Why These 3 Families Chose to Live on a Single Income

Before they decided to live off only one income, Devra Thomas, 39, and her husband, Clinton Wilkinson, 38, brought in a combined $50,000 annually working in corporate retail. When their daughter, Sophia, was born, they struggled to find ways to juggle their work schedules with child care.

“Since we were both working at the time, we really had to supplement with a lot of funky child care between parents, extended families, after school care, and babysitters,” says Devra.

Then Clinton got an opportunity for a raise and a job relocation. The family moved from outside of Chapel Hill, North Carolina, to Morehead City, where their cost of living was lower and Clinton’s work commute was shorter. Devra, who was an arts administrator at the time, initially looked for work when they moved, but when she wasn’t able to find a job in her field in the area, she and Wilkinson changed their plan. They decided Devra would stay home so they could eliminate one significant expense: child care.

For the couple, deciding to live off one income was worth it if it meant they could simplify their lives. Still, choosing to live on a single income didn’t come without its own set of challenges.

Devra and Clinton, along with two other single-earner families, told MagnifyMoney why they chose to budget their lives on a single income and how they make it work. For this article, we define single-earner families as those in which one family member generates 80% or more of the total household’s income used to cover household expenses.

Devra Thomas & Clinton Wilkinson

Morehead City, North Carolina

Annual Income: $70,000 to $80,000

Clinton Wilkinson, 38, Devra Thomas, 39, and daughter, Sophia, 9. Source: Devra Thomas

Their strategy: Zero-based budgeting and constant communication

Devra and Clinton swear by a zero-sum budget.

“Every time we get paid, all of that money has a name,” says Devra. The couple sits together every two weeks to discuss and create their budget and make sure every dollar earned is fulfilling a purpose. They put each dollar they’ve earned in a spending category such as groceries, transportation, subscription services, utilities and savings.

Devra does some light freelance marketing and writing projects on the side, which helps supplement their income to the tune of about $10,000 per year. Any income she brings in from freelance work becomes what they call “play money.” It either gets added to savings or spent on something they want but haven’t been able to fit into their budget, like a date night.

For example, they’ve already earmarked funds for their anniversary in August. Every part of their date night is planned for, with money going into categories for the dinner, babysitter, hotel, someone to watch their dog, and other expenses.

Where they run into obstacles

Thomas and Wilkinson like their single-income lifestyle, but as their daughter, 10, gets older, the pressure to keep up with the Joneses increases.

“There are other things kids in school have that she says I wish I had … or it may even be an experience like going to Disney World,” says Wilkinson. When that happens they explain to her that those things are “not where [they] are choosing to put [their] priorities.”

They also advise their daughter to try making use of her community. If she wants to play with a toy a friend has, for example, she can borrow it from them, or vice versa.

Overall, making all of their financial decisions together has been a crucial element in making their strategy work. “That’s typically when we break our budget. When we weren’t communicating about spending,” says Thomas.

Sage & Emerson Evans

Salt Lake City, Utah

Annual Income: $50,000

Sage, 25, and Emerson Evans, 24. Source: Sage Evans

Salt Lake City, Utah newlyweds Sage and Emerson Evans chose to live on one income while Emerson focuses on applying to medical school. They have learned to manage their lifestyle on Sage’s $50,000 salary in digital marketing and public relations. Their hope is that investing in Matt’s education will pay off by way of a higher salary later.

Their strategy: deal-hunting and communication

Sage and Emerson, both in their mid-20s, don’t follow a strict budget but they try to add at least $500 to their savings account each month. The couple spends the bulk of their income on things like dinner, cultural events, movies, and travel. But they have no student loan debt and only one car payment to manage.

Emerson says he’s used to pinching pennies because he grew up being frugal. He was able to qualify for the Pell grant and other scholarships to help pay for college. Although he isn’t working full time, he takes odd jobs on the weekend to earn pocket money for minor expenses like gas for his car or lunch outside of home.

“I make it so that Sage never has to send money my way,” says Emerson. “I know I’m not the income and I know I’m not working full time. I try to make sure I’m not a financial burden.” For example, if he doesn’t have money for lunch, he’ll simply skip lunch that day.

“He almost takes it too far,” says Sage, “I had to force him to buy a new pair of shoes.”

Where they run into obstacles

For Sage, adjusting to married life on a single income was tough. “I definitely had to learn to think of money as our money and not just my income,” Sage says about the transition.

“Part of it was just a personal problem that I had to overcome. Realizing that when you get married, me becomes we,”  she adds.

