| Tackling debt as a family |
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McAuliffe's system renews a couple's focus on how small things add up. He uses this system in his own life and has noticed that when going out to eat, he thinks twice before ordering a drink instead of sticking with water.
"When it's coming out of my account with $200 in it, that $5 matters," he says. 'When it's coming out of a joint account with $3,000 in it, it didn't seem like a big deal -- $5 for a soda."
Involve the children
Some couples who fall into debt pretend nothing has changed, ostensibly for the sake of the children. McAuliffe explains that children will pick up on the mixed messages the lack of action broadcasts. Imagine telling your kids outright, "We've got creditors calling the house, we've got no savings, but we've got cable!"
"What kind of message are you sending to your kids?" McAuliffe asks.
Instead, McAuliffe urges parents to confront their situation honestly and share that knowledge with their children. Hard times can also be a good opportunity to teach children some very important financial lessons.
"People have to face the harsh realities of looking at their budget and saying 'What is it we have, what can we cut, what is a need versus a want?'" he says. "Get your kids a library card and they can check out free DVDs."
Make it a lesson for everyone
Initially, some of the cutbacks may put a strain on the family because they won't be able to do all of the things that they normally do. However, the more you involve them and explain to them the purpose of the changes, the better they will take it.
"Almost at any age, you can help your children understand how their actions, like leaving the lights and TV on all night, make a difference in the electricity bill," Viale says. "Show them a bill that's bad and show them a bill that's good and say this is what it costs to heat our home."
Harrine Freeman, author of "How to Get Out of Debt," suggests keeping the family involved throughout the debt-reduction process with monthly family meetings. At the meetings, go over finances with the whole family: Write down expenses and how much money you have coming in, then write down financial goals.
"Show them every month, see, this bill is paid off and we are this much closer to achieving our goal, whatever that goal may be," she says.
"Include everyone in the process, so they see from the beginning to the end and that every time they spend money there's an impact on the household."
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