Compared to an average debtor, single moms may need more assistance for maintaining a better credit score and debt management. A single mother is also prone to suffering a debt than two-parent couples. They also tend to fall prey for lower credit and bankruptcy ultimately. As per a research report of the National Bureau of Economic Research, it is found that the single-mother households are overwhelmingly facing poverty lately.
Other statistics show that women run more than 85% of the single parent homes and among these, about 42% run in poverty. Between the expenses of utility bills, housing payments, clothing, food, studies, and childcare, single mothers tend to find themselves running short of money even when they are earning and also struggle to recover their credit scores over time.
Tips for single mothers
If you run your finances independently as a single mother and ended up in a troublesome financial situation, then the first ideal step may be to seek good financial counseling. If your situation is not yet dire, then getting onto an ideal debt management plan will be the best thing to do. You may want to supplement your debt management efforts also using the latest avenue of online credit counseling. If your financial condition is really grim, then one might want to enroll in bankruptcy counseling to identify whether or not to file bankruptcy.
Financial difficulties tend to plague single mothers across the globe. It is understood while raising a child of more than one, how a single income may make things worse over time and an add-on financial emergency may break you down completely. Below are a few do’s and don’ts for single moms to help them make better choices in managing credit and debt in such a manner to live a financially stable life.
#1 Don’t spend too much on credit
Spending money required now strategy. It is easy for shopaholics to fall into the trap of overspending. The current day credit cards allow you to carry an un-owned balanced and spend it at your wish, but remember the interest of it accrues on each payment cycle. This means you will not only be pressured to keep on paying for purchases at the first place but also to pay more overtime for a long time.
If you can help to do it, ensure that you make all your payments in cash to the maximum. This will keep a tab on your spending habit, and one may tend to stick to the bare minimum on paying out of your pocket.
#2 Do leverage the opportunities to build good credit
Even though it is a good idea to pay for things in cash as we discussed above, it is always not necessary if you aim to build your credit score. Keeping a good line of credit and paying it off properly every month is a reasonable mode of defraying your costs for a few weeks, and as an add-on, it is an ideal approach to keep your credit score going up. As a rule of thumb, ensure that you don’t spend any more than you can handle and also you can pay it off in a single cycle. As per debt consolidation reviews, this approach will help you to avoid any accruing interests and help keep your credit scores on top.
#3 Don’t take payday loans if possible
It is a bad move if you opt for a short-term payday loan. You may hear other opinions too for sure. Many of the lenders devised such loans as allure to prey on frail people. This means those who have some major debts and want to get money quickly for immediate needs. It is found that many single moms fall prey to it.
These loans, if not paid instantly, are designed to cost the borrowers a lot on a long run. Adding to it, lenders also feature some predatory practices on these loans which may haunt you for many months or years to come. So, if there is any possibility, don’t take out such a loan which you cannot pay on the back and make it double sure that any such loans you take out don’t feature such predatory interest rates.
#4 Do try to negotiate
When you owe money to many lenders, it doesn’t mean that you have to pay all of it off at once. If you owe multiple debts and finding it troublesome, you may call the lenders whom you owe to and try to negotiate over the outstanding amount. If they are convinced about the possibility of getting their capital amount back through consolidation or so, they may further be willing to cut down on the interest or come into a lump sum settlement figure.
Many lenders have programs to assist single mothers and other streamlined categories. Enrolling into such programs will help reduce your payments or postpone the payments without any penalties. Even though not, many financial companies are open to taking a realistic look into your capabilities and then rearranging the terms for you than ending up in getting nothing. Though there is no guarantee that the lender will comply with your negotiation, it never hurts to ask for the possibility of it.
#5 Don’t ignore debts
The worse thing a debtor can do is to ignore the debts altogether. It doesn’t matter if you moved over to a new place or changed your cell number, your debts are always following you. There are possibilities to avoid frustrating collection calls, but it is not possible to avoid impairing your credit record on defaulting.
Failure to manage your debts sincerely and seriously will ultimately put you into irreversible trouble. If you want to manage your debts well and rebuild your credit rating, then it is essential to manage your debts properly in a rational manner.
Remember, you can only repair your credit and debts. Whatever your financial liabilities are like the utility bills, student loans, or credit card debts, you can handle all these and bring back your stable finances through various available support. Just be diligent and responsive to make use of all available and reliable resources to get rid of your debts, repair your credit, and live a stable financial life.