"I bet you could you qualify for a credit card with a 0% introductory rate."
At the time, I was craving a flat screen TV.
I had just started my career as a financial adviser and even though I wasn’t making jack, I began giving myself the “entitlement pep talk”.
You know. The “I’ve worked hard so I deserve it” talk that many of us fall victim to.
“It” usually being some big ticket item that we really can’t afford but somehow we’ve convinced ourselves that we can.
At this time in my life, my “It” was a 42-inch flat screen TV that desperately needed to hung on my living room wall.
The reality is that I couldn’t afford it. Not even close.
But for about a monthlong process, I was determined to figure out a way to get it.
The TV had consumed me so much that I remember even talking to my dad about how bad I wanted one.
In case you’re new to the blog, you should know that my dad struggled with debt most of his adult life so he was the last one that I should have been getting advice from.
After pleading with him about how I deserved the flat screen TV, he suggested that I apply for a credit card with a 0% intro rate.
“Genius!” I gleamed, thinking that I had finally found the solution to my crisis.
I remember coming home and telling my girlfriend the good news.
Ummmm ... No You Can’t
That girlfriend eventually became my wife and the look she had on her face when I shared the “good news” was interesting to say the least.
She patiently listened to my plot to make my life-altering purchase and, after I was done, was quick to remind me of the reality of my financial situation.
“Do you really need it right now? You really can’t afford it.”
She was also wise to remind me of the self-inflicted financial hardships that my father was in and he was probably the last person that I should be getting financial advice from. Ummm ... how did I forget that?
Crap. She was right. I could not afford it. For now the 42-inch flat screen would have to wait.
When I reflect back on that conversation with my father, I’m left with disappointment.
Why didn’t he just tell me that couldn’t I afford it instead of encouraging to put myself further into debt?
That was a perfect opportunity for a parent to have a heart to heart with their child on the dangers that debt can have on someone’s life.
The Debt Movement where I’m now encouraging people to pay off $10 million of debt is a reminder that many parents probably missed that same conversation with their kids.
For those that were super motivated in paying off all their debt and finally becoming debt free, I asked them to share with me how they would talk to their kids about debt.
How would they make sure that their kids didn’t fall into the same debt trap that they did? Here are some of the best responses I received.
How to Talk to Your Kids About the Dangers of Debt
1. Debt is kind of like that bully on the school playground. He is constantly demanding your lunch money and always wants more money than you have. Once you get rid of that bully, and that debt, you can keep your lunch money for yourself. -- Samantha R.
2. Debt prevents you from doing what you want to do, it holds you down and doesn’t let go, it’s the monkey on your back and prevents you reaching your dreams. --Edwardo C.
3. Debt is like a melting ice cream cone on a hot day. You really want that cold ice cream because it tastes delicious and you REALLY want it. However, you decided to get the large cone (ie: that new car, that new cell phone) and while you enjoyed the first few licks, the hot day started to melt away the rest of the ice cream, faster than you could eat it! You end up having paid for the entire thing, but only getting to eat half before it all disappeared into a mess that you now have to clean up (debt.)
So the moral of the story is that sometimes your eyes are bigger than your stomach, or in personal finance terms -- your wants are bigger than your bank account. You may get temporary enjoyment and quench your immediate needs, but the sticky mess at the end from overspending is not worth it. -- Jessica E.
4. Debt is like quicksand. At first, you may not realize there is a problem -- but then you notice you are sinking. Before you know it, you are struggling to keep your head above water. It takes a huge, difficult struggle to get out and back on your feet on sold ground.
The sacrifice and struggle take a great toll on your life and even health -- but you need to get out and back on your feet. Only then do you get back your quality of life and reduced stress. It is much easier and preferable to avoid the quicksand in the first place. -- Kim T.
5. In Proverbs, it says that the borrower is slave to the lender, and having debt means having to say no to things that you would like to do, because you have lost a lot of your flexibility. It is like having your little brother sit on your foot and hold on to your leg. You can walk around, but it takes a lot more work until you can get him off (and debt is a lot less fun than your brother giggling as you drag him around the house). -- Ruth M.
6. I would explain good debt has things that are necessary in life that you need. Examples are a house that you can afford each month (mortgage), student loans for school. Only take out the necessary amount you need, and start paying it back while in school. This will elevate more debt/interest compiled on top of it.
It will also shrink the amount of the loan down by the time graduation comes around. Bad debt are things that you go out and buy on impulse shopping. Racking up the credit cards that you couldn’t afford to begin with. Not being able to pay off the balance each month.
I would explain to kids that if you can’t pay off the card within the 30 days, then you pay interest on it, and pay more for the item then you did to begin with. -- Jennifer A.
