Managing finances in this economy is already a delicate balancing act every day. But when you factor children into the mix, it becomes even more complex. As a mom, you only want the best for your child or children—happiness, health and a bright future. But the average cost of raising a child through age 17, excluding child expenses, now hovers between $174,690 and $233,610 depending on income. Housing and food constitute nearly half of these costs, but there’s also transportation, clothing and miscellaneous expenses to think about.
The Pitfalls of Credit Card Debt
It’s no easy feat coming up with an extra $13,000 or more per year in your budget. So, it’s totally understandable that many young moms turn to credit cards to help pick up the slack. But this strategy can quickly get out of hand. Why? Firstly, credit cards tend to come with high interest rates, often between 15 and 20 percent. Even 0 percent APR cards often jump up after an introductory period. Secondly, credit cards allow consumers to pay a minimum balance to avoid late fees. While this can seem like a life-saver in a pinch, it also keeps people in debt longer.
Credit card debt can be daunting, especially if it’s kept your family afloat for months or years. But there are absolutely ways to beat this debt cycle as a young mom. Keep reading to learn more.
Create a Spending Plan
It can be inspiring to look to other mothers who have overcome debt as you plan your own journey toward financial independence. Time outlines one example of a U.S. Marine Master Sergeant with three children who reduced $179,625 of debt down to $21,456 in a little under a decade. This single mother attributes trying to keep up with others as the reason for relying on credit cards and loans. When she could no longer make car payments on a large truck, she realized she was in over her head.
One strategy that helped her pay down her debt over time was using physical envelopes and cash to establish her budget. Instead of turning to the simplicity of swiping a credit card, she budgeted ahead of payday and used only cash to make purchases. In her own words: “Cash makes me more aware of what I’m spending my money on. If I run out of money for something that month, I don’t buy it. But I’ve never run out of money for something important—now I’m more aware of how much I’m spending.”
So, create a spending plan for the essentials. Then avoid defaulting to a credit card for every purchase. The money you save can go toward paying down your debt and beefing up your emergency fund.
Explore Debt Relief Options
Sometimes scrimping and saving is a start, but not necessarily enough to truly alleviate debt. After all, your children still need clothes, school supplies, childcare and nutritious meals. There’s only so much you can cut out of your budget before you hit a wall. When you reach this point, another option is exploring potential debt relief options such as:
Debt settlement: A debt settlement company works to negotiate with creditors and reduce the amount you owe. It’s important for young moms to avoid scams and work with only reputable partners. Google potential partners before enrolling, like Freedom Debt Relief reviews.
Balance-transfer: It’s possible to transfer your debt from a high-interest credit card to a low- or no-interest one, for a fee between 3 and 5 percent. Make sure you research the best cards for balance transfers before proceeding or you could end up paying high interest rates once again.
Beating debt as a young mom can be challenging, but it’s worth it to better secure your family’s future.