Supporting a family on one income can be a challenge. For single parents who don't have a partner to lighten the emotional and logistical load, these financial pressures can be especially stressful. However, there are some ways to make even the tightest budgets stretch. Read on for four budget tips that can help single parents thrive.
Take Care of Any Lingering Joint Debts
Dividing assets in a divorce can be a messy process. For single parents who are rebuilding after a divorce, one of the most important first steps is to refinance or pay off any jointly-held debt.
A divorce decree that awards a piece of property (like the marital home) to only one spouse may be legally enforceable but isn't binding on the lender. In other words, just because your divorce decree says that your spouse gets the house doesn't mean you can't also be sued for foreclosure if your ex-spouse stops making payments before you're removed from the loan.
In many cases, you may be able to refinance a loan in only your name, removing any entanglement with your ex-spouse. In other situations, it could be a better idea to simply pay off the joint debt to thoroughly—and legally—disentangle yourself from the marriage.
Evaluate Your Ongoing Payments
Often, simply freeing up a few extra hundred dollars a month in your family budget can help you feel more secure. One way to accomplish this is to take a fine-toothed comb through your ongoing memberships and subscription services.
Services like television and music streaming, magazine and newspaper subscriptions, and even online storage space can add up quickly. Other recurring expenses like gym and museum memberships may also be on the chopping block when your budget is especially tight.
Stretch Your Income When You Can
Not even the wealthiest billionaires in the world can afford everything at once; tradeoffs must always be made. Single parents should prioritize the expenses that have the biggest impact on their child. Just a few ways that single parents can stretch a limited income include:
- Buying consignment clothes and toys instead of new ones;
- Signing up for activities through your local parks and recreation department rather than (often more expensive) private programs;
- Taking advantage of family members' offers to babysit or participating in a childcare-share program among members of your neighborhood;
- Evaluating insurance coverage options and increasing deductibles (if possible) to reduce premium costs; and
- Meal planning to avoid food waste (and reduce the cost of eating out at restaurants).
Create a Debt Repayment Plan
It can be hard to stretch your income if payments on high-interest debt tend to consume most of your free dollars. By listing your debts, interest rates, and due dates in a spreadsheet, you'll be able to get a better handle on which of your debts are generating the most interest (and should be prioritized for repayment). The "debt snowball" method advises paying only the minimum payments on all accounts but the highest-interest debt, which gets extra payments. Once the highest-interest account has been fully repaid, you can divert the next payment to the debt on your list with the second-highest interest rate.
Others modify the debt snowball method to pay off the smallest debts first, then tackle the larger ones. Either way, the debt snowball can provide you with a great way to measure your financial progress. It's satisfying to pay off a debt quickly, even a low-dollar one, and as your interest rates drop, your payments will go even further. And even if you can only afford to put a few extra dollars a month toward your debt, these payments could reduce the amount on which you'll be charged interest.
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