Seven Ways Single Moms Can Pay Off Debt ASAP
A few days back we had picked up a less talked/ discussed topic, single moms in India. While discussed a lot of emotional and relationship issues, one thing that was on our mind was financials. When you separate or lose a partner, ‘how to manage financials’ is one issue we can’t overlook. Sometimes due to situations, they land up in debt. Paying off your financial obligations can be more difficult if you are a single parent because you don’t have anyone to share the financial burden.
If you live from one paycheck to another, then you don’t really own the money you earn. Instead, you are a slave to your loan. The situation can affect your relationships, career choices, and even your mental health.
Most single moms struggle with loan payments, and as a result, fail to start a savings account. Here are a few suggestions to get rid of the owed amount quickly.
- Find Out How Much You Owe
As a single parent, your family relies on you to make ends meet. To ensure you have enough each month, you should know how to manage your finances wisely. You need time and patience to determine the actual amount of any loans.
The first step is to get your checkbook, bills, and a calculator. You should also a box where you can place paid bills and a binder to hold your financial documents. Look at your bills and pay them before their due date. If there’s a bill that you can’t afford to pay, notify the billing company and ask for a payment plan; do not just ignore payments.
Make a list of your debts that include student loans, credit card balances, and car loans. You should also list the balance left on the loans and their respective interest rates. This is the easiest way to determine your total loan amount.
- Account for Your Cash Flow
Before you can manage your finances, you should first know how much is coming in and going out. More often than not, many people don’t realize that they spend more money than what they earn each month.
Single moms who feel they are living from one paycheck to another are actually doing that. They can’t make ends meet because they are spending more than what they can afford to. By knowing how much you spent and where you spent it, you can create a more realistic budget for the household.
- Create a Budget
Having a budget will allow you to determine how much remains in order to pay off your financial obligations. If the amount left is not enough to cover your expenses, then your goal is to find ways of cutting your overhead.
Monitor how much you spend on childcare, food, transportation, clothes, insurance, and other bills. Then you can find the areas where you can achieve some savings.
- Live Within Your Means
Now that you have a budget, you should learn how to live with it. Sticking to a budget might mean some changes to your lifestyle. However, these subtle changes can have a huge impact on your financial health.
Living with a limited budget might be tough at first, but it can help you have more savings while also paying your obligations. If you are serious about paying off your loans, then you should make your monthly budget work. For instance, you can cancel your gym membership and just start running around the neighborhood. You can also choose to downgrade your cable plan or even cut it off to realize savings. You can cut back on food spending by avoiding eating out a lot.
Single moms can lower expenses related to their kids. You should not compensate for being a single parent by buying your children too many toys and other stuff.
- Create an Emergency Fund
Before you start paying off loans, you should make sure that you have an emergency fund. By setting aside some amount for emergencies, you can avoid getting additional loans or depending on credit cards.
The emergency fund should be enough to cover emergencies when they come up in the future. When saving up for your emergency fund, you should still make minimum payments on your loans.
- Pay Off Debt
Your savings will all be for nothing if you are not successful in getting rid of your realistic quick loans. It is hard to see a portion of your hard-earned cash going to the lender every month. If you don’t want to spend most of your life working just to pay for your loans, then you should pay them off as soon as possible.
Keep in mind that paying the least amount on your student loan for 20 years means that you are paying much more for more interest. You could have used the amount paid for the interest on other stuff, such as your child’s education or even a family holiday.
Once you established a budget, though, you can start paying off your loans. It is important that you stick with your plan and don’t deviate from it. By following your budget in a strict manner, it’s possible that you can pay off your loan in less than a year.
- Consolidate Your Loans
You should consider consolidating different loans into a single one. You might have loans with high-interest rates. You can get more savings and at the same time, have an easier time paying for your loans through consolidation.
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Being a single mom is difficult, but your job will be easier when you pay off your loans as soon as possible. By using the tips mentioned here, you will be debt-free in no time. Is there anything else, you would like us to take up? Do write to us with suggestions or leave your comments below.