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How debt can affect young families

Raising a family can be difficult, especially in the early years. Your career is not yet mature, your children are not old enough to care for themselves and your bills pile up quickly. Debt can put major strain on a young family’s finances. But it can also affect your family in ways that you may not have considered.

The effects of debt

  • Health

Alarmingly, debt can have a negative effect on health—even for children. Worrying about how to make ends meet can cause serious stress and anxiety. The feeling of being overwhelmed by financial burden can also spark or exacerbate depression. These feelings can trickle down from adults to their children. Even if young kids are not aware of the family’s financial predicament, they often pick up on emotional cues from their parents.

  • Education and career opportunities

College is expensive, and the cost of tuition, books and housing seems to increase every year. A family’s financial status can significantly affect their children’s college prospects. The secondary education opportunities available may be significantly limited based on cost. This applies to parents, too: Moms and dads who wish to return to school to advance their careers may find themselves out of luck if they can’t come up with the cost of schooling and can’t take on more debt.

  • Future debt

Parents who struggle with overwhelming debt may unintentionally be setting up their children to take on debt as well.

Children tend to model their behavior off the adults in their lives. Uncontrollable spending that has led to credit card debt can teach children excessive spending habits. Children may also learn to take on other kinds of unsecured debt like payday loans and loans from family and friends.

When it comes to debt related to home, school or medical issues, children may have no choice but to take on more debt. With no other financial resources, some families and kids become stuck in a cycle of debt.

Dealing with debt

Many families wonder how to even begin reducing their debt. These are some approaches that young families can take to handle their debt:

  • Don’t ignore the notices from your creditors. It can be tempting to push them aside—especially if they become overwhelming. But late fees can add up quickly and only increase your debt.
  • Whenever you can, make your monthly payments on time and in full.
  • Work with a financial planner or attorney to evaluate your situation.
  • If necessary, consider filing for Chapter 7 bankruptcy. Bankruptcy is not shameful; rather, it can offer a fresh start for struggling families.
  • Create a budget, and do your best to stick to it.
  • Have honest, age-appropriate discussions with your children about household finances.

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