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Monday, 08 May 2017 16:10

Dave Ramsey has the Answers to Your Questions!

Written by  Dave Ramsey
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Teens and Checkbooks

 

Q: My daughter is 15, and she’s had jobs around the house and been on commission and the envelope system for years. She’s very good about saving and not spending on silly things. We recently opened a checking account for her, and I was wondering what bills you think we should assign for her to pay on her own?

A: This sounds a lot like what we did with our kids. She’s obviously bright and motivated, so the first thing you do is explain to her the seriousness and responsibility associated with a checking account. The next step is for her to balance the checkbook with you looking over her shoulder. Do this with her for several months, while you keep one eye on the account, too. After that, I want her to do it alone and show you her work. Her balance should match yours and the one at the bank.

 

As soon as she demonstrates competency, and you feel comfortable that she can handle things, I want you to start putting her clothing budget in the account. You know, the weirdest thing happened with our girls at this stage. They suddenly started shopping at less expensive stores. It’s amazing when they see that the dollars associated with these purchases can run out. My bet is you’ll see some changes in her value choices.

 

Just take it step-by-step, a little at a time. The more they exhibit competence, wisdom, and confidence, the more you can release them.

 

 

Why the Smallest Debt First?

 

Q: I’m new to you and your plan. Why do you want people to pay off the debt with the smallest balance first, instead of the one with the highest interest rate?

 

 

A: Simply put, because personal finance isn’t all about math. Personal finance is only about 20 percent math. The other 80 percent is behavior. 

 

We list debts in the debt snowball in order of the smallest to the largest balance, putting as much as possible toward the smallest while paying the minimum payments on the others. The reason, as I mentioned earlier, is behavior modification. It helps you see yourself making a dent in your debts.

 

It’s easier to change bad habits when you see quick results from your efforts to eliminate negative behaviors. Paying off the smallest debts first, instead of the debts with the highest interest rates, will give you quick wins that will help keep you motivated. It provides proof that you can succeed and become debt-free!

Last modified on Monday, 08 May 2017 16:16
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