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Setting Up Your Kids to Be Debt Free By Becoming Debt Free

by Editorial Team | October 17th, 2017 | Elementary

Like it or not, your children pay more attention to your actions more than you think. That can be a gift or a curse, depending on how you conduct business in your everyday life. Some negative behaviors may not have a lasting impact on your children if passed down. But when it comes to finances, showing them that it’s completely normal to rely on debt is a recipe for disaster. Here’s how to reverse the cycle so your children won’t inherit the same dangerous habits:

Face reality
The first step towards becoming debt free is getting to the root of the problem. In other words, what brought you to this point? And what can you do moving forward to make sure you don’t fall back into the same trap? Next, you’ll want to list all your debts if you haven’t already done so to know how much you owe across the board.

Considering wiping out your savings account to pay down debt? Proceed with caution as doing so doesn’t allow you to get the root of the problem.

Come up with a plan
It’s not enough to keep telling yourself you’re going to get out of debt. You need a realistic plan that will hold you accountable and help you reach the finish line. To illustrate, if you have $6,000 worth of debt that you’d like to pay off in a year, you’ll need to allocate $500 a month to the debt to make it happen.

Adjust your budget
Wondering where the heck you’re going to get enough money from to cover bills and pay down debt? The answer may lie in your budget. (If you don’t have one, now’s the time to create it). Take a hard look at your expenses and make cuts where you can. Also, call service and insurance providers to see if cheaper alternatives are available.

And if you’ve cut everything you can and it just isn’t working out, consider finding ways to earn extra income. This could be anything from a yard sale to a side hustle. Remember, short-term pain for long-term gain if you stay the course.

Call your creditors
Did you know that your creditors may be willing to work with you? Give them a call to inquire about a lower interest rate. This could save you hundreds, if not thousands so you can reach the finish line quicker.

You can also ask about programs designed for individuals experiencing a financial hardship. Even if you have enough each month to make the minimum payment, it may be worthwhile to enroll in a program. Reasoning? Some creditors will lower the minimum payment or temporarily suspend the accrual of interest.

Get to work
Now, for the hard part: sticking to the plan. Discipline is a must as you work to cut those debt balances each month. But you should also consider the following:

    • Consolidating your debt: paying off all your debts with a personal loan that has a lower interest rate can save you a ton of interest. To explore your options, find additional info here.
    • Getting a balance transfer credit card: if you’re disciplined enough to use the card to pay off debt and ax the balance before the introductory period expires, it may be worthwhile. But it’s a must you refrain from making more purchases.
    • Using financial windfalls wisely. If you’re lucky enough to receive an influx of unexpected cash, like a tax return or inheritance, use it to add fuel to the debt-repayment fire.

Pat yourself on the back
Congratulations! You finally made it. Kudos to you for doing what it takes to get out of debt. Now, be sure to stay disciplined and prevent history from repeating itself. Most importantly, explain to your children why debt free is the way to be.

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