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iQuestions Faculty, Ron Blue 
 
 
Question: 
 
Should I follow rules when it comes to borrowing money? 
 
Answer: 
 
What I’ve found is that if people, when making a borrowing decision, 
follow three simple rules, they’re going to make a better decision in 
terms of deciding when to borrow, what to borrow, and how to borrow. 
The rules are pretty simple.  
 
Number one, the economic return on the amount of money borrowed 
must be greater than the economic cost. So, for example, if I borrow 
on my home mortgage, in most cases, if I borrow at 5% or 6%, or 
whatever the interest rate might be, I’m going to get a growth in 
value, typically, in my home value. So, I’ve got an economic return 
that’s greater than my economic cost.  
 
In some ways, maybe investment debt works that way. But if you look 
at credit card debt, where you’re paying 18-21% interest for eating 
out, for taking a vacation, for buying clothes, for buying gas, for all 
those things that you use credit cards for, what you find is that the 
economic return is zero, or negative.  
 
So, why would you spend 18-21% to get a negative return? You 
wouldn’t do that. So, how do you handle credit cards? Well, credit 
cards are okay. Credit cards never got anybody into problems. It’s just 
the people who hold credit cards who get into problems. So, when you 
use a credit card, plan on paying it off 100% at the end of the month. 
Use the credit card for convenience. Therefore, you won’t violate the 
rule of the economic return being less than the economic cost. 
 
 
 
How about car loans? Any time you borrow money for a car that 
depreciates in value you get no economic return on it whatsoever. So, 
why would you make an investment where you have a guaranteed 
economic loss? When you’re borrowing money at one interest rate to 
pay for something that’s going down in value, it just doesn’t make 
sense. Once again, you can compare that to a mortgage where you get 
an increase, typically, in value, and you pay a fixed rate of interest 
over a long time frame, so economically it can make sense.  
 
The second rule is that if you’re going to borrow money, you’ve got to 
have a guaranteed way to repay it. Now, what do I mean by that? 
Well, when you take a house mortgage again, if I borrow money on 
my house, or my home, the banker is saying, “If you can’t repay it, 
we’ll take the home back,” and therefore you have a guaranteed way 
to repay. When you borrow money on credit cards or car loans or 
maybe even investment money, you may not have a guaranteed way 
to repay. Now, why do you need a guaranteed way to repay? Biblically, 
you don’t want to “presume upon the future.” (James 4:13-15) 
Therefore, you need a guaranteed way to repay, so as not to presume 
upon the future. 
 
The third rule, and this is the hard one, is that your spouse must be in 
total agreement as to the borrowing decision. I like what my mentor, 
Dr. Howard Hendricks says, “God did not give you a spouse to 
frustrate you, but to complete you.” 
 
I have found that in my counsel with thousands of people that 
husbands and wives think differently about debt, and many a husband 
has been saved by listening to his wife’s counsel.  
 
I was speaking one time to a group of professional football players, ex-
professional football players, and I used that illustration, husbands and 
wives must be in perfect agreement, and there’s a wife of a Super 
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Bowl champion. This guy had three Super Bowl rings, and his wife was 
sitting in the back row sobbing. And later she said to me that “my 
husband borrowed money to start a business. He didn’t listen to me. I 
didn’t think it was a good idea. We lost everything. He was a Super 
Bowl champion. He had a lot of money, and he invested it for what he 
thought was a really good thing, economically. But he violated the 
third rule. 
 
So, I would say that if you’re going to borrow money, make sure the 
economic return is greater than the economic cost. Make sure that the 
spouses are in agreement. And make sure that you have a guaranteed 
way to repay. 
 
  
 
 
 
 
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