Dwelling a life of the single parent is exciting, full of pressure and challenges, and also gives you a lot of experiences through the lifetime. One of the main things you learn in the process is finance management. If you were never into money management, then also entering the role of the single parent will immediately gear you up to take this role too. You will be able to take control of things much more, take responsibilities, and manage money, take a decision on investment and debt management and much more. Your mental abilities to take the money and invest and grow the money is also doubled while handling related hiccups also matures you more to handle future pressure situations with care.
Single parents tend to go into debt for many reasons
It’s true that single parents tend to go into debt more than normal parents living as a couple. The reasons are many. Some of the most common reasons are as follows:
- A divorce or separation compels the person to take the load of the loans which the couple was facing together earlier. Some loans get split between the two with a mutual understanding or a court’s decision. And then the parent taking the custody of the child has to live with this loan, and responsibly pay this back.
- As the couple normally, both have an income and contribution to the family. But when you are single, you have to do it all. Earnings also spilled, and you face scarcity of funds compared to earlier income. This way also you adapt to the new life and adjust at places while cutting costs. Especially with the kid on you, you have to budget cautiously to meet the child’s requirements at the priority and then look at other things.
- Single earning with increased responsibilities makes you go into a tight budget, and you spend only on things most required leaving very fewer funds for savings and emergency funding. And in the case of crunches, you tend to take a quick loan from any source.
- You may have lesser contacts and helpful hands after a divorce resulting in lack of workforce when you are into crunch situations. Thus, you may tend to get into debts more than traditional families, and you cannot ask many people for help.
- Many financial decisions are taken by you alone, and you may be wrong there.
- You may lose your job or business and lose earnings and won’t have any helping hand in that situation.
- If you fall sick or get physically incapable of working for some reason, then also you are all on your own and may not get financial help.
These are some of the reasons which alone or in combination makes single parents more susceptible to get into debts, and then into bad debt situations.
Difference between debt and bad debt
There is a difference between a normal debt and a bad debt situation. A normal debt should not bother you much when you can handle it somehow. It all depends on planning. Sometimes you may even plan and handle an unplanned debt. And at other times you may take a loan after considerable planning. But, a bad debt situation is that condition, when you cannot manage to pay the debt by staying financially stable and healthy. Either you pay the debt and fall short on other necessary expenses, or you meet all needed necessary expenses and are left with nothing to pay the debt. That’s the situation when your debt gets troublesome. And sadly, single parents often face such a situation.
How to avoid the financial imbalance
The financial imbalance can be avoided and fought at the root only. Just when you realize that you are in bad debt situation, you must visualize the outcome. Often such situations must be strategically tackled; else nothing comes in to control.
One of the best ways to control the bad debt situation is to keep a check on how many payments you have missed. Once you realize that you cannot control the things, and you are constantly missing payments on due time, and a few payments are getting skipped too, you must understand then that, this will sooner or later take a toll on your credit score. And you must not let that happen. Maintaining the credit score at a healthy scale will not just let you get more loans approved in the future on its basis, but also will let you take a debt consolidation loan if you wish to skip to a more affordable lower interest loan scheme for closing all existing loans.
Seeking debt consolidation before it’s too late
You may seek debt consolidation in certain situations to get out of a bad credit situation. If you see that you are into multiple loans from different sources, and if you see that most of these loans which may include credit card dues too are all on higher rates of interest, then you may find a way to pay much less towards them and bring things under one single account and better control. For this, you will have to calculate how much money you need in total to close all the existing loans with their pre-closure penalty charges, all accumulated late payment fines, etc. And then you will have to apply for this lump sum amount as a debt consolidation loan to lenders.
Normally, debt consolidation loans are given at a lower rate of interest through a longer tenure so that the EMIs of such loans are small and affordable for the indebted. And once you get such a loan, you may easily use that amount to close all existing expensive loans and continue paying one single EMI towards this new consolidated loan. This makes life easier for the single parent who is under lots of responsibilities. More ideas on debt management can be obtained from resources like nationaldebtreliefprograms.com.
Staying free from debt and building assets little by little is a much better way to live than to fight half of the life in debt. If only you get the guidance from the time you realize you are in trouble, you can take the right steps, and organize a debt-free sorted life.
Subscribe to our newsletter and get this FREE No Soliciting Sign in your inbox shortly after signing up!