The couple has learned to communicate about things such as what qualifies as a large purchase and whether or not Sage had to inform her husband of what she’s doing with what’s technically ‘her’ income.

Sage imagines their roles will flip once Emerson completes medical school and earns a higher wage than hers or if she elects to stay at home after having children.

“We get by, but it’s definitely not an income I want to spend the rest of my life on,” says Sage.

Matt and Brit Casady

Rancho Cucamonga, California

Income: $60,000 – $70,000

Matt, 28, and Brit Casady, 26, and 1-year-old son. Source: Matt Casady.

Matt, 28, and Brit Casady, 26, decided to live on one income to save on childcare, which doesn’t come cheap in their hometown of Rancho Cucamonga, California. They manage on Matt’s salary as an online marketer for a self storage company, where he makes between $60,000 and $70,000 a year.

“We were scared at first but we knew that we wanted to live on one income because we didn’t want to have to pay for child care,” says Brit, adding she’s always wanted to be a stay at home mom. “That money that I’d be earning from working would be paying just for daycare. So financially, one income makes more sense.”

Their strategy: thrifting and living two paydays ahead

The couple decided to transition to a single-income household when they were expecting their son, now 1. They started by reducing their monthly bills by paying off both of their car loans and cutting back on unnecessary expenses. The couple also got lucky: Within six months of having their son, Matt got a new job that paid a higher salary. But the new job also meant relocating the family from their hometown in Lehi, Utah to Rancho Cucamonga, a vastly more expensive area.

All of the furniture in their new house is either a hand-me-down or was purchased used. The Casadys bargain shop at discount retailers when they want nice, designer clothes.

“We’re very cheap people. We don’t feel like we live a restricted life,” says Matt. The couple also finds deals on things like furniture and decor for their baby’s room by joining yard sale or thrifting groups on Facebook.

They use a Google spreadsheet to keep track of the monthly family budget. When Matt’s paycheck comes in, the couple takes no less than 20 percent of his take-home pay and adds it to their savings. After paying for fixed expenses, they put the remainder of their funds to a spending category. When they spend money, they record the amount, place and description of the purchase in the spreadsheet and subtract it from the limit in the spending category.

“It’s more freeing than it is restrictive when you know that the money that you’re spending isn’t going to prevent you from paying rent next month,” Matt says.

Brit earns $2,000 to $3,000 annually freelancing as a graphic designer. She says about 90% of the time, the money she makes is added to the couple’s savings account. If Matt gets a bonus, or the couple receives an influx of funds in a tax return, it’s treated the same way.

Where they run into obstacles

Moving to a more expensive place has presented some challenges. Housing alone costs about 69% more in Rancho Cucamonga than in Lehi, Utah, according to Sperling’s Best Places cost of living calculator.

“It’s definitely been a sticker shock. Rent alone is significantly more money,” says Matt. The couple says they have adjusted to the rise by staying frugal.

“The activities that we do are mostly free, so we can create memories versus [buying] things that cost a lot of money,” says Brit.

The couple also tries to avoid keeping score on things like who has spent more money from the ‘fun’ category in their budgeting. For example, Matt, a fan of UFC foodball, may buy a ticket to a game for $150 and Brit may get her hair done for $90, but she doesn’t try to find another way to spend $60 afterward.

“Just because he spent more doesn’t mean I can spend more,” Brit says. “It helps us to stay in our budget and not compare [who spent what] so we are not constantly trying to level up.”

The post Why These 3 Families Chose to Live on a Single Income appeared first on MagnifyMoney.

7 Things You Can Do Now to Solidify Your Child’s Financial Future

There are plenty of things parents can do now to help set their kids down the right path financially.

If you have kids, or are considering having them, you’ve likely started thinking about what that will mean for your finances. But have you thought about how you can help your kids become prepared for their own financial future? There are plenty of things parents can do now to help set their kids down the right path financially. Here are a few.

1. Set up a College Savings Account

One of the most important things you can do is to consider how (and if) you’ll help them obtain a college education. An analysis of Labor Department statistics by the Economic Policy Institute found that in 2016, Americans with four-year college degrees made almost twice the average hourly wage compared to those without a degree. So a college degree is still important. However, you should never save for your child’s college at the expense of saving for your retirement. Instead, consider whether, and how much, you can responsibly save for both. (You can read this to help determine if a 529 college savings plan is the right avenue for you and this one about how much is enough when it comes to college savings.)

