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The key on discipline is that it not be made so harsh that you can't follow through with it and don't make it so final that your kid's hope is squashed. Selling the device definitely squashes the kid's hope.
We recently bought my 9 YO daughter an iPod for playing games and downloading music because we're kind of sick of her taking our phones. We dangled that carrot for a couple of weeks as a motivator for her schoolwork (she's homeschooled). Then the wife gets a notification from ebay in the middle of the night that she had bid on on an ebay decorative cover. She woke the kid up and asked about it. Kid denied and denied. Lying in my house is an automatic beating, no questions. I don't tolerate it from anybody and definitely not from my kids. So, strike one there. She also bid a maximum of $100 for an item worth like $8 maybe. Strike 2. The device wouldn't even fit the iPod we bought for her. Strike 3. Her mother already told her "no"... Strike 4. She got the swats for lying. The iPod is also on hold for a while longer. We emailed the ebay vendor and explained the situation. They let us off the hook but we didn't tell our kid. She has to do chores around the house (outside the scope of her normal responsibilities) until she earns $100.
I don't know if we're doing everything right but she's a pretty cool kid most of the time. She communicates really well and she means well. We're pretty proud 99% of the time.
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