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If you are perpetually living with consumer debt, no need to panic, you are not the only one. As per statistics, on average U.S. households are having $33,090 outstanding as in student loans and $15,863 as in credit card debt. Moreover, 52 percent of the total credit bureau filings are constituted by medical debts. However, there is no need to lose hope as there are effective strategies for eliminating all these debts.

Step-By-Step Guide to Getting Freedom from Debt

You may opt for debt consolidation if you are having multiple debts that could be rolled into a single fresh new loan with a relatively lower rate of interest. Debt consolidation is supposed to be the most effective way of getting rid of debts. Here are a few steps that a single mom could take for effectively getting out of debt.

Come to Terms with the Reality

Now that you are a single mom, you have added responsibilities. Your child’s comfort, education, and financial security are all in your hands. You must take control of your finances. Start collecting all the statements for your outstanding debts, medical bills, credit card debts, car loan, student loans, home equity line, mortgage, etc. If you are single but living with your partner, they should also be told about your financial situation. There should be complete transparency.

Examine Your Credit Rating

Ask for your precise credit card score. It is a must to consider double-checking all your debts including credit limits and notes of all missed payments. Obtain your three-digit credit score that could be your passport to financially happier times. If your credit score is high you could consolidate your debts and take out a debt consolidation loan with a relatively lower interest rate.

Create a Perfect List of the Outstanding Debts

Come up with a list of all your outstanding debts including minimum monthly payments, interest rates, and also, note down the relevant deadlines. You may identify and use debt repayment apps, such as ReadyforZero, and Debt Payoff Assist etc. Browse through nationaldebtrelief.com for a perfect financial solution.

Chalk Out a Proper Monthly Budget

Debt consolidation cannot do magic. It can help you in getting rid of your current debts but you need to opt for a lifestyle change to lead a debt-free life in future. You need to effectively chalk out a monthly budget. You must also try to determine exactly how much you could afford to pay every month to clear up your debts. Cut out unnecessary extra expenses. Your intention would be to reduce effectively your overhead charges. Always keep in mind that you are in this messy financial situation because of irrational spending habits.

Explore Alternatives

Look for lower rates and depending on your precise credit score, you could be eligible for obtaining credit cards with relatively lower rates that are far more affordable for you under the present financial circumstances. You need to choose between Debt Snowball and Debt Avalanche.

Debt Snowball: Start paying off from lowest to highest balances. The benefit of using this process is the satisfaction of paying off your debts quickly.

Debt Avalanche: Here you would be required to start paying off the account that has the highest rate of interest and go on this way from the highest to the lowest rate of interest. The biggest advantage of effectively using avalanche is that you could end up saving more money by getting rid of high-interest debts and loans sooner.

 

It is always a good idea to seek professional debt consolidation. A credit counselor would be assisting you in creating an effective debt repayment plan that would include debt consolidation.