As a single parent, you might feel like your finances are too much to handle. Suddenly you are on your own with the housing, utilities, insurance, and the daily cost of living for you and your kids. If you have debt on top of it, you might wonder how you’ll ever get ahead. If you were used to having two incomes and now it’s just you and the looming pile of debt, it’s time to learn how to take control.

We understand how scary it can feel, but with a few simple steps, you can get control of your debts and even find your way out.

Steps to Get Control of Your Debt

To get control of your debt, take these steps.

1. Know Where You Stand

You can’t get out of debt until you know what battle you’re facing. Pull out the statements from every debt you have and tally it up. Don’t let the number scare you. Consider it being informed. You’ll make better decisions and get the help you need when you know what you’re facing.

2. Total Your Income

You can’t create a debt payoff plan until you know how much money you bring in from all sources. This includes your main income from work, any income earned from side hustles, passive income from investments, and any spousal or child support you receive.

3. Prioritize Your Debts

Next, prioritize your debts. They will all feel important, but for now, put the debts first that affect you the most. For example, your housing payment and car payment are a top priority because you need a place to live and a way to get to and from work.

Next, list your remaining debts in order of importance. If you have collections, consider the timeline on them. If you have debts you’re current on, stay that way while figuring out how to work the other debts into your budget.

4. Create A Budget

Everyone needs a budget even if they aren’t in debt. A budget tells you how to use your money. Start with your income and enter your debts one by one to see how it affects your budget.

Do you have money left after paying the obligatory debts, like your rent or mortgage, car, and the minimum required payment on any other debts?

If so, distribute the funds between your other debts according to the prioritized list you created.

5. Use the Debt Snowball Method

The debt snowball method is a tried-and-true way to get out of debt methodically. You order your debts by balance, lowest to highest. First, you budget the minimum required payment for each debt into your monthly budget. Next, you take any extra money you can pay toward debt and add it to the minimum required payment of the first debt in line (smallest balance).

Do this every month until you pay the debt off in full. Next, take the amount paid to the first debt (minimum payment + extra payment) and add it to the next debt in line. Keep doing this until you pay your debts off in full.

Options When You can’t Deal with your Debt Alone

If the steps above don’t work for you or you just don’t have enough money to go around, it might be time to look at your other options for dealing with debt alone.

These options are available to everyone, including single parents.

Debt Consolidation

If you can’t make heads or tails out of your debt, a debt consolidation loan may help straighten things out. With a debt consolidation loan, you transfer all of your debts to one loan. This leaves you with one payment each month.

You no longer have to worry about missing payments or picking and choosing from all of your debts to decide where to put your money each month. You’ll have one loan and one interest rate to focus on.

Credit Counselling

If you just want someone to point you in the right direction, helping you get your budget on track, credit counselling can be an option.

At EmpireOne, we offer credit counselling that fits your budget and helps you meet creditor requirements. Sometimes we can also help you to work out payment arrangements or different payment structures for your debts to help you get on track.

After we help you get your debts under control, we’ll continue to be by your side, helping you learn how to manage your finances going forward so you are able to stay out of debt.

Consumer Proposal

If you’ve exhausted your other options and just need debt relief from your debts, you might want to consider a consumer proposal.

A consumer proposal is a debt repayment plan with agreed-upon settlements with your creditors. You’ll pay a lower amount than you owe, interest all stops, and your creditors will consider the debt settled.

A consumer proposal lasts for 3 – 5 years and gets you out of debt quickly and gives you the freedom to rebuild your credit for the future.

Bankruptcy

If you don’t have enough income to satisfy your debts even with a settled amount, you might want to consider filing for bankruptcy. Don’t consider this a loss or that people will judge you. Bankruptcy is a fresh start, eliminating your debts and wiping the slate clean.

At EmpireOne Credit, we help you through the process and help you understand the ramifications of Bankruptcy, including what assets you might lose and which are exempt from the process.

Final Thoughts

Single parents dealing with debt can feel like a lot, but the Debt Experts at EmpireOne Credit are here to help. We understand how overwhelming it can be to not only parent on your own but to also keep your head above water financially.

We’ll walk you through each of your options to help you determine which debt solution is right for you. Our ultimate goal is to help you get out of debt and educate you on how to live within your budget so you will get the financial freedom you deserve.