Debt-Proof Your Kids, Part 2

Bob: If your children are in junior high or about to be there, are they old enough to be making some of their own financial decisions?  Author Mary Hunt thinks so.

Mary: We would give our children, at the beginning of the month, the money we intended to spend on them during the month and let them manage the money that we were going to spend on them, anyway.  But our plan, and while everybody should make one that fits their own, I think is very important that children be allowed to make independent financial decisions that are significant while they are still within the safety net of the family.

Bob: This is FamilyLife Today for Friday, July 11th.  Our host is the president of FamilyLife, Dennis Rainey, and I'm Bob Lepine.  Today we'll offer some suggestions on how you can help your children become confident and competent money managers.  Stay tuned.

And welcome to FamilyLife Today, thanks for joining us on the Friday edition.  You know, Dennis, there are major American companies that are very interested in developing a relationship with your teenager.  In fact, if you are getting ready to send a teenager off to college, one of the smiling faces that will greet them in the Student Union or somewhere on campus or one of the brochures they will find in their dorm room as they settle in this fall will be a brochure from a company that wants to give them that symbol of American adulthood – their very own credit card.

Dennis: Yeah, in fact, one of our staff at FamilyLife had a baby, and when the baby, I think, was three or four months old, somehow the baby had gotten on some kind of list.  This is – he gave it to me, this is no joke.  He received an application to apply for a major credit card – a three-month-old baby.

Mary: Wow.

Bob: Well, I've got to tell you, I read an article about a guy who decided to unlist his phone number but didn't want to pay the phone company for an unlisted number, so he just had the number put in the name of his dog, and so then he started getting credit card solicitations for his dog.  You know, his dog was invited to have a $5,000 line of credit simply because he had a telephone number.

Dennis: I'll tell you, we're laughing about this, but we get, in an average month, I would imagine, anywhere between five and 10 credit card applications for our children.  They want the child on the hook.

Bob: We're going to give parents today a strategy for how they can help their kids be ready for that onslaught when it comes.

Dennis: Yes, that's correct.  Mary Hunt joins us for a second day.  Mary, welcome back to FamilyLife Today.

Mary: Oh, thank you so much.

Dennis: I wish our listeners could quickly listen to her story that she shared on yesterday's broadcast because she shared a story of how you and your husband were in more than $100,000 in credit card and consumer debt.  You had more than 30 credit cards.  In fact, so many you didn't know how many you had.  It took you more than a dozen years to get out of all that debt, but God has used that because he's turned you into a cheapskate.

Mary: Isn't that fabulous?

Dennis: She heads up a ministry, it's actually called "The Cheapskate Monthly."

Mary: That's the name of my newsletter, that's right.

Dennis: Explain to our listeners what's in that newsletter.

Mary:  Oh, it's a 12-page newsletter, of course, it comes out every month, and I try to make sure it's filled with motivation, inspiration as in lots of practical tips, exact how-tos, how to get out of debt, and there's a lot of reader communication.  Readers write in and tell their stories and their successes, and then that helps others.

It's like a support group by mail, I guess, for a lot of debtors in this country, and, I'm telling you, we're getting letters every single month of families now who are paying off their last debt – ecstatic, never dreamed in a million years they'd be able to call themselves debt-free, and we talk about unsecured consumer debt in that term – debt free.  It is the most exciting thing that God could take the most embarrassing, shameful thing in my life, and turn it out to be something that He has been able to use to His glory.  That's a miracle, right there.

Dennis: And she is so excited about it, Bob, because once she was blind but now she sees.

Bob: Right.

Dennis: She was literally once enslaved to debt, and that's why she's so excited about it.  She and her husband, Harold, have survived this.

Mary: Yes, we have.

Dennis: And have now been married nearly 30 years.  They have two sons, Jeremy and Josh, and there are some great stories in here about Jeremy and Josh.  I've got to ask you here at the beginning – you've written a book called "Debt-Proof Your Kids."  You tell the story about Uncle Harvey.

Mary: Isn't this amazing.  Well, let me tell you, when my life fell apart in 1982, and I had this spiritual experience.  I begged God to forgive me, and I promised I would do whatever it took to pay back this debt.  I think the second greatest fear in my life – the first was that I was going to lose my family; the second fear was that my boys were going to turn out like me, because you know something?  Families reproduce themselves.

Dennis: Mm-hm.

Mary: And I had this amazing insight – here they are, six and seven years old, realizing that children hear what we say, and they see what we do.

Dennis: They were watching you run up that $100,000 worth of consumer debt.

