When you have run up on a huge amount of credit card balances, then the foremost thing that you must do is budgeting. However, you need to take your kids as well as your spouse into confidence to help you stay within your monthly budget. In turn, it’ll help you to curb impulsive purchases and increase your disposable income so as to make extra debt repayments, thereby getting rid of your financial obligations faster.
Tips to keep your family within your budget
Here are some budgeting tips to make your kids understand its importance and the benefits of staying out of debt:
1. Provide them with substitutes
Many times, parents like you have to reject or say no to a proposal from their kids. It’s mainly required when you're not in a financial position to afford things that children sometimes want. For instance, your child may be asking you to take him or her to an amusement park nearby, but then your monthly income does not permit you to afford the tickets.
So, you may offer your kid some alternative options like spending an entire day at a playground.
This way your child gets to have fun and you save money to repay your overwhelming credit card balances, both at the same time.
2. Ask them for reasons
You need to ask your child why he/she is demanding a particular thing from you. Children have a similar psychology like that of the elders; that is, they too want to get heard or be the center of attraction in a crowd.
Therefore, rather than rejecting their demands outright, you should make a covert attempt and ask them to explain it to you as to why do they need a certain thing.
If your kids come up with proper justification, then say yes, or else give them the opportunity to hear about the same, later. As a result of this strategy, you get to enjoy your child's confidence that you value his/her opinions, while at the same time, you get to cut back on unnecessary costs.
3. Give explanations in advance
You need to be proactive while trying to save money to make debt payments, especially when you are shopping at a departmental store with your kids. So, here, in this case, you must tell your children about the basic purpose of going to that grocery store and inform them what is on your shopping list.
Show them what you need to buy and what you don’t. However, you shouldn't forget to offer your kids the alternative to letting them buy candies with their money.
4. Plan your meals ahead
If you are serving dinner from McDonald’s to your family every week, STOP this immediately. Instead of wasting your money on calories, serve something healthy. Make a food planner for every week.
Sit with your family and plan your meals for the whole week. This way you won’t end up visiting McDonald’s and waste your money on calories.
Are you finding it difficult to plan your meals? If yes, then take help from free meal planning tools like Evernote, Springpad, MealBoard and Grocery Planner App, Food on the Table, Menu Planner App, Plan to Eat, PepperPlate Recipe, Menu, and Cooking Planner, and so on.
5. Shop smart
Shop smart doesn’t mean you have to be a hardcore couponer. Instead, find out smart strategies that’ll keep you away from overspending. Before hitting the stores, make a list of things that you want to buy. Find out your family’s needs and shop for those items. Don’t waste your money purchasing unnecessary things.
To save more money on shopping, you can follow these tips:
- Buy things in bulk
- Shop from thrift stores and garage sales
- Do comparison shopping
- Buy second-hand goods
- Use coupons
- Use reusable items
If possible, shop without your kids. If you take your kids along with you, you’ll find it hard to stick to your shopping list and end up buying unnecessary things.
6. Use inexpensive entertainment
Why will you spend your dollars on expensive movie tickets when you can arrange cheap entertainment at home?
Instead of going out with your kids every weekend, think how you can enjoy a family time at home.
For instance, you can arrange a cricket match at the back of your house, play board games, and so on. Moreover, you must try to spend quality time with your family.
Now, that you've got a handle about budgeting, it’s important that you know some fundamentals of how to pay back credit cards without filing bankruptcy.
Don’t miss out - 5 Ways to teach your kids the importance of a frugal lifestyle
Credit card consolidation - A bankruptcy alternative
Check out the differences between bankruptcy and credit card consolidation:
|Sl No.||Questions||Debt Consolidation||Bankruptcy|
|1.||Does interest rates get reduced?||Yes||No|
|2.||Does it affect credit score negatively?||No||Yes|
|3.||Does it help increase your credit score?||Yes||No|
|4.||Does it help repay tax debt?||No||Yes|
|5.||Does it help repay unsecured debts?||Yes||Yes|
|6.||Are creditors bound to accept it?||No||Yes|
|7.||Do you need to appoint a lawyer?||No||Yes|
|8.||Can you still be sued?||Yes||No|
|9.||Does it provide legal protection?||No||Yes|
|10.||Can you do it yourself?||Yes||No|
|11.||Can you repay debts with single monthly payments?||Yes||No|
You can take advantage of credit card balance transfer to get all your balances consolidated into one. Basically, it’s a kind of credit card debt consolidation where all the balances from your high-interest credit cards are transferred to a low-interest one.
The annual percentage rate (APR) on your new card will be low for a particular promotional period; and so, you must be careful enough to try and repay all your dues well within that time.
Moreover, shop around and compare the rates as well as loan terms offered by the creditors before selecting any one balance transfer card.
Bankruptcy, should be your last resort. It’s because a Chapter 7 bankruptcy, for instance, would continue to show as a tradeline in your credit report for 10 years. As a result, getting new credit will become difficult for you during these years, as creditors will be wary of your financial stability and money-management skills. Moreover, a lot of employers too, prefer to hire people who are responsible with their money and spend cautiously.
Starting to follow a proper budget would be your first step towards financial liberation as that would guide you through temptations and desires to spend on unnecessary items.
Last but not the least, consult a certified financial expert if your financial troubles persist and work with him/her to drive them out for good.