Being in debt is certainly not a rosy experience. You certainly do not feel nice when the accusing fingers of your creditors point at you. Things can be worse if you are a single mom. You have no one else to rely on but you do have a lot of responsibilities. You need to support yourself as well as your kid without anyone by your side. How would you do it? Here are some smart tips to make your life easier:
Know your debt
You need to understand that you cannot get out of debt if you do not know clearly how much you owe. Begin with making a list of your debts and the corresponding monthly payments. Also write down the interest rate for each of them. This is important because the high interest debts are the ones which cost you more and you would need to pay them off first. Next, you equate your debts against your monthly income to understand if the former exceeds the latter.
Manageable debt? Consider debt snowball and budgeting
If your debt amount is under control then you can opt for debt reduction techniques like debt snowball and avoid options like debt settlement. Dave Ramsey’s debt snowball urges you to try to pay off the smallest debt first while making minimum payments on other debts. When the smallest debt is paid off, you move on to the next debt. This technique gives you some psychological boost as the smaller debts are paid off faster. There is also another method called debt avalanche which requires you to pay off the debt with highest rate of interest first. In case you have a single but huge debt then budgeting is a must to get things under control.
Weigh your options
If your monthly income is less than your monthly payments towards your debt then you would need to lower the payments. How can you do it? Well, you have three options:
a) Consolidating your debt with a lower rate of interest. This would involve taking a consolidation loan from a financial institution and paying off all your debts. Paying off the consolidation loan will be relatively easy because it is usually a long term loan and has a low rate of interest.
b) You can also approach the creditors to extend the term of the loan. If they agree then it would make your monthly payments much more affordable.
c) Finally, you can also opt for a settlement program. In this case the creditor forgives a part of your debt. However, debt settlement damages your credit substantially and more often than not, the creditor will object to this kind of payment plan
Assistance from government and non profit organizations
You can seek help from many non-profit organizations which help unemployed or low income single mothers to get back to their feet. Women’s independence scholarship program is one such program. It helps the single mothers by educating them and increasing the opportunities available to them. You can also look forward to government assistance. Many states offer living expenses to single moms.
Life as a single mom can be financially tough and debt can make things further complicated. There is no reason to lose hope though. Just remember the above tips and you would definitely be able to wipe your debts sooner or later.
Article by Amy Lewis