Mary: Oh, you bet they were.  They saw Mommy getting anything she wanted whenever she wanted it and, all of a sudden, those ugly attitudes of entitlement were starting to poke out of my children.  More was never enough, they always wanted everything, and when they got it, it was never enough. 

You know, Christmas morning would come, and they'd open all their gifts, and you would see these attitudes of – no appreciation, no gratitude, you know, like, "Well, what else can we have," you know?  Oh, that was just heartbreaking to me, and I saw this in my children, and I thought, "Oh, Lord, help us, help us to turn this thing around.  Is it too late?"

Well, my husband and I in our whole thing, you know, over the next few months as we were talking, I shared this with him.  "What if the boys turn out like us?"  And, all of a sudden, we started to remember and reminisce about his Uncle Harvey.  Now, let me tell you quickly about Uncle Harvey.  My husband's oldest uncle had four sons.  Of course, my husband's cousins now, but they were much older than he, so there were always these stories in the family.  They lived a continent away from us.  They lived in Eastern Canada, so we did not know them personally, but we had heard these amazing stories about Uncle Harvey.

What he would do is on January 1st of every year, he would give to his sons, in cash, all the money he intended to spend on them for the entire year. 

Dennis: At what age were the sons?

Mary: I don't know, I don't know.

Dennis: That was a part of the story.  You weren't allowed to know the facts.

Mary: I didn't know that part.  I envisioned they were teenagers.  They were very close in age, I know that, so I'm thinking junior high, high school, I don't know.  But it was such an amazing thing, because the children didn't have the same personality types.  He had one son who was a total spendthrift.  By February he didn't have a dime left.  He had to go get a job because Uncle Harvey's rules were you can live here, you can eat here, I will be your dad, we are your family, but if you need money, you're on your own, kid.

Then they had another son who was an absolute cheapskate, wouldn't spend a dime.  He'd rather save than do anything.  He wouldn't buy new shoes, wouldn't get his hair cut, a real embarrassment to his mother, but they kept their mouth shut.  Now, here is the important thing about the story.  All four of these men have turned out to be fantastic, unbelievable, adults – astute businessmen, very successful in their businesses, beautiful families, not a divorce among them, fabulous children, and we're thinking, "There's go to be something here." 

You know, and I can only imagine that he taught them how to manage their money.  I didn't know all of those details, but we had enough of the story to think there is something there.  And so Harold and I sat down, and we came up with a plan where we would use Uncle Harvey as our inspiration.  And then we would devise our own Hunt Kid Financial Plan.

And basically it was this – that we would give our children at the beginning of the month, the money we intended to spend on them during the month, and let them manage the money that we were going to spend on them, anyway.  That's the broad description.  How we actually did this, though, is the subject of the book, and I tell you, step by step by step, all the stories of what happened – some of them are hilarious.  I was scared to death that we had made a huge mistake, but our plan, and while everybody should make one that fits their own, I think it's very important that children be allowed to make independent financial decisions that are significant while they are still within the safety net of the family.

Bob: You know, we've done something similar with our kids, giving them a certain amount of money and saying, clothing and entertainment, all of that, you're on your own for, and I have said to a couple of our kids from time to time, "Would you prefer that I give you a lump sum once a year?  That you get that big deposit, and you've got it there to manage, and that way you'd have some money" – this usually comes about when they're looking for some kind of a big purchase right away, you know?

Dennis: Right, right.

Bob: I say, "I'll give you your money for the year, if you'd prefer that."  Usually, they back off from that real quick.  There is something inside of them that knows …

Dennis: "I need the discipline."

Bob: "I can't be trusted yet."

Dennis: That's exactly right.  You gave this money to Jeremy.

Mary: Right.

Dennis: There is a great story about Jeremy having eight cents left.

Mary: Yes.  Well, we had some definite rules, and our boys had to go through boot camp, and we tried to give big, grownup terms to our program.  We didn't put our children on allowance, we put them on salary.  Now, this elevated what we were doing to something very, very respectful.  There were some hard and fast rules.  Number one, they had to give away 10 percent.  They had to save 10 percent in a savings account in a bank.  It couldn't be in their room, it had to be in a real bank.  With what was left, they could do what they wanted.

"Do what I want, Mom?"  "You can spend it anything you want, but here is the kicker."  We had a list of things we would no longer pay for.  Now, in the very first year, we started this at the beginning of grade 6.  I think that's a good time for boys, 10, 11 years old, and on the list all things were optional.  "Kid optional" is what we called them for the first year – things that didn't matter if they bought them or not.  We didn't put their haircuts and things that were going to be essential, but things like their video games – everything a kid has their hand out for – their collections, their stuff at the store, their ticket to go to the movies with their friends – that kind of thing we put on the list.

