Single moms need to take loans and often encounter insurmountable debts and have poor credit scores. All this may culminate in bankruptcy. As per the report presented by ‘The National Bureau of Economic Research’ single-mom households often experiences abject poverty. Almost 85 percent of single-parent households are led by women. Moreover, about 42 percent of single-parent homes often experience poverty. We know that between utility bills, housing payments, food, education, clothing, and most importantly, childcare, it is quite likely that single moms would be facing financial difficulties and are just not able to recover their own credit scores. As per https://www.statista.com, the single-mom households in 1990 in the U.S.A. were around 11.26 million while the number rose to as many as 15.45 million in 2017.
Debt could prove to be quite overwhelming and life could be miserable and tough. Most single mothers encounter a broader scale of problems in comparison to the average borrower. Single mothers are compelled to follow hectic schedules. They are busy fulfilling their responsibilities of their small kids and performing daily chores. Life could be pretty challenging yet single moms are trying their best to cope up with multiple issues and particularly, financial crisis. They often end up taking a lot of loans and face humungous monthly payments. They are at the verge of bankruptcy so it is a better alternative to consider consolidating their multiple debts into one single lower interest loan. It is pretty challenging to tackle multiple loans and their repayments all at once. Single moms may not feel depressed as there is an effective technique of consolidating your debts and paying off all your loans. A debt consolidation loan may prove to be a boon for a single mom. You may visit https://www.libertylending.com/ for perfect lending solutions provided by qualified professionals.
What Is a Debt Consolidation Loan?
A debt consolidation loan is supposed to be an effective process that involves taking out a fresh new loan for paying off multiple existing loans. Debt consolidation is a really helpful process particularly, for single moms who find it increasingly difficult to manage multiple loans in terms of delinquency, interest rate, and repayments. In this context, you must understand clearly that multiple loans such as personal loan, student loan, and even credit card bills etc. could be effectively consolidated into one single loan. You no longer need to make five or six separate monthly payments anymore. You could simply repay in just one single payment.
Single Moms Must Avoid Debt Consolidation Mistakes
When you are neck-deep in debts, your relationships are adversely impacted. Your career choices and mental health would be negatively affected by overwhelming debts due to unpaid loans. Massive loan payments every month may steal away the happiness and financial security of a family. Single moms are often compelled to lead a stressful life because they are perpetually drowning in debts. They need to avoid a few common debt consolidation mistakes.
Mistake: You Do Not Bother to Chalk Out a Budget
If you are thinking of consolidating your debt, you need to determine a budget otherwise; you would again land up in huge credit card balance in no time. Chalking out a clear-cut budget could prove to be pretty tedious but you simply cannot do without a budget. You need to keep track of all the money going out and coming in. Without a proper budget, you would end up making bad spending decisions which may culminate in more and more debts. `
A well-structured and organized budget would help you in identifying the key reasons why you are facing overwhelming debts. For instance, you may discover that you are splurging on dining out. You could make certain simple lifestyle modifications such as cooking meals at home regularly. This way, you could cut down your spending and you would have some excess cash in hand for paying off all your pending loan repayments.
Solution: Write down clearly your income for every month. Then make a comprehensive list of your monthly expenses and that may include utilities, rent, student loan repayments, car loan payments, subscriptions, and credit card bills. Your income must be definitely more as compared to your spending. When you have a clear budget to keep you motivated, consider sticking to it religiously for staying on track with all your debt repayment.
Mistake: You Do Not Bother to Maintain an Emergency Fund
While paying off your debts, you may be focusing completely on paying down your debts and you must be ignoring savings. But it is important for single moms to maintain an emergency fund always for safeguarding against credit issues in the future. An emergency fund could come in handy in case of unanticipated expenses like car repair bills or medical bills.
Solution: You must concentrate on setting aside some amount of money as your emergency fund. It is ideal if you could save at least six months of all your expenses but that might sound a wee bit unrealistic for single moms under financial distress. You may consider starting small but go on adding consistently every month to the overall savings so that you have an emergency fund to shield you through tough times in the future.
Mistake: You Fall Unknowingly into Scams
You must keep in mind that there are numerous predators waiting to take advantage of you. Today, the debt consolidation program seems to be pretty much in vogue. However, you must exercise a certain degree of caution. Do not get fooled by sales pitches. You must do your homework and a thorough background check of debt consolidation companies and services. You must not get swayed by affordable rates, often there are additional costs that may make your debt consolidation loan far more expensive than you had thought. Single moms must not take impulsive decisions. Weigh the pros and cons of a debt consolidation loan and choose the right services to avoid scams.
Debt is a harsh reality and one that you can do without. Sometimes, debt mitigation might call for drastic measures on your part, like picking public transportation over the convenience of a personal vehicle, downgrading all your subscriptions to lower pricing tiers, getting a roommate and so on. These are tough decisions but are definitely beneficial in the long run. Debt consolidation is certainly an effective remedy because it gives you lower monthly rates, reduces the number of payments you have to make every month, and helps increase your credit score. That said you will have to ensure that you are making the most of your debt consolidation. This involves planning and managing your finances well both before and after securing the consolidation loan. Careful budgeting will help you get back on track quickly.