They say your family is there for you through the good times and bad. You share great memories, build your dreams together, and shower them with endless support as they would with you. But what if the next big storm your family has to face is a series of financial setbacks? What can you do now that your family is facing lots of debts?
Impact of Debt on Families
If managed well, debt can help families achieve specific goals. One can start owning their own home and vehicle, afford excellent education, and even provide for both needs and wants of family members that lead to a more satisfying life. But when debt management is not handled well, this can lead to a series of events that can impact each one of the family members.
Debt can impact a family’s overall health and wellness. It can affect a family’s ability to keep the members healthy, happy, and safe. It can impact a family’s ability to handle stress since financial issues are the most common triggers of stress.
The parents are usually the ones who feel the most impact of every debt they make. They become responsible for paying their debts, which can strain their relationship with their partners and children. When parents are stressed out because of debt, this can limit their abilities to provide for the family’s needs.
Parents can easily fall into anxiety and depression due to debts. This is since debts are not the only things they need to pay for when managing a household. There’s the utility bills they have to pay, food and transportation allowance they have to cover, and other expenses associated with running a home.
On the other hand, kids may feel like they miss most of their childhood because of their family’s debts. They can end up feeling isolated from their friends, ashamed because their parents can’t afford what they want and need, and excluded in school. This can be detrimental to their self-confidence and health.
Why Many Families Fall into Debts
There can be many reasons why families end up in massive debts. Usually, families have different kinds of debt. This, along with their inability to repay their creditors, makes them stressed out financially, physically, and mentally.
One of the usual reasons is credit card debt. Many families fall into the credit card trap wherein they cannot effectively control their credit card usage. They fall into the never-ending cycle of using their card to buy the things they can’t afford, ultimately increasing their debt each month.
Then there are mortgage and car loans. While a family vehicle and a roof above a family’s head may seem like a family’s basic needs, the inability to pay off these debts will only add to the family’s stress. This and other expenses like education, personal loans, and even emergency health expenses can drive families into deeper debt.
How Families Can Manage Their Debts
One way to manage debt better is to start assessing your needs and avoid taking in debt you can’t pay back. Assess your situation and start living below your means. Dedicate enough funds to start paying your debts.
One thing that can further drive your family into debt is your tax issues. Failure to consistently pay your taxes can get you in trouble with the International Revenue Service (IRS). You can find relief by investing in innovative tax relief solutions.
With a tax resolution process, you can figure out the best solution to your tax issues. This way, you can find ways to settle your debts for a much lesser price than your family initially owned. If you get approved for a debt settlement, this will freeze your interests and penalties.
This also helps you avoid other consequences, including wage garnishments, liens, and even asset seizures. You get to keep the assets you used as collateral for your loans. You get to lower your debt and start putting your life together.
It is crucial that you start building an emergency fund that your family can use in emergencies. It also helps if you start building separate rainy day funds for your family’s future endeavors. Create a realistic budget that works for your family while keeping in mind to live under your means.
It pays to work with a financial expert to help your family get over your debts. They can help you pinpoint the best ways you can manage your family finances. You get to improve your financial literacy and help family members learn the best habits to become more financially responsible in the future.
Debts can ruin families in many ways. You don’t want your family to fall apart just because you failed to manage your debts correctly. Create a plan on how you can get out of debt and start educating your family on proper financial management to break the cycle.