2. Have a Life Insurance Policy

Don’t think of a life insurance policy in terms of what would happen to your kid if you die. Consider it a way to ensure your child is taken care of in the future, no matter what happens to you. Talk to a certified financial planner if you aren’t sure where to start, or which option is best for you. (Or you can read this article that outlines seven essential documents to fill out.)

3. Put a Guardian in Your Will

Putting together a solid will so your child will be taken care of if something happens to you should be a top priority when estate planning. Picking the best guardian for your child is equally important. You can name two types of guardians — one to physically look after your child and one to look after their assets. Think seriously before simply naming your mom or best friend as your child’s guardian.

4. Open a Savings Account for Your Child

When it comes to helping kids become financially savvy, teaching them how to save — and why savings are important — is crucial. Your kid doesn’t have to be walking yet for you to open a savings account in their name. Ask your bank about a custodial savings account. Once your child is old enough for an allowance, you can discuss why everyone should have savings and how much to put away. Many experts say saving 20% of your income is a good way to build up a safety net.

5. Give Them an Allowance

Experts differ on whether giving kids an allowance helps them become financially savvy, how much to give and for what purpose (just to help them save, or in conjunction with chores, etc.). Research from T. Rowe Price, an investment management company, showed that children who receive an allowance are more likely to think they have a good understanding of basic financial topics than those who don’t get one. The important thing is to not give your kid an allowance and let him do with it what he will — you need to talk about money with your kid, as well. Discuss the importance of earning money and how to make it last.

6. Talk About Your Finances

Money is often a taboo subject in families, but it shouldn’t be. Consider talking to your kid about money early and often. A 2014 study from North Carolina State University and the University of Texas found that children pay close attention to issues related to money. Make sure you’re filling them in on the important facts. (View your free credit report snapshot on Credit.com to help see where you stand.)

7. Involve Them in (Certain) Financial Decisions

Your young child probably won’t help you save for a down payment on a new house or have detailed conversations about your debt-repayment plans. However, there’s no reason they can’t help put together a grocery list and come shop with you while you discuss how food costs money and the importance of family budgeting. Or perhaps on vacation, your kid can help decide how family money will be best spent on a few outings or can watch you fill up the gas tank to get an understanding of how much your road trip costs. Teach your kid early that it costs money to do fun things and how saving helps you achieve certain financial goals. You might be surprised how much your kid remembers later from your early — and repeated — money conversations in the future.

Image: szeyuen 

The post 7 Things You Can Do Now to Solidify Your Child’s Financial Future appeared first on Credit.com.

7 Things You Can Do Now to Solidify Your Child’s Financial Future

There are plenty of things parents can do now to help set their kids down the right path financially.

If you have kids, or are considering having them, you’ve likely started thinking about what that will mean for your finances. But have you thought about how you can help your kids become prepared for their own financial future? There are plenty of things parents can do now to help set their kids down the right path financially. Here are a few.

1. Set up a College Savings Account

One of the most important things you can do is to consider how (and if) you’ll help them obtain a college education. An analysis of Labor Department statistics by the Economic Policy Institute found that in 2016, Americans with four-year college degrees made almost twice the average hourly wage compared to those without a degree. So a college degree is still important. However, you should never save for your child’s college at the expense of saving for your retirement. Instead, consider whether, and how much, you can responsibly save for both. (You can read this to help determine if a 529 college savings plan is the right avenue for you and this one about how much is enough when it comes to college savings.)

2. Have a Life Insurance Policy

Don’t think of a life insurance policy in terms of what would happen to your kid if you die. Consider it a way to ensure your child is taken care of in the future, no matter what happens to you. Talk to a certified financial planner if you aren’t sure where to start, or which option is best for you. (Or you can read this article that outlines seven essential documents to fill out.)

3. Put a Guardian in Your Will

Putting together a solid will so your child will be taken care of if something happens to you should be a top priority when estate planning. Picking the best guardian for your child is equally important. You can name two types of guardians — one to physically look after your child and one to look after their assets. Think seriously before simply naming your mom or best friend as your child’s guardian.

4. Open a Savings Account for Your Child

When it comes to helping kids become financially savvy, teaching them how to save — and why savings are important — is crucial. Your kid doesn’t have to be walking yet for you to open a savings account in their name. Ask your bank about a custodial savings account. Once your child is old enough for an allowance, you can discuss why everyone should have savings and how much to put away. Many experts say saving 20% of your income is a good way to build up a safety net.

