is normal today, the agreement is that if ever I cannot pay, I give the house back, the lender sells it, and if it is not worth what I owe, then the lender sues me for the difference. That’s surety, and it is almost exclusively the kind of lending that is being done in America today. So, the problem is not borrowing itself but the misuse of it.
Allow me to say a word here about consumer debt. Consumer debt is the worst kind of debt because the product one buys is usually consumed. An example of this would be using credit cards to cover car repairs, buy tires, or take vacations. However, if the card is paid in full each month, it is the equivalent of paying cash.
R&L: Let’s talk a bit about consumerism, which relates to consumer debt. There have been a lot of warnings about it–the pope, for instance, has warned against consumerism–because of its connection to materialism.
Burkett: Consumerism in America is so pandemic because we are constantly told, “You need to have more, you need to have the best, you certainly need to have better than what somebody else has, and you need to have it now!” In our ministry here at Christian Financial Concepts, we often counsel young couples who have bought things they cannot afford–houses, cars, motor homes, vacations. The use of credit to buy these things did not avoid the reality that they could not afford them; it only delayed it and made it worse. Unfortunately, the proliferation of credit allows families to buy things they cannot afford to own.
Automobiles are a good example of this principle. Most young couples cannot afford to buy a new automobile; their budget simply will not handle it. A family making less than $50,000 per year should not spend more than 15 percent of their disposable income on an automobile. Yet, many young couples typically commit 25 to 30 percent of their income on automobiles. This trend has advanced to the next step, because now most young couples cannot even afford the down payment on a new car, so they lease it instead, thus incurring a higher monthly payment. Again, these couples do not avoid the fact that they cannot afford a new car, they only delay it and make it worse. This is why the divorce rate among new marriages is so high–it is about 50 percent right now. Over 80 percent of young couples getting a divorce say their primary problem is financial.
R&L: I think any pastor reading this will recognize what you are describing. Financial obligations put tremendous pressures on marriage.
Burkett: There is no doubt that it can be awful, and committed Christian couples are certainly not immune to these kinds of problems. The danger is that because they are under such financial stress, they stop talking to each other. They do not read their Bibles. They do not pray together anymore. They just do not have the mental attitude to do these things, and as a result they lose what they consider to be their emotional surplus to draw upon. Eventually this wears into their marriage to the point where a husband or wife thinks, If I could just get away from him or her everything will be okay, and since our generation has made it so easy to get a divorce, they do it. Then almost without fail they go back out and marry somebody almost exactly like the person they divorced, and within a couple of years they have a second marriage on the rocks for exactly the same reasons.
R&L: Why is it important for Christians to be grounded in sound economic thinking?
Burkett: Christians need to be grounded in sound economic thinking because we are required by God to be good stewards of His money. A steward is a manager of another’s property. We are called by God to be His stewards, and we are going to be held accountable to that standard. Many Christians are capable of making a great deal of money, and some of them do not use it wisely. They save it for some rainy day, or they squander it, or they hoard it. I believe we need to ask ourselves constantly, “How much is enough; at what point do I say that this is all God wants me to have?” Once we know how much that is, everything God gives us beyond that is meant for somebody else, and I am to be the purveyor of that through Christian organizations to meet the needs of others who are not going to be able to meet their own needs. I think the apostle Paul said it best in 2 Corinthians 8:14: “At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need.” This is really what Christianity ought to be. Unfortunately, we do not do that very much today.
R&L: We heard a lot in the last presidential campaign about entitlement spending, like Medicare, Medicaid, and Social Security. What is your view of such entitlement spending?
Burkett: I can prove to anybody in fifteen minutes that we cannot continue to do what we are doing for another decade. The only way we have been able to fund what we have been funding is by huge amounts of deficit spending. To me this is unconscionable and immoral; we are drawing off our grandchildren’s resources. They will either have to pay the money back or pay for it with an economic collapse, because we cannot continue borrowing to this extent. So the practical truth is that these entitlement programs are going to change, voluntarily or involuntarily. We will simply run out of money and then have to start borrowing more to make up the deficit, which will create inflation and ultimately destroy our currency. Every other nation that has tried to do what we are doing has ultimately ended up there. We have promised more than we can do.
For example, when Social Security began, it was intended only as a supplement. And even then, assuming that the average income during that time was $2,200 a year, Social Security would have provided about $200 a year, and we had twenty-two workers paying into that system for every recipient. Now forty or fifty years later, we have three people paying into the system per recipient, many of whom have more disposable income than the young couples paying into the system. This is unconscionable.
In my opinion, we have to do several things. Where Social Security is concerned, we are going to have to tell the truth to people, that not everybody can draw it. If you do not need it, you cannot get it. That may not sound fair but, practically, it is the only way we are going to be able to make it sound. Second, we cannot continue to allow the government to spend the surplus that we are putting in. I keep hearing people say that there is a Social Security trust fund. There is no trust fund. It does not exist anymore. The reality is that the government takes money out of Social Security, transfers it to general revenue, spends the money, and puts an i.o.u back in. Now, my question is, Where are they going to come up with the money to pay all those i.o.u.s when they come due? They are already spending more than they make per year. So there is no question that reform has to happen.
R&L: What is the connection between a healthy society and a healthy economy? I am thinking here about the moral fabric of hard work, integrity, responsibility, and the like.
Burkett: Financial and economic principles for individuals hold true for nations as well. The way people handle their money is an indicator of the way they handle other things, including spiritual things. Look at what we do with our money: We are not handling it well, we are frivolous with it, we buy foolish things with it. The American economy is nothing more than the reflection of our society in general, so just as we overspend in our society, we overspend in our government, and it is in debt. If you look around, you see a direct parallel to the way we are handling moral and social things in our society today. We are, as a society, doing very immoral things in our economy: We are spending money that does not belong to us without any regard for how it will ever be paid back. So I think there is a direct parallel between the two. I do not think the economy caused it, I think the economy reflects it.
R&L: Are you as pessimistic about the prospects here in America as you were when you wrote What Ever Happened to the American Dream, especially in light of the contention on the part of a number of political commentators that America is undergoing a conservative shift?
Burkett: We are seeing a conservative cycle in American history, but I do think it is short term. If one looks at the American people, the pattern is that they get frightened about what is happening in the culture and become temporarily more conservative. For example, we would like to have someone solve our economic problems, but when you start telling individuals about how much they need to sacrifice to solve these problems, not very many people are willing to do that. Everyone wants the budget balanced but want someone else to do it. Therefore, I think what you are seeing is just a short-term conservative cycle, not a long-term one at all.
Although I am pessimistic from a social perspective, I am optimistic from a spiritual perspective. If we had true revival in America and a large number of Americans turned back to God and accepted Him as their authority, then we could reverse these cultural trends instantly. This thing is not unalterable; it is purely a matter of decision on our part. I think this is a great opportunity to share Christ with a lot of people who otherwise would not listen. If God’s people will humble themselves and pray as they are asked to do, it will heal our land. It is up to Christians to take this responsibility.