“Mom, what’s it called again when a business has its trucks taken away?” my 11-year-old called from the living room. “Reposession,” I responded.
My husband had recently explained to our son what happens to a business when it files for bankruptcy. “Their vehicles are repossessed. They’re taken away and sold to someone else.”
The repossession of business assets may not be regular dinner table banter in other people’s households, but in our home, there is no financial topic that is not discussed.
We haven’t filed for bankruptcy, but because of some very bad financial decisions, we very nearly did. By speaking openly about our finances and general money literacy in front of our children, we’re hoping they won’t make the same mistakes we did.
We started off on the wrong foot
Our very first financial decision that my husband and I made was to use money borrowed from our families to pay for our wedding. Around $17,000 didn’t seem like a lot of money to spend on a wedding at the time. It turns out, it was $17,000.00 too much.
Starting our married life using debt catapulted us into a life where using debt became normalized. After we paid off the parental loans we used for our wedding, we launched ourselves into even more debt.
A string of financial missteps
In 2015, we borrowed $15,000.00 from my parents to help purchase a home. After spending over a year renovating the money pit of a house we really couldn’t afford, we sold it. From the deal, we only got a few thousand more than we paid for it, and a credit score so terrible we couldn’t buy another home at the time.
We landed in a nice rental in a smaller town and hoped to pay off our debts as soon as possible. Then, I lost my part-time job, and paying off our debt became a pipe dream. Instead of paying down our debt, we accumulated more.
At the time, we were relying on credit cards for everything from groceries and clothes to high-end gym memberships, eating out every Friday, and expensive vacations we couldn’t afford.
We were rescued and went right back into debt
At our lowest point, we nearly filed for bankruptcy, but thankfully, we were able to pay off our debt with money from a family inheritance. But, because we didn’t change our spending habits, our debt accumulated again.
I want better for my kids
Because my husband and I have made these costly mistakes, we talk about money in all forms to our kids, who are 8 and 11. They know we are once again working to pay down our debts. They understand this is why we sometimes say no when they ask for brand-new bikes or want to know why we’re living in a small apartment when their friends live in larger homes.
I never want my kids to know the stress that comes with carrying large amounts of consumer debt. My deepest hope for them is that they learn from our mistakes and live within their means. I don’t want their paychecks to be eaten up with debt payments; I want them to use their money to fund their dreams and their families’ joys.
Some people balk at how open we are about our finances with our kids, but if we don’t teach them, who will?
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