Children feel the effects of a debt reduction plan, too

This post over at Enemy of Debt describes some of the thoughts that go through children’s heads when their parents need to tell them that the family is in debt.

Even though the parents are the ones that implement a family’s debt reduction plan, and are ultimately responsible for it, the children likely will need to be participants in the plan as well.  If they’re old enough to earn their own money through a part-time job, then they are in the position to help directly with their parents’ debt reduction program.

If the children are younger than teenagers, then the participation will likely be more indirect, and not by their choice:

  • Fewer toys.  If children are tuned to anything,  they’re tuned to the inflow of entertainment.  They’ll be aware when it decreases, or they’ll be aware when they are going to the thrift store instead of a retail store like Walmart for their toys.
  • More needs, fewer wants.  The difference between “need” and “want” will become more apparent.  “I need ice cream” is corrected to the new reality.
  • Sharing the emotional burden. “Poor” is a heavy word for a seven-year-old to bear.
  • Thinking twice about spending money.  “Hesitating” was the word used in the post, as in “hesitating to do some of the fun things” they were used to doing.

In short, it’s not fun for anyone in a family undergoing a debt reduction plan.  Just like the parents, though, children can adjust to the new spending patterns, and in the process they can realize first-hand the importance of budgeting and spending less than is earned.

However, the children do get to see the debt go down, and eventually disappear, with the entire family as well.  They get to take part in the successful debt elimination.

These lessons will be valuable for the rest of their lives.

iHeartBudgets: Thankful for an inheritance

Most people’s debt reduction stories involve eating at home, slashing cable TV, foregoing vacations, and generally living like paupers.

But not everyone.  iHeartBudgets got a big boost to their debt reduction process with an inheritance.  That lump sum squashed one set of debts, making the other set of debts easier to pay down.

Sometimes you receive blessings when you least expect them.  It was clear that iHeartBudgets had done some planning for financial windfalls and had no doubt as to where to put that “found” money.  It’s also testimony to this mindset that they continued to pay down debt after this.

If you’re in consumer debt (car loans, student loans, credit cards, and eventually mortgage debt), paying the debt down in advance of the minimum payments will reduce the interest you pay overall.  So, plan to throw at least some of the extra money you receive — gifts, bonuses, second income, and even inheritances — at that debt to pay it down.