And we said, "It's up to you whether you want to spend it or not," but they had to keep the rules.  They had to give away 10 percent and save 10 percent.  Well, now, that opened up a discussion.  "What do you mean, give it away?  What do you mean give it away?"  "You have to give it away."  "Well, where do I give it?"  "You decide, you have to be the steward.  Maybe you have a little friend whose daddy is out of work.  They're really needy.  Maybe your heart says 'I need to help them.'" 

Well, then, that starts the question – "Well, what about the homeless guy with the sign?"  Well, it's up to you.  Do you think that's a good use?  Do you think you're being a good steward?"  And then the question would always come, "Well, do you and Daddy do that?"  "Well, yes, we do."  "Well, where do you give?"  "Well we give it to the church.  We give it to God, because in His Word," and then that opens up that whole thing.  "But, Jeremy, it's up to you.  You have to make the decision."

Well, the interesting things that both of our boys, of course, followed – our actions.  And they made that decision to give to the church, and they have been givers since they were age 11.  They've been marvelous savers.  At the beginning of each school year, we had a whole plan, it was all written down – at the beginning of each school year they got a raise, a significant raise.  But here's the deal – an event every year, their salary increased. 

By the time they were in high school, we didn't straight out pay for anything.  They bought their own yearbooks, they paid for all their senior events, they did all their own gasoline, they did everything, including clothes.  We put clothes on there because giving that freedom a little bit at a time, by this time, they were so frugal, they'd get the money, and then they'd go to the thrift store and buy their clothes.  It embarrassed me to death, but I thought, "You know what?  They're making their own decisions, and this is the good thing.  We are preparing them for life."

And once you start talking about money, oh, my goodness, the opportunities that arise.  When those applications would come in the mail, we'd sit down and talk about it.

Dennis: Are you talking about a credit card application?

Mary: You bet.  We'd say, "Now, let's just imagine, you know, get out the calculators, guys.  Let's say that we bought you this particular credit card they're offering us.  Let's say we're going to buy a big screen TV.  It's going to cost us $3,000, we're going to put it on the credit, we figure out the monthly payment, we figure how long, and it's going to take 18 years to pay this off?  And, all of a sudden, they go, "Who wants a TV for 18 years?"  They teach themselves when you open this thing up.

We would talk about newspaper articles.  You can't believe what's in the news about credit cards.  All you have to do is just start family discussions about it.  Our boys both had checking accounts.  We taught them that they had to have in their senior year in high school so they could start managing a checking account, very good exercise, and we talked about all of these things, and I've got to tell you, we have had a few years to experience how our program worked.  And as opposite as our two boys are, they both turned out very financially confident.

Let me tell you, Jeremy is now 25 years old.  He just purchased his first home as a single young man in Southern California, and the only trouble he had was qualifying for the mortgage was they couldn't understand why he had no debt – no student loans, absolutely no credit history of debt.  Now, he has a credit card so he has established credit, but absolutely no history of debt.  They called him four or five times, something doesn't add up here, you know, the computers can't handle this. 

Dennis: Right.

Mary: But they are not used to seeing a person enter adulthood without debt, and it was the most exciting thing in our lives.  Now, he doesn't make a tremendous amount of money.  He has a good job, he has a good education, but the fact that he has no debt increases his spending ability, his living ability – it is just phenomenal to me how the absence of debt can improve your life so dramatically.

Dennis: Let me ask you a question about your salary.  Let's say your child finds a pair of tennis shows – ha, that would be a relevant subject – a boy who wants a pair of tennis shoes that probably cost $75 to $100 or more.  Or maybe, you know, it's not that big, maybe it's a CD, and he's at the end of the month and doesn't quite have enough.  Did you ever allow your children to borrow money from you to be able to purchase?

Mary: Never.  I can say that without qualification – never.  Because in the book – we had a book with all the rules.  There would be no loans, there would be no advances.  We taught our children that borrowing was not an option.

Bob: Okay, what if you're at the store, though, because this has happened to me.

Dennis: Oh, yeah.

Bob: I've got the money at home.  Lend me the money here, I'll pay you back when we get home.

Mary: No, absolutely not.

Dennis: You wouldn't do that?

Mary: No, absolutely not.

Dennis: You really are a cheapskate.

Mary: Because why do that?  You're breaking the rules.  You're teaching your children that when they get in a pinch or they have a great need or desire that it's okay to spend money they don't have.  No, we'll go home and get your money, and we'll come back.

Dennis: Really?

Mary: Oh, absolutely.

Bob: The benefits – there is an obvious benefit here, and parents know this – you didn't have to deal with kids coming to you and saying, "Can I have money for this?"

