Single mothers struggle to keep up with the rising costs of bringing up children. The increase in expenditure has not made single-parent families’ lives any easier. Actually, it has made it difficult to make ends meet. The biggest challenge is coming up with a balanced budget that works well – in other words, a budget that allows to pay the rent, cell phone, insurance, bills, buy groceries, and save for emergencies. No matter what challenge you may face, keep in mind that there are always solutions. So what if you have accumulated a great deal of debt? You can turn it all around starting right now. If you want to get out of debt and start saving, continue reading to find out how you can balance things better financially.
Handle the bad debt first
Debt problems can be fixed. It might not be easy or quick, but there is always a solution. Nothing can compare to the feeling of paying off your debt and closing this chapter in your life. If you are struggling with several debts, the best thing you can do is to tackle them by importance. Decide which debt to pay off first. You should pay off the money you owe from the highest interest rate to the lowest. This will save you more money in the long run. It is important to know what kind of debt you are dealing with. The debt incurred can be good or bad.
Good debt is an asset that increases in value and generates long-term income. Borrowing money for education is generally considered good debt. An educated individual is more likely to be employed in a high-paying job and does not have difficulty finding new opportunities. Good debt is basically an investment that can enhance your financial position. Besides education, other things that are worth going into debt are homeownership and small business ownership.
Bad debt is money that you take to acquire things that lose their value really fast and do not generate long-term wealth. Examples include clothes, cars, and other goods. Bad debt typically comes in the form of personal bank loan and credit card debt. Although creditors are unlikely to collect, there is still a possibility. Needless to say, the interest rate charged is high. It is not a good idea to buy things that you cannot afford to pay for.
The first debt you will pay off will be the one with the highest interest rate – in other words, the bad debt. Ditch cable TV and Internet. Your kid will not be happy about it, as they will not be able to watch their beloved shoes or surf the Internet, but at least you will be able to pay the bills. You will be saving enough money to make it worthwhile. As your salary increases, you will be able to get back to your normal life. Clearing up existing bad debt will help you improve your credit score, so give all or part of the amount you owe.
Claim benefits and support
Single parents on a low income are able to claim benefits. There are numerous benefits that you can claim as a single mom, such as:
Budgeting loans: An amount of credit is given to those who are unable to pay for certain expenses, like clothing, furniture, and travel. Budgeting loans are interest-free loans.
Child benefit: If you have recently had a baby, you can claim the child benefit no matter if you are working. It is necessary to fill out a claim form and send it to the Childe Benefit Office.
Cold Weather Payment: This is paid to people to help them with the heating costs. You will receive a payment if the average temperature in the area is zero degrees or below, that is, freezing cold.
These are just some of the benefits you can claim in the UK. Keep in mind that there are also assistance programs that will take the pressure off your shoulders. And that you can claim child support. Parents are required by the law to provide for their kids financially. If the other parent refuses to pay or you consider the sum is not enough to meet your child’s needs, think about taking legal action.
Claiming benefits and support can provide extra money for living costs. What is more, you will be able to get out of debt. Creditors can sue you for debt of any amount. If they manage to get a judgement against you, they can seize the property you own. The last thing you want is a bailiff coming to your home. What can bailiffs do? A bailiff has actual power when it comes to collecting debt. They can come into your home, remove and sell the goods to recover lost money. It is best to avoid situations of this kind. If you fall into the low-income bracket, ask for financial help. Across the UK, when debts escalate there are a number of options to help you manage them. An Individual Voluntary Arrangement (IVA) is one of those options.
Prioritize saving for retirement
According to financial experts, it is paramount to set your priorities straight. Everyone goes through difficult times in life. If you are not quite sure what to do, here is a suggestion: start saving for retirement. Place yourself in a good financial position before saving for your child’s education. Do not lose focus on what is most important. It is true that you are decades away from retirement, but that does not mean that you should not start saving for the future. When you have various financial responsibilities, this can be a little bit difficult. Maybe so, but it is not impossible. Your current financial situation does not prevent you from building a retirement fund.
The key to success is to start planning of time. You do not need to put aside an optimal amount of money each month. It is enough that you are saving money. The amount, regardless of how small it is, will make a difference. An easy way to get started with your nest egg is to automate deposits. The money is sent to the retirement fund and you do not get to spend it. What kind of future do you want for yourself? Think about that when saving for retirement.
