Get Your Children in Debt to Keep Them Out of It!
November 27, 2007 | Author: Rob | Filed under: Money Matters
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This is an interesting title isn’t it? Have you ever heard of putting your children in debt to make sure later in life they don’t fall into it? I believe that most people get into debt trouble at one point or another in their lives only to learn to live within their means. Why not teach your children that at an early age? Chances are you’ll be a lot more reasonable than Visa, Mastercard, Amex, Dinners Club etc…
You can get into debt as a child, in your teens, in university, afterwards etc… Bottom line is until you’ve bought something and gotten sick of it but still had to continue paying for it you don’t know what being in debt is like. It’s also a ball and chain that enslaves you and keeps you working. How can you even consider quitting your job and following your dreams if you have debts to pay? Until you feel the pressure of debt first hand you don’t realize how bad it feels and how much more you end up paying in the end thanks to interest.
When I was a child I used to sleep with a consumer magazine; I wanted everything! I had a short attention span and went from one item to the next. If my parents had been billionaires I would of wanted them to buy entire stores. Didn’t matter what it was I wanted it and I wanted it now.
When I was about 10 years old I bothered my parents endlessly for something that I don’t even remember. I can’t remember what it was but back then it meant the world to me. It was an overpriced gimmick made of cheap plastic; that I do remember. My father told me that he would lend me the money and I’d have to pay him back in increments. I was ecstatic; couldn’t have been any happier! Hours went by and I played and played with this gimmick; then days went by and after a week or so I had gotten completely fed up with it. It went into a pile with the rest of my belongings and just collected dust.
The difference between this discarded toy and the others was that I hadn’t even begun paying for it yet and the honeymoon was already over! I remember it took me months to pay this item back. I’d do my paper route and give over a portion each week to my father to pay for this item that I had no use for and had basically forgotten about completely. If I didn’t still have to pay for it I probably would have totally forgotten about it.
By the time I ended up paying my father back in full I had learnt an incredibly valuable lesson about debt; it’s to be avoided at all costs. Some things you have to go in debt for though such as a home or schooling if you don’t have any help from your family. Unless you strike it big early in life chances are you will have to have a mortgage. Apart from a mortgage, I’m proud to say that 17 years later I’m still debt free. I have never had a credit card balance in my entire life. Each month I religiously pay off my credit card. They charge you 18%! That’s highway robbery.
The point of this story is that everyone has to learn about debt for themselves. The sooner you learn about it the better off you are in life. Instead of learning your lesson with a $10,000 furniture and kitchen set from Leon’s for the first apartment you rent why not learn about it at age 10 for some toy that cost you $50? At the time I thought my parents were being unfair but in hindsight I can’t thank them enough.
Almost everyone I know has credit card debt for consumer products ranging from clothes, computers, golf clubs, vacations, ski passes you name it. Unfortunately they are being billed at 18% interest or higher. For lots of them unless they completely detach themselves from the physical world for a year or so I can’t imagine them ever getting out of debt. How much harder is it to save for a down payment on a home when you have 5-$20,000+ in credit card debt being charged at 18%!?
If you have children my advice to you is to get them in debt for something small and stick to your guns and make sure they learn a lesson that things do have to be paid back. If you do that once and they still want more charge interest next time; they will quickly learn their lesson and it will help them financially for the rest of their lives. I’m not saying to never give your children anything; what I’m saying is everyone has a reasonable limit. Once they’ve passed that limit make them the proposition and go from there. You’ll know when the time is right and in my mind this is one of the most important financial lessons they will ever learn. Live within your means!
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21 people have left comments
I like how you think. I don’t have any children yet, but will think about details like this for the future. Will keep checking in to read your thoughts on business and finances.
This is great advice, i think it would work for most as well, debt in the past and smaller but current debt has taught me to live within my means, my parents have always lived within their means, they prefer to go without or wait till they can pay cash where possible.
Thanks for a well written post regarding this, its something that people tend to avoid talking about i find, denial i guess and it takes the buzz feeling away from their purchases, but must be faced if things begin to spiral out of control.
Thanks
John
This is a fascinating story. I think that you had a very wise father. It’s too bad that more people haven’t learned the lesson about staying out of debt.
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I got into bad debt at the age of 17, buying my first car. My Dad refused to help me out and eventually it was repossesed and here is the kicker, I STILL had to pay for it as its auction did not cover the cost of its purchase… 17 months later having paid out 120 pounds a month for something I didn’t even have taught me my lesson.
I owe nobody anything, I don’t even possess a credit card and pay for everything cash. My only vice is a debit card for Amazon but that only allows you to spend what you put on it, it has no debt allowance. If there is not enough money on it you can’t buy anything.
I remember that I read the book Millionaire next door, it explain that all of them learn money management skill. Debt has put a lot of us who are potential for financial freedom out of reach.
Rob,
This is an excellent post. I stumbled and wrote a short review.
By the way, for some reasons your comment on my blog was recognized as spam. My sincere apology. I have de-spam and posted it.
Your comment is in this link here : http://www.seaykopitiam.com/2007/11/18/the-story-of-page-rank/
Jamy
And have a wonderful weekend.
Rob,
I also dug and wrote a review.
Jamy
I blew a huge futsy today. It drove everyone in the office out the door.
Good story about kids and money on your blog.
I think with most things, learning them the hard way is the best way especially when it comes to money matters and debt. As a child growing up we didn’t have much $$ and I learned to be responsible for paying my own way at an early age. Selling greeting cards at 13, a paper route at 15 and 16 a burger slinger at MacDonald’s. At 17 I went into the Army for 3 years.
Now I have a good paying job, no debt beside the 4 bedroom house I live in with my beautiful wife. If I would have had it easy as I was growing up and was allowed to get in debt I’m sure things would not have turned out the same.
Sometimes what your parents do by accident turned out to be a good thing especially when it comes to kids and money.
Thanks for the kind words everyone. The old trite saying is true like most old trite sayings. Sometimes you have to be cruel to be kind!
At the time it stunk and I felt so victimized but where would I be now if my first real spending spree took place on a credit card at 18!?
Thanks Dad
I found this post to be very good. I am a mother of 3 kids , 2 of them teens and one of them leaving for college next year, I worry all of the time that they will have a hard time like me and my husband and I hope they have learned from the trouble that we have had.
It is interesting. I’da never thought of anything like that. But it would be hard to do with a three yr old. xD
Jennifer - Maybe get them to read this post.
Jenny - I’m not a parent yet but I’m sure you’ll know when the right time comes. =)
P.S Thanks to everyone who has stumbled this. It’s unreal how much traffic this post has gotten from SU.
What a great idea! My oldest is only 5 but I will be storing this one away in my bag of tricks for sure.
Great Post! I’m glad I am not the only parent who thinks this way. I made sure all my kids learned about the evils of debt while they were teenagers. And so far it is working. Both of my grown daughters are very responsible with their use of credit cards and debt.
[…] over at Home Business Blogger has a great post on “Get Your Children in Debt to Keep Them Out of It”. In his post he points out the importance of parents teaching their kids about debt at an early […]
Brilliant post. My children are young, but I am going to keep this in mind when we enter the young teen years. With so many parents buying their kids cars and major things like that, I think an important oppurtunity for a lesson is missed. Thanks for sharing your story.
Purely make sense. I’m only 17 though, and not in any debt yet. Dugg the post, and if I could remember this until I have a 10 years old kid, I will make them in debt like you advised.
Interesting approach Rob. Will add this to my debt related bookmarks.
Nice way of thinking. I hate depts.