Mary: Never. 

Bob: You never had that battle between whether you're going to give them money for this or not.

Mary: That's right, and never once did our boys say, "Well, what did you do with the 20 bucks I gave you last night?"  And all of the friction that happens between parents and teenagers – it was not there.  The adolescent years were the most beautiful, wonderful time of our lives.  I really, truly believe that a lot of the friction between adolescents and their parents stems from this thing of, "Mom, you're so cheap," and back to the thing about clothes.  Before our kids went on salary, they were designer freaks.  Well, what we did, along with our plan, was we had a list of what we would pay.  It was our basics of what we – 25 bucks was what we would pay for tennis shoes. 

Now, if they wanted to by the $95 pair, fabulous – we'll take you there to try them on.  Guess what?  You get to pay the difference.  I've got to tell you, it nipped that in the bud real fast.  It's amazing what children can learn, how they will mature, and children want to be trusted.  I think that is so important – they want to feel freedom, and they want to feel trust.  This is a way that we could do both.

Bob: But weren't there times, Mary, when you had to bite your tongue and go, "Ohhh, look at what you're wearing, ooooh."

Dennis: There is one right here in the book, Bob.

Bob: Yeah?

Dennis: It's a story of Jeremy and a purchase that he made for $39.92.

Mary: He had $40 to his name.

Dennis: That's right, and all he had left was 8 cents to last him a month.

Mary: That's right.  It was the longest month of my life.  I tell you, as a mother, I wanted more than anything to say "We've made a huge mistake, my darling, I will give you anything you want just like we've always done," and biting my tongue.  I still have the scars to prove it.

Bob: Mm-hm.

Mary: Yes!  That is so difficult to allow your children to make errors, to make poor judgment calls, but the best learning experiences – and it doesn't matter now.

Dennis: What did he buy for $39.92?

Mary: A Star Wars toy.

Dennis: And he bought it at the first of the month?

Mary: The very first day of his salary, that's right.

Dennis: And he had 8 cents to last him the rest of the month.

Mary: The entire month.  He had to miss a birthday party, he missed video games.  It was the most heartbreaking month of my life.  He's only 11 years old – to see my child suffer.  Never once did he ask for any more money.

Bob: There was a little too much cruelty in your laugh was there.

Dennis: Well, I'm listening to a mother, you know?  And you know what she's doing?  I'm glad she's articulating this, because it is the mother, many times – or it can be the dad, I mean, we can be a softie, who bails them out.

Mary: Oh, yeah, and we want to do that, and believe me, the credit card companies are counting on that.  They know that parents bail their kids out.  That's why they're giving them the credit cards without jobs, without co-signers, because they know parents will bail them out.

But, let me tell you, the second month with Jeremy – completely the opposite.  The kid became the tightest cheapskate you've ever seen in your life.  He missed a birthday party rather than buying a gift, and I'm going, "Oh, this cannot be.  I cannot raise this child this way.  We've really made a mistake."  But I've got to tell you, after a few months, the pendulum started to swing right in the middle, nice and easy.  The kid started to manage his own life using money as the tool, and it was absolutely incredible.

Bob: Dennis, at age 17, Amy got a letter in the mail from the bank from her checking account.  There were insufficient funds in the account for the check that she had written.  She came to me and – "Dad, I don't know how this happened."  I said, "Have you ever taken money out of the ATM and not written it down?"  "Maybe.  I thought I had written them all down."  Well, we went up and we asked for a printout, and we matched it up with what she had, and we found a couple of ATM withdrawals that hadn't made her deposit, and she had to pay, I forget what it was, $22 or something, for a bounced check?

Dennis: Yeah, they're expensive.

Bob: It was, like, a $12 check that she had to pay the $22 bounced check fee for.

Dennis: What a lesson.

Bob: That's a small price to pay keeping them out of where you wound up.

Mary: That's right.  And you know something about our boys – both of them saved far more than they were required to.  In fact, they saved so much that each of them, when they turned 16, had enough money to buy a car – all cash.

Now, you can see, they lived some frugal months, but the payoff was incredible, and they taught themselves this kind of thing.  I just cannot stress enough how important it is to allow your children to make some decisions on their own.

Dennis: You know, those listeners who listened to yesterday's broadcast and hear where you came from yesterday, I think, what a different story.  Talk about redemption, talk about deliverance from Egypt …

Mary: That's right.

Dennis: … for Mary and Harold, as a couple.  I mean, you were delivered.

One last question I've got to ask you quickly – salary.  You always mention the word "salary."  Is that tied to responsibilities that they have?  You're paying them to do certain duties in the family?

