Tuesday, December 11, 2007

Getting your kids in debt to keep them out of debt.

Have you ever Stumbled around the internet? Its a great way to waste time, full time or lose time. You pick!

I have stumbled over a lot of sites that are amazing using this little button on my browser. (Oh need to say here I am not being compensated in any way... just a good segway.) With Stumble, you fill out your interests so that when you start stumbling it takes you randomly to sites that meet your criteria. If you like the site you give feedback... thumbs up or down. That helps Stumble being even more attuned to what appeals to you and was does not. The more you do it... stumble, I mean... the better your random results end up being.

So this week as I was stumbling about, I fell into this blog. homebizblogger.com. The page will not load now so I can not link the url. But the writer had a very interesting idea on how to teach children about the mire of debt before they have to learn it on their own. And when their credit scores report are irreparably damaged.
The writer suggests getting your kids in debt and then letting them work their way out over the painful lifetime of the loan.

Do you have a debt nightmare in your history? One that you climbed out of over a long time or one you are in now with no end in site? My experience happened right after college. I started getting credit card offers. I was on my stepfather's credit card because I worked for him. So the credit limits they were offering me were fantastic. Like eye bulging. I figured if they were going to offer credit to me than I was eligible for it. Their thumbs up was my green light. Once I got one credit card in my name it was not long before I was being offered and/or signing up for others without a problem. I had never had the freedom to buy whatever I wanted. And these couple cards gave me that freedom. Well, ultimately it was all a sham. I figured out quickly that what I was making did not match what I owed. I was paying the minimum and still charging to the cards.

It took me a long time and ultimately a bank loan cosigned by a friend to pay off my debts. I then paid her monthly for a couple years til the debt was gone. That was one of the most wonderful gifts that I have ever gotten from a friend. By the time I married I was debt free, excluding my school loans. While Doc was in residency he was using credit cards. I had gotten rid of all mine and was using my debit card. So when we married we paid off all our debt, including cars. We lived debt free for a while. Of course, houses and kids require you to take on debt. That was hard. Buying our first house felt like such a weight after having no debt. We had to buy furniture and a mini van. It felt like we were digging another hole. But through it all we have only kept one credit card. We use it in a pinch, on trips or when my stupid debit card won't read at the gas pump. But we keep it balance free. Learning how debt can ruin peace of mind, relationships and your future was a hard lesson.

Which takes me to the idea
of getting your kids in debt before its too late. We have three kids. The oldest seems to want the most. He is always asking for things and expecting things. We have just started giving him chores around the house to earn his allowance which is $1.50/week. He is only 6. We automatically take 50% of that and put it in a savings can for him. When there is enough we will open an account. He is very excited about having money in savings. He won't be so happy when he understands he will not get to touch it til he is in his teens. But the money he does get in his little paws gets lost then found and spent on the silliest and most trivial things. This week he spent his 75cents on a squishy Sponge Bob that was about 1.5 inches x 1.5 inches. It does nothing. My son said he was hoping for the watch... but that is not what came out. So there is a lesson... maybe?

Well with everything that our oldest son "thinks" he needs there is
definitely room for a lesson. We will have to wait till he is a little older but I think it might actually be a great idea for him. There are so many things that he "wants" that really have little value, will not hold his attention for very long and are not worth the money. While we, his parents, make these decisions he can not learn the lesson for himself. We just end up being mean for depriving him. Why we say "no" really has no bearing on the meanies that we are labeled. So one of these days when he is just dying for something he must have... we are going to lend him the money. And long after that particular thing has bee stashed in the bottom of the closet he will still be paying for it. Money that he could be saving will be going back into money's pocketbook and he will still have to complete the chores even though he will be getting compensated less for them. I hope its painful to the point that he understands that money does not grow on trees and ultimately we have to "pay" for our financial decisions.


KellyJean said...

Yeah!!! I've been having big time trouble reading your blog! For days it has not allowed me to scroll down. I think it is needing more time to download than other blogs or something. I left it alone and when I came back it let me scroll down and now post. Well, I think it's gonna let me post. We'll see.

And debt. Ugh. We learned that lesson the hard way. We have the house and two car payments. We paid cash for our daughter's car. And, of course, the house payment. We only use credit cards for emergencies and pay them off ASAP. Our problem now is that we haven't saved and we've got two kids headed to college in the fall. Can you saw student loans??? Oy.

Stephanie said...

I am not sure why people are having trouble with my blog. Elysa can not load it either. Maybe that is why no one ever reads or comments here anymore. Not sure where to start to fix it.

Thanks for keeping up the effort.