Single parents have to go through a lot when families do not have the leverage of dual incomes and have to face financial setbacks. After all, clearing off your debts and taking care of your kids at the same time is definitely not an easy situation to deal with. A single parent must focus on their career in order to waive off the outstanding loans while meeting the duties and responsibilities towards their kids at the same time. Despite the challenges as a single parent in life paired with the financial difficulties, you will be surprised to know how quickly you can get out of your debt situation. All you need is the right resources and knowledge to get back your personal and financial life back on track.
If you are a single parent and looking to get your account back to the positives or facing major financial issues such as poor credit rating, here is a definitive guide to help you in dealing smartly with the scenario while paying your debt faster.
Try to Pay Extra Than the Minimum
This is particularly crucial for single parents that have opted for a credit card loan. If you are unable to deal with the outstanding credit balances and looking for a way to pay it off quickly, the best method is to try paying extra than the minimum. However, this does not imply that you have to break your pocket to get rid of the credit card, overdraft or line of credit loan. Just make sure that you are paying as much more as you can afford. Even an extra hundred dollar can do great in the upcoming months of due payment.
Work on Your Expenses
Life for a single parent is all about calculated financial planning and working on your budget especially when you are in a debt situation. Subtracting your necessary expenses from the additional unnecessary ones and adding them to your budget is the key to pay off your debt faster while saving money at the time. Apart from that, when you are working on your budget and expenses together, make sure you are also paying heed to your debt repayment plan. According to forbes.com, if your necessary expenditure is around 50 percent or less, take the objective to put twenty percent of your savings toward your debt.
Keep a Listing of Your Debts
As you are done tracking spending, it is time to create a list of your debts on a spreadsheet including your balances, minimum payments, and interest rates. Not only this will give you an idea of your debt situation, but doing so will also provide you with the correct numbers of what you owe. Make sure that the list you create comprises of all your debt including your personal loans and credit card balances and even your mortgage. Besides, if you have acquired money from friends and family, ensure putting those on the list too.
Rank Your Debts
After you have created your list of debts, arrange the debts in the accordance of their interest rates and critical priority. If you find a debt whose priority is supercritical and needs to be paid off as soon as possible, order the debts in such a manner. Some experts suggest the snowball method, which means that you should organize your debt from the smallest to the biggest amount in order to achieve the momentum required to keep going in the long run while other prefer the listing the debts from the highest interest to the lowest ones. The order you pick depends on you, as you are a single parent whose prime need is to look after the children; however, the only thing that matters is to commit to the order once you choose it.
Think of Becoming a One-Car Family
If your household has two cars, consider either taking transit or getting rid of one or walking to work. As a matter of fact, you can actually save thousands of dollars annually by only utilizing one car. According to a report, an average car owner is accountable to spend around nine thousand dollars per year to use, own, and operate the vehicle. Use this money to pay your debt and see the massive difference it brings in your life. Besides, it will also provide you with extra savings that can enable you to focus on the bright future of your children.
Consider Getting a Second Job
Although this might not work for every single parent, if you can make it work, you could go debt free quicker than expected. Getting a second job does not always mean that you have to scout for another post in different organizations, as you can try picking up an extra shift in your firm. Apply all your extra income in your debt repayment scheme and once you are debt free, you can easily scale back to normal shifts again. Furthermore, in order to generate extra cash for your debt repayment, you can think of capitalizing on your hobbies.
Consult a Credit Counselor
Facing a debt situation can be really struggling especially when you are a single parent and are clueless about the scenario. If you are unable to make any sort of advancement in paying down your loans, start consulting with a credit or debt counselor. Thanks to the Internet, speaking to such experts is now streamlined and you can easily get help in dealing with your debts. For instance, you can speak with experts on sites such as nationaldebtreliefprograms.com who can explain you all the options that are perfect for getting rid of your debt quickly.
Prefer a Debt Consolidation Loan
Perhaps this is the best option if you owe multiple debts and are unable to meet the multiple monthly payments as a single parent. A debt consolidation loan can pay off all your multiple debts by combining them into one and provide you with a new loan at a much lower rate of interest. Besides, it allows you to save a bit of cash every month which you in utilize in raising your children effectively.
Finally, start dealing with your debt situation as soon as possible in order to get rid of it quickly. Adhere to the aforementioned strategies and you can easily solve your financial challenges as a single parent.