Debt is something that keeps many single mothers up at night. Trying to raise children on a limited income can be difficult and reaching for credit cards to cover needed expenses may seem necessary. However, there comes a time when it has to stop.
Thankfully, you can take care of the debt and live debt-free. Whether it means setting realistic goals or saving for unexpected expenses, you can take care of your debt.
Set Realistic Goals
One of the biggest mistakes people make is to take on too much. Instead of saying that you want to pay off $10,000 this year, set a goal to pay off 20% of your debt. You don’t want to feel overwhelmed or you risk giving up. Find an amount you’re comfortable paying towards your debt each month and stick with it.
Use a Percentage Plan for Income
A great budget is necessary if you hope to gain control of your finances. Sit down and create a detailed budget and discover how much you spend on variable expenses, concrete expenses, debt, savings and fun. The next thing you need to do is determine how much you WANT to spend on these items. For example, if you know that your concrete expenses are 50% of your monthly income, you might put 20% towards debt, 20% towards variables, 5% towards savings, and 5% towards fun. The exact numbers you use will depend on your lifestyle and needs.
Focus on Small Debt First
One of the best methods for tackling debt is to pay off small debt first. For example, let’s say you have ten accounts ranging from $150 on a clothing store credit card to $10,000 on your car loan. It’s best to focus on putting extra money towards the $150 account. This will get rid of that monthly payment and give you even more money to put towards the next smallest account until it’s all paid off.
You will never win the debt game if you continue to charge expenses. If you’re used to charging items, and not questioning it, this will be hard to begin with. However, you need to start asking yourself if the purchase is a necessity or a want. Some even find it helpful to see how long they can go without spending money at all (other than on concrete expenses) and saving what they don’t waste on unneeded purchases. This will help build your savings account and give you a better control on spending.
Save! Save! and Save!
Last, but not least, you need to save for emergencies and unforeseen expenses. This will allow you to stop depending on credit cards when the brakes need replaced or your child breaks her glasses. You will be surprised even how how smaller saving adds up!
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