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Certain types of debt may be hurting your kids, a new study shows.

Researchers at Dartmouth and the University of Wisconsin at Madison found that children whose parents had higher levels of mortgage and student debt fared better emotionally and behaviorally than children whose parents had higher unsecured debt (i.e. credit cards, medical debt, payday loans).

The results show that children may benefit when their parents own a home and/or have higher levels of education (which, more often than not, require a certain amount of financing). Conversely, kids can be negatively impacted when their parents have high levels of unsecured debt, which may create stress or anxiety for parents and may hinder their ability to exhibit good parenting behaviors.

Debt Is a Double-Edged Sword

“It makes intuitive sense that debt that can help you improve your social status in life and make investments — taking on student loans to go to college or taking on a mortgage to buy a home might lead to better outcomes, while taking on debt that is not tied to these investments (such as credit card debt), may be more harmful,” Jason N. Houle, assistant professor of sociology at Dartmouth, who co-authored the study with Lawrence M. Berger, director of the Institute for Research on Poverty and professor and doctoral program chair in the School of Social Work at the University of Wisconsin-Madison, said in a press release. “Overall, our findings support the narrative that debt is a double-edged sword.”

The study followed 9,000 children (ages 5 to 14) and their mothers annually or biennially from 1986 to 2008. The childrens’ socio-emotional well-being was measured using a set of 28 questions to mothers that looked at frequency and severity of child behavior.

The study also measured the total personal debt not incurred from having a business, including: home debt (mortgage or home equity loans); education debt (student loans); auto debt (loans to buy a vehicle); and unsecured debt, such as credit card debt, medical debt, payday loans and other types of debt not tied to an asset.

Unlike other studies that compare families with a lot of debt to families with less debt, Houle and Berger looked at the same families over time, and examined how children’s behavioral problems changed as their parents moved into and out of debt over the course of their childhood.

“What we do in this study is a bit different,” Houle said. “That is, we follow the same families over time and essentially ask: what happens to children in families as their parents take on (or discharge) debt over time. Thus, we’re fundamentally making a ‘within-family’ comparison.”

For instance, in addition to the findings of unsecured versus secured debt, the study found that an increase in a family’s unsecured debt (from $5,000 to the sample average of $10,000) led to an increase in child behavior problems.

Avoiding Debt Can Be Difficult

“I think it is common to assume that those who are struggling with debt are those who have made poor financial decisions or are irresponsible but the research shows that the reality is quite different,” Houle said. “For those who are taking on a lot of credit card debt, or are buried in medical debt, or have payday loans – for many, it’s the only choice they have. In an era where wages have stagnated and costs have risen but credit has become more readily available (due in large part to financial deregulatory policies at the state and federal level over the past three decades), families are going into debt to help make ends meet and keep their head above water.”

If you have a lot of unsecured debt, you may want to consider a balance transfer credit card or a debt consolidation loan. In terms of keeping debt costs down, it can also help to stay on top of your credit since a good credit score will entitle you to more affordable financing. You can get your free credit scores each month and find out how much your debt will cost you in a lifetime on Credit.com.

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