Paying off debt may feel like an impossible task for many single moms, but it’s really not as daunting as it seems. Getting out of debt is hard work. That’s true, but it isn’t impossible.
Do you ever imagine life without constant financial pressure? Do you wish you could get out of debt so you can have more money to spend on the things you love?
Many single moms would like to get out of debt, but they don’t know where to start.The secret to paying off debt is to have a plan, and to start with one debt at a time.
So if you’re a single mom who would like to become debt free, I have a few tips that will help you to achieve your goals.
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The Ultimate Guide to Paying Off Debt for Single Moms
One of the reasons many people struggle with paying off debt is that, they lack the discipline and dedication that’s required to transform their lives.
I really believe that personal finance is 80% emotions and 20% logic. Most of us have enough knowledge and information to make the right financial decisions, but we allow our emotions to get the better of us.
If you’re a single mom drowning in debt, here are five steps you need to take:
1. Figure out how much you owe
How deep is the hole?
The journey to financial freedom begins with taking an inventory of your financial situation.
Here is how it works:
List all your debts including your mortgage, car note, personal loans, payday loans and credit card balances.
You don’t need any fancy program or tools to do this. All you need is a piece of paper, a calculator, and your last statements from all your creditors.
It’s better to do this when you have a good chunk of time to spend without distractions.
Are you shocked at how much you owe?
Maybe you’ve always had an estimate in your head of how much you owed. But taking the time to write every thing out will show you how bad your financial situation is.
When I went through this process some years ago, it forced me to stop living in denial as soon as I saw the actual figures.
This step can be pivotal in changing your financial situation, and I encourage you to stick with it. Don’t get discouraged at the numbers. You can’t make real progress until you have a complete picture of your situation.
Now that you know how much you owe, the next step is to figure out how you got into this mess.
2. How did you get into this situation?
This step involves figuring out the reason for your financial situation. You need to identify the source or sources of your problem before you can get your finances in order.
You may finally have to admit that you’re responsible for your financial situation.
While this doesn’t apply to everyone, it is the case with most people who find themselves overwhelmed with debt. It is important that you are honest with yourself as this will help you figure out the root of your problem.
Quick note. It’s very easy to blame other people or outside factors for your situation. I know this, because this is what I did.
I blamed my divorce, my ex-husband, and my employer. I pretty much blamed everything and everyone. But, at some point I had to stop living in denial.
It is actually liberating when you can admit that you’re responsible for your situation.Because, once you can admit that, it becomes easier to start thinking of how to take control of your situation.
The truth is, most of us are bad at managing our finances, and that’s the reason you are where you are right now.
Now let’s go back to figuring out the reason for your financial situation.
For you it may be due to an illness/medical bills, divorce, overspending, failure to budget, not earning enough money, or bad financial habits or decisions. It doesn’t really matter what the cause is. What’s important is that you figure out the reason/reasons.
I know that circumstances like divorce and death of a spouse can exacerbate financial problems, but more often than not, the problem already existed.
This process can be painful but we must own our mistakes. This may also be the wake-up call you need to change some of your bad money habits.
You may experience mixed feelings of sadness and relief like I did. Sadness at how bad things are, and relief that you can finally admit it.
If you are not too embarrassed, and think it may be beneficial, you can ask a trusted friend or family member for some input. Sometimes we are blind to things that are obvious, and need someone else to point them out.
After I completed this step, I was depressed and overwhelmed. The future looked bleak, but I also felt empowered, and ready to fight for my financial freedom.
So at this point you may be asking yourself, “how am I going to get out of debt on my own?”
If you’re going to have the kind of life and future you want for your family, you have to tackle this headlong. You have to create a plan to get you to your destination.
In the next step, we will talk about how to create a plan to pay off your debt.
3. Create your action plan
Now that you know how much you owe and how you got into debt, you’re ready to make a plan to take control of your finances. This is your get out of debt plan.
In case you’re wondering why you need a plan, Winston Churchill said “He who fails to plan is planning to fail.” You need a plan to help you stay focused on your goal.
Saying I want to be debt-free in five years is a worthy goal, but without writing down how you plan to accomplish this, then chances are you won’t.
I started talking about financial freedom back in 2008, but I didn’t really have a plan. I paid off a few credit card balances but didn’t change bad money habits. It’s no wonder I couldn’t stay on track for many years.
How to create a debt-free plan
Start by setting some short-term and long-term goals. Your short-term goals may include paying off small balances on your credit cards or getting caught up on your bills.
Your long-term goals may include paying off your mortgage or student loans. What’s important is that you have a written plan.
Do not set unrealistic goals like paying off $5000.00 in one week unless you know you can actually do it. Unrealistic goals lead to disappointment and discouragement which may be counter-productive.