5. Give Them an Allowance

Experts differ on whether giving kids an allowance helps them become financially savvy, how much to give and for what purpose (just to help them save, or in conjunction with chores, etc.). Research from T. Rowe Price, an investment management company, showed that children who receive an allowance are more likely to think they have a good understanding of basic financial topics than those who don’t get one. The important thing is to not give your kid an allowance and let him do with it what he will — you need to talk about money with your kid, as well. Discuss the importance of earning money and how to make it last.

6. Talk About Your Finances

Money is often a taboo subject in families, but it shouldn’t be. Consider talking to your kid about money early and often. A 2014 study from North Carolina State University and the University of Texas found that children pay close attention to issues related to money. Make sure you’re filling them in on the important facts. (View your free credit report snapshot on Credit.com to help see where you stand.)

7. Involve Them in (Certain) Financial Decisions

Your young child probably won’t help you save for a down payment on a new house or have detailed conversations about your debt-repayment plans. However, there’s no reason they can’t help put together a grocery list and come shop with you while you discuss how food costs money and the importance of family budgeting. Or perhaps on vacation, your kid can help decide how family money will be best spent on a few outings or can watch you fill up the gas tank to get an understanding of how much your road trip costs. Teach your kid early that it costs money to do fun things and how saving helps you achieve certain financial goals. You might be surprised how much your kid remembers later from your early — and repeated — money conversations in the future.

Image: szeyuen 

The post 7 Things You Can Do Now to Solidify Your Child’s Financial Future appeared first on Credit.com.

10 Cities Where Families Are Better Off Moving to the ‘Burbs (& 10 Where They’re Not)

The choice between living in the city and the suburbs can save families a lot of money. Here are the cities where that decision is easy.

Image: monkeybusinessimages

The post 10 Cities Where Families Are Better Off Moving to the ‘Burbs (& 10 Where They’re Not) appeared first on Credit.com.

5 Things Having a Baby Taught Me About Money

A new mom and personal finance expert shares the new money lessons she learned from baby.

While I’ve always been pretty financially conscious (you don’t become a personal finance writer by not caring about these kinds of things), it wasn’t really until I had a kid that I started putting some of the financial advice I’ve always heard into practice. Plus, I picked up plenty of new tips.

Here are five of the biggest things I learned about my finances after I had a baby. They don’t only apply to people with kids, though. In fact, I wish I’d taken some of them into consideration a little bit sooner.

1. Sometimes it’s OK to Spend Money to Save Time … or Your Sanity

While I’d never advocate for frivolous spending, I’ve learned that sometimes it’s OK to spend a little bit extra on something that will either help save time or make your life just a little bit easier. In my Mom Life, that has taken on all kinds of forms: From big-ticket items like forking over the cash for a nanny (as a freelancer I could just as easily be stingy and try to fit all my work into nap times, nights when my husband gets home or the weekends, but why make it so hard?) to deciding to finish our basement (a large chunk of cash upfront, yes, but with all the visitors we have coming to see the baby, and all the toys that are steadily taking over the house, this is a sanity saver for sure) to the small — and sometimes silly — but necessary, like investing in travel covers for our stroller and car seat so they don’t get ruined when they’re chucked carelessly under planes.

2. Time Really Does Fly, so Start Saving for Retirement Today

It’s pretty easy to get caught up in the day-to-day minutia when you have a tiny baby that depends on you for her every want and need. But every now and then, when I get five seconds to myself, I’m able to look back through the photos on my phone and see how much my daughter has grown. Can she honestly be six months already? You’re probably saying, “I already know time goes quickly. It’s been [insert amount of time here] since I graduated from college,” but really, there’s nothing that sets up a ticking clock quite like a quickly growing child. My point is, although I have always kept the mantra “the earlier you can start saving for retirement, the better,” tucked somewhere in the back of my mind, I now fully grasp the truth behind it.

For example, my daughter was born in July 2016. Had I invested just $100 on that day into a retirement account, by the time I’m potentially ready to retire in 30+ years, that measly $100 could grow to more than $900. Now imagine I invested more than $100, and did so every single month instead of once? Behold, the power of compound interest.

3. Things Change, so it’s Important to Revisit Budgets & Goals

Having a child would be an obvious change to anyone’s budget, but for me, becoming a parent just reinforced how important it is to not only have a budget and savings goals, but that it’s equally as important to revisit those things on a fairly routine basis. Before I was married, for example, my savings goals consisted of essentially two buckets: Emergency and travel. (Ah, the good ol’ days.) When I got married they became: Emergency, travel, move/house. When we started thinking about kids, a fourth “baby” bucket was added. You get the picture. Since buying a house, we’ve added “home repairs” to that list, too, and believe me when I say we’ve already tapped into that one mightily.

