At a time when the economy is in turmoil and there is constant talk of the role of debt in the finances of most Americans, single parents may be particularly vulnerable. Without the benefit of two wage-earners and the particular financial stresses of single parenting, it is imperative that single parents keep debt low and control their budgets. With an unpredictable economy, it is even more important for single parents to take control and eliminate debt.
Credit cards, loans and other high interest debts can be dangerous for single parents. It can also be tough for single parents to stay out of debt since budgets can be tight, income precarious and family needs high. Living on a tight budget can be challenging and it may seem that using credit for basic needs like groceries, bills, etc. is a way to keep things afloat. Carrying the debt, however, can be especially damaging.
So, when is debt “not debt” for a single parent? A mortgage or student loans can be viewed as investment and not debt. This doesn’t mean that you should take out abundant amounts in student loans in order to finish your education, but with low interest and long-term payment options, these can be one way of investing in your education and improving your earning potential as a single parent. It is still important to keep in mind your capacity for debt and to have a long term repayment plan.
As for credit cards, auto payments, loans and other typical debt, it is best for single parents to minimize these for the overall health and well-being of the family. Even if you have a good-paying job now, in a precarious economic climate this could change without warning and the debt could become unmanageable. Opting to live well within your means and keep the budget in control can be the best financial survival strategy for a single parent. Make a goal to eliminate debt and refrain from taking on new debt. This may mean changing holiday plans, taking a second job, or making payment arrangements with your creditors. The longer that you carry the debt, the more inhibiting it can be for your single parent family finances.
Even though it may seem like incurring debt is the only way to provide for your family as a single parent and that “everyone is doing it,” it is important to remember that circumstances change and as single parents, we need to be more conservative and consider how debt can limit our flexibility and resources.
Paying off debt can be a monstrous task. Some people suggest taking up side jobs or foraying into freelancing. One of my friends grabbed a Vulcan Welder and started MIG welding on the side and makes great money.