You will also need to choose a realistic time frame for achieving your goals based on your circumstances.
Set goals that are realistic and measurable.I don’t mean that you should keep your debt for longer than is necessary. You should make this a priority so you can pay it off as fast as you can.
Your debt-free plan must include all the steps you need to take to get you from where you are, to where you want to be.
So what else should you include in your plan?
For many of you, your get out of debt plan may include getting a financial education.Which means some of your action steps will be to read personal finance blogs and books.
Here are some of my favorites books that I highly recommend:
Tracking your spending and creating a budget should also be included in your debt-free plan. It is unlikely you will win this money war if you don’t track your spending, or use a budget to manage your finances.
If one of the reasons you’re in debt is because you’re not earning enough money, your plan must include the steps you can take to increase your income. Which means you have to brainstorm some income-generating ideas.
If you don’t already have one, you will need to start an emergency fund. An emergency fund will prevent you from taking on more debt if you’re faced with an unexpected bill or expense.
Part of your plan may also include cutting expenses or getting rid of some of them. You may also need to change some of your false or limiting beliefs about money.
You should also consider downsizing and selling liabilities like cars if it will help you to become debt free faster.
Your plan may also require you to move to a new city, change jobs, or career path to help you earn or save more money.
Don’t forget to include all the challenges or roadblocks that can trip you up, so you can figure out a way to navigate them ahead of time.
A lot of people start each year with optimism, and resolve to do something, change something or be something.
Usually by mid-January they start losing steam,and by February, they conclude they are unlikely to succeed after tripping over the same road blocks that have hindered them so many times.
This is the reason so many people give up and abandon their goals. That’s why you need to come up with a plan to help you stay on track.
It’s time to take action!
4. Put the plan to work
We’ve finally arrived at the fun part. This is where you start implementing all the steps you included in your debt-free plan.
Unfortunately, this is the point many people develop cold feet and jump ship! Taking action is hard, but you can’t change your situation if you don’t take action.
Andrew Carnegie said “Anything in life worth having, is worth working for.” Only you can decide if being debt free is a worthwhile goal for you to pursue.
Your action steps are the steps you need to take to find the extra money to start paying off your debt. If you need to get rid of some of your stuff, start listing them on your preferred website/platform.
If you need to get a second job, start your job search or start a side hustle. Don’t forget to create a budget, or build an emergency fund before you start getting rid of your debt.
Which method should you use to pay off your debt?
How you choose to pay off your debt depends on the debt-repayment plan you feel most comfortable with. There are two main ones: debt avalanche and debt snowball.
Personally, I prefer and use the debt snowball method. These posts do an excellent job of comparing both methods. I think you should check them out.
Don’t get stuck trying to choose the best method, just pick one and go with it. You can always change your mind if it’s not a good fit.
Some of you may benefit from a personal adviser or coach to help you make sense of your finances. You should also consider finding a mentor or an accountability partner to help you stay on track especially if you struggle with procrastination and motivation
I can go on and on about this, but only one thing is important, and that is take action!
5. Evaluate Your Progress
To stay on track, it is important that you monitor and evaluate your progress periodically. You can do this monthly or quarterly.
There is no rule, just do whatever works for you. But if you are just starting the process of getting out of debt, I suggest you do this monthly.
Give yourself a chance to succeed, and more time to accomplish your goals. Weekly or even monthly evaluations may not allow for this.
Here is what you should do during your evaluation:
Review your budget to see how well you followed it.
Take a look at your list of debts, did you pay off any debt? What are the new balances?
Some other questions to consider include:
- How much progress have you made?
- Did you have a “real” emergency that derailed you? If yes, was it foreseeable?
- Which hurdles hampered your progress? What do you plan to do to overcome them?
- Are you honestly committed to this process?
- How much of your plan did you implement?
So what do you do if you didn’t make much progress?
You hit the reset button, go back to steps 1 through 3,and try to identify where you veered off course, then retrace your steps.
You may also need to tweak your plan.
Getting discouraged or beating yourself up won’t get you anywhere. You are dealing with habits and debts that you accumulated over a number of years. You’re not going to fix things overnight.
Some of you may benefit from a personal adviser or coach to help you make sense of your finances and get out of debt. This can be a worthwhile investment. Just something to think about.
It’s normal to feel overwhelmed and discouraged if you’ve a lot of debt. But think of the alternative. A life of constant financial struggle, being broke, and unable to pursue your dreams.
I hope these 5 steps will help you to get started on your road to financial freedom.
Hopefully, at this point you have a good idea of what your financial situation looks like, and you are excited about starting your debt-free journey as a single mom.
Do you have a lot of debt? Do you have a plan to pay them off? Let me know in the comments.
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