Thursday, April 17, 2014

3 Steps to Reducing Your Family’s Debt

August 23, 2013 by  
Filed under Frugal Mom

Piggy Bank

Photo by joannelummy

When you were in twenties, you may have had a good track record with money.  You probably paid all of your bills on time, you didn’t have too much debt, you perhaps lived in a modest apartment so you could afford going out with your friends. . .

However, if you’re like a lot of moms, perhaps once you got married and had kids, you stepped out of the workforce for a bit.  Or, you might have gone down to part-time.  Even if you kept your job, once you had to pay for child care, you likely had a few hundred dollars less each month.

Sound familiar?  Add on another kid or two, and your family may be in a financial bind.  After all, kids cost a lot of money to feed and clothe.  Don’t forget that you may need a bigger house and vehicle, especially if you have more than two kids.  Then there are extracurricular activities to pay for.

If you find yourself with a bit too much debt, know that you’re not alone.  Even more reassuring, there are strategies that can put you on solid financial footing again.

1.  Stop the interest rate bleed.  If you have your debt on credit cards, you’re likely paying a high APR.  You can make your debt repayments go further if you secure a lower interest rate on your consumer debt.  A quick search of the Internet can help you find the best personal loans for you.  Look for a loan with a fairly low interest rate and manageable monthly payments.  Make sure to quit using your credit card so you don’t end up further in debt instead of being on the path to getting out of debt.

2.  Consider consolidating or refinancing other loans.  If you have a car loan, for instance, see if you can refinance and get a lower interest rate.  There are many bank loan options available; you don’t have to remain loyal to the bank that issued the loan.

3.  Live within your means.  This is the hardest step.  Learn to live on less than you earn.  This might mean that you need to find a way to increase your income, or more likely, reduce your expenses.  Remember, you only have to slash your expenses temporarily.  Once your debt is paid off, you’ll have more cash flow each month.

If you find yourself in debt in part because of your rapidly expanding family, know that there is a way to get your finances under control.  All you need is dedication and a plan.

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