The beginning of the year is a great time to check in on your current budget and savings goals and update as needed, but don’t be afraid to shift things around as often as you need to remain comfortable.

4. Finding What Makes You Most Productive Will Be to Your Advantage

I’ve always considered myself an organized person, but I really kicked it into high gear when my daughter was born, and that’s helped my career as well. As I planned to re-enter the workforce after taking a couple months off when my daughter was born, we didn’t yet have a nanny, but I wasn’t willing to wait to get started. Enter the key to my success: organization. As a working mom without a nanny — and then even when we did find one — I realized quickly that if I was going to get anything (let alone everything) done that I wanted to in a day, I better have a plan. For some people (ahem, me) that might mean making daily to-do lists where items can be crossed off. Others might find reminders set for specific times of day helpful, or setting calendar appointments.

The point is, most of us need a little help keeping on task throughout any given day, whether it’s with personal or professional goals. Learning the things that will get you moving more quickly and efficiently will help you power through your to-do list and streamline your day. Remember: Time is money, so make the most of yours.

5. It’s OK to Use Your Savings for What You’ve Saved For

I’ve always felt more secure when I had savings in the bank, which at times has meant going without things I could have really used, even if they were the exact things I was actually saving for in the first place. Silly, I know, but once I was able to start putting money into savings I loved to watch it grow — and I equally hated to watch it dwindle.

Fast forward a couple years and some of those savings buckets have to be spent — hello mortgage down payments, health insurance deductibles to give birth and any number of house repairs. These days it seems like I don’t have the option of whether to spend money in my savings … for the good of my family, money must be spent. And that’s OK. The whole point of saving up for something in the first place is so that when the time comes to actually purchase the item — whether it’s a house, a vacation or that really extravagant computer bag you’ve had your eye on — you’ve done your due diligence and can buy it outright, rather than go into credit card debt over it (and, if you already have, you can find tips for getting rid of those balances here). Coming to grips with this earlier could have saved me a lot of unwarranted angst.

Of course everyone is different when it comes to money management, but hopefully at least a few of the revelations I’ve had about finances over the past six months might be able to help you out, as well.

For more money lessons, visit Credit.com’s personal finance learning center.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: SolStock

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How to Have ‘The Talk’ With Your Family About Your Will

discussing-estate-planning

Most people never disclose the details of their estate plan to their children, who may also be their successor trustees, executors, and agents. As a result, after they die, the children are left to guess about their deceased family member’s true intentions because of the sterile, legal language used in their parent’s will or living trust.

It’s also true that many children are not even sure that their deceased parent wrote a will, much less know where it is located, and in fact, there are countless stories of children who were unable to find Mom or Dad’s will. Furthermore, even if a parent’s will, or trust document, can be located, there is a good chance that some of its provisions will be out-of-date and that it was based on the status of the family at the time it was written but not necessarily as it is today.

Too often, therefore, after a parent dies, there is a lot misunderstanding and conflict among the deceased’s surviving children because they are left to try to decipher the final wishes of their parent based on long-ago conversations, cryptic notes, family traditions, false assumptions and their own perceptions about what is fair. This can be a recipe for disaster.

To avoid leaving such a legacy to your children, it’s a good idea to have a family meeting, which could be held at your home or at your lawyer’s office. You may want to ask your key advisers to attend the meeting too. The tone of the meeting should be somewhat formal but friendly as well. After all, you aren’t dead yet!

Here are some of the topics I recommend discussing at your family meeting:

  • The legal documents in your estate plan (Trust, Will, Power of Attorney, Health Care Directive, etc.) and the purpose of each.
  • Where these documents are stored and how your family can access them quickly after your death or disability.
  • The responsibilities of the executors, successor trustees, personal representatives, and agents charged with administering your estate and the steps that must be taken to complete the administration process. During this discussion, be sure to assure your family members that they have the right to know what is going on during each stage of this process and explain to those who will serve as your agents that they have a responsibility to keep everyone informed throughout the process.
  • The purpose and responsibilities of your professional advisers.
  • If desired, why you made the decisions you did in your estate plan. For instance, why you designated one child as your agent instead of another and why you named your agents in a certain order or instructed them to work as a team.
  • How your assets, such as a 401K, will be distributed and protected for future generations.
  • Why certain “difficult” assets may need to be handled in a special way, like your home, family business or one-of-a-kind family heirlooms.
  • Why you’ve put one child’s inheritance in a trust rather than leaving it to him or her outright in your will, and why your decision to do so is wise and loving rather than arbitrary.

