Family can be your biggest strength or weakness when you’re in debt depending on how well you manage it. When your family understands your debt problems and cooperates with you, it becomes your biggest strength. But when your family refuses to cooperate, it becomes your biggest weakness.
If you want to burn debt with dollars, you have to reduce household expenses, lead a frugal lifestyle, and generate extra cash for paying off debts. Obviously, you need full family cooperation for this. The onus is on you to convince your family. The onus is on you to make major lifestyle changes and reduce household expenditures.
Here’s how you can burn debt with dollars and manage your family and life.
Debt is a personal and a sensitive issue. You may feel that your family will judge you due to your debt problems. You may not feel comfortable talking about your debt problems. Still, you have to do it for the benefit of your entire family.
Sit with your family and explain the scenario that got you into debt. Don’t hide anything. Tell them how much you owe and ask for help.
If your family loves you, they will help you to deal with this problem. Work together as a team and try to get rid of debt as soon as possible.
Your family members are aware of your debt problems. Sit together and set a financial goal. For instance: your goal can be to pay off your debts in the next 2 years. Chalk out a plan to reach your financial goal. Talk about the pros and cons of the plan and then think about the strategies to implement the plan.
|Financial Plan A||Financial Plan B|
This is a must. A household budget helps you know if your family is spending more than your monthly income. It helps you discover the areas where you need to cut down expenses.
When you’re in debt, it’s important to save money. You need extra money to pay off your debts as soon as possible. Set a budget for every category - food, clothes, accessories, entertainment, healthcare, and miscellaneous expenses. Make sure your entire family is spending less than what you earn.
Forget the luxurious lifestyle you lead in the past. Ask your family members to lead a frugal lifestyle for saving dollars. Here are a few tips that can help you lead a frugal lifestyle:
Kids are your future generation. Teach basic money lessons to them so that they can help your family save money. Teach them the basic concepts of spending, saving, and sharing. Explain why it’s important to save money. Talk about the ways to save money so that they can also contribute towards family savings. For instance, they can borrow books from the library instead of buying them. Besides, they can collect coupons every week. You can use them for shopping later.
Unexpected expenses can come up anytime. If you’re not ready for it, your debt problems will aggravate and ruin all your plans. The smartest way to be prepared for unexpected expenses is to create 2 emergency funds.
The first emergency fund should be small and the second one should be big. Use the first one as a rainy day fund. Dip into it for covering a sudden expense like a medical bill.
The second emergency fund is big. It’s like a long-term savings fund. It should be able to cover 3-6 months worth of expenses. You can use it when you lose job suddenly.
Make a list of dos and don’ts for your family. Stick the list on the wall or a refrigerator so that it acts as a constant reminder for all your family members.
Every problem has a solution. I agree that it’s tough to manage family and life when you’re in debt. But this isn’t impossible. I’m sure if you use the aforementioned tips, you can strike a perfect balance between debt management, family, and life.