Should We Help : Nowadays, there are many teenagers and college students who use credit cards for all their daily purchases. They even shop online to purchase their favorite items without getting the permission from their parents. They swipe the cards without controlling their spending habits and as a result, they accumulate huge amount of outstanding balances. They only start to get worried when they find out that their debts are becoming more and more and they fail to pay back the minimum payment every month.
As parents, you will be having big headache because you need to help your kids out from deep debt. It is impossible for us to leave them alone. You may feel regret for furnishing your kids with credit cards but you still need to face the problems with positive attitude. It is important for you to train your kids to be responsible persons. You are reminded not to pamper them by helping them to pay back their debts in full. However, you are playing an important role in guiding them to get their finances back to control. Let me share with you some practical tips to guide them:
· First thing first, you need to sit down and discuss with your kids. Teach them how to calculate their total credit card debts based on their latest financial statements. Let them know how much interest and late fee charges they need to bear when they fail to make payment. Besides, you need to make them aware about their legal responsibilities as card users.
· Secondly, ask them to suggest some ways to generate cash to pay back their debts. Do not offer them extra pocket money. You need to make sure that they also contribute their effort to pay partial of their debts. For instance, you may ask them to look for part time jobs during summer holiday so that they can have some income to clear off their outstanding balances. It is important for you to guide them to work out their monthly budget. They need to cut down the unnecessary expenses in order to pay their bills. You can build their self discipline from here.
· Some parents prefer to avoid high interest rates and they are willing to help their children to clear off all the debts in one shot. You may do so if you can afford for it but it is important for you to educate your children in financial planning. Tell your children that you are giving them a personal loan. You need to fix the terms and conditions and get your children to repay the loan on time.
Last but not the least; I would like to remind you that leaving your children with debt collection agents is not the right punishment. You MUST NOT do that! No matter how big the debt amount is, we need to take the right approach to get them back to the right track.