Learn how you can get out of debt even as a single mom! It is possible to pay off what you owe with these simple financial tips.
Single mothers are struggling financially
A few years ago, I become a single mother for the second time (with three kids). When my ex moved out of what was supposed to be our forever home, I was stuck with a mortgage well over what I could afford on my own (plus daycare costs).
My income was too high to get any type of assistance and despite cutting every possible expense, I could not make ends meet until I sold the house. Groceries went on a credit card. Legal fees went on a credit card. Never mind the fact that there was already a balance owing from when we were married.
Luckily the house sold quickly, but the time my divorce was finalized in 2016, I owed over $10,000 on credit cards plus over $7,000 was still left on my student loans.
And now? Three years later, I don’t owe money on any credit cards and my student loans are paid in full. I paid off more that $17,000 of debt in under 3 years as a single mom!
It is possible to climb your way out of debt even as a single mom. These are the strategies that I personally used to make the most of the money I had and pay my debt off as quickly as possible.
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Budgeting strategies for getting out of debt
Create a budget
Before you begin to work on paying of debt, you want to have a clear picture of your overall finances. You’ll need to know exactly what income is coming in and where you are spending your money.
Once you know your monthly income and expenses, you’ll know what you have left over to work with and allocate to your debt payoff each month.
Monitor your budget closely
When we become single mothers, we suddenly don’t have two incomes to support our family. There’s just never much wiggle room in our budgets since we have a lower household income overall.
Single moms have to monitor your spending more actively than before your divorce. Something as simple as overspending on groceries could mean no extra money for debt payments that month.
Find ways to save money
Cutting expenses is an easy way to add more money to your bottom line to pay your debts. For example, I ditched cable for Netflix, downgraded my cell phone plan, and reduced my dining out budget. Each little change might not feel like much of a difference, but when you implement several money saving strategies, they add up!
Treat yourself occassionally
Let’s face it. Your plate is full between work, kids, activities, and appointments. You don’t get much of a break or time to yourself. With everything going on personally, it’s easy to get burned out from constantly trying to save money and pay off debt. You may even feel resentful and just tired of pinching pennies.
Make sure you work little ways to treat yourself into your budget so you don’t feel like you are always going without. It could be something simple like going out for ice cream or some new nail polish so you can do pedicures at home.
It’s okay to not put every last dollar to debt.
More budgeting resources:
Get Out of Debt Faster With Larger Monthly Payments
To pay off debt quickly, you’ll need to find ways to make larger payments on your debts. Taking advantage of any extra income and finding ways to earn more are key strategies in reducing how much money you owe.
Put your tax refund toward debt
As a single parent with dependents, you can probably count on a decent tax refund each year. How often do you have an extra couple thousand go through your hands?
While it may be tempting to use this lump sum to make other purchases, keep the end goal in mind. Tax refunds are one of the easiest ways to put a huge dent in how much money you owe.
Using my tax refund was key in paying down my credit card balances and played a big part in how quickly I was able to pay my debts off.
Even if you have other things you need to spend your tax refund on, try to put as much of your refund as you can for maximum debt payoff progress!
Check your tax withholdings
If you are newly divorced, you should review your payroll tax deductions. If you got a sizable tax refund last year, you may need to adjust your withholding rates.
Check with your tax preparer or accountant first, but changing your tax withholding rates will increase your monthly take-home pay (but reduce next-year’s refund).
You may find it easier to pay off what you owe with small amounts of extra income rather than a large lump sum from a tax refund.
Use Ibotta to earn cash back on groceries
Ibot.ta is my favorite money saving app! The rebates I earned on groceries and online purchases add up over time and every little bit helps. I’ve earned over $300 from Ibotta and this extra money goes straight to reducing my debt payments.
READ MORE: Why Ibotta is the best rebate app
Use extra paychecks wisely
If you get paid weekly or every two weeks, there are a couple times a year where you will get an extra paycheck due to the way the calendar falls. This is a great way to boost your debt payoff!
Also, if you get sales commissions, a year-end bonus, or any other extra income from work, send these extra amounts straight toward your credit cards or other bills.
Financial Tips to Pay Off Debt Quickly
Stop using credit cards
To get on the right track financially, you have to stop using credit cards as a backup. I know I’ve been in the situation where my checking account was empty and I pulled out the credit card to make purchases anyway. I should have just gone without instead of getting further in debt.
If at the end if the month you find you are making up the difference in your budget by pulling out the credit cards, it’s time to put them away. Cut them up, freeze them in ice, do whatever you need to avoid using your credit cards.
The first step in improving your situation is to stop digging a bigger hole.
Use the debt snowball method
To pay off debts, you need a plan of attack. The debt snowball method is great for single moms because you start with the smallest debt. Whether it’s a credit card, medical bill, or student loan, getting the first loan paid off is a great feeling!
Whether it’s a credit card, medical bill, or student loan, getting the first loan paid off is a great feeling!
The debt snowball will keep you motivated to keep working towards financial freedom.
Focus on one debt at a time
If you have several credit cards or smaller debts, it may be tempting to pay a little extra here to one card and a little extra there to another card. But then the problem is you’ll have a hard time seeing any major progress being made on any of your debts.
Stick with the debt snowball method and put all extra money towards the debt you are focusing on. You should only be making minimum payments on the rest of your debts. Focusing on one debt at a time you’ll see how quickly the balance goes down and stay motivated!
Considering consolidating or refinancing
If you have a bunch of smaller debts, it may be worthwhile to consolidate it into a single debt. You can combine the balance of several store cards or credit cards into an installment loan (also sometimes called a personal loan).
The advantages of a single personal loan is that instead of having to pay several monthly payments, you have the simplicity of just paying a single payment. Simplicity=less stress about money.
Best debt payoff tips for single mothers
Single moms can get out of debt even though they have a lower income and a family to support. Living frugally to save money, finding ways to increase your income, and being strategic in how you pay off debt will help you on your journey to being debt-free!