Financial Acumen

Proverbs 17:18 

“A man void of understanding striketh hands, and becometh surety in the presence of his friend.”

“It’s poor judgment to guarantee another person’s debt or put up security for a friend.” (NLT)

What should you do when a good friend asks you to guarantee his or her debt, or put up security for a home or a loan? Your answer may depend to some extent on your own financial circumstances, but the fact that such advice appears in the book of Proverbs, suggests that wisdom should be involved.

I found myself in this position several years ago. Friends had fallen on hard times, largely because of a lack of wisdom in financial matters. Money from the sale of a house got spent, and eventually they ended up in rented accommodation. My wife and I helped them out as much as we could, but soon realized that he in particular needed to make some changes in approach and attitude to their financial affairs.

Then one day he arrived on the doorstep, and over a cup of coffee asked if I could stand as guarantor for another property he wanted to rent. With a heavy heart I told him I could not, even though he repeatedly told me that there was no risk to me as he would be able to pay the rent. I had no confidence that he could, and I knew that it was wrong to place my family at risk. Eventually, my friend acknowledged that he had to bring his expenditure in line with his income and downsized. We remained friends, although they live in another part of the country now.

If I had stood as guarantor and my friend had defaulted I would have been required to pay his rent. This would have made it difficult for me to meet my own outgoings. I wish I had known about this verse in Proverbs at the time. I remember the bad feeling inside when I refused to help my friend, but it was absolutely the right decision. How much wisdom do we miss out on by failing to study God’s word, and by forgetting to listen for His gentle whisper. 

The Lord said, “Go out and stand on the mountain in the presence of the Lord, for the Lord is about to pass by.” Then a great and powerful wind tore the mountains apart and shattered the rocks before the Lord, but the Lord was not in the wind. After the wind there was an earthquake, but the Lord was not in the earthquake. After the earthquake came a fire, but the Lord was not in the fire. And after the fire came a gentle whisper. When Elijah heard it, he pulled his cloak over his face and went out and stood at the mouth of the cave.

Then a voice said to him, “What are you doing here, Elijah?” (1 Kings 19:11-13 NIV)