Solutions to Credit Card Debt
Your Child Needs to Experience
Are you ready for the solutions to credit card debt that your child needs to hear and experience? It is us as parents who bear the sole responsibility for guiding our children in managing finances effectively. An incredible hot topic with teenagers is credit cards. To be more specific, teenagers often times have great desire is to have their own. What many do not understand it is having one is a huge responsibility and they need to be educated about its proper use. This takes teaching from you and their own experience.
If you are a bit lost on where to start teaching kids about money, use these solutions to credit card debt to get you started and keep them out of a lifestyle of debt:
The Best Learning is Experience
Ask your teenager the all important question: where will the money come from to pay the credit card charge once the statement comes? The charge card is to be used as a convenience, not a way to purchase something that cannot be afforded.
This encourages responsibility. Explain that they are the ones responsible for paying the bill on time, and knowing when that time is. Make it a requirement to do so and the first time it does not happen, the card gets yanked for three months and they have to pay the late fees and interest charges. If a child asks, "How do you expect me to pay for it?", respond with, "Figure it out."
The best learning available is not from books, but experience. It is better for them to lose a little now and learn from it then later and in debt for years as a result. Which brings us to the second strategy in our tutorial on teen solutions to credit card debt.
Limit the chargeable balance by starting with a $50.00 or $100 prepaid card, one they purchased with their own money. This is money that has been saved up and are allowed to spend as they please. Give them wisdom and stories from your own experiences, how you suggest they use their credit card and then stand back and say nothing. Yes, allow your teenager to get happy, silly, and prideful that they,"Know how to do it."
And yes, nine times out of ten, your child will blow the whole lot the first time out, even the second and third. Simply grit your teeth and say nothing. This is their training ground and they need to learn just as you did. If you started training them early, then you may be pleasantly surprised by the responsible behavior. If not, well…
This is why of all the teen solutions to credit card debt, the most effective is to start as early as possible. When my boys (now 13 and 11) were able to write their names neatly, they were given their own credit and identification cards. At four and five years old, they were thrilled and felt very grown up. For me, it provided a great training ground as well as a platform for many humorous encounters. The look on the cashier's face when one of my boys handed them their own credit card, backed up with a valid identification card as I walked a few steps away was very humorous. Giving his best growup look, my sons would complete the transaction with their signature, a printed first name as it appeared on their identification card.
They received many, "how cute" comments, quizzical looks at me, and in the ensuing six years, only one challenge because of a disbelief that it was legal for a child to have their own credit card. Thirty seconds with the manager allowed the transaction to be completed.
Now, in reality, their cards were simply add on ones to our account and they never had to worry about paying it off. However, the intended result materialized. Using a credit card became mundane and they now could care less to ever own one of their own. And if they do for convenience, I can rest assure knowing they will already have the money to pay it off when due. Just like sin, my wife and I have made debt disgusting enough to them so they want to have nothing to do with it. My children will never be saddled with a life of financial slavery as a result of their self indulgence. The living out of these solutions to credit card debt work.
How do I know these solutions to credit card debt works? A couple of minutes ago, I recieved some unintential feedback. As I was writing this article, my oldest son was reading it over my shoulder. I turned and fondly told him the story about how having his own credit card taught him his current thinking about how bad debt is. He replied,"You did?" He did not remember! Starting early and using real life as a training ground, he now understands the dangers of out of control spending.
If you did not start early, it is not too late. For their future family's sake, start now!
Talk With Them Often
Consistently communicate timeless truths about managing your finances better. As you encourage responsibility and are often discussing the realities of interest payments, late fees, emotional purchases, and so on, be keenly aware of how they are participating in the discussion. It may be that your teenager is not yet mature enough or lacks understanding of the basics. If this is the case, be responsible yourself by not allowing them to have a credit card - - and then realize that you have your work cut out for you, as well as an extra dose of required patience.
Parents, teaching children about money and effective solutions to credit card debt as soon as possible using real life situations does work -- and well. There can be no other options. You know best how to teach them, so do not leave it to others because it will not happen. If you need further incentives, how about avoiding them from moving back home in their late twenties or early thirties because of their high debt level and zero savings?
After you contemplate that for a bit, I trust you will reread this article on solutions to credit card debt for your children, and others on my website, getting busy teaching your children about money as soon as possible. Let me know how it goes or if you need some further help getting started.
Encourage discipline and responsibility by being upfront with them and explain that they alone are responsible for making sure their credit card bill gets paid for on time and in full according to the written due date. They need to understand that there is no other option but to do this.
Have a discussion about interest charges and late fees, getting across the reality that accepting either one is simply giving their money away. If needed, illustrate using real cash and show them that a $20.00 purchase will cost them an extra $8.00 in fees and interest over the year. That $8.00 may seem small, but added monthly or over the course of the year, it really adds up to wasted money, especially when the balance becomes well over the original $20.00, with interest being paid on interest. Compounding is really ugly when applied against you as opposed to for you when taking that same money and investing it.
Abstinence Works Every Time
This is true for those not married as well as plastic money. If these solutions to credit card debt are not working with your teenager, then it is best for them to never use one. Abstinence works 100 percent of the time it is used. Yes, teaching teens and younger children effective solutions to credit card debt is hard, challenging, and takes time. However, the dividends (pun intended) are enormous. Remember from earlier, the earlier you start, the better. Let your old play with the real money, teaching him to perform the same transactions he will do out on his own. Allow the younger child to "pay" for things at the store by handing the clerk the cash, card, or check, and getting the change and receipt, and then passing them on to you.
Time for Action
Challenge them throughout their childhood and adolescent years to earn, save and spend money responsibly, honoring God with what they have been allowed to have. And no, starting with teenagers is not too late, if you use the solutions to credit card debt I have given you here today to get started and then let your natural parenting abilities kick in. It does work.
Each time your child makes good financial decisions (no matter how small), praise him or her for their ability to learn how to manage their money better. Remind your child that if they continue to do well, they will never have to worry about being saddled with years of interest payments from debts resulting in your irrational and irresponsible decisions.
For as long as you are blessed to have them in your home, teaching your children about money and solutions to credit card debt will build their own confidence and gratefulness to you for this incredible gift. Let me know what you think and how you do. Please write me of your own experiences so I may put them on my website for others to benefit from. If your response is detailed and helpful enough, I will include it in my upcoming book on this topic and you will receive a free copy!
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