Small Business Guides

Why Do You fall Into Single Parent Debts? How to Manage the Situation?

Debt management is an art and has a methodical approach, and there are two ways to handle this. One is the first way to not to get into debt. How many problems you may be in as the single parent and sole earner of the family, you must control your impulses to get into debt and tread every step with many calculations. The next approach in debt management is to fight debt the right way when you are already into the mess.

Single parents have a lot of challenges ahead of them, and being a single parent is not easy. You have to be calculative in your monthly budget and expenses. And here are discussed some simple ways to avoid debt in the first place, and then fight them in the second place.

How to avoid debt by planning savings and emergency funds

The simplest way to avoid debt is to spend that much what you have. And even before spending, you must save. Therefore, the plan must be made this way, which whatever you earn, you must try to save at least 20% of that. This should be your plan for savings only. Next, you will have to build an emergency fund to not look for help elsewhere when the child is in a medical emergency or needs any extra funding at school or other classes, etc. To build this emergency fund, you should try to squeeze out another 10% or as much possible out of your earnings. Then you are ideally left with 70% of the earning, which you may then spend.

How to make a monthly budget

Just because you separated 70% of the earning to spend does not mean you spend without thinking! You will have to form a budget. A monthly budget is a plan according to which you allot portions of the fund you have, for different expenses like, groceries, utility bills, house rent, car loan EMI, insurance premiums, and transportation costs. And this, you must do in proper writing, and keep track of the spending.

Get out of the habit of using your credit cards

Do you have this tendency to pull out your credit every now and then for small and big purchases and randomly? Do you think later after the purchase that you have to pay the credit card bills too? If you realize that you did this again and again, and if you believe you may have the habit of shopping frequently using the card, then you should try and check this immediately, and stop all such expenses which you really cannot afford without the help of the credit card. The simple rule is, if you cannot afford, you do not buy. And to ensure strictness on yourself about this, you may keep the credit card at a place which is normally not accessible, or simply may cancel the card. An average credit card charges 15.3% interest if your credit score is average to good. But with bad credit scores, this interest rate may go as high as 29%. And you must avoid paying such high interests at any cost.

Never feel tempted towards a payday loan

Payday loans are even bigger pits than credit cards. The can eat up your whole paycheck if you are not cautious. When you feel like you need extra funds for something, always talk to find out if the payment can wait, or may be divided into a few parts. This will help you manage the payment without taking any loan. Also find out if you can lend some money from relatives or colleagues, which will help you fund the cause. But going for a payday loan without thinking much is a formula for disaster when you are a single parent and already struggling with your expenses. That’s because the interest rates of payday loans are much higher than normal personal loans or credit cards.

How to start fighting the debt

The above measures work well when you are still out of debt or are still managing things. But when you are already into debt which you cannot pay, then you must find out an alternative way through debt relief programs like that of This must be done so that you can save your credit score and reputation go low. Also, you must ensure that after all the expenses and loan related EMIs of the month you still have something to save. If your current debt is crushing you so hard that you have no money to save after paying debt installments, or you barely can pay the EMIs and are defaulting month after month, then now is the time for action. You must start fighting the debt through alternative means.

Think about debt consolidation

Debt consolidation works best when you have a few debts from various sources which are all charging you a high rate of interest, and the cumulative loan EMI amount you are paying each month is too high for you to bear. In that case, you may apply for another consolidated loan, which will pay for the existing debts with all penalties, pre-closure charges, etc. And you will take this new loan only when you see that it's offered with a lower interest rate and longer tenure, resulting in manageable low EMIs. The most important thing you must maintain to get a debt consolidation loan is a healthy credit rating.

You may try a debt settlement too

The last resort is settling a debt by taking help of debt settlement agencies. They would talk on behalf of you to the creditor and offer a full and final loan settlement sum you can afford to pay, which will be a lower amount than you actually owe to the creditor. If the creditor agrees after some negotiations, then you may proceed to pay a lump sum amount and close the account. This requires time and patience and takes a toll on your credit score as you keep all payments towards the creditor paused till settlement.


Whether you choose debt settlement or debt consolidation, fighting debt methodically is a must. And even before that, to resist falling in debt is most important. Hence once you get out of debt through any good means, you must take measures to never again fall in debt.