By Jason V. Simons ~
As the telephone jingles away through the Holiday Season with calls from friends and relatives, everyone seems to be in great spirits wishing all the best for a Happy New Year. Then suddenly the ring tone changes as we turn the calendar to 2012. Calls begin rolling in from creditors wondering why you haven’t paid the credit card bill. Before long the phone takes a very different tone, even the ring sounds different, almost angry and somewhat annoying. It is collection companies turning your Holiday Cheer and New Year resolutions into stress and concern about how you are possibly going to deal with the bills you racked up throughout the Holiday Season.
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This is a very common theme throughout our country, with millions of people facing the same financial distress. It is difficult to face in many instances and causes tremendous stress for families especially if there is no plan for resolving the debt. The average credit card balance per household in 2012 is estimated to be in excess of $15,000 and creditors are becoming more and more aggressive in their collection tactics. You need help, and in most cases professional advice is critical to ensure that you are maximizing your efforts and eliminating the debt both quickly and efficiently.
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The first and probably most important step you can take is to pull a recent credit report. Everyone in the United States is entitled to one free credit report per year and there are several websites that will walk you right through the process. Unfortunately, most people don’t know how to read a credit report which is why meeting with a credit counselor, financial planner, or bank representative is important. If you understand what you are facing, it is much easier to develop a plan of attack. It is also imperative to realize that you did not accumulate the debt overnight so it is going to take some time to reduce or eliminate the balances. Most people want a quick fix and that simply does not exist. It takes time and dedication to do a budget or program which will help you to achieve the ultimate result of becoming debt free.
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One of the other important steps to take right away is to create a carefully thought out budget for the current year. This will not only help with past debts, but also avoid more problems in the future. Even though the Holidays just whizzed by, now is the time to start saving some money for next year. Staying within the plan can be difficult as life throws financial curve balls at all of us throughout the year, but a budget will improve your chances for success and create a much better personal money management system—and that budget can include an emergency fund too.
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Another critical thing to consider is how the financial balance within the household is impacting the family unit. All too often parents fight about money without realizing that it can tear relationships apart and create stress and anxiety for children. We assume that children don’t understand what is going on, but they know more than you think and can certainly learn from some of the issues. If children do not get an explanation directly from their parents they will often stray outside the family unit in order to gain an understanding of what is really going on. This can cause tremendous embarrassment about a very sensitive topic if kids decide to speak to the parent of a friend or even a teacher. It is best to include your own children in the discussion to be sure the family issues don’t wander out of the household.
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It is also more important than ever to begin educating children about good credit habits, the value of money, and avoiding debt. If we start at a young age to expose children to these topics they will be much more prepared to handle similar challenges later in life. Even simple lessons like getting an allowance can teach children how to manage money, save, and even gain a basic knowledge about credit. I once taught a young class how to build credit with their parents by getting double allowance and then working off the “balance due” by doing chores around the house! Simple, but effective, and even fun for kids when they are working towards something they want or helping out around the house.
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During tough economic times, people are far more aware of financial stress especially if they have poor credit and significant debt. Generally it is all over the news, and following the Holidays we are often reminded just how easy it was to overspend when the credit card bills start bombarding our mailboxes. Many people learn the hard way after years of facing high balances, soaring interest rates, and the stress associated with juggling bills. Our children are poised to learn from those mistakes, but it is important that we take the time to teach them about money management and the value of good credit early on, even as we learn from our own mistakes.
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Jason V. Simons is President of National Settlement Solutions, Inc. and author of the recently released children’s book, The Day Debt Moved In. Simons, who holds a Business Administration degree from Roger Williams University, has an extensive financial background that includes a fifteen year focus on debt settlement. Meanwhile, his new book tells a common story of family life that reminds both children and parents that, when they stick together, many obstacles can be overcome. He was inspired to write The Day Debt Moved In after witnessing the tremendous impact of financial hardship on children, and he hopes to bring recognition and awareness to this issue. Jason and his wife have two young children.