For most single parents, one of the most difficult things to do is managing and balancing our personal finances. This problem will become even more overwhelming when you have two or three children to support. The number of expenses that a single parent has to bear on a daily basis is just staggering. From taking care of the education costs to the foods, the dresses, the expenses just keep coming on. A lot of single parents feel that they have to take up personal loans in order to help them through the tough times. They plan on repaying the debts later, but a lot of single parents have enormous difficulty in repaying the loans. As a result of this, they wonder if they can ever stop working and retire in peace or do they have to work and repay their debts forever. In this article, you shall learn about some essential tips that will help you to reduce expenditures and become debt-free.
Assessing your debts is the first step
It does not really impact your situation too much if you have a lot of debts. You can start working towards repaying those debts now. You need to understand and accept the fact that there are a lot of people like who are mired in debts. For instance, on an average, we have almost every working American to have a debt of around 90 thousand dollars in total. Credit card debts alone account for about sixteen thousand dollars. On an average, a car loan will be of around twenty-seven thousand dollars. Similarly, there are high student loans also. For single parents, it will be a huge task to pay this money alone.
However, prior to paying your debts, it is vital that you undergo some preparatory work also. Some of the essential things that you must do:
Make an account of all your various expenses
You will continue to feel overburdened and overwhelmed with your debts if you do not first try to know and understand where you should begin from. One can understand that initially you will be disinclined to tally and account your expenses. However, this has to be done as soon as possible. You must get all your credit cards bills which you have pending, add to this your expenses on your student loans, next add your personal loans, home loan (if any) and then you should add them all up. It is vital that you can combine the different amounts which you owe and consolidate it to know just how much money you truly owe.
You should formulate a new budget
It is of immense importance that you can formulate a new budget as quickly as you can. When you have a budget, you will be able to see how much money you shall be able to save once you repay your monthly debts. When you find out that this money does not amount to a lot, then you should not worry as you have just started out. You would be able to see that there are innumerable expenses which you make unnecessarily. You will have to get additional incomes if you want to repay the debts faster.
Frame a debt repayment plan
You should try to frame a plan to help you repay your debts. There are two fundamental ways for repaying the loans. You can either choose debt snowballing or go for the debt avalanche. In debt snowballs, you should arrange your debts from the smallest to the biggest debt amount. Then you must work towards repaying the small debt first while you continue making minimum payments to repay the other debts. After you repay the small debt, you will move on to the next smaller one. This way you will go on paying all your debts. In a debt avalanche, you would list the debts from the highest interest rate to lowest one. You must try to repay the loan with the highest interest first while working towards trying to make the minimum payments for the other debts. The debt avalanche method will help you to save more money in the long run. Thus, it is vital that you come to a decision about the way you would want to repay your debts.
Have your emergency funds put in place
It is important for you to know that prior to you starting to repay your debts, it is essential that you save a few thousand dollars for your emergency money. You need to set aside the money that you will use during emergency situations. Thus, you shall always have funds when you require it and also for when you retire.
Stop using credit cards altogether
Credit cards are the most dangerous things which can easily increase your debts by huge margins. The rate of interests charged on credit cards is also extremely high. It can take years before you can finally pay off the bills you owed. It is important that you stop using your credit cards altogether to ensure that you do not fall into any more debt. So, stop using credit cards completely and destroy them. Pay using cash as much as possible; this will save you from falling into debts. Thus, by the time you retire, you will be sure that you do not owe anyone any extra money in the form of debts. This will be a huge relief for you financially.
You can learn more from nationaldebtrelief.com about innovative ways by which you can successfully pay off your debts.
For any single parents, it can be quite difficult to repay debts. Life can be extremely difficult for anyone. But when you have some debt management plans the process will become easier. It will help you to save enough money for yourself by the time you retire. This will help you to retire without any financial burdens and in peace. Hopefully, the information mentioned in this article will have helped you.