By the way, most parents do not address the size or composition of their estate during a family meeting because they typically like to keep that information confidential, even when they are talking with their children.

You can also use your family meeting to:

  • Build and strengthen ties within your family and build relationships between your key advisers and your children.
  • Convey your family values to younger generations.
  • Answer questions so that everyone feels comfortable with your estate plan and how you arrived at your decisions.

Some parents worry that talking with their children about their estate plan will create conflicts and hurt feelings. But that’s exactly what may happen if you leave behind a plan that your children know nothing about, and as a result it’s possible that one of more of them may try to undermine the plan after your death.

Educating them now can help your children understand the rationale behind your estate planning decisions and that they are purposeful, carefully considered and based on good counsel. Also, if any conflicts or misunderstandings related to your plan do arise, you will have an opportunity to try to resolve them. And finally, you’ll be able to change your plan if you want based on your children’s comments and reactions to it.

Image: PeopleImages

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New Study Finds Your Debt Could Be Hurting Your Kids

killing your budget

Certain types of debt may be hurting your kids, a new study shows.

Researchers at Dartmouth and the University of Wisconsin at Madison found that children whose parents had higher levels of mortgage and student debt fared better emotionally and behaviorally than children whose parents had higher unsecured debt (i.e. credit cards, medical debt, payday loans).

The results show that children may benefit when their parents own a home and/or have higher levels of education (which, more often than not, require a certain amount of financing). Conversely, kids can be negatively impacted when their parents have high levels of unsecured debt, which may create stress or anxiety for parents and may hinder their ability to exhibit good parenting behaviors.

Debt Is a Double-Edged Sword

“It makes intuitive sense that debt that can help you improve your social status in life and make investments — taking on student loans to go to college or taking on a mortgage to buy a home might lead to better outcomes, while taking on debt that is not tied to these investments (such as credit card debt), may be more harmful,” Jason N. Houle, assistant professor of sociology at Dartmouth, who co-authored the study with Lawrence M. Berger, director of the Institute for Research on Poverty and professor and doctoral program chair in the School of Social Work at the University of Wisconsin-Madison, said in a press release. “Overall, our findings support the narrative that debt is a double-edged sword.”

The study followed 9,000 children (ages 5 to 14) and their mothers annually or biennially from 1986 to 2008. The childrens’ socio-emotional well-being was measured using a set of 28 questions to mothers that looked at frequency and severity of child behavior.

The study also measured the total personal debt not incurred from having a business, including: home debt (mortgage or home equity loans); education debt (student loans); auto debt (loans to buy a vehicle); and unsecured debt, such as credit card debt, medical debt, payday loans and other types of debt not tied to an asset.

Unlike other studies that compare families with a lot of debt to families with less debt, Houle and Berger looked at the same families over time, and examined how children’s behavioral problems changed as their parents moved into and out of debt over the course of their childhood.

“What we do in this study is a bit different,” Houle said. “That is, we follow the same families over time and essentially ask: what happens to children in families as their parents take on (or discharge) debt over time. Thus, we’re fundamentally making a ‘within-family’ comparison.”

For instance, in addition to the findings of unsecured versus secured debt, the study found that an increase in a family’s unsecured debt (from $5,000 to the sample average of $10,000) led to an increase in child behavior problems.

Avoiding Debt Can Be Difficult

“I think it is common to assume that those who are struggling with debt are those who have made poor financial decisions or are irresponsible but the research shows that the reality is quite different,” Houle said. “For those who are taking on a lot of credit card debt, or are buried in medical debt, or have payday loans – for many, it’s the only choice they have. In an era where wages have stagnated and costs have risen but credit has become more readily available (due in large part to financial deregulatory policies at the state and federal level over the past three decades), families are going into debt to help make ends meet and keep their head above water.”

If you have a lot of unsecured debt, you may want to consider a balance transfer credit card or a debt consolidation loan. In terms of keeping debt costs down, it can also help to stay on top of your credit since a good credit score will entitle you to more affordable financing. You can get your free credit scores each month and find out how much your debt will cost you in a lifetime on Credit.com.

More on Managing Debt:

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