Mary: You know, that question comes up, and I'm sure there are many schools of thought, but for our plan it was not tied to that at all.  This is how – we wanted to emulate real life.  We looked at our family as a community, each one of us were a citizen of the community.  As such, we had responsibilities within that community, within that home.  Our boys had responsibilities, they had chores, they had salary as well. 

But let me ask you this – if you're on the way to work, and you happen to be a little late, you get a speeding ticket.  Your paycheck next Friday doesn't have a deduction from it for that speeding ticket.  No, you get your paycheck, then you have to go on your own and pay for that citation. 

So we tried to do that.  We would give our boys citations if they messed up.  If something wasn't done, they got fined.  They still got their salary, it was not docked, but they might have to pay a $10 fee.

Dennis: Oh, really, like for failing to carry out the garbage?

Mary: Absolutely, absolutely.  And, let me tell you, you stop speeding when you get to many speeding tickets, and that's exactly what happened.  We did not dock their pay.  We saw them as – and we called them "certified," "official" family money managers.  We were turning over to them a portion of our family's income to manage.  Each person in the family had our own responsibility as part of the community, and that was how we looked at that.

I know that there are some families who don't believe in – you know, they would rather tie to chores.  I don't think there's a problem with that as long as you've got a plan that's working.

Dennis: You know, and what parent doesn't need a plan around finances today?  Especially as you move into the teenage years, because if you don't have proactive plan, I promise you, your teenager has one for you.

Bob: That's right.

Dennis: And it's not a pleasant plan, either.

Bob: And, you know, I think back to how we got a plan when we first came through this with our children.  We leaned into those who had been there before, and those who had learned along the way and had come up with wise strategies, and I think what Mary has put in her book, "Debt-Proof Your Kids" is exactly that kind of a wise strategy for parents, so that you can put a plan together and begin to help your children face what is going to be one of their big life-skill issues – how they handle money and credit cards and debt, the whole thing – getting them checking accounts and teaching them how to set money aside for different things.  It's all a part of what we have to pass on to our children, and Mary's book, "Debt-Proof Your Kids" helps do that.

If you'd like a copy, you can go to our website, FamilyLife.com.  On the right side of the home page, you'll see a box that says "Today's Broadcast," and if you click where it says "Learn More," that will take you to an area of the site where you can find out how you can get a copy of Mary Hunt's book, "Debt-Proof Your Kids," and, by the way, there is also a book called "Debt-Proof Your Marriage," that is available on our website as well.  It's from Mary Hunt, and if you'd like to get a copy of both books, let us know, and we'll make arrangements to have those sent out to you.

If it's easier to call, 1-800-FLTODAY to request these resources, you can do that.  1-800-358-6329, that's 1-800-F-as-in-family, L-as-in-life, and then the word TODAY.  When you get in touch with us, someone will let you know how you can get these resources, and we'll make arrangements to send them out to you.

There is one other resource I want to mention that we'd love to send out to you this month – we had an opportunity to sit down not long ago and talk with Nancy Leigh DeMoss about forgiveness.  It's a big issue in a lot of families today, and Nancy has written a book called "Choosing Forgiveness."  We would love to send you this month a CD that features our conversation with Nancy on this subject, and we're making it available when you make a donation of any amount to the ministry of FamilyLife Today.

We are listener-supported, so those donations are critical for this radio program to continue on this station and on other stations all across the country.  We also love hearing from you and, again, this month, when you make a donation of any amount, feel free to request the CD that features our conversation with Nancy Leigh DeMoss on forgiveness.

If you're donating online, there is a keycode box on the donation form.  Just type the word "forgive" into that box, and we'll know to send you a copy of the CD, or call 1-800-FLTODAY to make a donation over the phone and mention that you'd like the CD on forgiveness or the CD with Nancy Leigh DeMoss.  Again, we are happy to send it to you as our way of saying thank you for supporting the ministry of FamilyLife Today.  We appreciate hearing from you.

And we hope you have a great weekend.  We hope you and your family are able to worship together this weekend, and I hope you can join us back on Monday when we're going to begin a weeklong look at a subject that a lot of couples find themselves scratching their heads about – the subject of family planning.  What's appropriate, what's not appropriate, what do we do with contraception?  Should that be a part of our marriage?  We'll talk about that beginning on Monday.  I hope you can be with us for that.

I want to thank our engineer today, Keith Lynch, and our entire broadcast production team.  On behalf of our host, Dennis Rainey, I'm Bob Lepine.  We'll see you Monday for another edition of FamilyLife Today.

FamilyLife Today is a production of FamilyLife of Little Rock, Arkansas – help for today; hope for tomorrow. 

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