Being a single parent is supposed to be the most difficult job anywhere in the world especially, in the United States. In 2017, according to statistics, around 19.97 million kids in the U.S.A. lived actually with just one parent and almost 16.77 million of them lived only with their mother.
We are given to understand that the total number of kids living with one unmarried parent has actually more than doubled from 13 percent in 1968 to 32 percent in 2017. As per Pew Research Center, the number of kids living with both their married parents dipped from 85 percent in the year 1968 to as low as 65 percent in 2017. Getting adjusted to the life of a single mother involves tremendous responsibilities and several exasperating challenges that actually did not exist before getting the divorce or the death of your spouse.
Suppose you have just assumed the role of the head of the family, you are new to the job; hence, you need to chalk out a truly balanced stratagem that caters to the financial and emotional requirements of the family as a whole including the kids and you. As the head of a family, it is expected that you would be working actively towards fulfilling your family’s requirements. You must plan and work actively towards it.
Tally up All Your Debts
As a single mom, you would find it overwhelming to calculate all your debts. Moreover, right at the start, there could be some degree of hesitation for tallying up all existing loans and debts. You must understand how to and where exactly to start tallying. You must understand that all your debts cannot be repaid completely unless proper tallying of all your existing debts is done. Be honest and do not cheat yourself. Take out all the personal loans, student loans, credit card statements, car loans, furniture loans, etc. You must necessarily add up all your pending loans.
Chalk Out a Clear-Cut Budget
Once you determine a budget, you would be able to understand precisely how much additional funds you would require to pay off all your existing debts. You may accurately calculate how much money you could save in terms of household expenses to divert towards effective debt payments. If you are not able to find enough funds that could be used for paying off the debts, there is no reason to be disheartened as you have simply started the process. Gradually, you would learn new ways of slashing your household expenses and accumulate more funds to pay down your debts. You may learn how to generate a budget online and you could easily have access to budgeting printable for free.
Determine & Clearly Understand Your Plan of Action
There are two effective ways of paying off your pending debts. They are the debt avalanche and the debt snowball methods. The debt avalanche involves listing accurately all your existing debts from the highest rate of interest to the lowest rate of interest. You would put in your dedicated efforts to eliminate the debt with the highest rate of interest while at the same time going on making the minimum payments on the rest of the debts. You could save some money in the long run if you stick to this method.
The debt snowball method involves listing all of your debts from the smallest balance to the largest one. You start working toward getting rid of the smallest balance while going on with the minimum payments toward the rest of your debts. Once the smallest balance is paid off, you’ll tackle the next smallest one. Both of these methods are effective as well as the right ways of getting rid of your pending debts. However, you must choose a method that works for you. Visit National Debt Relief for learning more and for expert debt relief advice and assistance.
Generate an Emergency Fund & Maintain It
Before starting to pay off your existing debts, it is mandatory to keep aside at least $1,000 as an emergency fund. If you are strict about maintaining an emergency fund, you would not have to depend on expensive credit cards or some other types of debts suppose something unexpected happens and you require urgent cash. You must save a minimum $1000 for catering to your emergency needs but keep making minimum payments towards all your existing debt.
As per Forbes, often single moms land up in trouble as they focus on saving for education expenses above all other financial priorities. It is a wise move to save a minimum of three to six months expenses and keep it ready for emergencies before you start funding your 529 plan. It is not a good idea to withdraw any funds from your 529 plan in case of an emergency since the account earnings would be subject to taxes and you may have to give 10 percent penalty if you withdraw funds from this account towards certain non-qualified expenses.
Develop Investment Shrewdness
Single moms when in charge of the family finances including debt repayments, must develop investment acumen. You must consider learning ways to save and even invest effectively. You must consider opening your own investing and saving accounts for gaining exposure and experience. You may have easy access to various podcasts, books, and resources to achieve a sound knowledge of finance. You may sharpen your financial IQ and keep monitoring your credit history.
Get Rid of the Plastic Money
Consider cutting up your credit cards as they are undoubted the worst type of debt. They come with ridiculous interest rates. Thanks to the exorbitant interest rates, you could be spending years attempting to get rid of the debt. If you have realized that the root cause of your debts is credit cards, steer clear of them and cut them up right away. Your credit card is certainly not to be used as an emergency fund. Single moms use credit cards with utmost caution. If you have managed to get out of debts by now, it is best to do away with your plastic money so that you could remain debt-free henceforth.
You have not landed up in major debt overnight. So you simply cannot expect to get rid of your nagging debts in a jiffy. You need to be patient and consistent. Remember to follow the above-discussed tips and maintain honesty only then you could pay off all your debts faster. If you fail to get rid of all the debts at once, do not lose heart. Swing back into action with double determination and enthusiasm until you are debt-free.
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