GEO Principle Blog

Peer-to-peer lending web sites may bring meaning to Sabbath

I want to encourage you to think about at least one other way to help people who are struggling with debt. The Internet has made it possible for people with money to connect with people struggling with their personal finances. There are social networking sites that give you the opportunity to lend small dollar amounts to people in this country, and there are other sites that give you the opportunity to fund a micro-business entrepreneur in a Third World country. Both represent interesting opportunities to add meaning to Sabbath.

Prosper.com and Lendingclub.com are sites designed to match Americans who need money with people who have money. Sites such as Microplace.com, Kiva.org and GrameenFoundation.org facilitate micro-lending to grassroots entrepreneurs across the globe.

If you are in a position to fund loans through a website such as Lendingclub, you are in position to help someone reduce their debt load. Typically, the people who post loan requests on Lendingclub have large outstanding credit card balances, paying interest rates of twenty percent or more. Their goal is to refinance at a more manageable interest rate. People willing to lend even as little as fifty dollars can help borrowers substantially lower the cost of their debt. Prosper is an interesting site too, although it is not accepting loan requests at this time. I am assuming they will resume regular service before too long.

The beneficiaries of micro-loans have a much more difficult challenge than Americans who have over-spent on credit. Micro-loans typically are aimed at the poorest of the poor -- people who make less than one dollar per day. Lifting people out of poverty is a difficult proposition, but in some cases a micro-loan is the key. Hope for the City, a Minneapolis-based charity, runs a micro-loan program in India. Their loans range from one hundred dollars to five hundred dollars. One Indian used a Hope for the City loan to buy an iron and started a laundry business. Another used the money to buy a water buffalo; the milk feeds a family and provides a small but steady income.

The human family is enormous; God invites all of us into the Sabbath rest in order to develop our relationship with him. Every human wrestles with something that holds them back. For some, financial stress diminishes the prospects for periodic rest. The GEO Principle means working in a way that honors the Sabbath. Manage your debt so you don’t enslave yourself. If your own financial affairs are sufficiently ordered, consider what you might do to help someone less fortunate. One of the best ways to work on your own journey into the Sabbath is to help others to get there as well.

Lend a hand, and a few bucks, if you can

Returning to our discussion of Sabbath and debt -- if your life is unaffected by unmanageable levels of debt, praise God. I mean, praise Him in a concrete way that helps your neighbor; perhaps you are in a position to help someone who is wrestling with burdensome debt. Living in a relationship with God is not just about being happy for your personal situation, but about helping others.

While no one has the right to poke into someone else’s personal financial affairs, from time to time one becomes aware of another’s financial difficulties. Parents, for example, know the level of debt their college children may have. A relative might mention at a family gathering that he is struggling with mounting credit card bills. At work, you might hear a colleague complain about an unexpected increase in the rent at home. People of means should not let these clues go unnoticed.

If you are in a position to lend someone, say, a thousand dollars, consider doing so. If that person has to use a credit card to borrow a thousand dollars they are going to pay somewhere around two hundred dollars in interest over the course of a year. If you lend them the money at, say, four percent, you could save your borrower one hundred and sixty dollars.

Lending anyone money is a dicey endeavor. People with comfortable balances in their savings accounts don’t typically achieve such security by making risky moves with their money. But helping someone through a financial hardship is a real and tangible way to bring meaning to Sabbath.

If you ever find yourself considering lending money to someone:

• Put the agreement in writing, spelling out terms such as interest rate, monthly payment, and when you expect the loan to be paid off. (Take a clue from Deuteronomy and don’t lend money for more than seven years.)

• Charge some rate of interest. (Depending on the situation, consider a rate slightly higher than the rate you could get on a savings account. The point of charging interest is not for the lender to make money, but for the borrower to understand this is a serious loan.)

• Consider what will happen if the debt cannot be repaid. How will it affect you and those who depend on you? (If it would affect your household in a material way, you shouldn’t make the loan.) How will it affect your relationship with the borrower? Would you be able to maintain a friendly relationship with him or her?

• If the borrower cannot repay the loan, can you offer the borrower work to pay down the debt? For example, could the borrower mow your lawn for a year to repay a five hundred dollar debt?

Debt and the Sabbath

I want to get back to our consideration of the meaning of Sabbath. We have looked at it from the perspective of taking a rest, or with the idea that taking time off is important. But there is another dimension to Sabbath worth exploring – what does Sabbath mean with respect to debt?

Moses instructed that all debts be released during the Sabbath year (Deuteronomy 15:1-2). Such an edict kept people from entering into a lifestyle of debt. Ongoing financial indebtedness was considered a form of financial servitude to be avoided. Financial enslavement, since the time of Moses, has impeded people from entering into the Sabbath rest.

It is worthwhile for people to periodically evaluate the role of debt – financial and otherwise -- in their lives. If you owe somebody something, consider how you might pay off that debt as soon as possible. If somebody owes you something, consider how you might help them clear the debt up; don’t let the indebtedness go on forever.

Today’s economy offers a particularly harsh lesson about the perils of too much debt. Wall Street essentially ground to a halt last September when a house of cards built on debt collapsed. The rebuilding process is slow, and in some cases, painful. It could be six months, a year or even more before we get out of this recession.

In modern American culture, however, debt is a valuable tool. We can’t unrealistically declare that we will avoid all forms of debt. Credit cards, home equity lines of credit, mortgages and other loans help people smooth over personal cash flow anomalies, purchase homes and pay for college. Most people today would find it very difficult to establish their households without tapping into some form of credit.

Debt, however, like work, can be seductive. Many people borrow too much and get themselves in situations where they cannot repay. Regardless of the spirit of Deuteronomy 15, no modern-day creditor is willingly going to let a borrower off the hook. Prudent use of credit means never borrowing money without a plan for repaying it. Financial experts typically advise people to limit credit card use to major purchases; credit card bills should be paid off during the grace period whenever possible. Couples who finance a home with one income rather than two build a cushion into their personal financial situation. Car buyers willing to settle for a model that can be purchased with savings avoid trouble that could befall the buyer who finances over four or five years.

In the next couple of posts, we’ll look more into the nuance of debt and what it means with respect to Sabbath.