What To Do When Your Kids Are Struggling With Debt

Parenting can be on of the most difficult yet rewarding task of you entire life. It is never easy to see your kids struggling with anything, least of all debt. But what happens when just that situation arises and you feel obligated to help your children deal with their financial mistakes.

Here are some tips to help you analyze the situation and decide how to help or if, in fact, you should help at all:

Make an Assessment
Of course it is not easy to stay objective when it comes to your kids, you need to check out the situation and make sure you are not being taken advantage of for your assistance. You need to really admit to yourself whether this is the first time your child has needed serious financial help or does this trouble come about on a regular basis. If you keep bailing them out, they will likely keep making the same mistakes. There is also the possibility that your child may be having problems that needs help beyond your own assistance. For instance if there is consistent theme in overspending, counseling or professional assistance may be in order.

Consider Your Involvement
Before you decide whether or not to get involved, you should think about what that involvement will do to the future of your relationship with your child. Financial issues can cause major family stains and a lot of emotions. If you think you and your child are capable of resolving the financial and other issues without additional stress or arguments that can lead to severed relationships then proceed with casution. If you have the gut instincts that your involvement will turn out bad on many levels, refer your child to other avenues for help or just stay out of the situation altogether.

Don’t Get Over-Involved
If you decide to go forward with helping your child financially, make sure your commitment to helping them is not going to affect you negatively. Don’t add your name or co-sign on their accounts, especially if their credit is already bad. You could end up financially responsible for their continued credit mistakes. Do not let anyone take advantage of your help.

Establish and Define Limits
If you agree to help your child in any way financially, make sure you set clear terms and conditions. Let them know up front that you can only do so much to help and that your help will not continue on for an extended period of time. Establish clear time lines along with the expectations so each party will know what is going to happen and by when it needs to happen.

Get It In Writing
If you decide to loan your child money to get out of debt, you need to put all the terms in writing and make an agreement you both sign. If you opt to give a cash gift, know that you can only five up to $12,000 before taxes will complicate the transaction. Sounds like an extreme way to deal with your own kids, but you’ll be glad you did should something go wrong.

Organize Additional Help
Whether or not you choose to help your child financially, you can always direct them to the other available resources that can help a child with debt. If they need credit counseling or a debt support group, you might have more insight into the available programs than your debt-ridden child. You want to remain clear that you don’ mind helping but in the future your child will need to learn how to handle their own finances correctly and prevent a repeat of history.

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