Would You Use Kids' Money to Pay Debt?

[vendigirl]

We get a government credit of a little over $100 per child monthly. I have been putting that money directly into an ING account for each child. I plan to eventually buy each of them a Mutual Fund or other long term investment with it. However, if I "borrow" some of the kids' money I can pay off the Visa bill by the end of December. It makes sense, but I feel guilty. I'm not sure why since most folks just assimilate the child tax credit into their regular income and spend it. WWYD?

[terry1156]

First, you are doing great thinking ahead for your kids. They will appreciate you thinking ahead for them.

Why don't you make a compromise with the money. Use it to pay off the credit cards and then pay the amount you were paying toeard the credit card into their accounts. The result would be that you are paying the credit card interest to your kids instead of the credit card company.

I would definitely pay off my credit card bills first if I were in your situation.

[crosses]

I like terry's idea. It is a win-win situation for everyone. You pay off the credit card debt and your kids end up getting more money in their savings accounts. I guess you just have to make sure you have the willpower to pay the money back and not forget about their savings accounts.

[Tree0164]

Cindy,
I would put it towards the visa card as well.

[2moretrees]

I think it's wonderful what you're doing. I don't think there is anything wrong with "borrowing" from them if you pay it back. Why do you feel guilty doing it?

[terry1156]

Did you make a decision on what to do? I don't think you can really go wrong with whatever you choose.

[vendigirl]

Seriously, I feel like I'm stealing from my kids. Wierd, I know. If they were old enough to understand and say, "Sure Mom, I'll lend you $500" that would be another thing. But they're not.
It's crazy. Like I said, most people I know just absorb that tax credit and spend it on whatever without a thought. I mean, it's my tax money being credited back, but I always wanted to just put it aside for my kids and hope that with time and compound interest it would grow to be something significant that could help them achieve their goals when they're adults. My Mom used to give me the money every month as a sort of allowance. Of course, back then I only got $18 and change. LOL.
I have decided to go ahead and use that money and put it back in January plus the interest. It will take a load off my mind to not have that Visa bill, so it will really benefit all of us in the long run.

[terry1156]

I think you made a good choice. And you are right. It will benefit both you and your kids.

Isn't it strange how we get those feelings. But it is good that you have them. If you didn't, then you probably would use the money without even considering paying it back into the accounts. Your kids will be much better off because you do have that feeling.

[PrincessPerky]

This thread makes me giggle (at myself), My kids don't have an enourmous amount of money but they do each get cash for every holiday from the grandparents on my husbands side, and we have no idea what to spend it on!! We are struggling ot pay for groceries while our kids have more than enough for a week of groceries in their banks! But if I opened the door to take it for milk this week it might be more next week and so on and so on. Besides we can do it, just have to stop buying pringles and chicken nuggets. Now I am making myself hungry!

[Luv2shop]

Originally Posted by 2moretrees

I think it's wonderful what you're doing. I don't think there is anything wrong with "borrowing" from them if you pay it back. Why do you feel guilty doing it?

I agree

[robex]

I agree with paying off the Visa, and then paying back the kids. We get money every month for our three and I use it for what we need as a family. As for birthday money that they receive, that goes straight into their bank accounts and I don't touch it. My Dad puts money into a special education account for their birthday gifts, and then takes them each for a 'Birthday Sleepover'. The one on one time with him is great for them and him!

[mjrube94]

What is the purpose of the money? Is it a "rebate" from the government for taxes you've paid, and you're eligible for it because you have kids? If so, I think it ultimately is your money and not theirs and you should spend it on whatever you want without a second thought.

But if this money is really THEIR money (e.g., birthday gifts), then you have a fiduciary responsibility to keep it for them and only spend it on items for them (not clothing, food, and basic necessities that you're responsible for anyway), and it should be turned over to them when they reach 18 or 21.

[cercis]

We borrowed from our kids for our closing costs for our house. I didn't like doing it, but when we sold our first house, we made a large deposit into their accounts, so basically we just took back that money. Also, some of the money in their accounts came from FIL who flat out told us we were to use it for whatever we needed, even if it was to pay the utility bill or buy diapers.

Their bday money goes into their bottle and we don't touch that. We've decided, though, to open a special account with that money because we're getting close to $500 (or more, maybe) and getting a little afraid of having it stolen. The kids are okay with the idea because I explained about interest. We're still trying to figure out how we will decide they have earned their disney trip (what they were saving for) since the original goal was to fill the bottle.

[mjrube94]

Cercis, if you're looking for a place to put the kids' $500, check out AffinityBank.com. It's FDIC insured, and if you open a kids account, they pay 10% interest on the first $500. They're based in California, and I'm in NJ, but I had no problem opening the account, and the few interactions I've had with them have been favorable...

[cicy33]

Originally Posted by cercis

.

Their bday money goes into their bottle and we don't touch that. We've decided, though, to open a special account with that money because we're getting close to $500 (or more, maybe) and getting a little afraid of having it stolen. The kids are okay with the idea because I explained about interest. We're still trying to figure out how we will decide they have earned their disney trip (what they were saving for) since the original goal was to fill the bottle.

Make a mark on the side of the bottle before you take the money out. Then when you are ready to take the money out again. measure the mark you made and then measure that distance from the top of the current moneys and make another mark. Eventually they will "fill" the bottle. You are smart to get it out of the house and into a bank or something that draws interest plus the away from the danger of theft.

[cicy33]

Originally Posted by vendigirl

We get a government credit of a little over $100 per child monthly. I have been putting that money directly into an ING account for each child. I plan to eventually buy each of them a Mutual Fund or other long term investment with it. However, if I "borrow" some of the kids' money I can pay off the Visa bill by the end of December. It makes sense, but I feel guilty. I'm not sure why since most folks just assimilate the child tax credit into their regular income and spend it. WWYD?

Actually I agree with another poster. This money you are talking about is yours. You are a good person to give it to your children but this money is a tax break to help offset the cost of having children when your income is low. It is actually not the childrens. But I do think that is awesome that you are doing this for them. You should feel no guilt. The reason a lot of people wait until the end of the year (myself anyway) it is sorta like a savings account. I would spend it if it was in my paycheck. Also it helps to lower taxable income.

[shelbylovesmelby]

now that min pmts are douibling in january i'd work on the credit card also. or you could maybe put a portion of the $ away for the kids & the rest tward the card?

[Firefly]

I agree with borrowing it and putting it towards the Visa. I think it is great that you are doing that for your kids!!

[Bluezy]

If the debt incurred on the Visa was for child expenses or a mandatory survival means, I would borrow the amount of money from your tax credit, pay off the debt, then replace the money with interest to each child's account. If the Visa debt is from frivolous spending, you need to leave the children's money alone and tough it out.

It's very expensive to raise children. However, your children need to be paid back in good faith.