5 strategies for single parents to tackle credit card debt

Single parent strategies for addressing credit card debt
Single parent strategies for addressing credit card debt

Digging out of credit card debt can be a challenge for anyone, but single parents face a special set of obstacles.

Aja Williams knows firsthand how difficult managing out-of-control finances as a single parent can be. She bought her first home as a 23-year-old, single mother. A college graduate, she was living in Detroit, working for Ford Motor Co. and managing her finances quite well. Aja recalls that, "About 2003, I had two major increases happen -- the home insurance and taxes began to rise on the house."

Within two years, her property taxes jumped from $500 to $2,500 annually and her home insurance doubled to $1,400 a year. On top of private school tuition for her son and an auto loan, she found it increasingly difficult to cover the household expenses with her income. Aja began borrowing from family and using credit cards to supplement her lifestyle shortfall.

She's far from unique. The single parent household is a growing trend with 25 percent of American households being headed by single moms and 8 percent by single dads, according to the Pew Research Center.  The Pew Research Center report on Breadwinner Moms found that between 1960 and 2011, the number of households with children under 18 being cared for by a single mother more than tripled.

I hear from many single parents that their challenge is trying to get ahead of anticipating kids' activities and expenses so that they can be proactive with their finances.

-- Katie Brewer
CFP and financial coach

Triple threat to financial stability
Parents raising children alone earn significantly less than married parents, are generally less educated and more likely to work less than full-time. This triple threat can weigh heavily on a single parent's ability meet their expenses and manage credit card debt.

Katie Brewer, a Dallas-based financial planner and coach, understands that many single parents are busy juggling competing priorities on their own. "I hear from many single parents that their challenge is trying to get ahead of anticipating kids' activities and expenses so that they can be proactive with their finances," she says. But proactive planning can take a backseat to the hectic, daily responsibilities single mothers and fathers shoulder.

Single parents trying to eliminate credit card debt face real challenges. For instance, single mothers make a median annual income of $23,000 -- 40 percent of what their married counterparts earn, according to Pew. Getting ahead of financial challenges is certainly possible. Hardworking mothers and fathers just need to leverage their resources and consider the following five strategies for tackling debt.

1. Find a financial mentor
Single parents, like anyone else, need support. Jackie Cummings Koski, a Certified Educator in Personal Finance and author of "Money Letters 2 My Daughter," is familiar with the demands of raising a child as a single mom. After 11 years of marriage, a divorce forced her to accept a lifestyle change. Cummings Koski sought out financial education by joining an investment club. Connecting with other single parents through church, meet ups or online communities such as WealthySingleMommy.com can provide a healthy environment to learn from those who are thriving as single parents.

If you can't find a financial mentor as a single parent, reach out to other single parents and set up your own accountability team. Mentor one another as you relate based on shared experiences.

2. Investigate online employment
Paying off debt is hard work especially with limited income options. Minimal free time or added day care costs can make working a traditional second job impractical. Job sites list plenty of online employment positions such as tutors, customer service representatives or virtual assistants. Many positions offer flexible or nontraditional schedules that would allow a determined single mom or dad the flexibility to supplement their income from home.

3. Guard your schedule
No one can do it all. Even more, single parents should guard their family's time and schedule wisely. Everyone wants the best for their children, but the best doesn't always equate with packing your schedule or spending more. Single parents may feel obligated to compete with other families to provide the same opportunities for their children. Temporarily limiting your child's nonessential activities such as dance classes or sports leagues can free up resources and time that can be used to focus on making financial progress.

I didn't have the option to say, 'Go ask your dad.' It was just me.

-- Jackie Cummings Koski
Author and Certified Educator in Personal Finance

By guarding her schedule, Williams, the Detroit single mother, learned to say no -- to herself and others. She focused her resources and time on essential tasks. Williams sold her home to a family member and remained in the home as a renter. The sale paid off an $80,000 mortgage and gave her the financial room to work on repaying credit cards, old debt and an auto loan. Within seven years, she repaid the remaining $50,000 in loans and was able to raise her son as a debt free, single mom.

4. Make tough calls
Single parents may also find it hard to stand firm when making the best financial choices for their families. Disappointing children can be emotionally taxing for any parent. Single parents often have to carry that burden alone. Cummings Koski, realized early on that she wanted to pass healthy fiscal habits to her daughter. She now had to rely only on herself when deciding how much money should go where. "I didn't have the option to say, 'Go ask your dad.' It was just me. I also didn't have the benefit of tag-teaming when it came to difficult decisions."

Involving older children in discussions about family financial goals can help them appreciate the harder decisions. Help your children understand that prioritizing credit card debt repayment can lead to more opportunities in the future. Bring them onboard to support your efforts rather than whine and work against you.

5. Seek professional help
If your debt is overwhelming, seek out help from an accredited nonprofit credit counseling agency. You can find them through the National Foundation for Credit Counseling or the Financial Counseling Association of America.

Freeing up credit card debt has the added benefit of allowing single parents to then focus on essential financial planning tasks. Brewer, of Your Richest Life, notes that, "It is extremely important to put all of the protections of financial planning in place when you are the sole income provider for your family." To find fee-only financial planners, check out the National Association of Personal Financial Advisors.

See related: 6-step credit-building plan for a struggling single mom, Single mom struggling with card payments, For MoneySavingMom blogger, fulfillment, frugality go together

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Updated: 01-21-2018