If you want to consolidate debt, you should probably involve the whole family in the process. After all, you got into debt because of the various needs of everyone. It seems fair that everyone join in on the task, right?
But then again, talking about money is not always an easy subject for most people – much less if it is about debt. In fact, one study revealed that 47% of Americans do not feel comfortable discussing their credit card debt with anyone. 30% even said that they cannot discuss it to members of their immediate family. That includes spouses, parents, and children.
If you cannot talk to your family about your debts, how can you hope to enlist everyone to help out?
Why you need to include the family in debt consolidation
Before discussing how you can consolidate debt with the whole family, let us give you some motivation first. It might be embarrassing to admit to your family that you failed to manage your money properly. However, they are the closest people to you. Regardless of your mistakes, they should be able to accept and help you. With everyone helping you out, it should be easier to do DIY debt consolidation successfully.
Of course, there are other reasons why you should involve your family when you consolidate debt.
You all spend money
First of all, everyone in the household probably benefited from the debt in one way or another. This is especially true for your spouse and your children. As long as you used the credit for expenses around the house, then it should be safe to say that everyone is responsible for the debt. That means all of you should make an effort to pay off the debt. At least, some of you should be supportive.
You can support each other
Speaking of being supportive, you should know that this is very important during a debt relief process. Getting out of debt can be very hard. If you have the support of your family, you will find that it gets easier. They can stay with you as you try to cut back on your expenses. Your spouse can help you with the household budget and your kids might also be able to help.
It can bring you closer
Finally, when you consolidate debt with the family, it can help bring you closer. There is nothing like a bad situation that can make you bond with your loved ones. At least, if everyone does not judge you and remains positive and helpful. When they give you their support, you do not have to feel isolated because of debt. You also do not have to feel shame. It gets easier to do the sacrifices that will get you out of debt.
Tips to succeed when you consolidate debt with the family
Now that you know why it is important to involve the family when you consolidate debt, the next thing to learn is how to be successful at it. Here are some tips on how to go about it.
Talk about money
First of all, you need to start talking about your financial situation. Find a comfortable, quiet, and relaxing place for you to talk. It is okay if you have a hard time during the first time. But once you have talked about money, the next time should be easier to initiate.
Do not be like the other couples or households that think money talks are a taboo. It is not. This is part of your life. If you want money management to go smoothly, it is a must to have open communication about it.
The flow of the discussion will depend on the personality of the people in your family. If you are talking to kids, you might want to ease them into the money discussion. Or if you think they can take it, just go straight to the point. What is important is how you act while talking about money. It is usually best to keep an open mind. This is especially true if you will be discussing a financial problem like debt. Be respectful but also firm in your decisions.
Analyze spending and look for ways to cut back
As you talk about money, focus on how you spend your money. The goal is to find areas that will allow you to cut back. No matter how effective it is to consolidate debt, overspending habits can threaten its success. So make sure that you correct any spending mistakes that you have. No more eating out – or at least you should tone it down. Ask everyone in the family what they can cut back on. Maybe everyone can make a commitment to brown bag their lunches to save money. Or to limit date nights and other entertainment expenses. Energy efficient habits can also lower your utility bills.
This can be a great lesson for your kids. Identify budget categories and ask their opinion about how you can spend less on each. You might be surprised at how smart their input can be.
Find ways to boost savings
It is always a good idea to give your savings a boost while you consolidate debt. At least, focus on your emergency fund. Explain to the rest of the family how important it is to have this fund. This is the fund that will help you stay away from debt while you are in the midst of paying off your debts.
While it may be hard, it is possible to save more money while paying off your debts. You just have to make a commitment to limit your spending and try to earn more money. It does not matter if you can only save a small amount. As long as you are consistent with your efforts, you will soon find that your savings have grown to be a lot.
To make it easier, you might want to automate your savings. That way, you will never forget to make a contribution.
Be truthful with your kids
Reports reveal that 7 out of 10 parents are reluctant to discuss finances with their kids. While it is understandable for parents to try and shield their children from problems, it is not always a good idea. To help your kids, you should expose them to problems and allow them to make mistakes. They need to know that you have plans to consolidate debt. By informing them of the situation, you can get them to help in cutting back on expenses. If your kids are old enough, it is possible for them to get a part-time job during the summer to help pay for their own expenses. That way, they can ease your financial burden and at the same time, have the finances to pay for their own needs.
For smaller kids, this is a chance for you to teach them how to save and be creative. If they want to give a gift, they can opt to create on instead of buying. Use your debt situation as an opportunity to teach them good financial habits.