7. Debt is chains you put on yourself. It’s a form of slavery. And you hold the key to your own freedom. Debt makes you the slave and the people you owe are the ones who control your happiness. -- Alysis B.
8. Imagine living with me and your mother for 5 years after you graduate from college and your friends all live on their own and own their own houses and cars. -- Jordan S.
9. Debt makes you a slave to money. God’s Word says that a person cannot be a slave to two masters. If we want to be sold-out to Christ and follow Him wholeheartedly, then debt is a hindrance and a stumbling block. When we selfishly give into the desires to look good, please people and “keep up with the Joneses,” we will buy things we do not need and with money that we may not have.
We become a slave to that desire and the desire for more (money, possession, position, etc.). Debt is one of the most obvious ways that we have sinned against God by becoming a slave to something other than Him. Money is not bad in and of itself, but when it is used for more than meeting daily needs and serving God, then it can become the root of all your sinful behavior. -- Brittany S.
10. I would show them in the scriptures where it says that debts are bad (we are a religious family). I would also show them the cost of savings versus borrowing (if they were older). I think being a strong example to them that we always pay up front for the items that we want will be the best explanation for them. -- Elizabeth M.
11. I would explain the way it was explained to me: that debt isn’t bad, it’s the debt management that can be bad. My mother told me not to charge anything to credit cards unless I had an equal amount of money in my bank account. I followed that rule up until I decided to balance transfer my student loans. (I have actually saved up enough to pay off all of my credit card debt and can cover what I have put on my cards, but I am not liquidating my assets because I wouldn’t be able to cover my loan payments, rent, and other monthly expenses.) Debt isn’t necessarily bad, it’s the way you manage it, and I intend to educate my children. -- Katherine C.
12. Debt closes doors. Without debt, you can choose to invest, travel, remodel, educate yourself, etc. Debt simply robs us of options. -- Jennifer L.
13. Debt is like carrying a backpack full of books for classes you are not even taking. You bought those books because they looked nice but you realize that you should first purchase items you need and then splurge every now and then. But keep in mind that you will have to carry that weight around. -- Adriana G.
14. I have a 5- and 7-year-old and I will initially explain to them concept of borrowing. Most kids can understand the concept of borrowing a toy, so I will start with a statement like “Remember when you borrowed your brother’s or sister’s toy car?” and discuss how in that case borrowing meant your child returned it when he/she was done. Explore the idea of repaying something a little at a time.
Secondly, I’ll move toward talking about borrowing something that gets used up. Once my children have a grasp on the concept of needing to repay an item that has been borrowed and used up, I’ll move on to defining debt. In this situation, the basic answer is that debt is when something that has been borrowed -- typically money -- needs to be returned. A key point at this age is that you are in debt until that item has been returned completely or you have finished repaying it.
I’ll also explain to my children what bad debt is and how to avoid getting into bad debt. And that could be borrowing something and never returning or paying it back or helping them understand our needs and wants and what’s more important. -- LaKisha W.
15. I would just use us as an example. I would explain how our debt is now keeping us from certain things (like saving for a bigger house, family trips, etc.) that it is not worth the short-term happiness to buy what you can’t afford. -- Kara R.
16. I would try to explain that having a lot of debt can have a very negative impact on one’s life. Paying a lot of interest, stress leading to other severe medical problems, not being able to purchase everyday necessities. I would try to explain that these negative impacts can make living a happy life in debt, very hard. -- Jill M.
17. I would explain to my kids the reason why debt is bad is because it robs you of future wealth. You cannot get ahead with money if you are always spending it on material things that usually go down in value. Also by buying things you can’t afford and only making the minimum monthly payments, you end up paying more for that item with interest added. Interest is paying money for no reason, so when you buy something and you pay interest, you actually end up paying more that what you would have if you had bought the item with cash.
Also, the Bible says that the borrower is slave to the lender. I would tell my kids imagine working for 30 years only to give all our earnings to credit card companies or mortgage companies. Then imagine what you could do with that money if you had the freedom to do what you wanted to with it. The best way to take control of your money is to not owe other people. -- Charles D.
18. I have helped my 6-year-old son through Dave Ramsey’s Financial Peace Junior class. We have talked about how we do not ever buy anything that we don’t have money for. He earns commission payments for jobs he does around the house and divides that money into giving, spending and saving envelopes. He knows God says that having debt is not a good thing and that it hurts people. He has a heart for giving and already understands the importance of saving up his money to buy a long-term savings goal.
I am looking forward to continue to work with him to deepen that understanding and help him not make the same life alliterating mistakes I did with debt. My family tree will be changed. -- Joshua B.
19. I always tell them to look at mom and dad. We are always working. We shouldn’t have to have two jobs. Debt takes away from family time. -- Alicia G.