Among all the good things that contribute to good financial planning, single moms are advised to avoid the lure of overspending that has led to the outbreak of the malady of living with debts. Credit cards show the easy way of spending money even when your purse is empty, and this virtual richness can drive borrowers towards doom. In no time, you will find yourself sucked into a debt trap with no means of settling it. You live by what you owe to others and this can block your path to building wealth.
Consult experienced financial consultants like Carson law firm to show you the way out from the messy financial state. They can suggest a few ways of reducing the burden of loans, but what is more important is getting real with self, and facing the ground realities with grit. Look for the reasons that drove you towards debts and eradicate it from the roots instead of seeking fresh loans to repay debts. Read on to know about the ways of doing it.
Assess your lifestyle
Take a hard look at your lifestyle to judge how much of it is driven by needs and how much by wants. Needs are the basic necessities of life that you cannot do without, whereas wants are what you fancy in life and not something that is essential for living. Often the line that differentiates the two gets blurred and wants are converted to needs. When this happens, the floodgates of overspending are opened and you turn to debts to support your lifestyle. Go back to the basics, focus on your needs, do away with the wants as much as possible and keep the spending restricted within the monthly budget that you have set.
Limit your debts
Irregular cash flow is what single moms might experience and would require some support in the form of loans to manage the finances better. Stick to the use of a single credit card with low maximum balance. The lower credit limit helps to keep debts under control. For example, if the credit limit is fixed at $600, and by maintaining parity with your income, decide on the maximum spending so that you are able to repay the credit card bills in full every month.
Keep an eye on the credit report
Credit reports have to be scrutinized carefully to ensure that the balance amount reflects the correct account balance. Often creditors do not adjust the account balance correctly. The account balance impacts the ratio between debt and income, which should be decreased with every payment thereby increasing your credit score. Even if you have money in your account in bank that can cover charges, it helps to build the credit score without increasing debts.
If you happen to service more than one loan accounts, prioritize the payments every month. You can either choose to repay the accounts with highest rates of interest or you can pay off the lowest balances first. It all depends on how much cash you have when making payments.
About the author–Emma Goldberg is a lifestyle expert who has mentored several women to lead a balanced life. She has guided women who seek specialist assistance in personal finance. Having worked closely with many law firms like Carson law firm, she has a good grasp on financial matters. She loves to be creative with her skills in interior designing.