There are several grants and financial assistance available to help single mothers in their debt management. Statistics from surveys show that single mothers carry a lot of debts due to their low and sometimes unstable income.
With no assistance from family and partners, single mothers are more vulnerable to debt than any other person. These grants help single mothers to manage their finance and debts.
However, it’s the credit score that needs repair for financial stability. This guide will enable single mothers in repairing their credit score.
Lower credit scores and low income leads to limited resource for money ultimately resulting in bankruptcy. According to the reports of The National Bureau of Economic Research, single-mother households are highly likely to face poverty.
Also, statistics show women lead about 85 percent of single-parent homes. Furthermore, about 42 percent of these homes are in poverty.
Between housing payments and utility bills, there are additional bills such as food, clothing, health, education and childcare. Typically, juggling with all these, single mothers often find them strapped for cash.
A Road to Financial Freedom
Single mothers in bad financial situations should follow these steps to recover credit scores and evade filling for bankruptcy.
- The first step is to seek any financial counseling program. Discuss with the counselor regarding your options. Ideally, embarking on a debt management plan is perhaps the best option provided your situation is not dire.
- However, if your financial situation is found to be grim, you may wish to discuss the debt consolidation reviews and know about its possibilities and feasibility.
- In worse cases, you may need to enroll in a bankruptcy counseling to determine whether or not you need to declare bankruptcy.
You may even want to complement this step with any online credit counseling as well.
Follow the Do’s and Don’ts list
Apart from taking financial counseling from an expert, you must also follow a specific do’s and don’ts list. This will enable you to make far better choices when it comes to managing your credit score and your debt.
Do not Spend on Credit
Though it seems like a no-brainer, this is what most people easily fall prey to. It is very easy to spend money that is not hard earned. Excessive use of the credit cards will lead you to more debts in most cases.
It is important to remember that every payment cycle will have interest accrued. This will force you to keep on paying for the purchases you made that you cannot afford right now.
Apart from that, you will end up paying more in the long run. Therefore, make sure you purchase everything in cash.
This will prevent you from spending more than you have in your bank account.
Do Build Credit
Do not forgo an opportunity to build credit. Consider all these opportunities seriously.
The first step is to pay for everything in cash. However, other measures to build your credit score is to keep a line of credit available.
Another way to build your credit is to pay off the balance of your credit cards every month in its entirety. This is the most reasonable and sensible way to defray costs.
Follow the general rule of thumb and avoid spending money you cannot pay off in a single cycle. Eventually, this will help you to avoid accruing any added interest and also will keep your credit score high.
Don’t take Payday Loans
This is another mistake most people do especially single mothers. However, there cannot be any other financial move that is worse than this.
A short-term Payday loan targets people like you who have major debts to pay every month. Also, people in desperate need of quick money but have no other alternative source when an emergency comes up.
These loans will certainly cost you more in the long run. Apart from that, the predatory practices for such loans will keep on haunting you for years to come.
Know your limits – You must never take out a loan more than your ability and if you know that you cannot pay it back on time. Furthermore, avoid loans with a predatory rate of interest offered to people with bad credit.
Negotiate
It is not bad to take on debt if you pay it back or have the intent to pay it back. However, if you owe money and find it impossible to continue paying, call up your creditor or the agencies who you owe.
This way, you can negotiate with them for a lower payment that you can afford to pay every month. There are several programs available to benefit working single mothers struggling with debt.
You will be able to reduce and even postpone a few payments if you can convey the realistic picture of your financial condition. There is no guarantee that a company will be willing to negotiate with you.
However, it will not hurt you if you ask. Most importantly, do not ignore your debt as that is the worst thing to do.
Instead, single mothers can consider the financial assistance available to them and the benefits of these financial tips.
